Exhibit 10.3


 


Execution Version


 


$650,000,000


 


BREITBURN ENERGY PARTNERS LP

BREITBURN OPERATING LP

BREITBURN FINANCE CORPORATION


 


9.25% Senior Secured Second Lien Notes
due 2020


 


AMENDED AND RESTATED

PURCHASE AGREEMENT


 


April 8, 2015


 


The Purchasers named in Schedule
I attached hereto


 


Ladies and Gentlemen:


 


Breitburn Energy Partners
LP, a Delaware limited partnership (the “Partnership”), Breitburn Operating LP, a Delaware limited partnership
(the “Operating LP”), and Breitburn Finance Corporation, a Delaware corporation (“Breitburn
Finance,” and together with the Partnership and the Operating LP, the “Issuers”), propose
to issue and sell, severally and not jointly, upon the terms and conditions set forth in this agreement (this “Agreement”),
to the purchasers named in Schedule I attached to this agreement (the “Purchasers”), $650,000,000
in aggregate principal amount of their 9.25% Senior Secured Second Lien Notes due 2020 (the “Notes”).
References herein to the “Lead Holder” mean EIG Redwood Debt Aggregator, LP and its successors. The Notes
are to be issued pursuant to an indenture (the “Indenture”) to be dated as of the Closing Date (as defined
in Section 3 hereof), among the Issuers, the Guarantors listed on Schedule II hereto (the “Guarantors”)
and U.S. Bank National Association, as trustee (in such capacity, the “Trustee”) and as collateral agent
(in such capacity, the “Collateral Agent”). The Issuers’ obligations under the Notes, including
the due and punctual payment of interest on the Notes, will be irrevocably and unconditionally guaranteed (the “Guarantees”
and, together with the Notes, the “Securities”) by the Guarantors. As used herein, the term “Notes”
shall include the Guarantees, unless the context otherwise requires. This is to confirm the agreement among the Issuers and the
Guarantors (collectively, the “Breitburn Parties”), on the one hand, and the Purchasers, on the other
hand, concerning the purchase of the Notes from the Issuers by the Purchasers. Any term used but not otherwise defined herein shall
have the meaning ascribed thereto in Schedule IV hereto.


 


Each of the Partnership
and its Subsidiaries (collectively, the “Breitburn Entities”) is listed on Schedule III
hereof.


 




    	 



    	 



    

 


The Securities and
the Guarantees will be secured by a Second-Priority lien on substantially all of the tangible and intangible assets of the Breitburn
Parties, now owned or hereafter acquired by any of the Breitburn Parties, that secure borrowings under the Credit Facility (as
defined below) on a first-priority basis, subject to certain exceptions to be agreed (the “Collateral”).
The Collateral shall be described in (a) with respect to real property (including titles, rights and interests therein) that constitutes
Collateral, the mortgages, debentures, hypothecs, deeds of trust or deeds to secure debt to be entered into after the date hereof
(collectively, the “Mortgages”), (b) with respect to personal property that constitutes Collateral, the
Security Agreement, to be dated the date hereof, and entered into by the Issuers and the Guarantors party hereto (the “Security
Agreement”) and (c) with respect to cash, deposit accounts, securities accounts and commodity accounts that constitute
Collateral, the deposit account control agreements, securities account control agreements and commodity account control agreements
to be entered into after the date hereof (the “Control Agreements”). The term “Collateral
Documents” as used herein shall mean the Mortgages, the Security Agreement, the Control Agreements and related financing
statements as the same may be amended from time to time and any and all other instruments heretofore, now or hereafter executed
in connection with or as security for the payment of the Obligations. The rights of the holders of the Securities with respect
to the Collateral shall be further governed by the Intercreditor Agreement to be dated as of the Closing Date (as defined below),
among the Collateral Agent and the Priority Lien Collateral Agent and acknowledged by the Breitburn Parties (the “Intercreditor
Agreement”). “Second-Priority” means, with respect to any Lien, a Lien that is second priority
to the Priority Lien Debt (as defined in the Description of Notes), in each instance, subject to the Intercreditor Agreement and
any Liens expressly permitted to be incurred or exist on the Collateral under the Indenture (“Permitted Liens”).


 


This Amended and Restated
Purchase Agreement, dated as of the date set forth above, amends, restates and supersedes in its entirety that certain Purchase
Agreement, dated as of March 27, 2015, by and among the Breitburn Entities and the purchasers set forth in Schedule I thereto.


 




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1.A.           Representations,
Warranties and Agreements of the Breitburn Parties. The Breitburn Parties, jointly and severally, represent, warrant to, and
agree with, each of the Purchasers that:


 


(a)          Organization
and Good Standing of the Breitburn Parties. Each of the Breitburn Parties: (i) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization or formation except to the extent, in the case of any Restricted
Subsidiary, that any such failure of such Restricted Subsidiary to be in good standing would not reasonably be expected to have
a Material Adverse Effect; (ii) has the power and authority and all material governmental licenses, authorizations, consents
and approvals to execute, deliver, and perform its obligations under the Note Documents and, except to the extent that any failure
to have any thereof could not reasonably be expected to have a Material Adverse Effect, to own its assets and carry on its business;
(iii) is duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its business requires such qualification or license, except
where failure to do so would not reasonably be expected to have a Material Adverse Effect; and (iv) is in compliance in all
material respects with all Requirements of Law, except to the extent that the failure to be in compliance could not reasonably
be expected to have a Material Adverse Effect.


 


(b)          Corporate
Authorization; No Contravention. The execution, delivery and performance by each Breitburn Party of this Agreement and
each other Note Document to which such Person is a party, have been duly authorized by all necessary organizational action, and
do not and will not: (i) contravene the terms of any of that Person’s Organization Documents; (ii) conflict with
or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party that would be prior to the Liens granted to the Collateral Agent for the benefit of the Secured
Parties or otherwise that would constitute a Material Adverse Effect or, except to the extent that any such conflict, breach or
contravention would not reasonably be expected to have a Material Adverse Effect, any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or (iii) violate any Requirement of Law, that would
constitute a Material Adverse Effect, including any California Requirement of Law promulgated with respect to preparedness and
damage prevention associated with earthquakes.


 


(c)          Governmental
Authorizations. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental
Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Breitburn
Party of this Agreement or any other Note Document to which it is a party, except for filings necessary to obtain and maintain
perfection of Liens; routine filings related to the Breitburn Parties and the operation of their business; and such filings as
may be necessary in connection with the Collateral Agent’s exercise of remedies under the Note Documents.


 




    	 



    	 



    

 


(d)          Binding
Effect. This Agreement and each other Note Document to which any Breitburn Party is a party constitute the legal, valid and
binding obligations of such Person to the extent it is a party thereto, enforceable against such Person in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and
general equitable principles.


 


(e)          Litigation.
There are no actions, suits, proceedings, claims or disputes pending, or to the knowledge of the Breitburn Parties, threatened
or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against any Breitburn Party or any of
its subsidiaries, or any of their respective Properties which: (i) purport to affect or pertain to this Agreement or any other
Note Document, or any of the transactions contemplated hereby or thereby; or (ii) either individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect. To the knowledge of each Breitburn Party, no injunction, writ,
temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement or any other Note Document, or directing that the
transactions provided for herein or therein not be consummated as herein or therein provided.


 


(f)          No
Default.


 


(i)          No
Default or Event of Default exists or would be reasonably expected to result from the incurring of any Obligations by the Breitburn
Parties;


 


(ii)         No
Breitburn Party or any Restricted Subsidiary or any Unrestricted Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material
Adverse Effect. Each Breitburn Party and its subsidiaries is in compliance with all requirements of any Governmental Authority
applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other authorizations granted by Governmental Authorities necessary for the ownership
of its Property and the present conduct of its business, except in each case where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect;


 


(g)          ERISA
Compliance. Except as specifically disclosed in Schedule 1(g):


 


(i)          Each
Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has either received a favorable determination letter
from the IRS or may rely on favorable opinion letter issued by the IRS, and to the knowledge of any Issuer, nothing has occurred
which would cause the loss of such qualification. Each Breitburn Party and each ERISA Affiliate has made all required contributions
to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any Plan.


 




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(ii)         There
are no pending or, to the knowledge of any Breitburn Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.


 


(iii)        (1) No
ERISA Event has occurred or is reasonably expected to occur; (2) no Pension Plan has any Unfunded Pension Liability; (3) no
Breitburn Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (4) no Breitburn
Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (5) no Breitburn Party nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) or ERISA.


 


(h)          Margin
Regulations. No Breitburn Party is generally engaged in the business of purchasing or selling Margin Stock or extending credit
for the purpose of purchasing or carrying Margin Stock. No proceeds from the sale of any Note shall be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation
U) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred
for such purpose in violation of Regulation U.


 


(i)          Title
to Properties. Subject to Permitted Liens, the Breitburn Parties and their Restricted Subsidiaries shall each have good and
defensible title to all of their respective Oil and Gas Properties evaluated in the Initial Reserve Report (other than the interests
that have been disposed of in one or more dispositions since the date of such report), and except for such defects in title as
would not, individually or in the aggregate, reasonably be expected to be have a Material Adverse Effect, and each Breitburn Party
and its Restricted Subsidiaries shall have good title to all other Oil and Gas Properties necessary or used in the ordinary conduct
of their respective businesses. After giving full effect to the Permitted Liens, any Breitburn Party or Restricted Subsidiary thereof
specified as the owner under the Initial Reserve Report owns the net interests in production attributable to the Oil and Gas Properties
as reflected in such Reserve Report (other than the interests that have been disposed of in one or more dispositions permitted
under the Indenture), and the ownership of such Properties shall not in any material respect obligate such Breitburn Party or Restricted
Subsidiary thereof to bear the costs and expenses relating to the maintenance, development and operations of each such Property
in an amount in excess of the working interest of each Property set forth in the Initial Reserve Report that is not offset by a
corresponding proportionate increase in such Breitburn Party’s or Restricted Subsidiary’s net revenue interest in such
Property. Other than as set forth on Schedule 1(i), no consents or rights of first refusal exist or remain outstanding
with respect to such Breitburn Party’s or Restricted Subsidiary’s interest in the Mortgaged Properties assigned to
it pursuant to any acquisition of Oil and Gas Properties other than Permitted Liens. Other than as set forth on Schedule 1(i),
as of the Closing Date, the property of the Breitburn Parties and their Restricted Subsidiaries is subject to no Liens, other than
Permitted Liens.


 




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(j)          Oil
and Gas Reserves. Each Breitburn Party and each of its Restricted Subsidiaries is and will hereafter be, in all material respects,
the owner of the Oil and Gas that it purports to own from time to time in and under its Oil and Gas Properties, together with the
right to produce the same. The Oil and Gas Properties are not subject to any Lien other than Permitted Liens. All Oil and Gas has
been and will hereafter be produced, sold and delivered in accordance in all material respects with all applicable laws and regulations
of any Governmental Authority; each of the Breitburn Parties and its Restricted Subsidiaries has complied in all material respects
and will hereafter use commercially reasonable efforts to comply with all material terms of each oil, gas and mineral lease and
any other agreement comprising its Oil and Gas Properties; and all such oil, gas and mineral leases and other agreements have been
and will hereafter be maintained in full force and effect; provided, however that nothing in this Section 1(j)
shall prevent any Breitburn Party or its Restricted Subsidiaries from (i) abandoning any well or forfeiting, surrendering,
releasing or defaulting under any lease in the ordinary course of business which is not disadvantageous in any material respect
to the Holders and which, in the opinion of such Breitburn Party, is in its best interest, and such Breitburn Party and its Restricted
Subsidiaries is and will hereafter be in compliance with all obligations hereunder and (ii) making any disposition permitted
hereunder. All of the Breitburn Parties’ and their Restricted Subsidiaries’ operating agreements and operating leases
with respect to their Oil and Gas Properties are and will hereafter be enforceable in all material respects in accordance with
their terms except as such may be modified by applicable bankruptcy law or an order of a court in equity.


 


(k)          Initial
Reserve Report. The Issuers have heretofore delivered to the Lead Holder a true and complete copy of (x) reserve reports, each
dated effective as of December 31, 2014 prepared by Netherland, Sewell and Associates, Inc. (the “Initial Reserve Report”)
relating to an evaluation of the Oil and Gas attributable to the Oil and Gas Properties described therein. To the knowledge of
the Issuers, (i) the assumptions stated or used in the preparation of the Initial Reserve Report are reasonable, (ii) all
information furnished by the Breitburn Parties for use in the preparation of the Initial Reserve Report, was accurate in all material
respects, (iii) there has been no material adverse change in the amount of the estimated Oil and Gas shown in the Initial
Reserve Report since the date thereof, except for changes which have occurred as a result of production in the ordinary course
of business, and (iv) the Initial Reserve Report does not omit any material statement or information necessary to cause the
same not to be misleading to the Purchasers.


 




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(l)          Gas
Imbalances. There are no gas imbalances, take or pay or other prepayments with respect to any of the Oil and Gas Properties
which would require the Breitburn Parties or their Restricted Subsidiaries to deliver Oil and Gas produced from any of the Oil
and Gas Properties at some future time without then or thereafter receiving full payment therefor exceeding 5,000,000 Mcf of gas
(on an Mcf equivalent basis) in the aggregate.


 


(m)          Taxes.
Unless specifically disclosed on Schedule 1(m), the Breitburn Parties and their Restricted Subsidiaries have
filed all federal tax returns and reports required to be filed by them, including any filing extensions together with payments
for any estimated taxes due thereon on or before the time the extension is due, and have paid all federal taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except
those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. The Breitburn Parties and their Restricted Subsidiaries have filed all material state and other non-federal
tax returns and reports required to be filed by them, and have paid all material state and other non-federal taxes, assessments,
fees and other governmental charges levied or imposed upon them or their properties, income or assets prior to delinquency thereof,
except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP. To the knowledge of the Breitburn Parties, there is no proposed tax assessment against any Breitburn Party
or any of its Restricted Subsidiaries that would, if made, reasonably be expected to have a Material Adverse Effect.


 


(n)          Financial
Condition.


 


(i)          The
audited consolidated balance sheet of Partnership and its Consolidated Subsidiaries as of December 31, 2014, the related consolidated
statement of income, partners’ equity and cash flow of Partnership and its Consolidated Subsidiaries for the fiscal year
ended on said date, (1) were prepared in accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (2) fairly present the financial condition of Partnership and its Consolidated
Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; and (3) show all material indebtedness
and other liabilities, direct or contingent, of Partnership and its Consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness.


 


(ii)         Since
December 31, 2014, (1) there has been no event, development or circumstance that has had or could reasonably be expected to
have a Material Adverse Effect, and (2) the business of Partnership and the other Breitburn Parties have been conducted only
in the ordinary course consistent with past business practices.


 




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(o)          Environmental
Matters. Except as described on Schedule 1(o) hereto or that, either individually or in the aggregate, could
not be reasonably expected to have a Material Adverse Effect (or with respect to (ii) and (iii) below, where the failure, either
individually or in the aggregate, to take such actions could not be reasonably expected to have a Material Adverse Effect):


 


(i)          neither
any Property of any Breitburn Party or any of its Restricted Subsidiaries, nor the operations conducted thereon, violate Environmental
Laws.


 


(ii)         no
Property of any Breitburn Party or any of its Restricted Subsidiaries, nor the operations currently conducted thereon by any Breitburn
Party, or, to the knowledge of such Breitburn Party, no operations conducted thereon by any prior owner or operator of such Property,
are in violation of or subject to any existing, or to the knowledge of such Breitburn Party, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any Governmental Authority under Environmental Laws.


 


(iii)        all
notices, permits, licenses, exemptions and approvals, if any, required to be obtained or filed under any Environmental Law in connection
with the operation or use of any and all Property by each Breitburn Party, including any treatment, storage, disposal or Release
of any Hazardous Materials into the environment, have been duly obtained or filed or requested, and each Breitburn Party and its
Restricted Subsidiaries is in compliance with the material terms and conditions of all such notices, permits, licenses, exemptions
and approvals.


 


(iv)        Hazardous
Materials, if any, generated by the Breitburn Parties or any of their Restricted Subsidiaries at any and all Property of any such
Restricted Subsidiary have in the past been transported, treated and disposed of in compliance with Environmental Laws then in
effect, and, to the knowledge of such Breitburn Party, transport carriers and treatment and disposal facilities known by such Breitburn
Party to have been used by it are not the subject of any existing action, investigation or inquiry by any Governmental Authority
under any Environmental Laws.


 


(v)         no
Hazardous Materials have been disposed of or otherwise Released by any Breitburn Party or any Restricted Subsidiary thereof on
or to any Property of such Breitburn Party or Restricted Subsidiary except in compliance with Environmental Laws.


 


(vi)        no
Breitburn Party has any known pending assessment, investigation, monitoring, removal or remedial obligations under applicable Environmental
Laws in connection with any Release or threatened Release of any Hazardous Materials into the environment by any Breitburn Party
or any Restricted Subsidiary thereof.


 


(p)          Regulated
Entities. No Breitburn Party is an “investment company” or is a company “controlled by” an “investment
company” (or a company required to be registered as an “investment company”) within the meaning of
the Investment Company Act of 1940. None of the Breitburn Parties, or any Person controlling any Breitburn Party, is subject to
regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.


 




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(q)          No
Burdensome Restrictions. No Breitburn Party nor any of its Restricted Subsidiaries is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which would reasonably be expected
to have a Material Adverse Effect.


 


(r)          Copyrights,
Patents, Trademarks and Licenses, Etc. Except to the extent that any failure, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, each Breitburn Party and each of its Restricted Subsidiaries owns or is licensed
or otherwise has the right to use all of the material patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for the operation of its business, without material conflict
with the rights of any other Person. To the knowledge of any Breitburn Party, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to be employed, by any Breitburn Party or any Restricted
Subsidiary thereof infringes in a material respect upon any rights held by any other Person. No claim or litigation regarding any
of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of any Breitburn Party, proposed, which, in either case, could reasonably
be expected to have a Material Adverse Effect.


 


(s)          Subsidiaries
and Other Equity Interests. No Breitburn Party has any Restricted Subsidiary, Unrestricted Subsidiary or other equity investment
other than those specifically disclosed in Schedule 1(s) hereto. Each Breitburn Party owns the percentage interest
of all issued and outstanding Equity Interests in each Restricted Subsidiary, Unrestricted Subsidiary or other material equity
investment described on Schedule 1(s). Partnership owns one hundred percent (100%) of the issued and outstanding
equity in each of Operating LP and Breitburn Finance.


 


(t)          Insurance.
The Properties of each Breitburn Party and its respective Restricted Subsidiaries are insured with financially sound and reputable
insurance companies that are not Affiliates of any Breitburn Party, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Breitburn
Party or Restricted Subsidiary operates.


 


(u)          Hedging
Contracts. As of the date hereof, Schedule 1(u) sets forth, a true and complete list of all Hedging Contracts
of the Breitburn Parties and their Restricted Subsidiaries in effect as of the Closing Date, the material terms thereof (including
the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value thereof, all credit
support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.


 




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(v)         Full
Disclosure. None of the representations or warranties made by any Breitburn Party in the Note Documents as of the date such
representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, written statement
or certificate (other than any financial projections, forecasts or estimates) furnished by or on behalf of any Breitburn Party
in connection with the Note Documents, taken as whole, contains any untrue statement of a material fact known to any Breitburn
Party, or omits any material fact known to any Breitburn Party, required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. The
financial projections, forecasts, estimates and other forward looking statements furnished by or on behalf of any Breitburn Party
or made available to any Secured Party were (and, to the extent provided after the date hereof, will be) prepared in good faith
based upon assumptions that are reasonable at the time made and at the time of delivery thereof; provided that with respect
to any such information, it is agreed and understood that (i) such information (1) is based upon a number of estimates
and is subject to business, economic and competitive uncertainties and contingencies and (2) is as to future events and is
not to be viewed as facts, (ii) whether or not the results or other projections described therein are achieved will depend
on future events, many of which are not within the control of the Breitburn Parties and (iii) the actual results or other
projections during the period or periods covered by such information may differ from the projected results and other projections
and such differences may be material.


 


(w)          Solvency.
Each of the Partnership and the Operating LP is Solvent and the Breitburn Parties and their Subsidiaries, on a consolidated basis,
are Solvent.


 


(x)          Improved
Real Estate. To the knowledge of each Breitburn Party, the Oil and Gas Properties that are not Mortgaged Properties do not
include any “buildings” (as defined under Section 4000 et. seq. of the National Flood Insurance Reform
Act of 1994, as amended) that are critical to operating any Mortgaged Properties for the exploration and production of oil and
gas.


 


(y)          Anti-Corruption
Laws and Sanctions. The Partnership has implemented and maintains in effect policies and procedures designed to ensure compliance
by the Partnership, its subsidiaries and their respective directors, officers, employees and agents with Anti-Terrorism
and Money Laundering Law, OFAC Laws, Anti-Corruption Laws and applicable Sanctions. The Partnership, its subsidiaries and
their respective officers and employees and, to the knowledge of the Partnership, its directors, agents and other persons acting
on behalf of them, are in compliance with Anti-Terrorism and Money Laundering Law, OFAC Laws, Anti-Corruption
Laws and applicable Sanctions in all material respects. None of (i) the Partnership, any of its Subsidiaries or, to the knowledge
of the Partnership, any of their respective directors, officers or employees, is a Sanctioned Person, or (ii) to the knowledge
of the Partnership, any agent of the Partnership or any subsidiary that will act in any capacity in connection with or benefit
from the note purchase facility established hereby, is a Sanctioned Person. No Note purchase contemplated hereunder, the use of
proceeds thereof or other Transaction contemplated by this Agreement will violate any Anti-Terrorism
and Money Laundering Law, OFAC Laws, Anti-Corruption Laws or applicable Sanctions.


 




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(z)          Collateral.


 


(i)          Upon
making of the filings and taking of the other actions set forth on Schedule 1(z), all filings and other actions
necessary to perfect the security interests in the Collateral created under the Collateral Documents shall have been duly made
or taken to the extent the Security interest in such Collateral may be perfected by filing and taking the other actions set forth
on Schedule 1(z). Each Breitburn Party has properly delivered or caused to be delivered to Collateral Agent
(or, subject to the Intercreditor Agreement, the Priority Lien Agent) all Collateral that requires perfection of the Liens and
security interests described above by possession.


 


(ii)         The
Collateral Documents create in favor of Collateral Agent for the benefit of the Secured Parties a valid and, upon making of the
filings and taking of the other actions set forth on Schedule 1(z), perfected Second-Priority Lien and security
interest in the Collateral securing the payment of the Obligations to the extent the Security interest in such Collateral may be
perfected by filing and taking the other actions set forth on Schedule 1(z).


 


(iii)        Each
of Breitburn Party is the legal and beneficial owner of the Collateral to be pledged by it free and clear of any Lien, other than
Permitted Liens.


 


(iv)        The
mortgages and deeds of trust set forth on Schedule 5 represent all of the mortgages and deeds of trust granted
by a Breitburn Party to the Priority Lien Collateral Agent (other than any such mortgages and deeds of trust that have been released
prior to the Closing Date); provided it is agreed and understood that the Partnership may update this Schedule 5
by providing written notice to the Purchasers at any time between the date hereof and the Closing Date.


 


(aa)         No
General Solicitation.


 


(i)          No
Breitburn Party, Affiliate thereof or any person acting on its or any of their behalf has engaged, or will engage, in any form
of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with
the offering of the Notes.


 


(ii)         Other
than this Agreement and the Note Documents expressly contemplated hereunder, none of the Breitburn Parties or any Affiliate thereof
has entered into any agreement or arrangement with any person in relation to the sale of the Notes.


 


(iii)        Neither
any Breitburn Party nor any of their respective Affiliates nor any person acting on its or their behalf, directly or indirectly,
has made or will make any offers or sales of any security, or has solicited or will solicit offers to buy, or otherwise has negotiated
or will negotiate in respect of, any security, under circumstances that would require the registration of the Notes under the Securities
Act.


 




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(bb)         [Reserved].


 


(cc)         Indebtedness.
All Indebtedness constituting Existing Indebtedness for purposes of the Note Documents is set forth on Schedule 1(aa).


 


(dd)         Liens.
All Liens constituting Liens in existence as of the Closing Date (to the extent not constituting Liens that are Permitted Liens
other than by the fact that they are in existence on the Closing Date) for purposes of the Note Documents are set forth on Schedule 1(bb).


 


(ee)         Investments.
All Investments constituting Investments in existence as of the Closing Date (to the extent not constituting Permitted Investments
other than by the fact that they are in existence on the Closing Date) for purposes of the Note Documents are set forth on Schedule 1(dd).


 


1.B.           Representations,
Warranties and Agreements of Purchasers. Each of the Purchasers, severally but not jointly, represents, warrants and agrees
with the Breitburn Parties as follows, except with respect to any representation and warranty that speaks solely to a specific
Purchaser, which representation and warranty is made only by the Purchaser to which such representation and warranty speaks:


 


(a)          Accredited
Investor Status; Sophisticated Purchaser. Such Purchaser is an “accredited investor” within the meaning of Rule
501 under the Securities Act and is able to bear the risk of its investment in the Securities. Such Purchaser has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Securities.


 


(b)          Information.
Such Purchaser and its representatives have been furnished with all materials relating to the business, finances and operations
of the Partnership and its Subsidiaries that have been requested and materials relating to the offer and sale of the Securities
that have been requested by such Purchaser. Such Purchaser and its representatives have been afforded the opportunity to ask questions
of the Partnership. Neither such inquiries nor any other due diligence investigations conducted at any time by such Purchasers
and its representatives shall modify, amend or affect such Purchasers’ right (i) to rely on the Breitburn Parties’
representations and warranties contained in Section 1A above or (ii) to indemnification or any other remedy
based on, or with respect to the accuracy or inaccuracy of, or compliance with, the representations, warranties, covenants and
agreements in any Note Document. Such Purchaser understands that its purchase of the Securities involves a high degree of risk.
Such Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.


 


(c)          Purchase
Representation. Such Purchaser is purchasing the Securities for its own account and not with a view to distribution in violation
of any securities laws. Such Purchaser has been advised and understands that the Securities have not been registered under the
Securities Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the
provisions of the Securities Act (or if eligible, pursuant to the provisions of Rule 144 promulgated under the Securities Act or
pursuant to another available exemption from the registration requirements of the Securities Act). Such Purchaser has been advised
and understands that the Breitburn Parties issuing the Securities are relying upon, among other things, the representations and
warranties of each Purchaser contained in this Section in concluding that such issuance is a “private offering” and
is exempt from the registration provisions of the Securities Act.


 




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(d)          Reliance
by Breitburn. Such Purchaser understands that the Securities are being offered and sold in reliance on a transactional exemption
from the registration requirements of federal and state securities laws and that the Breitburn Parties are relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein
in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Securities.


 


2.          Purchase
of the Notes by the Purchasers. On the basis of the representations, warranties and agreements contained in, and subject to
the terms and conditions of, this Agreement, the Issuers agree, severally and jointly, to issue and sell to the several Purchasers,
and each of the Purchasers agrees, severally and not jointly, to purchase from the Issuers, the Notes, at a purchase price of 97.00%
of the principal amount thereof, in the respective principal amounts (before giving effect to any discount thereon) set forth on
Schedule I; provided that, notwithstanding the forgoing or anything else to the contrary provided herein,
in the event that the Guggenheim Purchasers fail, for any reason, to purchase their respective Notes as set forth on Schedule
I at the time at which they are obligated to consummate the Closing pursuant to Section 3, Anchorage
Purchasers shall purchase all of the Notes required to be purchased by the Guggenheim Purchasers hereunder; provided, further,
that, notwithstanding anything else contained herein, if the Guggenheim Purchasers, or a Person that is administered, advised or
managed by Guggenheim Management , do not purchase, in the aggregate, all of the Series B Convertible Preferred Units required
to be purchased by them under the Series B Preferred Unit Purchase Agreement, the closing of which is to occur simultaneously with
the Closing, the Guggenheim Purchasers shall not be entitled to purchase any Notes pursuant to this Agreement. The Breitburn Parties
shall not be obligated to deliver any of the securities to a Purchaser to be delivered hereunder, except upon payment for all of
the securities to be purchased by such Purchaser as provided herein.


 


3.          Delivery
of the Notes and Payment Therefor. The closing of the sale of the Notes pursuant to this Agreement (the “Closing”)
will be at the office of Vinson & Elkins L.L.P., 666 Fifth Avenue, New York, NY 10103 at 9:00 a.m., New York City time, on
April 8, 2015 (the “Scheduled Closing Date”); provided that if all conditions in Section
7 to be satisfied at or prior to the closing have not been satisfied or waived on the Scheduled Closing Date, the closing
shall occur on the first Business Day following the date on which all such conditions have been (or, at closing, will be capable
of being) satisfied or waived (subject to all such conditions in Section 7 being satisfied or waived at the closing).
The date the Closing actually occurs is called the “Closing Date.”


 




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4.          Further
Agreements of the Breitburn Parties and the Lead Purchasers. Each of the Breitburn Parties, jointly and severally, covenants
and agrees:


 


(a)          To
(i) complete on or prior to the Closing Date all filings and other similar actions required in connection with the perfection
of Second-Priority security interests in the Collateral as and to the extent contemplated by the Indenture and the Collateral Documents
and (ii) take all actions necessary to maintain such security interests and to perfect security interests in any Collateral
acquired after the Closing Date, in each case as and to the extent contemplated by the Indenture and the Collateral Documents;
provided that the Issuers and the Guarantors may deliver, furnish and/or cause to be furnished all of the obligations set
forth on Schedule 5 hereto within the time periods set forth therein; and


 


(b)          To
apply the net proceeds from the sale of the Securities released to the Issuers solely to (i) repay loans outstanding under
the Credit Facility in an amount no less than $930,000,000 and (ii) pay fees and expenses incurred in connection therewith
and with the (1) purchase and sale of the Securities on the Closing Date and (2) the issuance of the Series B Perpetual
Convertible Preferred Units in an aggregate amount of $350,000,000.


 


(c)          The
Partnership shall pay to the Lead Holder (through the trustee as set forth in the immediately following sentence), from time to
time, for the account of the Holders in accordance with their respective percentages of the aggregate principal amount of the then
outstanding Notes, with respect to any fee paid by any Breitburn Party to or for the account of the lenders under any Permitted
Credit Facility in respect of Indebtedness under the Permitted Credit Facility that is not (i) expressly required by the terms
of the Permitted Credit Facility as of the Closing Date or (ii) a fee of the type described in clauses (ii)(D) through (F)
of the definition of “Interest Rate Priority Cap” contained in the Intercreditor Agreement (any such fee other than
as set forth in clause (i) or clause (ii) above, an “Additional First Lien Fee”) a fee in an amount which
(when aggregated with the other fees paid under this Section 4(c) in respect of other Additional First Lien Fees
made within the one year period ending on such date) is equal to the product of (x) the Excess Fee Percentage, if any, and (y)
the total principal amount of the Notes outstanding as of such date of payment. Any fees payable under this Section 4(c)
shall be paid to the trustee for the benefit of all Holders on a pro rata basis and shall be due and payable on the date such Additional
First Lien Fee is paid to the lenders under Permitted Credit Facility. This covenant shall survive any termination of this Agreement
until such time as all of Notes shall have otherwise ceased to be outstanding.


 


5.          Additional
Covenants. So long as any Obligation (other than Obligations in respect of indemnification or expense reimbursement for which
no claim has been made) shall remain unpaid or unsatisfied each of the Breitburn Parties, jointly and severally, covenants and
agrees with each of the Lead Purchasers as follows:


 


(a)          Financial
Statements. The Partnership shall maintain, for itself and each of its Consolidated Subsidiaries, on a consolidated basis,
a system of accounting established and administered in accordance with GAAP and deliver, or cause to be delivered, to the Lead
Holder:


 




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(i)          no
later than fifteen (15) days following the date required by applicable SEC rules (without giving effect to any extensions available
thereunder) for the filing of such financial statements:


 


(1)         the
audited consolidated balance sheet and related statements of income, partners equity and cash flows of the Partnership as of the
end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all (A) reported
on by a nationally recognized independent public accounting firm (the “Independent Auditor”) (without
a “going concern” or like qualification or exception and without any qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition,
results of operations and cash flows of the Partnership and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, and (B) certified by a Proper Officer as fairly presenting in all material respects, the financial
condition, results of operations and cash flows of the Partnership and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;


 


(2)         unaudited
annual consolidating balance sheet and consolidating statement of income for the Partnership and its Consolidated Subsidiaries
as of the end of such year, certified by a Proper Officer as fairly presenting in all material respects, the financial condition,
results of operations of the Partnership and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied; and


 


(3)         the
unaudited consolidated balance sheet and related statements of income, partners equity and cash flows of the Partnership as of
the end of and for such year, setting forth in each case in comparative form the figures for the previous final year, and unaudited
consolidating balance sheets and statements of income, all certified by a Proper Officer of the Partnership as fairly presenting
in all material respects, the financial condition, results of operations and cash flows of the Partnership and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to the absence of footnotes.


 


(ii)         fifteen
(15) days following the date required by applicable SEC rules (without giving effect to any extensions available thereunder) for
the filing of such financial statements after the end of each of the first three fiscal quarters of each fiscal year of the Partnership:


 




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(1)         the
unaudited consolidated balance sheet and related statements of income, partners equity and cash flows of the Partnership as of
the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of), the previous
fiscal year, all certified by a Proper Officer of the Partnership as fairly presenting in all material respects, the financial
condition, results of operations and cash flows of the Partnership and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to the absence of footnotes; and


 


(2)         the
unaudited consolidated balance sheet and related statements of income, partners equity and cash flows of the Partnership as of
the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by a Proper Officer of the Partnership as fairly presenting in all material respects, the financial
condition, results of operations and cash flows of the Partnership and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to the absence of footnotes.


 


(b)          Certificates;
Other Production and Reserve Information. The Issuers shall furnish to the Lead Holder:


 


(i)          As
soon as available, but not later than forty-five (45) days after the close of each fiscal quarter of the Partnership (including
the fourth quarter), a Quarterly Status Report covering each of the three months during such fiscal quarter;


 


(ii)         Concurrently
with any delivery of financial statements under Sections 5(a)(i) and 5(a)(ii), a certificate of a Proper Officer
of the Partnership, setting forth as of the last Business Day of such fiscal quarter or fiscal year, a true and complete list of
all Hedging Contracts of each Issuer, Guarantor and Restricted Subsidiary, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 1(u), any margin required or supplied under any credit support
document, and the counterparty to each such agreement;


 


(iii)        [Reserved];


 




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(iv)        (A)         Annually
commencing March 1, 2015, dated as of January 1st of such year, a Reserve Report provided by the Reserve Engineer, and
annually, commencing September 1, 2015, dated as of July 1 of such year, a Reserve Report prepared by personnel of the Partnership
and certified by a Proper Officer of the Partnership as to the knowledge of such Property Officer, true and correct in all material
respects. With the delivery of each Reserve Report, the Issuers shall provide to the Lead Holder certificate from a Proper Officer
of each Issuer certifying that in all material respects: (1) to the knowledge of such Proper Officers, the information contained
in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects,
(2) the Breitburn Parties own good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report, and
such Properties are free of all Liens except for Permitted Liens, (3) except as set forth on an exhibit to the certificate,
on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 1(l)
with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require any Breitburn Party to deliver
Oil and Gas either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor, (4) none of their proved Oil and Gas Properties have been sold since the date of the delivery of the
previous Reserve Report except as set forth on an exhibit to the certificate, which certificate shall list all of its proved Oil
and Gas Properties sold and in such detail as reasonably required by the Lead Holder, (5) attached to the certificate is a
list of all marketing agreements entered into subsequent to the most recently delivered Reserve Report and (6) attached thereto
is a schedule of the Oil and Gas Properties of the Breitburn Parties evaluated by such Reserve Report that are Mortgaged Properties
and demonstrating the percentage of the present value determined by a discount factor of 10% per annum that such Mortgaged Properties
represent and certifying that such Mortgaged Properties represent at least 80% of the total net present value (determined by a
discount factor of 10% per annum) of the Breitburn Parties’ Oil and Gas Properties evaluated in the most recent Reserve Report;


 


(v)         In
connection with the delivery of each Reserve Report, a listing of any property or related properties of any Breitburn Party acquired
pursuant to an acquisition or series of related acquisitions since the date of the last Reserve Report for which such Breitburn
Party paid consideration in excess of $5.0 million, not subject to a Mortgage;


 


(vi)        Promptly
after the furnishing thereof, copies of any financial statement, report or notice furnished to or by any Person pursuant to the
terms of any preferred stock designation, indenture, note purchase agreement, loan or credit or other similar agreement other than
this Agreement and not otherwise required to be furnished to the Holders pursuant to any other provision of this Section 5(b).


 


(vii)       Concurrently
with the delivery of any Reserve Report to the Lead Holder pursuant to Section 5(b)(iv), or after an Event of
Default, upon request, a list of all Persons purchasing Oil and Gas from any of the Issuers or Guarantors;


 


(viii)      Prompt
written notice, and in any event within ten (10) Business Days (or such longer period as the Lead Holder may agree), of the occurrence
of any Casualty Event;


 




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(ix)         Prompt
written notice (and in any event within thirty (30) days prior thereto (or such shorter period as the Lead Holder may agree) of
any change (1) in any Issuer’s or Guarantor’s organizational name or in any trade name used to identify such Person
in the conduct of its business or in the ownership of its Properties, (2) in the location of any Issuer’s or Guarantor’s
chief executive office or principal place of business, (3) in any Issuer’s or Guarantor’s identity or organizational
structure or in the jurisdiction in which such Person is incorporated or formed, (4) in any Issuer’s or Guarantor’s
jurisdiction of organization or such Person’s organizational identification number in such jurisdiction of organization,
and (5) in any Issuer’s or Guarantor’s federal taxpayer identification number, if any;


 


(x)          Promptly
upon the request of the Lead Holder, such copies of all geological, engineering and related data contained in any of Issuer’s
or Guarantor’s files or readily accessible to the Issuer or Guarantor relating to the Oil and Gas Properties as may reasonably
be requested;


 


(xi)         On
request by the Lead Holder, based upon the Lead Holder’s good faith belief that any Issuer’s or Guarantors’ title
to the Mortgaged Properties or the Collateral Agent’s Lien on any of the Issuers’ or Guarantors’ properties is
subject to claims of third parties (other than Permitted Liens), title and mortgage lien evidence reasonably satisfactory to the
requesting party, as the case may be, covering such Mortgaged Property as may be designated by the requesting party covering such
Issuer’s or Guarantor’s title thereto and evidencing that the Obligations are secured by liens and security interests
as provided in this Agreement and the Collateral Documents;


 


(xii)        As
soon as available, and in any event within 90 days after the end of each fiscal year, a business and financial plan for the Partnership
(in form reasonably satisfactory to the Lead Holder), prepared by a Proper Officer of the Partnership, setting forth for the current
fiscal year, quarterly financial projections and budgets for the Partnership, and for three fiscal years thereafter yearly financial
projections and budgets;


 


(xiii)       Promptly,
such additional information regarding the properties, business, financial or corporate affairs of the Breitburn Parties as the
Lead Holder may from time to time reasonably request;


 


(xiv)      Concurrently
with the delivery to the Trustee or the Collateral Agent, as applicable, under any Note Document, copies of each notice, opinion,
certificate or other document furnished to the Trustee or Collateral Agent, as applicable, under any Note Document; and


 


(xv)       The
Breitburn Parties acknowledge and agree that (1) the Lead Holder has the right to review and discuss the Reserve Report and
the calculation of the PV10, Adjusted Consolidated Net Tangible Assets, Proved Reserves Coverage Ratio, Fixed Charge Coverage Ratio
and such other component calculations as the Lead Holder may reasonably request with the Breitburn Parties during normal business
hours, (2) the Reserve Report shall be in form and scope reasonably acceptable to the Lead Holder, and (3) the Breitburn
Parties shall, promptly upon the Lead Holder’s reasonable request, provide such information and data with respect to such
Oil and Gas Properties included in the Reserve Report and components of such calculations.


 




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(c)          Notices.
The Issuers shall promptly notify the Lead Holder:


 


(i)          of
any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect, including (1) breach
or non-performance of, or any default under, a Contractual Obligation of any Issuer or Guarantor or any subsidiary thereof; (2) any
dispute, litigation, investigation, proceeding or suspension between any Issuer, Guarantor or any subsidiary thereof and any Governmental
Authority; (3) the commencement of, or any material development in, any litigation, proposed legislation, ordinance or regulation
of a Governmental Authority, or proceeding affecting any Issuer, Guarantor or any subsidiary thereof, including pursuant to any
applicable Environmental Laws; or (4) revocation, cancellation or failure to renew any license, permit or franchise, where
such breach, non-performance, default, dispute, litigation, investigation, proceeding, suspension, proposed legislation, ordinance
or regulation, revocation, failure or loss could reasonably be expected to have a Material Adverse Effect;


 


(ii)         of
any material change in accounting policies or financial reporting practices by any Issuer, Guarantor or any Consolidated Subsidiary;
and


 


(iii)        of
the formation or acquisition of any Restricted Subsidiary or Unrestricted Subsidiary.


 


Each notice under this Section 5(c)
shall be accompanied by a written statement by a Proper Officer setting forth details of the occurrence referred to therein, and
(if applicable) stating what action such Issuer, Guarantor or subsidiary proposes to take with respect thereto and at what time.
Each notice under Section 5(c) shall describe with particularity any and all clauses or provisions of this Agreement
or other Note Document that have been (or foreseeably will be) breached or violated.


 


(d)          Maintenance
of Properties. The Issuers will, and will cause each of their respective Restricted Subsidiaries to, maintain and preserve
their respective property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted
and to use the standard of care typical in the industry in the operation and maintenance of its facilities except where failure
to do so would not reasonably be expected to have a Material Adverse Effect; provided, however, that nothing in this
Section 5(d) shall prevent any of the Issuers or any of their Restricted Subsidiaries from abandoning any well
or forfeiting, surrendering, releasing or defaulting under any lease in the ordinary course of business which is not materially
disadvantageous in any way to the Holders and which, in its opinion, is in the best interest of such Issuer or Restricted Subsidiary.


 




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(e)          Title
Information. On or before the delivery to the Lead Holder of each Reserve Report required by Section 5(b)(iv),
the Partnership will deliver title information in form and substance acceptable to the Lead Holder covering enough of the Oil and
Gas Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the
Lead Holder shall have received together with title information previously delivered to the Lead Holder, satisfactory title information
on at least 80% of the total net present value (determined by a discount factor of 10%) of the proved Oil and Gas Properties evaluated
by such Reserve Report.


 


(f)          Payment
of Obligations. The Partnership will, and will cause each of its Restricted Subsidiaries to, pay and discharge prior to delinquency,
all their respective obligations and liabilities, including: (i) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Partnership or any of its Restricted Subsidiaries; (ii) all
lawful claims which, if unpaid, would by law become a Lien upon its property; and (iii) all Indebtedness, as and when due
and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness;
except in each of (a), (b) and (c), where the failure to do so would not reasonably be expected to have a Material Adverse Effect.


 


(g)          Compliance
with Laws. The Partnership will, and will cause each of its Restricted Subsidiaries to, comply with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business (including Environmental Laws, the Federal Fair Labor
Standards Act and any California Requirement of Law promulgated with respect to earthquakes), except (i) such as may be contested
in good faith or as to which a bona fide dispute may exist or (ii) where the failure to do so would not reasonably be expected
to have a Material Adverse Effect. The Partnership will, and will cause its Subsidiaries to, maintain in effect and enforce policies
and procedures designed to ensure compliance by the Partnership and its subsidiaries and their respective directors, officers,
employees and agents with the applicable Anti-Terrorism and Money Laundering Laws, OFAC Laws, Anti-Corruption Laws and applicable
Sanctions.


 


(h)          Inspection
of Books and Records. The Partnership will, and will cause each of its Restricted Subsidiaries to, maintain proper books of
record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of such Issuer, Guarantor or Restricted Subsidiary, as applicable. The
Partnership will, and will cause each of its Restricted Subsidiaries to, permit representatives and independent contractors of
the Lead Holder to visit and inspect any of their respective properties, to examine their respective company, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their
respective managers, directors, officers, and independent public accountants, all at the expense of the Partnership and at such
reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the
Partnership; provided, however, when an Event of Default has occurred and is continuing, the Lead Holder may do any
of the foregoing at any time during normal business hours and without advance notice.


 




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(i)          Environmental
Laws.


 


(i)          The
Partnership will, and will cause each of its Restricted Subsidiaries to, comply with all applicable Environmental Laws and maintain
all environmental, health and safety permits, licenses, registrations and authorizations necessary for its operations and will
maintain such in full force and effect except where such noncompliance or the failure to maintain such permits, licenses, registrations
and authorizations would not reasonably be expected to have a Material Adverse Effect. The Partnership will, and will cause each
of its Restricted Subsidiaries to, promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation,
monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial
Work”) in the event any Remedial Work is required under applicable Environmental Laws because of or in connection
with the actual or suspected past, present or future Release of any Hazardous Material on, under, about or from any of the Properties
of the Partnership and its Restricted Subsidiaries, which failure to commence and diligently prosecute to completion could reasonably
be expected to have a Material Adverse Effect.


 


(ii)         The
Partnership will, and will cause each of its Restricted Subsidiaries to, establish and implement, such procedures as may be reasonably
necessary to continuously determine and assure that the Partnership’s obligations under this Section 5(i)(ii)
are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have a Material Adverse
Effect.


 


(iii)        The
Partnership will, and will cause each of its Restricted Subsidiaries to, promptly furnish to the Lead Holder all written notices
of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by the Partnership
or any of its Restricted Subsidiaries, or of which it has notice, pending or threatened against such Issuer, Guarantor or any of
the Restricted Subsidiaries, by any Governmental Authority with respect to any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses, registrations or authorizations related to Environmental Laws in connection with its
ownership or use of its properties or the operation of its business, except where any such alleged violations or incidents of non-compliance
would not, individually or in the aggregate, result in a penalty, assessment, fine or other cost or liability exceeding $2.0 million.


 


(iv)        The
Partnership will, and will cause each of its Restricted Subsidiaries to, promptly furnish to the Lead Holder all requests for information,
notices of claim, demand letters, and other notifications, received by the Partnership or any of its Restricted Subsidiaries in
connection with its ownership or use of its properties or the conduct of its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Materials at any location, except where any such alleged responsibility would
not, individually or in the aggregate, result in a penalty, assessment, fine or other cost or liability exceeding $2.0 million.


 




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(j)          Phase
I Reports. In the event such is obtained in connection with the acquisition of Oil and Gas Properties directly or indirectly
through a subsidiary or otherwise, the Partnership shall deliver to the Lead Holder a copy of a Phase I Report covering such Oil
and Gas Properties, and in the event such is not obtained, the Partnership will provide a Phase I Report upon request by the Lead
Holder and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Lead
Holder of any Governmental Authority), in connection with any future acquisition of any Oil and Gas Properties.


 


(k)          Margin
Stock. The Partnership will not and will not permit any of its Restricted Subsidiaries to use any portion of the proceeds from
the sale of the Notes, directly or indirectly, (i) to purchase or carry Margin Stock in violation of Regulation U, (ii) to
repay or otherwise refinance indebtedness of the Partnership or any of its Restricted Subsidiaries, any Subsidiary or others incurred
to purchase or carry Margin Stock in violation of Regulation U or (iii) to extend credit for the purpose of purchasing
or carrying any Margin Stock. If requested by the Lead Holder, the Issuers will furnish to the Trustee and the Purchasers a statement
to the foregoing effect in conformity with the requirements of FR Form G-3 or such other form referred to in Regulation U or Regulation
X of the FRB, as the case may be.


 


(l)          Amendments
to Organization Documents. The Partnership will not and will not permit any of its Restricted Subsidiaries to alter, amend
or modify in any manner materially adverse to the Holders any of its Organization Documents.


 


(m)          Accounting
Changes. Except as expressly permitted by the Lead Holder, the Partnership will not and will not permit any of its Restricted
Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change
the fiscal year of the Partnership or any of its Restricted Subsidiaries.


 


(n)          ERISA
Compliance. Except as would not reasonably be expected to result in a Material Adverse Effect, the Partnership will not and
will not permit any of its Restricted Subsidiaries to, at any time:


 


(i)          engage
in, or permit any ERISA Affiliate to engage in, any transaction in connection with which any Issuer, Guarantor or any ERISA Affiliate
could be subjected to either a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a
tax imposed by Chapter 43 of Subtitle D of the Code;


 


(ii)         fail
to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Partnership or any of its Restricted Subsidiaries or any ERISA Affiliate
is required to pay as contributions thereto;


 




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(iii)        permit
to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency within the meaning of Section 302
of ERISA or Section 412 of the Code, whether or not waived, with respect to any Plan;


 


(iv)        permit,
or allow any ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the
Partnership or any of its Restricted Subsidiaries or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the
current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term “actuarial present value of the benefit liabilities” shall have the meaning specified
in Section 4041 of ERISA;


 


(v)         incur,
or permit any ERISA Affiliate to incur, an ERISA Event;


 


(vi)        acquire,
or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect
to the Partnership or any of its Restricted Subsidiaries or with respect to any ERISA Affiliate of the Partnership or any of its
Restricted Subsidiaries if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such
acquisition has sponsored, maintained, or contributed to, (1) any Multiemployer Plan with respect to which such Person has
an outstanding withdrawal liability under Section 4201 or 4202 of ERISA, or (2) any other Plan that is subject to Title
IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the
assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities;


 


(vii)       incur,
or permit any ERISA Affiliate to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, or 4204 of
ERISA;


 


(viii)      contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute
to, any employee welfare benefit plan, as defined in Section 3(1) of ERISA, that provides retiree benefits to former employees
of such entities (other than coverage mandated by applicable law), that may not be terminated by such entities in their sole discretion
at any time without any material liability; and


 


(ix)         amend,
or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that such the Partnership or
any of its Restricted Subsidiaries or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29)
of the Code or establish or contribute to, or permit an ERISA Affiliate to establish or contribute to, a Pension Plan or a Multiemployer
Plan.


 




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(o)          Mortgages
and Opinions. Within 60 days of the Closing Date (or such later date as the Lead Holder may agree in its sole discretion),
the Breitburn Parties will (i) execute and deliver Mortgages in form and substance reasonably satisfactory to the Lead Holder
and the Collateral Agent in favor of the Collateral Agent on their respective Oil and Gas Properties as required by the Indenture,
including, for the avoidance of doubt, (x) those Mortgages as described on Schedule 5 under the heading “Mortgages”
and (y) Mortgages on the Permian Basin Properties and (ii) cause such Mortgages to be filed in the proper recorders’
offices or appropriate public records and pay the mortgage recording fees and taxes in respect thereof and otherwise comply with
the formal requirements of state law applicable to the recording of real estate mortgages generally with respect to the Mortgages.
On the date that each such Mortgage is so filed or recorded, the Company shall cause to be delivered to the Collateral Agent and
the Lead Holder favorable opinions of counsel for the Breitburn Parties in form and substance reasonably satisfactory to the Lead
Holder.


 


(p)          Control
Agreements. Within 60 days of the Closing Date (or such later date as the Lead Holder may agree in its sole discretion), the
Breitburn Parties shall execute and deliver to the Collateral Agent the Control Agreements as described on Schedule 5
under the heading “Control Agreements” in form and substance reasonably satisfactory to the Lead Holder and
the Collateral Agent.


 


(q)          Insurance.
Within 60 days of the Closing Date (or such later date as the Lead Holder may agree in its sole discretion), the Breitburn Parties
shall deliver, or cause to be delivered, to the Collateral Agent such certificates and endorsements to insurance policies in accordance
with the Indenture (or as the Lead Holder may otherwise agree) and as otherwise described on Schedule 5 under
the heading “Insurance Certificates and Endorsements” in form and substance reasonably satisfactory to
the Lead Holder and the Collateral Agent.


 


6.          Expenses;
Indemnification. Each of the Breitburn Parties agrees, jointly and severally, to pay and reimburse each Lead Purchaser, the
Lead Holder and their Related Parties in full for all costs, expenses, fees (including the reasonable fees, charges and disbursements
of outside counsel and advisors for the Lead Purchasers and Lead Holder and any fees and expenses incurred exercising their rights
under any Transaction Document) (provided that if the transactions contemplated by this Agreement are not consummated, the
Breitburn Parties shall not be liable for amounts in excess of $750,000 (the “Dead Deal Reimbursement Amount”)
unless the condition set forth in either Section 7(h) or Section 7(i) has not been satisfied
by the Drop Dead Date (a “Bank Condition Failure”) and taxes incident to and in connection with (a) the
authorization, issuance, sale and delivery of the Securities and any taxes payable in that connection; (b) the production
and distribution of this Agreement, any supplemental agreement among Purchasers, and any other related documents in connection
with the offering, purchase, sale and delivery of the Notes; (c) the preparation, negotiation, execution, delivery and administration
of this Agreement and the other Transaction Documents or any amendments, modifications or waivers of the provisions hereof or thereof
(in the case of amendments, modifications or waivers, whether or not the transactions contemplated thereby shall be consummated)
and creating, documenting and perfecting the security interests in the Collateral as contemplated by the Collateral Documents and
other security documents (including the reasonable related fees and out-of-pocket expenses of counsel for the Lead Purchasers for
all periods prior to and after the Closing Date); (d) the performance by the Breitburn Parties of their other obligations
under this Agreement and the Transaction Documents; and (e) the enforcement or protection of its rights in connection with
this Agreement and the other Transaction Documents, including its rights under this Section 6 and all expenses
incurred during any workout, restructuring or negotiations in respect of such Notes. Each of the Breitburn Parties agrees, jointly
and severally, to indemnify the Lead Purchasers, Lead Holder and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee)
incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Breitburn Party arising out of, in connection
with, or as a result of, any actual, threatened or prospective claim, litigation, investigation or proceeding relating to (i) the
execution or delivery of this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby or thereby,
the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, (ii) any Note (or the use or proposed use of the proceeds therefrom), or (iii) any actual
or alleged presence or Release of Hazardous Materials on or from any property owned or operated by any Breitburn Entity, or any
Environmental Liability related in any way to any Breitburn Entity, whether based on contract, tort or any other theory, whether
brought by a third party or by any Breitburn Party, and regardless of whether any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities
or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Breitburn Party against
an Indemnitee for breach in bad faith of such Indemnitee’s material obligations hereunder or under any other Transaction
Document, if the Breitburn Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction. “Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
This covenant shall survive any termination of this Agreement.


 




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7.          Conditions
of Purchasers’ Obligations to Purchase the Notes. The several and not joint obligations of the Purchasers hereunder to
purchase the Notes in accordance with the provisions herein are subject to the accuracy, when made on the Closing Date, of the
representations and warranties of the Breitburn Parties contained herein and each other Transaction Document, to the performance
by the Breitburn Parties of their respective obligations hereunder and each other Transaction Document, and to each of the following
additional terms and conditions (unless waived by the Lead Purchasers):


 


(a)          All
corporate, partnership and limited liability company proceedings and other legal matters incident to the authorization, form and
validity of this Agreement, the Transaction Documents, the Notes, and all other legal matters relating to this Agreement, the Transaction
Documents and the transactions contemplated hereby and thereby shall be reasonably satisfactory to counsel to the Lead Purchasers,
and the Breitburn Parties shall have furnished to such counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.


 




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(b)          The
Lead Purchasers shall have received a certificate of the secretary, assistant secretary or a Proper Officer with similar responsibilities
of each Breitburn Party, or in the event that such Breitburn Party is a limited partnership, of such Person’s general partner,
certifying that as of the Closing Date: (i) resolutions of its board of directors or members (or equivalent governing body),
authorizing the transactions contemplated hereby; (ii) the names and genuine signatures of the Proper Officers of such Person,
authorized to execute, deliver and perform, as applicable, the Indenture, the Notes, the Collateral Documents, and all other Note
Documents to be delivered by such Person; (iii) the Organization Documents of such Person as in effect as of the Closing Date;
(iv) the good standing certificate for such Person, from its state of incorporation, formation or organization, as applicable,
dated as of a recent date; (v) as may be reasonably required by the Lead Purchasers, certificate(s) of authority for such
Person from states wherein such Person is required to be qualified to conduct business, evidencing such Person’s qualification
to do business in such state, dated as of a recent date and (vi) since December 31, 2014, no change, event, development,
circumstance, condition, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.


 


(c)          Vinson
& Elkins L.L.P. shall have furnished to the Lead Purchasers its written opinion, as counsel to the Issuers and Guarantors,
addressed to the Lead Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Lead Purchasers.


 


(d)          Mike,
Meyers, Beckett & Jones PLLC shall have furnished to the Lead Purchasers its written opinion, as Michigan local counsel to
Beaver Creek Pipeline, L.L.C., a Michigan limited liability company, Mercury Michigan Company, LLC, a Michigan limited liability
company, Terra Energy Company LLC, a Michigan limited liability company, and Terra Pipeline Company, a Michigan limited liability
company, addressed to the Lead Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Lead
Purchasers.


 


(e)          The
Partnership shall have furnished or caused to be furnished to the Lead Purchasers, a certificate, dated as of the Closing Date,
signed on its behalf by the Chief Executive Officer and the Chief Financial Officer of the General Partner, or other officers satisfactory
to the Lead Holder, as to such matters as the Lead Holder may reasonably request, including, without limitation, statements that
(i) the representations, warranties and agreements of the Breitburn Parties in Section 1 are true and correct
on and as of the Closing Date, and the Breitburn Parties have complied with all their agreements contained herein and satisfied
all the conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date and (ii) each of the
Partnership and the Operating LP is Solvent and the Breitburn Parties and their Subsidiaries, on a consolidated basis, are Solvent.


 


(f)          Each
of the Breitburn Parties shall have furnished to counsel for the Lead Purchasers a duly executed copy of each Note, the Indenture,
each other Transaction Document and the Preferred Equity Series B Documentation, in each case, in form and substance reasonably
acceptable to the Lead Purchasers; provided that the Indenture shall be substantially identical to that certain Indenture,
dated as of January 13, 2012, by and among the Partnership, Breitburn Finance, the guarantors named therein and U.S. Bank National
Association, as trustee, with changes and modifications to reflect the terms agreed to in the Description of Notes, to otherwise
reflect the second lien nature of the financing contemplated hereunder and thereunder and to otherwise reflect any matters mutually
agreed to by the parties thereto. “Preferred Equity Series B Documentation” means the Partnership Limited
Partnership Agreement, the Series B Preferred Unit Purchase Agreement, the Registration Rights Agreement and the Board Representation
Agreement, each dated as of the Closing Date.


 




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(g)          The
Preferred Series B Issuance shall have occurred, or substantially simultaneously with the purchase of the Notes hereunder, shall
occur, in accordance with the terms of the Preferred Equity Series B Documentation. “Preferred Equity Series B Issuance”
means the issuance by Partnership of its Series B Perpetual Convertible Preferred Units in an aggregate amount of $350,000,000,
which such issuance is to occur on the terms set forth in the Preferred Equity Series B Documentation.


 


(h)          The
Lead Purchasers shall have received a duly executed copy of that certain First Amendment to Credit Agreement, in form and substance
reasonably satisfactory to the Lead Purchasers (it being understood and agreed that the draft of the First Amendment to Credit
Agreement circulated by counsel to Wells Fargo Bank, National Association at approximately 9:07 p.m., New York City time, on April
5, 2015, is deemed to be satisfactory to the Lead Purchasers), which such First Amendment to Credit Agreement shall, substantially
contemporaneous herewith, be fully effective.


 


(i)          The
Lead Purchasers shall have received a duly executed copy of that certain Intercreditor Agreement, in form and substance reasonably
satisfactory to the Lead Purchasers (it being understood and agreed that the draft of the Intercreditor Agreement circulated by
counsel to Wells Fargo Bank, National Association at approximately [2:32 p.m., New York City time, on March 26, 2015], is deemed
to be satisfactory to the Lead Purchasers).


 


(j)          The
Issuers shall repay, substantially simultaneously with the sale and purchase of the Notes, the principal amount of loans outstanding
under the Credit Facility in an amount no less than $930,000,000 funded with the proceeds from the sale and purchase of the Notes
and the Preferred Equity Series B Issuance.


 


(k)          Since
December 31, 2014, there shall not have been any change, event, development, circumstance, condition, occurrence or effect
that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.


 


(l)          Upon
giving effect to the Transactions contemplated to occur hereunder, no Default or Event of Default will exist under (i) any
indenture to which any Breitburn Party is a party or under any notes issued pursuant thereto or (ii) the Credit Facility or
ancillary document to which any Breitburn Party is a party or under any notes issued pursuant thereto.


 




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(m)          Except
for those items described on Schedule 5 under the headings “Mortgages” and “Control
Agreements”, which are required to be delivered within 60 days of the Closing Date (or such later date as the Lead Holder
may agree in its sole discretion), all documents and instruments required to perfect the Collateral Agent’s security interest
in the Collateral shall have been executed and delivered and, if applicable, be in the proper form for filing, including, without
limitation, UCC-1 financing statements as described on Schedule 1(z).


 


(n)          The
Issuers shall have paid the fees and expenses of the Collateral Agent, Trustee, the Purchasers and the Lead Holder required to
be paid under the terms hereof or any other Transaction Document, the Preferred Equity Series B Documentation or fee letter, including
reasonable fees and out-of-pocket expenses of counsel thereof to the extent a written estimate has been delivered to the Partnership
at least three (3) Business Day prior to the Closing Date.


 


(o)          On
or prior to the Closing Date, the Breitburn Parties shall have furnished to the Lead Purchasers such further documents, instruments
and certificates as the Lead Purchasers may reasonably request, including, without limitation, those set forth on the closing checklist
delivered in connection herewith.


 


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


 


8.          Notices.
All statements, requests, notices and agreements hereunder shall be in writing, and:


 


(a)          if
to the Purchasers, shall be delivered or sent by mail, overnight courier or facsimile transmission to (i) EIG Redwood Debt
Aggregator, LP c/o EIG Management Company, LLC, 1700 Pennsylvania Ave NW, Suite 800, Washington, DC 20006, Attention: Niranjan
Ravindran, along with copies to (which shall not constitute notice) to (x) EIG Management Company, LLC, Three Allen Center, 333
Clay Street, Suite 3500, Houston, TX 77002, Attention: Clayton Taylor, (y) Richard Aftanas, Kirkland & Ellis LLP, 601 Lexington
Avenue, New York, NY 10022 (Fax: 212-446-4900) and (z) John Pitts, Kirkland & Ellis LLP, 600 Travis Street, Suite 3300, Houston,
TX 77002 (Fax: 713-835-3601), (ii) Anchorage Capital Partners, L.P. c/o Anchorage Capital Group, L.L.C., 610 Broadway, 6th
Floor, New York, New York, 10012, Attn: Legal, (Fax: 212-426-4601) with a copy to (x) Ken Ziman, Skadden, Arps, Slate, Meagher
& Flom LLP, 4 Times Square, New York, NY 10036, (Fax: (917) 777-3310) and (y) Michelle Gasaway, Skadden, Arps, Slate, Meagher
& Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, CA 90071 (Fax: (213) 621-5122) and (iii)Midland
National Life Insurance Company, North American Company for Life and and Health Insurance, SEI Intuitional Managed Trust - Multi-Asset
Income Fund, Guggenheim Funds Trust - Guggenheim Macro Opportunities Fund, Maverick Enterprises, Inc., Carey Credit Income Fund
and NZC Guggenheim Fund LLC c/o Guggenheim Partners, Investment Management, LLC, 330 Madison Avenue, 10th Floor, New York, New
York 10017, Attn: GI Legal (Fax: 212-644-8107).


 




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(b)          if
to the Lead Holder, shall be delivered or sent by mail, overnight courier or facsimile transmission to EIG Redwood Debt Aggregator,
LP c/o EIG Management Company, LLC, 1700 Pennsylvania Ave NW, Suite 800, Washington, DC 20006, Attention: Niranjan Ravindran, along
with copies to (which shall not constitute notice) to (x) EIG Management Company, LLC, Three Allen Center, 333 Clay Street, Suite
3500, Houston, TX 77002, Attention: Clayton Taylor, (y) Richard Aftanas, Kirkland & Ellis LLP, 601 Lexington Avenue, New York,
NY 10022 (Fax: 212-446-4900) and (z) John Pitts, Kirkland & Ellis LLP, 600 Travis Street, Suite 3300, Houston, TX 77002 (Fax:
713-835-3601); and


 


(c)          if
to any of the Breitburn Parties, shall be delivered or sent by mail, overnight courier or facsimile transmission to Breitburn Energy
Partners LP, 515 South Flower Street, Suite 4800, Los Angeles, CA 90071, Attention: Gregory C. Brown (Fax: 213-225-5916), with
a copy (which shall not constitute notice) to Vinson & Elkins L.L.P., 666 Fifth Avenue, 26th Floor, New York, New York 10103,
Attention: Shelley A. Barber (Fax: 917-849-5353). Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Breitburn Parties each shall be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Purchasers by the Lead Holder.


 


9.          Persons
Entitled to Benefit of Agreement. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be
binding upon the Purchasers, the Breitburn Parties and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (a) the representations, warranties, indemnities and agreements
of the Breitburn Parties contained in this Agreement shall also be deemed to be for the benefit of the directors, officers and
employees of the Purchasers and each person or persons, if any, controlling any Purchaser within the meaning of Section 15
of the Securities Act, (b) the expense reimbursement and indemnities contained in this Agreement shall also be deemed to be
for the benefit of the Related Parties of the Purchasers and Lead Holder and (c) the payment provision of Section 4(c)
shall also be deemed to be for the benefit of the trustee under the Indenture and the Holders. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in this Section 11, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein; provided, however,
it is agreed that any inaccuracy of a representation or warranty and any failure of a covenant shall result in a Default or Event
of Default, as the case may be, under the Indenture in accordance with the terms thereof.


 


10.         Survival.
The respective representations, warranties and agreements of the Breitburn Parties and the Purchasers contained in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes
and shall remain in full force and effect, unless and until this agreement is terminated in accordance with Section 18,
except for the provisions set for in this Section 10 and Section 4(c), Section 6,
Section 8, Section 9(b) and 9(c), Section 11, Section 12,
Section 19 and Sections 20 and 22 (as they relate to the foregoing provisions) of
this Agreement, which shall survive termination.


 




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11.         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. Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the federal and state courts located in New York County, New York,
including the United States District Court for the Southern District of New York, in connection with any claim brought with respect
to this Agreement or related matter and waives any right to claim such forum would be inappropriate, including concepts of forum
non conveniens. Time is of the essence in this Agreement.


 


12.         Waiver
of Jury Trial. Each of the Breitburn Parties and each of the Purchasers hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.


 


13.         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 Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Breitburn
Parties, which information may include the name and address of their respective clients, as well as other information that will
allow the Purchasers to properly identify their respective clients.


 


14.         Counterparts.
This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument.


 


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


 


16.         Successors
and Assigns.


 


(a)          This
Agreement shall be binding upon the Purchasers and the Breitburn Parties and their successors and permitted assigns and any successor
or assign of any substantial portion of the Breitburn Parties and any of the Purchasers’ respective businesses and/or assets;
provided, however, no party hereto may assign any of its rights or obligations under this Agreement without
the prior written consent of each of the other parties hereto; provided, however, that, except as otherwise set forth
below in Section 16(b), nothing in this Section 16(a) shall restrict the ability or the right
of the Purchasers to transfer or assign the Notes.


 


(b)          Notwithstanding
anything to the contrary set forth herein or in any other Note Document (including the Indenture), EIG shall at all times own and
hold at least 50.1% of the outstanding principal amount of the Notes (the “Minimum Holding Requirement”);
provided that upon a bankruptcy or insolvency Event of Default, EIG may assign or transfer all or any portion of its Notes
without regard to the Minimum Holding Requirement and without the consent of the Partnership or any other person.


 


(c)          Any
assignment or transfer in violation of this Section shall be null and void ab initio.


 




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17.         Confidentiality.
No Purchaser shall, directly or indirectly, disclose to any person any Confidential Information received from the Breitburn Parties,
their Affiliates or their representatives in any form, whether acquired prior to or after the Closing Date, relating to the Breitburn
Parties; provided, however, that Confidential Information does not include information that (a) is
or becomes generally available to the public other than (i) as a result of a disclosure by the Purchaser in violation of this
Agreement or (ii) in violation of a confidentiality obligation to the Breitburn Parties known to the Purchaser, (b) is
or becomes available to the Purchaser on a non-confidential basis from a source not known to have an obligation of confidentiality
to the Breitburn Parties, (c) was already known to the Purchaser at the time of disclosure, or (d) is independently developed
by the Purchaser. Notwithstanding the foregoing, a Purchaser may disclose any information relating to the business and operations
of the Breitburn Parties (i) to its Affiliates and to its and its Affiliates’ directors, officers, employees, advisory
committee members, investment committee members, limited partners, investors and legal counsel (the “Permitted Recipients”)
to whom such disclosure is necessary and who in each case either (1) acknowledge that they are bound by the confidentiality
provisions of this Agreement or (2) are bound by confidentiality obligations to the Purchaser or its Affiliates that are at
least as stringent as the confidentiality provisions of this Agreement, and in each case the Purchasers shall use reasonable best
efforts to cause such Permitted Recipients to keep any such information confidential, (ii) as required by applicable law or
any securities exchange or market rule; (iii) as may be requested or required by any Governmental Authority (provided that
such Purchaser first notifies the Partnership and gives the Partnership the opportunity to contest such request or requirement,
in each case as permitted by applicable law; or (iv) except with prior notice of such request for disclosure to, and consent
of, the Partnership (which consent may be withheld in the Partnership’s sole discretion). “Confidential Information”
means all information received from the Partnership or any of its Subsidiaries relating to Partnership or any of its Subsidiaries
or any of their respective businesses, other than any such information that is available to the Lead Holder or any Purchaser on
a non-confidential basis prior to disclosure by the Purchaser or any of its Subsidiaries. Any Person required to maintain the confidentiality
of Information as provided in this Section 17 shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. “Confidentiality Agreements” means that certain letter agreement
by and between EIG Management Company, LLC and the General Partner, dated as of January 26, 2015, and that certain letter agreement
by and between Anchorage Capital Group, L.L.C. and the General Partner, dated as of March 3, 2015.


 


18.         Termination.


 


(a)          In
the event the Closing Date does not occur by 11:59 p.m. on April 30, 2015 Houston, Texas time (the “Drop Dead Date”),
this Agreement shall automatically terminate and be of no further force and effect, except Section 6, Section
8, Section 9(b), Section 10, Section 11, Section 12, Section 19
and Sections 20 and 22 (as they relate to the foregoing provisions) which shall survive termination.


 


(b)          In
the event that the Closing Date occurs and EIG at any time holds less than 50.1% of the outstanding principal amount of the Notes,
this agreement shall terminate and be of no further force and effect except as set forth in Section 10 above.


 




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19.         Valuation
of Notes.  The Partnership shall enter into or have put into effect, on or prior to the Closing Date, and shall maintain
in effect at all times an agreement with an investment bank (the “Valuation Firm”) pursuant to which
such Valuation Firm shall value the Notes, in accordance with customary market practices, on a monthly basis.  This covenant
shall survive any termination of this Agreement until such time as all of Notes shall have otherwise ceased to be outstanding.


 


20.         Several
and Not Joint; No Fiduciary. The parties hereto hereby agree and understand that the obligations of the Purchasers hereunder
are several and not joint. The Lead Holder has no duties or obligations except those expressly set forth herein and shall not be
subject to any fiduciary or other implied duties and shall not be liable for any action taken or not taken by it.


 


21.         Dead
Deal Reimbursement Amount. In the event the transactions contemplated by this Agreement are not consummated (other than on
account of a Bank Condition Failure), the Purchasers agree that the Dead Deal Reimbursement Amount will be allocated (a) 75.00%
to EIG Redwood Debt Aggregator, LP and (b) 25.00% to Anchorage Capital Partners, L.P. and ACMO BBEP, L.P.


 


22.         Amendments
and Waivers. This Agreement may not be amended or waived except by an instrument in writing signed by the parties hereto; provided
that, following the Closing, Sections 1A (with respect to the waiver of a Default or Event of Default arising out
of the inaccuracy of any representation or warranty), 4, 5, 8 (provided that each party hereto may amend its own contact information
as set forth in Section 8 by providing written notice to each other party in accordance with Section 8),
16(b), 18(b), 19 (only if Anchorage Capital Partners, L.P., ACMO BBEP, L.P. and their
respective Affiliates no longer hold any Notes) and Schedule IV (only to the extent such terms are used in, and for
the purposes of, the foregoing provisions) may be amended or waived in accordance with the terms of the Indenture; provided,
further, that Section 6 may be amended or waived by an instrument signed in writing by the Issuers and Lead
Purchasers; provided, however, no consent shall be required by any Anchorage Purchaser to the extent the Anchorage
Purchasers cease to hold Notes or by any Guggenheim Purchaser to the extent the Guggenheim Purchasers or any person that is administered,
advised or managed by Guggenheim Management cease to hold Notes. For the avoidance of doubt, this Section 22
may not be amended or waived except by an instrument in writing signed by the parties hereto and shall not affect the ability to
amend or waive any other Note Document in accordance with the terms of the Indenture.


 


If the foregoing correctly
sets forth the agreement among the Breitburn Parties and the Purchasers, please indicate your acceptance in the space provided
for that purpose below.


 




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Very truly yours,


 


	 	ISSUERS
	 	 
	 	BREITBURN ENERGY PARTNERS LP
	 	 	 
	 	By:	Breitburn GP LLC,
	 	 	its general partner
	 	 
	 	/S/ James G. Jackson
	 	Name:	James G. Jackson
	 	Title:	Executive Vice President and
	 	 	Chief Financial Officer
	 	 
	 	BREITBURN OPERATING LP
	 	 
	 	By:	Breitburn Operating GP LLC,
	 	 	its general partner
	 	 
	 	/S/ James G. Jackson
	 	Name:	James G. Jackson
	 	Title:	Executive Vice President and
	 	 	Chief Financial Officer
	 	 
	 	BREITBURN FINANCE CORPORATION
	 	 
	 	/S/ James G. Jackson
	 	Name:	James G. Jackson
	 	Title:	Chief Financial Officer


 




    	 



    	 



    

 


	 	GUARANTORS
	 	 
	 	ALAMITOS COMPANY
	 	BEAVER CREEK PIPELINE, L.L.C.
	 	GTG PIPELINE LLC
	 	MERCURY MICHIGAN COMPANY, LLC
	 	PHOENIX PRODUCTION COMPANY
	 	QRE GP, LLC
	 	TERRA ENERGY COMPANY LLC
	 	TERRA PIPELINE COMPANY LLC
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Chief Financial Officer
	 	 
	 	BREITBURN OPERATING GP LLC
	 	BREITBURN GP LLC
	 	BREITBURN MANAGEMENT COMPANY LLC
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Executive Vice President and
	 	 	 	Chief Financial Officer
	 	 
	 	BREITBURN FLORIDA LLC
	 	BREITBURN OKLAHOMA LLC
	 	BREITBURN SAWTELLE
	 	BREITBURN TRANSPETCO GP LLC
	 	BREITBURN TRANSPETCO LP LLC
	 	 	 
	 	By:	Breitburn Operating LP,
	 	 	its sole member
	 	 	 
	 	By:	Breitburn Operating GP LLC,
	 	 	its general partner
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Executive Vice President and Chief Financial Officer


 





[Signature Page to Amended and Restated Purchase Agreement]







 




    	 



    	 



    

 


	 	QR ENERGY, LP
	 	 	 
	 	By:	QRE GP, LLC,
	 	 	its general partner
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Chief Financial Officer
	 	 	 
	 	QRE OPERATING, LLC
	 	 	 
	 	By:	QR Energy, LP,
	 	 	its sole member
	 	 	 
	 	By:	QRE GP, LLC,
	 	 	its general partner
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Chief Financial Officer
	 	 	 
	 	TRANSPETCO PIPELINE COMPANY, L.P.
	 	 	 
	 	By:	Breitburn Operating LP,
	 	 	on behalf of itself and as the sole member of Breitburn Transpetco GP LLC, each a general partner
	 	 	 
	 	By:	Breitburn Operating GP LLC,
	 	 	its general partner
	 	 	 
	 	By:	/S/ James G. Jackson
	 	 	Name:	James G. Jackson
	 	 	Title:	Executive Vice President and
	 	 	 	Chief Executive Officer





 


[Signature Page to Amended and Restated
Purchase Agreement]


 









    	 



    	 



    

 


Accepted:


 


EIG REDWOOD DEBT AGGREGATOR, LP, as a Purchaser
and the Lead Holder


By: EIG Redwood Aggregator GP, LLC, its
general partner


By: EIG Asset Management, LLC, its sole
member


 


	By:	/S/ Clayton Taylor	 
	Name: Clayton Taylor	 
	Title:   Managing Director	 
	 	 	 
	By:	/S/ Richard Punches	 
	Name: Richard Punches	 
	Title:   Managing Director	 


  


[Signature Page to Amended and Restated
Purchase Agreement]







 




    	 



    	 



    

 


	ANCHORAGE CAPITAL PARTNERS, L.P., as a Purchaser	 
	 	 
	By:	Anchorage Capital Group, L.L.C., as	 
	 	investment manager	 
	 	 
	By:	/S/ Natalie A. Birrell	 
	 	Name: Natalie A. Birrell	 
	 	Title:   Chief Operating Officer	 
	 	 
	ACMO BBEP, L.P., as a Purchaser	 
	 	 
	By:	Anchorage Capital Group, L.L.C., as	 
	 	investment manager	 
	 	 
	By:	/S/ Natalie A. Birrell	 
	 	Name: Natalie A. Birrell	 
	 	Title:   Chief Operating Officer	 










 


[Signature Page to Amended and Restated
Purchase Agreement]




 




    	 



    	 



    

 


	MIDLAND NATIONAL LIFE INSURANCE COMPANY	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as investment manager 	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 
	 	 
	NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as investment manager 	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 
	 	 
	SEI INSTITUTIONAL MANAGED TRUST - MULTI-ASSET INCOME FUND	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as Sub-Adviser 	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 
	 	 
	GUGGENHEIM FUNDS TRUST - GUGGENHEIM MACRO OPPORTUNITIES FUND	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as Investment Adviser  	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 





 


[Signature Page to Amended and Restated
Purchase Agreement]







 




    	 



    	 



    

 


	MAVERICK ENTERPRISES, INC.	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as Investment Manager 	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 
	 	 
	CAREY CREDIT INCOME FUND	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as Sub-Advisor  	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 
	 	 
	NZC GUGGENHEIM FUND LLC	 
	 	 
	By:	Guggenheim Partners Investment Management, LLC, as Manager 	 
	 	 	 
	By:	/S/ William R. Hagner	 
	Name: William R. Hagner	 
	Title: Attorney-in-Fact	 





 


[Signature Page to Amended and Restated
Purchase Agreement]







 




    	 



    	 



    

 


 


Schedule
I






	Purchasers	 	Principal Amount of Notes	 
	EIG Redwood Debt Aggregator, LP	 	$	487,500,000.00	 
	ACMO BBEP, L.P.	 	$	69,865,000.00	 
	Anchorage Capital Partners, L.P.	 	$	43,885,000.00	 
	Midland National Life Insurance Company	 	$	17,550,000.00	 
	North American Company for Life and Health Insurance	 	$	9,100,000.00	 
	SEI Institutional Managed Trust - Multi-Asset Income Fund	 	$	813,00.00	 
	Guggenheim Funds Trust - Guggenheim Macro Opportunities Fund	 	$	5,037,00.00	 
	Maverick Enterprises, Inc.	 	$	650,000.00	 
	Carey Credit Income Fund	 	$	3,250,000.00	 
	NZC Guggenheim Fund LLC	 	$	12,350,000.00	 
	Total	 	$	650,000,000	 



 




    	 



    	 



    

 


Schedule
II



GUARANTORS


 


Alamitos Company


 


Beaver Creek Pipeline, L.L.C.


 


Breitburn Finance Corporation


 


Breitburn Florida LLC


 


Breitburn GP LLC


 


Breitburn Management Company LLC


 


Breitburn Oklahoma LLC


 


Breitburn Operating GP LLC


 


Breitburn Sawtelle LLC


 


Breitburn Transpetco GP LLC


 


Breitburn Transpetco LP LLC


 


GTG Pipeline LLC


 


Mercury Michigan Company, LLC


 


Phoenix Production Company


 


QR Energy, LP


 


QRE GP, LLC


 


QRE Operating, LLC


 


Terra Energy Company LLC


 


Terra Pipeline Company LLC


 


Transpetco Pipeline Company, L.P.


 




    	 



    	 



    

 


Schedule
III



BREITBURN ENTITIES


 


Alamitos Company


 


Beaver Creek Pipeline, L.L.C.


 


Breitburn Energy Partners LP


 


Breitburn Florida LLC


 


Breitburn GP LLC


 


Breitburn Management Company LLC


 


Breitburn Oklahoma LLC


 


Breitburn Operating GP LLC


 


Breitburn Operating LP


 


Breitburn Sawtelle LLC


 


Breitburn Transpetco GP LLC


 


Breitburn Transpetco LP LLC


 


GTG Pipeline LLC


 


Mercury Michigan Company, LLC


 


Phoenix Production Company


 


QR Energy, LP


 


QRE GP, LLC


 


QRE Operating, LLC


 


Terra Energy Company LLC


 


Terra Pipeline Company LLC


 


Transpetco Pipeline Company, L.P.


 




    	 



    	 



    

 


Schedule
IV



CERTAIN DEFINED TERMS


 


Any defined term used herein and not otherwise
defined in this Agreement or on this Schedule IV shall have the meanings assigned to such terms in the Description of Notes.


 


“Affiliate”
shall have the meaning assigned to such term in the Description of Notes.


 


“Anchorage
Purchasers” means ACMO BBEP, L.P., a Cayman Islands limited partnership, and Anchorage Capital Partners, L.P., a Delaware
limited partnership.


 


“Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Partnership or any of its respective
subsidiaries from time to time concerning or relating to bribery or corruption.


 


“Anti-Terrorism
and Money Laundering Laws” means any of the following (a) Section 1 of Executive Order 13224 of September 24,
2001, Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism and the
associated Global Terrorism Sanctions Regulation (Title 31, Part 594 of the US Code of Federal Regulations), (b) the Terrorism
Sanctions Regulations (Title 31 Part 595 of the US Code of Federal Regulations), (c) the Terrorism List Governments Sanctions
Regulations (Title 31 Part 596 of the US Code of Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions Regulations
(Title 31 Part 597 of the US Code of Federal Regulations), (e) the PATRIOT Act, (f) the US Money Laundering Control Act
of 1986, (g) the Bank Secrecy Act, 31 U.S.C. sections 5301 et seq., (h) Laundering of Monetary Instruments, 18
U.S.C. Section 1956, (i) engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C.
Section 1957, (j) the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations (Title 31
Part 103 of the US Code of Federal Regulations), (k) any other similar federal Requirement of Law having the force of law
and relating to money laundering, terrorist acts or acts of war and (l) any regulations promulgated under any of the foregoing.


 


“Board of
Directors” shall have the meaning assigned to such term in the Description of Notes.


 


“Board Representation
Agreement” means the Board Representation and Standstill Agreement, dated as of the Closing Date, among the Partnership,
Breitburn GP LLC, and the purchasers of the Series B Perpetual Convertible Preferred Units party thereto.


 


“Business
Day” shall have the meaning assigned to such term in the Description of Notes.


 


“Casualty
Event” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain
or by condemnation or similar proceeding of, any Property of any Issuer, Guarantor or any of their respective Restricted Subsidiaries
with a fair market value in excess of $20,000,000.


 




    	 



    	 



    

 


“Code”
means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder.


 


“Consolidated
Subsidiaries” of the Partnership means all Restricted Subsidiaries and Unrestricted Subsidiaries that are consolidated
in accordance with GAAP.


 


“Contractual
Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which
it or any of its property is bound.


 


“Credit Facility”
means the Third Amended and Restated Credit Agreement, dated November 19, 2014, by and among the Operating LP, as borrower,
the Partnership, as parent guarantor, the subsidiary guarantors, each of the financial institutions from time to time party thereto
and Wells Fargo Bank, N.A., as administrative agent (as amended, amended and restated, supplemented or otherwise modified).


 


“Default”
shall have the meaning assigned to such term in the Description of Notes.


 


“Description
of Notes” shall mean the Description of Notes attached hereto as Exhibit A.


 


“EIG”
means one or more funds managed or advised by EIG Management Company, LLC or its controlled Affiliates and Subsidiaries.


 


“Environmental
Laws” means all material federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all material administrative orders, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authorities, in each case having the force and effect of law and relating to environmental, health, and safety
matters.


 


“Equity Interests”
shall have the meaning assigned to such term in the Description of Notes.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and regulations promulgated thereunder.


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control with any Issuer within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).


 


“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Breitburn Party or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e)
of ERISA; (c) a complete or partial withdrawal by the Breitburn Party or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate (other than
pursuant to Section 4041(b) of ERISA), the treatment of a Plan amendment as a termination under Section 4041(c) or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Partnership
or any ERISA Affiliate.


 




    	IV-2



    	 



    

 


“Event of
Default” shall have the meaning assigned to such term in the Description of Notes.


 


“Excess Fee
Percentage” shall mean, as of any date on which a payment of an Additional First Lien Fee is made, the excess, if any
of (x) the aggregate Fee Percentage in respect of all such Additional First Lien Fee payments made during the one-year period ending
on such date less (y) 2.00%.


 


“Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended.


 


“Existing
Indebtedness” shall have the meaning assigned to such term in the Description of Notes.


 


“Fee Percentage”
means, in the context of an Additional First Lien Fee payment, a percentage determined by dividing (x) the amount of such payment
by (y) the outstanding principal amount of Indebtedness incurred (and Commitments outstanding) under the Permitted Credit Facility
as of the date of such payment and multiplying the result by 100% and (ii) in the context of an aggregation of such payments, the
aggregate of the Fee Percentages for each Additional First Lien Fee payment made during the one-year period ending on such date.


 


“First Amendment
to Credit Agreement” means the First Amendment to the Third Amended and Restated Credit Agreement, dated as of the Closing
Date, by and among the Operating LP, the Partnership, the subsidiary guarantors, each of the financial institutions required to
be a party thereto and Wells Fargo Bank, N.A., as administrative agent.


 


“Foreign”
means organized under the laws of a jurisdiction other than the United States or a political subdivision thereof.


 


“FRB”
means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions.


 


“GAAP”
shall have the meaning assigned to such term in the Description of Notes.


 


“General Partner”
means Breitburn GP LLC.


 


“Governmental
Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership
or otherwise, by any of the foregoing and including the European Union and the European Central Bank.


 




    	IV-3



    	 



    

 


“Guggenheim
Management” means Guggenheim Partners Investment Management, LLC.


 


“Guggenheim
Purchasers” means Midland National Life Insurance Company, an Iowa corporation, North American Company for Life and Health
Insurance, an Iowa corporation, SEI Institutional Managed Trust - Multi-Asset Income Fund, a Massachusetts business trust, Guggenheim
Funds Trust - Guggenheim Macro Opportunities Fund, a Iowa statutory trust, Maverick Enterprises Inc., an Iowa corporation, Carey
Credit Income Fund, a Delaware statutory trust, and NZC Guggenheim Fund LLC, a Delaware limited liability company.


 


“Hazardous
Materials” means any substance regulated or as to which liability might arise under any applicable Environmental Law,
including as a “hazardous substance,” “hazardous material,” “hazardous waste,” “solid
waste,” “toxic waste,” “extremely hazardous substance,” “toxic substance,” “contaminant,”
“pollutant,” or words of similar meaning or import, and including: (a) petroleum hydrocarbons, petroleum products,
petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any components, fractions, or derivatives thereof;
and (b) radioactive materials, asbestos containing materials in a friable condition or polychlorinated biphenyls.


 


“Hedging Contracts”
means, with respect to any specified Person:


 


(1)         interest
rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial
institutions and designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations
in interest rates with respect to Indebtedness incurred;


 


(2)         foreign
exchange contracts and currency protection agreements entered into with one or more financial institutions and designed to protect
the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations in currency exchanges rates with
respect to Indebtedness incurred;


 


(3)         any
commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations
in the price of hydrocarbons used, produced, processed or sold by that Person or any of its Restricted Subsidiaries at the time;
and


 


(4)         other
agreements or arrangements designed to protect such Person or any of its Restricted Subsidiaries against fluctuations in interest
rates, commodity prices or currency exchange rates,


 


and in each case are
entered into only in the normal course of business and not for speculative purposes.


 


“Holder”
shall have the meaning assigned to such term in the Description of Notes.


 






    	IV-4



    	 



    

 


“Indebtedness”
shall have the meaning assigned to such term in the Description of Notes.


 


“IRS”
means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code.


 


“Lead Purchasers”
means the Lead Holder and the Anchorage Purchasers and their successors.


 


“Lien”
shall have the meaning assigned to such term in the Description of Notes.


 


“Margin Stock”
means “margin stock” as such term is defined in Regulation U or X of the FRB.


 


“Material
Adverse Effect” means (i) for purposes of the Closing Date (including, without limitation, for making representations
and warranties on the Closing Date), any change, event or effect that, individually or in the aggregate, could reasonably be expected
to have a material adverse effect on the condition (financial or otherwise), liabilities, results of operations, properties or
business of the Breitburn Parties, taken as a whole, provided, however, that a Material Adverse Effect shall exclude
any change, event or effect resulting from, arising out of or relating to (a) changes in the financial or securities markets
or general economic or political conditions in the United States or elsewhere in the world; (b) changes or conditions generally
affecting the oil and gas exploration, development and/or production industry or industries (including changes in oil, gas or other
commodity prices); (c) the negotiation, execution, announcement or consummation of the transactions contemplated by this Agreement,
including any adverse change in customer, distributor, supplier or similar relationships resulting therefrom; (d) the existence
or occurrence of war, acts of war, terrorism or similar hostilities; (e) compliance with the terms of, or the taking of any
action required by, this Agreement and the Series B Preferred Unit Purchase Agreement;  (f) changes in accounting requirements
or principles imposed upon any Breitburn Party or their respective businesses or any changes in applicable law, or the interpretation
thereof, other than a change that would result in the Partnership being treated as a corporation for federal tax purposes; and
(g) changes in the market price of the Common Units (as defined in the Series B Preferred Unit Purchase Agreement);  except
to the extent such changes, events or effects in the cases of clauses (a), (b), and (d) above materially and disproportionately
affect the Breitburn Parties relative to other participants in the industry or industries in which the Breitburn Parties operate
(in which event the extent of such material and disproportionate effect may be taken into account in determining whether a Material
Adverse Effect has occurred) and (ii) for all purposes after the Closing Date, (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties or financial condition of the Breitburn Parties taken as a whole, including
any material adverse change in reserve estimates of the Oil and Gas Properties of the Breitburn Parties taken as a whole; (b) a
material impairment of the ability of any Breitburn Party to perform its material obligations under the Transaction Documents;
or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Breitburn Party
(or, in the case of the Intercreditor Agreement, against any party thereto other than the trustee or collateral agent) of any material
Transaction Document.


 




    	IV-5



    	 



    

 


“Mortgaged
Property” shall have the meaning assigned to such term in the Description of Notes without giving effect to the proviso
thereto.


 


“Multiemployer
Plan” means a “multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA, to which
a Breitburn Party or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.


 


“Note Document”
shall have the meaning assigned to such term in the Description of Notes.


 


“Obligations”
shall have the meaning assigned to such term in the Description of Notes.


 


“OFAC Laws”
means any laws, regulations, and executive orders relating to the economic sanctions programs administered by OFAC, including the
International Emergency Economic Powers Act, 50 U.S.C. sections 1701 et seq.; the Trading with the Enemy Act, 50 App. U.S.C.
sections 1 et seq.; and the Office of Foreign Assets Control, Department of the Treasury Regulations, 31 C.F.R. Parts 500
et seq. (implementing the economic sanctions programs administered by OFAC).


 


“Oil and Gas”
means petroleum, natural gas and other related hydrocarbons or minerals or any of them and all other substances produced or extracted
in association therewith.


 


“Oil and Gas
Properties” shall have the meaning assigned to such term in the Description of Notes.


 


“Organization
Documents” means (a) for any corporation: the articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of the shareholders of such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such corporation; (b) for any limited liability company:
the articles of organization, the regulations or operating agreement, certificate of organization and all applicable resolutions
of the members of such company; and (c) for any limited partnership: the limited partnership agreement and all Organization
Documents for its general partner, as any of the foregoing have been amended or supplemented from time to time.


 


“Partnership
Limited Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership Agreement of the
Partnership dated as of the Closing Date.


 


“PBGC”
means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under
ERISA.


 


“Pension Plan”
means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan,
which a Breitburn Party or any of its Subsidiaries sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) plan years.


 




    	IV-6



    	 



    

 


“Permian Basin
Properties” shall have the meaning assigned to such term in the Description of Notes.


 


“Permitted
Credit Facility” shall have the meaning assigned to such term in the Description of Notes.


 


“Permitted
Liens” shall have the meaning assigned to such term in the Description of Notes.


 


“Person”
shall have the meaning assigned to such term in the Description of Notes.


 


“Phase I Report”
means a report detailing the findings of an environmental site assessment conducted by a qualified third party that satisfies the
standards set forth in the current American Standards and Testing Materials designated protocol for Phase I Environmental Site
Assessments, E1527-13, or any subsequent edition thereof.


 


“Plan”
means an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to ERISA, other than a Multiemployer
Plan, which any Breitburn Party sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five (5) plan years.


 


“Priority
Lien Collateral Agent” shall have the meaning assigned to such term in the Description of Notes.


 


“Priority
Lien Document” shall have the meaning assigned to such term in the Description of Notes.


 


“Priority
Lien Debt” shall have the meaning assigned to such term in the Description of Notes.


 


“Proper Officer”
of a Person means any chief executive officer or co-chief executive officer, president, vice president with responsibility for
financial matters, chief financial officer or treasurer of (a) such Person, if such Person is a corporation or limited liability
company, or (b) the general partner of such Person, if such Person is a partnership.


 


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


 


“Quarterly
Status Report” for a fiscal quarter means a status report prepared quarterly by the Issuers in form reasonably acceptable
to the Lead Holder, setting forth as of the last day of each month during such quarter (a) detailing production from the Oil
and Gas Properties, the volumes of Oil and Gas produced and saved, the volumes of Oil and Gas sold, gross revenue, net income,
related leasehold operating expenses, severance taxes, other taxes, capital costs and any production imbalances incurred during
such period, (b) information concerning any Hedge Contracts entered into by any Issuer, Guarantor or their respective Restricted
Subsidiaries, and (c) such additional information with respect to any of the Oil and Gas Properties as may be reasonably requested
by the Lead Holder.


 




    	IV-7



    	 



    

 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, between the Partnership and
the purchasers of the Series B Perpetual Convertible Preferred Units party thereto.


 


“Regulation
U” and “Regulation X” means Regulation U and Regulation X, respectively, of the FRB from time to time
in effect and shall include any successor or other regulations or official interpretations of the FRB relating to the subject matter
addressed therein.


 


“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, depositing,
dispersing, disposing, or migrating.


 


“Reportable
Event” means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder.


 


“Requirement
of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of a Governmental
Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property
is subject.


 


“Reserve Engineer”
means each of (a) Netherland, Sewell and Associates, Inc., (b) Cawley Gillespie and Associates, Inc., (c) Schlumberger
Limited, (d) Miller and Lents, LTD and (e) any other independent oil and natural gas reserve engineers selected by the
Issuers in accordance with the Credit Facility.


 


“Reserve Report”
shall have the meaning assigned to such term in the Description of Notes.


 


“Restricted
Subsidiary” shall have the meaning assigned to such term in the Description of Notes.


 


“Sanctioned
Country” means, at any time, a country or territory which itself is the subject or target of any Sanctions.


 


“Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained
by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United
Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident
in a Sanctioned Country or (c) any Person owned or controlled by any such Person or the Persons described in the foregoing
clauses (a) or (b).


 


“Sanctions”
means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S.
government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S.
Department of Commerce or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any
European Union member state or Her Majesty’s Treasury of the United Kingdom.


 




    	IV-8



    	 



    

 


“SEC”
means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.


 


“Secured Parties”
means each Purchaser, the Collateral Agent, the Trustee and each other Person constituting a “secured party” pursuant
to any Collateral Document.


 


“Securities
Act” means the Securities Act of 1933, as amended.


 


“Series B
Preferred Unit Purchase Agreement” means the Amended and Restated Series B Preferred Unit Purchase Agreement, dated as
of the date hereof, by and among the Partnership and the purchasers of the Series B Perpetual Convertible Preferred Units party
thereto.


 


“Solvent”
means, as to any Person at any time, that (a) the fair value of all of the property of such Person is greater than the amount
of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and
liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair salable value of all
of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is
not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s
property would constitute unreasonably small capital.


 


“Subsidiary”
shall have the meaning assigned to such term in the Description of Notes.


 


“Transaction
Documents” means this Agreement, the Indenture, the Notes, the Guarantees, the Collateral Documents, the Intercreditor
Agreement and each other agreement, document and instrument delivered in connection therewith.


 


“Unrestricted
Subsidiary” shall have the meaning assigned to such term in the Description of Notes.


 




    	IV-9



    	 



    

  


EXHIBIT A


 


DESCRIPTION OF NOTES


 


(Please see attached)


 




    	 



    	 



    

 


DESCRIPTION OF NOTES


 


You can find the definitions
of certain terms used in this description under the subheading “—Certain Definitions.” In this description, the
term “Company,” “us,” “our” or “we” refers only to Breitburn Energy
Partners LP and not to any of its subsidiaries, the term “Operating Partnership” refers to Breitburn Operating LP and
not any of its subsidiaries, the term “Finance Corp.” refers to Breitburn Finance Corporation, and the
term “Issuers” refers, collectively, to the Company, the Operating Partnership and Finance Corp. The
term “notes” refers to the Issuers’ notes being offered hereby.


 


The Issuers will issue
the notes under an indenture among themselves, the Guarantors and U.S. Bank National Association, as trustee, in a private transaction
that is not subject to the registration requirements of the Securities Act. See “Transfer Restrictions.”


 


The following description
is a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. We urge you to read
the indenture because it, and not this description, will define the rights of Holders of the notes. Certain defined terms used
in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in
the indenture.


 


The registered Holder
of a note will be treated as the owner of it for all purposes. Only registered Holders will have rights under the indenture.


 


Brief Description of the Notes and the
Subsidiary Guarantees


 


The Notes.
The notes offered hereby will:


 


be general
senior obligations of the Issuers;


 


be secured
on a Second-Priority Basis by a Lien on the Collateral described below under “—Security for the Notes,” subject
in priority to the Liens securing the Operating Partnership’s obligations under, and the Company’s and Finance Corp.’s
guarantees of, the Credit Agreement and any other Priority Lien Debt;


 


be effectively
subordinated, pursuant to the terms of the Intercreditor Agreement described below under “—The Intercreditor Agreement,”
to the extent of the value of the Collateral, to the Operating Partnership’s obligations under, and the Company’s and
Finance Corp.’s guarantees of, the Credit Agreement and any other Priority Lien Debt, which will be secured on a first-priority
basis by the same assets of the Issuers that secure the notes;


 


be equal
in right of payment (without giving effect to any collateral arrangements) with all existing and future Senior Debt of any of the
Issuers, including the Company’s and Finance Corp.’s outstanding obligations under, and Operating Partnership’s
guarantee of, the 2020 Senior Notes and 2022 Senior Notes and the Operating Partnership’s obligations under, and the Company’s
and Finance Corp.’s guarantees of, the Credit Agreement;


 


be effectively
senior to any existing and future unsecured Indebtedness of any of the Issuers, to the extent of the value of the Collateral;


 


rank senior
in right of payment to any future subordinated Indebtedness of any of the Issuers; and


 


be fully
and unconditionally guaranteed by the Guarantors on a senior secured basis, which such guarantees shall be secured by a Lien on
the Collateral described below under “—Security for the Notes,” on a Second-Priority Basis.


 


The Subsidiary
Guarantees. Initially, the notes will be guaranteed by all of the Company’s Subsidiaries (other than the Operating
Partnership and Finance Corp.) that guarantee borrowings under the Credit Agreement, which provides the Operating Partnership with
a senior secured revolving credit facility.


 


Each guarantee of
the notes will:


 




    	 



    	 



    

 


be a general
senior obligation of the Guarantor;


 


be secured
on a Second-Priority Basis by a Lien on the Collateral described below under “—Security for the Notes,” subject
in priority to the Liens securing that Guarantor’s guarantee of, or obligations under, the Credit Agreement and any other
Priority Lien Debt;


 


be effectively
subordinated, pursuant to the terms of the Intercreditor Agreement described below under “— The Intercreditor Agreement,”
to the extent of the value of the Collateral, to that Guarantor’s guarantee of the Credit Agreement and any other Priority
Lien Debt, which will be secured on a first-priority basis by the same assets of the Guarantors that secure the notes;


 


be equal
in right of payment (without giving effect to any collateral arrangements) with all existing and future Senior Debt of that Guarantor,
including its guarantees of the 2020 Senior Notes, the 2022 Senior Notes and the Credit Agreement;


 


be effectively
senior to any existing and future unsecured Indebtedness of that Guarantor, to the extent of the value of the Collateral; and


 


rank senior
in right of payment to any future subordinated Indebtedness of that Guarantor.


 


As of December
31, 2014, on an as further adjusted basis to reflect this offering, our use of proceeds therefrom and the other transactions described
under “Capitalization,” the Issuers and the Guarantors would have had:


 


total Priority
Lien Debt (excluding obligations under letters of credit and hedges) of approximately $ billion, consisting of Priority Lien Debt
outstanding under the Credit Agreement;


 


total Senior
Debt (excluding obligations under letters of credit and hedges) of approximately $ billion, consisting of the notes, the 2020 Senior
Notes and the 2022 Senior Notes and approximately $ billion of revolving credit Senior Debt outstanding under the Credit Agreement;
and


 


no Indebtedness
contractually subordinated to the notes or the guarantees, as applicable.


 


Initially, all of
our existing Subsidiaries (other than the Operating Partnership, Finance Corp., Utica and East Texas Salt Water Disposal Company)
will guarantee the Obligations. Under the circumstances described below under the subheading “—Certain Covenants—Additional
Subsidiary Guarantees,” in the future one or more of our newly created or acquired Subsidiaries may not guarantee the notes.
In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, the non-guarantor Subsidiaries
will pay current outstanding obligations to the holders of their debt and their trade creditors before they will be able to distribute
any of their assets to us.


 


Utica does not guarantee
our Credit Agreement and will not guarantee our notes. Utica owns interests in certain Michigan oil and gas leases that, as of
December 31, 2014, had no associated production or proved reserves. Currently, Utica has no Indebtedness and no revenues. We may
seek to monetize Utica’s assets or its Equity Interests or to develop these assets either on our own or jointly with one
or more other companies. East Texas Salt Water Disposal Company does not guarantee our Credit Agreement and will not guarantee
the notes. As of December 3], 2014, the book value of our 59% interest in East Texas Salt Water Disposal Company was approximately
$ million. Currently, East Texas Salt Water Disposal Company has approximately $ million of outstanding indebtedness and $ million
in revenues.


 


Initially, all of
our Subsidiaries will be “Restricted Subsidiaries,” except for Utica and East Texas Salt Water Disposal Company. However,
under the circumstances described below under the subheading “—Certain Covenants—Designation of Restricted and
Unrestricted Subsidiaries,” we may designate certain of our other Subsidiaries as “Unrestricted Subsidiaries.”
Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture. Our Unrestricted Subsidiaries
will not guarantee the notes.


 




    	2



    	 



    

 


Principal, Maturity and Interest 


 


The Issuers will issue
the notes in an aggregate principal amount of $650 million. The Issuers may issue additional notes from time to time after this
offering to the extent permitted hereunder. Any offering of additional notes will be subject to the covenants described below under
the captions “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” and the Certain
“—Certain Covenants—Liens”. The notes and any additional notes subsequently issued under the indenture
will be treated as a single class for all purposes under the indenture, including, without limitation, for waivers, amendments,
redemptions and offers to purchase. The notes will be issued in denominations of $2,000 and integral multiples of $1,000 in excess
of $2,000. The notes will mature on May 18, 2020 (the “Maturity Date”). As of the Issue Date, an
offering of additional notes is not permitted under the indenture.


 


Interest on the notes
will accrue at the rate of 9.25% per annum, and will be payable quarterly in arrears on March 31, June 30, September 30 and December
31, beginning on June 30, 2015. The Issuers will make each interest payment to the Holders of record on the March 15,
June 15, September 15 and December 15 immediately preceding each interest payment date. Upon the occurrence and
during the continuance of an Event of Default, additional interest will accrue on the principal amount of all notes and, to the
extent permitted by applicable law, other Obligations outstanding (including post-petition interest in any proceeding (including
any Insolvency Proceeding) under applicable bankruptcy, insolvency or similar laws, whether or not allowed in such a proceeding),
payable in cash on demand by the trustee at a rate that is two percent (2.00%) per annum in excess of the interest rate otherwise
payable on the notes (the “Default Rate”). Payment or acceptance of the Default Rate will not be a permitted
alternative to timely payment and will not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights
or remedies of the trustee or any Holder.


 


Interest on the notes
will accrue from __________________, 20153 or, if
interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The obligations of the Issuers hereunder will be joint and several.


 


Methods of Receiving Payments on the Notes



 


If a Holder has given
wire transfer instructions to the Issuers, the Issuers will pay all principal, interest and premium, if any, on that Holder’s
notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the paying
agent and registrar within the City and State of New York unless the Issuers elect to make interest payments by check mailed to
the Holders at their addresses set forth in the register of Holders.


 


Paying Agent and Registrar for the Notes



 


The trustee will act
as the initial paying agent and registrar. The Issuers may change the paying agent or registrar without prior notice to the Holders
of the notes, and the Company or any of its Subsidiaries may act as paying agent or registrar.


 


Transfer and Exchange 


 


A Holder may transfer
or exchange notes in accordance with the indenture. The registrar and the trustee may require a Holder to furnish appropriate endorsements
and transfer documents in connection with a transfer of notes. No service charge will be imposed by the Issuers, the trustee or
the registrar for any registration of transfer or exchange of notes, but Holders will be required to pay all taxes due on transfer.
The Issuers will not be required to transfer or exchange any note selected for redemption. Also, the Issuers will not be required
to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.


 


Subsidiary Guarantees 


 


Initially, all of
our existing Subsidiaries, excluding the Operating Partnership, Finance Corp., Utica and East Texas Salt Water Disposal Company,
will guarantee the notes, in each case on a senior secured basis, subject to the Intercreditor Agreement. In the future, the Restricted
Subsidiaries of the Company will be required to guarantee the notes on a senior secured basis under the circumstances described
under “—Certain Covenants—Additional Subsidiary Guarantees.” These Subsidiary Guarantees will be full and
unconditional, joint and several obligations of the Guarantors. The obligations of each Guarantor under its Subsidiary Guarantee
will be limited as necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance under applicable law,
although this limitation may not be effective to prevent the Subsidiary Guarantees from being voided in bankruptcy.


 


 






3
The closing date.


 




    	3



    	 



    

 


A Guarantor may not
sell or otherwise dispose of all or substantially all of its properties or assets to, or consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person), another Person, other than, subject to the Collateral Requirements, an
Issuer or another Guarantor, unless:


 


		(1)	immediately after giving effect to such transaction,
no Default or Event of Default exists; and



 


		(2)	either:



 


		(a)	(i) the Person acquiring the properties or assets
in any such sale or other disposition or the Person formed by or surviving any such consolidation or merger (if other than the
Guarantor) unconditionally assumes, pursuant to a supplemental indenture substantially in the form specified in the indenture
and pursuant to such other agreements as are reasonably satisfactory to the trustee and the collateral agent, as applicable, the
Subsidiary Guarantee and all other obligations of such Guarantor under the notes and the other Note Documents on terms set forth
therein, (ii) any Collateral owned by or transferred to the Person acquiring the properties or assets in any such sale or
other disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) shall continue
to constitute Collateral under the Note Documents subject to the Collateral Requirements, (iii) the property and assets of
the Person which is consolidated or merged with or into such Guarantor, to the extent that they are property or assets of the
types which would constitute Collateral under the Note Documents, shall be treated as after-acquired property and such Guarantor
shall take such action (or agree to take such action) as may be reasonably necessary to cause such property and assets to be made
Collateral, in the manner, and to the extent required under the Note Documents, (iv) the Person formed by or surviving any
such consolidation or merger (if other than the Guarantor) shall be engaged in the Oil & Gas Business, except to the extent
permitted by the covenant set forth under the caption “—Business Activities”, (v) the Person formed by,
continuing or surviving any such merger is a Person organized and existing under the laws of the United States, any State of the
United States or the District of Columbia and, after giving effect to such transaction, shall be a wholly-owned Subsidiary of
the Company, (vi) all Issuers and other Guarantors shall confirm and reaffirm all their obligations under the notes and other
Note Documents to which such Issuer or Guarantor is a party pursuant to a supplemental indenture and (vii) (x) the Company
will, on the date of such consolidation or merger after giving pro forma effect thereto and any related financing transactions
as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above
under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock” or (y) immediately after giving
effect to such consolidation or merger and any related financing transactions on a pro forma basis as if the same had occurred
at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio of the Company will be equal to or greater
than the Fixed Charge Coverage Ratio of the Company immediately before such consolidation or merger; or



 


		(b)	such transaction complies with the “Asset Sales”
provisions of the indenture;



 


provided,
however, in the case of a transaction pursuant to clause (2)(a), such Issuer has delivered to the trustee an officers’
certificate stating that such consolidation, merger or disposition and such supplemental indenture and other Note Documents (if
any) comply with the indenture and Note Documents.


 




    	4



    	 



    

 


The Subsidiary Guarantee
of a Guarantor will be released:


 


		(1)	in connection with any sale or other disposition of all
or substantially all of the properties or assets of that Guarantor (including by way of merger or consolidation) to a Person that
is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the
sale or other disposition complies with the “Asset Sales” provisions of the indenture;



 


		(2)	in connection with any sale or other disposition of Capital
Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted
Subsidiary of the Company, if the sale or other disposition complies with the “Asset Sales” provisions of the indenture
and the Guarantor ceases to be a Restricted Subsidiary of the Company as a result of the sale or other disposition;



 


		(3)	[reserved];



 


		(4)	upon Legal Defeasance or Covenant Defeasance as described
below under the caption “—Legal Defeasance and Covenant Defeasance” or upon satisfaction and discharge of the
indenture as described below under the caption “—Satisfaction and Discharge”; or



 


		(5)	upon the liquidation or dissolution of such Guarantor
provided no Default or Event of Default has occurred that is continuing and provided that the assets of such Guarantor are transferred
to a Guarantor or Issuer subject to the Collateral Requirements upon such liquidation or dissolution or are otherwise disposed
of as permitted by the indenture.



 


See “—Repurchase
at the Option of Holders—Asset Sales.”


 


Security for the Notes


 


The obligations of
Issuers with respect to the notes, the obligations of the Guarantors under the Subsidiary Guarantees, all other Obligations, and
the performance of all Obligations of the Issuers and the Guarantors under the Note Documents will be secured by Second-Priority
Liens in the Collateral granted to the collateral agent for the benefit of the holders of the Obligations. These Liens will be
junior in priority only to the Liens securing Priority Lien Obligations, to the extent permitted to be incurred or to exist under
the Intercreditor Agreement, and to certain other Permitted Liens.


 


Except as otherwise
provided below or in the Intercreditor Agreement, the indenture will provide that the Collateral will consist of the Issuers’
and the Guarantors’ Oil and Gas Properties and substantially all other assets of the Issuers and the Guarantors to the extent
such properties and assets are subject to Liens securing any of the Priority Lien Obligations, provided that the indenture shall
require the Company to deliver to the trustee semi-annually on or before March 31 and September 30 in each calendar year, beginning
September 30, 2015, an officers’ certificate providing a good faith estimate, as of the date of such certificate, of the
percentage of the total discounted future net revenue (determined by a discount factor of 10% per annum) of the Issuers’
and the Guarantors’ Oil and Gas Properties evaluated in the Company’s most recent Reserve Report that the Collateral
represents (which, in any case, shall not be less than 80% of the total discounted future net revenue (determined by a discount
factor of 10% per annum) of the Issuers’ and the Guarantors’ Oil and Gas Properties evaluated in the Company’s
most recent Reserve Report (the “Collateral Certification”).


 


Notwithstanding the forgoing,
the indenture will provide the collateral agent and Majority Holders with the Additional Collateral Right.


 


The Collateral will
not include the following (the following excluded assets collectively referred in the offering circular as the “Excluded
Assets”):


 


		(1)	any permit, lease, license, contract, property right
or agreement to which any Issuer or Guarantor is a party and any of its rights or interests thereunder if, and only for so long
as, the grant of a security interest under the security documents (a) is prohibited by or a violation of any law, rule or
regulation applicable to such Issuer or Guarantor or requires the consent of an applicable governmental authority or a third party
which has not been obtained or (b) shall constitute or result in a breach of a term or provision of or termination or default
under any such permit, lease, license, contract, property right or agreement (other than to the extent that any such law, rule,
regulation, consent requirement, violation, term or provision would be rendered ineffective pursuant to Section 9-406, 9-407,
9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law);



 




    	5



    	 



    

 


		(2)	property owned by any Issuer or Guarantor that is subject
to a purchase money Lien or capital lease permitted under the indenture if the agreement pursuant to which such Lien is granted
(or the document providing for such capital lease) prohibits, or requires the consent of any Person other than any Issuer or Guarantor
which has not been obtained as a condition to, the creation of any other Lien on such property;



 


		(3)	any “intent-to-use” application for registration
of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement
of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c)
of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the
grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use
application under applicable federal law;



 


		(4)	any deposit account exclusively used for trust, payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of any Issuer’s or Guarantor’s employees;
and



 


		(5)	certain Equity Interests, as set forth in the security
documents.



 


provided, however, “Excluded
Assets” shall not include any proceeds, products, substitutions or replacements of any Excluded Assets (unless such proceeds,
products, substitutions or replacements would constitute Excluded Assets).


 


Release of Liens in Respect of Notes



 


The indenture will
provide that the collateral agent’s Parity Liens upon the Collateral will no longer secure the notes outstanding under the
indenture or any other Obligations under the Note Documents, and the right of the Holders and such Obligations to the benefits
and proceeds of the collateral agent’s Parity Liens on the Collateral will terminate and be discharged:


 


		(1)	upon satisfaction and discharge of the indenture as set
forth under the caption “—Satisfaction and Discharge”;



 


		(2)	upon a Legal Defeasance or Covenant Defeasance of the
notes as set forth under the caption “—Legal Defeasance and Covenant Defeasance”;



 


		(3)	upon payment in full and discharge of all notes outstanding
under the indenture and all other Obligations that are outstanding, due and payable under the indenture and the other Note Documents
at the time the notes are paid in full and discharged;



 


		(4)	as to any Collateral that is sold, transferred or otherwise
disposed of by any Issuer or any Guarantor to a Person that is not (either before or after such sale, transfer or disposition)
the Company or a Restricted Subsidiary of the Company in a transaction or other circumstance that complies with the provisions
described under the caption “—Repurchase at the Option of Holders—Asset Sales” below (other than the obligation
to apply proceeds of such Asset Sale as provided in such provision), at the time of such sale, transfer or other disposition or
to the extent of the interest sold, transferred or otherwise disposed of; provided that the collateral agent’s Liens upon
the Collateral will not be released if the sale or disposition is subject to the covenant described below under the caption “—Certain
Covenants—Merger, Consolidation or Sale of Assets”; provided, further, that the proceeds of such sale,
transfer or other disposition shall remain subject to the Parity Lien to the extent required by the Note Documents;



 


		(5)	in whole or in part, with the consent of the Holders
of the requisite percentage of notes in accordance with the provisions described below under the caption “—Amendment,
Supplement and Waiver”;



 




    	6



    	 



    

 


		(6)	with respect to the assets of any Guarantor, at the time
that such Guarantor is released from its Subsidiary Guarantee as described above under the caption “—Subsidiary Guarantees”;
or



 


		(7)	if and to the extent required by the provisions of the
Intercreditor Agreement described under the caption “—The Intercreditor Agreement—Release of Liens; Automatic
Release of Second Liens; Supplemental Liens.”



 


Further Assurances; Collateral; Liens
on Additional Property 


 


The indenture and
the security documents establishing the Parity Liens will provide that the Issuers and each of the Guarantors will do or cause
to be done all acts and things that may be required, or that the collateral agent from time to time may reasonably request, to
assure and confirm that the collateral agent holds, for the benefit of the holders of the Obligations, duly created and enforceable
and perfected Liens upon the Collateral (including any property or assets that are acquired or otherwise become, or are required
by any Note Document to become, Collateral after the notes are issued), in each case, as contemplated by, and with the Second-Priority
Lien required under, the Note Documents.


 


In addition, from
and after the date of the indenture, if any Issuer or any Guarantor acquires any property or asset that constitutes (or becomes)
collateral for the Priority Lien Debt, if and to the extent that any Priority Lien Document requires any supplemental security
document for such collateral or other actions to achieve a perfected second-priority security interest in such collateral or if
any Issuer or Guarantor otherwise provides or agrees to provide any of the foregoing to the Priority Lien Agent or any holder of
Priority Lien Debt, the Company shall, or shall cause the Operating Partnership, Finance Corp. or the applicable Guarantor to,
promptly (but not in any event later than the date that is 10 Business Days after which such supplemental security documents are
executed and delivered (or other action taken) under such Priority Lien Documents), to the extent permitted by applicable law,
execute and deliver to the collateral agent appropriate security documents (or amendments thereto) in such form as shall be necessary
to grant the collateral agent a perfected Second-Priority Lien on such collateral or take such other actions in favor of the collateral
agent as shall be necessary to grant a perfected Second Priority Lien on such collateral to the collateral agent, subject to the
terms of the Intercreditor Agreement and the other Note Documents. Additionally, subject to the Intercreditor Agreement and the
other Note Documents, if any Issuer or any Guarantor creates any additional security interest upon any property or asset that would
constitute Collateral, or takes any additional actions to perfect any existing security interest in Collateral, in each case for
the benefit of any of the holders of the Priority Lien Debt after the date of the indenture, such Issuer or such Guarantor, as
applicable, must, to the extent permitted by applicable law, within ten (10) Business Days after such security interest is granted
or other action taken, grant a Second-Priority security interest upon such property or asset, and take such additional perfection
actions, as applicable, for the benefit of the Holders and obtain all related deliverables as those delivered to the Priority Lien
Representative in each case as security for the obligations of Issuers with respect to the notes, the obligations of the Guarantors
under the Subsidiary Guarantees and the performance of all other obligations of the Issuers and the Guarantors under the Note Documents.
Notwithstanding the foregoing, to the extent that any Lien on any Collateral is perfected by the possession or control of such
Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession
or under the control of the Priority Lien Representative, or of agents or bailees of the Priority Lien Representative, the perfection
actions and related deliverables described in this paragraph shall not be required; provided, however, notwithstanding anything
to the contrary set forth in foregoing, the Issuers and Guarantors shall be required to deliver duly executed control agreements
with respect to deposit accounts, securities accounts and commodity accounts to the extent required under the Note Documents.


 


Notwithstanding the
foregoing, the collateral trustee, at the request of the Majority Holders, will (and the Majority Holders will) have the right
to require that the Issuers and Guarantors place Mortgages on any properties of any Issuer or Guarantor acquired after the Issue
Date (including, for the avoidance of doubt, Oil and Gas Properties whether consisting of proved or unproved crude oil or natural
gas reserves or developed or undeveloped acreage or otherwise) that are not already subject to a Mortgage (the “Additional
Collateral Right”). The indenture will provide that the collateral trustee, at the direction of the Majority Holders,
or the Majority Holders, may exercise such Additional Collateral Right by delivering notice to the Priority Lien Agent with a copy
to the Company (the “Election Notice”) of its intent to require a Mortgage or Mortgages over the property
specified in such notice (the “Required Mortgages”). Upon the earlier of (i) the expiration of the 60th
day after delivery of such notice to the Priority Lien Agent and (ii) the date the Priority Lien Agent informs the collateral trustee
or Majority Holders, as applicable, that it does not intend to seek such Required Mortgages, the collateral trustee, at the direction
of the Majority Holders, or the Majority Holders may deliver written notice to the Company informing the Company that it is exercising
its Additional Collateral Right with respect to the Required Mortgages. The indenture will provide that the applicable Issuer or
Guarantor will then have 60 days from the date of receipt of such notice (or such later date as the Majority Holders may agree
to in their reasonable discretion) to deliver the duly executed and recorded Second-Priority Required Mortgages, accompanied by
title information in form and substance reasonably acceptable to the Majority Holders, customary legal opinions and deliverables
consistent with the legal opinions and deliverables delivered in connection with the Mortgaged Properties under the Note Purchase
Agreement; provided, however, to the extent any such property is subject to title defects that prevent the Issuers and Guarantors
from placing a Mortgage thereon, the Issuers and Guarantors shall use commercially reasonable efforts to cure or overcome such
title defects so that Mortgages may be placed on such properties as promptly as practicable (and the Majority Holders will extend
such delivery dates as reasonably determined in their discretion to accommodate the same). Notwithstanding the foregoing, the indenture
will provide that with respect to any such Second-Priority Mortgage granted to the collateral agent for the benefit of the
collateral agent, trustee, Holders and indemnitees, the applicable Issuer or Guarantor shall also, immediately prior to or contemporaneously
therewith, deliver a first-priority Mortgage securing the Priority Lien Obligations over such property to the Priority Lien Agent
for the benefit of the secured parties under the Priority Lien Documents.


 




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Furthermore, upon
the reasonable request of the collateral agent or the Majority Holders at any time and from time to time, each Issuer and each
of the Guarantors will promptly execute, acknowledge and deliver such security documents, instruments, certificates, notices and
other documents, and take such other actions as shall be reasonably required, or that the collateral agent or Majority Holders
may reasonably request, to create, perfect, protect, assure or enforce the Liens and benefits intended to be conferred, in each
case as contemplated by the Note Documents for the benefit of the holders of the Obligations; provided, that no such security
document, instrument or other document shall be materially more burdensome upon the Issuers and the Guarantors than the Note Documents
executed and delivered by the Issuers and the Guarantors in connection with the issuance of the notes on or about the date of the
indenture.


 


Optional Redemption 


 


On and after April
      , 20184, the Issuers
may redeem all or a part of the notes (and, following acceleration of the maturity thereof, in connection with an Event of Default
and/or in or in connection with a voluntary or involuntary Insolvency Proceeding or otherwise, shall redeem all of the notes) at
the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any,
on the notes to be redeemed to the applicable redemption date (subject to the right of Holders of record on the relevant record
date to receive interest due on an interest payment date that is on or prior to the redemption date), if redeemed during the twelve-month
period beginning on April of the years indicated below:


 


	Year	 	Percentages	 
	·  2018	 	 	106.000	%
	·  2019	 	 	100.000	%



 


Prior to April , 20185,
the Issuers may redeem all or part of the notes, at a redemption price equal to the sum of:


 


(1)         the
principal amount thereof, plus


 


(2)         the
Make-Whole Amount,


 


plus accrued and unpaid interest, if any,
to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the redemption date).


 


 






4
Third anniversary of the Closing Date


5
Third anniversary of the Closing Date


 




    	8



    	 



    

 


Selection and Notice 


 


If less than all of
the notes are to be redeemed at any time, the trustee will select notes for redemption as follows:


 


		(1)	if the notes are listed on any national securities exchange,
in compliance with the requirements of the principal national securities exchange on which the notes are listed; or



 


		(2)	if the notes are not listed on any national securities
exchange, on a pro rata basis (or in the case of global notes, on as nearly a pro rata basis as is practicable, subject to the
procedures of The Depository Trust Company (“DTC”)).



 


No notes of $2,000
or less can be redeemed in part. Notices of optional redemption will be sent at least 30 but not more than 60 days before the redemption
date to each Holder of notes to be redeemed at its registered address, except that optional redemption notices may be sent more
than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction
and discharge of the indenture.


 


Any such redemption
may, at the Company’s discretion, be subject to one or more conditions precedent, including any related equity offering.
If such redemption is subject to the satisfaction of one or more conditions precedent, the related notice shall describe each such
condition, and if applicable, shall state that, in the Company’s discretion, the date of redemption may be delayed until
such time as any or all such conditions shall be satisfied or waived (provided that in no event shall such date of redemption be
delayed to a date later than 10 Business Days after the date initially designated for redemption in such notice), or such redemption
may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied or waived
by the date of redemption, or by the date of redemption as so delayed (the “Delayed Redemption Date”).


 


If any note is to
be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of
that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued
in the name of the Holder of notes upon cancellation of the original note.


 


Notes called for redemption
without any condition precedent will become due on the date fixed for redemption, and at the redemption price described above.
Notes called for redemption subject to conditions precedent will be become due on the date such conditions precedent are satisfied;
provided such conditions precedent are satisfied prior to the Delayed Redemption Date. On and after the redemption date, interest
will cease to accrue on notes or portions of them called for redemption, unless the Issuers default in the payment of the redemption
price.


 


Special Mandatory Redemption


 


Invalid Debt Incurrence


 


If the Company or
any Restricted Subsidiary incurs Indebtedness that is not permitted to be incurred by the covenant set forth under the heading
“—Incurrence of Indebtedness and Issuance of Preferred Stock” (an “Invalid Debt Incurrence”),
the Company will make an offer to all holders of Notes to purchase the maximum principal amount of notes that may be purchased
out of the portion of the net proceeds received from such Invalid Debt Incurrence incurred in violation of such covenant. Such
offer shall be made within 15 business days after receipt of notice of such Invalid Debt Incurrence by the trustee or holders of
at least 50.1% of the aggregate principal amount of the notes. The offer price in any such offer will be equal to the price at
which the notes could have been redeemed at the time of the Invalid Debt Incurrence pursuant to the provisions set forth under
the heading “—Optional Redemption” (including at the Make-Whole Amount or Prepayment Premium, if applicable),
plus accrued and unpaid interest, if any, on the notes repurchased to the date of settlement (the “Invalid Debt Incurrence
Settlement Date”), subject to the right of Holders of record on the relevant record date to receive interest due
on an interest payment date that is on or prior to the Invalid Debt Incurrence Settlement Date. Notwithstanding the foregoing,
the Invalid Debt Incurrence Offer and any redemption or repurchase of notes pursuant thereto will not be a permitted alternative
to complying with the provisions of the indenture and will not constitute a waiver of any Default or Event of Default or otherwise
prejudice or limit any rights or remedies of the trustee, collateral agent or any Holder.


 




    	9



    	 



    

 


The Issuers will comply
with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the notes as a result of an Invalid Debt Incurrence. To the extent that the provisions of any securities
laws or regulations conflict with the Invalid Debt Incurrence provisions of the indenture, the Issuers will comply with the applicable
securities laws and regulations and will not be deemed to have breached their obligations under the Invalid Debt Incurrence provisions
of the indenture by virtue of such conflict.


 


Repurchase at the Option of Holders 


 


Change of Control 


 


If a Change of Control
occurs, each Holder of notes will have the right, except as provided below, to require the Company to repurchase all or any part
(equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that Holder’s notes pursuant to a cash tender
offer (the “Change of Control Offer”) on the terms set forth in the indenture. In the Change of Control
Offer, the Company will offer a payment in cash (“Change of Control Payment”) equal to 101% of the aggregate
principal amount of notes repurchased plus accrued and unpaid interest, if any, on the notes repurchased, to the date of settlement
(the “Change of Control Settlement Date”), subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date that is on or prior to the Change of Control Settlement Date.


 


Within 30 days following
any Change of Control, unless the Issuers have previously or concurrently exercised their right to redeem all of the notes as described
under “—Optional Redemption” or one of the other two exceptions described below applies, the Company will send
a notice to each Holder and the trustee describing the transaction or transactions that constitute the Change of Control and offering
to repurchase notes on the Change of Control Settlement Date specified in the notice, which date will be no later than 30 days
from the date such notice is sent, pursuant to the procedures required by the indenture and described in such notice.


 


The Company will comply
with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the indenture, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture
by virtue of such conflict.


 


On or before the Change
of Control Settlement Date, the Company will, to the extent lawful, accept for payment all notes or portions of notes properly
tendered pursuant to the Change of Control Offer. Promptly after such acceptance, on the Change of Control Settlement Date the
Company will:


 


		(1)	deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all notes or portions of notes properly tendered; and



 


		(2)	deliver or cause to be delivered to the trustee the notes
properly accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of
notes being purchased by the Company.



 


On the Change of Control
Settlement Date, the paying agent will mail to each Holder of notes properly tendered the Change of Control Payment for such notes
(or, if all the notes are then in global form, make such payment through the facilities of DTC), and the trustee will authenticate
and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion
of the notes surrendered, if any; provided, however, that each new note will be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess of $2,000. The Company will publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Settlement Date.


 




    	10



    	 



    

 


The Credit Agreement
provides that certain change of control events with respect to the Company would constitute an event of default thereunder, entitling
the lenders, among other things, to accelerate the maturity of all Indebtedness outstanding thereunder. Any future credit agreements
or other agreements relating to Indebtedness to which any Issuer or Guarantor becomes a party may contain similar restrictions
and provisions. The indenture will provide that, prior to complying with any of the provisions of this “Change of Control”
covenant, but in any event no later than the Change of Control Settlement Date, any Issuer or any Guarantor must either repay all
of its other outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing such Senior Debt
to permit the repurchase of notes required by this covenant (it being agreed that making such payments and obtaining such consents
is not a condition precedent to complying with the provisions of this “Change of Control” covenant).


 


The provisions described
above that require the Company to make a Change of Control Offer following a Change of Control will be applicable whether or not
any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture
does not contain provisions that permit the Holders of the notes to require that the Company repurchase or redeem the notes in
the event of a takeover, recapitalization or similar transaction.


 


The Company will not
be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in
the manner, at the time and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of
Control Offer made by the Company and purchases all notes properly tendered and not withdrawn under the Change of Control Offer,
(2) notice of redemption of all outstanding notes has been given pursuant to the indenture as described above under “—Optional
Redemption,” or (3) in connection with or in contemplation of any Change of Control, the Company has made an offer to purchase
(an “Alternate Offer”) any and all notes validly tendered at a cash price equal to or higher than the
Change of Control Payment and has purchased all notes properly tendered in accordance with the terms of such Alternate Offer.


 


A Change of Control
Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of the Change of Control, if a definitive
agreement is in place for the Change of Control at the time of making the Change of Control Offer.


 


The definition of
Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of
“all or substantially all” of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a Holder of notes to require the Company to repurchase
its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the properties or assets
of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.


 


In the event that
Holders of not less than 90% of the aggregate principal amount of the outstanding notes accept a Change of Control Offer or Alternate
Offer, and the Company (or the third party making the Change of Control Offer in lieu of the Company as described above) purchase
all of the notes validly tendered by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days’
prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer or Alternate Offer, as
applicable, to redeem all of the notes that remain outstanding following such purchase at a redemption price equal to the Change
of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the notes
that remain outstanding, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to the redemption date).


 


Asset Sales 


 


The Company will not,
and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:


 


		(1)	the Company (or a Restricted Subsidiary, as the case
may be) receives consideration at the time of the Asset Sale at least equal to the fair market value of the assets or Equity Interests
issued or sold or otherwise disposed of,



 




    	11



    	 



    

 


		(2)	the fair market value is determined by (a) an executive
officer of the General Partner if the value is less than $20 million and evidenced by an officers’ certificate delivered
to the trustee, or (b) the Company’s Board of Directors if the value is $20 million or more and evidenced by a resolution
of the Board of Directors set forth in an officers’ certificate delivered to the trustee;



 


		(3)	at least 75% of the aggregate consideration received
by the Company and its Restricted Subsidiaries in such Asset Sale is in the form of cash; provided, however, consideration
in respect of an Asset Sale of Permian Basin Properties or Mortgaged Properties from an Issuer or Guarantor to a Restricted Subsidiary
that is not an Issuer or a Guarantor, an Unrestricted Subsidiary or Joint Venture shall be 100% in cash. For purposes of this
provision, each of the following will be deemed to be cash:



 


		(a)	any liabilities, as shown on the Company’s or any
Restricted Subsidiary’s most recent balance sheet, of the Company or such Restricted Subsidiary (other than contingent liabilities
and liabilities that are by their terms subordinated to the notes or any Subsidiary Guarantee) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary, respectively,
from further liability; and



 


		(b)	any securities, notes or other obligations received by
the Company or any Restricted Subsidiary from such transferee that are, within 90 days after the Asset Sale, converted by the
Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion;



 


		(4)	no Event of Default has occurred and is continuing or
would result therefrom; and



 


		(5)	in the case of Production Payments and Reserve Sales,
any such Production Payments and Reserve Sales will have been created, incurred, issued, assumed or guaranteed in connection with
the financing of, and within 60 days after the acquisition of, the property that is subject thereto;



 


provided that no Issuer
or Guarantor shall sell, transfer, assign or otherwise dispose of the Equity Interests it owns in any Issuer or Guarantor (other
than to an Issuer or Guarantor) if after giving effect to such sale, transfer, assignment or disposition, such Issuer would be
a Restricted Subsidiary of the Company that is not wholly-owned by the Issuers and Guarantors.


 


Within 180 days after
the receipt of any Net Proceeds from an Asset Sale, the Company or any Restricted Subsidiary may apply those Net Proceeds at its
option to any combination of the following:


 


		(1)	(A) to repay, redeem or repurchase Priority Lien Debt
or (B) to make an offer to all Holders to repay, redeem or repurchase the notes;



 


		(2)	to invest in Additional Assets; or



 


		(3)	to make capital expenditures in respect of the Company’s
or its Restricted Subsidiaries’ Oil and Gas Business;



 


provided, however, to
the extent the assets disposed of pursuant to an Asset Sale (or casualty or condemnation event) constitute Collateral, the Additional
Assets and capital expenditures to which such Net Proceeds are applied will be treated as after acquired property and will become
Collateral in accordance with and to the extent required by the Note Documents.


 


Pending the final
application of any Net Proceeds, the Company or any Restricted Subsidiary may invest the Net Proceeds in any manner that is not
prohibited by the indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph
will constitute “Excess Proceeds.”


 


On the 181st day after
an Asset Sale (or, at the Company’s option, any earlier date), if the aggregate amount of Excess Proceeds then exceeds $10.0
million, the Company will make an offer (an “Asset Sale Offer”) to all Holders of notes to purchase the
maximum principal amount of notes that may be purchased out of the Excess Proceeds; provided that, if an Event of Default has occurred
and is continuing, the Company shall promptly (and, in any event, within 15 Business Days after the first date of such Event of
Default) make an Asset Sale Offer with respect to all Net Proceeds from Asset Sales not yet applied pursuant to clauses (1)-(3)
above as of the first date of such Event of Default, except to the extent that such Excess Proceeds are otherwise committed to
be used for an Investment as of the first date of such Event of Default pursuant to a binding contract.


 




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Notwithstanding anything
to the contrary set forth in the foregoing, to the extent that consideration for Asset Sales together with consideration in the
form of cash or Cash Equivalents for Asset Swaps under clause (14) of the definition of “Asset Sales” and consideration
received in the form of cash or Cash Equivalents for joint ventures, farm-outs and farm-ins under the definition of “Permitted
Business Investments” less any amounts previously applied to prepay the notes in accordance with this provision under “Repurchase
at the Option of Holders—Asset Sales” since the date of the indenture exceeds $500 million in the aggregate, the Company
or any Restricted Subsidiary shall promptly (and, in any event, within 15 Business Days of receipt thereof) apply 75% of the Net
Proceeds resulting thereafter (without the right of reinvestment) to cause the Issuers to make an Asset Sale Offer to purchase
the maximum principal amount of notes that may be purchased out of such Net Proceeds. The remaining 25% of such Net Proceeds shall
be applied pursuant to clauses (1)-(3) above.


 


The offer price in
any Asset Sale Offer (or an offer pursuant to clause (1)(B) in the second paragraph under the heading of “Asset Sales”)
will be equal to 100% of principal amount plus accrued and unpaid interest, if any, to the date of settlement, subject to the right
of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the
date of settlement, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer to Holders
of notes, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate
principal amount of notes tendered into such Asset Sale Offer (or offer pursuant to clause (1)(B) in the second paragraph under
the heading of “Asset Sales”) exceeds the amount of Excess Proceeds, the trustee will select the notes to be purchased
on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.


 


The Issuers will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent
those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the “Asset Sales” provisions of the indenture,
the Issuers will comply with the applicable securities laws and regulations and will not be deemed to have breached their obligations
under the “Asset Sales” provisions of the indenture by virtue of such conflict.


 


Certain Covenants 


 


Restricted Payments 


 


The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or indirectly:


 


		(1)	declare or pay any dividend or make any other payment
or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries)
or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company
or payable to the Company or a Restricted Subsidiary of the Company);



 


		(2)	purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of
the Company;



 


		(3)	make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes or the Subsidiary
Guarantees (excluding any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries) or constitutes
Unsecured Notes (including Existing Indebtedness in the form of Unsecured Notes), except a payment of interest or principal at
the Stated Maturity thereof; or



 




    	13



    	 



    

 


		(4)	make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted
Payments”),



 


unless, in the case of clauses
(3) and (4) only, (A) at the time of and after giving effect to such Restricted Payment, no Default (except
a Reporting Default) or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment,
(B) the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial
statements are available at the time of such Restricted Payment is not less than 2.25 to 1.0, and (C) such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries (excluding
“Permitted Investments” and Restricted Payments permitted by the next succeeding paragraph) since the Issue Date, is
less than the sum, without duplication, of:


 


		(a)	100% of the aggregate net cash proceeds received by the
Company after the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale after the Issue Date of convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Company)
to the extent Not Otherwise Applied; provided, however, that the amount of any such net cash proceeds that are utilized
for any such Restricted Payment will be excluded (or deducted, if included) from the calculation of Available Cash, plus



 


		(b)	to the extent that any Restricted Investment that was
made after the Issue Date pursuant to this first paragraph under the heading “—Restricted Payments” is sold
for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment (less
the cost of disposition, if any); provided, that, Issuers and Guarantors may only make Restricted Payments with such cash
return of capital to the extent an Issuer or Guarantor was the recipient of such cash return of capital, plus



 


		(c)	the net reduction in Restricted Investments made pursuant
to this first paragraph under the heading “—Restricted Payments” resulting from cash dividends, repayments of
loans or advances in cash, or other transfers of cash (together, the “cash returns”) in each case to
the Company or any of its Restricted Subsidiaries from any Person (including, without limitation, Unrestricted Subsidiaries);
provided, that, Issuers and Guarantors may only make Restricted Payments with such cash returns to the extent an Issuer
or Guarantor was the recipient of such cash returns; plus



 


		(d)	(d) the fair market value of Unrestricted Subsidiaries
redesignated as Restricted Subsidiaries to the extent the investment in such Unrestricted Subsidiaries was made pursuant to this
first paragraph under the heading “—Restricted Payments” as long as such redesignated Restricted Subsidiary
becomes a Guarantor (items (a), (b), (c) and (d) being referred to as “Incremental Funds).



 


So long as no Default
(except Reporting Default) or Event of Default has occurred and is continuing or would be caused thereby (except with respect to
clause (1) below under which the payment of a distribution or dividend is permitted notwithstanding that any such
Default or Event of Default has occurred and is continuing as long as there was no Default (except Reporting Default) or Event
of Default occurring or continuing on the date of declaration of any such Restricted Payment)), the preceding provisions will not
prohibit:


 


		(1)	the payment of any dividend or distribution within 90
days after the date of its declaration, if at the date of declaration the payment would have complied with the provisions of the
indenture;



 


		(2)	without duplication of any Restricted Payments made pursuant
to the preceding paragraph, any Restricted Payment (other than a Restricted Payment of the type specified in clause (1)
or (2) of the first paragraph above) in exchange for, or out of (or of, in the case of a contribution of
assets that were acquired in exchange for Equity Interests of the Company or with net cash proceeds of a contribution described
in the following clause (a)) the net cash proceeds of (or, in the case of any such contribution of assets, in the
form of the assets so contributed) the substantially concurrent (a) contribution (other than from a Restricted Subsidiary
of the Company) to the equity capital of the Company (other than in respect of Disqualified Stock, but including a contribution
of assets) or (b) sale (other than to a Restricted Subsidiary of the Company) of, Equity Interests of the Company (other
than Disqualified Stock), with such contribution or sale being deemed substantially concurrent if such Restricted Payments occurs
not more than 60 days after such contribution or sale and the proceeds of such contribution or sale (or assets contributed) are
designated for such purpose pursuant to an officer’s certificate by an executive officer of the Company delivered to the
trustee no later than 5 Business Days after the occurrence of such contribution or sale and are Not Otherwise Applied; provided,
however, that (i) the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be
excluded (or deducted, if included) from the calculation of Available Cash and Incremental Funds and (ii) any such contributed
assets shall not be required to become Collateral if such Restricted Payment if made not more than 60 days after such contribution;



 




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		(3)	the purchase, redemption, defeasance or other acquisition
or retirement of Unsecured Notes or subordinated Indebtedness of any Issuer or Guarantor with the net cash proceeds from an incurrence
of, or in exchange for, Permitted Refinancing Indebtedness;



 


		(4)	the payment of any dividend or distribution by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis;



 


		(5)	the purchase, redemption or other acquisition or retirement
for value of any Equity Interests of (i) the Company or any Restricted Subsidiary of the Company pursuant to any director
or employee equity subscription agreement or equity option agreement or other employee benefit plan or to satisfy obligations
under any Equity Interests appreciation rights or option plan or similar arrangement; provided, however, that the aggregate
price paid for all such purchased, redeemed, acquired or retired Equity Interests may not exceed $5 million in any calendar year,
with any portion of such $5 million amount that is unused in any calendar year to be carried forward to successive calendar years
and added to such amount and (ii) the Company from former officers, directors or employees (or spouses, ex-spouses or trustees
thereof) in the ordinary course of business;



 


		(6)	the purchase, repurchase, redemption or other acquisition
or retirement for value of Equity Interests deemed to occur upon the exercise, exchange or conversion of unit options, warrants,
incentives, rights to acquire Equity Interests or other convertible securities if such Equity Interests represent a portion of
the exercise, exchange or conversion price thereof, and any purchase, repurchase, redemption or other acquisition or retirement
for value of Equity Interests made in lieu of withholding taxes in connection with any exercise, exchange or conversion of unit
options, warrants, incentives or rights to acquire Equity Interests, and any cash payment in lieu of the issuance of fractional
Equity Interests upon exercise, exchange or conversion;



 


		(7)	[Reserved];



 


		(8)	the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of any Unsecured Notes of any Issuer or Guarantor (other than Unsecured Notes that are subordinated
in right of payment to the Obligations) (a) at a purchase price not greater than 101% of the principal amount of such Unsecured
Notes in the event of a change of control in accordance with mandatory offer provisions similar to those set forth under the heading
“Repurchase at the Option of Holders—Change of Control” or (b) at a purchase price not greater than 100%
of the principal amount thereof in accordance with mandatory offer provisions similar to those set forth under the heading “Repurchase
at the Option of Holders—Asset Sales”; provided that, prior to or simultaneously with such purchase, repurchase,
redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Sale Offer,
as applicable, and has completed the repurchase or redemption of all notes validly tendered for payment in connection with such
Change of Control Offer or Asset Sale Offer; or



 




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		(9)	the declaration and payment of (i) Permitted Distributions
on Common Units and (ii) Permitted Distributions on Preferred Units by the Company.



 


The amount of all
Restricted Payments (other than cash) will be the fair market value, on the date of the Restricted Payment, of the Restricted Investment
proposed to be made or the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment, except that the fair market value of any non-cash dividend or distribution
paid within 60 days after the date of its declaration shall be determined as of such date. The fair market value of any Restricted
Investment, assets or securities that are required to be valued by this covenant will be determined, in the case of amounts under
$20 million, by an officer of the General Partner and, in the case of amounts over $20 million, by the Board of Directors of the
Company, whose determination shall be evidenced by a Board Resolution. Not later than the date of making any Restricted Payment
(excluding any Restricted Payment described in the preceding clause (2), (3), (4), (5),
(6) or (7)) the Company will deliver to the trustee an officers’ certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments”
covenant were computed.


 


Notwithstanding the
foregoing, clauses (a) through (d) of the first paragraph of this covenant and clauses (2), (4),
or (9) of the second paragraph of this covenant may not be used by any Issuer or Guarantor to make any Restricted
Payment to another Person (other than an Issuer or Guarantor) with, in the form of or in respect of the Permian Basin Properties
or Mortgaged Properties (or Equity Interests of any Person that owns any Permian Basin Properties or Mortgaged Property).


 


Incurrence of Indebtedness and Issuance
of Preferred Stock 


 


The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”)
any Indebtedness (including Acquired Debt); the Company will not, and will not permit any of its Restricted Subsidiaries to, issue
any Disqualified Stock; and the Company will not permit any of its Restricted Subsidiaries to issue any other preferred securities;
provided, however, that any Issuer and any Guarantor may incur unsecured Indebtedness (including Acquired Debt) or the Company
may issue Disqualified Stock, if, for the Company’s most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified
Stock or other preferred securities are issued, the Fixed Charge Coverage Ratio of the Company would have been at least 2.25 to
1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or Disqualified Stock o had been issued, as the case may be, at the beginning of such four-quarter period; provided,
however, any such Indebtedness in the form of Unsecured Notes shall (i) have a scheduled maturity date that is no earlier
than ninety-one (91) days after the Maturity Date and (ii) not have any amortization in excess of 1% per annum of the original
principal amount thereof.


 


The first paragraph
of this covenant will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of any Disqualified
Stock described in clause (13) below (collectively, “Permitted Debt”) or the issuance of
any preferred securities described in clause (11) below:


 


		(1)	the incurrence by any Issuer or Guarantor of Indebtedness
under Permitted Credit Facilities, subject to the Intercreditor Agreement;



 


		(2)	the incurrence by the Company or its Restricted Subsidiaries
of the Existing Indebtedness;



 


		(3)	the incurrence by the Issuers and the Guarantors of Indebtedness
represented by the notes and the related Subsidiary Guarantees issued on the date of the indenture;



 


		(4)	the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each
case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Company or such Restricted Subsidiary, including all Permitted Refinancing Indebtedness
incurred to extend, refinance, renew, replace, defease or refund any Indebtedness incurred pursuant to this clause (4),
provided that after giving effect to any such incurrence, the principal amount of all Indebtedness incurred pursuant to this clause
(4) and then outstanding does not exceed the greater of (a) $30 million or (b) .8% of the Company’s Adjusted Consolidated
Net Tangible Assets at such time;



 




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		(5)	the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to, extend, refinance,
renew, replace, defease or refund Indebtedness that was permitted by the indenture to be incurred under the first paragraph of
this covenant or clause (2) or (3) of this paragraph or this clause (5);



 


		(6)	the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however,
that:



 


		(a)	if an Issuer is the obligor on such Indebtedness and
an Issuer or a Guarantor is not the obligee, such Indebtedness must be expressly subordinated to the prior payment in full in
cash of all Obligations, or if a Guarantor is the obligor on such Indebtedness and neither any Issuer nor another Guarantor is
the obligee, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations; and



 


		(b)	(i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company
and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary
of the Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (6);



 


		(7)	the incurrence by the Company or any of its Restricted
Subsidiaries of obligations under Hedging Contracts;



 


		(8)	the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or any of its Restricted Subsidiaries that was permitted to be incurred by another
provision of this covenant;



 


		(9)	the incurrence by the Company or any of its Restricted
Subsidiaries of obligations relating to net Hydrocarbon balancing positions arising in the ordinary course of business and consistent
with past practice;



 


		(10)	the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of bid, performance, surety and similar bonds issued for the account of the Company and
any of its Restricted Subsidiaries in the ordinary course of business, including guarantees and obligations of the Company or
any of its Restricted Subsidiaries with respect to letters of credit supporting such obligations (in each case other than an obligation
for money borrowed);



 


		(11)	the issuance by any of the Company’s Restricted
Subsidiaries to the Company or to any of its Restricted Subsidiaries of any preferred securities; provided, however, that:



 


		(a)	any subsequent issuance or transfer of Equity Interests
that results in any such preferred securities being held by a Person other than the Company or a Restricted Subsidiary of the
Company; and



 


		(b)	any sale or other transfer of any such preferred securities
to a Person that is not either the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute
an issuance of such preferred securities by such Restricted Subsidiary that was not permitted by this clause (11);



 


		(12)	the incurrence by the Company or any of its Restricted
Subsidiaries of liability in respect of the Indebtedness of any Unrestricted Subsidiary of the Company or any Joint Venture but
only to the extent that such liability is the result of the Company’s or any such Restricted Subsidiary’s being a
general partner of such Unrestricted Subsidiary or Joint Venture and not as guarantor of such Indebtedness and provided that,
after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness incurred under this clause
(12) and then outstanding does not exceed $25 million;



 




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		(13)	Permitted Acquisition Indebtedness; and



 


		(14)	the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, provided that, after giving effect to any such incurrence, the aggregate principal amount
of all Indebtedness incurred under this clause (14) and then outstanding does not exceed the greater of (a) $60
million or (b) 1.6% of the Company’s Adjusted Consolidated Net Tangible Assets.



 


For purposes of determining
compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item
of Indebtedness (including Acquired Debt) meets the criteria of more than one of the categories of Permitted Debt described in
clauses (1) through (14) above, or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company will be permitted to classify (or later classify or reclassify in whole or in part in its sole discretion)
such item of Indebtedness in any manner that complies with this covenant; provided that any Indebtedness under any Permitted Credit
Facility on the date of the indenture shall be considered incurred under clause (1) of the definition of “Permitted
Debt” and may not later be reclassified.


 


The accrual of interest,
the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same
class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant, provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued.
Further, the accounting reclassification of any obligation of the Company or any of its Restricted Subsidiaries as Indebtedness
will not be deemed an incurrence of Indebtedness for purposes of this covenant.


 


Liens 


 


The Company will not
and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien of any kind (other than Permitted Liens) securing Indebtedness (including Attributable Debt) upon any of their
property or assets, now owned or hereafter acquired.


 


Restrictive Agreements


 


The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective
any consensual encumbrance or restriction on the ability of (a) any Issuer or Guarantor to create, incur, assume or suffer
to exist any Lien in favor of the Holders in respect of the notes and the Subsidiary Guarantees upon any of its property, assets
or revenues constituting Collateral as and to the extent contemplated by the Notes Documents or (b) any Restricted Subsidiary
to:


 


		(1)	pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted Subsidiaries, or pay any Indebtedness or other obligations owed to the Company
or any of its Restricted Subsidiaries;



 


		(2)	make loans or advances to the Company or any of its Restricted
Subsidiaries; or



 


		(3)	transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.



 


However, the preceding
restrictions will not apply to encumbrances or restrictions existing under or by reason of:


 


		(1)	agreements as in effect on the date of the indenture
and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of
those agreements or the Indebtedness to which they relate, provided that the amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such
dividend, distribution and other payment restrictions than those contained in those agreements on the date of the indenture, as
long as, in each case, no such agreement or amendment, modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing thereof would reasonably be expected to result in a material adverse effect on the Company and its Restricted Subsidiaries;



 




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		(2)	the Note Documents;



 


		(3)	applicable law;



 


		(4)	any instrument governing Indebtedness or Capital Stock
of a Person or other agreement acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness or Capital Stock or agreement was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was otherwise permitted by the terms of the indenture to be incurred;



 


		(5)	customary non-assignment provisions in Hydrocarbon purchase
and sale or exchange agreements or similar operational agreements or in licenses, easements or leases, in each case entered into
in the ordinary course of business and consistent with past practices;



 


		(6)	Capital Lease Obligations, mortgage financings or purchase
money obligations, in each case for property acquired in the ordinary course of business that impose restrictions on that property
of the nature described in clause (3) of the preceding paragraph;



 


		(7)	any agreement for the sale or other disposition of a
Restricted Subsidiary of the Company that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;



 


		(8)	Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a
whole, than those contained in the agreements governing the Indebtedness being refinanced;



 


		(9)	Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of the covenant described above under the caption “—Liens” that limit the right
of the debtor to dispose of the assets subject to such Liens;



 


		(10)	provisions with respect to the disposition or distribution
of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other agreements described
in the definition of “Permitted Business Investments,” entered into in the ordinary course of business;



 


		(11)	any agreement or instrument relating to any property
or assets acquired after the date of the indenture, so long as such encumbrance or restriction relates only to the property or
assets so acquired and is not and was not created in anticipation of such acquisitions;



 


		(12)	restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business;



 


		(13)	the issuance of preferred securities by a Restricted
Subsidiary of the Company or the payment of dividends thereon in accordance with the terms thereof; provided that issuance of
such preferred securities is permitted pursuant to the covenant described above under the caption “—Incurrence of
Indebtedness and Issuance of Preferred Stock” and the terms of such preferred securities do not expressly restrict the ability
of such Restricted Subsidiary to pay dividends or make any other distributions on its Capital Stock (other than requirements to
pay dividends or liquidation preferences on such preferred securities prior to paying any dividends or making any other distributions
on such other Capital Stock);



 


		(14)	with respect to any Foreign Subsidiary, any encumbrance
or restriction contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was incurred if
either (a) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial
covenant in such Indebtedness or agreement or (b) the Company determines that any such encumbrance or restriction will not
materially affect the Company’s ability to make principal or interest payments on the notes, as determined in good faith
by the Board of Directors of the Company, whose determination shall be conclusive;



 




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		(15)	arise pursuant to agreements entered into with respect
to any Asset Sale permitted or not prohibited by covenant under the caption “—Asset Sales” and applicable solely
to the assets under such Asset Sale;



 


		(16)	negative pledges and restrictions on Liens in favor of
any holder of Indebtedness permitted by the covenant under the caption “—Liens”, but solely to the extent any
negative pledge relates to the property financed by such Indebtedness; and



 


		(17)	any other agreement governing Indebtedness of any Issuer
or Guarantor that is permitted to be incurred by the covenant described under “—Incurrence of Indebtedness and Issuance
of Preferred Stock”; provided, however, that such encumbrances or restrictions are not materially more restrictive,
taken as a whole, than those contained in the indenture or the Credit Agreement as it exists on the date of the indenture.



 


Merger, Consolidation or Sale of Assets



 


None of the Issuers
may, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not such Issuer is the survivor);
or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person, unless:


 


		(1)	either: (a) such Issuer is the survivor; or (b) the
Person formed by or surviving any such consolidation or merger (if other than such Issuer) or to which such sale, assignment,
transfer, lease, conveyance or other disposition has been made is a Person organized or existing under the laws of the United
States, any state of the United States or the District of Columbia; provided, however, that Finance Corp. may not consolidate
or merge with or into any Person other than a corporation satisfying such requirement; provided, however, the Company shall
not convert (by merger, sale, contribution or exchange of assets or otherwise) into a corporation;



 


		(2)	the Person formed by or surviving any such consolidation
or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition
has been made assumes all the obligations of such Issuer under the notes and the other Note Documents to which such Issuer is
a party, as applicable, and all other Issuers and Guarantors confirm and reaffirm all their obligations under the notes and other
Note Documents to which such Issuer or Guarantor is a party pursuant to a supplemental indenture;



 


		(3)	immediately after such transaction no Default or Event
of Default exists;



 


		(4)	(a)          the
Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition has been made will, on the date of such transaction after giving
pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness
and Issuance of Preferred Stock”; or



 


		(b)	immediately after giving effect to such transaction and
any related financing transactions on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter
period, the Fixed Charge Coverage Ratio of the Company (or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made),
will be equal to or greater than the Fixed Charge Coverage Ratio of the Company immediately before such transactions;



 




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		(5)	any Collateral owned by or transferred to the Person
formed by or surviving any such consolidation or merger (if other than such Issuer) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition has been made continues to constitute Collateral under the Note Documents, subject
to the Collateral Requirements;



 


		(6)	the property and assets of the Person which is consolidated
or merged with or into such Issuer, to the extent that they are property or assets of the types which would constitute Collateral
under the security documents, shall be treated as after-acquired property and such Issuer shall take such action (or agree to
take such action) as may be reasonably necessary to cause such property and assets to be made subject to the perfected Liens,
in the manner and to the extent required under the Note Documents;



 


		(7)	the Person formed by or surviving any such consolidation
or merger (if other than such Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition has
been made is engaged in the Oil and Gas Business, except to the extent permitted by the covenant, under the caption “—Business
Activities”; and



 


		(8)	such Issuer has delivered to the trustee an officers’
certificate and an opinion of counsel, each stating that such consolidation, merger or disposition and such supplemental indenture
and other Note Documents (if any) comply with the indenture and Note Documents.



 


Notwithstanding the
restrictions described in the foregoing clause (4), any Restricted Subsidiary (other than the Operating Partnership
or Finance Corp.) may consolidate with, merge into or dispose of all or part of its properties and assets to the Company without
complying with the preceding clause (4) in connection with any such consolidation, merger or disposition.


 


Notwithstanding the
second preceding paragraph, the Company is permitted to reorganize as any other form of entity in accordance with the following
procedures provided that:


 


		(1)	the reorganization involves the conversion (by merger,
sale, contribution or exchange of assets or otherwise) of the Company into a form of entity other than a limited partnership formed
under Delaware law; provided, however, the Company shall not convert (by merger, sale, contribution or exchange of assets
or otherwise) into a corporation;



 


		(2)	the entity so formed by or resulting from such reorganization
is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia;



 


		(3)	the entity so formed by or resulting from such reorganization
assumes all the obligations of the Company under the notes and other Note Documents pursuant to agreements reasonably satisfactory
to the trustee and the collateral agent, as applicable, and all other Issuers and Guarantors confirm and reaffirm all their obligations
under the notes and other Note Documents to which such Issuer or Guarantor is a party pursuant to agreements reasonably satisfactory
to the trustee and the collateral agent, as applicable;



 


		(4)	any Collateral owned by or transferred to the Person
formed by or surviving any such consolidation or merger (if other than such Issuer) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition has been made continues to constitute Collateral under the Note Documents, subject
to the Collateral Requirements;



 


		(5)	immediately after such reorganization no Default or Event
of Default exists; and



 


		(6)	such reorganization is not materially adverse to the
Holders or Beneficial Owners of the notes (for purposes of this clause (6) a reorganization will not be considered
materially adverse to the Holders or Beneficial Owners of the notes solely because the successor or survivor of such reorganization
(a) is subject to federal or state income taxation as an entity or (b) is considered to be an “includible corporation”
of an affiliated group of corporations within the meaning of Section 1504(b) of the Code or any similar state or local law);



 




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For the avoidance
of doubt, the transactions described under “Merger, Consolidation or Sale of Assets” will be subject to the prior notice
requirements set forth in the security documentation and Note Documents (if any).


 


Although there is
a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition
of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a
particular transaction would involve “all or substantially all” of the properties or assets of a Person.


 


Transactions with Affiliates 


 


The Company will not,
and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an “Affiliate
Transaction”), unless:


 


		(1)	the Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary (or, in a transaction between an Issuer or Guarantor, on the one
hand, and a Restricted Subsidiary that is not an Issuer or Guarantor, on the other hand, to such Issuer or Guarantor) than those
that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person;
and



 


		(2)	the Company delivers to the trustee, with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20 million,
a resolution of the Board of Directors of the Company set forth in an officers’ certificate certifying that such Affiliate
Transaction or series of Affiliate Transactions complies with this covenant and that such Affiliate Transaction or series of related
Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of the Company.



 


The following items
will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:


 


		(1)	any employment, equity award, equity option or equity
appreciation agreement or plan entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;



 


		(2)	transactions between or among any of the Issuers and
Guarantors;



 


		(3)	transactions by and among the Company and any of its
Restricted Subsidiaries, on the one hand, and the Holders of the notes as of the Issue Date and their Affiliates, on the other
hand;



 


		(4)	transactions effected in accordance with the terms of
agreements that are identified in the indenture, in each case as such agreements are in effect on the date of the indenture, and
any amendment or replacement of any of such agreements so long as such amendment or replacement agreement is no less advantageous
to the Company in any material respect than the agreement so amended or replaced;



 


		(5)	customary compensation, indemnification and other benefits
made available to officers, directors or employees of the Company or a Restricted Subsidiary or Affiliate of the Company, including
reimbursement or advancement of out-of-pocket expenses and provisions of officers’ and directors’ liability insurance;



 


		(6)	sales of Equity Interests (other than Disqualified Stock)
to, or receipt of capital contributions from, Affiliates of the Company;



 


		(7)	Permitted Investments (other than Permitted Investments
under clause (7) or (8) of the definition thereof) or Restricted Payments that are permitted by the
provisions of the indenture described above under the caption “—Restricted Payments”;



 


		(8)	in the case of contracts for buying and selling Hydrocarbons
or other operational contracts, any such contracts are entered into in the ordinary course of business on terms substantially
similar to those contained in similar contracts entered into by the Company or any of its Restricted Subsidiaries and unrelated
third parties; and



 




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		(9)	transactions between or among any of the Issuers and
Guarantors, on the one hand, and any Restricted Subsidiary that is not an Issuer or Guarantor, on the other hand; provided,
that (a) such transaction is for the provision of goods, sales or services in the nature of overhead at no less than
cost in the ordinary course of business or (b) the aggregate consideration paid for all such transactions not otherwise covered
by clause (a) does not exceed $10 million in any fiscal year.



 


Designation of Restricted and Unrestricted
Subsidiaries


 


As long as no Default
(other than a Reporting Default) or Event of Default has occurred and is continuing, the Board of Directors of the Company may
designate any newly-formed Subsidiary of the Company or any Subsidiary of the Company acquired after the date of the indenture
pursuant to an Acquisition permitted under the provisions governing Restricted Payments and Permitted Investments to be an Unrestricted
Subsidiary if, in either case, that designation would not cause a Default. Any such designation shall be made on or promptly after
the date such Subsidiary becomes a Subsidiary of the Company (and, in any case, within 30 days of the formation or acquisition
thereof). If a Restricted Subsidiary of the Company is designated as an Unrestricted Subsidiary, the aggregate fair market value
of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated as an
Unrestricted Subsidiary will be deemed to be either an Investment made as of the time of the designation that will reduce the amount
available for Restricted Payments under the first paragraph of the covenant described above under the caption “Restricted
Payments” or represent (and will reduce the amount available for) Permitted Investments under clause (10) of
the definition thereof as determined by the Company. That designation will only be permitted if the Investment would be permitted
at that time and if the Subsidiary so designated otherwise meets the definition of an Unrestricted Subsidiary.


 


The Board of Directors
of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary, provided that such designation
will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant
described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on
a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (2) no Default
or Event of Default would be in existence following such designation.


 


Additional Subsidiary Guarantees 


 


If, after the date
of the indenture, any Restricted Subsidiary of the Company that is not already a Guarantor or an Issuer guarantees (or is a co-borrower,
co-issuer or co-direct obligor of) any other Indebtedness of any Issuer or Guarantor, then in either case that Subsidiary will
become a Guarantor by executing a supplemental indenture and delivering it to the trustee within 10 Business Days of the date on
which it guaranteed or incurred such Indebtedness, as the case may be; provided, however, that the preceding shall not apply
to Subsidiaries of the Company that have properly been designated as Unrestricted Subsidiaries in accordance with the indenture
for so long as they continue to constitute Unrestricted Subsidiaries.


 


In the event (a) the
Priority Lien Debt is paid-off or otherwise discharged or the guaranty-related provisions thereunder are otherwise made materially
less restrictive on the Issuers and Guarantors than the Priority Lien Documents as in effect on the date of the indenture, the
indenture shall provide for customary guaranty-related provisions substantially consistent with those in effect under the Priority
Lien Debt on the date of the indenture or (b) the Priority Lien Collateral Agent or holders of the Priority Lien Debt fail
to require, fail to take any action to obtain or otherwise waive the right to receive a guaranty from a Restricted Subsidiary to
the extent such guaranty would be required (or could be required upon reasonable request or otherwise) under the Priority Lien
Documentation as in effect on the Issue Date, the collateral trustee, at the request of the Majority Holders, or the Majority Holders,
will have the right to require the Issuers and Guarantors to take reasonable actions to cause such Restricted Subsidiary to execute
a supplemental indenture (if any) within 60 days of the date of such request (or such later date as the Majority Holders may reasonably
determine).


 




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Business Activities 


 


The Company will not,
and will not permit any Restricted Subsidiary (including the Operating Partnership) to, engage in any business other than the Oil
and Gas Business, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.


 


Finance Corp. may
not incur Indebtedness unless (1) the Company is a co-obligor or guarantor of such Indebtedness or (2) the net proceeds
of such Indebtedness are loaned to the Company, used to acquire outstanding debt securities issued by the Company or used to repay
Indebtedness of the Company as permitted under the covenant described about under the caption “—Incurrence of Indebtedness
and Issuance of Preferred Stock.” Finance Corp. may not engage in any business not related directly or indirectly to obtaining
money or arranging financing for the Company or its Restricted Subsidiaries.


 


Anti-Layering


 


No Issuer or Guarantor
will incur or suffer to exist any (i) Indebtedness (including Indebtedness that is otherwise permitted hereunder) that is
contractually subordinated in right of payment to any other Indebtedness of such Issuer or Guarantor unless such Indebtedness is
also contractually subordinated in right of payment to the notes and the Subsidiary Guarantees on substantially identical terms
or (ii) Indebtedness that is secured by Liens that are contractually subordinated or junior to other Liens securing such Indebtedness
(or contractually subordinated or junior to Liens securing other Indebtedness) of any Issuer, or Guarantor unless such Liens are
also contractually subordinated or junior to the Liens securing the notes and the Subsidiary Guarantees on substantially identical
terms.


 


Reports


 


Whether or not required
by the Commission, so long as any notes are outstanding, the Company will file with the Commission for public availability within
the time periods specified in the Commission’s rules and regulations (unless the Commission will not accept such a filing),
and the Company will furnish to the trustee and, upon its prior request, to any of the Holders or Beneficial Owners of notes, within
five Business Days of filing, or attempting to file, the same with the Commission:


 


		(1)	all quarterly and annual financial and other information
with respect to the Company and its Subsidiaries that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual
financial statements by the Company’s certified independent accountants; and



 


		(2)	all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such reports.



 


The availability of
the foregoing information or reports on the SEC’s website will be deemed to satisfy the foregoing delivery requirements.


 


If the Company has
designated any of its Subsidiaries as Unrestricted Subsidiaries, then, to the extent material, the quarterly and annual financial
information required by the preceding paragraph will include a reasonably detailed presentation, either on the face of the financial
statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries of the Company.


 


In addition, the Company
and the Guarantors have agreed that, for so long as any notes remain outstanding, they will furnish to the Holders and Beneficial
Owners of the notes and to securities analysts and prospective investors in the notes, upon their request the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.


 




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Corporate Existence 


 


Subject to “—Subsidiary
Guarantees” and “—Merger, Consolidation or Sale of Assets”, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect:


 


		(1)	its limited partnership, limited liability company or
corporate existence, and the corporate, partnership or other existence of each of the Restricted Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary;
and



 


		(2)	the rights (charter and statutory), licenses and franchises
of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries (other than
the existence of the Issuers), if the Company shall determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the notes.



 


Insurance


 


The Company will,
and will cause each Restricted Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as is customarily maintained by companies engaged in the same or similar businesses operating
in the same or similar locations. Subject to the Intercreditor Agreement, the Company shall cause the lender loss payable, mortgagee
or additional insured clauses or provisions in said insurance policy or policies, insuring any of the Collateral or providing for
general liability insurance (and any other policies with respect to which the Priority Lien Agent has received or will receive
an endorsement or “lender loss payee”, “mortgagee” or “additional insured” status), as applicable,
to be endorsed in favor of the collateral agent as its interests may appear and such policies shall name the collateral agent as
a “lender loss payee”, “mortgagee” or “additional insured” and provide that the insurer will
endeavor to give at least 30 days prior notice of any cancellation to the collateral agent (or 10 days prior notice of any cancellation
in the event of non-payment). Such insurance policies or endorsements thereto will provide, and the Company and each of its Restricted
Subsidiaries will agree in the indenture, that the insurer will waive any right of subrogation against the collateral agent, the
trustee and each Holder of the notes.


 


Amendments to Priority Lien Debt 


 


The Issuers and Guarantors
shall not amend, waive, modify or supplement and shall not consent to any amendment, waiver, modification or supplement to the
Priority Lien Debt if the effect thereof would be to (i) prohibit or restrict any payment of principal, interest or otherwise
with respect to the Obligations in a manner that is more restrictive than as of the Issue Date, (ii) subordinate in right
of payment any Priority Lien Debt to any other Indebtedness or subordinate the Liens securing Priority Lien Debt to any other Lien
or (iii) add any restrictions on amendments, waivers, modifications or supplements to the Note Documents that are materially more
restrictive than the restrictions set forth in the Credit Agreement as in effect on the date of the indenture.


 


Events of Default and Remedies 


 


Each of the following
is an Event of Default:


 


		(1)	default for 5 Business Days in the payment when due of
interest on the notes;



 


		(2)	default in payment when due of the principal of, or premium
(including the Make-Whole Amount or Prepayment Premium), if any, on the notes;



 


		(3)	failure by the Company to comply with the provisions
described under the captions “—Repurchase at the Option of Holders—Invalid Debt Incurrence,” “—Repurchase
at the Option of Holders—Asset Sales,” “—Repurchase at the Option of Holders—Change of Control”
or “—Certain Covenants—Merger, Consolidation or Sale of Assets”;



 




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		(4)	failure by the Company for 120 days after notice to comply
with the provisions described under “—Certain Covenants—Reports” (provided that if beginning on
the 61st day the Company is not in compliance with such covenant, additional interest at a rate of 0.25% per annum
shall accrue and be payable (in the same manner and at the same time as regular interest payments));



 


		(5)	any representation or warranty by the Company or any
of its Restricted Subsidiaries made in any Note Document, or which is contained in any certificate furnished at any time under
any Note Document, is incorrect in any material respect on or as of the date made or deemed made;



 


		(6)	failure by the Company or any Guarantor for 30 days after
the earlier of (i) knowledge by an executive officer of the Company or any Restricted Subsidiary or (ii) receipt of
notice by the trustee or holders of 50.1% of the principal amount of notes to comply with any of its other agreements in the indenture
or any other Note Document;



 


		(7)	default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date of the indenture, if that default:



 


		(a)	is caused by a failure to make any payment on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness (a “Payment Default”); or



 


		(b)	results in the acceleration of such Indebtedness prior
to its Stated Maturity,



 


and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $40 million or more; provided, however, that
if any such Payment Default is cured or waived or any such acceleration rescinded, or such indebtedness is repaid, within a period
of 30 days from the continuation of such Payment Default beyond the applicable grace period or the occurrence of such acceleration,
as the case may be, such Event of Default and any consequential acceleration of the notes shall be automatically rescinded, so
long as such rescission does not conflict with any judgment or decree; provided, further, in the event any Permitted Refinancing
Indebtedness with respect to the Unsecured Notes outstanding as of the Issue Date has terms that are materially more burdensome
or restrictive on the Issuers and Guarantors, taken as a whole, than those in the Unsecured Notes being extended, refinanced, renewed
or replaced (it being agreed that the existence of a financial maintenance covenant in any such Permitted Refinancing Indebtedness
will constitute terms that are materially more burdensome or restrictive on the Issuers and Guarantors, taken as a whole, than
those in the Unsecured Notes being extended, refinanced, renewed or replaced), then the occurrence of any default under any indenture
or instrument under which such Permitted Refinancing Indebtedness may be issued or evidenced which gives the agent, trustee, collateral
agent or any holder or holders thereunder the right to accelerate will constitute an Event of Default under the indenture;


 


		(8)	failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $40 million (to the extent not covered by insurance by a reputable and creditworthy
insurer as to which the insurer has not disclaimed coverage), which judgments are not paid, discharged or stayed for a period
of 60 days;



 


		(9)	except as permitted by the indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under
its Subsidiary Guarantee;



 


		(10)	the occurrence of any of the following:



 




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		(a)	except as permitted by the Note Documents, any security
document establishing the Parity Liens ceases for any reason to be enforceable; provided that it will not be an Event of
Default under this clause (10)(a) if the sole result of the failure of one or more security documents to be fully
enforceable is that any Lien purported to be granted under such security documents on any Collateral, individually or in the aggregate,
having a Fair Market Value of not more than $10 million, ceases to be an enforceable and perfected Second-Priority Lien, subject
only to Permitted Liens; provided further that if such failure is susceptible to cure, no Event of Default shall arise
with respect thereto until 30 days after any officer of the General Partner, the Company or any Restricted Subsidiary becomes
aware of such failure (including by notice thereof sent by trustee, collateral agent or any Holder), which failure has not been
cured during such time period;



 


		(b)	except as permitted by the Note Documents, any Parity
Liens purported to be granted under any security document on Collateral, individually or in the aggregate, having a Fair Market
Value in excess of $10 million, ceases to be an enforceable and perfected Second-Priority Lien, subject only to Permitted Liens;
provided that if such failure is susceptible to cure, no Event of Default shall arise with respect thereto until 30 days
after any officer of the General Partner, the Company or any Restricted Subsidiary becomes aware of such failure (including by
notice thereof sent by trustee, collateral agent or any Holder), which failure has not been cured during such time period;



 


		(c)	any Issuer or any Guarantor, or any Person acting on
behalf of any of them, denies or disaffirms, in writing, any obligation of any Issuer or any Guarantor set forth in or arising
under any Security Document establishing Parity Liens;



 


		(d)	Any other Note Document is partially or wholly revoked
or invalidated, or otherwise ceases to be in full force and effect other than in accordance with its terms or the terms of the
indenture, or a Guarantor or any other Person on behalf of a Guarantor contests in any manner the validity or enforceability thereof
or any Issuer or Guarantor denies that it has any further liability or obligation thereunder or purports to revoke, terminate
or rescind any such Note Document; or



 


		(11)	certain events of bankruptcy, insolvency or reorganization
described in the indenture with respect to the Operating Partnership, Finance Corp., the Company or any of the Company’s
Restricted Subsidiaries that is a Significant Subsidiary or any group of its Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary of the Company.



 


In the case of an
Event of Default arising from certain events of bankruptcy, insolvency or reorganization, with respect to the Operating Partnership,
Finance Corp., the Company, any Restricted Subsidiary of the Company that is a Significant Subsidiary or any group of its Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary of the Company, all outstanding notes and Obligations,
including accrued and unpaid interest thereon and the Make-Whole Amount or Prepayment Premium, if applicable. If the maturity of
the notes is accelerated (under any provision of this “Events of Default and Remedies” or otherwise) a premium equal
to the Make-Whole Amount or Prepayment Premium (in each case, determined as if the notes were redeemed at the time of such acceleration
at the option of the Issuers pursuant to the terms of “Optional Redemptions” hereunder) will, if applicable, become
due and payable immediately without further action or notice, and the Issuers will pay such premium, as compensation to the Holders
for the loss of their investment opportunity and not as a penalty, whether or not an Insolvency Proceeding has commenced, and (if
an Insolvency Proceeding has commenced) without regard to whether such Insolvency Proceeding is voluntary or involuntary, or whether
payment occurs pursuant to a motion, plan of reorganization, or otherwise, and without regard to whether the notes and other Obligations
are satisfied or released by foreclosure (whether or not by power of judicial proceeding), deed in lieu of foreclosure or by any
other means. Without limiting the foregoing, any redemption of the notes in or in connection with an Insolvency Proceeding shall
constitute an optional redemption thereof under the terms of “Optional Redemptions” and, if applicable, require the
immediate payment of the Make-Whole Amount and Prepayment Premium.


 


If any other Event
of Default occurs and is continuing, the trustee or the Holders of at least 50.1% in principal amount of the then outstanding notes
may declare all the notes and Obligations, including accrued and unpaid interest thereon and the Make-Whole Amount and/or Prepayment
Premium, as applicable, to be due and payable immediately (and such amounts shall become immediately due and payable).


 




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Holders of the notes
may not enforce the indenture, the notes or any other Note Documents except as provided in the indenture and the Note Documents.
Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the collateral
agent or trustee in its exercise of any trust or power, including any powers arising under the indenture and any other Note Document.
The trustee may withhold notice of any continuing Default or Event of Default from Holders of the notes (other than any Holder
or affiliated Holders holding notes in an amount equal to or in excess of 50.1% of the principal amount of the Notes) if it determines
that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal of, or
interest or premium, if any, on, the notes.


 


The Holders of a majority
in principal amount of the notes then outstanding by notice to the trustee may on behalf of the Holders of all of the notes waive
any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default
in the payment of principal of, or interest or premium (including the Make-Whole Amount and Prepayment Premium), if any, on, the
notes.


 


The Issuers will be
required to deliver prompt notice to the trustee and collateral agent upon an executive officer’s knowledge of any Default
or Event of Default hereunder (and, in any case, no later than five Business Days after notice thereof), which notice shall specify
such Default or Event of Default. The Issuers will be required to deliver to the trustee annually a statement regarding compliance
with the indenture.


 


No Personal Liability of Directors, Officers,
Employees and Unitholders 


 


No director, officer,
partner, employee, incorporator, manager or unitholder or other owner of Capital Stock of the Issuers or any Guarantor, as such,
will have any liability for any obligations of the Issuers or any Guarantor under the notes, the indenture, any other Note Document
or the Subsidiary Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration
for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.


 


Legal Defeasance and Covenant Defeasance



 


The Issuers may, at
their option and at any time, elect to have all of their obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Subsidiary Guarantees (“Legal Defeasance”), except
for:


 


		(1)	the rights of Holders of outstanding notes to receive
payments in respect of the principal of, and interest or premium, if any, on, such notes when such payments are due from the trust
referred to below;



 


		(2)	the Issuers’ obligations with respect to the notes
concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an
office or agency for payment and money for security payments held in trust;



 


		(3)	the rights, powers, trusts, duties and immunities of
the trustee, and the Issuers’ obligations in connection therewith; and



 


		(4)	the Legal Defeasance provisions of the indenture.



 


In addition, the Issuers
may, at their option and at any time, elect to have their obligations released with respect to certain covenants that are described
in the indenture and the other Note Documents (“Covenant Defeasance”) and thereafter any omission to
comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy, insolvency or reorganization events) described under
“—Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes. If
the Issuers exercise either their Legal Defeasance or Covenant Defeasance option, each Guarantor will be released and relieved
of any obligations under its Subsidiary Guarantee and all Collateral (other than the trust) will be released.


 


In order to exercise
either Legal Defeasance or Covenant Defeasance:


 




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		(5)	the Issuers must irrevocably deposit with the trustee,
in trust, for the benefit of the Holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination
of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of, and interest and premium, if any, on, the outstanding
notes on the date of fixed maturity or on the applicable redemption date, as the case may be, and the Issuers must specify whether
the notes are being defeased to the date of fixed maturity or to a particular redemption date;



 


		(6)	in the case of Legal Defeasance, the Issuers must deliver
to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that:



 


		(a)	the Issuers have received from, or there has been published
by, the Internal Revenue Service a ruling; or



 


		(b)	since the date of the indenture, there has been a change
in the applicable federal income tax law,



 


in either case to the effect
that, and based thereon such opinion of counsel will confirm that, the Holders of the outstanding notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;


 


		(7)	in the case of Covenant Defeasance, the Issuers must
deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the Holders of the outstanding
notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;



 


		(8)	no Default or Event of Default has occurred and is continuing
on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such
deposit (and any similar concurrent deposit relating to other Indebtedness) and the granting of Liens to secure such borrowings);



 


		(9)	such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the indenture
and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;



 


		(10)	the Issuers must deliver to the trustee an officers’
certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders of notes over the other
creditors of the Issuers with the intent of defeating, hindering, delaying or defrauding creditors of the Issuers or others; and



 


		(11)	the Issuers must deliver to the trustee an officers’
certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.



 


Amendment, Supplement and Waiver 


 


Except as provided
in the next three succeeding paragraphs, the Note Documents may be amended or supplemented with the consent of the Holders of a
majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the
Note Documents may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including,
without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).


 




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Without the consent
of each Holder affected, an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting Holder):


 


		(1)	reduce the principal amount of notes whose Holders must
consent to an amendment, supplement or waiver;



 


		(2)	reduce the principal of or change the fixed maturity
of any note or alter the provisions with respect to the redemption or repurchase of the notes (other than provisions relating
to minimum required notice of optional redemption or those provisions relating to the covenants described above under the caption
“—Repurchase at the Option of Holders”);



 


		(3)	reduce the rate of or change the time for payment of
interest on any note;



 


		(4)	waive a Default or Event of Default in the payment of
principal of, or interest or premium, if any, on the notes (except a rescission of acceleration of the notes by the Holders of
a majority in principal amount of the notes and a waiver of the payment default that resulted from such acceleration);



 


		(5)	make any note payable in currency other than that stated
in the notes;



 


		(6)	make any change in the provisions of the indenture relating
to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium, if
any, on the notes (other than as permitted in clause (7) below);



 


		(7)	waive a redemption or repurchase payment with respect
to any note (other than a payment required by one of the covenants described above under the caption “—Repurchase
at the Option of Holders”);



 


		(8)	release any Guarantor from any of its obligations under
its Subsidiary Guarantee or the indenture, except in accordance with the terms of “Subsidiary Guarantees” as set forth
in the indenture, or amend any provision or term of “Subsidiary Guarantees” as set forth in the indenture affecting
the release of any Guarantor from any of its obligations under its Subsidiary Guarantee or the indenture; or



 


		(9)	make any change in the preceding amendment, supplement
and waiver provisions or the other provisions of this “Amendment, Supplement and Waiver”.



 


In addition, any amendment
or supplement to, or waiver of, the provisions of the indenture or any Note Document establishing the Parity Liens that has the
effect of releasing or subordinating all or substantially all of the Collateral from the Liens securing the notes will require
the consent of Holders of at least 50.1% in aggregate principal amount of the notes then outstanding.


 


Notwithstanding the
preceding, without the consent of any Holder of notes, the Issuers, the Guarantors, the trustee and the collateral agent may amend
or supplement any of the Note Documents:


 


		(1)	to cure any ambiguity, defect or inconsistency;



 


		(2)	to provide for uncertificated notes in addition to or
in place of certificated notes;



 


		(3)	to provide for the assumption of an Issuer’s or
Guarantor’s obligations to Holders of notes in the case of a merger or consolidation or sale of all or substantially all
of such Issuer’s or Guarantor’s properties or assets permitted under the indenture;



 


		(4)	to make any change that would provide any additional
rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the Note Documents of any
such Holder;



 


		(5)	with respect to the security documents establishing Parity
Liens, as provided in the Intercreditor Agreement;



 


		(6)	to provide for the issuance of additional notes in accordance
with the limitations set forth in the indenture;



 




    	30



    	 



    

 


		(7)	to add any additional Guarantor or Collateral or to evidence
the release of any Guarantor from its Subsidiary Guarantee or the release of any Liens, in each case as provided in the indenture
or the other Note Documents, as applicable;



 


		(8)	to make, complete or confirm any grant of Collateral
permitted or required by the indenture or any of the security documents establishing Parity Liens;



 


		(9)	to comply with requirements of the Commission in order
to effect or maintain the qualification of the indenture under the Trust Indenture Act; or



 


		(10)	to evidence or provide for the acceptance of appointment
under the indenture of a successor trustee.



 


In addition, the trustee and collateral
agent, as applicable, may enter into additional intercreditor and subordination agreements or amend, supplement or waive the Intercreditor
Agreement or any such additional intercreditor or subordination agreements with the consent of Holders of 50% of the principal
amount of the notes; provided, however, the trustee and collateral agent, as applicable, may, without the consent of any Holder,
execute or countersign joinders and other acknowledgements in connection with the Intercreditor Agreement to give effect to the
joinder of any Priority Lien Debt to the Intercreditor Agreement in accordance with the terms of the Intercreditor Agreement and
to the extent permitted under the indenture.


 


Satisfaction and Discharge 


 


The indenture and
the other Note Documents will be discharged and will cease to be of further effect as to all notes issued thereunder (except as
to surviving rights of registration of transfer or exchange of the notes and as otherwise specified in the indenture), when:


 


		(1)	either:



 


		(a)	all notes that have been authenticated, except lost,
stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter
repaid to the Issuers, have been delivered to the trustee for cancellation; or



 


		(b)	all notes that have not been delivered to the trustee
for cancellation have become due and payable or will become due and payable within one year by reason of the giving of a notice
of redemption or otherwise and the Issuers or any Guarantor has irrevocably deposited or caused to be deposited with the trustee
as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration
of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation
for principal, premium, if any, and accrued interest to the date of fixed maturity or redemption;



 


		(2)	in respect of clause (1)(b) above, no Default
or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit (other
than a Default or Event of Default resulting from the borrowing or securing of funds to be applied to such deposit) and the deposit
will not result in a breach or violation of, or constitute a default under, any other material agreement or instrument (other
than the agreements or instruments governing any other Indebtedness being defeased, discharged or replaced) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;



 


		(3)	the Issuers or any Guarantor has paid or caused to be
paid all sums payable by it under the indenture; and



 


		(4)	the Issuers have delivered irrevocable instructions to
the trustee to apply the deposited money toward the payment of the notes at fixed maturity or the redemption date, as the case
may be.



 


In addition, the Issuers
must deliver an officers’ certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.


 




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Concerning the Trustee 


 


The trustee under
the indenture, U.S. Bank National Association, also serves as trustee under the indenture for the 2020 Senior Notes and the 2022
Senior Notes and is a lender under our bank credit facility.


 


If the trustee becomes
a creditor of an Issuer or any Guarantor, the indenture will limit its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or otherwise. The trustee may engage in other transactions;
however, if it acquires any conflicting interest (as defined in the Trust Indenture Act) after a Default has occurred and is continuing,
it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as trustee or resign.


 


The Holders of a majority
in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the trustee, subject to certain exceptions. If an Event of Default occurs and is continuing,
the trustee will be required, in the exercise of its powers, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any Holder of notes, unless such Holder has offered to the trustee security or indemnity satisfactory
to it against any loss, liability or expense.


 


The indenture will
provide that the trustee can be replaced and a new trustee appointed at the direction of the Majority Holders without the consent
of any Issuer or Guarantor.


 


Governing Law 


 


The indenture, the
notes, the Subsidiary Guarantees and the Intercreditor Agreement will be governed by, and construed in accordance with, the laws
of the State of New York.


 


Book-Entry, Delivery and Form 


 


The notes are being
offered and sold to qualified institutional buyers (“QIBs”) in reliance on Rule 144A (“Rule 144A Notes”).
Notes also may be offered and sold in offshore transactions in reliance on Regulation S (“Regulation S Notes”). Except
as set forth below, notes will be issued in registered, global form. Notes will be issued at the closing of this offering only
against payment in immediately available funds.


 


Rule 144A Notes initially
will be represented by one or more permanent global notes in registered form without interest coupons (collectively, the “Rule
144A Global Notes”). Regulation S Notes initially will be represented by one or more permanent global notes in registered
form without interest coupons (collectively, the “Regulation S Global Notes”). The Rule 144A Global Notes and the Regulation
S Global Notes are collectively referred to herein as the “Global Notes.”


 


The Global Notes will
be deposited upon issuance with the trustee as custodian for The Depository Trust Company (“DTC”), , and registered
in the name of DTC’s nominee, Cede & Co., in each case for credit to an account of a direct or indirect participant in
DTC as described below. Beneficial interests in the Global Notes may be held through the Euroclear System (“Euroclear”)
and the Clearstream System(“Clearstream”) (as indirect participants in DTC). Beneficial interests in the Rule 144A
Global Notes may not be exchanged for beneficial interests in the Regulation S Global Notes or vice versa at any time except in
the limited circumstances described below. See “—Exchanges Between Regulation S Notes and Rule 144A Notes.”


 


The Global Notes may
be transferred, in whole but not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests
in the Global Notes may not be exchanged for notes in registered, certificated form (“Certificated Notes”) except in
the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.”


 


Global Notes (including
beneficial interests in the Global Notes) will be subject to certain restrictions on transfer and will bear a restrictive legend
as described under “Transfer Restrictions.” In addition, transfers of beneficial interests in the Global Notes will
be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those
of Euroclear and Clearstream), which may change from time to time.


 




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Depository Procedures 


 


The following description
of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations
and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no
responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss
these matters.


 


DTC has advised us
that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “Participants”)
and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry
changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers),
banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to
other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership
interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of
the Participants and Indirect Participants.


 


DTC has also advised
us that, pursuant to procedures established by it:


 


		(1)	upon deposit of the Global Notes, DTC will credit the
accounts of Participants designated by the initial purchasers with portions of the principal amount of the Global Notes; and



 


		(2)	ownership of these interests in the Global Notes will
be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests
in the Global Notes).



 


Investors in the Global
Notes who are Participants in DTC’s system may hold their interests therein directly through DTC. Investors in the Global
Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream)
which are Participants in such system. Euroclear and Clearstream may hold interests in the Global Notes on behalf of their participants
through customers’ securities accounts in their respective names on the books of their depositories, which are Euroclear
Bank S.A./N.V, as operator of Euroclear, and Clearstream Banking, S.A., as operator of Clearstream. All interests in a Global Note,
including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests
held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.


 


The laws of some jurisdictions
may require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability
to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf
of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a
Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect
of such interests, may be affected by the lack of a physical certificate evidencing such interests.


 


Except as described
below, owners of beneficial interests in the Global Notes will not have notes registered in their names, will not receive physical
delivery of Certificated Notes and will not be considered the registered owners or “Holders” thereof under the indenture
for any purpose.


 


Payments in respect
of the principal of, and interest and premium, if any, on, a Global Note registered in the name of DTC or its nominee will be payable
to DTC in its capacity as the registered Holder under the indenture. Under the terms of the indenture, the Issuers, the Guarantors
and the trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners of the
notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuers, the Guarantors, the
trustee nor any agent of an Issuer or the trustee has or will have any responsibility or liability for:


 




    	33



    	 



    

 


		(1)	any aspect of DTC’s records or any Participant’s
or Indirect Participant’s records relating to or payments made on account of beneficial ownership interests in the Global
Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s
records relating to the beneficial ownership interests in the Global Notes; or



 


		(2)	any other matter relating to the actions and practices
of DTC or any of its Participants or Indirect Participants.



 


DTC has advised us
that its current practice, at the due date of any payment in respect of securities such as the notes, is to credit the accounts
of the relevant Participants with the payment due on the payment date unless DTC has reason to believe it will not receive payment
on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest
in the principal amount of the notes as shown on the records of DTC. Payments by the Participants and the Indirect Participants
to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or the Issuers. Neither
the Issuers nor the trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners
of the notes, and the Issuers and the trustee may conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.


 


Subject to the transfer
restrictions set forth under “Transfer Restrictions,” transfers between Participants in DTC will be effected in accordance
with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream
will be effected in accordance with their respective rules and operating procedures.


 


Subject to compliance
with the transfer restrictions applicable to the notes described herein, crossmarket transfers between the Participants in DTC,
on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with
DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its depository; however, such cross-market transactions
will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance
with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as
the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depository
to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC,
and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.


 


DTC has advised us
that it will take any action permitted to be taken by a Holder of notes only at the direction of one or more Participants to whose
account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount
of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default
under the notes, DTC reserves the right to exchange the Global Notes for Certificated Notes, and to distribute such notes to its
Participants.


 


Although DTC, Euroclear
and Clearstream have agreed to the foregoing procedures to facilitate transfers of beneficial interests in the Rule 144A Global
Notes and the Regulation S Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform
or to continue to perform such procedures, and may discontinue such procedures at any time. None of the Issuers, the trustee or
any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective
participants or indirect participants of their respective obligations under the rules and procedures governing their operations.


 


Exchange of Global Notes for Certificated
Notes 


 


A Global Note is exchangeable
for Certificated Notes in minimum denominations of $2,000 and in integral multiples of $1,000 in excess of $2,000, if:


 




    	34



    	 



    

 


		(1)	DTC (a) notifies the Issuers that it is unwilling or
unable to continue as depositary for the Global Note or (b) has ceased to be a clearing agency registered under the Exchange Act
and in either event the Issuers fail to appoint a successor depositary within 90 days; or



 


		(2)	there has occurred and is continuing an Event of Default
and DTC notifies the trustee of its decision to exchange the Global Note for Certificated Notes.



 


Beneficial interests
in a Global Note may also be exchanged for Certificated Notes in the other limited circumstances permitted by the indenture, including
if an affiliate of ours acquires such interests. In all cases, Certificated Notes delivered in exchange for any Global Note or
beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or
on behalf of the depositary (in accordance with its customary procedures) and will bear the restrictive legend referred to in “Transfer
Restrictions,” unless that legend is not required by the indenture.


 


Exchange of Certificated Notes for Global
Notes 


 


Certificated Notes
may not be exchanged for beneficial interests in any Global Note, except in the limited circumstances provided in the indenture.


 


Exchanges Between Regulation S Notes and
Rule 144A Notes 


 


Until the 40th day
after the later of the commencement of the offering of the notes and the original issue date of the notes (such period, the “Distribution
Compliance Period”), a beneficial interest in a Regulation S Global Note may be transferred to a Person who takes delivery
in the form of an interest in a Rule 144A Global Note only if the transferor first delivers to the trustee a written certificate
(in the form provided in the indenture) to the effect that such transfer is being made to a Person who the transferor reasonably
believes is purchasing for its own account or accounts as to which it exercises sole investment discretion and that such Person
is a QIB, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction. After the expiration of the Distribution Compliance Period, such
certification requirements will not apply to such transfers of beneficial interests in the Regulation S Global Notes.


 


Beneficial interests
in a Rule 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global
Note, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the
trustee a written certificate (in the form provided in the indenture) to the effect that such transfer is being made in accordance
with Rule 904 of Regulation S or Rule 144 (if available).


 


Transfers involving
exchanges of beneficial interests between the Regulation S Global Notes and the Rule 144A Global Notes will be effected in DTC
by means of an instruction originated by the trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection
with any such transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of a Regulation S Global
Note and a corresponding increase in the principal amount of a Rule 144A Global Note or vice versa, as applicable. Any beneficial
interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global
Note will, upon transfer, cease to be an interest in such Global Note and will become an interest in another Global Note and, accordingly,
will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global
Note for so long as it remains such an interest.


 


Same-Day Settlement and Payment 


 


The Issuers will make
payments in respect of the notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer
of immediately available funds to the accounts specified by the Global Note Holder. The Issuers will make all payments of principal,
interest and premium, if any, with respect to Certificated Notes in the manner described under “—Methods of Receiving
Payments on the Notes.” The notes represented by the Global Notes are eligible to trade in DTC’s Same-Day Funds Settlement
System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in
immediately available funds. We expect that secondary trading in any Certificated Notes will also be settled in immediately available
funds.


 




    	35



    	 



    

 


Because of time zone
differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant
in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement
date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note
by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date
of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or
Clearstream following DTC’s settlement date.


 


Certain Definitions 


 


Set forth below are
certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well
as any other capitalized terms used herein for which no definition is provided.


 


“Acquired
Debt” means, with respect to any specified Person:


 


Indebtedness
of any other Person existing at the time such other Person was merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into,
or becoming a Subsidiary of, such specified Person, but excluding Indebtedness which is extinguished, retired or repaid in connection
with such Person merging with or into or becoming a Subsidiary of such specified Person; and


 


Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.


 


“Acquisition”
means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in  the acquisition
of all or substantially all of the assets of a Person, or of any business unit or division of a Person or  the acquisition
of in excess of 50% of the capital stock of a corporation (or similar entity), which stock has ordinary voting power for the election
of the members of such entity’s board of directors or persons exercising similar functions (other than stock having such
power only by reason of the happening of a contingency), or the acquisition of in excess of 50% of the partnership interests or
equity of any Person not a corporation which acquisition gives the acquiring Person the power to direct or cause the direction
of the management and policies of such Person.


 


“Additional
Assets” means:


 


any assets
used or useful in the Oil and Gas Business, other than Indebtedness or Capital Stock;


 


the Capital
Stock of a Person that becomes a Guarantor as a result of the acquisition of such Capital Stock by any Issuer or Guarantor; or


 


Capital
Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary to the extent such Person becomes
a Guarantor;


 


provided, however, that any such
Restricted Subsidiary described in clause (2) or (3) is primarily engaged in the Oil and Gas Business.


 


“Adjusted
Consolidated Net Tangible Assets” of a specified Person means (without duplication), as of the date of determination:


 


the sum
of:


 


discounted
future net revenue from proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries calculated in
accordance with SEC guidelines before any state or federal or other income taxes, as estimated by such Person in the latest Reserve
Report with an effective date of January 1 or July 1 based on the Strip Price as of the effective date of the Reserve Report, as
increased by, as of the date of determination, the estimated discounted future net revenue from:


 




    	36



    	 



    

 


estimated
proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries attributable to acquisitions consummated
since the date of such Reserve Report, which reserves were not reflected in such Reserve Report, and


 


estimated
crude oil and natural gas reserves of such Person and its Restricted Subsidiaries attributable to extensions, discoveries and other
additions and upward revisions of estimates of proved crude oil and natural gas reserves (including previously estimated development
costs incurred during the period and the accretion of discount since the prior period end) due to exploration, development or exploitation,
production or other activities which would, in accordance with standard industry practice, cause such revisions, in the case of
clauses (i) and (ii) calculated in accordance with SEC guidelines (utilizing the prices utilized in the semi-annual Reserve Report
most recently delivered under the Note Purchase Agreement),


 


and decreased by, as of the date of
determination, the estimated discounted future net revenue attributable to:


 


estimated
proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries reflected in such Reserve Report produced
or disposed of since the date of such Reserve Report, and


 


reductions
in the estimated crude oil and natural gas reserves of such Person and its Restricted Subsidiaries reflected in such Reserve Report
since the date of such Reserve Report due to changes in geological conditions or other factors which would, in accordance with
standard industry practice, cause such revisions, in the case of clauses (A) and (B) calculated in accordance with SEC guidelines
(utilizing the prices utilized in the semi-annual Reserve Report most recently delivered under the Note Purchase Agreement); provided,
however, that, in the case of each of the determinations made pursuant to clauses (i), (ii), (A) and (B) above, such increases
and decreases shall be estimated in good faith by the Company’s petroleum engineers based upon assumptions believed in good
faith to be reasonable at the time made;


 


the capitalized
costs that are attributable to crude oil and natural gas properties of such Person and its Restricted Subsidiaries to which no
proved crude oil and natural gas reserves are attributable, based on such Person’s books and records as of a date no earlier
than the date of such Person’s latest available annual or quarterly financial statements (whichever is more recent);


 


the Net Working
Capital of such Person as of a date no earlier than the date of such Person’s latest available annual or quarterly financial
statements (whichever is more recent); and


 


the greater
of:


 


the net
book value of other tangible assets of such Person and its Restricted Subsidiaries as of a date no earlier than the date of such
Person’s latest available annual or quarterly financial statements (whichever is more recent), and


 


the appraised
value, as estimated by independent appraisers, of other tangible assets of such Person and its Restricted Subsidiaries as of a
date no earlier than the date of such Person’s latest available annual or quarterly financial statements (provided that such
Person shall not be required to obtain such an appraisal of such assets if no such appraisal has been performed);


 


minus 


 


the sum of:


 


Minority
Interests;


 




    	37



    	 



    

 


to the
extent not otherwise taken into account in determining Adjusted Consolidated Net Tangible Assets, any net natural gas balancing
liabilities of such Person and its Restricted Subsidiaries reflected in such Person’s latest audited financial statements;


 


to the
extent included in clause (1)(a) above, the discounted future net revenue, calculated in accordance with SEC guidelines (utilizing
the prices utilized in the semi-annual Reserve Report most recently delivered under the Note Purchase Agreement), attributable
to reserves subject to participation interests, overriding royalty interests or other interests of third parties, pursuant to participation,
partnership, vendor financing or other agreements then in effect, or which otherwise are required to be delivered to third parties;


 


to the
extent included in clause (1)(a) above, the discounted future net revenue calculated in accordance with SEC guidelines (utilizing
the prices utilized in the semi-annual Reserve Report most recently delivered under the Note Purchase Agreement), attributable
to reserves that are required to be delivered to third parties to fully satisfy the obligations of such Person and its Restricted
Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and


 


the discounted
future net revenue, calculated in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production
Payments that, based on the estimates of production and price assumptions included in determining the discounted future net revenue
specified in clause (1)(a) above, would be necessary to satisfy fully the obligations of such Person and its Restricted Subsidiaries
with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.


 


“Affiliate”
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition, “control,” as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial
ownership of 10% or more of the Voting Stock of a Person will be deemed to be control by the other Person. For purposes of this
definition, the terms “controlling,” “controlled by” and “under common control with” have correlative
meanings.


 


“Asset
Sale” means:


 


the sale,
lease, conveyance or other disposition of any properties or assets (including by way of a Production Payment or a sale and leaseback
transaction); provided, however, that the disposition of all or substantially all of the properties or assets of the Company
and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the
caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above
under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions
of the Asset Sales covenant; and


 


the issuance
of Equity Interests in any of the Company’s Restricted Subsidiaries that are Guarantors or the sale of Equity Interests in
any of its Restricted Subsidiaries:


 


Notwithstanding the
preceding, the following items will not be deemed to be Asset Sales:


 


the sale,
lease, conveyance or other disposition of properties or assets to the extent the aggregate fair market value of all such transactions
in any fiscal year does not exceed $10 million;


 


a transfer
of properties or assets between or among  any of the Company and its Restricted Subsidiaries that are Issuers or Guarantors
 between Restricted Subsidiaries that are not Issuers or Guarantors and  by any Restricted Subsidiary to any Issuer or
Guarantor.;


 




    	38



    	 



    

 


an issuance
or sale of Equity Interests by a  Restricted Subsidiary that is not a Guarantor or Issuer to the Company or to another Restricted
Subsidiary and  Guarantor or Issuer (other than the Company) to any other Guarantor or Issuer;


 


the sale,
lease or other disposition of  inventory,  products,  accounts receivable or  equipment and other properties
or assets (other than Oil and Gas Properties and acreage) in the ordinary course of business;


 


the sale
or other disposition of cash or Cash Equivalents, Hedging Contracts or other financial instruments in the ordinary course of business;


 


a disposition
of properties or assets that constitutes (or results in by virtue of the consideration received for such disposition) either a
Restricted Payment that is permitted by the covenant described above under the caption “—Certain Covenants—Restricted
Payments” or a Permitted Investment;


 


a disposition
of Hydrocarbons or mineral products inventory in the ordinary course of business;


 


[reserved];


 


the farm-out,
lease or sublease of developed or undeveloped crude oil or natural gas properties owned or held by the Company or any Restricted
Subsidiary in exchange for crude oil and natural gas properties owned or held by another Person in the ordinary course of business;
provided, that, this clause (9) may not be used by any Issuer or Guarantor to make a sale, transfer, assignment, conveyance
or other disposition of Permian Basin Properties or Mortgaged Property to any Restricted Subsidiary that is not an Issuer or Guarantor,
Unrestricted Subsidiary or Joint Venture.


 


the creation
or perfection of a Lien that is permitted by the covenant described above under the caption “—Certain Covenants—Liens”;


 


disposition
in connection with Permitted Liens (other than a disposition of property with a fair market value in excess of $25 million in the
aggregate);


 


surrender
or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind in the ordinary
course of business;


 


the grant
in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar
intellectual property;


 


an Asset
Swap; provided, that, this clause (14) may not be used by any Issuer or Guarantor to make a sale, transfer, assignment,
conveyance or other disposition of Permian Basin Properties or Mortgaged Property to any Restricted Subsidiary that is not an Issuer
or Guarantor, Unrestricted Subsidiary or Joint Venture; and


 


transfers
of property subject to casualty or condemnation proceedings (including in lieu thereof) upon the receipt of the net cash proceeds
therefor; provided such net cash proceeds are deemed to be Net Proceeds (calculated in accordance with the definition thereof)
and are applied in accordance with the second paragraph under “—Repurchase at the Option of Holders—Asset Sales”.


 


“Asset
Swap” means any substantially contemporaneous (and in any event occurring within 60 days of each other) purchase
and sale or exchange of any Oil and Gas Properties customary in the Oil & Gas Business between the Company or any of its Restricted
Subsidiaries and another Person in the ordinary course of business; provided that any cash received must be applied in accordance
with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”
as if the Asset Swap were an Asset Sale.


 




    	39



    	 



    

 


“Attributable
Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction
including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance
with GAAP. As used in the preceding sentence, the “net rental payments” under any lease for any such period shall mean
the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder, excluding any amounts
required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also
include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.


 


“Available
Cash” has the meaning assigned to such term in the Partnership Agreement, as in effect on the date of the indenture.


 


“Banking
Services” means each and any of the following bank services provided to any Issuer or Guarantor by any holder of
Priority Lien Debt or any Affiliate thereof:  commercial credit cards,  stored value cards and  treasury management
services (including controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository
network services).


 


“Banking
Services Obligations” means any and all obligations of any Issuer or Guarantor, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof
and substitutions therefor) in connection with Banking Services.


 


“Bankruptcy
Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended, and
regulations promulgated thereunder.


 


“Beneficial
Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange
Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has
the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned”
have correlative meanings. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are
the subject of a stock purchase agreement, merger agreement or similar agreement until consummation of the transaction or, as applicable,
series of related transactions contemplated thereby.


 


“Board
of Directors” means:


 


with respect
to Finance Corp., its board of directors;


 


with respect
to the Company, the board of directors of the General Partner or any authorized committee thereof;


 


with respect
to the Operating Partnership, the board of directors of the Operating General Partner or any authorized committee thereof; and


 


with respect
to any other Person, the board or committee of such Person serving a similar function.


 


“Board
Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the applicable Person
to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification,
and delivered to the trustee.


 


“Business
Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York
or another place of payment are authorized or required by law to close.


 




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“Capital
Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a
capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.


 


“Capital
Stock” means:


 


in the
case of a corporation, corporate stock;


 


in the
case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;


 


in the
case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests;
and


 


any other
interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.


 


“Cash
Equivalents” means:


 


United
States dollars;


 


securities
issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United
States government (provided that the full faith and credit of the United States is pledged in support of those securities) having
maturities of not more than six months from the date of acquisition;


 


marketable
general obligations issued by any state of the United States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof,
having a credit rating of “A-” or better from S&P or A3 or better from Moody’s;


 


certificates
of deposit, demand deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender party to the Credit
Agreement or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thomson Bank Watch Rating
of “B” or better;


 


repurchase
obligations with a term of not more than seven days for underlying securities of the types described in clauses (2),
(3) and (4) above entered into with any financial institution meeting the qualifications specified
in clause (4) above;


 


commercial
paper having one of the two highest ratings obtainable from Moody’s or S&P and in each case maturing within six months
after the date of acquisition; and


 


money market
funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through
(6) of this definition.


 


“Change
of Control” means the occurrence of any of the following:


 


the direct
or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or assets (including Capital Stock of the Restricted
Subsidiaries) of the Company and its Restricted Subsidiaries taken as a whole, to any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act);


 




    	41



    	 



    

 


the liquidation
or dissolution of the Company or the adoption of a plan relating to the liquidation or dissolution of the Company, the removal
of the General Partner by the limited partners of the Company; or the failure of the Company to own, directly or indirectly, 100%
of the Equity Interests in Finance Corp., the Operating Partnership, the Operating General Partner or the General Partner;


 


the consummation
of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person”
(as that term is used in Section 13(d)(3) of the Exchange Act), (excluding the Qualifying Owners), becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the General Partner, measured by voting power rather than number
of shares, units or the like;


 


the consummation
of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person”
(as that term is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than
50% of the Voting Stock of the Company, measured by voting power rather than number of shares, units or the like;


 


the first
day on which a majority of the members of the Board of Directors of the General Partner are not Continuing Directors; or


 


a “change
of control” (or similar defined term) under any Permitted Credit Facility or Indebtedness with an aggregate principal amount
in excess of $70 million.


 


Notwithstanding the
preceding, a conversion of the Company or any of its Restricted Subsidiaries from a limited partnership, corporation, limited liability
company or other form of entity to a limited liability company, corporation, limited partnership or other form of entity or an
exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests in another form of entity shall
not constitute a Change of Control, so long as following such conversion or exchange the “persons” (as that term is
used in Section 13(d)(3) of the Exchange Act) who Beneficially Owned the Capital Stock of the Company immediately prior to such
transactions continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or continue to Beneficially
Own sufficient Equity Interests in such entity to elect a majority of its directors, managers, trustees or other persons serving
in a similar capacity for such entity or its general partner, as applicable, and, in either case no “person” Beneficially
Owns more than 50% of the Voting Stock of such entity or its general partner, as applicable. For the avoidance of doubt, a Change
of Control under clause (6) shall be determined by reference to the Permitted Credit Facility or Indebtedness with an aggregate
principal amount in excess of $70 million without giving effect to operation of this paragraph.


 


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


 


“Collateral”
means all property wherever located and whether now owned or at any time acquired after the date of the indenture by any Issuer
or any Guarantor as to which a Lien is granted under the security documents to secure the notes or any Subsidiary Guarantee, but
excluding any Excluded Assets.


 


“Collateral
Requirements” means, in connection with any transaction or event between or amongst Issuers and Guarantors, the requirement
that the Issuer or Guarantor receiving (by way of Asset Sale, Investment, merger, consolidation, reorganization, dividend, distribution,
assignment, sale, lease, transfer or other disposition) Collateral from an Issuer or Guarantor shall substantially concurrent with
such transaction or event execute and deliver such documentation (including, without limitation, mortgages, deeds of trust, control
agreements, other supplemental security documentation, supplemental indentures and any other agreements, documents or other instruments)
to provide for the grant of a Parity Lien thereon and perfection thereof in accordance with and to the extent required by the Note
Documents.


 


“Commission”
or “SEC” means the Securities and Exchange Commission.


 


“Common
Unit” means “Common Unit” as such term is defined in the Partnership Agreement as in effect on the date
of the indenture.


 




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“Consolidated
Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person
for such period plus:


 


an amount
equal to any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent
such losses were deducted in computing such Consolidated Net Income; plus


 


provision
for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision
for taxes was deducted in computing such Consolidated Net Income; plus


 


consolidated
interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized
(excluding any interest attributable to Dollar-Denominated Production Payments but including, without limitation, amortization
of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’
acceptance financings), and net of the effect of all payments made or received pursuant to interest rate Hedging Contracts, to
the extent that any such expense was deducted in computing such Consolidated Net Income; plus


 


depreciation,
depletion and amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period), impairment, non-cash equity based compensation expense and other non-cash items (excluding any such non-cash
item to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid
cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that
such depreciation, depletion and amortization, impairment and other non-cash items that were deducted in computing such Consolidated
Net Income; plus


 


unrealized
non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted
in computing such Consolidated Net Income; plus


 


all extraordinary,
unusual or non-recurring items of gain or loss, or revenue or expense; minus


 


non-cash
items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business;
and minus


 


to the
extent increasing such Consolidated Net Income for such period, the sum of  the amount of deferred revenues that are amortized
during such period and are attributable to reserves that are subject to Volumetric Production Payments and  amounts recorded
in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments,


 


in each case, on a consolidated basis and
determined in accordance with GAAP.


 


“Consolidated
Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person
and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, provided that:


 


the Net
Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting
will be included, but only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;


 


the Net
Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members;


 




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the cumulative
effect of a change in accounting principles will be excluded;


 


any gain
(loss) realized upon the sale or other disposition of any property, plant or equipment of such Person or its consolidated Restricted
Subsidiaries (including pursuant to any sale and leaseback transaction) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person will be excluded;


 


any asset
impairment writedowns on oil and gas properties under GAAP or SEC guidelines will be excluded;


 


unrealized
losses and gains under Hedging Contracts included in the determination of Consolidated Net Income, including, without limitation
those resulting from the application of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
815, will be excluded; and


 


any nonrecurring
charges relating to any premium or penalty paid, write off of deferred finance costs or other charges in connection with redeeming
or retiring any Indebtedness prior to its Stated Maturity will be excluded.


 


“Consolidated
Senior Secured Debt” means all Indebtedness for borrowed money secured by a Lien on the assets of any Issuer or Guarantor
(other than  property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured
thereby and  such Indebtedness that is subordinated in right of payment to the notes and Subsidiary Guarantees), minus
unrestricted cash and Cash Equivalents of the Issuers and Guarantors subject to a perfected Second-Priority Lien in favor of the
collateral agent for the benefit of the Holders pursuant to a control agreement delivered in accordance with the indenture and
the other Note Documents.


 


“Continuing
Directors” means, as of any date of determination, any member of the Board of Directors of the General Partner, who:


 


was a member
of such Board of Directors on the date of the indenture; or


 


was nominated
for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.


 


“Credit
Agreement” means that certain Third Amended and Restated Credit Agreement, dated as of November 19, 2014, by
and among the Operating Partnership, as borrower, the Company, as parent guarantor, and Wells Fargo Bank, National Association,
as administrative agent, and the other lenders party thereto (the “Existing Credit Agreement”), including any
related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case
as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time, in each case, subject to the Intercreditor
Agreement; provided, that, the Credit Agreement and any amendment, restated, modification, renewal, refund, replacement
or refinancing thereof must satisfy the Credit Facility Criteria (as such term is defined in the Intercreditor Agreement as in
effect on the date hereof) and the terms thereof must satisfy the requirements under the heading “Amendments to Priority
Lien Debt” as if such amendment, restatement, modification, renewal, refund, replacement or refinancing were an amendment
to the Existing Credit Agreement.


 


“Default”
means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.


 


“Default
Rate” has the meaning set forth under the heading “Principal, Maturity and Interest”.


 


“Disqualified
Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible,
or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder
of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding
the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock
have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase
or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described
above under the caption “—Certain Covenants—Restricted Payments.”


 




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“Dollar-Denominated
Production Payments” means production payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.


 


“Domestic
Subsidiary” means any Restricted Subsidiary of the Company that was formed under the laws of the United States or
any state of the United States or the District of Columbia and all of whose outstanding Capital Stock is Beneficially Owned by
the Company.


 


“East
Salt Water Texas Disposal Company” means East Salt Water Texas Disposal Company, a Texas corporation.


 


“Equity
Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding
any debt security that is convertible into, or exchangeable for, Capital Stock until so converted).


 


“Excluded
Assets” has the meaning set forth under the heading “—Security for the Notes.”


 


“Existing
Indebtedness” means the aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries
(other than Indebtedness under the Credit Agreement, which is considered incurred under clause (1) of the definition of “Permitted
Debt,” Indebtedness represented by the notes under the indenture, which is considered incurred under clause (3) of the definition
of “Permitted Debt” and other than intercompany Indebtedness) in existence on the date of the indenture, until such
amounts are repaid.


 


The term “fair
market value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction
not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company in the case
of amounts of $20 million or more and otherwise by an officer of the General Partner.


 


“Fixed
Charge Coverage Ratio” means with respect to any specified Person for any four-quarter reference period, the ratio
of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event
that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the
commencement of the applicable four-quarter reference period and on or prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or such
issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the
beginning of such period. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness will be calculated as if the average rate in effect from the beginning of such period to the Calculation
Date had been the applicable rate for the entire period (taking into account any interest Hedging Contract applicable to such Indebtedness,
but if the remaining term of such interest Hedging Contract is less than 12 months, then such interest Hedging Contract shall only
be taken into account for that portion of the period equal to the remaining term thereof). If any Indebtedness that is being given
pro forma effect bears an interest rate at the option of such Person, the interest rate shall be calculated by applying such optional
rate chosen by such Person. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor
of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional rate chosen as such Person may designate.


 


In addition, for purposes
of calculating the Fixed Charge Coverage Ratio:


 




    	45



    	 



    

 


acquisitions
that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers, consolidations or
otherwise (including acquisitions of assets used in the Oil and Gas Business), and including in each case any related financing
transactions (including repayment of Indebtedness) during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date, will be given pro forma effect as if they had occurred on the first day of the four-quarter
reference period, including any Consolidated Cash Flow and any pro forma expense and cost reductions that have occurred or are
reasonably expected to occur within the next 12 months, in the reasonable judgment of the chief financial or accounting officer
of the General Partner (regardless of whether those cost savings or operating improvements could then be reflected in pro forma
financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of
the Commission related thereto);


 


the Consolidated
Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership
interests therein) disposed of prior to the Calculation Date, will be excluded;


 


the Fixed
Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership
interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving
rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the
Calculation Date;


 


any Person
that is a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed to have been a Restricted Subsidiary
of the specified Person at all times during such four-quarter period;


 


any Person
that is not a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed not to have been a Restricted
Subsidiary of the specified Person at any time during such four-quarter period; and


 


interest
income reasonably anticipated by such Person to be received during the applicable four-quarter period from cash or Cash Equivalents
held by such Person or any Restricted Subsidiary of such Person, which cash or Cash Equivalents exist on the Calculation Date or
will exist as a result of the transaction giving rise to the need to calculate the Fixed Charge Coverage Ratio, will be included.


 


“Fixed
Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:


 


the consolidated
interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (excluding any interest
attributable to Dollar-Denominated Production Payments but including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts
and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect
of all payments made or received pursuant to interest rate Hedging Contracts; plus


 


the consolidated
interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus


 


any interest
expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by
a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus


 


all dividends,
whether paid or accrued and whether or not in cash, on any series of Disqualified Stock of such Person or on any series of preferred
securities of its Restricted Subsidiaries, other than dividends payable solely in Equity Interests of the payor (other than Disqualified
Stock) or to such Person or a Restricted Subsidiary of such Person,


 




    	46



    	 



    

 


in each case, on a consolidated basis and
determined in accordance with GAAP.


 


“Foreign
Subsidiary” means any Restricted Subsidiary of the Company that  is not a Domestic Subsidiary and  has
50% or more of its consolidated assets located outside the United States or any territory thereof.


 


“GAAP”
means generally accepted accounting principles in the United States, which are in effect from time to time.


 


“General
Partner” means Breitburn GP LLC, a Delaware limited liability company, and its successors and permitted assigns as
general partner of the Company or as the business entity with the ultimate authority to manage the business and operations of the
Company.


 


The term “guarantee”
means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, by way of a pledge of assets, acting as co-obligor or through letters
of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. When used as a verb, “guarantee”
has a correlative meaning.


 


“Guarantors”
means each of:


 


the Subsidiaries
of the Company, other than the Operating Partnership and Finance Corp., executing the indenture as initial Guarantors; and


 


any other
Restricted Subsidiary of the Company that becomes a Guarantor in accordance with the provisions of the indenture.


 


and their respective permitted successors
and assigns.


 


“Hedging
Contracts” means, with respect to any specified Person:


 


interest
rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial
institutions and designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations
in interest rates with respect to Indebtedness incurred;


 


foreign
exchange contracts and currency protection agreements entered into with one or more financial institutions and designed to protect
the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations in currency exchanges rates with
respect to Indebtedness incurred;


 


any commodity
futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price
of Hydrocarbons used, produced, processed or sold by that Person or any of its Restricted Subsidiaries at the time; and


 


other agreements
or arrangements designed to protect such Person or any of its Restricted Subsidiaries against fluctuations in interest rates, commodity
prices or currency exchange rates;


 


and in each case are entered into only
in the normal course of business and not for speculative purposes.


 


“Holder”
means a Person in whose name a Note is registered.


 


“Hydrocarbon
Interests” means leasehold and other interests in or under oil, gas and other liquid or gaseous hydrocarbon leases
wherever located, mineral fee interests, overriding royalty and royalty interests, net profit interests, and production payment
interests relating to oil, gas or other liquid or gaseous hydrocarbons wherever located, including any reserved or residual interest
of whatever nature.


 




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“Hydrocarbons”
means crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.


 


“Indebtedness”
means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:


 


in respect
of borrowed money;


 


evidenced
by bonds, notes, debentures or similar instruments;


 


in respect
of all outstanding letters of credit issued for the account of such Person that support obligations that constitute Indebtedness
(provided that the amount of such letters of credit included in Indebtedness shall not exceed the amount of the Indebtedness being
supported) and, without duplication, the unreimbursed amount of all drafts drawn under letters of credit issued for the account
of such Person;


 


in respect
of bankers’ acceptances;


 


representing
Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;


 


representing
the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense
or trade payable; or


 


representing
any obligations under Hedging Contracts,


 


representing
deferred purchase price of property or services (including, without limitation, holdbacks, earn-outs and other contingency payment
obligations based on the performance of the acquired or disposed assets or similar obligations) (other than trade payables on ordinary
and customary terms and customary indemnities); provided, that, earn-outs and other contingency payment obligations based
on the performance of the acquired or disposed assets and similar obligations shall constitute Indebtedness only to the extent
no longer contingent,


 


in each case, if and to the
extent any of the preceding items (other than letters of credit and obligations under Hedging Contracts) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.


 


In addition, the term “Indebtedness”
includes all Indebtedness of other Persons secured by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness
of any other Person (including, with respect to any Production Payment, any warranties or guarantees of production or payment by
such Person with respect to such Production Payment, but excluding other contractual obligations of such Person with respect to
such Production Payment).


 


The amount of any
Indebtedness outstanding as of any date will be:


 


the accreted
value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;


 


in the
case of obligations under any Hedging Contracts, the termination value of the agreement or arrangement giving rise to such obligations
that would be payable by such Person at such date; and


 


the principal
amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any
other Indebtedness.


 


“Insolvency
Proceeding” means  any case, action or proceeding relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or  any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion
of its creditors, undertaken under U.S. federal, state or foreign law, including the Bankruptcy Code.


 




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“Intercreditor
Agreement” means the Intercreditor Agreement among the collateral agent, the trustee, the Priority Lien Collateral
Agent, the Issuers, the Guarantors and the other parties from time to time party thereto, to be entered into on the date of the
indenture, as it may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with the
indenture and the terms thereof.


 


“Investments”
means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including guarantees or other obligations), advances or capital contributions (excluding  commission,
travel and similar advances to officers and employees made in the ordinary course of business and  advances to customers in
the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other securities, Acquisitions together with all items that
are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of
the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of
the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal
to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined
as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted
Payments.” The acquisition by the Company or any Subsidiary of the Company of a Person that holds an Investment in a third
Person will be deemed to be an Investment made by the Company or such Subsidiary in such third Person in an amount equal to the
fair market value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an
amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted
Payments.” It is agreed and understood that any transfer, sale, assignment, conveyance or other disposition of properties
or assets for less than fair market value shall be deemed an “Investment”.


 


“Issue
Date” means the first date upon which the notes are issued under the indenture.


 


“Joint
Venture” means any Person that is not a direct or indirect Subsidiary of the Company in which the Company or any
of its Restricted Subsidiaries makes any Investment.


 


“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other
title retention agreement, any lease in the nature thereof or any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction other than a precautionary financing statement respecting a lease not intended as a security agreement.


 


“Majority
Holders” means the Holders of at least 50.1% in principal amount of the then outstanding notes.


 


“Make-Whole
Amount” means, with respect to a note at the time of computation, the excess, if any, of  the present value
at such time of  the redemption price of such note at April       , 2018 plus  any required
interest payments due on such note through April       , 2018 (except for currently accrued and unpaid
interest), computed using a discount rate equal to the Treasury Rate as of such time plus 50 basis points, discounted to the redemption
date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), over  the principal amount of such
note.


 


“Minority
Interest” means the percentage interest represented by any Capital Stock of a Restricted Subsidiary of the Company
that is not owned by the Company or a Restricted Subsidiary of the Company.


 


“Mortgaged
Property” means any property owned by any Issuer or any Guarantor that is subject to the Liens existing and to exist
under the terms of the Mortgages; provided, however, “Mortgaged Property” also includes any property that is
required to become subject to a Mortgage after the Issue Date in accordance with the Note Purchase Agreement and any property acquired
after the Issue Date for which the Additional Collateral Right may be exercised unless such exercise has not occurred within 60
days after notice of such acquisition has been provided pursuant to the Note Purchase Agreement. For the avoidance of doubt, the
foregoing shall not impact the Majority Holders Additional Collateral Right in any manner.  


 




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“Mortgages”
means all mortgages, deeds of trust and similar documents, instruments and agreements (and all amendments, modifications and supplements
thereof) creating, evidencing, perfecting or otherwise establishing the Liens on Oil and Gas Properties and other related assets
to secure payment of the notes and the Subsidiary Guarantees or any part thereof.


 


“Net Income”
means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding, however:


 


any gain
(but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with:  any
Asset Sale; or  the disposition of any securities by such Person or the extinguishment of any Indebtedness of such Person;
and


 


any extraordinary
gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss).


 


“Net Proceeds”
means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale),
net of:


 


the direct
costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees and sales commissions,
severance costs and any relocation expenses incurred as a result of the Asset Sale;


 


taxes paid
or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any
tax sharing arrangements;


 


amounts
required to be applied to the repayment of Indebtedness secured by a Permitted Lien on the properties or assets that were the subject
of such Asset Sale; and


 


any amounts
to be set aside in any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment
in respect of the sale price of such properties or assets or for liabilities associated with such Asset Sale and retained by the
Company or any of its Restricted Subsidiaries until such time as such reserve is reversed or such escrow arrangement is terminated,
in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Company or its
Restricted Subsidiaries from such escrow arrangement, as the case may be.


 


“Net Working
Capital” means, with respect to any specified Person,  all current assets of such Person and its Restricted
Subsidiaries, except current assets from commodity price risk management activities arising in the ordinary course of business,
less  all current liabilities of such Person and its Restricted Subsidiaries, except  current liabilities included in
Indebtedness,  current liabilities associated with asset retirement obligations relating to oil and gas properties and  any
current liabilities from commodity price risk management activities arising in the ordinary course of business, in each case as
set forth in the consolidated financial statements of such Person prepared in accordance with GAAP (excluding any adjustments made
pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815).


 




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“Non-Recourse
Debt” means Indebtedness:


 


as to which
neither the Company nor any of its Restricted Subsidiaries  provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness),  is directly or indirectly liable as a guarantor or otherwise,
or  is the lender;


 


no default
with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the notes)
of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the
Indebtedness to be accelerated or payable prior to its Stated Maturity; and


 


as to which
the lenders have been notified in writing that they will not have any recourse to the Capital Stock or assets of the Company or
any of its Restricted Subsidiaries except as contemplated by clause (9) of the definition of Permitted Liens.


 


For purposes of determining
compliance with the covenant described under “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred
Stock” above, in the event that any Non-Recourse Debt of any of the Company’s Unrestricted Subsidiaries ceases to be
Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company.


 


“Note
Documents” means the indenture, the notes, the Note Purchase Agreement, the security documents and mortgages establishing
Parity Liens and the Intercreditor Agreement.


 


“Note
Purchase Agreement” means that certain Note Purchase Agreement dated as of March 27, 2015 by and among the Issuers,
Guarantors and initial Holders of the notes, as amended, amended and restated, supplemented or modified from time to time in accordance
with the indenture and the terms thereof.


 


“Not Otherwise
Applied” means, with reference to any amount of proceeds of any transaction or event, that such amount was not previously
applied to  make Restricted Payments or Permitted Investments,  purchase, redeem, defease, acquire or retire any subordinated
Indebtedness or Unsecured Notes of any Issuer or Guarantor or of any Equity Interests of the Company and  make any Permitted
Distributions on Preferred Units.


 


“Obligations”
means any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), any make-whole payment (including,
without limitation, the Make-Whole Amount), repayment premium (including the Prepayment Premium), change of control premium, other
premiums, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities
or amounts payable under the Note Documents or in respect thereto.


 


“Oil and
Gas Business” means:


 


the acquisition,
exploration, development, production, operation and disposition of interests in oil, gas and other Hydrocarbon properties;


 


the gathering,
marketing, treating, processing (but not refining), storing, distributing, selling and transporting of any production from such
interests or properties;


 


any business
relating to exploration for or development, production, treatment, processing (but not refining), storage, transportation or marketing
of, oil, gas and other minerals and products produced in association therewith;


 


any other
business that generates gross income that constitutes “qualifying income” under Section 7704(d) of the Code; and


 


any activity
that is ancillary, complementary or incidental to or necessary or appropriate for the activities described in clauses (1)
through (4) of this definition.


 




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“Oil and
Gas Properties” means Hydrocarbon Interests and contracts executed in connection therewith and all tenements, hereditaments,
appurtenances, and properties belonging, affixed or incidental to such Hydrocarbon Interests, including any and all property, real
or personal, and situated upon or to be situated upon, and used, built for use, or useful in connection with the operating, working
or developing of such Hydrocarbon Interests, including any and all petroleum and/or natural gas wells, buildings, structures, field
separators, liquid extractors, plant compressors, pumps, pumping units, field gathering systems, pipelines, tank and tank batteries,
fixtures, valves, fittings, machinery and parts, engines, boilers, liters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, taping, tubing and rods, surface leases, rights-of-way, easements and servitudes, and all additions, substitutions,
replacements for, and fixtures and attachments thereto.


 


“Operating
General Partner” means Breitburn Operating GP LLC, a Delaware limited liability company, and its successors and permitted
assigns as general partner of the Operating Partnership or as the business entity with the ultimate authority to manage the business
and operations of the Operating Partnership.


 


“Operating
Partnership” means Breitburn Operating LP, a Delaware limited partnership and any successor thereto.


 


“Parity
Lien” means a Lien granted by a security document to the collateral agent, at any time, upon any property of any
Issuer or any Guarantor to secure the Obligations for the benefit of the collateral agent, trustee, the holders of the notes and
indemnitees.


 


“Partnership
Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Company dated as of the Issue
Date, as amended and in effect on the date of the indenture and as such may be further amended, modified or supplemented from time
to time.


 


“Permian
Basin Properties” means Oil and Gas Properties and undeveloped acreage owned by any Issuer or Guarantor located in
the Permian Basin of Texas and New Mexico.


 


“Permitted
Acquisition Indebtedness” means Indebtedness or Disqualified Stock of the Company or any of its Restricted Subsidiaries
to the extent such Indebtedness or Disqualified Stock was Indebtedness or Disqualified Stock of any other Person existing at the
time  such Person became a Restricted Subsidiary of the Company or  such Person was merged or consolidated with or into
the Company or any of its Restricted Subsidiaries, provided that on the date such Person became a Restricted Subsidiary of the
Company or the date such Person was merged or consolidated with or into the Company or any of its Restricted Subsidiaries, as applicable,
either


 


immediately
after giving effect to such transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter
period, the Company or such Restricted Subsidiary, as applicable, would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption
“—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” or


 


immediately
after giving effect to such transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter
period, the Fixed Charge Coverage Ratio of the Company would be equal to or greater than the Fixed Charge Coverage Ratio of the
Company immediately prior to such transaction.


 


“Permitted
Business Investments” means Investments made in the ordinary course of, and of a nature that is or shall have become
customary in, the Oil and Gas Business, including investments or expenditures for actively exploring for, acquiring, developing,
producing, processing, gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or arrangements
that permit one to share risk or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives
customarily achieved through the conduct of the Oil and Gas Business jointly with third parties, including without limitation:


 




    	52



    	 



    

 


direct
or indirect ownership of crude oil, natural gas, other Hydrocarbon properties or any interest therein, gathering, transportation,
processing, storage or related systems, or ancillary real property interests and interests therein; and


 


the entry
into operating agreements, joint ventures, processing agreements, working interests, royalty interests, mineral leases, farm-in
agreements, farm-out agreements, development agreements, production sharing agreements, area of mutual interest agreements, contracts
for the sale, transportation or exchange of crude oil and natural gas and related Hydrocarbons and minerals, unitization agreements,
pooling arrangements, joint bidding agreements, service contracts, partnership agreements (whether general or limited), or other
similar or customary agreements, transactions, properties, interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary course of the Oil and Gas Business;


 


provided that, (i) the
foregoing may not be used by any Issuer or Guarantor to make any Investment in another Person (other than any Issuer or Guarantor)
with or in the form of Permian Basin Properties or Mortgaged Properties (or Equity Interests of any Person that owns any Permian
Basin Properties or Mortgaged Property); (ii) in the case of a joint venture, farm-in agreement or farm-out agreement involving
the conveyance or other disposition of assets with a fair market value in excess of $10 million in the aggregate in any fiscal
year, the consideration therefor shall be (a)(x) for fair market value and (y) 100% in the form of cash or carry, and (b)
the net cash proceeds thereof (but excluding, for the avoidance of doubt, carried amounts) shall be deemed to be Net Proceeds and
subject to the provisions of “Repurchase at the Option of Holders—Asset Sales”, other than the first paragraph
thereof; and (iii) that “Permitted Business Investments” shall exclude Investments in corporations and publicly traded
Persons.


 


“Permitted
Credit Facility” means one or more credit facilities (including, without limitation, the Credit Agreement) providing
for loans and letters of credit secured by Oil and Gas Properties and other customary Property of the Issuers and the Guarantors,
as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time, at all times subject
to the Intercreditor Agreement and satisfying the Credit Facility Criteria (as such term is defined in the Intercreditor Agreement
as in effect on the date hereof).


 


“Permitted
Distributions on Common Units” means, to the extent permitted under Delaware State Law and the organizational documents
of the Company, and subject to the covenant under the caption “—Restricted Payments,” (x) dividends, distributions
or other payments (other than on account of a redemption, repurchase, or other acquisition or retirement for value) by the Company
on account of its Common Units or to the direct or indirect holders of the Company’s Common Units in their capacity as such
and (y) beginning with the 18th month anniversary of the Issue Date, any purchase, redemption or other acquisition or retirement
for value of any Common Units of the Company, up to the following aggregate amounts:


 


until
the 18th month anniversary of the Issue Date, in an aggregate amount not to exceed $0.50 per Common Unit on an annualized basis;
and


 


thereafter,
in an unlimited amount so long as the Proved Reserves Coverage Ratio is equal to or greater than 1.50 to 1.00 as of the date of
such calculation measured on a pro forma basis to give effect to any dividend, distribution or other payment by the Company on
account of its Common Units and any purchase, redemption, acquisition or retirement of the Company’s Common Units as if such
dividend, distribution or such other payment and such purchase, redemption, acquisition or retirement had occurred on the date
of calculation of such ratio. Such Proved Reserves Coverage Ratio will be tested semi-annually on the Proved Reserves Coverage
Ratio Date and will govern the Permitted Distributions on Common Units for the succeeding 6 months following the Proved Reserves
Coverage Ratio Date.


 


“Permitted
Distributions on Preferred Units” means, to the extent permitted under Delaware State Law and the organizational
documents of the Company, and subject to the covenant under the caption “—Restricted Payments,” dividends, distributions,
other payments (other than on account of a redemption, repurchase, or other acquisition or retirement for value) and any Preferred
Change of Control Redemption by the Company on account of its Preferred Units or to the direct or indirect holders of the Company’s
Preferred Units in their capacity as such, up to the following aggregate amounts:


 




    	53



    	 



    

 


if immediately
after giving effect thereto on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period,
the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of the covenant described above under the caption “—Certain Covenants—Incurrence
of Indebtedness and Issuance of Preferred Stock,” the sum of Available Cash with respect to the Company’s preceding
fiscal quarter, plus 100% of the aggregate net cash proceeds received by the Company after the Issue Date as a contribution
to its common equity capital or from the issue or sale after the Issue Date of Equity Interests of the Company (other than Disqualified
Stock) or from the issue or sale after the Issue Date of convertible or exchangeable Disqualified Stock or convertible or exchangeable
debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests
(or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Company), in each case, to the extent so designated
for such dividend, distribution or other payment in an officer’s certificate delivered to the trustee by an executive officer
of the Company within 10 Business Days after such contribution, issuance, sale, conversion or exchange and to the extent Not Otherwise
Applied, minus without duplication, Permitted Distributions on Common Units that have occurred during such fiscal quarter;
or


 


if immediately
after giving effect thereto on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period,
the Company would not be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described above under the caption “—Certain Covenants—Incurrence
of Indebtedness and Issuance of Preferred Stock,” an amount equal to Available Cash with respect to the Company’s preceding
fiscal quarter minus, without duplication, Permitted Distributions on Common Units that have occurred during such fiscal
quarter, but in no event shall the amount of any dividends, distributions or other payments made by the Company on account of its
Preferred Units pursuant to this clause (ii) exceed $70 million in any fiscal year; provided that such amounts
must be paid to the holders of the Series A Convertible Preferred Units and Series B Convertible Preferred Units on a pro rata
basis based on the amount of dividend or distribution obligations (including accrued but unpaid obligations) thereon at such time.


 


“Permitted
Investments” means:


 


any Investment
 by any Issuer or any Guarantor in any Issuer or any Guarantor, subject to the Collateral Requirements,  by any Restricted
Subsidiary that is not an Issuer or a Guarantor in any other Restricted Subsidiary that is not an Issuer or a Guarantor,  by
any Restricted Subsidiary that is not an Issuer or a Guarantor in any Issuer or any Guarantor (so long as no Capital Stock of any
Issuer or Guarantor is transferred to a Restricted Subsidiary that is not an Issuer or a Guarantor in connection with such Investment)
or  by any Issuer or any Guarantor in any Restricted Subsidiary that is not an Issuer or a Guarantor in an amount not to exceed
the greater of (a) $25 million or (b) 0.65% of the Company’s Adjusted Consolidated Net Tangible Assets at such time;


 


any Investment
in Cash Equivalents;


 


as long
as no Event of Default has occurred and is continuing, any Acquisition by the Company or any Restricted Subsidiary of the Company
if as a result of such Investment:


 


either


 


on the
date of such Acquisition after giving pro forma effect thereto and any related financing transactions as if the same had occurred
at the beginning of the applicable four-quarter period, the Company will be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption
“—Incurrence of Indebtedness and Issuance of Preferred Stock”; or


 




    	54



    	 



    

 


immediately
after giving effect to such Acquisition and any related financing transactions on a pro forma basis as if the same had occurred
at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio of the Company will be equal to or greater
than the Fixed Charge Coverage Ratio of the Company immediately before such transactions;


 


such Person
and its Subsidiaries becomes Restricted Subsidiaries of the Company (or, in the case of such Person, such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its properties or assets to, or is liquidated into, the
Company or a Restricted Subsidiary of the Company) and all of the Equity of such Person is acquired;


 


other
than as set forth in the proviso below, such Person and its Subsidiaries become Guarantors and grant a Lien on their assets in
accordance with and to the extent required by the provisions under the heading “Further Assurances; Collateral; Liens on
Additional Property”; and


 


such Person
and its Subsidiaries are, taken as a whole, principally engaged in the same business as the Issuers and Guarantors; and


 


any Investment
held by such Person; provided, that such Investment was not acquired by such Person in contemplation of such acquisition,
merger, consolidation or transfer;


 


provided that with respect to any
Acquisition the amount of consideration paid or provided by any Issuer or any Guarantor (including the aggregate principal amount
of all Indebtedness assumed in connection with such Acquisition and the fair market value of non-cash consideration) with respect
to any Person or Persons that shall not be or, after giving effect to such Acquisition, shall not become a Guarantor or shall not
transfer all or substantially all of its assets to any Issuer or a Guarantor, shall not exceed 10% of the aggregate consideration
paid in connection with such Acquisition at such time;


 


any Investment
made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” including
pursuant to clause (9) or (14) of the items deemed not to be Asset Sales under the definition of “Asset
Sale”;


 


any Investment
in any Person solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;


 


any Investments
received in compromise of obligations of trade creditors or customers in the ordinary course of business, including pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or as a
result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment in default;


 


Hedging
Contracts;


 


Permitted
Business Investments;


 


Investments
in Utica having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments made pursuant to this clause (9) that
are at the time outstanding, do not exceed the greater of $25 million or 0.65% of the Company’s Adjusted Consolidated Net
Tangible Assets; and


 




    	55



    	 



    

 


other Investments
in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect
to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (10)
that are at the time outstanding, do not exceed the greater of $50 million or 1.30% of the Company’s Adjusted Consolidated
Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (10) is made in any
Person that is not a Guarantor at the date of the making of such Investment and such Person becomes a Guarantor after such date,
such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant
to this clause (10) for so long as such Person continues to be a Guarantor;


 


Notwithstanding the foregoing,
clauses (1), (3), (9) and (10) may not be used by any Issuer or Guarantor
to make any contribution to any Person (other than an Issuer or a Guarantor) with (or Investment in the form of) the Permian Basin
Properties or other Mortgaged Properties (or Equity Interests of any Person that owns any Permian Basin Properties or Mortgaged
Property).


 


“Permitted
Liens” means:


 


any Priority
Lien with respect to any Permitted Credit Facility incurred under clause (1) of the definition of “Permitted Debt”;


 


Liens in
favor of the Company or the Guarantors securing claims in which the collateral agent has a perfected Second-Priority Lien and that
are junior in priority to the Parity Liens; provided, however, such Liens must be immediately released upon assignment or transfer
to a Person that is not an Issuer or Guarantor;


 


Liens on
property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted
Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such merger or consolidation
and do not extend to any assets (other than improvements thereon, accessions thereto and proceeds thereof) other than the property
of such Person that secured such Lien at the time such Person merged into or consolidated with the Company or the Restricted Subsidiary;


 


Liens on
property existing at the time of acquisition of the property by the Company or any Restricted Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any other assets (other than
improvements thereon, accessions thereto and proceeds thereof);


 


any interest
or title of a lessor to the property subject to a Capital Lease Obligation; provided, that the principal amount of such Capital
Lease Obligation is otherwise permitted to be incurred under the indenture;


 


Liens for
the purpose of securing the payment of all or a part of the purchase price of, or Capital Lease Obligations, purchase money obligations
or other payments incurred to finance the acquisition, lease, improvement or construction of or repairs or additions to, assets
or property acquired or constructed in the ordinary course of business, in each case, to the extent permitted under clause (4)
of the definition of “Permitted Debt”; provided that:


 


the aggregate
principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under clause (4) under
the heading “Incurrence of Indebtedness and Issuance of Preferred Stock” indenture and does not exceed the cost of
the assets or property so acquired or constructed; and


 


such Liens
are created within 180 days of the later of the acquisition, lease, completion of improvements, construction, repairs or additions
or commencement of full operation of the assets or property subject to such Lien and do not encumber any other assets or property
of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;


 




    	56



    	 



    

 


Liens existing
on the date of the indenture (other than Liens permitted under clause (1) and clause (17));


 


customary
Liens to secure the performance of tenders, bids, statutory obligations, surety or appeal bonds, trade contracts, government contracts,
operating leases, performance bonds or other obligations of a like nature incurred in the ordinary course of business;


 


Liens on
and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Company or any Restricted
Subsidiary of the Company to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or Joint
Venture;


 


customary
Liens in respect of Production Payments and Reserve Sales, which Liens shall be limited to the property that is the subject of
such Production Payments and Reserve Sales;


 


Liens on
pipelines or pipeline facilities that arise by operation of law;


 


Liens arising
under operating agreements, joint venture agreements, partnership agreements, oil and gas leases, farm-out agreements, farm-in
agreements, division orders, contracts for the sale, transportation or exchange of crude oil and natural gas and related Hydrocarbons
and minerals, unitization and pooling declarations and agreements, area of mutual interest agreements and other agreements arising
in the ordinary course of business of the Company and its Restricted Subsidiaries that are customary in the Oil and Gas Business;


 


customary
Liens reserved in oil and gas mineral leases for bonus or rental payments and for compliance with the terms of such leases;


 


Liens upon
specific items of inventory, receivables or other goods or proceeds of the Company or any of its Restricted Subsidiaries securing
such Person’s obligations in respect of bankers’ acceptances or receivables securitizations issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such inventory, receivables or other goods or proceeds
and permitted by the covenant “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;


 


Liens securing
Obligations of the Issuers or any Guarantor under the notes or the Subsidiary Guarantees issued as of the Issue Date;


 


Liens to
secure performance of Hedging Contracts of the Company or any of its Restricted Subsidiaries to the extent subject to the Intercreditor
Agreement;


 


Liens securing
any insurance premium financing under customary terms and conditions, provided that no such Lien may extend to or cover any assets
or property other than the insurance being acquired with such financing, the proceeds thereof and any unearned or refunded insurance
premiums related thereto;


 


Liens arising
from royalties, overriding royalties, revenue interests, net revenue interests, net profit interests, reversionary interests, production
payments, preferential rights of purchase, working interests and other similar interests, all as ordinarily exist with respect
to properties and assets of the Company and its Restricted Subsidiaries or otherwise as are customary in the Oil and Gas Business;


 


other Liens
incurred by the Company or any Restricted Subsidiary of the Company (other than Liens securing Indebtedness for borrowed money)
not exceeding at any time, in the aggregate, the greater of $30 million or .8% of the Company’s Adjusted Consolidated Net
Tangible Assets; and


 


any Lien
securing Permitted Refinancing Indebtedness, provided that  the principal amount of the Indebtedness secured by such Lien
is not increased except by an amount equal to accrued interest on the Indebtedness and the amount of all expenses and premiums
incurred in connection therewith and  no assets encumbered by any such Lien other than the assets permitted to be encumbered
immediately prior to such renewal, extension, refinance or refund are encumbered thereby (other than improvements thereon, accessions
thereto and proceeds thereof).


 




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“Permitted
Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness), provided that:


 


the principal
amount of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums
incurred in connection therewith);


 


such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded and, in the case of any extension, refinancing, renewal, replacement, defeasance or refunding of the notes
and Subsidiary Guarantees, such Permitted Refinancing Indebtedness has a final maturity date at least ninety-one (91) days after
the Maturity Date and amortization of no more than 1.00% per annum of the original principal amount thereof;


 


if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes
or the Subsidiary Guarantees, such Permitted Refinancing Indebtedness is subordinated in right of payment to the notes or the Subsidiary
Guarantees on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded;


 


such Indebtedness
is not incurred (other than by way of a guarantee) by a Restricted Subsidiary of the Company (other than the Operating Partnership
or Finance Corp.) if the Company is the issuer or other primary obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;


 


such Indebtedness
is not secured by a Lien on any assets other than the collateral securing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded or with a priority that is senior to the Lien securing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded (provided any extension, refinancing, renewal, replacement, defeasance or refunding
of the notes and Subsidiary Guarantees shall be on an unsecured basis); and


 


such Indebtedness
is not recourse to any Person that is liable on account of such Indebtedness immediately after giving effect to such incurrence
other than those Persons which were obligated on the Indebtedness being extended, refinanced, renewed, replaced or refunded.


 


“Person”
means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.


 


“Preferred
Change of Control Redemption” means the purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value of the Series B Preferred Units (as such term is defined in the Parent’s Third Amended and Restated Agreement of
Limited Partnership as in effect on the Issue Date) in accordance with Section 17.4 of Parent’s Third Amended and Restated
Agreement of Limited Partnership as in effect on the Issue Date; provided, however, such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall only constitute a “Preferred Change of Control Redemption”
as long as prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value, the Company has made the Change of Control Offer and has completed the repurchase or redemption of all notes validly
tendered for payment in connection with such Change of Control Offer.


 




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“Prepayment
Premium” means, with respect to the principal amount of any note, the extent to which the redemption price for such
note is in excess of 100.000% of the principal amount of such note, as set forth under the heading “Optional Redemption”.


 


“Priority
Lien” means a Lien granted by an Issuer or any Guarantor in favor of the Priority Lien Collateral Agent, at any time,
upon any property of any Issuer or any Guarantor to secure Priority Lien Obligations.


 


“Priority
Lien Collateral Agent” means Wells Fargo Bank, N.A., as agent under the Credit Agreement and any successor thereof
in such capacity under the Credit Agreement, or if the Credit Agreement ceases to exist, the collateral agent or other representative
of lenders or holders of Priority Lien Obligations designated pursuant to the terms of the Priority Lien Documents and the Intercreditor
Agreement.


 


“Priority
Lien Debt” has the meaning given such term in the Intercreditor Agreement as in effect on the date hereof; provided,
that the terms of Priority Lien Debt must satisfy the requirements of the provision under the heading “Amendments to Priority
Lien Debt” as if the Priority Lien Debt were an amendment to the Existing Credit Agreement.


 


“Priority
Lien Documents” has the meaning given such term in the Intercreditor Agreement as in effect on the date hereof.


 


“Priority
Lien Obligations” has the meaning given such term in the Intercreditor Agreement as in effect on the date hereof.


 


“Production
Payments” means, collectively, Dollar-Denominated Production Payments and Volumetric Production Payments.


 


“Production
Payments and Reserve Sales” means the grant or transfer by the Company or a Restricted Subsidiary of the Company
to any Person of a royalty, overriding royalty, net profits interest, production payment (whether volumetric or dollar denominated),
partnership or other interest in oil and gas properties, reserves or the right to receive all or a portion of the production or
the proceeds from the sale of production attributable to such properties, including any such grants or transfers pursuant to incentive
compensation programs on terms that are reasonably customary in the oil and gas business for geologists, geophysicists and other
providers of technical services to the Company or a Subsidiary of the Company.


 


“Proved
Developed Producing Reserves” means Proved Reserves which are categorized as both “Developed” and “Producing”
in the Reserve Definitions.


 


“Proved
Reserves” means “Proved Reserves” as defined in the Definitions for Oil and Gas Reserves
(the “Reserve Definitions”) promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect at the time in question.


 


“Proved
Reserves Coverage Ratio” means the ratio of the (i) PV10 of the Proved Reserves of the Issuers’ and Guarantors’
Oil and Gas Properties as of the latest Reserve Report to (ii) the Consolidated Senior Secured Debt as of the date such ratio is
calculated. The Proved Reserves Coverage Ratio will be tested semi-annually on April 1 and October 1 of each year (the “Proved
Reserves Coverage Ratio Date”) and will govern the distribution for the succeeding 6 months following the Proved
Reserves Coverage Ratio Date. For the avoidance of doubt, the April 1 Proved Reserves Coverage Ratio will be tested based on the
January 1 Reserve Report with Strip Pricing as of March 15 and the Consolidated Senior Secured Debt as of April 1. In addition,
the October 1 Proved Reserves Coverage Ratio will be tested based on the July 1 Reserve Report with Strip Pricing as of September
15 and the Consolidated Senior Secured Debt as of October 1.


 


“Proved
Reserves Coverage Ratio Date” has the meaning specified in the definition of “Proved Reserves Coverage Ratio”.


 




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“PV10”
means, in respect of the Proved Reserves of any Issuer’s or any Guarantor’s Oil and Gas Properties, the net present
value of future cash flows (discounted at a rate of ten percent per annum) on a pre-income tax basis calculated by the Company
based on the information from the most recent Reserve Report that is available and taking into account all other factors which
are reasonably deemed by the Company to be material, but provided that each calculation of such expected future cash flow shall
be made in accordance with the then existing standards of the Society of Petroleum Engineers, provided that in any event  reasonable
adjustments as determined in good faith by management shall be made for management’s projections of (a) operating, gathering,
transportation and marketing costs required for the production and sale of such reserves, (b) capital expenditures required to
maintain and develop such reserves and (c) basis differentials,  reasonable adjustments as determined in good faith by management
shall be made for the acquisition and sale of reserves since the date of such Reserve Report (with such adjustments being based
on the Strip Price as of March 15 or September 15, as applicable, or a date that is mutually agreed by the Company and the Majority
Holders) and  the pricing assumptions used in determining PV10 for any particular reserves shall be based upon the Strip Price
as of March 15 or September 15, as applicable, or a date that is mutually agreed by the Company and the Majority Holders; provided
that, for purposes of calculating PV10 for purposes of the Proved Reserves Coverage Ratio for all purposes hereunder, no more than
40% of such amount may be attributable to Proved Reserves described in the applicable Reserve Report other than Proved Developed
Producing Reserves. PV10 shall be adjusted to give effect to Hedging Contracts as in effect on the date of determination.


 


“Qualifying
Owners” means, collectively, the Company and its Restricted Subsidiaries.


 


“Reporting
Default” means a Default described in clause (4) under “—Events of Default and Remedies.”


 


“Reserve
Definitions” has the meaning set forth for such term in the definition of “Proved Reserves” herein.


 


“Reserve
Report” means a report as of January 1 or July 1 of each year covering proved developed and proved undeveloped oil
and gas reserves attributable to the Oil and Gas Properties owned by the Company and its Restricted Subsidiaries and setting forth
with respect thereto  the total quantity of proved developed and proved undeveloped reserves (separately classified as to
producing, non-producing, shut-in, behind pipe, and undeveloped),  the estimated future net revenues and cumulative estimated
future net revenues and  the present discounted value of future net revenues; provided, however, that the January 1
reserve report is provided by a nationally recognized third party reserve engineer and any succeeding reserve report for the same
year is prepared by the Company.


 


“Restricted
Investment” means an Investment other than a Permitted Investment.


 


“Restricted
Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Notwithstanding
anything in the indenture to the contrary, the Operating Partnership and Finance Corp. shall be Restricted Subsidiaries of the
Company.


 


“S&P”
refers to Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor to the
rating agency business thereof.


 


“Second-Priority”
or “Second-Priority Basis” means, with respect to any Lien, a Lien that is second priority to Priority Lien
Debt, in each instance, subject to the Intercreditor Agreement and Permitted Liens.


 


“Senior
Debt” means:


 


all Indebtedness
of the Company or any of its Restricted Subsidiaries outstanding under any Permitted Credit Facility and all obligations under
Hedging Contracts with respect thereto;


 


any other
Indebtedness of the Company or any of its Restricted Subsidiaries permitted to be incurred under the terms of the indenture, unless
the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the
notes or any Subsidiary Guarantee; and


 


all Obligations
with respect to the items listed in the preceding clauses (1) and (2).


 




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Notwithstanding anything
to the contrary in the preceding sentence, Senior Debt will not include:


 


any intercompany
Indebtedness of the Company or any of its Restricted Subsidiaries to the Company or any of its Affiliates; or


 


any Indebtedness
that is incurred in violation of the indenture.


 


For the avoidance
of doubt, “Senior Debt” will not include any trade payables or taxes owed or owing by the Company or any of its Restricted
Subsidiaries.


 


“Series
A Convertible Preferred Units” has the meaning assigned to such term in the Partnership Agreement, as in effect on
the date of the indenture.


 


“Series
B Convertible Preferred Units” has the meaning assigned to such term in the Partnership Agreement, as in effect on
the date of the indenture.


 


“Significant
Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the indenture.


 


“Stated
Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date
on which the payment of interest or principal was scheduled (including interest payments to be paid in accordance with applicable
interest periods) to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.


 


“Strip
Price” means, as of any date of the determination thereof with respect to the Oil and Gas Properties included in
the then most recent Reserve Report,  the average of the closing midpoint contract prices on a monthly basis for each month
through the eighth anniversary of the then most recent Reserve Report (the “Initial Strip”) and  thereafter,
the average of such midpoint contract prices for the last twelve (12) months of such Initial Strip period escalated at 2.0% per
annum for five years, in each case as quoted on the New York Mercantile Exchange (the “NYMEX”) for WTI
oil and Henry Hub gas prices and the ICE Futures Europe (“ICE”) for Brent oil prices; provided, however,
that lease operating costs will be escalated at 1% per annum for the same period that WTI oil prices are escalated. If NYMEX and/or
ICE no longer provides such futures midpoint contract quotes or has ceased to operate, the Company shall designate another nationally
recognized commodities exchange to replace the NYMEX and/or ICE for purposes of the references to the NYMEX and ICE herein.


 


“Subsidiary”
means, with respect to any specified Person:


 


any corporation,
association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total
voting power of Voting Stock of such Person is at the time owned or controlled, directly or indirectly, by that Person or one or
more of the other subsidiaries of that Person (or a combination thereof); and


 


any partnership
(whether general or limited) or limited liability company  the sole general partner or member of which is such Person or a
subsidiary of such Person, or  if there is more than a single general partner or member, either (x) the only managing general
partners or managing members of which are such Person or one or more subsidiaries of such Person (or any combination thereof) or
(y) such Person owns or controls, directly or indirectly, a majority of the outstanding general partner interests, member interests
or other Voting Stock of such partnership or limited liability company, respectively.


 


“Subsidiary
Guarantee” means any guarantee by a Guarantor of the Issuers’ Obligations under the indenture and on the notes.


 




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“Treasury
Rate” means, in respect of any redemption date, the yield to maturity at the time of computation of United States
Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior to such time (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption
date to March       , 2018; provided, however, that if such period is not equal to the
constant maturity of a United States Treasury security for which a weekly average yield is given, the Company shall obtain the
Treasury Rate by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the period from the redemption date to March          ,
2018 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used. The Company will  calculate the Treasury Rate no later than the second Business Day (and
no earlier than the fourth Business Day) preceding the applicable redemption date (or, in the case of any redemption in connection
with a defeasance of the notes or a satisfaction and discharge of the indenture, on the business day preceding such event) and
 prior to such redemption date file with the trustee a statement setting forth the Make-Whole Amount and the Treasury Rate
and showing the calculation of each in reasonable detail.


 


“Unrestricted
Subsidiary” means  Utica,  East Texas Salt Water Disposal Company and  any Subsidiary of the Company
(other than Finance Corp., the Operating Partnership or the General Partner) that is designated (and permitted to be designated
under the indenture) by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution, but
only to the extent that Utica, East Texas Salt Water Disposal Company or such Subsidiary:


 


has no
Indebtedness other than Non-Recourse Debt owing to any Person other than the Company or any of its Restricted Subsidiaries;


 


is not
party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless
the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted
Subsidiary than those that would be obtained at the time from Persons who are not Affiliates of the Company;


 


is a Person
with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation  to
subscribe for additional Equity Interests or  to maintain or preserve such Person’s financial condition or to cause
such Person to achieve any specified levels of operating results; and


 


has not
guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries.


 


All Subsidiaries of
an Unrestricted Subsidiary shall also be Unrestricted Subsidiaries.


 


Any designation of
a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a Board Resolution
giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption “—Certain Covenants—Restricted
Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness or Liens
of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness
is not permitted to be incurred as of such date under the covenant described under the caption “—Certain Covenants—Incurrence
of Indebtedness and Issuance of Preferred Stock,” or such Liens are not permitted to be incurred as of such date under the
covenant described under “—Certain Covenants—Liens” the Company will be in default of such covenant.


 


“Unsecured
Notes” means unsecured notes, loans or other instruments evidencing Indebtedness for borrowed money issued by any
Issuer or Restricted Subsidiary in a capital markets, bank or syndicated loan financing or similar financing prior to or after
the Issue Date.


 


“Utica”
means Breitburn Collingwood Utica LLC, a Delaware limited liability company indirectly wholly-owned by the Company on the date
of the indenture.


 




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“Volumetric
Production Payments” means production payment obligations recorded as deferred revenue in accordance with GAAP, together
with all related undertakings and obligations.


 


“Voting
Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled (without
regard to the occurrence of any contingency) to vote in the election of the Board of Directors of such Person.


 


“Weighted
Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:


 


the sum
of the products obtained by multiplying  the amount of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect of the Indebtedness, by  the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by


 


the then
outstanding principal amount of such Indebtedness.


 




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