Document:

EX-10.1

 Exhibit 10.1 

Execution Version 

$325,000,000 
 REX ENERGY
CORPORATION 
 6.25% Senior Notes due 2022 

Purchase Agreement 
 July 14,
2014 
 RBC Capital Markets, LLC 
 KeyBanc Capital Markets Inc.

 SunTrust Robinson Humphrey, Inc. 
 Wells Fargo Securities,
LLC 
 As Representatives of the several 

    Initial Purchasers listed in Schedule 1 hereto 

c/o RBC Capital Markets, LLC 
 Three World Financial Center 

200 Vesey Street, 9th Floor 
 New York, New York 10281 

Ladies and Gentlemen: 
 Rex Energy Corporation, a
Delaware corporation (the “Company”), proposes to issue and sell to the several purchasers named in Schedule 1 hereto (the “Initial Purchasers”), for whom you are acting as representatives
(the “Representatives”), $325,000,000 aggregate principal amount of its 6.25% Senior Notes due 2022 (the “Notes”), which will be unconditionally guaranteed on a senior unsecured basis as to principal,
premium, if any, and interest (the “Guarantees” and, together with the Notes, the “Securities”) by the subsidiaries of the Company listed in Schedule 2 hereto (each individually, a
“Guarantor” and collectively, the “Guarantors”). The Company and the Guarantors are referred to collectively as the “Rex Parties.” The Guarantors, together with R.E. Ventures
Holdings, LLC, a Delaware limited liability company, R.E. Disposal, LLC, a Delaware limited liability company, Rex Energy Marketing, LLC, a Delaware limited liability company, Water Solutions Holdings, LLC, a Delaware limited liability company
(“Water Solutions”), Keystone Clearwater Solutions, LLC, a Delaware limited liability company (“Keystone Clearwater”), Keystone Clearwater Transportation, LLC, a Delaware limited liability company (“Keystone
Transportation”), and Cocoa Properties I, LLC, a Delaware limited liability company (“Cocoa Properties”), are referred to collectively as the “Subsidiaries.” The Company and the Subsidiaries are
referred to collectively as the “Rex Entities.” The Securities will be issued pursuant to an Indenture (the “Indenture”) dated as of the Closing Date (as defined in Section 1 hereof) among
the Rex Parties and Wilmington Trust, National Association, as trustee (the “Trustee”). The Notes will be issued only in book-entry form in the name of Cede & Co., as nominee of The Depository Trust Company
(“DTC”) pursuant to a blanket letter of representations from the Company. 

 The Securities will be offered and sold through the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act and in offshore
transactions in reliance on Regulation S under the Securities Act (“Regulation S”). The Initial Purchasers have advised the Company that they will offer and sell the Notes purchased by them hereunder in accordance with
Section 1 hereof as soon as the Representatives deem advisable. 
 The holders of the Notes will be entitled to the benefits of
a registration rights agreement, to be dated as of the Closing Date, among the Initial Purchasers and the Rex Parties (the “Registration Rights Agreement”), pursuant to which the Rex Parties will agree to file with the
Securities and Exchange Commission (the “Commission”) (i) a registration statement under the Securities Act relating to another series of debt securities of the Company and the guarantees of the Guarantors under the
Indenture, each respectively with terms substantially identical to the Notes (the “Exchange Notes”) and the Guarantees (the “Exchange Guarantees”) to be offered in exchange for the Notes and the
Guarantees (the “Exchange Offer”), and (ii) to the extent required by the Registration Rights Agreement, a shelf registration statement pursuant to Rule 415 of the Securities Act relating to the resale by certain
holders of the Notes, and in each case, to use their commercially reasonable efforts to cause such registration statements to be declared effective. The Exchange Notes and the Exchange Guarantees are herein collectively referred to as the
“Exchange Securities.” 
 This Agreement, the Registration Rights Agreement, the Indenture and the Notes are
hereinafter collectively referred to as the “Transaction Documents” and the execution and delivery of the Transaction Documents and the transactions contemplated herein and therein are hereinafter referred to as the
“Transactions.” 
 In connection with the sale of the Notes, the Company has prepared a preliminary offering
memorandum, dated July 14, 2014 (the “Preliminary Memorandum”), the Offering Memorandum (as defined below) and a Final Memorandum (as defined below), dated the date hereof. Each of the Preliminary Memorandum, the
Offering Memorandum and the Final Memorandum is referred to herein as a “Memorandum.” Each Memorandum sets forth certain information concerning the Company, the Transaction Documents and the Transactions for use by the
Initial Purchasers in connection with the solicitation of offers for or sales of the Securities. The Company hereby confirms that it has authorized the use of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum, and any
amendment or supplement thereto, in connection with the offer and sale of the Notes by the Initial Purchasers. 
 At or prior to the time
when the sales of the Notes were first made (the “Time of Sale”), the Company has prepared and delivered to the Initial Purchasers a pricing supplement (the “Pricing Supplement”) dated July 14,
2014, in the form attached as Schedule 3 hereto. The Pricing Supplement together with the Preliminary Memorandum is referred to herein as the “Offering Memorandum.” 

Promptly after the Time of Sale and in any event no later than the second Business Day following the Time of Sale, the Company will prepare
and deliver to each Initial Purchaser a Final Offering Memorandum (the “Final Memorandum”), which will consist of the Preliminary 

  
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Offering Memorandum with such changes therein as are required to reflect the information contained in the Pricing Supplement, and from and after the time such Final Memorandum is delivered to
each Initial Purchaser, all references herein to the Offering Memorandum shall be deemed to be a reference to both the Offering Memorandum and the Final Memorandum. 

All references herein to the terms “Offering Memorandum” and “Final Memorandum” shall be deemed to mean and include all
information filed under the Securities Exchange Act of 1934 (as amended, the “Exchange Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder) prior to the Time of Sale
and incorporated by reference in the Offering Memorandum (including the Preliminary Memorandum) or the Final Memorandum (as the case may be), and all references herein to the terms “amend,” “amendment” or “supplement”
with respect to the Final Memorandum shall be deemed to mean and include all information filed under the Exchange Act after the Time of Sale and incorporated by reference in the Final Memorandum. 

1. Purchase of the Securities by the Initial Purchasers; Delivery and Payment. 

(a) The Company, on the basis of the representations, warranties and agreements set forth herein and subject to the terms and
conditions set forth herein, agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and
subject to the terms and conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth opposite such Initial Purchaser’s name in Schedule 1
hereto at a price equal to 98.28% of the principal amount thereof plus accrued interest, if any, from July 14, 2014. The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased
as provided herein. 
 (b) The Company acknowledges and agrees that the Initial Purchasers may offer and sell Securities to
or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser. 

(c) Payment for and delivery of the Securities will be made at the offices of Vinson & Elkins L.L.P., 1001 Fannin,
Suite 2500, Houston, Texas 77002, at 9:00 A.M., local time, on July 17, 2014, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon
in writing. The time and date of such payment and delivery is referred to herein as the “Closing Date.” 

(d) Payment for the Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the
Company to the Representatives against delivery of the Notes through the facilities of DTC, for the account of the Initial Purchasers. Concurrently, the Company will deliver to the Trustee, as custodian for DTC, one or more global notes representing
the Securities, with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company. 

  
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 2. Representations and Warranties of the Rex Parties. The Rex Parties jointly and
severally represent and warrant to, and agree with each Initial Purchaser that: 
 (a) Offering Memorandum. The
Offering Memorandum at the Time of Sale and at the Closing Date, and the Final Memorandum as of its date and at the Closing Date, did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations or warranties set forth in this paragraph shall not apply to statements in or omissions
from any Memorandum made in reliance upon and in conformity with information furnished in writing to the Company by the Initial Purchasers through the Representatives expressly for use therein, it being understood and agreed that the only such
information furnished by any Initial Purchaser consists of the information described in Section 6(b) hereof. 

(b) Company Written Communication. The Rex Parties (including their agents and representatives, other than the Initial
Purchasers in their capacity as such) have not prepared, made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the
Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and representatives (other than a communication referred to in clauses (i),
(ii) and (iii) below), a “Company Written Communication”) other than (i) the Preliminary Memorandum, (ii) the Final Memorandum, (iii) the Pricing Supplement, which constitutes part of the
Offering Memorandum, and (iv) any electronic road show or other written communications, in each case approved in writing in advance by the Representatives in accordance with Section 3(c) and, such Company Written Communication when
taken together with the Offering Memorandum, did not at the Time of Sale, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided that the Rex Parties make no representation and warranty with respect to any statements or omissions made in each such Company Written Communication in reliance
upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives expressly for use in any Company Written Communication, it being understood and
agreed that the only such information furnished by any Initial Purchaser consists of the information described in Section 6(b) hereof. 

(c) Incorporated Documents. The documents incorporated by reference in the Preliminary Memorandum, the Offering
Memorandum and the Final Memorandum (the “Incorporated Documents”), when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities
Act or Exchange Act, as applicable, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further 

  
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documents so filed and incorporated by reference in the Preliminary Memorandum, the Offering Memorandum or the Final Memorandum, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 

(d) Financial Statements. The historical financial statements of the Company included or incorporated by reference in
each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum, together with the related schedules and notes, comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange
Act and fairly present in all material respects the financial condition of the Company on a historical consolidated and combined basis as of the respective dates indicated; such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise indicated in the notes thereto). The other financial information included or incorporated by reference in the Preliminary Memorandum,
the Offering Memorandum and the Final Memorandum has been derived from the accounting records of the Rex Entities and present fairly, in all material respects, the information shown thereby. The Rex Entities do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations), not disclosed or incorporated by reference in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum. The interactive data in eXtensible
Business Reporting Language (“XBRL”) incorporated by reference in the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum fairly presents the financial information called for in all material respects and
has been prepared in accordance with the Commission’s rules and guidelines applicable thereto. 
 (e) No Material
Adverse Change. None of the Rex Entities has sustained since the date of the last audited financial statements included or incorporated by reference in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum any loss
or interference with its business material to the Rex Entities considered as a whole, otherwise than as set forth or contemplated in each of the Offering Memorandum and the Final Memorandum. Since the respective dates as of which information is
given in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum, there has not been any (i) material change in the capitalization of the Rex Entities, (ii) material increase in the aggregate in the
consolidated short-term or long-term debt of the Company, (iii) transaction that is material to the Rex Entities contemplated or entered into by any of the Rex Entities, (iv) obligation, contingent or otherwise, directly or indirectly
incurred by any Rex Entity that is material to the Rex Entities taken as a whole or (v) dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, in each case otherwise than as set forth or
contemplated in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum. 

  
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 (f) Organization and Good Standing of the Company. The Company has been
duly incorporated and is validly existing and in good standing as a corporation under the laws of the State of Delaware, with the requisite power and authority to own and lease its properties and conduct its business as described in each of the
Offering Memorandum and the Final Memorandum. The Company is duly qualified to do business and in good standing as a foreign corporation in all jurisdictions in which its ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, properties,
prospects, results of operations or stockholders’ equity, of the Rex Entities, taken as a whole, in each case other than as a result of an event, circumstance or condition applicable to the oil and gas industry as a whole (a
“Material Adverse Effect”). 
 (g) Organization and Good Standing of the Subsidiaries. Each
Subsidiary has been duly organized, is validly existing and in good standing as a corporation or limited liability company, as applicable, under the laws of the jurisdiction of its organization, as applicable, with the requisite power and authority
(corporate or limited liability company, as applicable) to own and lease its properties and conduct its business as described in each of the Offering Memorandum and the Final Memorandum. Each Subsidiary is duly qualified to do business as a foreign
corporation or limited liability company, as applicable, in good standing in all jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (h) Ownership. As
of the Closing Date, the Company will not own, directly or indirectly, an equity interest in any corporation, association or other entity other than the Subsidiaries and RW Gathering, LLC, a Delaware limited liability company (“RW
Gathering”). As of the Closing Date, the Company will not control, directly or indirectly, any corporation, association or other entity other than the Subsidiaries. Except for Water Solutions, Keystone Clearwater, Keystone
Transportation and Cocoa Properties, all of the outstanding capital stock or other equity interests, as applicable, of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and, as of the Closing Date, will
be owned by the Company, directly or indirectly through subsidiaries, free and clear of all liens, encumbrances, equities or claims, except for any security interests covering the outstanding capital stock or other equity interests, as applicable,
of any Subsidiary granted by the Company or any Subsidiary to the lenders under the Credit Facility (as such term is hereinafter defined). As of the date hereof and as of the Closing Date, the Company, directly or indirectly, will own a 60% equity
interest in Water Solutions, which in turn owns a 100% equity interest in Keystone Clearwater and Cocoa Properties, and Keystone Clearwater in turn owns a 100% equity interest in Keystone Transportation; all of the equity interests of Water
Solutions, Keystone Clearwater, Keystone Transportation and Cocoa Properties in which the Company owns a beneficial interest, directly or indirectly through subsidiaries, have been duly authorized and validly issued, are fully paid and nonassessable
and, as of the Closing Date, will be owned by the Company, directly or indirectly through subsidiaries, 

  
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free and clear of all liens, encumbrances, equities or claims, except for any security interests covering the outstanding equity interests of Water Solutions, Keystone Clearwater, Keystone
Transportation or Cocoa Properties granted by any Rex Entity to the lenders under the Credit Facility (as such term is hereinafter defined). The Company, indirectly through subsidiaries, owns a 40% equity interest in RW Gathering; all of the equity
interests of RW Gathering in which the Company owns a beneficial interest, directly or indirectly through subsidiaries, have been duly authorized and validly issued, are fully paid and nonassessable and, as of the Closing Date, will be owned by the
Company, directly or indirectly through subsidiaries, free and clear of all liens, encumbrances, equities or claims, except for any security interests covering the outstanding equity interests of RW Gathering granted by any Rex Entity to the lenders
under the Credit Facility (as such term is hereinafter defined). 
 (i) Capitalization. The duly authorized, issued
and outstanding capitalization of the Company is as set forth under the caption “Capitalization” in each of the Offering Memorandum and the Final Memorandum as of the date set forth therein; all of the issued and outstanding shares of
capital stock of the Company on the date hereof are duly authorized and validly issued, fully paid and nonassessable, are free of any preemptive rights, rights of first refusal or similar rights, were issued and sold in compliance with applicable
federal and state securities laws and conform in all material respects to the description thereof in each of the Offering Memorandum and the Final Memorandum; except as described in each of the Offering Memorandum and the Final Memorandum, there are
no outstanding options, warrants or other rights calling for the issuance of, and there are no commitments, plans or arrangements to issue any shares of capital stock of the Company or any security convertible or exchangeable or exercisable for
capital stock of the Company. 
 (j) Due Authorization. Each of the Rex Parties has full right, power and authority to
execute and deliver the Transaction Documents to which it is a party and to perform its obligations thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and
the consummation of the Transactions has been, or as of the Closing Date will have been, duly and validly taken. 
 (k)
The Indenture. The Indenture has been duly authorized by the Rex Parties, and, at the Closing Date, will have been validly, executed and delivered by the Rex Parties, and, assuming due authorization, execution and delivery by the Trustee,
will constitute a valid and legally binding agreement of the Rex Parties enforceable against the Rex Parties in accordance with its terms; provided that such enforceability may be limited by (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law) and (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing (collectively, the “Enforceability Exceptions”). 

  
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 (l) The Notes. The Notes have been duly authorized by the Company for
issuance and sale to the Initial Purchasers pursuant to this Agreement and the Indenture and, when duly and validly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly
issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the
Indenture. 
 (m) The Exchange Notes. The Exchange Notes have been duly authorized by the Company for issuance and
sale and, when duly and validly executed, authenticated, issued and delivered as provided in the Indenture, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against
the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture. 

(n) The Guarantees. Each Guarantee has been duly authorized for issuance and sale to the Initial Purchasers pursuant to
this Agreement and the Indenture by each of the Guarantors and, when the Notes have been validly issued, executed and authenticated in accordance with the terms of the Indenture and paid for and delivered as provided herein, such Guarantee will
constitute a valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture. 

(o) The Exchange Guarantees. Each Exchange Guarantee has been duly authorized by each of the Guarantors for issuance and
sale and, when the Exchange Notes have been validly issued, executed and authenticated in accordance with the terms of the Indenture, such Exchange Guarantee will constitute a valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture. 

(p) The Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by each of the Rex
Parties and, when executed and delivered by the other parties thereto at the Closing Date, will have been validly, executed and delivered in accordance with its terms by each of the Rex Parties, and, assuming due authorization, execution and
delivery by the other parties thereto, will constitute a valid and legally binding agreement of each of the Rex Parties enforceable against the Rex Parties in accordance with its terms, subject to the Enforceability Exceptions. 

(q) Purchase Agreement. This Agreement has been duly authorized and validly executed and delivered by each of the Rex
Parties. 
 (r) Trust Indenture Act. The Indenture conforms in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”) and to the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. 

  
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 (s) Description of Transaction Documents. The statements set forth in the
Offering Memorandum under the caption “Description of Notes,” insofar as they purport to constitute a summary of the terms of the Notes and the Registration Rights Agreement, are accurate in all material respects. 

(t) No Violation or Default. None of the Rex Entities (i) is in violation of its certificate of incorporation,
by-laws, certificate of formation, limited liability company agreement or similar organizational documents, as applicable, (ii) is in default (or, with the giving of notice or lapse of time or both, would be in default) under any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or instrument to which any of the Rex Entities is a party or by which any of the Rex Entities is bound or to which any of the property or assets of the Rex Entities is subject, or
(iii) is in violation of any law or statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over it or its property or assets or has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business, except in the cases of clauses (ii) and (iii), to the extent any such conflict, breach,
violation or default would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

(u) No Conflicts. The execution, delivery and performance (subject to the Enforceability Exceptions) by each of the Rex
Parties of each of the Transaction Documents to which it is a party, the issuance of the Securities and the Exchange Securities and compliance by the Rex Parties with the terms thereof and the consummation of the Transactions (including the
application of the proceeds from the sale of the Securities as described under “Use of Proceeds” in the Offering Memorandum and the Final Memorandum) does not and will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Rex Entities, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license or other agreement or instrument to
which any of the Rex Entities is a party or by which any of the Rex Entities is bound or to which any of the property or assets of the Rex Entities is subject; (ii) result in any violation of the provisions of the charter or by-laws (or similar
organizational documents) of the Rex Entities; or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Rex Entities or any of their respective
properties or assets, except with respect to clauses (i) and (iii), for such conflicts, breaches, violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 (v) No Consents Required. Except for (i) such consents, approvals, authorizations, orders, filings,
registrations or qualifications as may be required (A) under applicable state securities or “Blue Sky” laws in connection with the purchase and resale of the Securities by the Initial Purchasers and (B) with respect to the
Exchange Securities under the Securities Act, the Trust Indenture Act and applicable state securities or “Blue Sky” laws as contemplated by the Registration Rights Agreement, (ii) such consents that have been, or prior to the Closing
Date will have been, obtained and (iii) such consents 

  
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that, if not obtained, would not reasonably be expected to have a Material Adverse Effect, no consent, approval, authorization or order of, or filing or registration with, any governmental agency
or body or any court having jurisdiction over any of the Rex Entities or any of their respective properties is required in connection with the offering, issuance and sale of the Securities by the Rex Parties in the manner contemplated herein or in
the Offering Memorandum, the execution, delivery and performance of this Agreement, the Indenture, the Notes and the Registration Rights Agreement by the Rex Parties, or the consummation by the Rex Parties of the transactions contemplated hereby or
thereby. 
 (w) Legal Proceedings. Except as described in each of the Offering Memorandum and the Final Memorandum,
there are no legal, governmental or regulatory investigations, actions, suits, arbitrations or other proceedings pending as to which the any of the Rex Entities is a party or of which any property of the Rex Entities is the subject that, if
determined adversely to the Rex Entities, would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect or would reasonably be expected to adversely affect the ability of each of the Rex Parties to perform its
obligations under the Transaction Documents; and no such actions, suits or proceedings are, to the Company’s knowledge, threatened. No labor dispute with the employees of the Rex Entities exists or, to the knowledge of the Company, is
threatened or imminent that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 

(x) Independent Accountants. KPMG LLP, which has expressed its opinion with respect to certain financial statements of
the Company and the related schedules and notes thereto included or incorporated by reference in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum, is an independent public registered accounting firm with respect
to the Company within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) as required by the Securities Act. 

(y) Title to Real and Personal Property. The Rex Entities have good and marketable title in fee simple to all real
property owned by them, and good and marketable title to all other property owned by them, in each case free from mortgages, pledges, liens, security interests, claims, restrictions, encumbrances and defects of any kind (each a
“Lien”), except Liens that (i) are described in each of the Offering Memorandum and the Final Memorandum, including Liens under the Company’s amended and restated senior secured revolving credit agreement dated as
of March 27, 2013 and the Company’s amended and restated guaranty and collateral agreement, dated as of March 27, 2013, each as amended to date (collectively, the “Credit Facility”), (ii) liens and
encumbrances under operating agreements, unitization pooling agreements, production sales contracts, farm-out agreements and other oil and gas exploration and production agreements, in each case that secure payment of amounts not yet due and payable
for the performance of other inchoate obligations and are of a scope and nature customary in connection with similar drilling and producing operations, or (iii) such would not, individually or in the aggregate, have a Material Adverse Effect.
All of the leases and subleases material to the business of the Rex Entities, and under which the Rex 

  
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Entities hold the properties described in each of the Offering Memorandum and the Final Memorandum, are in full force and effect, and none of the Rex Entities has any notice of any material claim
of any sort that has been asserted by anyone adverse to the rights of the Rex Entities under any such leases or subleases, or affecting or questioning the rights of the Rex Entities to the continued possession of the leased or subleased property
under any such lease or sublease. 
 (z) Investment Company. Each of the Rex Entities is not, and after giving effect
to the offering and sale of the Securities and the application of the proceeds thereof as described in each of the Offering Memorandum and the Final Memorandum, will not be, required to register as an “investment company” as such term is
defined under the Investment Company Act of 1940, as amended. 
 (aa) Taxes. The Rex Entities have (i) filed on a
timely basis all necessary federal, state, local and foreign income and franchise tax returns required to be filed or have duly requested extensions thereof; and (ii) paid all taxes shown as due on such tax returns (including any related
assessments, fines or penalties), except for taxes being contested in good faith for which reserves in accordance with the generally accepted accounting principles have been established. No tax deficiency has been asserted against the Rex Entities
which has had, nor does the Company know of any tax deficiency that is likely to be asserted against the Rex Entities which, if determined adversely to the Rex Entities, would have, a Material Adverse Effect. 

(bb) Governmental Licenses. The Rex Entities possess such certificates, permits, licenses, approvals, consents and other
authorizations (collectively, “Governmental Licenses”) issued by appropriate federal, state or local governmental or regulatory agencies or bodies necessary to conduct the businesses in the manner described in each of the
Offering Memorandum and the Final Memorandum, except where the failure to possess or make the same would not reasonably be expected to have a Material Adverse Effect; and the Rex Entities are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so possess or comply would not, individually or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid in full force and effect, except where the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not reasonably be expected to have a Material Adverse Effect; and none of the Rex Entities has received any notice of proceedings relating
to the revocation or modification of any such Governmental Licenses that, if determined adversely to the Rex Entities, would, individually or in the aggregate, have a Material Adverse Effect. 

(cc) Compliance with Environmental Laws. Except as would not, individually or in the aggregate, have a Material Adverse
Effect, or as described in each of the Offering Memorandum and the Final Memorandum, (i) none of the Rex Entities is in violation of any federal, state or local statute, rule, regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, of any governmental agency or body or any court relating to the pollution or protection of human health, the

  
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environment (including, without limitation, ambient air, surface water, groundwater, land surface, or subsurface strata) or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”) and (ii) the Rex Entities have all material permits, authorizations and
approvals required under any applicable Environmental Laws and are each in material compliance with their requirements. Except as disclosed in each of the Offering Memorandum and the Final Memorandum, there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law that, if determined adversely to
the Rex Entities, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, and except as described in each of the Offering Memorandum and the Final Memorandum, there are no
events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Rex Entities relating
to any Hazardous Materials or the violation of any Environmental Laws that would, individually or in the aggregate, have a Material Adverse Effect. 

(dd) Compliance with ERISA. (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “controlled group” (defined as any organization which is a member of a controlled group of corporations within
the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each, a “Plan”) has been maintained in all material respects in compliance with
its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code; (ii) to the knowledge of the Company, no prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975 of the Code, has occurred with respect to any Plan excluding transactions effected pursuant to a statutory or administrative exemption; and (iii) no Plan is subject to Title IV of ERISA; except, in the case of each
of clauses (i) and (ii) above, for any such failure to maintain or comply or the occurrence of any transaction as would not reasonably be expected to have a Material Adverse Effect. 

(ee) No Restrictions on Distributions. Except as described in each of the Offering Memorandum and the Final Memorandum,
and except as pursuant to the Credit Facility, upon consummation of this offering, including the application of the use of proceeds of the offering, none of the Subsidiaries will be restricted, directly or indirectly, from (i) paying any
dividends or distributions to the Company, (ii) repaying to the Company any loans or advances to such Subsidiary from the Company or (iii) transferring any property or assets to the Company or any other Subsidiary of the Company. 

  
 12 

 (ff) Intellectual Property. The Rex Entities own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “intellectual property rights”)
necessary to conduct the business now operated by them, or presently employed by them, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if
determined adversely to the Rex Entities, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

(gg) Disclosure Controls. Each of the Rex Entities has established and maintain disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), (i) such disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Rex Entities in the reports they will file or submit under
the Exchange Act is accumulated and communicated to management of the Rex Entities, including their respective principal executive officers and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure to
be made and (ii) such disclosure controls and procedures have been evaluated for effectiveness as of the end of the period covered by the Company’s most recent Quarterly Report on Form 10-Q and have been determined to be effective in all
material respects to perform the functions for which they were established. 
 (hh) No Changes in Internal Controls.
(a) As of the date hereof, and except as disclosed in each of the Offering Memorandum and the Final Memorandum, the Company is not aware of (i) any “material weakness” or “significant deficiency” (as defined in Public
Company Accounting Oversight Board Standard No. 2) in any of the Rex Entities’ internal control over financing reporting (as defined in Rule 13a-15(f)), whether or not subsequently remediated, or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant role in any of the Rex Entities’ internal control over financial reporting and (b) since the date of the most recent balance sheet of the Company reviewed or
audited by KPMG LLP and the audit committee of the board of directors of the Company, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses. 
 (ii) Accounting Controls. Each of the Rex Entities
maintains a system of internal control over financial reporting (as defined in Rule 13a-15(f)) sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain accountability for assets, (iii) access to its assets is
permitted only in accordance with management’s general or specific authorization, (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences and (v) the interactive data in XBRL incorporated by reference in the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum fairly presents the information called for in all material respects and is prepared in
accordance with the Commission’s rules and guidelines applicable thereto. 

  
 13 

 (jj) Absence of Relationships. No relationship, direct or indirect, exists
between or among the Company, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company, on the other hand, that would be required to be described by the Securities Act in a registration statement filed with
the Commission that is not so described in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum. 

(kk) Insurance. The Rex Entities carry, or are covered by, insurance in such amounts and covering such risks as is
commercially reasonable for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. All policies of insurance of the Rex Entities
are in full force and effect; the Rex Entities are in compliance with the terms of such policies in all material respects; and none of the Rex Entities has received notice from any insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to continue such insurance; there are no claims by the Rex Entities under any such policy or instrument as to which any insurance company is denying liability or defending under a
reservation of rights clause; and none of the Rex Entities has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect. 
 (ll)
No Unlawful Payments. None of the Rex Entities, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Rex Entities, has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. 

(mm) Compliance with Money Laundering Laws. The operations of the Rex Entities are and have been conducted at all times
in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Rex Entities with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each case, as would not reasonably be expected to
have a Material Adverse Effect. 

  
 14 

 (nn) Compliance with OFAC. None of the Rex Entities, nor, to the knowledge
of the Company, any director, officer, agent, employee or affiliate of the Rex Entities, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC. 

(oo) Compliance with OSHA. The Rex Entities are in compliance in all respects with all applicable provisions of the
Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder, except for such noncompliance as would not, individually or in the aggregate, have a Material Adverse Effect. 

(pp) Anti-Discrimination. None of the Rex Entities is in violation of or has received notice of any violation with
respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wage and hour laws, nor any state law precluding the denial of credit due to the neighborhood in which a
property is situated, the violation of any of which could reasonably be expected to have a Material Adverse Affect. 
 (qq)
No General Solicitation. None of the Rex Entities or any of their Affiliates has, directly or through any person acting on its or their behalf (other than the Initial Purchasers, as to which no representation is made), offered, solicited
offers to buy or sold the Notes by any form of general solicitation or general advertising (within the meaning of Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. 

(rr) Regulation S. None of the Rex Entities, any of their Affiliates, nor any person acting on its or their behalf
(other than the Initial Purchasers, as to which no statement is made), has engaged in any directed selling efforts with respect to the Notes, and each of them has complied with the offering restrictions requirement of Regulation S. Terms used in
this paragraph have the meanings given to them by Regulation S. 
 (ss) Rule 144A. The Notes satisfy the
eligibility requirements of Rule 144A(d)(3) under the Securities Act. 
 (tt) Stamp Tax. There are no transfer
taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of the Transaction Documents or the issuance and sale by the
Company and the Guarantors of the Securities. 
 (uu) Margin Rules. Neither the issuance, sale and delivery of the
Securities nor the application of the proceeds thereof by the Company and the Guarantors as described in the Offering Memorandum and the Final Memorandum will violate Section 7 of the Exchange Act or Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors. 

  
 15 

 (vv) Statistical and Market Data. The statistical and market-related data
included in each of the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum are based on or derived from sources that the Company believes to be reliable and accurate in all material respects or represent the Company’s good
faith estimates that are made on the basis of data derived from such sources. 
 (ww) Sarbanes-Oxley Act. None of the
Rex Entities, nor any of their respective directors or managers, as applicable, or officers, in their capacities as such, is in material breach or violation of any provision of the Sarbanes Oxley Act of 2002 and the rules and regulations promulgated
in connection therewith. 
 (xx) Reserve Report. Netherland Sewell & Associates, Inc., whose summary reserve
report dated January 17, 2014 (the “Reserve Report Letter”) from which the oil and natural gas reserve estimates of the Rex Entities contained or incorporated by reference in each of the Offering Memorandum and the Final
Memorandum were derived, was, as of the date of the Reserve Report Letter, and is, as of the date hereof, an independent petroleum engineer with respect to the Rex Entities. The information underlying the estimates of reserves of the Rex Entities
used in the preparation of the reserve reports and other estimates, including, without limitation, production, costs of operation and development, current prices for production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the dates such estimates were made and such information was supplied and was prepared in accordance with customary industry practices; other than normal production of the reserves,
intervening market commodity price fluctuations, fluctuations in demand for such products, adverse weather conditions, unavailability or increased costs of rigs, equipment, supplies or personnel, the timing of third party operations and other
factors described in each of the Offering Memorandum and the Final Memorandum, the Company is not aware of any facts or circumstances that would result in a material adverse change in the reserves, or the present value of future net cash flows
therefrom, as described in each of the Offering Memorandum and the Final Memorandum and as reflected in the Reserve Report Letter; estimates of such reserves and present values as described in each of the Offering Memorandum and the Final Memorandum
and reflected in the Reserve Report Letter comply in all material respects with the applicable requirements of Regulation S X and the Securities Act, including Items 1201 through 1208 of Regulation S-K. 

Any certificate signed by an officer of any of the Rex Parties and delivered to the Initial Purchasers or counsel to the Initial Purchasers
shall be deemed a representation and warranty by such Rex Party to each Initial Purchaser as to the matters set forth therein. 

  
 16 

 3. Further Agreements of the Rex Parties. The Rex Parties jointly and severally covenant
and agree with each Initial Purchaser that: 
 (a) Notice to Representatives. The Company will prepare the Preliminary
Memorandum, the Offering Memorandum and the Final Memorandum in the form approved by the Representatives and, prior to the Closing Date, will not amend or supplement the Preliminary Memorandum, the Offering Memorandum or the Final Memorandum without
first furnishing to the Representatives a copy of such proposed amendment or supplement and will not use any amendment or supplement to which the Representatives may object. 

(b) Delivery of Copies. The Company will furnish to the Initial Purchasers and to Counsel for the Initial Purchasers
concurrently with the Time of Sale and at any time prior to the completion of the distribution of the Notes by the Initial Purchasers, without charge, as many copies of the Preliminary Memorandum and the Offering Memorandum and any amendments and
supplements thereto as they reasonably may request. 
 (c) Written Communications. Before making, preparing, using,
authorizing, approving or referring to any Company Written Communication, the Company will furnish to the Representatives and counsel for the Initial Purchasers a copy of such written communication for review and will not make, prepare, use,
authorize, approve or refer to any such written communication to which the Representatives reasonably object. 
 (d) No
Untrue Statements. At any time prior to the completion of the distribution of the Notes by the Initial Purchasers, if any event occurs or condition exists as a result of which, in the judgment of the Company or in the opinion of counsel for the
Initial Purchasers, the Preliminary Memorandum or the Offering Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or if it should be necessary to amend or supplement the Preliminary Memorandum or the Offering Memorandum, to comply with applicable law, the Company will promptly (i) notify the
Initial Purchasers of the same; (ii) subject to the requirements of paragraph (a) of this Section 3, prepare and provide to the Initial Purchasers, at their own expense, an amendment or supplement that corrects such
misstatement or omission or effects a compliance with law; and (iii) supply any supplemented or amended Preliminary Memorandum or the Offering Memorandum, to the Initial Purchasers and counsel for the Initial Purchasers, without charge, in such
quantities as may be reasonably requested. 
 (e) Blue Sky Compliance. The Company will (i) cooperate with the
Initial Purchasers to qualify the Notes and the Guarantees for sale by the Initial Purchasers under the laws of such jurisdictions as the Representatives may designate and (ii) maintain such qualifications for so long as required for the sale
of the Notes by the Initial Purchasers. The Company will promptly advise the Initial Purchasers of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. None of the Rex Entities shall be required to qualify as a foreign corporation or other entity or to take any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation or other entity. 

  
 17 

 (f) Additional Information. At any time prior to the completion of the
distribution of the Notes by the Initial Purchasers, the Company will deliver to the Initial Purchasers such additional information concerning the business and financial condition of the Rex Entities as the Initial Purchasers may from time to time
request and whenever it or any of its subsidiaries publishes or makes available to the public (by filing with any regulatory authority or securities exchange or by publishing a press release or otherwise) any information that would reasonably be
expected to be material in the context of the issuance of the Notes under this Agreement, shall promptly notify the Initial Purchasers as to the nature of such information or event. The Company will likewise notify the Initial Purchasers of
(i) any decrease in the rating of the Notes or any other debt securities of the Rex Entities by any nationally recognized statistical rating organization (as defined in Rule 436(g)(2) under the Securities Act) or (ii) any notice or
public announcement given of any intended or potential decrease in any such rating or that any such securities rating agency has under surveillance or review, with possible negative implications, its rating of the Notes, as soon as the Company
becomes aware of any such decrease, notice or public announcement. 
 (g) Resale by Affiliates. During the period of
one year after the Closing Date, the Company will not, and will not cause any of their Affiliates to, resell any of the Notes that constitute “restricted securities” under Rule 144 that have been acquired by any of them, other than
pursuant to an effective registration statement under the Securities Act or in accordance with Rule 144 under the Securities Act. 

(h) No General Solicitation. None of the Rex Entities or any of their Affiliates, nor any person acting on its or their
behalf (other than the Initial Purchasers or any of their respective Affiliates, as to which no statement is made), will solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising (within
the meaning of Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. 

(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Notes as set forth under “Use of
Proceeds” in the Preliminary Memorandum and the Offering Memorandum. 
 (j) Restrictive Legend. Each Note shall
bear the legend specified in the Indenture until such legend shall no longer be necessary or advisable because the Notes are no longer subject to the restrictions on transfer described therein. 

(k) Clear Market. The Company will not, directly or indirectly, offer, sell, contract to sell, issue or grant any option
to sell, pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1 under the Exchange Act, or otherwise dispose of or transfer, announce the offering of, or file any registration statement in
respect of, any securities of the 
 Company substantially similar to the Notes or any securities convertible into or exchangeable for the
Notes (other than the Notes 

  
 18 

 
offered pursuant to this Agreement) for a period of 60 days after the date hereof, without the prior written consent of RBC Capital Markets, LLC (which consent may be withheld at its sole
discretion). 
 (l) Reportable Transactions. The Company will, promptly after it has notified the Representatives of
any intention by the Company to treat the Transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), deliver a duly completed copy of IRS Form 8886 or any successor form to the
Representatives. 
 (m) Arms’ Length Negotiation. The Rex Parties acknowledge and agree that the Initial
Purchasers are acting solely in the capacity of an arm’s length contractual counterparty to the Rex Parties with respect to the offering of the Notes and the Guarantees contemplated hereby (including in connection with determining the terms of
the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, no Initial Purchaser is advising the Rex Parties or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Rex Parties shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and
the Initial Purchasers shall have no responsibility or liability to the any of the Rex Parties with respect thereto. Any review by the Initial Purchasers of any of the Rex Parties, the transactions contemplated hereby or other matters relating to
such transactions will be performed solely for the benefit of the Initial Purchasers and shall not be on behalf of any of the Rex Parties. 

RBC Capital Markets, LLC, on behalf of the several Initial Purchasers, may, in its sole discretion, waive in writing the
performance by any Rex Parties of any one or more of the foregoing covenants or extend the time for their performance. 
 4. Certain
Agreements of the Initial Purchasers. Each Initial Purchaser hereby represents and warrants to and agrees with the Company that: 

(a) Qualified Institutional Buyer. It is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a “QIB”). 
 (b) Directed Selling Efforts. None of the Initial Purchasers, any
of their Affiliates, nor any person acting on its or their behalf (other than the Rex Parties, as to which no statement is made), has engaged in any directed selling efforts with respect to the Notes, and each of them has complied with the offering
restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. 

(c) Limited Solicitation. It will solicit offers for such Notes only from, and will offer such Notes only to, persons
that it reasonably believes to be (A) in the case of offers inside the United States, QIBs, or (B) in the case of offers outside the United States, in accordance with the restrictions set forth in Section 4(d). 

  
 19 

 (d) Sales Outside the United States. With respect to offers and sales
outside the United States: 
 (i) Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell
the Securities in the United States or to, or for the benefit or account of, a U.S. Person (other than a distributor), in each case, as defined in Rule 902 of Regulation S (i) as part of its distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering of the Securities pursuant hereto and the Closing Date, other than in accordance with Regulation S or another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any advertisement with respect to the Securities (including any “tombstone” advertisement) to be published in any newspaper or periodical or posted in
any public place and will not issue any circular relating to the Securities, except such advertisements as permitted by and include the statements required by Regulation S. 

(ii) Such Initial Purchaser agrees that, at or prior to confirmation of a sale of Securities by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration during the 40-day restricted period referred to in Rule 903 of Regulation S, it will send to such distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect: 
 “The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or
(ii) otherwise until 40 days after the later of the date the Securities were first offered to persons other than distributors in reliance on Regulation S and the Closing Date (as defined in the Purchase Agreement dated July 14, 2014 by and
among Rex Energy Corporation, a Delaware corporation, as issuer, and the guarantors and initial purchasers named therein), except in either case in accordance with Regulation S under the Securities Act (or in accordance with Rule 144A under the
Securities Act or to accredited investors in transactions that are exempt from the registration requirements of the Securities Act), and in connection with any subsequent sale by you of the Securities covered hereby in reliance on Regulation S under
the Securities Act during the period referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above have the
meanings assigned to them in Regulation S under the Securities Act.” 

  
 20 

 (iii) Such Initial Purchaser agrees that the Securities offered and sold in
reliance on Regulation S will be represented upon issuance by a global security that may not be exchanged for definitive securities until the expiration of the 40-day restricted period referred to in Rule 903 of Regulation S and only upon
certification of beneficial ownership of such Securities by non-U.S. persons or U.S. persons who purchased such Securities in transactions that were exempt from the registration requirements of the Securities Act. 

Terms used in this Section 4(d) have the meanings given to them by Regulation S. 

5. Conditions of Initial Purchasers’ Obligations. The obligations of the several Initial Purchasers to purchase the Securities
shall be subject to the accuracy of the representations and warranties of the Rex Parties in Section 2 hereof, in each case as of the date hereof and as of the Closing Date, as if made on and as of the Closing Date, to the performance by
the Rex Parties of their covenants and agreements hereunder and to the following additional conditions: 
 (a) No
Downgrade. From and after the date of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other securities of the Company by any “nationally recognized statistical rating
organization,” as such term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, or has changed its
outlook with respect to, its rating of any securities of the Company (other than an announcement with positive implications of a possible upgrading). 

(b) No Material Adverse Change. From and after the Time of Sale, no event or condition of a type described in
Section 2(e) hereof shall have occurred or shall exist, the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in
the manner contemplated by this Agreement, the Offering Memorandum and the Final Memorandum. 
 (c) Officers’
Certificate. The Representatives shall have received on and as of the Closing Date a certificate from an executive officer of each Rex Party who has knowledge of such matters and is satisfactory to the Initial Purchasers (x) confirming that
such officers have carefully reviewed the Preliminary Memorandum, the Offering Memorandum and the Final Memorandum and, to the best knowledge of such officers, the matters set forth in Section 2(e) hereof are true and correct,
(y) confirming that the representations and warranties of such Rex Party in this Agreement are true and correct and (z) confirming that such Rex Party has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date. 
 (d) Comfort Letters. On the date of this
Agreement and on the Closing Date, KPMG LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial

  
 21 

 
Purchasers, in form and substance reasonably satisfactory to the Representatives, (i) confirming that they are independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of the Regulation S-X promulgated by the Commission, and (ii) containing statements and information of the type customarily
included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Preliminary Memorandum, the Offering Memorandum and
the Final Memorandum; provided that the letter delivered on the Closing Date shall also confirm in all material respects the conclusions and findings set forth in the letter delivered on the date of this Agreement and use a “cut-off” date
no more than three business days prior to the Closing Date. 
 (e) Opinion and Negative Assurance Statement of Counsel for
the Rex Parties. Each of (i) Thompson & Knight LLP, counsel for the Rex Parties, and (ii) Jennifer McDonough, vice president, general counsel and secretary of the Company, shall have furnished to the Representatives, at the
request of the Company, their written opinion and/or negative assurance statement, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in
Annex A-1 and Annex A-2 hereto, respectively. 
 (f) Opinion and Negative Assurance Statement of
Counsel for the Initial Purchasers. The Representatives shall have received on and as of the Closing Date an opinion and negative assurance statement of Vinson & Elkins L.L.P., counsel for the Initial Purchasers, with respect to such
matters as the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters. 

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

(h) Reserve Report Confirmation Letters. On the date of this Agreement and on the Closing Date, Netherland
Sewell & Associates, Inc. shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, in form and substance reasonably
satisfactory to the Representatives, containing statements and information with respect to the estimated oil and gas reserves of the Rex Entities as reported in letters to the Company. 

(i) DTC. The Notes shall be eligible for clearance and settlement through DTC. 

  
 22 

 (j) Indenture; Registration Rights Agreement. The Initial Purchasers shall
have received a counterpart of each of the Indenture and the Registration Rights Agreement that shall have been validly executed and delivered by each of the Rex Parties and, in the case of the Indenture, the Trustee. 

(k) Additional Documents. On or prior to the Closing Date, the Rex Parties shall have furnished to the Representatives
such further certificates and documents as the Representatives may reasonably request. 
 If any condition specified in this
Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Initial Purchasers by notice to the Company at any time on or prior to the Closing Date, which termination shall be without
liability on the part of any party to any other party, except that Sections 6 and 10 hereof shall at all times be effective and shall survive such termination. 

6. Indemnification and Contribution. 

(a) Indemnification of the Initial Purchasers. The Rex Parties agree to indemnify and hold harmless each Initial
Purchaser, its affiliates, their respective directors, officers and employees and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Memorandum, the Final Memorandum (or any amendment or supplement thereto), any Company Written
Communication, the Offering Memorandum, any materials or information provided to investors by, or with the approval of, any of the Rex Parties in connection with the marketing of the offering of the Notes (“Marketing
Materials”), including any road show or investor presentations made to investors by the Company (whether in person or electronically), or caused by any omission or alleged omission to state therein a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to any of the Rex Parties in writing by such Initial Purchaser through the Representatives expressly for
use therein, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in paragraph (b) below. 

(b) Indemnification of the Rex Parties. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Rex Parties, their respective directors, managers, officers and employees and each person, if any, who controls any Rex Party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but 

  
 23 

 
only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to such Initial Purchaser furnished to any the Rex Parties in writing by such Initial Purchaser through the Representatives expressly for use in Preliminary Memorandum, the Final Memorandum (or
any amendment or supplement thereto), any Company Written Communication, the Offering Memorandum, or any Marketing Materials, including any road show or investor presentations made to investors by the Company (whether in person or electronically),
it being understood and agreed that the only such information consists of the following information in the Preliminary Memorandum and the Final Memorandum: (i) the third and fourth paragraphs under the caption “Plan of Distribution,”
which paragraphs relates to selling arrangements; and (ii) the eighth and ninth paragraphs under the caption “Plan of Distribution,” which paragraphs relate to stabilizing transactions and market-making. 

(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the
person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under
paragraph (a) or (b) of this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) of this Section 6. If any such proceeding shall be brought or asserted against
an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to
indemnification pursuant to Section 6 that the Indemnifying Party may designate in such proceeding and shall pay the costs and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and
that all such fees and expenses shall be reimbursed as they are incurred. Any such 

  
 24 

 
separate firm for any Initial Purchaser, its affiliates, directors, officers and employees and any control persons of such Initial Purchaser shall be designated in writing by the Representatives
and any such separate firm for the Rex Parties, their respective directors, members, officers and employees and any control persons of the Rex Parties shall be designated in writing by the Partnership. The Indemnifying Person shall not be liable for
any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by the Indemnifying Person
of such request and (ii) the Indemnifying Person shall not have (A) reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement or (B) notified the Indemnified Person in writing that it is
disputing in good faith all or any non-reimbursed portion of the fees and expenses included in such request stating in reasonable detail the basis for such dispute. No Indemnifying Person shall, without the written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement
(x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. 

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

  
 25 

 
relates to information supplied by the Company or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission. 
 (e) Limitation on Liability. The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed
to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall an
Initial Purchaser be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Initial Purchaser with respect to the offering of the Securities exceeds the amount of any
damages that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute pursuant to this Section 6 are several in proportion
to their respective purchase obligations hereunder and not joint. 
 (f) Non-Exclusive Remedies. The remedies provided
for in this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity. 

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

8. Termination. This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Rex Parties, if
after the Company’s execution and delivery of this Agreement and prior to the Closing Date (a) any events described in Section 5(b) shall have occurred; (b)(i) trading in securities generally on the New York Stock Exchange
or NASDAQ Global Select Market shall have been suspended or limited or (ii) other than in connection with an event described in the preceding clause (b)(i), trading of any securities issued or guaranteed by the Company on any
exchange shall have been suspended or limited; (c) a general moratorium on commercial banking activities shall have been declared by federal or state authorities; or (d) there shall have occurred any outbreak or escalation of hostilities
or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the offering,
sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Offering Memorandum and the Final Memorandum. 

  
 26 

 9. Defaulting Initial Purchaser. 

(a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the Securities that it has agreed to
purchase hereunder, the non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such
default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Initial Purchasers to purchase such Securities on such terms. If other persons become obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Preliminary Memorandum and the Final Memorandum
or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Preliminary Memorandum and the Final Memorandum that effects any such changes. As used in this Agreement, the term “Initial
Purchaser” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 9, purchases Securities that a defaulting Initial
Purchaser agreed but failed to purchase. 
 (b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Securities that such Initial Purchaser
agreed to purchase hereunder plus such Initial Purchaser’s pro rata share (based on the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser or Initial
Purchasers for which such arrangements have not been made. 
 (c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers. Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part of any of the Rex Parties, except that the Rex Parties will continue to be liable for
the payment of expenses as set forth in Section 10 hereof and except that the provisions of Section 6 hereof shall not terminate and shall remain in effect. 

  
 27 

 (d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any
liability it may have to the Rex Parties or any non-defaulting Initial Purchaser for damages caused by its default. 
 10. Payment of
Expenses. 
 (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is
terminated, the Company will pay or cause to be paid all costs and expenses incident to the performance of their respective obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities and any taxes payable in that connection; (ii) the costs incident to the preparation, printing of Preliminary Memorandum, the Offering Memorandum, any Company Written Communication and the Final
Memorandum (including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of counsel to the Rex
Parties and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions as the
Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the Initial Purchasers); (vi) any fees charged by rating agencies for rating the
Securities; (vii) the fees and expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to such parties); and (viii) all expenses incurred by the Company in connection with any “road show”
presentation to potential investors (subject to the reimbursement by the Initial Purchasers of one-half of the costs of using an airplane with respect to any such “road show” presentation); provided that, except as provided in this
Section 10, the Initial Purchasers shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Securities that they may sell and the expenses of advertising any offering of the
Securities made by the Initial Purchasers. 
 (b) If (i) the Company for any reason fails to tender the Securities for
delivery to the Initial Purchasers or (ii) this Agreement is terminated pursuant to Section 8(a) or Section 8(b)(ii) (in each case, other than by reason of any action or default by any of the Initial Purchasers), the
Company agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses (including the documented fees and expenses of their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the
offering contemplated hereby; provided, that the Company shall not in any event be liable pursuant to this Section 10 to any of the Initial Purchasers for damages on account of loss of anticipated profits from the sale by them of
the Securities. 
 11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates of each Initial Purchaser referred to in Section 6 hereof. Nothing in this Agreement is
intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Securities from any Initial Purchaser shall be deemed to
be a successor merely by reason of such purchase. 

  
 28 

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

13. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term
“Affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in
New York City; and (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act. 

14. Research Analyst Independence. The Company acknowledges that the Initial Purchasers’ research analysts and research
departments are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Initial Purchasers’ research analysts may hold views and make statements
or investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of their respective investment banking divisions. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Initial Purchasers with respect to any conflict of interest that may arise from the fact that the views expressed by their independent research analysts and research departments may
be different from or inconsistent with the views or advice communicated to the Company by such Initial Purchasers’ investment banking divisions. The Company acknowledges that each of the Initial Purchasers is a full service securities firm and
as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the companies that may be the subject of
the transactions contemplated by this Agreement. 
 15. No Fiduciary Duty. The Rex Parties acknowledge and agree that in connection
with this offering and sale of the Securities or any other services the Initial Purchasers may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations
or assurances previously or subsequently made by the Initial Purchasers: (a) no fiduciary or agency relationship between the Rex Parties and any other person, on the one hand, and the Initial Purchasers, on the other, exists; (b) the
Initial Purchasers are not acting as advisors, expert or otherwise, to the Rex Parties, such relationship between the Rex Parties, on the one hand, and the Initial Purchasers, on the other, is entirely and solely commercial, based on
arm’s-length negotiations; (c) any duties and obligations that the Initial Purchasers may have to the Rex Parties shall be limited to those duties and obligations specifically stated herein; and (d) the Initial Purchasers and their
respective affiliates may have interests that differ from those of the Rex Parties. The Rex Parties hereby waive any claims that any such entity may have against the Initial Purchasers with respect to any breach of fiduciary duty in connection with
this offering. 

  
 29 

 16. Miscellaneous. (a) Authority of the Representatives. Any action by the
Initial Purchasers hereunder may be taken by RBC Capital Markets, LLC on behalf of the Initial Purchasers, and any such action taken by RBC Capital Markets, LLC shall be binding upon the Initial Purchasers. 

(b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly
given if mailed or transmitted and confirmed by any standard form of telecommunication. 
 Notices to the Initial Purchasers: 

RBC Capital Markets, LLC 
 Three
World Financial Center 
 200 Vesey Street, 9th Floor 

New York, New York 10281 

Facsimile: 212-858-7455 

Attention: High Yield Capital Markets 

with a copy to: 

Vinson & Elkins L.L.P. 

1001 Fannin, Suite 2500 

Houston, Texas 77002 
 (fax:
713-615-5956) 
 Attention: Stephen M. Gill 

Notices to the Rex Parties: 

366 Walker Drive 
 State
College, Pennsylvania 16801 
 (fax: 814-278-7286) 

Attention: Jennifer McDonough, Esq. 

with a copy to: 

Thompson & Knight LLP 

1722 Routh Street, Suite 1500 

Dallas, Texas 75201 
 (fax:
214-999-1567) 
 Attention: Wesley P. Williams 

(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. 

  
 30 

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

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

(f) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or
to affect the meaning or interpretation of, this Agreement. 
 (g) Partial Unenforceability. The invalidity or
unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, then to the extent practicable there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. 

  
 31 

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

					
	REX ENERGY CORPORATION
		
	By:    	 	 /s/ Michael L. Hodges

		 	Name:	 	Michael L. Hodges
		 	Title:	 	Chief Financial Officer

  

	
	REX ENERGY I, LLC
	REX ENERGY OPERATING CORP.
	REX ENERGY IV, LLC
	PENNTEX RESOURCES ILLINOIS, INC.
	R.E. GAS DEVELOPMENT, LLC

  

					
	By:    	 	 /s/ Michael L. Hodges

		 	Name:	 	Michael L. Hodges
		 	Title:	 	Chief Financial Officer

  
 Signature Page to
Purchase Agreement 

 Accepted as of the date hereof: 

RBC CAPITAL MARKETS, LLC 
 KEYBANC CAPITAL MARKETS INC.

 SUNTRUST ROBINSON HUMPHREY, INC. 
 WELLS FARGO
SECURITIES, LLC 
 For themselves and as Representatives of the several 

Initial Purchasers named in Schedule 1 hereto 
  

					
	By:    	 	RBC Capital Markets, LLC
		
	By:    	 	 /s/ Kevin Hays

		 	Name:	 	Kevin Hays
		 	Title:	 	Managing Director

  

					
	By:    	 	KeyBanc Capital Markets Inc.
		
	By:    	 	 /s/ Eric Peiffer

		 	Name:	 	Eric Peiffer
		 	Title:	 	Managing Director

  

					
	By:    	 	SunTrust Robinson Humphrey, Inc.
		
	By:    	 	 /s/ Ronald B. Caldwell

		 	Name:	 	Ronald B. Caldwell
		 	Title:	 	Managing Director

  

					
	By:    	 	Wells Fargo Securities, LLC
		
	By:    	 	 /s/ Todd Schanzlin

		 	Name:	 	Todd Schanzlin
		 	Title:	 	Managing Director

  
 Signature Page to
Purchase Agreement 

 Schedule 1 
  

					
	 Initial Purchaser
	  	Principal Amount	 
	 RBC Capital Markets, LLC
	  	$	92,857,144	  
	 KeyBanc Capital Markets Inc.
	  	 	46,428,571	  
	 SunTrust Robinson Humphrey, Inc.
	  	 	46,428,571	  
	 Wells Fargo Securities, LLC
	  	 	46,428,571	  
	 BMO Capital Markets Corp.
	  	 	26,530,612	  
	 Mitsubishi UFJ Securities (USA), Inc.
	  	 	26,530,612	  
	 Capital One Securities, Inc.
	  	 	16,581,633	  
	 U.S. Bancorp Investments, Inc.
	  	 	16,581,633	  
	 The Huntington Investment Company
	  	 	6,632,653	  
	 Total
	  	$	325,000,000	  
		  	  
	  
	 

  
 Schedule 1 to
Purchase Agreement 

 Schedule 2 

Guarantors 
 Rex Energy I, LLC 

Rex Energy Operating Corp. 
 Rex Energy IV, LLC 

PennTex Resources Illinois, Inc. 
 R.E. Gas Development, LLC 

  
 Schedule 2 to
Purchase Agreement 

 Schedule 3 
  

 
 REX ENERGY CORPORATION 

$325,000,000 6.250% Senior Notes due 2022 

Pricing Supplement 
 Pricing Supplement
dated July 14, 2014 to the Preliminary Offering Memorandum dated July 14, 2014 of Rex Energy Corporation. This Pricing Supplement is qualified in its entirety by reference to the Preliminary Offering Memorandum. The information in this
Pricing Supplement supplements the Preliminary Offering Memorandum and supersedes the information in the Preliminary Offering Memorandum to the extent it is inconsistent with the information in the Preliminary Offering Memorandum. Capitalized terms
used in this Pricing Supplement but not defined have the meanings given them in the Preliminary Offering Memorandum. 
  

			
	 Issuer
	  	Rex Energy Corporation
		
	 Guarantors
	  	The notes will be jointly and severally guaranteed on a senior unsecured basis by all of the Issuer’s current subsidiaries that guarantee the Issuer’s revolving credit facility and by any future restricted subsidiaries
that guarantee indebtedness under the Issuer’s revolving credit facility or certain other indebtedness.
		
	 Title of Securities
	  	6.250% Senior Notes due 2022 (the “Notes”)
		
	 Aggregate Principal Amount
	  	$325,000,000
		
	 Gross Proceeds
	  	$325,000,000
		
	 Distribution
	  	144A / Regulation S with Registration Rights
		
	 Maturity Date
	  	August 1, 2022
		
	 Issue Price
	  	100% plus accrued interest from July 17, 2014
		
	 Coupon
	  	6.250%
		
	 Yield to Maturity
	  	6.250%
		
	 Interest Payment Dates
	  	February 1 and August 1 of each year, beginning on February 1, 2015
		
	 Record Dates
	  	January 15 and July 15 of each year
		
	 Trade Date
	  	July 14, 2014
		
	 Settlement Date
	  	July 17, 2014 (T+3)

  
 Schedule 3 to
Purchase Agreement 

					
	 Optional Redemption
	  	On or after August 1, 2017, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, on the Notes redeemed during the twelve-month period
indicated beginning on August 1 of the years indicated below:

  

			
	 Year
	  	Price
	2017	  	104.688%
	2018	  	103.125%
	2019	  	101.563%
	2020 and thereafter	  	100.000%

  

					
	 Equity Clawback
	  	Up to 35% at 106.250% prior to August 1, 2017
		
	 Make-Whole Redemption
	  	Make-whole redemption at Treasury Rate + 50 basis points prior to August 1, 2017
		
	 Change of Control Put
	  	101% plus accrued and unpaid interest
		
	 Joint Book-Running Managers
	  	 RBC Capital Markets, LLC
 KeyBanc
Capital Markets Inc.
 SunTrust Robinson Humphrey, Inc.
 Wells
Fargo Securities, LLC

		
	 Senior Co-Managers
	  	 BMO Capital Markets Corp.

Mitsubishi UFJ Securities (USA), Inc.
 Capital One Securities,
Inc.
 U.S. Bancorp Investments, Inc.

		
	 Co-Managers
	  	The Huntington Investment Company
		
	 CUSIP Numbers
	  	 Rule 144A: 761565 AC4
 Regulation
S: U75968 AC8

		
	 ISIN Numbers
	  	 Rule 144A: US761565AC42

Regulation S: USU75968AC84

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

 Additional Information: 

The information under the caption “Capitalization” in the Preliminary Offering Memorandum and each other location where it appears in
the Preliminary Offering Memorandum is hereby replaced in its entirety with the following information: 
 CAPITALIZATION 

The following table sets forth our capitalization as of March 31, 2014: 

 

	 	•	 	on a historical basis; and 

  

	 	•	 	on an as adjusted basis to give effect to the issuance of the notes offered hereby, and our application of the estimated net proceeds therefrom in the manner described in “Use of Proceeds” as though such
transactions had occurred on such date. 

  
 Schedule 3 to
Purchase Agreement 

 You should read the information in this table together with “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2013 and in our Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2014, each of which is incorporated herein by reference. 
  

									
	 	  	March 31, 2014	 
	(in thousands)	  	Historical	 	 	As Adjusted	 
	 Cash and cash equivalents(1)
	  	$	1,790	  	 	$	200,603	  
		  	  
	  
	 	 	  
	  
	 
	 Long-term debt
	  				 			
	 Revolving credit facility(2)
	  	$	120,000	  	 	$	—  	  
	 8.875% Senior Notes due 2020
	  	 	350,000	  	 	 	350,000	  
	 6.250% Senior Notes due 2022
	  	 	—  	  	 	 	325,000	  
	 Premium on senior notes, net
	  	 	2,992	  	 	 	2,992	  
	 Capital leases and other long-term obligations
	  	 	16,663	  	 	 	16,663	  
	 Current portion of long-term debt
	  	 	(10,696	) 	 	 	(10,696	) 
		  	  
	  
	 	 	  
	  
	 
	 Total long-term debt
	  	$	478,959	  	 	$	683,959	  
			
	 Stockholders’ equity:
	  				 			
	 Common Stock, $.001 par value per share, 100,000,000 shares authorized and 54,182,454 shares issued and outstanding
	  	$	54	  	 	$	54	  
	 Additional paid-in capital
	  	 	458,228	  	 	 	458,228	  
	 Accumulated deficit
	  	 	(32,857	) 	 	 	(32,857	) 
		  	  
	  
	 	 			
	 Rex Energy stockholders’ equity
	  	 	425,425	  	 	 	425,425	  
	 Noncontrolling interests
	  	 	3,251	  	 	 	3,251	  
		  	  
	  
	 	 	  
	  
	 
	 Total stockholders’ equity
	  	$	428,676	  	 	$	428,676	  
		  	  
	  
	 	 	  
	  
	 
	 Total capitalization
	  	$	918,331	  	 	$	1,123,331	  
		  	  
	  
	 	 	  
	  
	 

  

	(1)	As of July 10, 2014, we had cash and cash equivalents of approximately $4.6 million. 

	(2)	As of July 10, 2014, we had outstanding borrowings of approximately $218 million under our revolving credit facility. 

This material is strictly confidential and has been prepared by the Issuer solely for use in connection with the proposed offering of the securities
described in the Preliminary Offering Memorandum. This material is personal to each offeree and does not constitute an offer to any other person or the public generally to subscribe for or otherwise acquire the securities. Please refer to the
Preliminary Offering Memorandum for a complete description. 
 The securities have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and are being offered only to (1) “qualified institutional buyers” as defined in Rule 144A under the Securities Act and (2) outside the United States to non-U.S. persons in compliance with
Regulation S under the Securities Act, and this communication is only being distributed to such persons. 
 This communication is not an offer to
sell the securities and it is not a solicitation of an offer to buy the securities in any jurisdiction to any person to whom it is unlawful to make such offer or soliciation in such jurisdiction. 

Any disclaimers or notices that may appear on this Pricing Supplement below the text of this legend are not applicable to this Pricing Supplement and
should be disregarded. Such disclaimers may have been electronically generated as a result of this Pricing Supplement having been sent via, or posted on, Bloomberg or another electronic mail system. 

  
 Schedule 3 to
Purchase Agreement 

 Annex A-1 
  

					
		 	Form of Opinion of Thompson & Knight LLP	 	
			
		 	THOMPSON & KNIGHT LLP	 	
		 	  
 ATTORNEYS AND COUNSELORS

 
 ONE ARTS PLAZA

1722 ROUTH STREET — SUITE 1500

DALLAS, TEXAS 75201-2533
 (214)
969-1700
 FAX (214) 969-1751

www.tklaw.com
	 	 AUSTIN
 DALLAS

FORT WORTH
 HOUSTON

LOS ANGELES
 NEW YORK

SAN FRANCISCO

                        
              
  

ALGIERS
 LONDON

MEXICO CITY
 MONTERREY

PARIS

			
		 	July     , 2014	 	

 RBC Capital Markets, LLC, 

KeyBanc Capital Markets Inc., 
 SunTrust Robinson Humphrey, Inc.
and 
 Wells Fargo Securities, LLC, 
     as
representatives of the Initial Purchasers (as defined below) 
 c/o RBC Capital Markets, LLC 

Three World Financial Center 
 200 Vesey Street, 9th Floor 

New York, New York 10281 
 Ladies and Gentlemen: 

We have acted as special counsel for Rex Energy Corporation, a Delaware corporation (the “Company”), in connection with the
transactions contemplated by the Purchase Agreement dated as of July     , 2014 (the “Purchase Agreement”) between the Company and the other Relevant Parties (as defined below) and you, as representatives of the
initial purchasers listed in Schedule I thereto (the “Initial Purchasers”). This opinion letter is furnished to you solely for purposes of complying with the requirements of Section 5(e) of the Purchase Agreement. 

In this opinion letter: 

(a) Each of the Company and Rex Energy Operating Corp. and PennTex Resources Illinois, Inc., each a Delaware corporation, is
referred to as a “Rex Corporation”. 
 (b) The Rex Corporations (other than the Company) and Rex Energy I,
LLC (“Rex Energy I”), Rex Energy IV, LLC (“Rex Energy IV”) and R.E. Gas Development, LLC (“R.E. Gas”) are referred to as the “Guarantors”. 

(c) The Company and the Guarantors are referred to as the “Relevant Parties”. 

(d) The Guarantors, other than the Rex Corporations that are Guarantors, and R.E. Ventures, LLC, Rex Energy Marketing LLC, R.E.
Disposal, LLC, Water Solutions 

  
 Annex A-1 to Purchase
Agreement 

 
Holdings, LLC, Keystone Clearwater Solutions, LLC, Keystone Clearwater Transportation, LLC, and Cocoa Properties I, LLC, each a Delaware limited liability company, are referred to as the
“Rex LLC’s”. 
 In connection with this opinion letter, we have examined original counterparts or copies of original
counterparts of the following documents: 
 (a) The Purchase Agreement. 

(b) The Indenture dated as of the date hereof (the “Indenture”) among the Relevant Parties and Wilmington
Trust, National Association, as trustee (the “Trustee”). 
 (c) The
    .    % Senior Notes due 2022 issued today by the Company (the “Notes”), together with the notations of guarantee (the “Guarantees”) of the Guarantors attached
thereto. 
 (d) The Registration Rights Agreement dated as of the date hereof (the “Registration Rights
Agreement”) among the Relevant Parties and you. 
 (e) The Preliminary Offering Memorandum dated July
    , 2014 (the “Preliminary Offering Memorandum”) relating to the offering of the Notes (together with the pricing information set forth and any other documents referred to in Schedule 3 to the Purchase
Agreement, the “Pricing Disclosure Package”). 
 (f) The Offering Memorandum dated July
    , 2014 (the “Offering Memorandum”) relating to the offering of the Notes. 
 The documents listed in items
(a) through (d) above, any     .    % Senior Notes due 2022 that may be issued in accordance with any exchange offer pursuant to the Registration Rights Agreement (the “Exchange
Notes”) and any notations of guarantee attached thereto (the “Exchange Guarantees”) are referred to collectively herein as the “Transaction Documents”. We have also examined originals or copies of such
other records of the Relevant Parties, certificates of public officials and of officers or other representatives of the Relevant Parties and agreements and other documents as we have deemed necessary, subject to the assumptions set forth below, as a
basis for the opinions expressed below. 
 In rendering the opinions expressed below, we have assumed: 

(i) The genuineness of all signatures. 

(ii) The authenticity of the originals of the documents submitted to us. 

(iii) The conformity to authentic originals of any documents submitted to us as copies. 

  
 Annex A-1 to Purchase
Agreement 

 (iv) As to matters of fact, the truthfulness of the representations made or
otherwise incorporated in the Purchase Agreement and the other Transaction Documents and representations and statements made in certificates of public officials and officers of the Relevant Parties. 

(v) That the Transaction Documents constitute valid, binding and enforceable obligations of each party thereto (other than the
Relevant Parties party thereto). 
 (vi) That: 

(A) The execution, delivery and performance by each Relevant Party of the Transaction Documents to which it is a party do not:

 (1) except with respect to Applicable Laws (and (I) the laws, rules and regulations referred to in qualifications
(a)(i) and (ii), insofar as they relate to our opinions in paragraphs 1, 2, 3 and 7(a) and (II) the laws, rules and regulations referred to in paragraphs 6, 8, 9 and 10, insofar as they relate to the matters referred to therein), violate any law,
rule or regulation applicable to it, or 
 (2) for purposes of our opinions in paragraphs 4 and 5, result in any conflict
with or breach of any agreement or document binding on it (other than any Applicable Contract (as defined below), to the extent we opine thereon in paragraph 7(b)). 

(B) Except as required by Applicable Laws (and (I) the laws, rules and regulations referred to in qualifications (a)(i)
and (ii), insofar as they relate to our opinions in paragraphs 1, 2, 3 and 7(a) and (II) the laws, rules and regulations referred to in paragraphs 6, 8, 9 and 10, insofar as they relate to the matters referred to therein), no authorization, approval
or other action by, and no notice to or filing with, any governmental authority or regulatory body or, for purposes of our opinions in paragraphs 4 and 5 (to the extent the same is required under any agreement or document binding on it, other than
any Applicable Contract, to the extent we opine thereon in paragraph 7(b)) any other third party is required for the due execution, delivery or performance by any Relevant Party of any Transaction Document to which it is a party or, if any such
authorization, approval, action, notice or filing is required, it has been duly obtained, taken, given or made and is in full force and effect. 

  
 Annex A-1 to Purchase
Agreement 

 (vii) With respect to: 

(A) the Amended and Restated Credit Agreement dated as of March 27, 2013, as amended as of January 14,
2014, March 25, 2014 and July 11, 2014 (the “Credit Agreement”) among the Company; the guarantors party thereto; the lenders from time to time party thereto; and Royal Bank of Canada, as the successor to KeyBank
National Association, as administrative agent that: 
 (1) both before and after giving effect to the issuance of the Notes,
the Exchange Notes, the Guarantees and the Exchange Guarantees, no Default, Event of Default or Borrowing Base Deficiency (each as defined in the Credit Agreement) exists or would exist (after giving effect to any concurrent prepayment pursuant to
the Credit Agreement or any other repayment of indebtedness), except for any Default or Event of Default resulting from the issuance of the Notes, the Exchange Notes, the Guarantees and the Exchange Guarantees, to the extent that we opine with
respect thereto in paragraph 7(b), and the Company is in Pro Form Compliance (as defined in the Credit Agreement) after giving effect to such issuances; and 

(2) the Borrowing Base (as defined in the Credit Agreement) has been adjusted to the extent required by the Credit Agreement
and any prepayment required by the Credit Agreement has been made. 
 We have not independently established the validity of the foregoing assumptions. 

As used herein, “Applicable Laws” means the laws, rules and regulations of the State of New York and the federal laws, rules
and regulations of the United States of America, that in our experience are normally applicable to the Relevant Parties, the Purchase Agreement or transactions of the type contemplated in the Purchase Agreement. However, the term “Applicable
Laws” does not include: 
 (i) Any state or federal laws, rules or regulations relating to: (A) pollution or
protection of the environment; (B) zoning, land use, building or construction; (C) occupational safety and health or other similar matters; (D) labor, employee rights and benefits, including without limitation the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), and the Fair Labor Standards Act, as amended; (E) the regulation of utilities; (F) antitrust and trade regulation; (G) tax; (H) securities, including without
limitation federal and state securities laws, rules or regulations, including state anti-fraud laws, rules, or regulations, and the Investment Company Act of 1940, as amended (the “Investment Company Act”); (I) corrupt
practices, including without limitation the Foreign Corrupt Practices Act of 1977, as amended, and the Currency and Foreign Transactions Reporting Act of 1970, as amended; (J) insurance; (K) the Dodd-Frank Wall Street Reform and Consumer
Protection Act; and (L) copyrights, patents, service marks and trademarks. 
 (ii) Any laws, rules or regulations of any
county, municipality or similar political subdivision or any agency or instrumentality thereof. 
 (iii) Any laws, rules or
regulations that are applicable to the Relevant Parties, the Transaction Documents or such transactions solely because such laws, rules or regulations are part of a regulatory regime applicable to any party to the Purchase Agreement or any of its
affiliates because of the specific assets or business of such other party or such affiliate. 

  
 Annex A-1 to Purchase
Agreement 

 Based upon the foregoing, and subject to the qualifications and limitations herein set forth, we
are of the opinion that: 
 1.(a) Each Rex Corporation is a corporation validly existing and in good standing under the laws of the State of
Delaware. 
 (b) Each Rex LLC is a limited liability company validly existing and in good standing under the laws of the State of Delaware.

 2. Based solely on certificates of public officials, each Relevant Party listed in Schedule I.B hereto was duly qualified or licensed to
do business and was in good standing as a foreign corporation in each jurisdiction listed in such Schedule with respect to it as of the respective dates specified in such Schedule. 

3.(a) Each Relevant Party has the corporate or limited liability company power and authority, as applicable, to carry on its business and to
own, lease and operate its properties and assets, in each case as described in the Preliminary Offering Memorandum and the Offering Memorandum. 

(b) Each Relevant Party: 

(i) has the corporate or limited liability company power and authority, as applicable, to execute, deliver and perform the
Transaction Documents to which it is a party; 
 (ii) has taken all corporate or limited liability company action, as
applicable, necessary to authorize the execution, delivery and performance of such Transaction Documents; and 
 (iii) has
duly executed and delivered such Transaction Documents. 
 4.(a) Assuming the due authentication of the Notes by the Trustee in accordance
with the Indenture and payment for the Notes by the Initial Purchasers in accordance with the Purchase Agreement: 
 (i) the
Notes will be duly and validly issued and the valid and binding obligations of the Company, enforceable against it in accordance with its terms and entitled to the benefits of the Indenture, and 

(ii) the Guarantees will be duly and validly issued and the valid and binding obligations of the Guarantors enforceable against
the Guarantors in accordance with their terms. 

  
 Annex A-1 to Purchase
Agreement 

 (b) Assuming the due issuance, execution and authentication of the Exchange Notes and the
Exchange Guarantees in accordance with the Registration Rights Agreement and the Indenture: 
 (i) the Exchange Notes will be
duly and validly issued and the valid and binding obligations of the Company, enforceable against it in accordance with their terms and entitled to the benefits of the Indenture, and 

(ii) the Exchange Guarantees will be duly and validly issued and the valid and binding obligations of the Guarantors,
enforceable against the Guarantors in accordance with their terms. 
 5. Each of the Indenture and the Registration Rights Agreement
constitutes the valid and binding obligation of each Relevant Party that is a party thereto, enforceable against such Relevant Party in accordance with its terms. 

6. The form of the Indenture complies with the requirements of the Trust Indenture Act of 1939, as amended (the “TIA”). 

7. The execution, delivery and performance by each of the Relevant Parties of each Transaction Document to which it is a party, the issuance
of the Notes and the Exchange Notes and compliance by the Relevant Parties with the terms thereof and the consummation of the transactions contemplated thereby (including the application of the proceeds from the sale of the Securities as described
under “Use of Proceeds” in the Preliminary Offering Memorandum and the Offering Memorandum) will not: 
 (a)
in the case of any Relevant Party, violate its certificate of incorporation, bylaws, certificate of formation or limited liability company agreement, as applicable; 

(b) breach or result in a default or the creation of any lien under any agreement or instrument listed in Schedule I.C (the
“Applicable Contracts”) (except that we express no opinion with respect to financial covenants and other similar provisions in any Applicable Contract requiring financial calculations or determinations to ascertain compliance) or
any order, writ, judgment, injunction, decree, determination or award listed in Schedule I.D; or 
 (c) result in a violation
by any Relevant Party of any Applicable Laws, the Delaware General Corporation Law or the Delaware Limited Liability Company Act. 
 8. No
authorization, approval or other action by, and no notice to or filing with, any United States federal or New York governmental authority or regulatory body, or any third party that is a party to an Applicable Contract, is required for (a) the
due execution, delivery or performance by a Relevant Party of any Transaction Document to which it is a party, or (b) the application of the proceeds from the Notes by the Company as described under “Use of Proceeds” in the
Preliminary Offering Memorandum and the Offering Memorandum, except, in each case, as may be required under the Securities Act of 1933, as amended (the “Securities Act”), and the TIA in connection with the registration statement
described in the Preliminary Offering Memorandum and the Offering Memorandum and contemplated by the Registration Rights Agreement, and except (i) for a notice and determination required under the Credit Agreement, which has been given and
obtained, and (ii) that we express no opinion with respect to authorizations, approvals, actions, notices and filings that may be required in connection with financial covenants and other similar provisions in any Applicable Contract requiring
financial calculations or determinations to ascertain compliance. 

  
 Annex A-1 to Purchase
Agreement 

 9. No Relevant Party is, or as a result of the transactions contemplated by the Transaction
Documents is or will be after applying the proceeds from the offering as described in the Pricing Disclosure Package and the Offering Memorandum, required to register as an investment company under the Investment Company Act. 

10. Based upon the representations, warranties and agreements of the Company and the Initial Purchasers in the Purchase Agreement, and
assuming compliance with the offering and transfer procedures and restrictions described in the Offering Memorandum, it is not necessary in connection with the offer and sale of the Notes or the Guarantees to the Initial Purchasers under the
Purchase Agreement, or in connection with the initial offer, resale or delivery of the Notes and the Guarantees by the Initial Purchasers in the manner contemplated by the Purchase Agreement, to register the Notes or the Guarantees under the
Securities Act, or to qualify the Indenture under the TIA, except for any registration or qualification of the Notes that may be required in connection with the exchange offer contemplated by the Preliminary Offering Memorandum, the Offering
Memorandum and the Registration Rights Agreement, it being understood that no opinion is expressed as to any subsequent resale of any Notes. 

11. The statements set forth under the heading “Description of Notes” and “Exchange Offer; Registration
Rights” in the Preliminary Offering Memorandum and the Offering Memorandum, insofar as such statements purport to summarize the terms of the Indenture, the Notes, the Guarantees and the Registration Rights Agreement, accurately summarize
such documents in all material respects. 
 12. The statements set forth under the headings “Material United States Federal Income
Tax Considerations” in the Preliminary Offering Memorandum and the Offering Memorandum, insofar as such statements purport to constitute summaries of the terms of statutes, rules and regulations, accurately summarize such statutes, rules
and regulations in all material respects. 
 13. We are not representing any Relevant Party in any pending litigation in which it is a named
defendant that challenges the validity or enforceability of, or seeks to enjoin the performance of the transactions contemplated by, the Transaction Documents. 

The opinions set forth above are subject to the following qualifications and exceptions: 

(a) Our opinions are limited to Applicable Laws and also include: 

(i) in the case of our opinions in paragraphs 1, 3 and 7(a) and (c), the Delaware General Corporation Law and the Delaware
Limited Liability Company Act, but in each case only to the extent based on our review thereof, without consideration of any judicial or administrative interpretation thereof; 

  
 Annex A-1 to Purchase
Agreement 

 (ii) in the case of our opinion in paragraph 2, to the limited extent set forth
therein, the law of the states referred to in Schedule I.B; 
 (iii) in the case of our opinions in paragraphs 6, 8 and 10,
the TIA; 
 (iv) in the case of our opinion in paragraph 9, the Investment Company Act; 

(v) in the case of our opinions in paragraphs 8 and 10, the Securities Act; and 

(vi) in the case of our opinion in paragraph 12, the Internal Revenue Code of 1986, as amended, 

and we do not express any opinion herein concerning any other laws. Without derogating from the limitation on the scope of our opinion in this qualification
(a), we note that we express no opinion in paragraph 7(c) or 8 with respect to the blue-sky laws of any jurisdiction in the United States. 

(b) Our opinions are subject to bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium or similar laws
affecting the rights and remedies of creditors generally. 
 (c) Our opinions are subject to general principles of equity exercisable in the
discretion of a court (including without limitation obligations and standards of good faith, fair dealing, materiality and reasonableness and defenses relating to unconscionability or to impracticability or impossibility of performance). 

(d) We express no opinion in paragraph 4 or 5 with respect to 

(i) The enforceability of indemnification provisions, or of waiver, release or exculpation provisions, contained in the
Transaction Documents referred to therein to the extent that enforcement thereof is contrary to public policy regarding the indemnification against or release or exculpation of criminal violations, intentional harm, violations of securities laws or
acts of gross negligence or willful misconduct or to the extent that the same relate to punitive damages. 
 (ii) Any waiver
of defenses by a Guarantor in Article 10 of the Indenture. 
 (iii) Section 10.08 of the Indenture, to the extent that
such Section limits the obligation of a Guarantor under Article 10 of the Indenture (and we express no opinion as to the enforceability of Article 10 of the Indenture as a result of the inclusion of such provision). 

(e) With respect to our opinion in paragraph 1, we have relied exclusively upon the certificates of public officials described in Schedule I.A
hereto. 
 In the course of our acting as counsel to the Company in connection with the preparation of the Offering Memorandum, we reviewed
the Pricing Disclosure Package and the Offering Memorandum and participated in conferences with officers and other representatives of the 

  
 Annex A-1 to Purchase
Agreement 

 
Company, representatives of the Initial Purchasers and counsel for the Initial Purchasers, and representatives of the independent public accountants and independent reserve engineers for the
Company, at which the contents of the Pricing Disclosure Package and the Offering Memorandum and related matters were discussed. We did not participate in the preparation of some of the documents filed by the Company with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, and incorporated by reference in or otherwise used in the preparation of the Pricing Disclosure Package or the Offering Memorandum. The purpose of our professional engagement was not
to establish or confirm factual matters set forth in Pricing Disclosure Package or the Offering Memorandum, and we have not undertaken to verify independently any of such factual matters. Moreover, many of the determinations required to be made in
the preparation of the Pricing Disclosure Package and the Offering Memorandum involve matters of a non-legal nature. Subject to the foregoing, we confirm to you, on the basis of the information we gained in the course of performing the services
referred to above, nothing came to our attention that caused us to believe that: 
 (a) the Pricing Disclosure Package, as of
    :            p.m., eastern time, on July     , 2014, contained any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or 

(b) the Offering Memorandum, as of its date and as of the date hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; 

provided that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Pricing Disclosure
Package or the Offering Memorandum (except as otherwise specifically stated in paragraphs 11 and 12), and we do not express any belief with respect to the financial statements and related notes and schedules and other financial data, or oil and gas
reserves or prospects, production data or related geological data, or statistical data derived from such financial, oil and gas reserves, prospects, production data or geological data, contained in or omitted from the Pricing Disclosure Package or
the Offering Memorandum. 
 This opinion letter is rendered to you in connection with the transactions contemplated by the Transaction
Documents. Without our prior written consent, this opinion letter may not be relied upon by any person other than you and the other Initial Purchasers (except that Wilmington Trust, National Association, in its individual capacity and not as the
Trustee, also may rely on paragraphs 1, 3, 5, 6, 7 and 8 of this opinion, subject to the same limitations and qualifications contained herein as are applicable to you and the other Initial Purchasers) or by you, the other Initial Purchasers or
Wilmington Trust, National Association for any other purpose. 
 This opinion letter has been prepared, and is to be understood, in
accordance with customary practice of lawyers who regularly give and lawyers who regularly advise recipients regarding opinions of this kind, is limited to the matters expressly stated herein and is provided solely for purposes of complying with the
requirements of the Purchase Agreement, and no opinions may be inferred or implied beyond the matters expressly stated herein. The opinions expressed herein are rendered and speak only as of the date hereof and we specifically disclaim any
responsibility 

  
 Annex A-1 to Purchase
Agreement 

 
to update such opinions subsequent to the date hereof or to advise you of subsequent developments affecting such opinions. We note that we only represent the Relevant Parties and their affiliates
with respect to specific transactions, including the transactions contemplated by the Transaction Documents, and we are not general outside counsel for the Relevant Parties and their affiliates. 

Respectfully submitted, 

  
 Annex A-1 to Purchase
Agreement 

 SCHEDULE I 

SECTION A 

CERTIFICATES OF PUBLIC OFFICIALS 

 

									
	 Rex Entity
	  	State	 	  	 Type of Certificate
	  	 Date of Certificate

	 The Company
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Rex Energy Operating Corp.
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 PennTex Resources Illinois, Inc.
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Rex Energy I, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Rex Energy IV, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 R.E. Gas Development, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 R.E. Ventures Holdings, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Rex Energy Marketing LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 R.E. Disposal, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Water Solutions Holdings LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Keystone Clearwater Solutions, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Cocoa Properties I, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014
	 Keystone Clearwater Transportation, LLC
	  	 	Delaware	  	  	 Existence and Good Standing
	  	July     , 2014

  
 Annex A-1 to Purchase
Agreement 

 SECTION B 

STATES WHERE QUALIFIED TO DO BUSINESS 

 

					
	 Rex Entity
	  	 State
	  	 Date of Certificate

	 Company
	  	 Indiana
 Illinois

Pennsylvania
	  	 July     , 2014

July     , 2014
 July
    , 2014

			
	 Rex Energy Operating Corp.
	  	 Colorado
 Indiana

Illinois
 Ohio

Pennsylvania
 New York
	  	 July     , 2014

July     , 2014
 July
    , 2014
 July     , 2014

July     , 2014
 July
    , 2014

			
	 PennTex Resources Illinois, Inc.
	  	 Indiana
 Illinois

Pennsyavania
	  	 July     , 2014

July     , 2014
 July
    , 2014

			
	 Rex Energy I, LLC
	  	 Indiana
 Illinois

Pennsylvania
 New York

West Virginia
 New Mexico
	  	 July     , 2014

July     , 2014
 July
    , 2014
 July     , 2014

July     , 2014
 July
    , 2014

			
	 Rex Energy IV, LLC
	  	 Indiana
 Illinois

Pennsylvania
	  	 July     , 2014

July     , 2014
 July
    , 2014

			
	 R.E. Gas Development, LLC
	  	 Ohio
 Pennsylvania
	  	 July     , 2014

July     , 2014

  
 Annex A-1 to Purchase
Agreement 

 SECTION C 

APPLICABLE CONTRACTS 

[To be inserted.] 

  
 Annex A-1 to Purchase
Agreement 

 SECTION D 

ORDERS, WRITS, JUDGMENTS, INJUNCTIONS, DECREES,
DETERMINATIONS AND AWARDS 
 [None.] 

  
 Annex A-1 to Purchase
Agreement 

 Annex A-2 

Form of Opinion of Jennifer McDonough 

[Letterhead of Rex Energy Corporation] 

July     , 2014 
 RBC Capital
Markets, LLC, 
 KeyBanc Capital Markets Inc., 
 SunTrust
Robinson Humphrey, Inc., and 
 Wells Fargo Securities, LLC, 

    as representatives of the Initial Purchasers (as defined below) 

c/o RBC Capital Markets, LLC 
 Three World Financial Center 

200 Vesey Street, 9th Floor 
 New York, New York 10281 

Ladies and Gentlemen: 
 I am the vice president,
general counsel and secretary of Rex Energy Corporation, a Delaware corporation (the “Company”), and have acted as such in connection with the transactions contemplated by the Purchase Agreement dated as of July
    , 2012 (the “Purchase Agreement”) between the Company and certain of its subsidiaries and you, as representatives of the initial purchasers listed in Schedule I thereto (the “Initial
Purchasers”). This opinion letter is furnished to you solely for purposes of complying with the requirements of Section 5(e) of the Purchase Agreement. 

In connection with this opinion letter, I have examined original counterparts or copies of original counterparts of the following documents:

 (a) The Purchase Agreement. 

(b) The Indenture dated as of the date hereof among the Company, the guarantors party thereto and Wilmington Trust, National
Association, as trustee. 
 (c) The     .    % Senior Notes due 2022 (the
“Notes”) issued as of the date hereof by the Company, together with the notations of guarantee of the Subsidiaries attached thereto. 

(d) The Registration Rights Agreement dated as of the date hereof among the Company and certain of its subsidiaries and you.

 (e) The Preliminary Offering Memorandum dated July     , 2014 relating to the offering of the Notes
(together with the pricing information set forth and any other documents referred to in Schedule 3 to the Purchase Agreement, the “Pricing Disclosure Package”). 

  
 Annex A-2 to Purchase
Agreement 

 (g) The Offering Memorandum dated July    , 2014 (the
“Offering Memorandum”) relating to the offering of the Notes. 
 In rendering the opinions expressed below, I have assumed: 

(i) The genuineness of all signatures. 

(ii) The authenticity of the originals of the documents submitted to me. 

(iii) The conformity to authentic originals of any documents submitted to me as copies. 

As to matters of fact, I have relied, without independent investigation or verification, upon the representations of the Rex
Parties made or otherwise incorporated in the Purchase Agreement and representations and statements made in certificates of public officials and officers of the Company and its subsidiaries. 

I have not independently established the validity of the foregoing assumptions. 

Based upon the foregoing, and subject to the qualifications and limitations herein set forth, I am of the opinion that, to my knowledge and
except as described in the Pricing Disclosure Package and the Offering Memorandum, there are no legal or governmental actions, suits, arbitrations or other proceedings pending to which the Company or any of its subsidiaries is a party that would be
required to be described in a registration statement filed with the Securities and Exchange Commission, and to my knowledge, no such proceedings have been overtly threatened in writing by governmental authorities or other persons. 

The opinions set forth above are subject to the following qualifications and exceptions: 

(a) My opinions are limited to the laws, rules and regulations of the State of Pennsylvania and I do not express any opinion herein concerning
any other laws. 
 (b) When used in this opinion, the words “my knowledge” signify that, in the course of my rendering legal
services for the Company, no information with respect to statements in such opinion has come to my actual attention that would lead me to conclude that such statements are untrue. I have not made any special examination of my files or the files of
the Company, any investigation of court or other public records, or any inquiry with any other person to determine the existence or absence of such facts. 

This opinion letter is rendered to you and the other Initial Purchasers in connection with the transactions contemplated in the Purchase
Agreement. This opinion letter may not be relied upon by any person other than you and the other Initial Purchasers, or by you or the other Initial Purchasers for any other purpose, without my prior written consent. 

This opinion letter has been prepared, and is to be understood, in accordance with customary practice of lawyers who regularly give and
lawyers who regularly advise recipients regarding opinions of this kind, is limited to the matters expressly stated herein and is provided solely for purposes of complying with the requirements of the Purchase Agreement, and no

  
 Annex A-2 to Purchase
Agreement 

 
opinions may be inferred or implied beyond the matters expressly stated herein. The opinions expressed herein are rendered and speak only as of the date hereof and I specifically disclaim any
responsibility to update such opinions subsequent to the date hereof or to advise you of subsequent developments affecting such opinions. 

This opinion letter is rendered to you by the undersigned as general counsel and on behalf of the Company. Recourse with respect to this
opinion letter is limited to the Company and there shall be no recourse against the undersigned individually with respect to this opinion letter. 

Respectfully submitted, 

  
 Annex A-2 to Purchase
Agreementex4-1.htm

Exhibit 4.1

 

MEDIZONE INTERNATIONAL, INC.

 

2014 EQUITY INCENTIVE PLAN

 

1.             Purposes of the Plan.  The purposes of this Equity Incentive Plan are to attract and retain the best available personnel for positions of substantial responsibility, to align the interests of Service Providers with those of the Company’s stockholders, and to promote the success of the Company’s business.

 

Awards to Service Providers granted hereunder may be Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents, at the discretion of the Administrator and as reflected in the terms of the written option agreement.  Unless otherwise specified, all section references contained herein shall refer to sections of the Plan.

 

2.             Definitions.  As used herein, the following definitions shall apply:

 

“Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4.

 

“Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

“Award” means, individually or collectively, a grant under the Plan of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents.

 

“Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

“Awarded Stock” means the Shares subject to an Award.

 

“Board” means the Board of Directors of the Company.

 

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

 

(i)             A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this clause (i), the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; or

 

(ii)            A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

  

 

  

 

(iii)           A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this clause (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in subsection (iii)(B)(3). For purposes of this clause (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

For purposes hereof, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

 

“Committee” means the Committee appointed by the Board of Directors or a sub-committee appointed by the Board’s designated committee in accordance with Section 4(a), if one is appointed.

 

“Common Stock” means the common stock, par value $0.0000001 per share, of the Company.

 

“Company” means Medizone International, Inc.

 

“Compensation Committee” means the compensation committee of the Board.

 

“Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services and who is compensated for such services; provided, however, that the term “Consultant” shall not include Outside Directors, unless such Outside Directors are compensated for services to the Company other than pursuant to their services as a Director.

 

“Continuous Status as a Director” means that the Director relationship is not interrupted or terminated.

 

“Director” means a member of the Board.

 

  

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“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

“Dividend Equivalent” means a credit, payable in cash, made at the discretion of the Administrator, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant. Dividend Equivalents shall be subject to the same vesting restrictions as the related Shares subject to an Award.

 

“Employee” means any person, including Officers and Directors, employed by the Company [or any Parent or Subsidiary of the Company]. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company [or between the Company, its Parent, any Subsidiary, or any successor]. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock Option.

 

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

 

“Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have higher or lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.

 

“Fair Market Value” means as of any date, the value of the Shares determined as follows:

 

(i)             If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or the Nasdaq Capital Market of the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable or shall be such other value determined in good faith by the Administrator;

 

(ii)            If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable or shall be such other value determined in good faith by the Administrator; or

 

(iii)           In the absence of an established market for the Shares, the Fair Market Value shall be determined in good faith by the Administrator.

 

“Fiscal Year” means a fiscal year of the Company.

 

“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

  

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“Nonqualified Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

“Option” means a stock option granted pursuant to the Plan.

 

“Optioned Stock” means the Shares subject to an Option.

 

 “Outside Director” means a Director who is not an Employee or Consultant.

 

“Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

“Participant” means the holder of an outstanding Award.

 

“Performance Goals” means one or more of the following pre-established criteria, determined in accordance with generally accepted accounting principles, where applicable:  (i) net earnings; (ii) earnings per share; (iii) net sales growth; (iv) net income (before taxes); (v) net operating profit; (vi) return measures (including, but not limited to, return on assets, capital, equity or sales); (vii) cash flow (including, but not limited to, operating cash flow and free cash flow); (viii) earnings before or after taxes, interest, depreciation, and/or amortization; (ix) productivity ratios; (x) Share price (including, but not limited to, growth measures and total stockholder return); (xi) expense targets; (xii) operating efficiency; (xiii) working capital targets; (xiv) any combination of, or a specified increase in, any of the foregoing; or (xv) the formation of joint ventures, or the completion of other corporate transactions.  Without limiting the generality of the foregoing, the Administrator shall have the authority to make equitable adjustments in the Performance Goals in recognition of unusual or non-recurring events affecting the Company, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

 

“Performance Share” means a performance share Award granted to a Participant pursuant to Section 13.

 

“Performance Unit” means a performance unit Award granted to a Participant pursuant to Section 14.

 

“Plan” means this 2014 Equity Incentive Plan, as may be amended from time to time.

 

“Restricted Stock” means a restricted stock Award granted to a Participant pursuant to Section 11.

 

“Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 12.  Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

“Section 16(b)” means Section 16(b) of the Exchange Act.

 

  

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

 

“Service Provider” means an Employee, Director or Consultant.

 

“Shares” means shares of Common Stock, as adjusted in accordance with Section 19.

 

“Stock Appreciation Right” or “SAR” means a stock appreciation right granted pursuant to Section 8.

 

“Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.             Stock Subject to the Plan.

 

(a)            Share Reserve.  Subject to the provisions of Section 19, the maximum aggregate number of Shares that may be issued under the Plan is 6,000,000 authorized and previously unissued Shares.

 

(b)            Lapsed Awards.  If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan.  Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will not become available for future grant or sale under the Plan.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.  Notwithstanding the foregoing and, subject to adjustment as provided in Section 19, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 3(b).

 

(c)            Share Reserve.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

 

4.             Administration of the Plan.

 

(a)            Procedure.

 

(i)             Multiple Administrative Bodies.  If permitted by Applicable Laws, the Plan may be administered by different bodies with respect to Directors, Officers who are not Directors, and Employees who are neither Directors nor Officers.

 

  

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(ii)            Section 162(m).  To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee consisting solely of two or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(iii)           Administration With Respect to Officers Subject to Section 16(b).  With respect to Award grants made to Employees who are also Officers subject to Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the Board, if the Board may administer the Plan in compliance with Rule 16b-3, or (B) a Committee designated by the Board to administer the Plan, which committee shall be constituted to comply with Rule 16b-3.  Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.  From time to time the Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by Rule 16b-3.

 

(iv)           Administration With Respect to Other Persons.  With respect to Award grants made to Employees or Consultants who are not Officers subject to Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the Board, (B) a committee designated by the Board, or (C) a sub-committee designated by the designated committee, which committee or sub-committee shall be constituted to satisfy Applicable Laws.  Once appointed, such Committee shall serve in its designated capacity until otherwise directed by the Board.  The Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by Applicable Laws.

 

(v)            Administration With Respect to Outside Directors.  Any discretionary Award grants to Outside Directors shall be made by the Board or a Committee thereof.  The Board or a Committee thereof shall administer the Plan with respect to Outside Director Awards.

 

(b)            Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion to:

 

(i)             determine the Fair Market Value;

 

(ii)            select the Service Providers to whom Awards may be granted hereunder;

 

(iii)           determine whether and to what extent Awards are granted hereunder;

 

(iv)           determine the number of Shares to be covered by each Award granted hereunder;

 

(v)            approve forms of agreement for use under the Plan;

 

(vi)           determine the terms and conditions of any, and to institute any Exchange Program;

 

(vii)          determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards vest or may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions (subject to compliance with applicable laws, including Code Section 409A, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

  

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(viii)         construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 

(ix)            prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

 

(x)             modify or amend each Award (subject to Sections 6 and 23(c)), including the discretionary authority to extend the post-termination exercisability period of Options or SARs longer than is otherwise provided for in the Plan (but in no event more than ten years from the grant date);

 

(xi)            allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(xii)           authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xiii)          determine the terms and restrictions applicable to Awards;

 

(xiv)          determine whether Awards (other than Options or SARs) will be adjusted for Dividend Equivalents; and

 

(xv)           make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)            Delegation.  The Board may delegate responsibility for administering the Plan, including with respect to designated classes of Employees and Consultants, to different committees consisting of one or more Directors subject to such limitations as the Board deems appropriate.  To the extent consistent with applicable law, the Board or the Compensation Committee may authorize one or more officers of the Company to grant Awards to designated classes of Employees and Consultants, within limits specifically prescribed by the Board or the Compensation Committee; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to other Company executive officers.

 

(d)            Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants and any other holders of any Awards granted under the Plan.

 

(e)            Indemnification.  In addition to such other rights of indemnification to which the Administrator or any Directors or members of any Committee comprising the Administrator may be entitled, and to the extent allowed by Applicable Laws, the Administrator shall be indemnified by the Company against the reasonable expenses, including attorney's fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Administrator may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Administrator in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Administrator in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Administrator did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after institution of any such action, suit or proceeding, such Administrator shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.

 

  

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5.             Eligibility.  Awards may be granted only to Service Providers.  Incentive Stock Options may be granted only to Employees.  A Service Provider who has been granted an Award may, if he or she is otherwise eligible, be granted an additional Award or Awards.

 

6.             Code Section 162(m) Provisions.

 

(a)            Option and SAR Annual Share Limit.  No Participant shall be granted, in any Fiscal Year, Options and Stock Appreciation Rights to purchase more than 250,000 Shares; provided, however, that such limit shall be 500,000 Shares in the Participant’s first Fiscal Year of Company service.

 

(b)            Restricted Stock, Performance Share and Restricted Stock Unit Annual Limit.  No Participant shall be granted, in any Fiscal Year, more than 250,000 Shares in the aggregate of the following: (i) Restricted Stock, (ii) Performance Shares, or (iii) Restricted Stock Units; provided, however, that such limit shall be 500,000 Shares in the Participant’s first Fiscal Year of Company service.

 

(c)            Section 162(m) Performance Restrictions.  For purposes of qualifying grants of Restricted Stock, Performance Shares, Performance Units or Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Administrator on or before the latest date permissible to enable the Restricted Stock, Performance Shares, Performance Units or Restricted Stock Units to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting Restricted Stock, Performance Shares, Performance Units or Restricted Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

(d)            Changes in Capitalization.  The numerical limitations in Sections 6(a) and (b) shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 19(a).

 

7.             Stock Options.

 

(a)            Type of Option.  Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares subject to a Participant’s Incentive Stock Options granted by the Company, any Parent or Subsidiary, that become exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options.  For purposes of this Section 7(a), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant.

 

  

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(b)            Term of Option.  The term of each Option shall be stated in the notice of grant; provided, however, that the term shall be 10 years from the date of grant or such shorter term as may be provided in such notice of grant.  Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the notice of grant.

 

(c)            Exercise Price and Consideration.

 

(i)             The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

 

(A)           In the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

 

(B)            In the case of any other Incentive Stock Option and any Nonqualified Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(C)            Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.

 

(ii)            The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator.  Such consideration, to the extent permitted by Applicable Laws, may consist entirely of: (A) cash; (B) check; (C) other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; (D) broker-assisted cashless exercise; (E) any combination of the foregoing methods of payment; or (F) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

 

8.             Stock Appreciation Rights.

 

(a)            Grant of SARs.  Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion. Subject to Section 6(a), the Administrator shall have complete discretion to determine the number of SARs granted to any Participant.

 

(b)            Exercise Price and other Terms.  The per share exercise price for the Shares to be issued pursuant to exercise of an SAR shall be determined by the Administrator and shall be no less than 100% of the Fair Market Value per share on the date of grant.  Otherwise, subject to Section 6(a), the Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan; provided, however, that no SAR may have a term of more than ten (10) years from the date of grant.

 

  

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(c)            Payment of SAR Amount.  Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

(i)             The difference between the Fair Market Value of a Share on the date of exercise over the exercise price, times

 

(ii)             The number of Shares with respect to which the SAR is exercised.

 

(d)            Payment upon Exercise of SAR.  At the discretion of the Administrator, but only as specified in the Award Agreement, payment for a SAR may be in cash, Shares or a combination thereof.  If the Award Agreement is silent as to the form of payment, payment of the SAR may only be in Shares.

 

(e)            SAR Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, whether it may be settled in cash, Shares or a combination thereof, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.

 

(f)             Expiration of SARs.  A SAR granted under the Plan shall not exceed 10 years and shall expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement.

 

9.             Exercise of Option or SAR.

 

(a)            Procedure for Exercise; Rights as a Shareholder.  Any Option or SAR granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Participant, and as shall be permissible under the terms of the Plan.  An Option or SAR may not be exercised for a fraction of a Share.  An Option or SAR shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option or SAR by the person entitled to exercise the Option or SAR and, with respect to Options only, full payment for the Shares with respect to which the Option is exercised has been received by the Company.  With respect to Options only, full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 7(c)(ii).  Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 19.

 

(b)            Termination of Status as a Service Provider.  If a Participant ceases to serve as a Service Provider, other than upon their death or Disability, he or she may, but only within 90 days (or such other period of time as is determined by the Administrator and as set forth in the Option or SAR Agreement) after the date he or she ceases to be a Service Provider, exercise his or her Option or SAR to the extent that he or she was entitled to exercise it at the date of such termination.  To the extent that he or she was not entitled to exercise the Option or SAR at the date of such termination, or if he or she does not exercise such Option or SAR (which he or she was entitled to exercise) within the time specified herein, the Option or SAR shall terminate.

 

  

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(c)            Disability.  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR within such period of time as is specified in the Award Agreement to the extent the Option or SAR is vested on the date of termination (but in no event later than the expiration of the term of such Option or SAR as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option or SAR shall remain exercisable for 12 months following the Participant’s termination.  If, on the date of termination, the Participant is not vested as to his or her entire Option or SAR, the Shares covered by the unvested portion of the Option or SAR shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option or SAR within the time specified herein, the Option or SAR shall terminate, and the Shares covered by such Option or SAR shall revert to the Plan.

 

(d)            Death of Participant.  If a Participant dies while a Service Provider, the Option or SAR may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement (but in no event may the option be exercised later than the expiration of the term set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator.  If no such beneficiary has been designated by the Participant, then such Option or SAR may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option or SAR is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option or SAR shall remain exercisable for 12 months following Participant’s death.  If the Option or SAR is not so exercised within the time specified herein, the Option or SAR shall terminate, and the Shares covered by such Option or SAR shall revert to the Plan.

 

10.           Automatic Grants to Outside Directors.  The Board or a Committee thereof may institute, by resolution, automatic Award grants to new and to continuing members of the Board, with the number and type of such Awards, with such terms and conditions, and based upon such criteria, if any, as is determined by the Board or its Committee, in their sole discretion.

 

11.           Restricted Stock.

 

(a)            Grant of Restricted Stock.  Subject to the terms and conditions of the Plan, Restricted Stock may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion.  Subject to Section 6(b), the Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on continued provision of services but may include a performance-based component, upon which is conditioned the grant, vesting or issuance of Restricted Stock.

 

(b)            Other Terms.  The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Restricted Stock granted under the Plan; provided that Restricted Stock may only be issued in the form of Shares. Restricted Stock grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock or the restricted stock unit is awarded.  The Administrator may require the recipient to sign a Restricted Stock Award agreement as a condition of the award.  Any certificates representing the Shares awarded shall bear such legends as shall be determined by the Administrator.

 

(c)            Restricted Stock Award Agreement.  Each Restricted Stock grant shall be evidenced by an agreement that shall specify the purchase price (if any) and such other terms and conditions as the Administrator, in its sole discretion, shall determine; provided; however, that if the Restricted Stock grant has a purchase price, such purchase price must be paid no more than 10 years following the date of grant.

 

  

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12.           Restricted Stock Units.

 

(a)            Grant.  Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it shall advise the Participant in writing or electronically of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units and the form of payout, which, subject to Section 6(b), may be left to the discretion of the Administrator.

 

(b)            Vesting Criteria and Other Terms.  The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion.

 

(c)            Earning Restricted Stock Units.  Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award Agreement.  Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

(d)            Form and Timing of Payment.  Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award Agreement.  The Administrator, in its sole discretion, but only as specified in the Award Agreement, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof.  If the Award Agreement is silent as to the form of payment, payment of the Restricted Stock Units may only be in Shares.

 

(e)            Cancellation.  On the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company.

 

13.           Performance Shares.

 

(a)            Grant of Performance Shares.  Subject to the terms and conditions of the Plan, Performance Shares may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion.  Subject to Section 6(b), the Administrator shall have complete discretion to determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares.  Performance Shares shall be granted in the form of units to acquire Shares.  Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award.  Until the Shares are issued, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the units to acquire Shares.

 

(b)            Other Terms.  The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Shares granted under the Plan.  Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator.  The Administrator may require the recipient to sign a Performance Shares Award Agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.

 

  

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(c)            Performance Share Award Agreement.  Each Performance Share grant shall be evidenced by an Award Agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine.

 

14.           Performance Units.

 

(a)            Grant of Performance Units.  Performance Units are similar to Performance Shares, except that they shall be settled in a cash equivalent to the Fair Market Value of the underlying Shares, determined as of the vesting date.  Subject to the terms and conditions of the Plan, Performance Units may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion.  The Administrator shall have complete discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Units.  Performance Units shall be granted in the form of units to acquire Shares.  Each such unit shall be the cash equivalent of one Share.  No right to vote or receive dividends or any other rights as a shareholder shall exist with respect to Performance Units or the cash payable thereunder.

 

(b)            Number of Performance Units.  Subject to Section 6(c), the Administrator will have complete discretion in determining the number of Performance Units granted to any Participant.

 

(c)            Other Terms.  The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Units granted under the Plan.  Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the grant is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator.  The Administrator may require the recipient to sign a Performance Unit agreement as a condition of the award.  Any certificates representing the units awarded shall bear such legends as shall be determined by the Administrator.

 

(d)            Performance Unit Award Agreement.  Each Performance Unit grant shall be evidenced by an agreement that shall specify such terms and conditions as the Administrator, in its sole discretion, shall determine.

 

15.           Deferred Stock Units.

 

(a)             Description.  Deferred Stock Units shall consist of a Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator.  Deferred Stock Units shall remain subject to the claims of the Company’s general creditors until distributed to the Participant.

 

(b)            162(m) Limits.  Deferred Stock Units shall be subject to the annual 162(m) limits applicable to the underlying Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award as set forth in Section 6.

 

16.           Leaves of Absence.  Unless the Administrator provides otherwise or as otherwise required by Applicable Laws, vesting of Awards granted hereunder shall cease commencing on the first day of any unpaid leave of absence and shall only recommence upon return to active service.

 

  

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17.           Part-Time Service.  Unless otherwise required by Applicable Laws, if as a condition to being permitted to work on a less than full-time basis, the Participant agrees that any service-based vesting of Awards granted hereunder shall be extended on a proportionate basis in connection with such transition to a less than a full-time basis, vesting shall be adjusted in accordance with such agreement.  Such vesting shall be proportionately re-adjusted prospectively in the event that the Employee subsequently becomes regularly scheduled to work additional hours of service.

 

18.           Non-Transferability of Awards.  Except as determined otherwise by the Administrator in its sole discretion (but never a transfer in exchange for value), Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution, without the prior written consent of the Administrator.  An Award may be exercised, during the lifetime of the Participant, only by the Participant.  If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.

 

19.           Adjustments Upon Changes in Capitalization, Dissolution, Merger or Change in Control.

 

(a)            Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, as well as the price per share of Common Stock covered by each such outstanding Award and the annual share limitations under Sections 6(a) and (b), shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.

 

(b)            Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option or SAR until 10 days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with respect to Options and SARs) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)            Merger or Change in Control.  In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  The Administrator will not be required to treat all Awards similarly in the transaction.

 

  

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In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely shares of common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely shares of common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

 

Notwithstanding anything in this Section 19(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

(d)            Outside Director Awards.  With respect to Awards granted to an Outside Director that are assumed or substituted for in a Change in Control or merger, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such voluntary resignation is at the request of the acquirer), then the Outside Director will immediately vest 100% in all such Awards.

 

20.           Time of Granting Awards.  The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award or such later date as is specified by the Administrator. Notice of the determination shall be given to each Employee or Consultant to whom an Award is so granted within a reasonable time after the date of such grant.

 

21.           Term of Plan.  Subject to Section 22, the Plan will become effective upon its adoption by the Board.  The Plan shall continue in effect until ten years from the date of its initial adoption by the Board.

 

  

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22.           Shareholder Approval.  The Plan will be subject to approval by the shareholders of the Company within 12 months after the date the Plan is adopted by the Board.  Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws.

 

23.           Amendment and Termination of the Plan.

 

(a)            Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)            Shareholder Approval.  The Company shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of the Code (or any successor rule or statute or other applicable law, rule or regulation, including the requirements of any exchange or quotation system on which the Shares are listed or quoted).  Such shareholder approval, if required, shall be obtained in such a manner and to such a degree as is required by the applicable law, rule or regulation.

 

(c)             Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

24.           Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

As a condition to the exercise or payout, as applicable, of an Award, the Company may require the person exercising such Option or SAR, or in the case of another Award (other than a Dividend Equivalent or Performance Unit), the person receiving the Shares upon vesting, to render to the Company a written statement containing such representations and warranties as, in the opinion of counsel for the Company, may be required to ensure compliance with any of the aforementioned relevant provisions of law, including a representation that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required.

 

25.           Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.  Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

26.           Tax.

 

(a)            Withholding Requirements.  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 

  

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(b)            Withholding Arrangements.  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

(c)            Section 409A Compliance.  Awards granted hereunder are intended to comply with the requirements of Section 409A of the Code to the extent Section 409A of the Code applies to such Awards, and any ambiguities in this Plan or Awards granted hereunder will be interpreted to so comply. The terms of the Plan and any Award granted under the Plan shall be interpreted, operated and administered in a manner consistent with the foregoing intention to the extent the Administrator deems necessary or advisable in its sole discretion.  Notwithstanding any other provision in the Plan, the Administrator, to the extent it unilaterally deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption from or complies with Section 409A of the Code; provided, however, that the Company makes no representation that the Awards granted under the Plan shall be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to Awards granted under the Plan.

 

27.           No Effect on Employment or Service.  Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

 

28.           Governing Law.

 

(a)            This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws, but not the choice of law rules, of the state of Nevada.

 

(b)            In the event that any provision of the Plan or any Award granted under the Plan is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.

 

(c)            The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute a part of the Plan, nor shall they affect its meaning, construction or effect.

 

(d)            The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.

 

  

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29.           Dodd-Frank Clawback.  In the event that the Company is required to restate its audited financial statements due to material noncompliance with any financial reporting requirement under applicable securities laws, to the extent required by Applicable Law, each current or former executive officer Participant shall be required to immediately repay the Company any compensation they received pursuant to Awards hereunder during the three-year period preceding the date upon which the Company is required to prepare the restatement that is in excess of what would have been paid to the executive officer Participant under the restated financial statement, in accordance with Section 10D of the Exchange Act and any rules promulgated thereunder. Any amount required to be repaid hereunder shall be determined by the Board or its Committee in its sole discretion, unless otherwise required by Applicable Laws, and shall be binding on all current and former executive officer Participants.

 

 

ADOPTED: ­­­­­­­­­­­­­­­­ April 30, 2014

 

*   *   *   *   *

 

I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Medizone International, Inc. on April 30, 2014.

 

*   *   *   *   *

 

Executed on this 16 day of July, 2014.

 

 

	  	  	

/s/ Jill Marshall

	  	  	
Corporate Secretary

 

 

  

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