PURCHASE AND EXCHANGE AGREEMENT

EX-10.1 2 d309480dex101.htm EX-10.1 EX-10.1

Exhibit 10.1

Execution Version

PURCHASE AND EXCHANGE AGREEMENT

THIS PURCHASE AND EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of December 6, 2016 by and among Cobalt International Energy, Inc., a Delaware corporation (the “Company”), the Guarantors party hereto, and the holders, named in Schedule I hereto (the “Holders”), of the Company’s (i) 2.625% Convertible Senior Notes due 2019 (the “2019 Notes”), which were issued under that certain First Supplemental Indenture (the “2019 Notes Supplemental Indenture”), dated as of December 17, 2012, supplementing the Senior Indenture (the “Senior Indenture”), dated as of December 17, 2012, between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”) and (ii) 3.125% Convertible Senior Notes due 2024 (the “2024 Notes”), which were issued under that certain Second Supplemental Indenture (the “2024 Notes Supplemental Indenture”), dated as of May 13, 2014, supplementing the Senior Indenture.

RECITALS

WHEREAS, the Company has issued and outstanding (i) $1,380.0 million aggregate principal amount of 2019 Notes pursuant to the 2019 Notes Supplemental Indenture and (ii) $1,300.0 million aggregate principal amount of 2024 Notes pursuant to the 2024 Notes Supplemental Indenture;

WHEREAS, the Company has agreed to issue and sell $500 million aggregate principal amount of new 10.75% First Lien Senior Secured Notes due 2021 of the Company (the “First Lien Notes”) to the Holders (the “First Lien Notes Offering”);

WHEREAS, the Company and Wilmington Trust, National Association, as trustee (the “First Lien Trustee”) and as first lien collateral agent (the “First Lien Collateral Agent”), are entering into a new indenture which shall govern the First Lien Notes, substantially in the form attached hereto as Exhibit A (the “First Lien Notes Indenture”), and related collateral documents, substantially in the forms attached hereto as Exhibit B (the “First Lien Collateral Documents”);

WHEREAS, the Company and the Holders have reached an agreement for the exchange of (A) (i) $616,554,000 aggregate principal amount of 2019 Notes held by the Holders (or certain funds and/or accounts for which a Holder acts as investment advisor) (the “2019 Exchanged Notes”) and (ii) $95,855,000 aggregate principal amount of 2024 Notes held by the Holders (or certain funds and/or accounts for which a Holder acts as investment advisor) (the “2024 Exchanged Notes,” and together with the 2019 Exchanged Notes, the “Exchanged Notes”), for (B) (i) $584,732,000 aggregate principal amount of new 7.75% Second Lien Senior Secured Notes due 2023 of the Company (the “Second Lien Notes”), and (ii) 30 million shares (the “Exchange Shares”) of the Company’s common stock, par value $0.01 (“Common Stock”), in each case, in the amounts per each Holder as indicated on Schedule I hereto;

WHEREAS, the Company and Wilmington Trust, National Association, as trustee (the “Second Lien Trustee”) and as second lien collateral agent (the “Second Lien Collateral Agent”), are entering into a new indenture which shall govern the Second Lien Notes, substantially in the form attached hereto as Exhibit C (the “Second Lien Notes Indenture”), and related collateral documents, substantially in the form attached hereto as Exhibit D (the “Second Lien Collateral Documents”);

WHEREAS, concurrently with the consummation of the First Lien Notes Offering and the Exchange (as defined below), the First Lien Collateral Agent named therein and the Second Lien Collateral Agent named therein, and the borrowers and obligors named therein are entering into an intercreditor agreement (the “Intercreditor Agreement”), substantially in the form attached hereto as Exhibit E;

WHEREAS, the payment by the Company of all amounts due or in respect of the First Lien Notes and the Second Lien Notes and the performance of the Company under the First Lien Notes Indenture, the First Lien Collateral Agreement, the Second Lien Notes Indenture and the Second Lien Collateral Agreement will be initially guaranteed (the “Guarantees”) by each of the subsidiaries of the Company set forth on Exhibit F attached hereto (the “Guarantors”); and

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained and intending to be legally bound hereby, the Company and the Holders hereby agree as follows:

ARTICLE I

PURCHASE OF NOTES AND EXCHANGE OF NOTES

Section 1.1 Purchase of First Lien Notes. Subject to the terms and conditions set forth in this Agreement, at the Closing (as defined below), the Company will sell to the Holders, and each of the Holders, on its behalf and on behalf of certain funds and/or accounts for which such Holder acts as investment advisor, will purchase from the Company the principal amount of First Lien Notes set forth opposite such Holder’s name on Schedule I hereto, for an aggregate purchase price set forth on Schedule I hereto for all such Holders; provided, that the Company and each Holder agree that the First Lien Notes will be issued with original issue discount (“OID”) of 2.0%, and such OID shall constitute principal for all purposes under this Agreement and the First Lien Notes Indenture.

Section 1.2 Exchange of Exchanged Notes for Second Lien Notes and Exchange Shares. Subject to the terms and conditions set forth in this Agreement, each Holder hereby agrees, on its behalf and on behalf of certain funds and/or accounts for which such Holder acts as investment advisor, to exchange (the “Exchange” and together with the First Lien Notes Offering, the “Transaction”) at the Closing (as defined below) the principal amount of the Exchanged Notes held by such Holder (or certain funds and/or accounts for which such Holder acts as investment advisor), as set forth opposite such Holder’s name on Schedule I hereto, for (i) the principal amount of Second Lien Notes and (ii) a number of shares of Exchange Shares, each as set forth opposite such Holder’s name on Schedule I hereto plus an amount in cash equal to the accrued and unpaid interest on the Exchanged Notes from the most recent payment date to the Closing, net of any required tax withholdings in respect of accrued interest, if any, to the extent of such Holder’s failure to provide appropriate forms showing that such Holder is not subject to withholding. Upon the surrender of the Exchanged Notes in exchange for the Second Lien Notes and Exchange Shares, all then outstanding principal amount of such Exchanged Notes, shall be deemed satisfied and such Exchanged Notes shall be cancelled, and all accrued

but unpaid interest on the Exchanged Notes up to and including the Closing Date (as defined below) shall be deducted from the amounts each Holder shall pay for the First Lien Notes. Each Holder waives all rights to receive any future interest payments scheduled for its Exchanged Notes from and after the Closing. Following the Closing, the Exchanged Notes exchanged pursuant to this Agreement shall be delivered to the Trustee for cancellation and cease to accrue interest. The principal amount of the Second Lien Notes to be issued shall be rounded to the nearest $1,000. The number of Exchange Shares to be issued shall be rounded to the nearest whole number. The First Lien Notes, the Second Lien Notes and the Exchange Shares that are issued to the Holders in exchange for the Exchanged Notes are collectively referred to herein as the “New Securities.”

Section 1.3 Withholding. The Company and Holders agree that the principal amount of First Lien Notes and Second Lien Notes and the number of Exchange Shares deliverable by the Company pursuant to the Transaction and all amounts payable by the Company in cash pursuant to the Transaction shall be free and clear of any withholdings or deductions for taxes pursuant to Section 1445 of the Code, and the regulations thereunder. Each Holder agrees to severally indemnify and hold harmless the Company against any amounts imposed on the Company pursuant to Section 1445 of the Code, and the regulations thereunder, as a result of the Company’s failure to withhold and remit any such taxes in respect of such Holder’s Exchanged Notes.

ARTICLE II

CLOSING DATE; DELIVERY

Section 2.1 Closing. The closing of the Transaction described in Article I shall take place at the offices of Kirkland & Ellis LLP, 600 Travis Street, Suite 3300, Houston, Texas 77002 at 10:00 a.m., Houston time, on the date hereof or at such other place as shall be mutually agreed by the Company and the Holders (which time and place are designated as the “Closing” and which day is referred to herein as the “Closing Date”).

Section 2.2 Delivery for the First Lien Notes. At the Closing, (a) the Company shall deliver to The Depository Trust Company (“DTC”) or its custodian one or more global certificates representing the First Lien Notes being issued in the First Lien Notes Offering (the “Global First Lien Notes”) and (b) each Holder shall effect payment for such First Lien Notes by Federal (same day) funds by wire transfer to an account at a bank designated by the Company at least three (3) Business Days prior to the date of this Agreement and acceptable to the Holders in an amount as set forth opposite such Holder’s name on Schedule I, against delivery to the First Lien Trustee as custodian for DTC of the Global First Lien Notes representing all of the First Lien Notes.

Section 2.3 Delivery for the Exchange. At the Closing, (a) the Company shall (i) deliver to DTC or its custodian one or more global certificates representing the Second Lien Notes being issued in the Exchange and (ii) deliver evidence of issuance of the Exchange Shares credited to book-entry accounts maintained by the transfer agent of the Company in the amounts as indicated on Schedule I hereto, and (b) each Holder shall effect by book entry, in accordance with the applicable procedures of DTC and the terms of the 2019 Notes Supplemental Indenture and the 2024 Notes Supplemental Indenture, as applicable, the delivery to the Company (or to its

designee which may be the Second Lien Trustee for the benefit of the Company), the Exchanged Notes held by such Holder (or certain funds and/or accounts for which such Holder acts as investment advisor) as set forth opposite such Holder’s name on Schedule I and such Exchanged Notes shall be cancelled by the Trustee under the relevant indenture or the amount outstanding under global certificates representing the 2019 Notes and 2024 Notes, as applicable, shall be decreased by the respective amounts of Exchanged Notes delivered.

Section 2.4 Consummation of Closing. All acts, deliveries and confirmations comprising the Closing, regardless of chronological sequence, shall be deemed to occur contemporaneously and simultaneously upon the occurrence of the last act, delivery or confirmation of the Closing and none of such acts, deliveries or confirmations shall be effective unless and until the last of same shall have occurred. For the avoidance of doubt, in no event shall the Holders be required to purchase the First Lien Notes if the Exchange is not concurrently consummated.

Section 2.5 No Transfer of Exchanged Notes After the Closing; No Further Ownership Rights in the Exchanged Notes. Upon consummation of the Closing, all Exchanged Notes (or interests therein) exchanged pursuant to this Agreement shall cease to be transferable and there shall be no further registration of any transfer of any such Exchanged Notes or interests therein. From and after the Closing, the Holders shall cease to have any rights with respect to such Exchanged Notes, including any payments of accrued and unpaid interest, except as otherwise provided for herein or by applicable law. Upon consummation of the Closing the Exchanged Notes shall be deemed cancelled and no longer outstanding.

Section 2.6 Payment of Fees and Expenses. The Company shall have paid on the Closing Date all reasonable and documented legal and advisor fees , including the local counsel firms Jones Walker LLP and Walkers, of the Holders incurred in connection with the Transaction, to the extent invoiced at least one (1) Business Day before the Closing Date in accordance with the terms of (i) that certain letter agreement, dated as of September 26, 2016, by and between Weil, Gotshal and Manges LLP (“Weil”) and the Company and (ii) that certain letter agreement, dated as of November 14, 2016, by and among Weil, Moelis & Company LLC and the Company.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS

The Company and each of the Guarantors represents and warrants to each of the Holders as follows:

Section 3.1 Organization and Good Standing of the Company and its Subsidiaries. The Company is a corporation duly formed, validly existing and in good standing under the laws of the state of Delaware and has all requisite corporate power and authority to own, lease and operate its properties, and to enter into this Agreement and perform its obligations hereunder. Each subsidiary of the Company has been duly formed and is validly existing and in good standing (or equivalent status to the extent applicable in the relevant jurisdiction) under the laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and

operate its properties and to enter into this Agreement and perform its obligations hereunder. The Company and each of its subsidiaries is duly qualified to do business and is in good standing in all jurisdictions wherein such qualification is necessary, except where failure so to qualify would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, properties, management, operations or prospects, financial condition, results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”).

Section 3.2 Exchange Agreement and Other Transaction Documents. This Agreement, the Second Lien Notes Indenture, the First Lien Notes Indenture, the Intercreditor Agreement, the Second Lien Collateral Documents, the First Lien Collateral Documents, and the other agreements and instruments contemplated hereby and thereby (collectively, the “Transaction Documents”) have been duly and validly authorized by the Company and the Guarantors party thereto, this Agreement has been duly executed and delivered by the Company and the Guarantors and this Agreement is, and the Second Lien Notes Indenture, the First Lien Notes Indenture, the Intercreditor Agreement, the Second Lien Collateral Documents and the First Lien Collateral Documents, when executed and delivered by the Company and the Guarantors party thereto, will be, valid and binding obligations of the Company and the Guarantors party thereto, enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally, and except that the enforceability of any indemnification or contribution provisions thereof may be limited under applicable securities laws or the public policies underlying such laws.

Section 3.3 First Lien Notes. The First Lien Notes have been duly and validly authorized by the Company, and when the First Lien Notes are executed by the Company and authenticated and delivered pursuant to this Agreement and the First Lien Notes Indenture, the First Lien Notes will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally.

Section 3.4 Second Lien Notes. The Second Lien Notes have been duly and validly authorized by the Company, and when the Second Lien Notes are executed by the Company and authenticated and delivered in exchange for the Exchanged Notes pursuant to this Agreement and the Second Lien Notes Indenture at the Closing, the Second Lien Notes will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally.

Section 3.5 Exchange Shares. The Exchange Shares have been duly authorized by the Company; all outstanding shares of capital stock of the Company are, and, when the Exchange Shares have been issued and delivered to the applicable Holder pursuant to the Exchange against delivery of the Exchanged Notes in accordance with the terms of this Agreement on the Closing Date, will be validly issued, fully paid and nonassessable, and the issuance of the Exchange Shares will not be subject to any preemptive, participation, rights of first refusal or other similar rights.

Section 3.6 Title to Properties.

Except (i) to the extent disclosed in the reports filed with, or furnished by the Company to, the Securities and Exchange Commission (the “Commission”) prior to or on the date of this Agreement and publicly available on the date of this Agreement (other than forward-looking disclosures set forth in any risk factor section or similar section, or disclosures relating to forward-looking statements, in each case to the extent they are predictive, cautionary or forward-looking in nature) (the “SEC Filings”) made with the Commission and (ii) as disclosed on Schedule 3.6 hereto:

(a) The Company and its subsidiaries have legal, valid and defensible title to their respective Oil and Gas Properties in each case free from Liens, charges, encumbrances and defects, security interests, charges, mortgages, deeds of trust and hypothecations of any kind other than Permitted Liens (as defined in the First Lien Notes Indenture);

(b) None of the Company or Guarantors own any real property. The Company and Guarantors have good and marketable title to all other properties and assets owned by them, other than Oil and Gas Properties, in each case free from liens, charges, encumbrances and defects other than Permitted Liens (as defined in the First Lien Notes Indenture) and, the Company and the Guarantors hold any leased real or personal property under valid and enforceable leases with no terms or provisions that would interfere with the use made or currently proposed to be made thereof by them;

(c) None of the Company or any of its subsidiaries own any Oil and Gas Properties except as shown on the Initial Reserves Report or Annex II;

(d) The descriptions of the quantum and nature of the record title and beneficial interests of the Company and its subsidiaries set forth in the Initial Reserves Report or as shown on Annex II include the entire record title and beneficial interests of the Company and its subsidiaries in such asset, and are complete and accurate in all material respects; and

(e) No “back-in” or “reversionary” interests held by third parties exist which could reduce the interests of the Company or its applicable subsidiary set forth in the Initial Reserves Report or set forth on Annex II.

Section 3.7 Non-Contravention. The execution and delivery by the Company of this Agreement and the other Transaction Documents and each other agreement and transaction contemplated hereby or thereby to which the Holders are a party, do not and will not (i) result in any violation of any terms of the charter or certificate of formation or by-laws or limited liability company agreement, as applicable, of the Company or any of its subsidiaries; (ii) conflict with or result in a breach by the Company or any of its subsidiaries of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company, its subsidiaries or any of their respective properties or assets is bound or affected or (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any government or political subdivision thereof, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political

subdivision thereof (a “Governmental Body”) or court having jurisdiction over the Company or any of its or its subsidiaries’ properties or assets, except, in the case of (ii) and (iii), as would not, materially and adversely affect the ability of the Company or the Guarantors to perform its obligations under the Transaction Documents, or which are otherwise material in the context of the issuance or sale of the New Securities.

Section 3.8 Consents. No consent, approval, authorization, or order of, or filing with, any Governmental Body or any court is required for the consummation of the transactions contemplated by the Transaction Documents in connection with the issuance and sale of the Exchange Shares, Second Lien Notes and the First Lien Notes by the Company, except for (i) as have been obtained, (ii) as may be necessary to perfect security interests granted pursuant to the Second Lien Collateral Documents and the First Lien Collateral Documents or (iii) as may be required under applicable state securities laws.

Section 3.9 Capitalization. The authorized capital stock of the Company is (a) 2,000,000,000 shares of Common Stock and (b) 200,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”). All of the outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and nonassessable. As of September 30, 2016, there were: (a) 417,333,252 shares of Common Stock outstanding and (b) no shares of Preferred Stock outstanding. Except for shares of Common Stock reserved for future grants or issuances (i) under the Amended and Restated Long Term Incentive Plan of the Company, (ii) under the Annual Incentive Plan of the Company, (iii) under the Cobalt International Energy, Inc. 2015 Long Term Incentive Plan and (iv) upon conversion of the 2019 Notes and 2024 Notes in accordance with the 2019 Notes Supplemental Indenture and the 2024 Notes Supplemental Indenture, as applicable, the Company has no shares of Common Stock reserved for issuance except for the shares of Common Stock referenced in the preceding sentence. The Company has good title to all outstanding capital stock or limited liability company interests of its subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity other than Liens to be granted under the Second Lien Collateral Documents and the First Lien Collateral Documents and other liens permitted under the Second Lien Notes Indenture and the First Lien Notes Indenture, and all such capital stock is duly issued, fully paid and non-assessable, to the extent applicable. None of the outstanding shares of capital stock of any subsidiary were issued in violation of the preemptive or similar rights of any securityholder of such subsidiary. The only subsidiaries of the Company are the subsidiaries listed on Exhibit 21.1 to the Company’s 2015 Annual Report (as defined below).

Section 3.10 Financial Statements. The financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “2015 Annual Report”), were prepared in accordance with generally accepted accounting principles in effect in the United States from time to time, and fairly present in all material respects the financial positions and results of operations of the Company and its subsidiaries at the dates and for the periods indicated. The financial statements included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2016, were prepared in accordance with generally accepted accounting principles in effect in the United States from time to time, and fairly present in all material respects the financial positions and results of operations of the Company and its subsidiaries at the dates and for the periods indicated.

Section 3.11 Taxes. The Company and its subsidiaries have filed, or have caused to be filed or have requested extensions thereof, all material federal, state, local and foreign tax returns, information statements and reports that they are required to file and such tax returns were true, correct and complete in all material respects. Except as set forth in the Company’s SEC Filings, the Company and its subsidiaries have paid, or made adequate provisions for the payment of, all material taxes, except for any such taxes, assessments, fines or penalties currently being contested in good faith.

Section 3.12 Exchange Act Reports. The Company’s 2015 Annual Report, and all other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end of such fiscal year, when they were filed with the Commission conformed in all material respects to the requirements of the Exchange Act, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 3.13 Governmental Approvals. Except as disclosed in the Company’s SEC Filings, the Company and its subsidiaries possess, and are in compliance with the terms of, all adequate certificates, authorizations, franchises, licenses and permits (“Licenses”) necessary or material to the conduct of the business now conducted or proposed in the Company’s SEC Filings to be conducted by them and have not received any notice of proceedings relating to the revocation or modification of any Licenses that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3.14 Compliance with Environmental Laws. (i)(A) Neither the Company nor any of its subsidiaries is or has been in violation of, or has any liability under, any applicable federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any domestic or foreign governmental agency, governmental body or court, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and safety including as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, “Environmental Laws”), (B) neither the Company nor any of its subsidiaries owns, occupies, operates or uses any real property contaminated with Hazardous Substances, (C) neither the Company nor any of its subsidiaries is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (D) neither the Company nor any of its subsidiaries is liable or allegedly liable for any release or threatened release of Hazardous Substances, including, but not limited to, at any off-site treatment, storage or disposal site or any formerly owned, operated, or occupied real property, (E) neither the Company nor any of its subsidiaries is subject to any claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (F) the Company and its subsidiaries have received and are in compliance with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses; except in each case covered by clauses (A) — (F) such as would not individually or in the aggregate, reasonably be expected to result in the Company or

any subsidiary incurring material liabilities; (ii) to the knowledge of the Company there are no facts or circumstances that would reasonably be expected to result in a violation of, liability under, or claim pursuant to any Environmental Law that would reasonably be expected to result in the Company or any subsidiary incurring material liabilities; (iii) to the knowledge of the Company there are no requirements proposed for adoption or implementation under any Environmental Law that would reasonably be expected to have a Material Adverse Effect; and (iv) except as disclosed in the Company’s SEC Filings, the Company has reasonably concluded that the effect, including associated costs and liabilities, of Environmental Laws on the business, properties, results of operations, products and financial condition of the Company and its subsidiaries would not, singly or in the aggregate, reasonably be expected to result in the Company or any subsidiary incurring material liabilities. For purposes of this section, “Hazardous Substances” means (1) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold, and (2) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under applicable Environmental Laws.

Section 3.15 Litigation. Except as disclosed in the Company’s SEC Filings, there are no pending actions, suits or proceedings (including, to the best of the Company’s knowledge, any inquiries or investigations threatened by any court or governmental agency or body, domestic or foreign) against the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate, reasonably be expected to (a) have a Material Adverse Effect,(b) result in an Event of Default pursuant to Section 6.01(a)(7)(b) of the First Lien Notes Indenture (without giving effect to clause (c) thereof), (c) would materially and adversely affect the ability of the Company or the Guarantors to perform its obligations under the Transaction Documents, or (d) which are otherwise material in the context of the issuance or sale of the New Securities; and no such actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) are threatened or, to the Company’s knowledge, contemplated.

Section 3.16 Not an Investment Company. Neither the Company nor any Guarantor is, and upon the application of the proceeds of the sale of the First Lien Notes will be, an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.17 Margin Stock. The Company is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System). No proceeds from the sale of the First Lien Notes will be used by the Company to purchase or carry, or to reduce or refinance any debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors of the Federal Reserve System.

Section 3.18 Sarbanes-Oxley. Except as disclosed in the Company’s SEC Filings, there is and has been no failure on the part of the Company, its subsidiaries or any of its directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402

related to loans and Sections 302 and 906 related to certifications, to the extent such sections are applicable. Since the 2015 Annual Report, except as disclosed in the Company’s SEC Filings, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Section 3.19 No General Solicitation. The Company is not, none of its affiliates, nor, to the knowledge of the Company, any person acting on their behalf (i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Second Lien Notes or the First Lien Notes, or any security of the same class or series as the Second Lien Notes or the First Lien Notes or (ii) has offered or will offer or sell the Second Lien Notes or the First Lien Notes in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act.

Section 3.20 DTC. The First Notes and the Second Lien Notes have been declared eligible for clearance and settlement through DTC and have been delivered to the custodian of DTC for distribution to the accounts of applicable DTC participants for each Holder.

Section 3.21 NYSE Listing. The Exchange Shares have been approved for listing, subject to official notice of issuance, on the New York Stock Exchange (the “NYSE”).

Section 3.22 No Material Adverse Change. Except as disclosed in the Company’s SEC Filings, since December 31, 2015, (i) there has been no Material Adverse Effect, (ii) no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock and (iii) no material adverse change in the capital stock, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its subsidiaries. Since September 30, 2016, the Company has operated its business in the ordinary course consistent with past practice.

Section 3.23 No Registration. Assuming the accuracy of, and compliance with, the representations and warranties of the Holders set forth in Article IV hereof, the offer and sale of the New Securities to the Holders in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act by reason of Section 4(a)(2) thereof; and it is not necessary to qualify the First Lien Notes Indenture or the Second Lien Notes Indenture under the Trust Indenture Act of 1939, as amended.

Section 3.24 Insurance. The Company and its subsidiaries (i) are insured by insurers with financially sound and reputable insurance companies licensed to provide insurance in the applicable jurisdiction, in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar location, (ii) true and complete copies of all such insurance policies have been provided by the Company to the First Lien Collateral Agent and the Second Lien Collateral Agent, and (iii) the Company and its subsidiaries are in compliance with the terms of such policies and instruments in all material respects.

Section 3.25 Condition of Assets. All of the assets of the Company and its subsidiaries that are material to the operations of the Company or its subsidiaries are in good order and working condition and suitable for the use thereof, ordinary wear and tear excepted, and there has been no material casualty or loss, or notice of taking or condemnation or equivalent action on the part of any governmental agency or body, with respect thereto and none of the Company or its subsidiaries has reason to believe that any such action is contemplated by any governmental agency or body.

Section 3.26 No Default. No Default or Event of Default (as such terms are defined in the First Lien Notes Indenture and Second Lien Notes Indenture) exists or would result from (i) the execution and delivery by the Company and its subsidiaries of this Agreement and the other Transaction Documents and each other agreement and transaction contemplated hereby or thereby or (ii) the grant or perfection of the Liens on the Collateral in favor of the First Lien Collateral Agent and Second Lien Collateral Agent.

Section 3.27 Sanctions; Anti-Corruption Laws.

Except as disclosed on Schedule 3.27:

(a) The Company and its subsidiaries have implemented and maintain, or cause to be implemented and maintained in effect, policies, and procedures designed to ensure compliance by the Company and its subsidiaries and all directors, officers, employees and agents currently engaged by the Company or its subsidiaries and carrying out activities on their behalf, with applicable Anti-Corruption Laws and applicable Sanctions, and the Company and its subsidiaries and any directors, officers, and employees and, to the knowledge of the Company, its Affiliates, or any agents acting on its behalf, are in compliance with Anti-Corruption Laws and applicable Sanctions.

(b) None of the Company, any subsidiary of the Company, or any director, officer or employee of the Company or any of its subsidiaries, nor, to the knowledge of the Company, any of its Affiliates or agents acting on its behalf (i) is a Sanctioned Person, (ii) has any of its assets located in a Sanctioned Country; or (iii) derives revenues from investments in, or transactions with, Sanctioned Persons.

(c) None of the Company, any subsidiary of the Company, or any director, officer or employee of the Company or any of its subsidiaries, nor, to the knowledge of the Company, any of its Affiliates or agents acting on its behalf, has taken any action, directly or indirectly, that would result in a material violation by such persons of the FCPA, including without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and, the Company and its subsidiaries and, to the knowledge of the Company, its Affiliates have conducted their businesses in material compliance with the FCPA.

Section 3.28 Sufficient Capital. All indebtedness represented by the First Lien Notes and the Second Lien Notes is being incurred for proper purposes and in good faith; at the Closing, after giving pro forma effect to the Transaction and other good faith assumptions of the Company, the Company and its subsidiaries, taken as a whole on a consolidated basis, will have sufficient capital for carrying on their business.

Section 3.29 Outstanding Indebtedness. As of the Issue Date, there exists no indebtedness of any subsidiary of the Company that is not a Guarantor, other than Permitted Debt (as defined in the First Lien Notes Indenture).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

Each Holder represents and warrants, severally and not jointly, to the Company as follows:

Section 4.1 Organization and Standing of Holders. Each Holder is duly organized, validly existing and in good standing under the laws of its jurisdiction of its incorporation or formation and has all requisite power and authority to enter into this Agreement and perform its obligations hereunder.

Section 4.2 Exchange Agreement and Other Transaction Documents. This Agreement and each other agreement contemplated hereby to which each Holder is a party has been duly and validly authorized by such Holder. This Agreement has been duly executed and delivered by each Holder, and this Agreement is a valid and binding obligation of each Holder enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally, and except that the enforceability of any indemnification or contribution provisions thereof may be limited under applicable securities laws or the public policies underlying such laws.

Section 4.3 Non-Contravention. The execution and delivery by each Holder of this Agreement and the other documents and transactions contemplated hereby and each other agreement contemplated hereby to which such Holder is a party, do not and will not (i) result in any violation of any terms of the charter documents of such Holder; (ii) conflict with or result in a breach by such Holder of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which such Holder is a party or by which such Holder or any of its properties or assets is bound or affected or (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any Governmental Body or court having jurisdiction over such Holder or any of its properties or assets, except, in the case of (ii) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, properties, operations, financial condition or results of operations of such Holder and its subsidiaries, taken as a whole.

Section 4.4 Ownership. Each Holder is (i) the sole beneficial owner and/or the investment advisor, authorized representative or manager for the beneficial owners of the Exchanged Notes, the principal amount of which is set forth on its signature page attached hereto, having the power to vote and dispose of such Exchanged Notes on behalf of such beneficial owners and (ii) entitled (for its own account or for the account of certain funds and/or accounts for which it acts as investment advisor) to all of the rights and economic benefits of such Exchanged Notes. There are no outstanding agreements, arrangements or understandings under which such Holder, its nominee or the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor may be obligated to transfer any of the Exchanged Notes, other than this Agreement. Each Holder has full power and authority to enter into this Agreement, make the representations and warranties set forth herein and transfer the Exchanged Notes in accordance with the terms hereof on behalf of the beneficial owners of the Exchanged Notes, the principal amount of which is set forth on its signature page hereto.

Section 4.5 Transfers. Each Holder (and the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor) has made no prior assignment, sale, participation, grant, conveyance or other transfer of, and has not entered into any other agreement to assign, sell, participate, grant or otherwise transfer (except for liens or encumbrances in favor of a broker dealer over property in an account with such dealer generally in which an encumbrance is released upon transfer), in whole or in part, any portion of its right, title or interests in the Exchanged Notes it beneficially owns, subject to this Agreement, that is inconsistent with the representations and warranties made in Section 4.4 above or that would render such Holder (and the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor) otherwise unable to comply with its obligations under this Agreement.

Section 4.6 Liens. The Exchanged Notes held by each Holder (or the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor, as the case may be) are not subject to any lien, pledge, mortgage, security interest, charge, option or other encumbrance of adverse claim of any kind (a “Lien”), except for liens or encumbrances in favor of a broker dealer over property in an account with such dealer generally in which an encumbrance is released upon transfer. The execution and delivery of, and the performance by each Holder of its obligations under, this Agreement, will not result in the creation of any Lien upon the Exchanged Notes held by such Holder (or the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor, as the case may be). Upon the consummation of the Exchange, the Company will acquire the Exchanged Notes to be exchanged by each Holder (or the beneficial owners of the Exchanged Notes for which such Holder acts as investment advisor, as the case may be) free and clear of any Lien.

Section 4.7 No Illegal Transactions. Each of the Holders has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it has, disclosed to a third party any information regarding the Exchange or engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) since the time that such Holder became restricted from trading in the Company’s securities. Each of the Holders covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will disclose to a third party any information regarding the Exchange or engage, directly or indirectly, in any

transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed by the Company. “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the Exchange Act, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers. Solely for purposes of this Section 4.7, subject to each Holder’s compliance with its obligations under the U.S. federal securities laws and such Holder’s internal policies, (i) “Holder” shall not be deemed to include any employees, subsidiaries, desks, groups or affiliates of each Holder that are effectively walled off by appropriate “Fire Wall” information barriers approved by such Holder’s respective legal or compliance department (and thus such walled off parties have not been privy to any information concerning the Exchange), and (ii) the foregoing representations and covenants of this Section 4.7 shall not apply to any transaction by or on behalf of an account, desk or group that was effected without the advice or participation of, or such account’s, desk’s or group’s receipt of information regarding the Exchange provided by such Holder.

Section 4.8 Investment Experience. Each Holder has such knowledge and experience in financial and business affairs that such Holder is capable of evaluating the merits and risks of an investment in the Exchange Shares, Second Lien Notes and First Lien Notes. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) is an “accredited investor,” within the meaning of Rule 501 promulgated by the Commission under the Securities Act, and a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) will acquire the Exchange Shares, Second Lien Notes and First Lien Notes for its own account (or for the account of certain funds and/or accounts for which such Holder acts as investment advisor), for investment, and not with a view to or for sale in connection with any distribution thereof in violation of the registration provisions of the Securities Act or the rules and regulations promulgated thereunder. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) understands that the Exchange Shares, Second Lien Notes and First Lien Notes are being issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and each Holder’s compliance (and the compliance of each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) with, the representations, warranties, agreements, acknowledgments and understandings of such Holder (on its own behalf and on behalf of each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) set forth herein in order to determine the availability of such exemptions and the eligibility of such Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) to acquire the Exchange Shares, Second Lien Notes and First Lien Notes. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) acknowledges that no representations, express or implied, are being made with respect to the Company, the Exchange Shares, Second Lien Notes and First Lien Notes, or otherwise, other than those expressly set forth herein. In making its decision to invest in the Exchange Shares, Second Lien Notes and First Lien Notes hereunder, such Holder has relied upon independent investigations made by such Holder and, to the extent believed by such Holder to be appropriate, such Holder’s representatives, including

such Holder’s own professional, tax and other advisors. Each Holder and its representatives have been given the opportunity to ask questions of, and to receive answers from, the Company and its representatives concerning the terms and conditions of the investment in the Exchange Shares, Second Lien Notes and First Lien Notes. Each Holder has reviewed, or has had the opportunity to review, all information it deems necessary and appropriate for such Holder to evaluate the financial risks inherent in an investment in the Exchange Shares, Second Lien Notes and First Lien Notes and has had sufficient time to evaluate the Exchange. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) understands that its investment in the Exchange Shares, Second Lien Notes and First Lien Notes involves a high degree of risk and that no Governmental Body has passed on or made any recommendation or endorsement of the Exchange Shares, Second Lien Notes and First Lien Notes.

Section 4.9 Restricted Securities. Each Holder has been advised by the Company that (i) the offer and sale of the New Securities has not been registered under the Securities Act; (ii) the offer and sale of the New Securities is intended to be exempt from registration under the Securities Act pursuant to Section 4(a)(2) under the Securities Act; and (iii) there is currently no established market for the Second Lien Notes or First Lien Notes. Each Holder is familiar with Rule 144 promulgated by the Commission under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. Each Holder (and each beneficial owner of the Exchanged Notes for which such Holder acts as investment advisor) will only sell or otherwise transfer the First Lien Notes and Second Lien Notes in accordance with the First Lien Notes Indenture or Second Lien Notes Indenture, as applicable. None of the Holders is an “affiliate” (as that term is defined in Rule 144(a)(1) under the Securities Act) of the Company or has been an “affiliate” of the Company during the preceding three (3) months of the date hereof.

ARTICLE V

CLOSING DELIVERABLES OF THE COMPANY

In addition to those items described in Section 2.3, the obligation of each Holder to purchase the First Lien Notes and to exchange the Exchanged Notes for the Exchange Shares and Second Lien Notes is conditioned upon the delivery of the following (any or all of which may be waived by such Holder in its sole discretion):

(a) the First Lien Notes Indenture, duly executed by the Company, the First Lien Trustee, and the First Lien Collateral Agent;

(b) the Second Lien Notes Indenture, duly executed by the Company, the Second Lien Trustee and the Second Lien Collateral Agent;

(c) the First Lien Collateral Documents, duly executed by the Company, certain subsidiaries of the Company, the First Lien Trustee, and the First Lien Collateral Agent;

(d) the Second Lien Collateral Documents, duly executed by the Company, certain subsidiaries of the Company, the Second Lien Trustee and the Second Lien Collateral Agent;

(e) the Intercreditor Agreement, duly executed by the First Lien Collateral Agent, the Second Lien Collateral Agent and the borrowers and obligors named therein;

(f) each other item listed on Annex I hereto; and

(g) a legal opinion of Davis Polk & Wardwell LLP, counsel for the Company, in the form of Exhibit G hereto.

ARTICLE VI

CLOSING DELIVERABLES OF THE HOLDERS

In addition to those items described in Section 2.3, the obligation of the Company to issue and sell the First Lien Notes and exchange the Exchanged Notes for the Exchange Shares and Second Lien Notes is conditioned upon the delivery of each Holder’s payment for the First Lien Notes in the amount as set forth opposite such Holder’s name on Schedule I (which may be waived by the Company in its sole discretion).

ARTICLE VII

CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES

Section 7.1 Further Actions by Holder. Each Holder shall, at the written request of the Company, at any time and from time to time following the Closing execute and deliver to the Company all such further instruments and take all such further action as may be reasonably necessary or appropriate in order to confirm or carry out its obligations under this Agreement.

Section 7.2 Further Action by the Company. The Company shall, at the written request of any Holder, at any time and from time to time following the Closing execute and deliver to such Holder all such further instruments and take all such further action as may be reasonably necessary or appropriate in order to confirm or carry out its obligations under this Agreement.

Section 7.3 Best Efforts. The Company and the Holders shall use their respective best efforts (subject to standards of commercial reasonableness) to consummate the transactions contemplated to be performed by it under this Agreement.

Section 7.4 Tax Treatment. The parties intend that the exchange of the Exchanged Notes for the New Securities be treated as a reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as amended, and the parties shall file all applicable tax returns in a manner consistent with such tax treatment, unless otherwise required by applicable law.

Following the Closing, the Company shall, within a reasonable period after a request by any Holder provide such Holder with a statement informing the Holder whether as of the Closing Date its Exchanged Notes constitute “U.S. real property interests” in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(1). If the Company does not provide such a statement within a reasonable period in accordance with Treasury Regulations Section 1.897-2(h)(1)(i), the Company shall cooperate in good faith and provide such assistance and information regarding the assets and liabilities of the Company as is reasonably requested by the Holders for the Holders to determine the tax consequences to them (or their direct or indirect equity holders) of the exchange of the Exchanged Notes for the New Securities under Section 897 of the Internal Revenue Code of 1986.

Section 7.5 Publicity. The Company and the Holders agree that promptly following the Closing, the Company will issue a press release, substantially in the form attached hereto as Exhibit I.

Section 7.6 Use of Proceeds. The Company shall not use, and shall procure that its subsidiaries and its or their respective directors, officers, employees and agents shall not use, either directly or indirectly, the proceeds from the sale of the First Lien Notes in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Anti-Corruption Laws or in furtherance of any payment to any Sanctioned Person or otherwise in violation of the Sanctions laws.

ARTICLE VIII

TERMINATION

Section 8.1 Termination. Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and the transactions contemplated by this Agreement abandoned at any time prior to the Closing by any party if the transactions contemplated by this Agreement are not consummated in accordance with their terms within 15 days after the date hereof; provided, however, that a party hereto shall not have the right to terminate this Agreement if the failure to consummate the transactions contemplated by this Agreement shall be primarily attributable to such party’s failure to satisfy its obligations hereunder; provided further that the provisions of Sections 7.5 and 9.1 shall survive any such termination of this Agreement.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnification.

(a) The Company and the Guarantors jointly and severally agree to indemnify and hold harmless each Holder and its affiliates, and in each case, their respective officers, directors, employees, controlling persons (within the meaning of the Securities Act or the Exchange Act) and agents (each, an “Indemnified Holder”), against any loss, claim, damage, liability or out-of-pocket expense (including reasonable attorneys’ fees), as incurred, if any (collectively, “Losses”), arising out of or relating to this Agreement and the transactions contemplated hereby, other than Losses relating to (i) taxes, (ii) to the extent finally determined by a court of competent jurisdiction to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnified Holder, from a willful and material breach by a Holder of its obligations under this Agreement or from a claim solely among the Indemnified Holders or (iii) a claim brought by or on behalf of another holder of 2019 Notes or 2024 Notes to the extent arising from actions taken by any Indemnified Holder prior to the date of this Agreement that has not been disclosed to the Company prior to the date hereof.

(b) Promptly after receipt by an Indemnified Holder under this Section 9.1 of notice of the commencement of any action, such Indemnified Holder will, if a claim in respect thereof

is to be made against the Company under this Section 9.1, notify the Company in writing of the commencement thereof, but the failure to notify the Company will not relieve it from liability under paragraph (a) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the Company of substantial rights and defenses. In case any such action is brought against any Indemnified Holder and such Indemnified Holder seeks or intends to seek indemnity from the Company, the Company will be entitled to participate in, and, to the extent that it shall elect, by written notice delivered to the Indemnified Holder promptly after receiving the aforesaid notice from such Indemnified Holder, to assume the defense thereof; provided, however, if the defendants in any such action include both the Indemnified Holder and the Company and the Company or the Indemnified Holder shall have reasonably concluded that a conflict may arise between the positions of the Company and the Indemnified Holder in conducting the defense of any such action or that there may be legal defenses available to them and/or other Indemnified Holders that are different from or additional to those available to the Company, the Indemnified Holder or Holders shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Holder or Holders. Upon receipt of notice from the Company to such Indemnified Holder of the Company’s election so to assume the defense of such action and approval by the Indemnified Holder of counsel, the Company will not be liable to such Indemnified Holder for any legal or other expenses subsequently incurred by such Indemnified Holder in connection with the defense thereof unless (i) the Indemnified Holder shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that in connection with any such action the Company shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) representing the Indemnified Holders who are parties to such action) or (ii) the Company shall not have employed counsel reasonably satisfactory to the Indemnified Holder to represent the Indemnified Holder within a reasonable time after notice of commencement of the action.

(c) The Company shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but if settled with such consent or if there is a final judgment for the plaintiff, the Company agrees to indemnify the Indemnified Holder against any Loss by reason of such settlement or judgment. The Company shall not, without the prior written consent of the Indemnified Holder, effect any settlement in any pending or threatened action, suit or proceeding in respect of which any Indemnified Holder is or could have been a party and indemnity was or could have been sought hereunder by such Indemnified Holder, unless such settlement, compromise or consent (x) includes an unconditional release of such Indemnified Holder from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Holder.

(d) If the indemnification provided for in this Section 9.1 is for any reason unavailable to or otherwise insufficient to hold harmless the Indemnified Holder in respect of any Loss referred to therein, then the Company shall contribute to the aggregate amount paid or payable by such Indemnified Holder, as incurred, as a result of any Loss referred to therein:

(i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, pursuant to this Agreement, or

(ii) if the allocation provided by Section 9.1(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in Section 9.1(d)(i) above but also the relative fault of the Company, on the one hand, and the Holders, on the other hand, as well as any other relevant equitable considerations.

The Company and each of the Holders agree that it would not be just and equitable if contribution pursuant to this Section 9.1(d) were determined by pro rata allocation (even if the Holders 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 this Section 9.1. 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 Holders’ obligations to contribute as provided in this Section 9.1(d) are several and not joint.

(e) The provisions of this Section 9.1 will survive the Closing.

ARTICLE X

MISCELLANEOUS

Section 10.1 Survival of Representations. The representations, warranties, covenants and agreements of the Company and each of the Holders contained in this Agreement or in any certificate furnished hereunder shall survive the Closing.

Section 10.2 Prior Agreements. Except as set forth in the Confidentiality Agreements by and between the Company and each of the Holders, this Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes any prior representations, understandings or agreements. There are no representations, warranties, agreements, conditions or covenants, of any nature whatsoever (whether express or implied, written or oral) between the parties hereto with respect to such subject matter except as expressly set forth herein.

Section 10.3 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision or the validity and enforceability of this Agreement in any other jurisdiction.

Section 10.4 Governing Law; Jurisdiction. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules. All actions or proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any federal court of the United States of America sitting in the City of New York, Borough of Manhattan; provided, however, that if such federal court does not have jurisdiction over such action or proceeding, such action or proceeding shall be heard and determined exclusively in any state court sitting in the City of New York, Borough of Manhattan. Consistent with the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of any federal or state court sitting in City of New York, Borough of Manhattan, for the purpose of any action or proceeding arising out of or relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not

to assert by way of motion, defense, or otherwise, in any such action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action or proceeding is brought in an inconvenient forum, that the venue of the action or proceeding is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts.

Section 10.5 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.6 Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of, or affect the interpretation of, this Agreement.

Section 10.7 Certain Definitions. Capitalized terms in this Agreement shall have the meanings specified below, or as specified elsewhere in this Agreement, for all purposes hereof. The following terms, as used in this Agreement, shall have the meanings as set forth below:

(i) “Affiliate” means, with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with such specified person.

(ii) “Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Company and each of its subsidiaries from time to time concerning or relating to bribery or corruption, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997, including the FCPA or any other law, rule or regulation of similar purpose and scope.

(iii) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

(iv) “FCPA” means the United States Foreign Corrupt Practices Act of 1977, as amended.

(v) “Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

(vi) “Governmental Requirements” means, as of the date of determination thereof, all applicable laws, ordinances, rules, regulations, judgments, interpretations, policy orders, decrees or similar forms of decision of any Governmental Authority.

(vii) “Heidelberg Field” means all of Green Canyon Block 859 Unit-Federal Unit No. ###-###-####, effective May 1, 2011, which is presently comprised of Green Canyon Blocks 859, 903, 904 and 948.

(viii) “Hydrocarbons” means oil, gas, coal seam gas, coalbed methane, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by¬ products, and other substances derived therefrom or the processing thereof, and all other minerals and substances produced in conjunction with such substances, including, but not limited to, sulphur, geothermal steam, water, carbon dioxide, helium, and other minerals, ores, or substances of value and the products and proceeds therefrom, but excluding: (a) coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation, and (b) any substance unavoidably lost in the production thereof or used in conformity with good industry practice for drilling and the production operations (including gas injection, fuel, secondary recovery pressure maintenance, re-pressuring or re-cycling operations) conducted for the purpose of winning and saving such substances but only for the duration of such use.

(ix) “Hydrocarbon Interests” means rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, mineral term interests, subleases, farm-outs, overriding royalty and royalty interests, net profit interests, carried interests, back-in interests, reversionary interests, production payment interests, and other similar mineral interests, including any reserved or residual interests of whatever nature.

(x) “Independent Engineering Consultant” means, in the case of the Initial Reserves Report, Netherland, Sewell & Associates, Inc., or, in all other cases, such other reputable independent Hydrocarbons engineer or other expert as may be approved by the Holders (acting reasonably and in consultation with the Company).

(xi) “Initial Reserves Report” means the reserves report by the Independent Engineering Consultant in relation to the Heidelberg Field and delivered as a condition precedent pursuant to Annex I.

(xii) “Oil and Gas Properties” means all Hydrocarbon Interests, including without limitation, equity or other ownership interests directly or indirectly therein, and any interests in any concession or license to explore or produce oil and natural gas and interests pooled or unitized therewith.

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

(xiv) “Sanctioned Person” means, at any time, any person that is:

(a) listed on, or acting on behalf of, a person listed on any Sanctions List;

(b) organized or resident in a Sanctioned Country; or

(xv) “Sanctions” means economic or financial sanctions or trade embargoes or related restrictive measures enacted, imposed, administered or enforced from time to time by a Sanctions Authority.

(xvi) Sanctions Authority” means:

(a) the United Nations Security Council;

(b) the United States of America;

(d) the United Kingdom (together, “Sanctions Authorities”).

(xvii) Sanctions List” means:

(a) the Specially Designated Nationals and Blocked Persons list maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or any list of designated persons maintained by the U.S. Department of State;

(b) the Denied Persons List maintained by the US Department of Commerce;

(c) the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by Her Majesty’s Treasury;

(d) the European Union’s lists of restrictive measures against persons and entities issued pursuant to its Common Foreign and Security Policy, for which a consolidated list is provided on the website of the European External Action Service, as well as any publicly-available implementing or additional lists of restrictive measures against persons or entities issued by any of its member states in which a Secured Party is operating, organized or resident;

or any other similar list issued or maintained by, or public announcement of a Sanctions designation made by, a Sanctions Authority of persons the target or subject of Sanctions (including investment or related restrictions), each as amended, supplemented or substituted from time to time.

Section 10.8 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and either of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and binding on such party.

Section 10.9 Assignment; Binding Effect. Each Holder shall not convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of the Company, and the Company shall not convey, assign or otherwise transfer any of its rights and obligations under this Agreement without the express written consent of each Holder. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

Section 10.10 Waiver; Remedies. No delay on the part of any Holder or the Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any Holder or the Company of any right, power or privilege under this Agreement operate as a waiver of any other right, power or privilege of such party under this Agreement, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege under this Agreement.

Section 10.11 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this agreement or to enforce specifically the performance of the terms and provisions hereof in addition to any other remedy to which they are entitled at law or in equity.

Section 10.12 Amendment. This Agreement may be modified or amended only by written agreement of each of the parties to this Agreement.

Section 10.13 Notice. Any notice or communications hereunder shall be in writing and shall be deemed to have been given if delivered in person or by electronic transmission or by registered or certified first-class mail or courier service, to the following addresses, or such other addresses as may be furnished hereafter by notice in writing, as follows:

if to the Company:

Cobalt International Energy, Inc.

Cobalt Center

920 Memorial City Way, Suite 100

Houston, Texas 77024

Attention: General Counsel

Email: ***@***

with copies to:

Kirkland & Ellis LLP

600 Travis St., Suite 3300

Houston, Texas 77002

Attention: Matthew R. Pacey

Facsimile: (713) ###-###-####

Email: ***@***

and

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, N.Y. 10017

Attention: Byron B. Rooney

Facsimile: (212) ###-###-####

Email: ***@***

if to the Holders:

As set forth on each Holder’s signature page hereto.

with copies to:

Weil Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Matt Barr and Heather L. Emmel

Facsimile: (212) ###-###-####

Email: ***@***

***@***

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this Agreement to be executed by their respective duly authorized officers, as of the date first above written.


COBALT INTERNATIONAL ENERGY, INC.

By:		/s/ David D. Powell
Name:		David D. Powell
Title:		Chief Financial Officer and Executive Vice President

COBALT INTERNATIONAL ENERGY GP, LLC

By:		/s/ David D. Powell
Name:		David D. Powell
Title:		Authorized Officer

COBALT INTERNATIONAL ENERGY, L.P.
By:		Cobalt International Energy GP, LLC, its general partner

By:		/s/ David D. Powell
Name: David D. Powell
Title: Authorized Officer

COBALT GOM LLC

By:		/s/ David D. Powell
Name: David D. Powell Title: Authorized Officer

COBALT GOM #1 LLC

By:		/s/ David D. Powell
Name: David D. Powell Title: Authorized Officer

COBALT GOM #2 LLC

By:		/s/ David D. Powell
Name: David D. Powell Title: Authorized Officer