LINN ENERGY FINANCE
CORP.
$250,000,000
11.750% Senior Notes due 2017
Citigroup Global Markets
Inc.
Barclays Capital
Inc.
BNP Paribas Securities
Corp.
Calyon Securities
(USA) Inc.
RBC Capital Markets
Corporation
RBS Securities
Inc.
As Representatives of the several
Initial Purchasers named in Schedule 1
attached hereto,
c/o Citigroup Global Markets Inc.
333 Clay Street
37 th
Floor
Houston, Texas 77002
Linn Energy, LLC,
a Delaware limited liability company (the “
Company ”), and Linn Energy Finance Corp., a
Delaware corporation (together with the Company, the “
Issuers ,” and each of them, an “
Issuer ”), propose to sell an aggregate of
$250,000,000 principal amount of the Company’s and Linn
Energy Finance Corp.’s 11.750% Senior Notes due 2017 (the
“ Notes ”) to the initial purchasers (the
“ Initial Purchasers ”) named in
Schedule 1 attached to this agreement (this “
Agreement ”), for whom you are acting as the
representatives (the “ Representatives
”). The Notes will be issued pursuant to an Indenture (the
“ Indenture ”) to be dated as of the
Closing Date (as defined in Section 3(a) ), among the
Issuers, the Guarantors (as defined below) and U.S. Bank, National
Association, as trustee. The Notes will be issued only in
book-entry form in the name of Cede & Co., as nominee of The
Depository Trust Company (the “ Depositary
”) pursuant to a blanket letter of representations dated
June 26, 2008 (the “ DTC Agreement
”) from the Issuers.
The holders of the
Notes will be entitled to the benefits of a registration rights
agreement, to be dated as of the Closing Date (the “
Registration Rights Agreement ”), among the
Issuers, the Guarantors and the Initial Purchasers, pursuant to
which the Issuers and the Guarantors will agree to file with the
Commission (as defined below), under certain circumstances set
forth therein, (i) a registration statement under the
Securities Act (as defined below) relating to another
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series of debt
securities of the Issuers 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 its
reasonable best efforts to cause such registration statements to be
declared effective.
The payment of
principal of, premium and Additional Interest (as defined in the
Indenture), if any, and interest on the Notes and the Exchange
Notes will be fully and unconditionally guaranteed on a senior
unsecured basis, jointly and severally, by (i) the guarantors
listed on Schedule 2 attached hereto and (ii) any
subsidiary of the Company formed or acquired after the Closing Date
that executes an additional guarantee in accordance with the terms
of the Indenture, and their respective successors and assigns (such
persons referred to in clauses (i) and (ii) are
collectively referred to as the “ Guarantors
”), pursuant to their guarantees (the “
Guarantees ”). The Notes and the Guarantees are
herein collectively referred to as the “
Securities ,” and the Exchange Notes and the
Exchange Guarantees are herein collectively referred to as the
“ Exchange Securities .”
The Issuers and
the Guarantors understand that the Initial Purchasers propose to
make an offering of the Securities on the terms and in the manner
set forth herein and in the Pricing Disclosure Package (as defined
below) and agree that the Initial Purchasers may resell, subject to
the conditions set forth herein, all or a portion of the Securities
to purchasers (the “ Subsequent Purchasers
”) on the terms set forth in the Pricing Disclosure Package
(the first time when sales of the Securities are made by the
Initial Purchasers is referred to herein as the “ Time
of Sale ”). The Securities are to be offered and sold
to or through the Initial Purchasers without being registered with
the Securities and Exchange Commission (the “
Commission ”) under the Securities Act of 1933,
as amended (the “ Securities Act
,” which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder), in reliance
upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors who acquire Securities shall be deemed
to have agreed that Securities may only be resold or otherwise
transferred, after the date hereof, if such Securities are
registered for sale under the Securities Act or if an exemption
from the registration requirements of the Securities Act is
available (including the exemptions afforded by Rule 144A
under the Securities Act (“ Rule 144A
”) and Regulation S under the Securities Act (“
Regulation S ”)).
In connection with
the sale of the Securities, the Company has prepared and delivered
to each Initial Purchaser copies of a Preliminary Offering
Memorandum dated May 11, 2009 (the “ Preliminary
Offering Memorandum ”), and has prepared and
delivered to each Initial Purchaser copies of a Pricing Supplement
dated May 12, 2009, substantially in the form of
Exhibit A (the “ Pricing Supplement
”), describing the terms of the Securities, each for use by
the Initial Purchasers in connection with its solicitation of
offers to purchase the Securities. The Preliminary Offering
Memorandum, as supplemented by the Pricing Supplement, is herein
referred to as the “ Pricing Disclosure Package
.” Promptly after this Agreement is executed and delivered,
and in any event not later than the second business day following
the date hereof, the Company will prepare and deliver to each
Initial Purchaser a final offering memorandum, dated as of the date
hereof (the “ Offering Memorandum
”).
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All references
herein to the terms “Pricing Disclosure Package” and
“Offering 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 Pricing Disclosure Package
(including the Preliminary Offering Memorandum) or the Offering
Memorandum (as the case may be), and all references herein to the
terms “amend,” “amendment” or
“supplement” with respect to the Offering 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 Offering Memorandum.
1.
Representations, Warranties and Agreements of the Issuers and
the Guarantors . Each of the Issuers and each of the
Guarantors, jointly and severally, represent, warrant and agree
that:
(a) None of the
Issuers or the Guarantors, nor any person acting on its or their
behalf has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities
under the Securities Act.
(b) None of the
Issuers or Guarantors, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Rule 502(c) under the
Securities Act) in connection with any offer or sale of the
Securities in the United States.
(c) The Securities
satisfy the eligibility requirements of Rule 144A(d)(3) under
the Securities Act.
(d) None of the
Issuers or Guarantors, nor any person acting on its or their
behalf, has engaged in any directed selling efforts with respect to
the Securities, 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.
(e) None of the
Issuers or Guarantors has paid or agreed to pay to any person any
compensation for soliciting another to purchase any Securities
(except as contemplated by this Agreement).
(f) The documents
incorporated by reference in the Pricing Disclosure Package or the
Offering Memorandum conformed, and any further documents so
incorporated will conform, when filed with the Commission, in all
material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the
Commission thereunder.
(g) The documents
incorporated by reference in the Pricing Disclosure Package or the
Offering Memorandum did not, and any further documents filed and
incorporated by reference therein will not, when filed with the
Commission, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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(h) The Offering
Memorandum will not, as of its date and on the Closing Date,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Offering Memorandum in reliance upon and in
conformity with written information furnished to the Company
through the Representatives by or on behalf of any Initial
Purchaser specifically for inclusion therein, which information is
specified in Section 8(e) .
(i) The Pricing
Disclosure Package did not and will not, as of the Time of Sale and
on the Closing Date, contain an 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 no
representation or warranty is made as to information contained in
or omitted from the Pricing Disclosure Package in reliance upon and
in conformity with written information furnished to the Company
through the Representatives by or on behalf of any Initial
Purchaser specifically for inclusion therein, which information is
specified in Section 8(e) .
(j) The Issuers
and the Guarantors have not prepared, made, used, authorized,
approved or distributed and will not prepare, make, use, authorize,
approve or distribute any written communication that constitutes an
offer to sell or solicitation of an offer to buy the Securities
(each such communication by any of the Issuers, Guarantors or their
respective agents and representatives (other than a communication
referred to in clauses (i) and (ii) below) an “
Additional Written Communication ”) other than
(i) the Pricing Disclosure Package, (ii) the Offering
Memorandum and (iii) any electronic road show or other written
communications, in each case used in accordance with
Section 5(a) . Each such Additional Written
Communication, when taken together with the Pricing Disclosure
Package as of the Time of Sale, did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided , however , that the
Issuers and the Guarantors make no representation or warranty as to
statements contained in or omitted from any such Additional Written
Communication in reliance upon and in conformity with written
information furnished to the Company through the Representatives by
or on behalf of any Initial Purchaser specifically for inclusion
therein, which information is specified in Section 8(e)
.
(k) Each of the
Company and its subsidiaries (as defined in Section 18
) listed on Schedule 3 to this Agreement, including
each of the Guarantors, has been duly organized, is validly
existing and in good standing as a corporation or other business
entity under the laws of its jurisdiction of organization and is
duly qualified to do business and in good standing as a foreign
corporation or other business entity in each jurisdiction in which
its ownership or lease of property or the conduct of its businesses
requires such qualification, except where the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a material
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adverse effect
on the condition (financial or otherwise), results of operations,
stockholders’ or members’ equity or business of the
Company and its subsidiaries, taken as a whole (a “
Material Adverse Effect ”). Except as disclosed
in the Pricing Disclosure Package and the Offering Memorandum, each
of the Company and its subsidiaries has all power and authority
necessary to own or hold its properties and to conduct the
businesses in which it is engaged. The Company does not own or
control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed on
Schedule 3 to this Agreement. None of the subsidiaries
of the Company (other than Linn Energy Holdings, LLC) is a
“significant subsidiary” (as defined in Rule 405
under the Securities Act).
(l) The Company
has an authorized capitalization as set forth in each of the
Pricing Disclosure Package and the Offering Memorandum, and all of
the units representing limited liability company interests of the
Company (“ Units ”) have been duly
authorized and validly issued in accordance with the certificate of
formation and limited liability company agreement of the Company,
conform to the description thereof contained in each of the Pricing
Disclosure Package and the Offering Memorandum and were issued in
compliance with federal and state securities laws and not in
violation of any preemptive right, resale right, right of first
refusal or similar right.
(m) The Company
owns 100% of the limited liability company interests of each of the
subsidiaries listed on Schedule 3A to this Agreement.
Such limited liability company interests have been duly authorized
and validly issued in accordance with the certificate of formation
and limited liability company agreement of each such limited
liability company and are fully paid (to the extent required under
the applicable limited liability company’s certificate of
formation and limited liability company agreement) and
nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware Limited Liability Company Act
(the “ Delaware LLC Act ”) or
Sections 18-2030 and 18-2031 of the Oklahoma Limited Liability
Company Act, as applicable); and the Company owns all such
interests free and clear of all liens, encumbrances, security
interests, charges and other adverse claims (other than contractual
restrictions on transfer contained in the applicable constituent
documents or the Indenture, dated as of June 27, 2008, among
the Issuers, the Subsidiary Guarantors named therein and U.S. Bank
National Association, as trustee (the “ Old
Indenture ”)), except for liens created under or
pursuant to the Fourth Amended and Restated Credit Agreement dated
as of April 28, 2009 among the Company, as Borrower, BNP
Paribas, as Administrative Agent, and the Lenders and agents party
thereto (as amended or modified from time to time, the “
Bank Credit Facility ” and, collectively with
the Old Indenture, the “ Debt Instruments
”), and other “ Permitted Liens ”
as defined in the Indenture. The Company owns 100% of the
outstanding capital stock of the entities listed on
Schedule 3B to this Agreement. Such capital stock has
been duly authorized and validly issued in accordance with the
certificate of incorporation and bylaws of such corporations and is
fully paid and nonassessable; and the Company owns all such capital
stock free and clear of all liens, encumbrances, security
interests, charges and other adverse claims (other than contractual
restrictions on transfer contained in the applicable constituent
documents or the Old Indenture), except for liens created under the
Bank Credit Facility. The Company is the sole general partner of
the entities listed on Schedule 3C to this Agreement; such
general
5
partner
interests have been duly authorized and validly issued in
accordance with the agreement of limited partnership of such
entities and are fully paid (to the extent required under the
applicable limited partnership’s certificate of formation and
limited partnership agreement); and the Company owns such general
partner interests free and clear of all liens, encumbrances,
security interests, equities, charges or claims (other than
contractual restrictions on transfer contained in the applicable
constituent documents or the Old Indenture), except for liens
created under the Bank Credit Facility.
(n) Each of the
Issuers and each of the Guarantors have full right, power and
authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions
contemplated by this Agreement, the Registration Rights Agreement,
the Pricing Disclosure Package and the Offering Memorandum. This
Agreement and the transactions contemplated by this Agreement, the
Pricing Disclosure Package and the Offering Memorandum have been
duly and validly authorized by the Issuers and the Guarantors. This
Agreement has been duly and validly executed and delivered by the
Issuers and the Guarantors.
(o) The
Registration Rights Agreement has been duly and validly authorized
by the Issuers and the Guarantors and, at the Closing Date, will
have been validly executed and delivered by each of the Issuers and
the Guarantors, and, assuming due authorization and execution by
each of the Initial Purchasers or other parties thereto, will
constitute a legal, valid and binding agreement enforceable against
each of the Issuers and the Guarantors in accordance with its terms
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors’ rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). On the Closing
Date, the Registration Rights Agreement will conform in all
material respects with the description thereof in the Pricing
Disclosure Package and the Offering Memorandum.
(p) The Notes and
the Guarantees have been duly and validly authorized by each of the
Issuers and each of the Guarantors for issuance and sale to the
Initial Purchasers pursuant to this Agreement and, when the Notes
are issued and authenticated and the Guarantees are executed in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof,
will be the legal, valid and binding obligations of the Issuers and
each of the Guarantors, enforceable against them in accordance with
their terms and entitled to the benefits of the Indenture, except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors’ rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). On the Closing
Date, the form of the Notes and the terms of the Guarantees will
conform in all material respects with the descriptions thereof in
the Pricing Disclosure Package and the Offering
Memorandum.
(q) The Exchange
Notes have been duly authorized by the Issuers and the Exchange
Guarantees have been duly authorized by each of the Guarantors for
issuance
6
and sale and if
and when the Exchange Notes are issued and authenticated by the
Trustee and the Exchange Guarantees are executed in the manner
provided for in the Indenture, the Registration Rights Agreement
and the Exchange Offer, will have been validly executed by the
Issuers and each of the Guarantors and will be legal, valid and
binding obligations of the Issuers and each of the Guarantors
entitled to the benefits of the Indenture, enforceable against each
of them in accordance with their terms except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors’ rights generally and except as
enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). On the Closing Date, the form of
the Exchange Notes and the terms of the Exchange Guarantees will
conform in all material respects with the descriptions thereof in
the Pricing Disclosure Package and the Offering
Memorandum.
(r) Each of the
Issuers and each of the Guarantors have full right, power and
authority to execute and deliver the Indenture and to perform their
respective obligations thereunder. The Indenture has been duly and
validly authorized by each of the Issuers and each of the
Guarantors. When the Indenture is executed and delivered by each of
the Issuers and each of the Guarantors, assuming the due
authorization, execution and delivery of the Indenture by the
Trustee, the Indenture will be a legal, valid and binding agreement
of the Issuers and the Guarantors, enforceable against the Issuers
and the Guarantors in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors’ rights generally and
except as enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the description
thereof in the Pricing Disclosure Package and the Offering
Memorandum.
(s) The execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Indenture, the Notes, the Guarantees, the Exchange
Notes and the Exchange Guarantees by the Issuers and the
Guarantors, the consummation of the transactions contemplated
hereby and thereby and the application of the proceeds from the
sale of the Notes as described under “Use of Proceeds”
in each of the Pricing Disclosure Package and the Offering
Memorandum 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 Company
and its subsidiaries, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, license or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of
its subsidiaries is subject; (ii) result in any violation of
the provisions of the limited liability company agreement, charter
or by-laws (or similar organizational documents) of the Company or
any of its subsidiaries; 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 Company or
any of its subsidiaries or any of their properties or assets,
except (in the case of clauses (i) and (iii) above) as
could not reasonably be expected to have a Material Adverse
Effect.
7
(t) No consent,
approval, authorization or order of, or filing or registration
with, any court or governmental agency or body having jurisdiction
over the Company or any Guarantor or any of their properties or
assets is required for the execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Indenture,
the Notes, the Guarantees, the Exchange Notes and the Exchange
Guarantees by the Issuers and the Guarantors, the consummation of
the transactions contemplated hereby and thereby, and the
application of the proceeds from the sale of the Notes as described
under “Use of Proceeds” in each of the Pricing
Disclosure Package and the Offering Memorandum, except for
(i) 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 as may be
required under the State securities or Blue Sky laws,
(iii) such consents that have been, or prior to the Closing
Date will be, obtained or (iv) as disclosed in the Pricing
Disclosure Package.
(u) Except as
identified in the Pricing Disclosure Package, there are no
contracts, agreements or understandings between any Issuer or any
Guarantor and any person granting such person the right to require
any Issuer or any Guarantor to file a registration statement under
the Securities Act or to require any Issuer or any Guarantor to
include such securities in the securities to be registered pursuant
to the registration statement relating to the Exchange Securities
or in any securities being registered pursuant to any other
registration statement filed by any Issuer or any Guarantor under
the Securities Act in connection with the filing of the
registration statement relating to the Exchange
Securities.
(v) Except as
described in the Pricing Disclosure Package, neither the Company
nor any of its subsidiaries has sustained, since the date of the
latest audited financial statements included in the Pricing
Disclosure Package, any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, and since such date, there has not been
any change in the members’ equity or long-term debt of the
Company or any Guarantor, taken as a whole, or any adverse change
or development, in or affecting the condition (financial or
otherwise), results of operations, members’ equity, business
or prospects of the Company and its subsidiaries, taken as a whole,
in each case except as could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(w) Since the date
as of which information is given in the Pricing Disclosure Package
and except as may otherwise be described in the Pricing Disclosure
Package, the Issuers and the Guarantors have not (i) incurred
any material liability or obligation, direct or contingent, other
than liabilities and obligations that were incurred in the ordinary
course of business, or (ii) entered into any material
transaction not in the ordinary course of business.
(x) The historical
financial statements (including the related notes and supporting
schedules) included or incorporated by reference in the Pricing
Disclosure Package and the Offering Memorandum comply as to form in
all material respects with
8
the
requirements of Regulation S-X under the Securities Act and
present fairly in all material respects the financial condition,
results of operations and cash flows of the entities purported to
be shown thereby at the dates and for the periods indicated and,
except as disclosed therein, have been prepared in conformity with
accounting principles generally accepted in the United States
applied on a consistent basis throughout the periods
involved.
(y) The pro forma
financial statements included or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum include
assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to
the historical financial statement amounts in the pro forma
financial statements included or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum.
(z) KPMG LLP, who
has audited certain financial statements of the Company and its
consolidated subsidiaries, whose report with respect to the Company
and its subsidiaries appears in the Pricing Disclosure Package and
the Offering Memorandum or is incorporated by reference therein and
who has delivered the initial letter referred to in Section
7(e) , is an independent registered public accounting firm as
required by the Exchange Act, the Securities Act, the Rules and
Regulations and the Public Company Accounting Oversight Board
(“ PCAOB ”).
(aa) DeGolyer and
MacNaughton, who issued a report with respect to the
Company’s oil and natural gas reserves at December 31,
2008, who has delivered the letter referred to in
Section 7(g) hereof, was, as of the date of such
report, and is, as of the date hereof, an independent petroleum
engineer with respect to the Company.
(bb) The
information underlying the estimates of reserves of the Company
included in the Pricing Disclosure Package and the Offering
Memorandum, 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, in each case as described
in the Pricing Disclosure Package and the Offering Memorandum, the
Company is not aware of any facts or circumstances that would
result in a material adverse change in the aggregate net reserves,
or the present value of future net cash flows therefrom, as
described in the Pricing Disclosure Package and the Offering
Memorandum; estimates of such reserves and present values as
described in the Pricing Disclosure Package and the Offering
Memorandum comply in all material respects with the applicable
requirements of Regulation S-X and Industry Guide 2 under the
Securities Act.
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(cc) The pro forma
reserve information included in the Pricing Disclosure Package and
the Offering Memorandum includes assumptions that provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions and events described therein, the
related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma adjustments reflect the proper
application of those adjustments to the historical reserve
information of the Company included or incorporated by reference in
the Pricing Disclosure Package and the Offering
Memorandum.
(dd) The
statistical and market-related data under the captions
“Summary,” “Business” and
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included or incorporated
by reference in the Pricing Disclosure Package and the Offering
Memorandum and the consolidated financial statements of the Company
and its subsidiaries included or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum are based on
or derived from sources that the Company believes to be reliable
and accurate in all material respects.
(ee) Neither the
Company nor any of its subsidiaries is, and as of the Closing Date,
after giving effect to the offer and sale of the Notes and the
application of the proceeds therefrom as described under “Use
of Proceeds” in the Pricing Disclosure Package and the
Offering Memorandum none of them will be, an “investment
company” within the meaning of such term under the Investment
Company Act of 1940, as amended (the “ Investment
Company Act ”), and the rules and regulations of the
Commission thereunder.
(ff) Except as
described in the Pricing Disclosure Package, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject that could, in
the aggregate, reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the performance of this
Agreement or the consummation of any transaction contemplated by
this Agreement or any other material transaction contemplated by
the Pricing Disclosure Package or the Offering Memorandum; and to
the Company’s knowledge, no such proceedings are threatened
or contemplated by governmental authorities or others.
(gg) The
Company’s Definitive Proxy Statement on Schedule 14A
filed April 3, 2009 describes all relationships, direct or
indirect, between or among any Issuer or any Guarantor, on the one
hand, and the directors, officers, unitholders, customers or
suppliers of any Issuer or any Guarantor, on the other hand, that
would be required by the Securities Act to be described in a
registration statement on Form S-3; provided that , with
respect to the Initial Purchasers, such disclosure is supplemented
by the information presented under “Plan of
Distribution” in the Preliminary Offering
Memorandum.
(hh) No labor
disturbance by the employees of the Company or its subsidiaries
exists or, to the knowledge of the Company, is imminent that could
reasonably be expected to have a Material Adverse
Effect.
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(ii)
(i) There exists no “employee benefit plan”
(within the meaning of Section 3(3) of the Employee Retirement
Security Act of 1974, as amended (“ ERISA
”)) that is subject to Title IV of ERISA or Section 412
of the Code (as defined below) 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 ”)) may have any
liability; and (ii) each plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would
reasonably be expected to cause the loss of such qualification,
except where failure to be so qualified would not be reasonably
likely to result in a Material Adverse Effect. Neither the Company
nor any member of its Controlled Group has any withdrawal or other
liability to any “multiemployer plan”, within the
meaning of Section 4001(c)(3) of ERISA.
(jj) The Company
and the Guarantors have filed all federal, state, local and foreign
income and franchise tax returns required to be filed through the
date hereof, subject to permitted extensions, and have paid or made
provision for the payment of all taxes due thereon, except
(i) those taxes that are not reasonably likely to result in a
Material Adverse Effect, (ii) those taxes, assessments or
other charges that are being contested in good faith, if such
taxes, assessments, or other charges are adequately reserved for or
(iii) as described in the Pricing Disclosure Package and the
Offering Memorandum; and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries, nor does the
Company have any knowledge of any tax deficiencies, in either case,
that could, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(kk) Neither the
Company nor any Guarantor is in violation of its charter or by-laws
(or similar organizational documents); neither the Company or any
of its subsidiaries (i) is in default, and no event has
occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, license or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (ii) is in
violation of any statute or any 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 case of clauses (i) and (ii),
to the extent any such violation or default could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(ll) The Company
is in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith, except where failure to be in
compliance would not reasonably be expected to result in a Material
Adverse Effect.
(mm) The Company
and its subsidiaries maintain a system of internal accounting
controls and other controls sufficient to provide reasonable
assurances that (i)
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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
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accounting for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(nn) The Company
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the Exchange Act), which
(i) are designed to ensure that material information relating
to the Company, including its subsidiaries, required to be
disclosed in the Company’s reports under the Exchange Act, is
made known to the principal executive officer and the principal
financial officer of the Company by others within the Company,
particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared, and
(ii) as of the evaluation date with respect to the most recent
report requiring certification under Rule 13a-14 under the
Exchange Act filed with the Commission, such disclosure controls
and procedures were effective in all material respects to perform
the functions for which they were established.
(oo) The Company
and the Guarantors have such permits, licenses, patents,
franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities (“
Permits ”) as are necessary under applicable
law to own their properties and conduct their businesses in the
manner described in the Pricing Disclosure Package and the Offering
Memorandum, subject to such qualifications as may be set forth in
the Pricing Disclosure Package and the Offering Memorandum and
except for any of the foregoing that could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; each of
the Company and the Guarantors has fulfilled and performed all of
its obligations with respect to the Permits, and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
impairment of the rights of the holder or any such Permits, except
for any of the foregoing that could not reasonably be expected to
have a Material Adverse Effect.
(pp) Except as
described in the Pricing Disclosure Package and the Offering
Memorandum and except as would not in the aggregate reasonably be
expected to have a Material Adverse Effect, (i) neither the
Company nor any of the Guarantors has received any notice that has
not been resolved alleging that it is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent,
decree or judgment, pertaining to pollution or protection of human
health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations
pertaining to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, “ Hazardous
Materials ”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “
Environmental Laws ”), (ii) the
12
Company and the
Guarantors have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance
with their requirements, (iii) 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
under any Environmental Law against the Company or any of the
Guarantors, and (iv) to the knowledge of the Company, there
are no events or circumstances that would 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 Company or any of the
Guarantors pertaining to Hazardous Materials or under any
Environmental Laws.
(qq) The Issuers
and the Guarantors have not taken and will not take, directly or
indirectly, any action designed to or that has constituted or that
could reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the
Company or the Guarantors to facilitate the sale or resale of the
Notes or Guarantees.
(rr) The Company
and the Guarantors have good and marketable title to all real
property and to all personal property described in the Pricing
Disclosure Package and the Offering Memorandum as being owned by
them and valid, legal and defensible title to the interests in oil
and gas properties underlying the estimates of the Company’s
proved reserves described in the Pricing Disclosure Package, in
each case free and clear of all liens, encumbrances and defects
except (i) such as are described in the Pricing Disclosure
Package and the Offering Memorandum, (ii) such as arise in
connection with the Bank Credit Facility, (iii) such as do not
(individually or in the aggregate) materially interfere
with
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