Exhibit 1.1
Execution Copy
PIONEER SOUTHWEST ENERGY PARTNERS L.P.
8,250,000 Common Units
Representing Limited Partner Interests
UNDERWRITING AGREEMENT
April 30, 2008
Deutsche
Bank Securities Inc.
Citigroup Global Markets Inc.
UBS Securities LLC
As Representatives of the Several Underwriters,
c/o
Deutsche Bank Securities Inc.
60 Wall Street, 4 th Floor
New York, New York 10005
Ladies
and Gentlemen:
Pioneer Southwest Energy Partners
L.P., a limited partnership organized under the laws of the State
of Delaware (the “ Partnership ”), proposes to
sell to the several underwriters named in Schedule I hereto
(the “ Underwriters ”), for whom Deutsche Bank
Securities Inc., Citigroup Global Markets Inc. and UBS Securities
LLC are acting as representatives (the “
Representatives ”), an aggregate of 8,250,000 Common
Units (the “ Firm Units ”), each representing a
limited partner interest in the Partnership (the “ Common
Units ”). The respective amounts of the Firm Units to be
so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Partnership also
proposes to grant to the Underwriters an option to purchase up to
1,237,500 additional Common Units to cover over-allotments, if any
(the “ Option Units ”). The Firm Units and the
Option Units (to the extent the aforementioned option is exercised)
are herein collectively called the “ Units
.”
As the Representatives, you have
advised the Partnership (a) that you are authorized to enter
into this Agreement on behalf of the several Underwriters and
(b) that the several Underwriters are willing, acting
severally and not jointly, to purchase the numbers of Firm Units
set forth opposite their respective names in Schedule I, plus
their pro rata portion of the Option Units if you elect to exercise
the over-allotment option in whole or in part for the accounts of
the several Underwriters.
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Deutsche Bank Securities Inc. has
agreed to reserve up to 412,500 of the Units to be purchased by it
under this Agreement for sale to the Partnership’s directors,
officers, employees and business associates and other parties
related to the Partnership (collectively, “
Participants ”), as set forth in the Prospectus (as
defined below) under the heading “Underwriting” (the
“ Directed Unit Program ”). The Units to be sold
by Deutsche Bank Securities Inc. and its affiliates pursuant to the
Directed Unit Program are referred to hereinafter as the “
Directed Units .” Any Directed Units not orally
confirmed for purchase by any Participants by the end of the
business day on which this Agreement is executed will be offered to
the public by the Underwriters as set forth in the
Prospectus.
It is understood and agreed to by all
parties that the Partnership was formed by Pioneer Natural
Resources Company (“ Pioneer ”) to own and
acquire producing oil and gas properties (the “
Partnership Assets ”) in its area of operations, as
described more particularly in the Preliminary Prospectus (as
defined herein).
It is further understood and agreed
to by all parties that as of the date hereof:
(a) Pioneer owns 100% of the
issued and outstanding shares of capital stock of Pioneer Natural
Resources USA, Inc., a Delaware corporation (“ Pioneer
USA ”);
(b) Pioneer USA directly owns a
100% membership interest in Pioneer Natural Resources GP LLC, a
Delaware limited liability company and the sole general partner of
the Partnership with a 0.1% general partner interest in the
Partnership (the “ General Partner ”);
(c) Pioneer USA directly owns a
99.9% limited partner interest in the Partnership;
(d) Pioneer USA directly owns a
100% membership interest in Pioneer Southwest Energy Partners USA
LLC, a Texas limited liability company (the “ Operating
Company ”); and
(e) Pioneer USA directly owns a
100% membership interest in Pioneer Retained Properties Company
LLC, a Texas limited liability company (the “ Retained
Company ”).
It is further understood and agreed
to by the parties hereto that the following transactions will occur
on or prior to the Closing Date:
(a) On the same day, Pioneer USA
will convert to a Texas corporation and enter into an agreement and
plan of merger (“ Agreement and Plan of Merger
”) with Pioneer Limited Natural Resources Properties LLC, a
Texas limited liability company (“ Properties LLC
”), the Operating Company and the Retained Company, pursuant
to which such parties will participate in a merger (the “
Merger ”) pursuant to which:
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(i) |
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Pioneer USA will survive and will retain all of its assets and
liabilities not specifically allocated to and vested in the
Operating Company; |
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(ii) |
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The Operating Company will survive with legal title and
beneficial interest to varying percentages of the right, title and
interest theretofore held by Pioneer USA and Properties LLC in
certain well bores and related assets and liabilities; |
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(iii) |
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Retained Company will survive and will hold all assets and
liabilities theretofore held by Properties LLC not specifically
allocated to and vested in the Operating Company; and |
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(iv) |
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Properties LLC will cease to exist. |
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Immediately following the Merger, Pioneer USA will convert back
to a Delaware corporation. |
(b) the Partnership, the General
Partner and Pioneer USA will enter into a Contribution Agreement
(the “ Contribution Agreement ”) pursuant to
which, immediately after the closing of the offering of the Firm
Units, (i) Pioneer USA will contribute a portion of its
interest in the Operating Company (the “GP Contribution
Interest”) with a value equal to 0.1% of the equity value of
the Partnership at the Closing Date to the General Partner,
(ii) the General Partner will contribute the GP Contribution
Interest to the Partnership in exchange for a continuation of its
0.1% general partner interest in the Partnership and
(iii) Pioneer USA will contribute a portion of its membership
interest in the Operating Company to the Partnership in exchange
for 20,521,200 Common Units, representing a 71.3% limited partner
interest in the Partnership (the “ Sponsor Units
”);
(c) the Partnership and Pioneer
USA will enter into a Membership Interest Sale Agreement (the
“ Membership Interest Sale Agreement ”) pursuant
to which, immediately after the closing of the public offering of
the Firm Units, Pioneer USA will sell its remaining membership
interest in the Operating Company to the Partnership for a cash
payment of approximately $141.1 million that, pursuant to the
qualified intermediary assignment, is paid directly to the
qualified intermediary and the Partnership will become the sole
member of the Operating Company;
(d) Pioneer USA, the Retained
Company and the Operating Company will enter into a Purchase and
Sale Agreement (the “ Purchase and Sale Agreement
”) pursuant to which, if the underwriters exercise the
over-allotment option to purchase the Option Units after the
Closing Date, the Operating Company will purchase additional
properties from Pioneer USA and Retained Company;
(e) the Partnership, as
borrower, will close a $300 million Credit Agreement with Bank
of America, N.A., as Administrative Agent, Swing Line Lender and
L/C Issuer, Wells Fargo Bank, N.A., as Syndication Agent, and BMO
Capital Markets Financing, Inc., as Documentation Agent, and the
other lenders party thereto (together with the agreements, exhibits
and attachments contemplated or included therein, the “
Credit Agreement ”);
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(f) Pioneer, Pioneer USA, the
General Partner, the Operating Company and the Partnership will
enter into an omnibus agreement (the “ Omnibus
Agreement ”), which will address certain limitations to
the Partnership’s area of operations and certain
indemnification matters;
(g) Pioneer USA, the General
Partner, the Partnership and the Operating Company will enter into
an administrative services agreement (the “ Administrative
Services Agreement ”) pursuant to which Pioneer and its
subsidiaries will perform certain administrative services for the
Partnership;
(h) Pioneer and the Partnership
will enter into a tax sharing agreement (the “ Tax Sharing
Agreement ”) pursuant to which the Partnership will pay
Pioneer for its portion of certain taxes;
(i) Pioneer USA and the
Operating Company will enter into a omnibus operating agreement
(the “ Omnibus Operating Agreement ”) pursuant
to which the Partnership will be restricted in its ability to
exercise certain rights under the Operating Agreements (as defined
below).
(j) The Operating Company will
enter into an operating agreement with Pioneer USA as operator, and
the Operating Company will become subject to the operating
agreements pursuant to which Pioneer USA is operator (collectively,
the “ Operating Agreements ”), pursuant to which
the Partnership will pay to Pioneer USA certain overhead charges
relating to the operation of the Partnership’s properties;
and
(k) the public offering of the
Firm Units contemplated hereby will be consummated;
The
transactions contemplated in subsections (a) through
(k) above are referred to herein as the “
Transactions .” The sequence of the Transactions shall
be consummated in the order set forth in the Contribution Agreement
and the Membership Interest Sale Agreement. In connection with the
Transactions, the parties to the Transactions will enter into
various transfer agreements, conveyances, contribution agreements
and related documents (collectively, and together with the
Agreement and Plan of Merger, the Contribution Agreement, the
Membership Interest Sale Agreement and the Purchase and Sale
Agreement, the “ Contribution Documents ”). The
Contribution Documents, the Omnibus Agreement, the Credit
Agreement, the Administrative Services Agreement, the Tax Sharing
Agreement, the Omnibus Operating Agreement and the Operating
Agreements shall be collectively referred to as the “
Transaction Documents .” Pioneer, Pioneer USA, the
Partnership, the General Partner and the Operating Company are
hereinafter collectively referred to as the “ Pioneer
Parties .” The Pioneer Parties and Retained Company are
hereinafter collectively referred to as the “ Pioneer
Entities .” The Partnership, the General Partner and the
Operating Company are herein collectively referred to as the
“ Partnership Entities .”
In consideration of the mutual
agreements contained herein and of the interests of the parties in
the transactions contemplated hereby, the parties hereto agree as
follows:
1. Representations and Warranties of the
Pioneer Parties .
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Each of
the Pioneer Parties represents and warrants to each of the
Underwriters as follows:
(a)
Registration . A registration statement on Form S-1 (File
No. 333-144868) with respect to the Units has been prepared by
the Partnership in conformity with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations
of the Securities and Exchange Commission (the “
Commission ”) thereunder (collectively, the “
Act ”) and has been filed with the Commission. Copies
of such registration statement, including any amendments thereto,
the preliminary prospectuses (meeting the requirements of the Act)
contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been
delivered by the Partnership to you. Such registration statement,
together with any registration statement filed by the Partnership
pursuant to Rule 462(b) under the Act, is herein referred to as the
“ Registration Statement ,” which shall be
deemed to include all information omitted therefrom in reliance
upon Rules 430A, 430B or 430C under the Act and contained in
the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. “
Prospectus ” means the form of prospectus first filed
with the Commission pursuant to and within the time limits
described in Rule 424(b) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes
effective is herein referred to as a “ Preliminary
Prospectus .”
(b)
No Material Misstatements or Omissions in General Disclosure
Package . As of the Applicable Time (as defined below) and as
of the Closing Date or the Option Closing Date, as the case may be,
none of the Issuer Free Writing Prospectus(es) (as defined below)
issued at or prior to the Applicable Time, if any, the Statutory
Prospectus (as defined below) and the information included on
Schedule II hereto, all considered together (collectively, the
“ General Disclosure Package ”), and each
electronic road show when taken together as a whole with the
General Disclosure Package, included or will include any untrue
statement of a material fact or omitted or will 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 Pioneer Parties make no
representations or warranties as to information contained in or
omitted from the General Disclosure Package, in reliance upon, and
in conformity with, written information furnished to the
Partnership by or on behalf of any Underwriter through the
Representatives, specifically for use therein, it being understood
and agreed that the only such information is that described in
Section 13 herein. As used in this subsection and elsewhere in
this Agreement:
“ Applicable Time
” means 4:30 pm (New York time) on the date of this Agreement
or such other time as agreed to by the Partnership and the
Representatives.
“ Statutory Prospectus
” as of any time means the Preliminary Prospectus relating to
the Units that is included in the Registration Statement
immediately prior to that time.
“ Issuer Free Writing
Prospectus ” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Act,
relating to the Units in the form filed or required to be filed
with the
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Commission or, if not required to be filed, in the form retained in
the Partnership’s records pursuant to Rule 433(g) under the
Act and that is identified on Schedule III to this
Agreement.
(c)
No Material Misstatements or Omissions in Registration Statement
or Prospectus . The Commission has not issued an order
preventing or suspending the use of any Registration Statement,
Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus relating to the proposed offering of the Units, and no
proceeding for that purpose or pursuant to Section 8A of the
Act has been instituted or, to the Partnership’s knowledge,
threatened by the Commission. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will
contain, all statements that are required to be stated therein by,
and will conform to, in all material respects the applicable
requirements of the Act. The Registration Statement and any
amendments thereto do not contain, and will not contain, any untrue
statement of a material fact and do not omit, and will not omit, to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any
amendments and supplements thereto do not contain, and will not
contain, any untrue statement of a material fact and do not omit,
and will not 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; each of the statements
made by the Partnership in the Registration Statement and in the
Preliminary Prospectus as of the Applicable Time, and to be made in
the Prospectus and any further amendments or supplements to the
Registration Statement or Prospectus within the coverage of Rule
175(b) of the rules and regulations under the Act, including (but
not limited to) any statements with respect to projected results of
operations, estimated available cash and future cash distributions
of the Partnership, and any statements made in support thereof or
related thereto under the heading “Cash Distribution Policy
and Restrictions on Distributions” or the anticipated ratio
of taxable income to distributions, was made or will be made with a
reasonable basis and in good faith; provided, however, that the
Partnership makes no representations or warranties as to
information contained in or omitted from the Registration Statement
or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the
Partnership by or on behalf of any Underwriter through the
Representatives, specifically for use therein, it being understood
and agreed that the only such information is that described in
Section 13 herein.
(d)
Issuer Free Writing Prospectuses . Each Issuer Free Writing
Prospectus did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus;
provided, however, that the Partnership makes no representations or
warranties as to information contained in or omitted from any
Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Partnership by or on
behalf of any Underwriter through the Representatives, specifically
for use therein, it being understood and agreed that the only such
information is that described in Section 13 herein.
(e)
Offering Material . None of the Pioneer Parties have,
directly or indirectly, distributed, and none of the Pioneer
Parties will distribute, any offering material in connection
with
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the
offering and sale of the Units other than any Preliminary
Prospectus, the Prospectus and other materials, if any, permitted
under the Act and consistent with Section 4(b) below. The
Partnership will file with the Commission all Issuer Free Writing
Prospectuses in the time required under Rule 433(d) under the Act.
The Partnership has satisfied or will satisfy the conditions in
Rule 433 under the Act to avoid a requirement to file with the
Commission any electronic road show.
(f)
Eligible Issuer . (i) At the time of filing the
Registration Statement and (ii) as of the date hereof (with
such date being used as the determination date for purposes of this
clause (ii)), the Partnership was not and is not an
“ineligible issuer” (as defined in Rule 405 under
the Act, without taking into account any determination by the
Commission pursuant to Rule 405 under the Act that it is not
necessary that the Partnership be considered an ineligible issuer),
including, without limitation, for purposes of Rules 164 and
433 under the Act with respect to the offering of the Units as
contemplated by the Registration Statement.
(g)
Formation and Qualification . Each of the Pioneer Entities
has been duly formed or incorporated and is validly existing as a
limited partnership, limited liability company or corporation, as
applicable, in good standing under the laws of its jurisdiction of
organization with full power and authority to enter into and
perform its obligations under the Transaction Documents to which it
is a party. Each of the Partnership Entities has full limited
partnership or limited liability company power and authority to own
or lease and to operate its properties currently owned or leased or
to be owned or leased on the Closing Date and any Option Closing
Date and conduct its business as currently conducted or as to be
conducted on the Closing Date and any Option Closing Date, in each
case as described in the Registration Statement, the General
Disclosure Package and the Prospectus. Each of the Partnership
Entities is, or at the Closing Date and any Option Closing Date
will be, duly qualified to do business as a foreign limited
partnership, limited liability company or corporation, as
applicable and is in good standing under the laws of each
jurisdiction that requires, or at the Closing Date and any Option
Closing Date will require, such qualification, except where the
failure to be so qualified could not (i) have, individually or
in the aggregate, a material adverse effect on the earnings,
business, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Partnership Entities
taken as a whole or (ii) prevent the consummation of the
transactions contemplated hereby (the occurrence of any such effect
or any such prevention described in the foregoing clauses (i) and
(ii) being referred to as a “ Material Adverse
Effect ”), or subject the limited partners of the
Partnership to any material liability or disability.
(h)
Power and Authority to Act as a General Partner . The
General Partner has, and, on the Closing Date and any Option
Closing Date, will have, full power and authority to act as general
partner of the Partnership in all material respects as described in
the Registration Statement, the General Disclosure Package and the
Prospectus.
(i)
Ownership of Partnership Entities . On the Closing Date and
any Option Closing Date, after giving effect to the Transactions,
all of the equity interests of each of the Partnership Entities
will be owned as set forth on Exhibit A hereto. All of
such equity interests will be duly and validly authorized and
issued in accordance with the general partnership, limited
partnership or
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limited
liability company agreements of each such Partnership Entity (the
“ Organizational Agreements ”), will be fully
paid (to the extent required by the applicable Organizational
Agreements) and nonassessable (except as such nonassessability may
be affected by (i) Sections 17-607 and 17-804 of the Delaware
Limited Partnership Act (the “ Delaware LP Act
”), or (ii) Sections 18-607 and 18-804 of the Delaware
Limited Liability Company Act (the “ Delaware LLC Act
”). On the Closing Date and any Option Closing Date, such
equity interests will be owned as set forth on
Exhibit A free and clear of all liens, encumbrances,
security interests, charges or other claims (“ Liens
”) (except restrictions on transferability as described in
the General Disclosure Package and the Prospectus).
(j)
Valid Issuance of the Units . The Units to be purchased by
the Underwriters from the Partnership have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Partnership pursuant to this
Agreement against payment of the consideration set forth herein,
will be validly issued and fully paid to the extent required under
the partnership agreement of the Partnership (as the same may be
amended or restated at or prior to the Closing Date, the “
Partnership Agreement ”) and nonassessable (except as
such nonassessability may be affected by matters described in
Sections 17-607 and 17-804 of the Delaware LP Act).
(k)
Capitalization . At the Closing Date, after giving effect to
the Transactions and the offering of the Firm Units as contemplated
by this Agreement, the issued and outstanding partnership interests
of the Partnership will consist of 28,771,200 Common Units and a
0.1% general partner interest. Other than the Sponsor Units, the
Units will be the only limited partner interests of the Partnership
issued and outstanding on the Closing Date and, except for any
Units issued by the Partnership in compliance with Section 4(j) of
this Agreement, on any Option Closing Date.
(l)
No Other Subsidiaries . Except as described in the General
Disclosure Package and the Prospectus, none of the Partnership
Entities will, on the Closing Date and any Option Closing Date,
own, directly or indirectly, any equity or long-term debt
securities of any corporation, partnership, limited liability
company, joint venture, association or other entity.
(m)
No Preemptive Rights, Registration Rights or Options .
Except as identified in the General Disclosure Package and the
Prospectus, there are no (i) preemptive rights or other rights
to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any equity securities of the Partnership
Entities or (ii) outstanding options or warrants to purchase
any securities of the Partnership Entities. Except for such rights
that have been waived or as described in the General Disclosure
Package and the Prospectus, neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated by
this Agreement gives rise to any rights for or relating to the
registration of any Units or other securities of the
Partnership.
(n)
Authority and Authorization . Each of the Pioneer Parties
has all requisite power and authority to execute and deliver this
Agreement and perform its respective obligations hereunder. The
Partnership has all requisite partnership power and authority to
issue, sell and
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deliver
(i) the Units, in accordance with and upon the terms and
conditions set forth in this Agreement, the Partnership Agreement,
the Registration Statement, the General Disclosure Package and the
Prospectus and (ii) the Sponsor Units in accordance with and
upon the terms and conditions set forth in the Partnership
Agreement and the Contribution Agreement. On the Closing Date and
any Option Closing Date, all corporate, partnership and limited
liability company action, as the case may be, required to be taken
by the Pioneer Parties or any of their stockholders, members or
partners for the authorization, issuance, sale and delivery of the
Units, the execution and delivery by the Pioneer Parties of the
Operative Agreements (as defined herein) and the consummation of
the transactions (including the Transactions) contemplated by this
Agreement and the Operative Agreements, shall have been validly
taken.
(o)
Authorization of this Agreement . This Agreement has been
duly authorized, executed and delivered by each of the Pioneer
Parties.
(p)
Enforceability of Operative Agreements . At or before the
Closing Date:
(i) the
Organizational Agreements will have been duly authorized, executed
and delivered by the parties thereto and will be valid and legally
binding agreements of such parties, enforceable against such
parties in accordance with their respective terms; and
(ii) the
Transaction Documents will have been duly authorized, executed and
delivered by the parties thereto and will be valid and legally
binding agreements of such parties, enforceable against such
parties in accordance with their respective terms;
provided that, with respect to each agreement described in
this Section 1(p), the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting
creditors’ rights generally and by general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); and; provided
further that, the indemnity, contribution and exoneration
provisions contained in any of such agreements may be limited by
applicable laws and public policy.
The
Organizational Agreements and the Transaction Documents are herein
collectively referred to as the “ Operative Agreements
.”
(q)
No Conflicts . None of (i) the offering, issuance or
sale by the Partnership of the Units, (ii) the execution,
delivery and performance of this Agreement and the Operative
Agreements by the Pioneer Entities that are parties hereto or
thereto, as the case may be, or (iii) the consummation of the
Transactions and any other transactions contemplated by this
Agreement or the Operative Agreements, (A) conflicts or will
conflict with or constitutes or will constitute a violation of the
partnership agreement, limited liability company agreement,
certificate of formation or conversion, certificate or articles of
incorporation, bylaws or other constituent document (collectively,
the “ Organizational Documents ”) of any of the
Pioneer Entities, (B) conflicts or will conflict with or
constitutes or will constitute a breach or violation of, or a
default (or an event that,
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with
notice or lapse of time or both, would constitute such a default)
under any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which any of the Pioneer
Entities is a party or by which any of them or any of their
respective properties may be bound, (C) violates or will
violate any statute, law or regulation or any order, judgment,
decree or injunction of any court or governmental agency or body
directed to any of the Pioneer Entities or any of their properties
in a proceeding to which any of them or their property is a party
or (D) results or will result in the creation or imposition of any
Lien upon any property or assets of any of the Partnership
Entities, which conflicts, breaches, violations, defaults or Liens,
in the case of clauses (B), (C) or (D), would reasonably be
expected to have a Material Adverse Effect or materially impair the
ability of the Pioneer Entities to consummate the Transactions or
any other transactions provided for in this Agreement or the
Operative Agreements.
(r)
No Consents . No permit, consent, approval, authorization,
order, registration, filing or qualification of or with any court,
governmental agency or body having jurisdiction over any of the
Pioneer Entities or any of their properties or assets is required
in connection with the offering, issuance or sale by the
Partnership of the Units, the execution, delivery and performance
of this Agreement by the Pioneer Entities, the execution, delivery
and performance by the Pioneer Entities that are parties thereto of
their respective obligations under the Transaction Agreements or
the consummation of the Transactions or any other transactions
contemplated by this Agreement or the Transaction Agreements except
(i) for such permits, consents, approvals and similar
authorizations required under the Act, the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the “ Exchange
Act ”) and blue sky laws of any jurisdiction,
(ii) for such consents that have been, or prior to the Closing
Date will be, obtained, (iii) for such consents that, if not
obtained, would not reasonably be expected to have a Material
Adverse Effect or materially impair the ability of the Pioneer
Parties to consummate the Transactions and (iv) as disclosed
in the General Disclosure Package and the Prospectus.
(s)
No Defaults . None of the Pioneer Entities is in
(i) violation of its Organizational Documents, or of any
statute, law, rule or regulation, or any judgment, order,
injunction or decree of any court, governmental agency or body or
arbitrator having jurisdiction over any of the Pioneer Entities or
any of their properties or assets or (ii) breach, default (or
an event which, with notice or lapse of time or both, would
constitute such an event) or violation in the performance of any
obligation, agreement or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
or instrument relating to the Partnership Assets to which it is a
party or by which it or any of its properties may be bound, which
in the case of either (i) or (ii) would reasonably be
expected to have, if continued, a Material Adverse Effect or
materially impair the ability of the Pioneer Entities to consummate
the Transactions.
(t)
Conformity of Units to Description . The Units, when issued
and delivered in accordance with the terms of the Partnership
Agreement and this Agreement against payment therefor as provided
therein and herein, will conform in all material respects to the
description thereof contained in the Registration Statement, the
General Disclosure Package and the Prospectus.
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(u)
No Labor Dispute . No labor problem or dispute with the
Pioneer Parties’ employees who are engaged in the business
associated with the Partnership Assets exists or is threatened or
imminent, that would reasonably be expected to have a Material
Adverse Effect, except as set forth in or contemplated in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(v)
Sufficiency of the Transaction Documents . The Transaction
Documents will be legally sufficient to transfer or convey to, or
vest in, the Partnership and its subsidiaries satisfactory title
to, or valid rights to use or manage all properties not already
held by it that are, individually or in the aggregate, required to
enable the Partnership and its subsidiaries to conduct their
operations in all material respects as contemplated by the
Registration Statement, the General Disclosure Package and the
Prospectus, subject to the conditions, reservations, encumbrances
and limitations described therein or contained in the Transaction
Documents. The Partnership and its subsidiaries, upon execution and
delivery of the Transaction Documents, will succeed in all material
respects to the business, assets, properties, liabilities and
operations reflected by the pro forma financial statements of the
Partnership.
(w)
Financial Statements . The historical financial statements
and schedules included in the Registration Statement, the General
Disclosure Package and the Prospectus present fairly the financial
condition, results of operations and cash flows of the entities
purported to be shown thereby on the basis shown therein as of the
dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). The summary
historical and pro forma financial and operating information set
forth in the Registration Statement, the General Disclosure Package
and the Prospectus under the caption “Summary—Summary
Historical and Pro Forma Financial and Operating Data” and
the selected historical and pro forma financial and operating
information set forth under the caption “Selected Historical
and Pro Forma Financial Data” in the Registration Statement,
the General Disclosure Package and the Prospectus is accurately
presented in all material respects and prepared on a basis
consistent with the audited and unaudited historical financial
statements and pro forma financial statements, as applicable, from
which it has been derived. The pro forma financial statements
included in the Registration Statement, the General Disclosure
Package and the Prospectus 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 in
the Registration Statement, the General Disclosure Package and the
Prospectus. The pro forma financial statements included in the
Registration Statement, the General Disclosure Package and the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the
Act and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements.
11
(x)
Independent Public Accountants . Ernst & Young LLP, who
has audited the audited financial statements and schedules included
in the General Disclosure Package and the Prospectus and delivered
its reports with respect to the audited financial statements and
schedules included in the Registration Statement, the General
Disclosure Package and the Prospectus, is an independent registered
public accounting firm with respect to the Partnership within the
meaning of the Act and the Public Company Accounting Oversight
Board (United States) (the “ PCAOB ”).
(y)
Litigation . Except as described in the Registration
Statement, the General Disclosure Package and the Prospectus, there
is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the knowledge of any of the Pioneer
Parties, threatened, to which any of the Partnership Entities is or
may be a party or to which the business or property of any of the
Partnership Entities is or may be subject, (ii) no statute,
rule, regulation or order that has been enacted, adopted or issued
by any governmental agency and (iii) no injunction,
restraining order or order of any nature issued by a federal or
state court or foreign court of competent jurisdiction to which any
of the Partnership Entities is or may be subject, that, in the case
of clauses (i), (ii) and (iii) above, is reasonably
expected to (A) have a Material Adverse Effect,
(B) prevent or result in the suspension of the offering and
issuance of the Units or (C) in any manner draw into question
the validity of this Agreement.
(z)
Title to Partnership Assets . Following consummation of the
Transactions and on the Closing Date and any Option Closing Date,
the Partnership Entities will have good and indefeasible title to
all real property and good title to all personal property described
in the Registration Statement, the General Disclosure Package or
the Prospectus as owned by the Partnership Entities, free and clear
of all Liens, except (i) as described, and subject to
limitations contained, in the Registration Statement, the General
Disclosure Package and the Prospectus or (ii) such as do not
materially interfere with the use of such properties taken as a
whole as they have been used in the past and are proposed to be
used in the future as described in the Registration Statement, the
General Disclosure Package and the Prospectus; provided that, with
respect to any real property and buildings held under lease by the
Partnership Entities, such real property and buildings are held
under valid and subsisting and enforceable leases with such
exceptions as do not materially interfere with the use of the
properties of the Partnership Entities taken as a whole as they
have been used in the past as described in the Registration
Statement, the General Disclosure Package and the Prospectus and
are proposed to be used in the future as described in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(aa)
Rights-of-Way . Following consummation of the Transactions
and on the Closing Date and any Option Closing Date, the
Partnership Entities will have such easements or rights-of-way from
each person (collectively, “ rights-of-way ”) as
are necessary to conduct their business in the manner described,
and subject to the limitations contained, in the Registration
Statement, the General Disclosure Package and the Prospectus,
except for (i) qualifications, reservations and encumbrances
that would not have a Material Adverse Effect and (ii) such
rights-of-way that, if not obtained, would not have a Material
Adverse Effect; other than as set forth, and
12
subject
to the limitations contained, in the Registration Statement, the
General Disclosure Package and the Prospectus, the Partnership
Entities have, or following consummation of the Transactions will
have, fulfilled and performed all their material obligations with
respect to such rights-of-way and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or
termination thereof or would result in any impairment of the rights
of the holder of any such rights-of-way, except for such
revocations, terminations and impairments that would not have a
Material Adverse Effect and, except as described in the
Registration Statement, the General Disclosure Package and the
Prospectus, none of such rights-of-way contains any restriction
that is materially burdensome to the Partnership Entities, taken as
a whole.
(bb)
Transfer Taxes . There are no transfer taxes or other
similar fees or charges under federal law or the laws of any state,
or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the
Transaction Agreements or the issuance by the Partnership or sale
by the Partnership of the Units.
(cc)
Tax Returns . Each of the Partnership Entities has filed all
foreign, federal, state and local tax returns that are required to
be filed or has requested extensions thereof, except in any case in
which the failure so to file would not have a Material Adverse
Effect. Except as set forth in or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus, each
of the Partnership Entities has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it,
to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse
Effect.
(dd)
Insurance . The Partnership Parties carry or are entitled to
the benefits of insurance relating to the Partnership Assets in
such amounts and covering such risks as is commercially reasonable,
and all such insurance is in full force and effect. None of the
Partnership Entities has any reason to believe that they will not
be able (i) to renew their existing insurance coverage
relating to the Partnership Assets as and when such policies expire
or (ii) to obtain comparable coverage relating to the
Partnership Assets from similar institutions as may be necessary or
appropriate to conduct such business as now conducted and at a cost
that would not reasonably be expected to have a Material Adverse
Effect.
(ee)
Distribution Restrictions . No subsidiary of the Partnership
is currently prohibited, directly or indirectly, from paying any
distributions to the Partnership, from making any other
distribution on such subsidiary’s equity interests, from
repaying to the Partnership any loans or advances to such
subsidiary from the Partnership or from transferring any of such
subsidiary’s property or assets to the Partnership or any
other subsidiary of the Partnership, except as described in or
contemplated by the Registration Statement, the General Disclosure
Package and the Prospectus or arising under the Credit
Agreement.
(ff)
Possession of Licenses and Permits . The Pioneer Entities
possess such permits, licenses, approvals, consents and other
authorizations (collectively, “ Governmental Licenses
”)
13
issued
by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business associated
with the Partnership Assets, except where the failure so to possess
would not reasonably be expected to result in a Material Adverse
Effect; the Pioneer Entities are in compliance with the terms and
conditions of all such Governmental Licenses, except where the
failure so to comply would not reasonably be expected to result in
a Material Adverse Effect. All of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not reasonably be
expected to result in a Material Adverse Effect. The Pioneer
Entities have not received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses
that, if the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to result in a Material Adverse
Effect.
(gg)
Environmental Laws . With respect to the Partnership Assets,
each of the Pioneer Entities (i) is in compliance with all
applicable federal, state and local laws and regulations relating
to the prevention of pollution or protection of the environment or
imposing liability or standards of conduct concerning any Hazardous
Material (as defined below) (“ Environmental Laws
”), (ii) has received all permits required of them under
applicable Environmental Laws to conduct their respective
businesses as presently conducted, (iii) is in compliance with
all terms and conditions of any such permits and (iv) does not
have any liability in connection with the release into the
environment of any Hazardous Material, except where such
noncompliance with Environmental Laws, failure to receive required
permits, failure to comply with the terms and conditions of such
permits or liability in connection with such releases would not
have a Material Adverse Effect. The term “ Hazardous
Material ” means (A) any “hazardous
substance” as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
(B) any “hazardous waste” as defined in the
Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated
under or within the meaning of any applicable Environmental Law. In
the ordinary course of business, the Pioneer Entities periodically
review the effect of Environmental Laws on their business,
operations and properties, in the course of which they identify and
evaluate costs and liabilities that are reasonably likely to be
incurred pursuant to such Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental
Laws, or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third
parties). On the basis of such review, the Pioneer Entities have
reasonably concluded that such associated costs and liabilities
relating to the Partnership Assets would not have a Material
Adverse Effect.
(hh)
Certain Relationships and Related Transactions . No
relationship, direct or indirect, exists between or among any
Partnership Entity, on the one hand, and the directors, officers,
stockholders, affiliates, customers or suppliers of any Partnership
Entity, on the other hand, that is required to be described in the
Registration Statement, Preliminary Prospectus or the Prospectus
and is not so described.
14
(ii)
ERISA . On the Closing Date and any Option Closing Date,
each Partnership Entity will be in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“
ERISA ”). No “reportable event” (as
defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which any Partnership Entity
(after giving effect to the Transactions) would have any liability,
excluding any reportable event for which a waiver could apply; no
Partnership Entity (after giving effect to the Transactions)
expects to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “pension
plan” or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the “ Code
”). Each “pension plan” for which any Partnership
Entity would have any liability that is intended to be qualified
under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and nothing has
occurred, whether by action or by failure to act, that could
reasonably be expected to cause the loss of such
qualification.
(jj)
Description of Legal Proceedings and Contracts; Filing of
Exhibits . There are no legal or governmental proceedings
pending or, to the knowledge of the Pioneer Parties, threatened or
contemplated, against any of the Partnership Entities, or to which
any of the Partnership Entities is a party, or to which any of
their properties or assets, or to which the Partnership Assets, is
subject, that are required to be described in the Registration
Statement, the General Disclosure Package or the Prospectus that
are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement, the General
Disclosure Package or the Prospectus or to be filed as an exhibit
to the Registration Statement that are not described or filed as
required by the Act or the Exchange Act. The statements included in
the Registration Statement, the General Disclosure Package and the
Prospectus, insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are
accurate summaries of such legal matters, agreements, documents or
proceedings.
(kk)
Sarbanes-Oxley Act of 2002 . On and after the Closing Date,
the Partnership will be in compliance in all material respects with
all applicable provisions of the Sarbanes-Oxley Act of 2002 (the
“ Sarbanes-Oxley Act ”), the rules and
regulations promulgated in connection therewith and the rules of
the New York Stock Exchange (“ NYSE ”) that are
effective and applicable to the Partnership.
(ll)
Investment Company . None of the Partnership Entities is
nor, after giving effect to the offering and sale of the Units and
the application of the proceeds thereof as described in the
Registration Statement, the General Disclosure Package and the
Prospectus, will any of the Partnership Entities be an
“investment company” or a company “controlled
by” an “investment company,” each as defined in
the Investment Company Act of 1940, as amended (the “
Investment Company Act ”) and the rules and
regulations thereunder.
15
(mm)
Books and Records . Each Partnership Entity maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorizations; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
Each Partnership Entity’s internal controls over financial
reporting are effective and none of the Partnership Entities is
aware of any material weakness in their internal control over
financial reporting.
(nn)
Disclosure Controls and Procedures . (i) Each
Partnership Entity has established and maintains “disclosure
controls and procedures” (to the extent required by and as
such term is defined in Rule 13a-15 under the Exchange Act),
(ii) such disclosure controls and procedures are designed to
ensure that all information required to be disclosed by the
Partnership in the reports it files or will file or submit under
the Exchange Act, as applicable, is accumulated and communicated to
management of the General Partner, including its respective
principal executive officers and principal financial officers, as
appropriate, to allow timely decisions regarding required
disclosure to be made and (iii) such disclosure controls and
procedures are effective in all material respects to perform the
functions for which they were established to the extent required by
Rule 13a-15 of the Exchange Act.
(oo)
Market Stabilization . None of the Pioneer Parties has
taken, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Partnership to
facilitate the sale or resale of the Units.
(pp)
Foreign Corrupt Practices Act . No Partnership Entity nor,
to the knowledge of the Pioneer Parties, any director, officer,
agent, employee or affiliate of any Partnership Entity is aware of
or has taken any action, directly or indirectly, that would result
in a violation by such Partnership Entity of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations
thereunder (collectively, 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 Partnership Entities and, to the knowledge of the
Pioneer Parties, their affiliates have conducted the businesses of
the Partnership Entities in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith by the Partnership Entities.
16
(qq)
Money Laundering Laws . The operations of the Partnership
Entities are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “ Money Laundering
Laws ”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving any of the Partnership Entities with respect
to the Money Laundering Laws is pending or, to the best knowledge
of the Pioneer Parties, threatened.
(rr)
Office of Foreign Assets Control . No Partnership Entity
nor, to the knowledge of the Pioneer Parties, any director,
officer, agent or employee of any Partnership Entity or any of its
subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“ OFAC ”); and the
Partnership will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by
OFAC.
(ss)
Lending Relationship . Except as disclosed in the
Registration Statement, the General Disclosure Package and the
Prospectus, the Partnership (i) does not have any material
lending or other relationship with any bank or lending affiliate of
any of the Underwriters and (ii) does not intend to use any of
the proceeds from the sale of the Units hereunder to repay any
outstanding debt owed to any affiliate of the Underwriters.
(tt)
Private Placement . The sale and issuance of the Sponsor
Units to Pioneer USA are exempt from the registration requirements
of the Act, the rules and regulations and the securities laws of
any state having jurisdiction with respect thereto, and none of the
Partnership Entities has taken or will take any action that would
cause the loss of such exemption.
(uu)
Statistical Data . All statistical and market-related data
included in the Registration Statement, the General Disclosure
Package or the Prospectus is based on or derived from sources that
the Partnership believes to be reliable and accurate, and the
Partnership has obtained the written consent to the use of such
data from such sources to the extent required.
(vv)
Directed Unit Sales . None of the Directed Units distributed
in connection with the Directed Unit Program will be offered or
sold outside the United States. All sales of the Directed Units
will comply with the rules of the Financial Industry Regulatory
Authority (“ FINRA ”), including Conduct
Rule 2790. The Pioneer Parties have not offered, or caused the
Underwriters to offer, any of the Units to any person pursuant to
the Directed Unit Program with the specific intent to unlawfully
influence (i) a customer or supplier of the Partnership
Entities, to alter the customer’s or supplier’s level
or type of business with the Partnership Entities, or (ii) a trade
journalist or publication to write or publish favorable information
about the Partnership Entities or their operations.
17
(ww)
Independent Petroleum Engineers . Netherland, Sewell &
Associates, Inc. (“ NSAI ”), whose reports are
referenced in the Registration Statement, the General Disclosure
Package and Prospectus and who has delivered the letter referenced
to in Section 6(h) hereof, was, as of the date of such reports, and
is, as of the date hereof, an independent engineering firm with
respect to the Partnership.
(xx)
Information Underlying Reserve Report . The factual
information underlying the estimates of pro forma reserves of the
Partnership Entities, which was supplied by the Partnership
Entities to NSAI for the purposes of auditing the
Partnership’s internally prepared reserve report and
preparing the letter (the “ Reserve Report Letter
”) of N
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