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SECTION 1. Representations and
Warranties
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2
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SECTION 2. Sale and Delivery to Underwriters;
Closing
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13
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SECTION 3. Covenants of the
Partnership
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15
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SECTION 4. Payment of Expenses
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SECTION 5. Conditions of Underwriters’
Obligations
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20
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SECTION 6. Indemnification
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SECTION 8. Representations, Warranties and
Agreements to Survive Delivery
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26
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SECTION 9. Termination of Agreement
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SECTION 10. Default by One or More of the
Underwriters
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SECTION 13. GOVERNING LAW AND TIME
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SECTION 14. Effect of Headings
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29
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SECTION 16. Permitted Free Writing
Prospectuses
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32
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SECTION 17. Absence of Fiduciary
Relationship
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Exhibit A
– Underwriters
Exhibit B – Initial Securities to be Sold
Exhibit C – Subsidiaries of the Partnership
Exhibit D – List of Directors and Officers
Exhibit E – Form of Lock-Up Agreement
Exhibit F – Form of Opinion of Partnership Counsel
Exhibit G – Price-Related Information
Exhibit H – Issuer General Use Free Writing
Prospectuses
Exhibit I – Existing Unitholders
i
Wachovia
Capital Markets, LLC
As Representative of the several Underwriters
c/o Wachovia Capital Markets, LLC
7 St. Paul Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Legacy Reserves
LP, a Delaware limited partnership (the “ Partnership
”), confirms its agreement with Wachovia Capital Markets, LLC
(“ Wachovia ”) and each of the other
Underwriters named in Exhibit A hereto (collectively,
the “ Underwriters ,” which term shall also
include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Wachovia is acting as
representative (in such capacity, the “ Representative
”), with respect to the issue and sale by the Partnership of
a total of 6,000,000 Units (the “ Initial Securities
”) representing limited partner interests in the Partnership
(the “ Units ”), and the purchase by the
Underwriters, acting severally and not jointly, of the respective
numbers of Initial Securities set forth in said
Exhibit A hereto, and with respect to the grant by the
Partnership to the Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or
any part of 900,000 additional Units to cover over-allotments, if
any. The Initial Securities to be purchased by the Underwriters and
all or any part of the 900,000 Units subject to the option
described in Section 2(b) hereof (the “ Option
Securities ”) are hereinafter called, collectively, the
“ Securities .” Certain terms used in this
Agreement are defined in Section 15 hereof.
Legacy Reserves
GP, LLC, a Delaware limited liability company (the “
General Partner ”), is the Partnership’s sole
general partner. Legacy Reserves Operating GP, LLC, a Delaware
limited liability company and a wholly owned subsidiary of the
Partnership (“ Operating GP ”), is the sole
general partner of Legacy Reserves Operating LP, a Delaware limited
partnership (the “ Operating Partnership ” and,
together with the General Partner, the Partnership and the
Operating GP, the “ Legacy Parties ” and,
together with the direct and indirect subsidiaries of the
Partnership (collectively, the “ Subsidiaries ”)
listed on Exhibit C , the “ Partnership
Entities ”).
All or some of the
Partnership Entities have entered into, prior to the date hereof,
the following agreements (the “ Formation Documents
”): (i) the Amended and Restated Agreement of Limited
Partnership governing the Partnership (the “ Partnership
Agreement ”), (ii) the Amended and Restated Limited
Liability Company Agreement governing the General Partner (the
“ GP LLC Agreement ”), (iii) the Agreement
of Limited Partnership governing the Operating Partnership (the
“ Operating Partnership Agreement ”) and
(iv) the Limited Liability Company Agreement governing the
Operating GP (the “ Operating GP Agreement
”).
1
The Partnership
understands that the Underwriters propose to make a public offering
of the Securities as soon as the Representative deems advisable
after this Agreement has been executed and delivered.
The Partnership
and the Underwriters agree that up to 5% of the Initial Securities
to be purchased by the Underwriters (the “ Reserved
Securities ”) shall be reserved for sale by the
Underwriters to the Partnership’s directors, officers,
friends, business associates and other related persons (the “
Reserved Security Offerees ”) as part of the
distribution of the Securities by the Underwriters, subject to the
terms of this Agreement, the applicable rules, regulations and
interpretations of the NASD and all other applicable laws, rules
and regulations. To the extent that any such Reserved Securities
are not orally confirmed for purchase by any such Reserved Security
Offeree before 9:00 A.M. (Eastern Time) on the first day of trading
of the Securities, such Reserved Securities may, at the sole and
absolute discretion of Wachovia, be offered to the public as part
of the public offering contemplated hereby or offered or sold to
any other Reserved Security Offerees.
Promptly after the
execution of this Agreement, the Partnership will prepare and file
with the Commission a prospectus in accordance with the provisions
of Rule 430A and Rule 424(b) and the Partnership has
previously advised you of all information (financial and other)
that will be set forth therein. Such prospectus in the form first
furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the “
Prospectus .” Any Prospectus delivered pursuant to
Rule 173(d) shall be identical to the electronically transmitted
copy thereof filed with the Commission pursuant to
Rule 424(b), except to the extent permitted by
Regulation S-T.
SECTION 1.
Representations and Warranties .
(a)
Representations and Warranties by the Partnership. The
Legacy Parties jointly and severally represent and warrant to each
Underwriter as of the date hereof, as of the Applicable Time, as of
the Closing Date referred to in Section 2(c) hereof, and as of each
Option Closing Date (if any) referred to in Section 2(b) hereof,
and agrees with each Underwriter, as follows:
(1) Compliance
with Registration Requirements . The Securities have been duly
registered under the 1933 Act pursuant to the Registration
Statement. Each of the Initial Registration Statement and any Rule
462(b) Registration Statement has become effective under the 1933
Act and no stop order suspending the effectiveness of the Initial
Registration Statement or any Rule 462(b) Registration Statement
has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of
the Partnership, are contemplated by the Commission, and any
request on the part of the Commission for additional information
has been complied with.
At the respective
times the Initial Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto
became or become effective and at the Closing Date (and, if any
Option Securities are purchased, at the applicable Option Closing
Date), the Initial Registration Statement, any Rule 462(b)
Registration Statement and any amendments and supplements thereto
complied and will
2
comply in all
material respects with the requirements of the 1933 Act and the
1933 Act Regulations and did not and will not 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 not misleading. Neither the Prospectus nor any amendments
or supplements thereto, as of its date, at the Closing Date (and,
if any Option Securities are purchased, at the applicable Option
Closing Date), and at any time when a prospectus is required by
applicable law to be delivered in connection with sales of
Securities, included or will include an 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. Each
of the statements made by the Partnership in such documents within
the coverage of Rule 175(b) of the Rules and Regulations, including
(but not limited to) any projections, results of operations or
statements with respect to future available cash or future cash
distributions of the Partnership or the anticipated ratio of
taxable income to distributions, was made or will be made with a
reasonable basis and in good faith. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement, the Statutory
Prospectus, the Prospectus or any Issuer Free Writing Prospectus
made in reliance upon and in conformity with information furnished
to the Partnership in writing by any Underwriter through Wachovia
expressly for use in the Registration Statement, the Statutory
Prospectus, the Prospectus or such Issuer Free Writing Prospectus,
as the case may be.
Each preliminary
prospectus and prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act in connection
with the offering of the Securities (including, without limitation,
the Prospectus and the Statutory Prospectus), complied when so
filed in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and each preliminary prospectus
and prospectus (including, without limitation, the Prospectus and
the Statutory Prospectus) and any amendments or supplements thereto
delivered to the Underwriters for use in connection with the
offering of the Securities was identical to the electronically
transmitted copy thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by
Regulation S-T.
As of the
Applicable Time, neither (a) any Issuer General Use Free
Writing Prospectuses issued at or prior to the Applicable Time, the
Statutory Prospectus as of the Applicable Time and the information
included on Exhibit H hereto, all considered together
(collectively, the “ General Disclosure Package
”), nor (b) any individual Issuer Limited Use Free
Writing Prospectus, when considered together with the General
Disclosure Package, included or will include any untrue statement
of a material fact or omitted or will omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
The Partnership
has made available a “bona fide electronic road show”
(as defined in Rule 433(h)(5)) in compliance with
Rule 433(d)(8)(ii) such that no filing with the Commission of
any “road show” (as defined in Rule 433(h)) is
required in connection with the offering of the
Securities.
3
Each Issuer Free
Writing Prospectus, as of its date and at all subsequent times
through the completion of the public offering and sale of the
Securities, 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 Statutory Prospectus
or the Prospectus and any preliminary or other prospectus deemed to
be a part thereof that has not been superseded or
modified.
At the time of
filing the Initial Registration Statement, any 462(b) Registration
Statement and any post-effective amendments thereto and at the date
hereof, the Partnership was not and is not an “ ineligible
issuer ” as defined in Rule 405, in each case
without taking into account any determination made by the
Commission pursuant to paragraph 2 of the definition of such term
in Rule 405.
(2) Independent
Accountants . The accountants who certified the financial
statements and supporting schedules included in the Registration
Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(3) Reserve
Engineer . LaRoche Petroleum Consultants Ltd. (the “
Reservoir Engineer ”), whose report is included in the
Registration Statement (the “ Reserve Report ”)
are the Partnership’s independent reserve engineers. No
information has come to the attention of the Partnership or, to the
Partnership’s knowledge, to the Reservoir Engineer, that
could reasonably be expected to cause the Reservoir Engineer to
withdraw its Reserve Report.
(4) Information
Underlying Reserve Report . The information underlying the
estimates of the Partnership’s proved reserves that was
supplied to the Reservoir Engineer for the purposes of preparing
the Reserve Report and estimates of the proved reserves of the
Partnership disclosed in the Registration Statement, General
Disclosure Package and the Prospectus, including, production, costs
of operation, and, to the Partnership Entities’ knowledge,
future operations and sales of production, was true and correct in
all material respects on the dates such information was provided,
and such information was supplied and was prepared in accordance
with customary industry practices; and the estimates of such
reserves and standardized measure thereof as described in the
Registration Statement, General Disclosure Package and the
Prospectus and future net cash flow reflected in the Reserve Report
referenced therein have been prepared in a manner that complies
with the applicable requirements of the 1933 Act Regulations. Other
than normal production of the reserves, product price fluctuations,
and fluctuations of demand for such products, and except as
disclosed in the Registration Statement, General Disclosure Package
and the Prospectus, no Legacy Party is aware of any facts or
circumstances that would result in a materially adverse change in
the reserves in the aggregate, or the aggregate present value of
the future net cash flows therefrom as described in the
Registration Statement, General Disclosure Package and the
Prospectus and as reflected in the Reserve Report.
(5) Financial
Statements . The financial statements of the Partnership
included in the Registration Statement, the General Disclosure
Package and the Prospectus,
4
together with
the related schedules (if any) and notes, present fairly in all
material respects the financial position of the Partnership and its
consolidated subsidiaries at the dates indicated and the results of
operations, changes in unitholders’ equity and cash flows of
the Partnership and its consolidated subsidiaries for the periods
specified; the financial statements of any other entities or
businesses included in the Registration Statement, the General
Disclosure Package or the Prospectus, together with the related
schedules (if any) and notes, present fairly in all material
respects the financial position of each such entity or business, as
the case may be, and its consolidated subsidiaries (if any) at the
dates indicated and the results of operations, changes in
stockholders’ (or other owners’) equity and cash flows
of such entity or business, as the case may be, and its
consolidated subsidiaries, if any, for the periods specified; and
all such financial statements have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved
and comply with all applicable accounting requirements under the
1933 Act and the 1933 Act Regulations. The supporting schedules, if
any, included in the Registration Statement present fairly, in all
material respects in accordance with GAAP, the information required
to be stated therein. The information (other than the pro forma
information) in the Statutory Prospectus constituting a part of the
General Disclosure Package and in the Prospectus under the captions
“Summary Historical and Pro Forma Consolidated Financial and
Operating Data” and “Selected Historical and Pro Forma
Consolidated Financial Data” presents fairly in all material
respects the information shown therein and has been compiled on a
basis consistent with that of the audited financial statements of
the Partnership included in the Registration Statement and the
Prospectus. The pro forma financial statements and the related
notes thereto included in the Registration Statement, the General
Disclosure Package and the Prospectus present fairly in all
material respects the information shown therein, have been prepared
in accordance with the Commission’s rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein; and the pro forma information
appearing in the Statutory Prospectus constituting a part of the
General Disclosure Package and in the Prospectus under the caption
“Summary Historical and Pro Forma Consolidated Financial and
Operating Data” presents fairly in all material respects the
information shown therein and has been compiled on a basis
consistent with that of the pro forma financial statements included
in the Registration Statement, the General Disclosure Package and
the Prospectus. All information contained in the Registration
Statement, the General Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as defined in
Regulation G of the Commission) complies with
Regulation G and Item 10 of Regulation S-K of the
Commission, to the extent applicable. There are no financial
statements (historical or pro forma) that are required to be
included in the Registration Statement, the General Disclosure
Package or the Prospectus that are not included as
required.
(6) No Material
Adverse Change in Business . Since the respective dates as of
which information is given in the Registration Statement, the
General Disclosure Package and the Prospectus (in each case
exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement), except as otherwise stated therein,
(A) there
5
has been no
material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the
Partnership and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a
“Material Adverse Effect”), (B) there have been no
transactions entered into by the Partnership or any of its
subsidiaries which are material with respect to the Partnership and
its subsidiaries considered as one enterprise, and (C) except
for regular quarterly distributions on the Units in amounts per
Unit that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the
Partnership on the Units.
(7) Good
Standing of the Partnership Entities . Each Partnership Entity
has been duly organized or formed and is validly existing as a
limited partnership, limited liability company, corporation or
other business entity, in good standing under the laws of the state
of its incorporation or formation and has power and authority to
own, lease and operate its properties and to conduct its business
as described in the Registration Statement, the General Disclosure
Package and the Prospectus and to enter into and perform its
obligations under this Agreement; and the Partnership is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business, except to the extent that the failure
to be so qualified or be in good standing would not, individually
or in the aggregate result in a Material Adverse Effect.
(a)
Moriah Properties, Ltd., DAB Resources, Ltd., Brothers Production
Properties, Ltd., Brothers Production Company, Inc., Brothers
Operating Company, Inc., J&W McGraw Properties, Ltd., MBN
Properties LP, and H2K Holdings, Ltd. own 100% of the issued and
outstanding membership interests in the General Partner; such
membership interests have been duly authorized and validly issued
in accordance with the GP LLC Agreement, and are fully paid and
non-assessable (except as such non-assessability may be limited by
Sections 18-607 and 18-804 of the Delaware LLC Act); and such
persons and entities own such membership interests free and clear
of all Liens.
(b)
The General Partner is the sole general partner of the Partnership
with an approximate 0.1% general partner interest in the
Partnership; such general partner interest has been duly authorized
and validly issued in accordance with the Partnership Agreement,
and is fully paid; and the General Partner owns such general
partner interest free and clear of all Liens; the General Partner
owns no assets, and has no business, other than with respect to its
general partner interest in the Partnership.
(c)
At the Closing Date, after giving effect to the offering
contemplated hereby (assuming the option to purchase Option
Securities is not exercised), the persons listed on
Exhibit I (the “ Existing Unitholders
”) will own 13,240,068 Units, representing collectively an
approximate 54.1% limited partner interest in the Partnership (the
“ Existing Unitholder Units ”). All of the
issued and outstanding
6
Existing
Unitholder Units, and the limited partner interests represented
thereby, have been duly authorized and validly issued in accordance
with the Partnership Agreement, and are fully paid (to the extent
required under the Partnership Agreement) and non-assessable
(except as such non-assessability may be affected by
Sections 17-607 and 18-804 of the Delaware LP Act).
(d)
The Units to be issued and sold by the Partnership hereunder, and
the limited partner interests represented thereby, will be duly
authorized in accordance with the Partnership Agreement and, when
issued and delivered to the purchaser thereof against payment
therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid (to the extent required under the
Partnership Agreement) and non-assessable (except as such
non-assessability may be affected by Sections 17-303, 17-607
and 17-804 of the Delaware LP Act).
(9) Operating
GP Ownership . The Partnership owns 100% of the membership
interests in the Operating GP; such membership interests have been
duly authorized and validly issued in accordance with the Operating
GP Agreement, and are fully paid and non-assessable (except as such
non-assessability may be affected by Sections 18-607 and
18-804 of the Delaware LLC Act); and the Partnership owns such
membership interests free and clear of all Liens, except for the
pledge of such membership interests under the Existing Credit
Agreement.
(10) Operating
Partnership Ownership . (A) The Operating GP is the sole
general partner of the Operating Partnership with a 0.1% general
partner interest in the Operating Partnership; such general partner
interest has been duly authorized and validly issued in accordance
with the Operating Partnership Agreement, and is fully paid; and
the Operating GP owns such general partner interest free and clear
of all Liens, except for the pledge of such general partner
interest under the Existing Credit Agreement; and (B) the
Partnership is the sole limited partner of the Operating
Partnership with a 99.9% limited partner interest in the Operating
Partnership; such limited partner interest has been duly authorized
and validly issued in accordance with the Operating Partnership
Agreement and is fully paid (to the extent required under the
Operating Partnership Agreement) and non-assessable (except as such
non-assessability may be affected by Sections 17-303, 17-607
and 17-804 of the Delaware LP Act and as otherwise described in the
Prospectus); and the Partnership owns such limited partner interest
free and clear of all Liens, except for the pledge of such limited
partner interest under the Existing Credit Agreement.
(11) No Other
Subsidiaries . Other than ownership interests in the
Subsidiaries, the Partnership does not own, and at the Closing Date
and the Option Closing Date, will not own, directly or indirectly,
an equity or long-term debt securities of any corporation,
partnership, limited liability company, joint venture, association
or other entity. Other than its ownership interest in the
Partnership and its indirect ownership interests in the
Subsidiaries, the General Partner does not own, and at the Closing
Date and the Option Closing Date will not own, directly or
indirectly, any equity or long-term debt securities of any
corporation, partnership, limited liability company, joint venture,
association or other entity.
7
(12)
Authorization of Agreement . This Agreement has been duly
authorized, executed and delivered by the Legacy
Parties.
(13)
Description of Securities . The Units and the
Partnership’s Organizational Documents conform in all
material respects to all of the respective statements relating
thereto contained in the Registration Statement, the General
Disclosure Package and the Prospectus and such statements conform
in all material respects to the rights set forth in the respective
instruments and agreements defining the same.
(14) Absence of
Defaults and Conflicts . Neither the Partnership nor any of its
subsidiaries is in violation of its Organizational Documents or in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any Partnership
Document, except (solely in the case of Partnership Documents other
than Subject Instruments) for such defaults that would not result
in a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated herein and in the Registration Statement,
the General Disclosure Package and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectus
under the caption “Use of Proceeds”) and compliance by
the Legacy Parties with their obligations under this Agreement do
not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event under, or result in the creation or
imposition of any Lien upon any property or assets of the
Partnership or any of its subsidiaries pursuant to any Partnership
Documents, except (solely in the case of Partnership Documents
other than Subject Instruments) for such conflicts, breaches,
defaults or Liens that would not result in a Material Adverse
Effect, nor will such action result in any violation of the
provisions of the Organizational Documents of the Partnership or
any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Partnership or any of its subsidiaries or any
of their respective assets, properties or operations, except for
such violations of any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction
over the Partnership or any of its subsidiaries or any of their
respective assets, properties or operations that would not,
individually or in the aggregate, result in a Material Adverse
Effect.
(15) Absence of
Labor Dispute . No labor dispute with the employees of any
Partnership Entity exists or, to the knowledge of the Partnership,
is threatened or imminent, and the Partnership is not aware of any
existing or imminent labor disturbance by the employees of any of
the principal suppliers, manufacturers, customers or contractors of
any Partnership Entity which, in any such case, would reasonably be
expected to result in a Material Adverse Effect.
(16) Absence of
Proceedings . There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of
the Partnership, threatened, against or affecting any Partnership
Entity which is required to be disclosed in the
Registration
8
Statement
(other than as disclosed therein), or which would reasonably be
expected to result in a Material Adverse Effect, or which would
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by
the Partnership of its obligations under this Agreement; the
aggregate of all pending legal or governmental proceedings to which
any Partnership Entity is a party or of which any of their
respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(17) Accuracy
of Descriptions and Exhibits . The information in the Statutory
Prospectus constituting a part of the General Disclosure Package
and in the Prospectus under the captions
“Business—Environmental Matters and Regulation,”
“Business—Other Regulation of the Oil and Natural Gas
Industry,” “Business—Legal Proceedings,”
“Description of Units,” and “Material Tax
Consequences,” in each case to the extent that it constitutes
matters of law, summaries of legal matters, summaries of provisions
of the Partnership’s Organizational Documents or any other
instruments or agreements, summaries of legal proceedings, or legal
conclusions, is correct in all material respects; all descriptions
in the Registration Statement, the General Disclosure Package and
the Prospectus of any Partnership Documents are accurate in all
material respects; and there are no franchises, contracts,
indentures, mortgages, deeds of trust, loan or credit agreements,
bonds, notes, debentures, evidences of indebtedness, leases or
other instruments or agreements required to be described or
referred to in the Registration Statement, the Statutory Prospectus
constituting a part of the General Disclosure Package or the
Prospectus or to be filed as exhibits to the Registration Statement
which have not been so described and filed as required.
(18) Possession
of Intellectual Property . The Partnership and its subsidiaries
own or possess or have the right to use on reasonable terms all
patents, patent rights, patent applications, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names,
service names and other intellectual property (collectively,
“ Intellectual Property ”) necessary to carry on
their respective businesses as described in the Prospectus except
where the failure to own, possess or have the right to use would
not, individually or in the aggregate, result in a Material Adverse
Effect; and neither the Partnership nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect
the interest of the Partnership or any of its subsidiaries therein,
and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or
inadequacy, individually or in the aggregate, would result in a
Material Adverse Effect.
(19) Absence of
Further Requirements . (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign, (B) no authorization, approval,
vote or other consent of any member, unitholder or creditor of any
Partnership Entity,
9
(C) no
waiver or consent under any Subject Instrument, and (D) no
authorization, approval, vote or other consent of any other person
or entity, is necessary or required for the performance by the
Partnership of its obligations under this Agreement, for the
offering, issuance, sale or delivery of the Securities hereunder,
or for the consummation of any of the other transactions
contemplated by this Agreement, in each case on the terms
contemplated by the Registration Statement, the General Disclosure
Package and the Prospectus, except such as have been already
obtained under the 1933 Act or the 1933 Act Regulations or such as
may be required under state securities laws.
(20) Possession
of Licenses and Permits . The Partnership Entities possess such
permits, licenses, approvals, consents and other authorizations
(collectively, “ Governmental Licenses ”) issued
by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated
by them, except where the failure to possess such permits,
licenses, approvals, consents and other authorizations would not,
individually or in the aggregate, have a Material Adverse Effect;
the Partnership Entities are in compliance with the terms and
conditions of all such Governmental Licenses, except where the
failure so to comply would not, individually or in the aggregate,
have 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, individually or
in the aggregate, have a Material Adverse Effect; and none of the
Partnership Entities has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(21) Title to
Assets . Each of the Partnership Entities has (A) legal,
valid and defensible title to the interests in Oil and Gas
Properties supporting the estimates of its net proved reserves
contained in the Registration Statement, the General Disclosure
Package and the Prospectus, (B) good and marketable title in
fee simple to all real property other than Oil and Gas Properties
covered by clause (A), and (C) good and marketable title to
all personal property owned by them, in each case free and clear of
all Liens except such as are described in the Registration
Statement, the General Disclosure Package and the Prospectus or
such as do not materially affect the value of the property of the
Partnership Entities, taken as a whole, and do not materially
interfere with the use made of such property by any of the
Partnership Entities; all real property and buildings held under
lease by any of the Partnership Entities are held by them under
valid, subsisting and enforceable leases, with such exceptions as
do not materially affect the value of such property and do not
materially interfere with the use made of such property by any of
the Partnership Entities. The Working Interests derived from the
Oil and Gas Properties evidence in all material respects the right
of the Partnership Entities to explore, develop and produce
hydrocarbons from such Hydrocarbon Interests, and the acquisition
and procurement of such oil and gas leases, options to lease,
drilling rights and concessions or other property interests was
generally consistent with standard industry practices in the areas
in which the Partnership Entities operate for acquiring or
procuring oil and gas leases and interests therein to explore,
develop or produce hydrocarbons.
10
(22) Investment
Company Act . No Partnership Entity is, and upon the issuance
by the Partnership and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Prospectus, no Partnership Entity will be, an
“investment company” or an entity
“controlled” by an “investment company” as
such terms are defined in the 1940 Act.
(23)
Environmental Laws . Except as described in the Registration
Statement, the General Disclosure Package and the Prospectus and
except as would not, individually or in the aggregate, result in a
Material Adverse Effect, (A) no Partnership Entity is in
violation of any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating 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 relating to the
release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “ Hazardous
Materials ”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “
Environmental Laws ”), (B) the Partnership
Entities have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any
Environmental Law against any Partnership Entity and (D) there
are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental
body or agency, against or affecting any Partnership Entity
relating to Hazardous Materials or any Environmental
Laws.
(24) Absence of
Registration Rights . Except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, there
are no persons with registration rights or other similar rights to
have any securities (debt or equity) (A) registered pursuant to the
Registration Statement or included in the offering contemplated by
this Agreement or (B) otherwise registered by the Partnership
under the 1933 Act. There are no persons with tag along rights or
other similar rights (other than any such rights which have been
complied with or waived) to have any securities (debt or equity)
included in the offering contemplated by this Agreement or sold in
connection with the sale of Securities by the Partnership pursuant
to this Agreement.
(25) Parties to
Lock-Up Agreements . Each of the parties listed on Exhibit
D hereto has executed and delivered to the Representative a
lock-up agreement in the form of Exhibit E hereto.
Exhibit D hereto contains a true, complete and correct
list of all directors and officers of the Legacy
Parties.
(26) Nasdaq
Global Market . The Securities being sold hereunder by the
Partnership have been approved for listing, subject only to
official notice of issuance, on the Nasdaq Global
Market.
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(27) NASD
Matters . All of the information provided to the Underwriters
or to counsel for the Underwriters by the Partnership and its
officers and directors in connection with letters, filings or other
supplemental information provided to NASD Regulation Inc.
pursuant to NASD Conduct Rule 2710 or 2720 is true, complete
and correct.
(28) Tax
Returns . The Partnership Entities have filed all foreign,
federal, state and local tax returns that are required to be filed
or have requested extensions thereof, except where the failure so
to file would not, individually or in the aggregate, have a
Material Adverse Effect, and have paid all taxes required to be
paid by them and any other assessment, fine or penalty levied
against any of them, to the extent that any of the foregoing is due
and payable, except for any such tax, assessment, fine or penalty
that is currently being contested in good faith by appropriate
actions and except for such taxes, assessments, fines or penalties
the nonpayment of which would not, individually or in the
aggregate, have a Material Adverse Effect.
(29)
Insurance . The Partnership Entities are insured by insurers
of recognized financial responsibility against such losses and
risks and in such amounts as, in management’s judgment, are
prudent and customary in the businesses in which they are engaged;
all policies of insurance and any fidelity or surety bonds insuring
any Partnership Entity or their respective businesses, assets,
employees, officers and directors are in full force and effect; the
Partnership Entities are in compliance with the terms of such
policies and instruments in all material respects; there are no
claims by any Partnership Entity under any such policy or
instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause; no Partnership
Entity has been refused any insurance coverage sought or applied
for; and no Partnership Entity has any reason to believe that it
will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a
cost that would not result in a Material Adverse Effect.
(30) Accounting
Controls . The Partnership Entities (A) make and keep
books, records and accounts, which, in reasonable detail,
accurately and fairly reflect transactions and dispositions of
assets and; (B) maintain and have maintained effective
internal control over financial reporting as defined in
Rule 13a-15 under the Exchange Act and a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for their assets; (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(31) Compliance
with the Sarbanes-Oxley Act. There is and has been no failure
on the part of the Partnership or any of the Partnership’s
directors or officers, in their capacities as such, to comply in
all material respects with any provision of the
12
Sarbanes-Oxley
Act with which any of them is required to comply, including
Section 402 related to loans.
(32) Absence of
Manipulation . No Partnership Entity has taken nor will any
Partnership Entity take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be
expected to cause or result in the stabilization or manipulation of
the price of any security to facilitate the sale or resale of the
Securities.
(33) No Right
of First Refusal . No Partnership Entity nor any other person
has any preemptive right, right of first refusal or other similar
right to purchase or otherwise acquire any of the Securities to be
sold by the Partnership to the Underwriters pursuant to this
Agreement.
(34)
Statistical, Demographic or Market-Related Data . Any
statistical, demographic, market-related, customer-related or
production-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 all such data included in the Registration Statement,
the General Disclosure Package or the Prospectus accurately
reflects the materials upon which it is based or from which it was
derived.
(35) Lending
Relationship . Except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, no
Partnership Entity has any lending relationship or other commercial
banking relationship with any bank or similar institution
affiliated with any of the Underwriters, and no Partnership Entity
intends to use any of the proceeds from the sale of the Securities
to repay any debt owed to any Underwriter or any affiliate of any
Underwriter.
(36) No
Prohibition on Dividends by Subsidiaries . No subsidiary of the
Partnership is prohibited, directly or indirectly, from paying any
dividends or making any other distributions on such
subsidiary’s capital stock, from repaying any debt owed to
the Partnership or any of its other subsidiaries, or from
transferring any of its property or assets to the Partnership or
any of its other subsidiaries, except as described in or
contemplated by (A) the Registration Statement, General
Disclosure Package and the Prospectus or (B) the
organizational documents of the Subsidiaries.
(b)
Certificates. Any certificate signed by any officer of the
Partnership Entities or any of its subsidiaries and delivered to
the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by such Partnership Entity to
each Underwriter as to the matters covered thereby.
SECTION 2. Sale
and Delivery to Underwriters; Closing .
(a)
Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Partnership agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Partnership,
at the price of $17.67 per Unit (the “ Purchase Price
”), that proportion of the number of Initial Securities set
forth in Exhibit B opposite the name of the
13
Partnership,
which the number of Initial Securities set forth in
Exhibit A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial
Securities, subject in each case to such adjustments among the
Underwriters as the Representative in its sole discretion shall
make to eliminate any sales or purchases of fractional Securities.
The price at which the Securities shall initially be offered to the
public is $19.00 per Unit.
(b)
Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Partnership hereby
grants an option to the Underwriters, severally and not jointly, to
purchase up to 900,000 Units at a price per Unit equal to the
Purchase Price referred to in Section 2(a) above; provided that the
price per Unit for any Option Securities shall be reduced by an
amount per Unit equal to any dividends or distributions declared by
the Partnership and payable or paid on the Initial Securities but
not payable on such Option Securities. The option hereby granted
will expire at the close of business on the 30th day after the date
hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial
Securities upon notice by the Representative to the Partnership
setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any
such time and date of delivery (an “ Option Closing
Date ”) shall be determined by the Representative, but
shall not be later than seven full business days after the exercise
of said option, nor in any event prior to the Closing Date, as
hereinafter defined. If the option is exercised as to all or any
portion of the Option Securities, the Partnership will sell to the
Underwriters that number of Option Securities as to which the
Underwriters are exercising the Option, and each of the
Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in
Exhibit A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial
Securities, subject in each case to such adjustments as the
Representative in their discretion shall make to eliminate any
sales or purchases of fractional Units.
(c)
Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the
offices of Andrews Kurth LLP, 600 Travis, Suite 4200, Houston,
Texas 77002, or at such other place as shall be agreed upon by the
Representative and the Partnership, at 9:00 A.M. (Eastern time) on
January 18, 2007 (unless postponed in accordance with the
provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by the
Representative and the Partnership (such time and date of payment
and delivery being herein called “ Closing Date
”).
In addition, in
the event that any or all of the Option Securities are purchased by
the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed
upon by the Representative and the Partnership, on each Option
Closing Date as specified in the notice from the Representative to
the Partnership.
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Payment shall be
made to the Partnership by wire transfer of immediately available
funds to a single bank account designated by the Partnership
against delivery to the Representative for the respective accounts
of the Underwriters of certificates for the Securities to be
purchased by them. It is understood that each Underwriter has
authorized the Representative, for its account, to accept delivery
of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has
agreed to purchase. Wachovia, individually and not as
representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities
or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Date
or the relevant Option Closing Date, as the case may be, but such
payment shall not relieve such Underwriter from its obligations
hereunder.
(d)
Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representative
may request in writing at least one full business day before the
Closing Date or the relevant Option Closing Date, as the case may
be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and
packaging by the Representative in Houston, Texas not later than
noon (Central time) on the business day prior to the Closing Date
or the relevant Option Closing Date, as the case may be.
SECTION 3.
Covenants of the Partnership . The Partnership covenants
with each Underwriter as follows:
(a) Compliance
with Securities Regulations and Commission Requests. The
Partnership, subject to Section 3(b), will comply with the
requirements of Rule 430A and will notify the Representative
immediately, and confirm the notice in writing, (i) when the
Initial Registration Statement, any Rule 462(b) Registration
Statement or any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission,
(iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or any Issuer Free Writing Prospectus or for additional
information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such
purposes, or of any examination pursuant to Section 8(e) of the
1933 Act concerning the Registration Statement and (v) if the
Partnership becomes the subject of a proceeding under
Section 8A of the 1933 Act in connection with the offering of
the Securities. The Partnership will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of
Amendments. The Partnership will give the Representative notice
of its intention to file or prepare any amendment to the
Registration Statement (including any filing under
Rule 462(b)) or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the
time it became
15
effective or to
the Prospectus, whether pursuant to the 1933 Act or otherwise, or
(without limitation to the provisions of Section 16 of this
Agreement), any Issuer Free Writing Prospectus or any amendment or
supplement thereto, and will furnish the Representative with copies
of any such documents within a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file
or use any such document to which the Representative or counsel for
the Underwriters shall object.
(c) Delivery of
Registration Statements. The Partnership has furnished or will
deliver to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits
filed therewith) and signed copies of all consents and certificates
of experts. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of
Prospectuses. The Partnership has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus and any Issuer Free Writing Prospectuses prepared prior
to the date of this Agreement as such Underwriter reasonably
requested, and the Partnership hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Partnership will
furnish to each Underwriter, without charge, such number of copies
of the documents constituting the General Disclosure Package, any
Issuer Free Writing Prospectuses prepared on or after the date of
this Agreement and the Prospectus (and any amendments or
supplements thereto) as such Underwriter may reasonably request.
The Statutory Prospectus, each Issuer Free Writing Prospectus and
the Prospectus and any amendments or supplements thereto furnished
to the Underwriters is or will be, as the case may be, identical to
the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued
Compliance with Securities Laws. The Partnership will comply
with the 1933 Act, the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in
this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities (including, without
lim
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