Attached files
file | filename |
---|---|
8-K - FORM 8-K - LEGACY RESERVES LP | h85640e8vk.htm |
EX-5.1 - EX-5.1 - LEGACY RESERVES LP | h85640exv5w1.htm |
EX-8.1 - EX-8.1 - LEGACY RESERVES LP | h85640exv8w1.htm |
Exhibit 1.1
Execution
Version
LEGACY RESERVES LP
3,400,000 Units
Representing Limited Partner Interests
Representing Limited Partner Interests
UNDERWRITING AGREEMENT
November 8, 2011
UBS Securities LLC
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
As Representatives of the several Underwriters
named in Schedule I
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
As Representatives of the several Underwriters
named in Schedule I
c/o UBS Securities LLC
1285 6th Avenue, 9th Floor
New York, New York 10019
1285 6th Avenue, 9th Floor
New York, New York 10019
Legacy Reserves LP, a Delaware limited partnership (the Partnership), confirms its agreement
with UBS Securities LLC (UBS), Raymond James & Associates, Inc. (Raymond James), Citigroup
Global Markets Inc. (Citi) and each of the other Underwriters named in Schedule 1 hereto
(collectively, the Underwriters, which term shall also include any underwriter substituted as
hereinafter provided in Section 11 hereof), for whom UBS, Raymond James and Citi are acting as
representatives (in such capacity, the Representatives), with respect to the issue and sale by
the Partnership of a total of 3,400,000 units (the Firm 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 Firm Securities set forth in said Schedule 1 hereto,
and with respect to the grant by the Partnership to the Underwriters, acting severally and not
jointly, of the option described in Section 3 hereof to purchase all or any part of 510,000
additional Units to cover over allotments, if any (the Option Securities). The Firm Securities
and the Option Securities are hereinafter called, collectively, the Securities. Certain terms
used in this Agreement are defined in Section 17 hereof.
Legacy Reserves GP, LLC, a Delaware limited liability company (the General Partner), is the
Partnerships 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 listed
in Schedule III (collectively, the Subsidiaries), the Partnership Entities).
It is understood and agreed to by the parties hereto that (i) on September 6, 2011, the
Partnership and a third party entered into a Purchase and Sale Agreement (as amended, the Permian
Purchase Agreement) pursuant to which the Partnership agreed to purchase from such party on or
before November 14, 2011, and effective as of August 1, 2011, certain assets described in the
Permian Purchase Agreement (the Permian Assets) including, but not limited to, certain oil and
natural gas properties in Lea, Eddy and Chaves Counties, New Mexico, for $20.0 million in cash and
278,396 Units, in each case subject to adjustments as described in the Permian Purchase Agreement,
and (ii) on October 20, 2011, the Partnership and a third party entered into a Purchase and Sale
Agreement (the Wyoming Purchase Agreement, and together with the Permian Purchase Agreement, the
Purchase Agreements) pursuant to which the Partnership agreed to purchase from such party on or
before December 1, 2011, and effective as of July 1, 2011, certain assets described in the Wyoming
Purchase Agreement (the Wyoming Assets, and together with the Permian Assets, the Assets)
including, but not limited to, certain natural gas properties in Freemont County, Wyoming as well
as a natural gas gathering system, gas processing plant and related compression facilities, for
$45.0 million in cash, subject to adjustments as described in the Wyoming Purchase Agreement.
1. Representations and Warranties by the Legacy Parties. The Legacy Parties jointly and
severally represent and warrant to and agree with each Underwriter as set forth below:
(a) Registration Statement/Prospectus. A shelf registration statement (Registration No.
333-174434) on Form S-3 to be used in connection with the public offering and sale of the
Securities, including a related Basic Prospectus (as defined below), (i) has been prepared
by the Partnership pursuant to and in conformity with the requirements of the Securities Act
of 1933 (the 1933 Act), and the rules and regulations thereunder (the 1933 Act Rules and
Regulations), of the United States Securities and Exchange Commission (the Commission),
(ii) has been filed with the Commission under the 1933 Act, and (iii) is effective under the
1933 Act. The conditions for the use of Form S-3 under the 1933 Act, including those set
forth in the General Instructions to Form S-3, have been satisfied. The Partnership may
have filed with the Commission, as part of an amendment to the Registration Statement or
pursuant to Rule 424(b), one or more Preliminary Prospectuses (as defined below) relating to
the Securities, each of which has previously been furnished to the Representatives. As used
in this Agreement:
(i) Basic Prospectus shall mean the prospectus referred to in paragraph 1(a)
above contained in the Registration Statement at the Effective Date.
(ii) Disclosure Package shall mean, as of the Execution Time, the most recent
Preliminary Prospectus, together with (A) any Issuer Free Writing Prospectus filed
by the Partnership on or before the Execution Time and identified on Schedule II
hereto, and (B) the pricing information identified on Schedule II hereto.
2
(iii) Effective Date shall mean any date as of which any part of the
Registration Statement became, or is deemed to have become, effective under the 1933
Act in accordance with the 1933 Act Rules and Regulations.
(iv) Execution Time shall mean the date and time (7:30 am Central Time) that
this Agreement is executed and delivered by the parties hereto.
(v) Prospectus shall mean the prospectus supplement relating to the
Securities that was first filed pursuant to Rule 424(b) after the Execution Time,
together with the Basic Prospectus.
(vi) Issuer Free Writing Prospectus means each free writing prospectus (as
defined in Rule 405 of the 1933 Act Rules and Regulations) prepared by or on behalf
of the Partnership or used or referred to by the Partnership in connection with the
offering of the Securities.
(vii) Preliminary Prospectus shall mean any preliminary prospectus supplement
to the Basic Prospectus, which describes the Securities and the offering thereof,
and is used prior to filing of the Prospectus, together with the Basic Prospectus.
(viii) Registration Statement shall mean the registration statement referred
to in paragraph 1(a) above, including exhibits and financial statements and any
prospectus supplement relating to the Securities that is filed with the Commission
pursuant to Rule 424(b) and deemed part of such registration statement pursuant to
Rule 430B, as amended at the Execution Time and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes effective prior
to the Initial Delivery Date, shall also mean such registration statement as so
amended or such Rule 462(b) Registration Statement, as the case may be.
(ix) Rule 462(b) Registration Statement shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the offering
covered by the registration statement referred to in Section 1(a) hereof.
Any reference to the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus or the Basic Prospectus, or any amendment or supplement thereto,
shall be deemed to refer to and include any documents incorporated by reference therein
pursuant to Form S-3 under the 1933 Act as of the date of such Registration Statement,
Preliminary Prospectus, the Prospectus or the Basic Prospectus, as the case may be, or in
the case of the Disclosure Package, as of the Execution Time. Any reference to the most
recent Preliminary Prospectus shall be deemed to refer to the latest Preliminary Prospectus
included in the Registration Statement or filed pursuant to Rule 424(b) on or prior to the
date hereof. Any reference to any amendment or supplement to any Preliminary Prospectus, the
Prospectus or the Basic Prospectus shall be deemed to refer to and include any document
filed under the Securities Exchange Act
3
of 1934 (the 1934 Act), after the date of such Preliminary Prospectus, the Prospectus or
the Basic Prospectus, as the case may be, and incorporated by reference in such Preliminary
Prospectus, the Prospectus or the Basic Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to include the most recent
annual report of the Partnership on Form 10-K filed with the Commission pursuant to Section
13(a) or 15(d) of the 1934 Act after the Effective Date that is incorporated by reference in
the Registration Statement. The Commission has not issued any stop order suspending the
effectiveness of the Registration Statement, and no proceeding or examination for such
purpose has been instituted or, to the Partnerships knowledge, threatened by the
Commission. The Commission has not notified the Partnership of any objection to the use of
the form of the Registration Statement.
(b) Well-Known Seasoned Issuer and Not an Ineligible Issuer. The Partnership was at the
time of the initial filing of the Registration Statement, and continues to be, a well-known
seasoned issuer (as defined in Rule 405 under the 1933 Act) eligible to use an automatic
shelf registration statement (as defined in Rule 405 under the 1933 Act) for the
registration of the Units, including not having been an ineligible issuer (as defined in
Rule 405 under the 1933 Act Rules and Regulations), at any such time or date. The
Partnership has not received from the Commission any notice pursuant to Rule 401(g)(2) under
the 1933 Act objecting to the use of the automatic shelf registration statement form. To
the Partnerships knowledge, the Registration Statement is not the subject of a pending
proceeding or examination under Section 8(d) or 8(e) of the 1933 Act, and the Partnership is
not the subject of a pending proceeding under Section 8A of the 1933 Act in connection with
the offering of the Units.
(c) Form of Documents. The Registration Statement complied and will comply in all
material respects on each Effective Date and on the applicable Delivery Date, and any
amendment to the Registration Statement filed after the date hereof will comply in all
material respects when filed, to the requirements of the 1933 Act and the 1933 Act Rules and
Regulations. The most recent Preliminary Prospectus complied, and the Prospectus will
comply, in all material respects when filed with the Commission pursuant to Rule 424(b) to
the requirements of the 1933 Act and the 1933 Act Rules and Regulations. The documents
incorporated by reference in the Registration Statement, the Disclosure Package and the
Prospectus conformed, and any further documents so incorporated will conform, when filed
with the Commission, in all material respects to the requirements of the 1934 Act and 1934
Act Rules and Regulations or the 1933 Act and 1933 Act Rules and Regulations, as applicable.
(d) No Material Misstatements or Omissions in the Registration Statement. The
Registration Statement did not, as of each Effective Date, 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; provided, however, that the Partnership makes no
representations or warranties as to the information contained in or omitted from the
Registration Statement in reliance upon and in conformity with written information furnished
to the Partnership by or on behalf of the Underwriters specifically for inclusion in the
Registration Statement, it being understood and agreed that the only
4
such information furnished by the Underwriters consists of the information described as
such in Section 13 hereof.
(e) No Material Misstatements or Omissions in the Prospectus. The Prospectus will not,
as of its date and on the applicable Delivery Date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading; provided,
however, that the Partnership makes no representations or warranties as to the information
contained in or omitted from the Prospectus in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of the Underwriters specifically
for inclusion in the Prospectus, it being understood and agreed that the only such
information furnished by the Underwriters consists of the information described as such in
Section 13 hereof.
(f) No Material Misstatements or Omissions in the Disclosure Package. The Disclosure
Package did not, as of the Execution Time, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided, however,
that the Partnership makes no representations or warranties as to the information contained
in or omitted from the Disclosure Package in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of the Underwriters specifically
for inclusion in the Disclosure Package, it being understood and agreed that the only such
information furnished by the Underwriters consists of the information described as such in
Section 13 hereof.
(g) No Material Misstatements or Omissions in Issuer Free Writing Prospectus. Each
Issuer Free Writing Prospectus (including, without limitation, any road show that is a free
writing prospectus under Rule 433), when considered together with the Disclosure Package as
of the Execution Time, did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing sentence does not
apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and
in conformity with written information furnished to the Partnership by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement, the Disclosure
Package, any Issuer Free Writing Prospectus or the Prospectus (or any supplement thereto),
it being understood and agreed that the only such information furnished by the Underwriters
consists of the information described as such in Section 13 hereof. Each Issuer Free
Writing Prospectus (including, without limitation, any road show that is a free writing
prospectus under Rule 433) does not include any information that conflicts in any material
respect with the information contained in the Disclosure Package, including any document
incorporated by reference therein that has not been superseded or modified.
(h) Issuer Free Writing Prospectus Conforms to Requirements of 1933 Act. Each Issuer
Free Writing Prospectus conformed or will conform in all material respects to the
requirements of the 1933 Act and the 1933 Act Rules and Regulations on the date of first
use, and the Partnership has complied with any filing requirements applicable to
5
such Issuer Free Writing Prospectus pursuant to the 1933 Act Rules and Regulations. The
Partnership has not made any offer relating to the Securities that would constitute an
Issuer Free Writing Prospectus without the prior written consent of the Representatives. The
Partnership has retained in accordance with the 1933 Act Rules and Regulations all Issuer
Free Writing Prospectuses that were not required to be filed pursuant to the 1933 Act Rules
and Regulations. The Partnership filed the Registration Statement before using any Issuer
Free Writing Prospectus and each Issuer Free Writing Prospectus was accompanied by the most
recent Preliminary Prospectus satisfying the requirements of Section 10 of the 1933 Act. The
Partnership has taken all actions necessary so that any road show (as defined in Rule 433 of
the 1933 Act Rules and Regulations) in connection with the offering of the Securities will
not be required to be filed pursuant to the 1933 Act Rules and Regulations.
(i) Other Sales. The Partnership has not sold or issued any Units during the six-month
period preceding the date of the Initial Delivery Date, other than pursuant to (i)
acquisitions, employee benefit plans, qualified options plans or other employee compensation
plans described in the Disclosure Package and the Prospectus, (ii) outstanding options,
rights or warrants described in the Disclosure Package and the Prospectus, or (iii) the
Equity Distribution Agreement dated August 25, 2011, by and among the Partnership and Knight
Capital Americas, L.P.
(j) Independent Accountants. BDO USA LLP, who have audited the audited financial
statements included or incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, is an independent public accounting firm with respect
to the Partnership and the General Partner within the meaning of the 1933 Act and the 1933
Act Rules and Regulations and the Public Company Accounting Oversight Board (United States).
(k) Reserve Engineer. LaRoche Petroleum Consultants Ltd. (the Reserve Engineer),
whose report dated January 20, 2011 (the Reserve Report) is referenced in the Registration
Statement, the Disclosure Package and Prospectus and who has delivered the letter referred
to in Section 6(f) hereof, was as of the date of such report, and is, as of the date hereof,
an independent reserve engineer with respect to the Partnership. No information has come to
the attention of the Partnership or, to the knowledge of the Partnership, to the Reserve
Engineer that could reasonably be expected to cause the Reserve Engineer to withdraw its
Reserve Report.
(l) Information Underlying Reserve Report. The information underlying the estimates of
the Partnerships proved reserves that was supplied to the Reserve Engineer for the purposes
of preparing the Reserve Report and estimates of the proved reserves of the Partnership
disclosed in the Registration Statement, the Disclosure Package and the Prospectus,
including, production, costs of operation, and, to the knowledge of the Partnership, 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, the Disclosure
Package and the Prospectus and future net cash flow reflected
6
in the Reserve Report referenced therein have been prepared in a manner that complies
with the applicable requirements of the 1933 Act Rules and 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, the 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, the
Disclosure Package and the Prospectus and as reflected in the Reserve Report.
(m) Financial Statements. The financial statements of the Partnership included or
incorporated by reference in the Registration Statement, the Disclosure Package and the
Prospectus, 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 or
incorporated by reference in the Registration Statement, the 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 U.S.
Generally Accepted Accounting Principles (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 Rules and Regulations. The supporting schedules, if any, included or
incorporated by reference in the Registration Statement present fairly, in all material
respects in accordance with GAAP, the information required to be stated therein. The
information in the Disclosure Package and in the Prospectus under the caption Summary
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 or incorporated by reference in the Registration Statement, the Disclosure Package
and the Prospectus. All information contained in the Registration Statement, the 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 or incorporated by reference in the Registration
Statement, the Disclosure Package or the Prospectus that are not so included or
incorporated, as applicable, as required.
(n) No Material Adverse Change in Business. Since the respective dates as of which
information is given in the Registration Statement, the 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, (i) there 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
7
as one enterprise, whether or not arising in the ordinary course of business, (ii)
there have been no transactions entered into by any Partnership or any of its subsidiaries
which are material with respect to the Partnership and its subsidiaries, considered as one
enterprise, and (iii) 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.
(o) Formation and Good Standing of the Partnership Entities. Each Partnership Entity
has been duly organized, formed or incorporated and is validly existing as a limited
partnership, limited liability company, corporation or other business entity, as applicable,
in good standing under the laws of the state of its organization, incorporation or
formation, as applicable, and has full limited partnership, limited liability or corporate
power and authority to own, lease and operate its properties and to conduct its business as
described in the Registration Statement, the Disclosure Package and the Prospectus and, with
respect to each Legacy Party, to enter into and perform its obligations under this
Agreement; and each Partnership Entity is duly qualified as a foreign limited partnership,
limited liability company or 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 on the condition (financial or otherwise),
results of operations, business or prospects of the Partnership Entities taken as a whole (a
Material Adverse Effect).
(p) Entity Ownership.
(i) Moriah Properties, Ltd., DAB Resources, Ltd., Brothers Production
Properties, Ltd., Brothers Production Company, Inc., Brothers Operating Company,
Inc., J&W McGraw Properties, Ltd., SHP Capital 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 Amended and Restated Limited Liability Company Agreement of GP LLC (as amended
as of the date hereof, 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 Limited Liability Company Act (the Delaware LLC Act));
and such persons and entities own such membership interests free and clear of all
Liens.
(ii) The General Partner is the sole general partner of the Partnership with an
approximate 0.04% general partner interest in the Partnership; such general partner
interest has been duly authorized and validly issued in accordance with the Amended
and Restated Limited Partnership Agreement of the Partnership (as amended as of the
date hereof, 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.
8
(iii) As of the date hereof and immediately prior to the issuance of the
Securities pursuant to this Agreement, the issued and outstanding limited partner
interests of the Partnership consists of 43,760,533 Units. All of the issued and
outstanding 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 by 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 Revised Uniform Limited Partnership Act (the
Delaware LP Act)).
(iv) The Securities 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 Underwriters
against payment therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid (to the extent required by 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).
(q) 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 Limited Liability Company Agreement of the Operating GP (as amended as
of the date hereof, 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 Second Amended and
Restated Credit Agreement, dated March 10, 2011, by and between the Partnership and BNP
Paribas, as administrative agent, as amended (the Credit Agreement).
(r) Operating Partnership Ownership. (i) 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 Agreement of Limited Partnership of the Operating Partnership (as
amended as of the date hereof, 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 Credit Agreement; and (ii) 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 by 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 Credit Agreement.
9
(s) No Other Subsidiaries. Other than ownership interests in the Operating Partnership,
Operating GP and the Subsidiaries, the Partnership does not own, and at each Delivery 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 Operating Partnership, the Operating GP and the Subsidiaries, the General
Partner does not own, and at each Delivery 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. The Subsidiaries, considered
individually or in the aggregate as a single subsidiary, do not constitute a significant
subsidiary as defined in Rule 1-02 of Regulation S-X.
(t) Authority and Authorization. The Partnership has all requisite power and authority
to issue, sell and deliver the Securities in accordance with and upon the terms and
conditions set forth in this Agreement, the Partnership Agreement, the Registration
Statement, the Disclosure Package and the Prospectus. At each Delivery Date, all corporate,
partnership and limited liability company action, as the case may be, required to be taken
by the Partnership Entities or any of their stockholders, partners or members for the
authorization, issuance, sale and delivery of the Securities shall have been validly taken.
(u) Authorization of Agreement. This Agreement has been duly authorized, executed and
delivered by each of the Legacy Parties and constitutes the valid and legally binding
agreement of each of the Legacy Parties.
(v) Authorization and Enforceability of the Purchase Agreements. Each of the Purchase
Agreements has been duly authorized and executed by the Partnership and constitutes a valid
and binding agreement, enforceable against the Partnership in accordance with its terms,
except to the extent that enforcement thereof may be limited in bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to creditors
rights generally and general principles of equity whether enforcement is sought at law or in
equity.
(w) Enforceability of Organizational Documents. The Organizational Documents of each of
the Legacy Parties have been duly authorized and validly executed and delivered by the
parties thereto and are valid and legally binding agreements of such party, enforceable
against such party in accordance with their respective terms; provided that 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.
(x) Description of Securities. The Securities, when issued and delivered in accordance
with the terms of this Agreement, will conform in all material respects to the
10
description thereof contained in the Registration Statement, the Disclosure Package and
the Prospectus.
(y) Absence of Violations or Defaults. None of the Partnership Entities is in breach or
violation of or default under (i) its Organizational Documents; (ii) any Partnership
Document, other than Subject Instruments, (iii) 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 Entities or any of
their respective assets, properties or operations, or (iv) any rule or regulation of any
self-regulatory organization or other non-governmental regulatory authority (including,
without limitation, the rules and regulations of the NASDAQ Global Select Market (the
NASDAQ), except in the case of clauses (ii) through (iv) for any such breaches, violations
or default that would not, individually or in the aggregate, result in a Material Adverse
Effect, or materially impair the ability of the Legacy Parties to consummate the
transactions contemplated by this Agreement.
(z) Absence of Conflicts. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement and the Purchase
Agreements, and in the Registration Statement, the 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, 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.
(aa) Absence of Consents. No permit, consent, approval, authorization, order,
registration, filing or qualification (Consent) of or with any court, governmental agency
or body having jurisdiction over any of the Partnership Entities or any of their respective
properties is required in connection with the offering, issuance and sale by the Partnership
of the Securities, the execution, delivery and performance of this Agreement by the Legacy
Parties, or the consummation by the Legacy Parties of the transactions contemplated by this
Agreement or the Purchase Agreements, except for such Consents as may be required under the
1933 Act, the 1933 Act Rules and Regulations, the 1934
11
Act and the rules and regulations thereunder (the 1934 Act Rules and Regulations) and
state securities or Blue Sky laws and applicable rules and regulations under such laws.
(bb) 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.
(cc) 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
Statement, the Disclosure Package or the Prospectus (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 Legacy Parties of their 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, the Disclosure Package and the Prospectus, including ordinary
routine litigation incidental to the business, could not reasonably be expected to result in
a Material Adverse Effect.
(dd) Accuracy of Descriptions and Exhibits. The information in the Registration
Statement, the Disclosure Package, the Prospectus and the Preliminary Prospectus under the
captions Description of Our Units, Material Provisions of Our Partnership Agreement,
Conflicts of Interest and Fiduciary Duties and Material Tax Considerations, in each case
to the extent that it constitutes matters of law, summaries of legal matters, summaries of
provisions of the Partnerships 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 Disclosure Package, the
Prospectus and the Preliminary 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 Disclosure Package, the Prospectus and the Preliminary
Prospectus or to be filed as exhibits to the Registration Statement which have not been so
described and filed as required.
(ee) 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
12
intellectual property (collectively, Intellectual Property) necessary to carry on
their respective businesses as described in the Registration Statement, the Disclosure
Package and 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.
(ff) 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, (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
Legacy Parties of their obligations under this Agreement, for the offering, issuance, sale
or delivery by the Partnership 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 Disclosure Package and the Prospectus,
except such as have been already obtained under the 1933 Act or the 1933 Act Rules and
Regulations or such as may be required under state securities laws.
(gg) 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.
(hh) Title to Real Property. Each of the Partnership Entities has (i) 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 Disclosure Package and the
Prospectus, (ii) good and marketable title in fee simple to all real property other
13
than Oil and Gas Properties covered by clause (i), and (iii) 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 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.
(ii) Certain Relationships and Related Transactions. No relationship, direct or
indirect, exists between or among any Partnership Entity, on the one hand, and the
directors, managers, officers, members, partners, stockholders, customers or suppliers of
any Partnership Entity, on the other hand, that is required to be described in the
Registration Statement, the Disclosure Package and the Prospectus and is not so described.
(jj) 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 Disclosure Package and 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 Investment Company Act of 1940, as amended (the 1940
Act).
(kk) Environmental Laws. Except as described in the Registration Statement, the
Disclosure Package and the Prospectus and except as would not, individually or in the
aggregate, result in a Material Adverse Effect, (i) 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), (ii) the Partnership Entities have
all permits, authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (iii) there are no pending or threatened
administrative, regulatory or judicial actions, suits,
14
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against any Partnership
Entity and (iv) 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.
(ll) Absence of Registration Rights. Except as may arise under the Subject Instruments
or as disclosed in the Registration Statement, the 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.
(mm) Preemptive Rights. Except as may arise under the Subject Instruments or as
disclosed in the Registration Statement, the Disclosure Package and the Prospectus or in the
Partnership Documents, there are no preemptive rights or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares of capital stock of
or partnership or membership interests in any of the Partnership Entities. 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, other than as have been waived or deemed waived.
Except as disclosed in the Registration Statement, the Disclosure Package and the
Prospectus, there are no outstanding options or warrants to purchase any shares of capital
stock of, or partnership or membership interests in, any of the Partnership Entities.
(nn) Parties to Lock-up Agreements. Each of the parties listed on Exhibit A
hereto has executed and delivered to the Representatives a lock-up agreement in the form of
Exhibit B hereto. Exhibit A hereto contains a true, complete and correct
list of all directors and officers of the Legacy Parties.
(oo) NASDAQ Global Select Market. The Securities being sold hereunder by the
Partnership have been approved for listing, subject only to official notice of issuance, on
the NASDAQ.
(pp) FINRA Conduct Rule Matters. To the knowledge of the Partnership Entities, 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 the Financial Industry Regulatory Authority (the
FINRA) pursuant to FINRA Rule 5110 is true, complete and correct.
15
(qq) 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.
(rr) Insurance. The Partnership Entities are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as, in
managements 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.
(ss) Accounting Controls. The Partnership Entities (i) make and keep books, records and
accounts, which, in reasonable detail, accurately and fairly reflect transactions and
dispositions of assets and; (ii) maintain and have maintained effective internal control
over financial reporting as defined in Rule 13a-15 under the 1934 Act Rules and Regulations
and a system of internal accounting controls sufficient to provide reasonable assurance that
(A) transactions are executed in accordance with managements general or specific
authorization; (B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for their assets; (C)
access to assets is permitted only in accordance with managements general or specific
authorization; and (D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(tt) Disclosure Controls and Procedures. (i) The Partnership has established and
maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act
Rules and Regulations), (ii) such disclosure controls and procedures are designed to ensure
that the information required to be disclosed by the Partnership in the reports it files or
will file or submit under the 1934 Act, as applicable, is accumulated and communicated to
management of the Partnership including its respective principal executive officers and
principal financial officers, as appropriate, to allow such officers to make timely
decisions regarding required disclosure and (iii) except as described in the Pricing
Disclosure Package and the Prospectus, such disclosure controls and procedures
16
are effective in all material respects to perform the functions for which they were
established.
(uu) Compliance with the Sarbanes-Oxley Act. There is and has been no failure on the
part of the Partnership or any of the Partnerships directors or officers, in their
capacities as such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002, as amended, with which any of them is required to comply,
including Section 402 related to loans.
(vv) Absence of Manipulation. No Partnership Entity, Subsidiary or director or
executive officer of the General Partner has taken nor will 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.
(ww) 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.
(xx) Statistical, Demographic or Market-Related Data. Any statistical, demographic,
market-related, customer-related or production-related data included in the Registration
Statement, the 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 Disclosure Package or the Prospectus accurately reflects the
materials upon which it is based or from which it was derived.
(yy) Lending Relationship. Except as disclosed in the Registration Statement, the
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.
(zz) 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 subsidiarys equity securities, 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 (i) the Registration Statement, Disclosure Package and the Prospectus or
(ii) the organizational documents of the subsidiaries.
(aaa) No Conflict with OFAC Laws. None of the Partnership Entities, nor, to the
knowledge of the Partnership, any officer, agent or employee of any of the Partnership
Entities is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (OFAC); and the Partnership will not
knowingly, directly or indirectly, use the proceeds of the offering or lend,
17
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.
(bbb) No Conflict with FCPA. Neither the Partnership nor any of its subsidiaries nor,
to the knowledge of the Partnership, any director, officer, agent, employee or affiliate of
the Partnership or any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a violation by such persons 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, its subsidiaries and, to the knowledge of the Partnership, its affiliates have
conducted their businesses 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.
(ccc) Compliance with Money-Laundering Laws. The operations of each of the Legacy
Parties, Legacy Reserves Services, Inc., a Texas corporation (Services), and Legacy
Reserves Finance Corporation, a Delaware corporation (Legacy Finance), 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 Legacy Parties, Services or Legacy Finance with respect to
the Money Laundering Laws is pending or, to the knowledge of each of the Legacy Parties,
threatened.
(ddd) Certificates. Any certificate signed by any officer of the Partnership Entities
and delivered to the Representatives 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.
2. Purchase, Sale and Delivery of the Firm Securities. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and conditions herein set
forth, (a) the Partnership agrees to sell to the Underwriters, and each such Underwriter agrees,
severally and not jointly, to purchase from the Partnership, at a purchase price of $27.696 per
unit, the number of Firm Securities set forth opposite the name of such Underwriter in Schedule I
hereto and (b) the Partnership agrees to sell to the Underwriters, and each such Underwriter
agrees, severally and not jointly, to purchase from the Partnership, any additional number of
Option Securities that such Underwriter may become obligated to purchase pursuant to Section 3
hereof.
18
Delivery of the Firm Securities will be in book-entry form through the facilities of The
Depository Trust Company, New York, New York (DTC). Delivery of the documents required by Section
6 hereof with respect to the Securities shall be made available at or prior to 9:00 a.m. Houston
time on November 14, 2011 at the offices of Andrews Kurth LLP, 600 Travis, Suite 4200, Houston,
Texas 77002 or at such other place as may be agreed upon between the Representatives and the
Partnership (the Place of Closing), or at such other time and date not later than five full
business days thereafter as the Representatives and the Partnership may agree, such time and date
of payment and delivery being herein called the Initial Delivery Date. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of the Underwriters hereunder.
The Partnership will deliver the Firm Securities to the Underwriters, against payment of the
purchase price therefor in Federal (same day) Funds by wire transfer to an account at the bank
specified by the Partnership at least two business days before the Initial Delivery Date.
The Partnership will cause its transfer agent to deposit the Firm Securities pursuant to the
Full Fast Delivery Program of the DTC.
It is understood that the Underwriters propose to offer the Securities to the public upon the
terms and conditions set forth in the Disclosure Package and the Prospectus.
3. Purchase, Sale and Delivery of the Option Securities. The Partnership hereby grants the
option to the Underwriters to purchase from the Partnership up to 510,000 Option Securities, on the
same terms and conditions as the Firm Securities. No Option Securities shall be sold or delivered
unless the Firm Securities previously have been, or simultaneously are, sold and delivered and such
Option Securities shall be sold at the same price as the Firm Securities. Option Securities may be
purchased as provided in this Section 3 solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Securities.
The option is exercisable by the Representatives at any time, in whole or in part, and from
time to time, before the expiration of 30 days from the date of the Prospectus (or, if such 30th
day shall be a Saturday or Sunday or a holiday, on the next day thereafter when the NASDAQ is open
for trading), for the purchase of all or part of the Option Securities covered thereby, by notice
given by the Representatives to the Partnership in the manner provided in Section 12 hereof,
setting forth the number of Option Securities as to which the Underwriters are exercising the
option, and the date of delivery of said Option Securities, which date shall not be earlier than
the Initial Delivery Date, nor less than one business day (unless it is exercised prior to the
Initial Delivery Date; provided, that the Option Security Delivery Date shall be the same as the
Initial Delivery Date), or more than five business days, after such notice unless otherwise agreed
to by the Partnership and the Representatives. The Underwriters may terminate the option at any
time, as to any unexercised portion thereof, by notice given by the Representatives to the
Partnership to such effect. The percentage of Option Securities to be purchased by each
Underwriter shall be the same as the percentage of Firm Securities purchased by such Underwriter.
The Underwriters shall make such allocation of the Option Securities among them as may be
required to eliminate purchases of fractional Securities.
19
Delivery of Option Securities will be in book-entry form through the facilities of DTC.
Delivery of the documents required by Section 6 hereof with respect to the Option Securities shall
be made at the Place of Closing at or prior to 9:00 a.m. Houston time on the date designated in the
notice given by the Representatives as provided above, or at such other time and date as the
Representatives and the Partnership may agree (which may be the same as the Initial Delivery Date),
such time and date of payment and delivery being herein called the Option Security Delivery Date.
The Initial Delivery Date and any Option Security Delivery Date are sometimes each referred to as
a Delivery Date. Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of the Underwriters hereunder.
On each Option Security Delivery Date, the Legacy Parties shall provide the Underwriters such
representations, warranties, agreements, opinions, letters, certificates and covenants with respect
to Option Securities as are required to be delivered on the Initial Delivery Date with respect to
the Firm Securities.
The Partnership will cause its transfer agent to deposit Option Securities pursuant to the
Full Fast Delivery Program of the DTC.
4. Covenants of the Partnership.
(a) The Legacy Parties jointly and severally covenant and agree with the several
Underwriters that:
(i) The Partnership will timely transmit copies of the Preliminary Prospectus
and the Prospectus, and any amendments or supplements thereto (subject to the
provisions of this Section 4), to the Commission for filing pursuant to Rule 424(b)
of the 1933 Act Rules and Regulations.
(ii) The Partnership will deliver or make available to each of the Underwriters
and to counsel for the Underwriters (i) a signed copy of the Registration Statement
as originally filed, including copies of exhibits thereto, and of any amendments and
supplements to the Registration Statement and (ii) a signed copy of each consent and
certificate included in, or filed as an exhibit to, the Registration Statement as so
amended or supplemented; the Partnership will deliver to the Underwriters as soon as
practicable after the date of this Agreement as many copies of the Preliminary
Prospectus, the Prospectus and any amendment or supplement thereto as the
Underwriters may reasonably request for the purposes contemplated by the 1933 Act;
the Partnership will promptly advise the Underwriters of any request of the
Commission for amendment of the Registration Statement or for supplement to the
Preliminary Prospectus or the Prospectus or for any additional information, and of
the issuance by the Commission or any state or other jurisdiction or other
regulatory body of any stop order under the 1933 Act or other order suspending the
effectiveness of the Registration Statement (as amended or supplemented) or
preventing or suspending the use of the Preliminary Prospectus, any Issuer Free
Writing Prospectus or the Prospectus or suspending the qualification or registration
of the Securities for offering or sale in any jurisdiction, and of the institution
or threat of any proceedings therefor, of which the Partnership shall have received
notice or
20
otherwise have knowledge prior to the completion of the distribution of the
Securities; and the Partnership will use its best efforts to prevent the issuance of
any such stop order or other order and, if issued, to obtain the lifting thereof at
the earliest possible moment.
(iii) The Partnership will not file any amendment or supplement to the
Registration Statement, the Prospectus, the Basic Prospectus or Issuer Free Writing
Prospectus or any other free writing prospectus (or any other prospectus relating to
the Securities filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations),
of which the Underwriters shall not previously have been advised or to which the
Underwriters shall have reasonably objected in writing after being so advised unless
the Partnership shall have determined based upon the advice of counsel that such
amendment or supplement is required by law; and the Partnership will promptly notify
the Underwriters after it shall have received notice thereof of the time when any
amendment to the Registration Statement, the Prospectus, the Basic Prospectus or
Issuer Free Writing Prospectus becomes effective or when any supplement to the Basic
Prospectus has been filed.
(iv) During the period when a prospectus relating to any of the Securities is
required to be delivered under the 1933 Act by any Underwriter or dealer, the
Partnership will comply, at its own expense, with all requirements imposed by the
1933 Act and the 1933 Act Rules and Regulations, so far as necessary to permit the
continuance of sales of or dealing in the Securities during such period in
accordance with the provisions hereof and as contemplated by the Prospectus.
(v) If, during the period when a prospectus relating to any of the Securities
is required to be delivered under the 1933 Act by any Underwriter or dealer, (i) any
event relating to or affecting the Partnership Entities or of which the Partnership
shall be advised in writing by the Representatives shall occur as a result of which,
in the opinion of the Partnership or the counsel for the Underwriters, the
Prospectus or any Issuer Free Writing Prospectus, as then amended or supplemented
would include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) it shall be
necessary to amend or supplement the Registration Statement, the Prospectus or any
Issuer Free Writing Prospectus to comply with the 1933 Act, the 1933 Act Rules and
Regulations, the 1934 Act or the 1934 Act Rules and Regulations, the Partnership
will forthwith at its expense prepare and file with the Commission, and furnish to
the Underwriters a reasonable number of copies of, such amendment or supplement or
other filing that will correct such statement or omission or effect such compliance.
(vi) During the period when a prospectus relating to any of the Securities is
required to be delivered under the 1933 Act by any Underwriter or dealer, the
Partnership will furnish such proper information as may be lawfully required and
otherwise cooperate with the Underwriters in qualifying the
21
Securities for offer and sale under the applicable securities or Blue Sky laws
of such states and other jurisdictions (domestic or foreign) as the Representatives
may designate and will file and make such statements or reports as are or may be
reasonably necessary; provided, however, that the Partnership shall not be required
to qualify as a foreign partnership or to qualify as a dealer in securities or to
file a general consent to service of process under the laws of any jurisdiction
where the Partnership is not presently qualified or where the Partnership would be
subject to taxation as a foreign entity.
(vii) The Partnership will timely file such reports pursuant to the 1934 Act as
are necessary in order to make generally available to its securityholders as soon as
practicable an earnings statement for the purposes of, and to provide to the
Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of
the 1933 Act.
(viii) The Partnership will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under Use of Proceeds.
(ix) The Partnership will use its best efforts to obtain the approval for and
maintain the listing of the Securities on the NASDAQ.
(x) The Legacy Parties will not, for a period of 45 days from the date of the
Prospectus (the Lock-up Period), without the prior written consent of UBS,
directly or indirectly:
1) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of any
Units or any securities convertible into or exercisable or exchangeable for
Units,
2) file or cause the filing of any registration statement under the
1933 Act with respect to any Units or any securities convertible into or
exercisable or exchangeable for any Units (other than any Rule 462(b)
Registration Statement filed to register Securities to be sold to the
Underwriters pursuant to this Agreement and registration statements on Form
S-8 to register Units or options to purchase Units pursuant to the long-term
incentive plan described in clause (2) of the next paragraph, or
3) enter into any swap or other agreement, arrangement or transaction
that transfers to another, in whole or in part, directly or indirectly, any
of the economic consequences of ownership of any Units or any securities
convertible into or exercisable or exchangeable for Units,
whether any transaction described in (1) or (3) above is to be settled by delivery of Units, other
securities, in cash or otherwise.
22
Notwithstanding the provisions set forth in the immediately preceding paragraph, the
Partnership may, without the prior written consent of UBS:
1) issue Securities to the Underwriters pursuant to this Agreement,
2) issue Units, and options to purchase Units, pursuant to the Legacy
Reserves LP Long-Term Incentive Plan, as such plan is in effect on the date
of this Agreement,
3) issue Units upon the exercise of options outstanding on the date of
this Agreement or issued after the date of this Agreement under the Legacy
Reserves LP Long-Term Incentive Plan, as such options and plan are in effect
on the date of this Agreement, and
4) issue Units directly to a seller of a business as part of the
purchase price if the General Partner determines that such acquisition will
increase cash flow from operations on a per unit basis after giving effect
to such issuance, provided that the persons receiving Units shall have
agreed in writing to be bound by the terms of these lock-up provisions for
the remainder of the Lock-up Period.
(xi) The Partnership, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, will file all documents required to be
filed with the Commission pursuant to the 1934 Act within the time periods required
by the 1934 Act and the 1934 Act Rules and Regulations.
(xii) The Partnership agrees that, unless it has obtained or will obtain the
prior written consent of the Representatives, it has not made and will not make any
offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a free writing prospectus (as
defined in Rule 405 of the 1933 Act Rules and Regulations) required to be filed by
the Partnership with the Commission or retained by the Partnership under Rule 433 of
the 1933 Act Rules and Regulations; provided that the prior written consent of the
parties hereto shall be deemed to have been given in respect of the free writing
prospectuses included in Schedule II hereto and any electronic road show. The
Partnership agrees that (x) it has treated and will treat, as the case may be, each
Issuer Free Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has
complied and will comply, as the case may be, with the requirements of Rules 164 and
433 of the 1933 Act Rules and Regulations applicable to any Issuer Free Writing
Prospectus, including in respect of timely filing with the Commission, legending and
record keeping.
(xiii) If, at any time prior to the filing of the Prospectus pursuant to Rule
424(b) of the 1933 Act Rules and Regulations, any event occurs as a result of which
the Disclosure Package would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in
23
light of the circumstances under which they were made at such time not
misleading, the Partnership will (i) notify the Representatives promptly so that any
use of the Disclosure Package may cease until it is amended or supplemented; (ii)
amend or supplement the Disclosure Package to correct such statement or omission and
(iii) supply any amendment or supplement to the Representatives in such quantities
as the Representatives may reasonably request.
(xiv) If the Partnership elects to rely on Rule 462(b) of the 1933 Act Rules
and Regulations, the Partnership shall both file an Abbreviated Registration
Statement with the Commission in compliance with Rule 462(b) and pay the applicable
fees in accordance with Rule 111 of the 1933 Act Rules and Regulations by the
earlier of (i) 10:00 p.m., Houston time, on the date of this Agreement and (ii) the
time that confirmations are given or sent, as specified by Rule 462(b)(2).
(b) Each of the Underwriters, severally but not jointly, covenant and agree with the
Partnership that, unless it has obtained or will obtain, as the case may be, the prior
written consent of the Partnership, it has not made and will not make any offer relating to
the Securities that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a free writing prospectus (as defined in Rule 405 of the 1933 Act
Rules and Regulations) required to be filed by the Partnership with the Commission or
retained by the Partnership under Rule 433 of the 1933 Act Rules and Regulations; provided
that the prior written consent of the parties hereto shall be deemed to have been given in
respect of the free writing prospectuses included in Schedule II hereto and any electronic
road show.
5. Payment of Expenses.
(a) Expenses. The Partnership will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as originally filed and
of each amendment thereto, (ii) the word processing, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other documents as
may be required in connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (iv) the fees and disbursements of the counsel, accountants and other advisors
to the Partnership, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 4(a)(vi) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplements thereto,
(vi) the printing and delivery to the Underwriters of copies of each Preliminary Prospectus,
any Free Writing Prospectus, the documents constituting the Disclosure Package and the
Prospectus and any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any supplements thereto,
(viii) the fees and expenses
24
of the transfer agent and registrar for the Securities, (ix) the fees and expenses
incurred in connection with the listing of the Securities on the NASDAQ, (xi) all costs and
expenses of the Underwriters (other than air transportation expenses relating to the road
show in connection with the offering of the Securities), including the reasonable fees and
disbursements of counsel for the Underwriters and (xii) the disbursements of counsel for
the Underwriters in connection with the copying and delivery of closing documents delivered
by the Partnership or the Partnerships accountants or counsel (including any local
counsel).
(b) Termination of Agreement. If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 6 or Section 10(a)(i) or (v) hereof, the
Partnership shall reimburse the Underwriters for all of their out of pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
6. Conditions of the Underwriters Obligations. The several obligations of the Underwriters
to purchase and pay for the Securities, as provided herein, shall be subject to the accuracy, as of
the date hereof and as of each Delivery Date, of the representations and warranties of the Legacy
Parties contained in this Agreement or in certificates of any officer of the Partnership or any
subsidiary of the Partnership, to the performance by the Legacy Parties of their respective
covenants and other obligations hereunder, and to the following further conditions:
(a) All filings required by Rule 424 and Rule 430B of the 1933 Act Rules and
Regulations shall have been timely made.
(b) No stop order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus
shall have been issued and no proceeding for that purpose shall have been initiated or, to
the knowledge of the Partnership, threatened or contemplated by the Commission, and any
request on the part of the Commission for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Underwriters.
(c) At each Delivery Date, the Representatives shall have received the favorable
opinion, dated as of such Delivery Date, of Andrews Kurth LLP, counsel for the Partnership
(Partnership Counsel), in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other Underwriters,
in the form set forth in Exhibit C hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(d) At each Delivery Date, the Representatives shall have received the favorable
opinion, dated as of such Delivery Date, of Vinson & Elkins L.L.P., counsel for the
Underwriters, together with signed or reproduced copies of such letter for each of the other
Underwriters, with respect to such matters as the Underwriters may reasonably require. In
giving such opinion such counsel may rely without investigation, as to all matters governed
by the laws of any jurisdictions other than the law of the State of New
25
York, the federal law of the United States and the Delaware Revised Uniform Limited
Partnership Act, upon the opinions of counsel satisfactory to the Representatives. Such
counsel may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the Partnership and
its subsidiaries and of public officials.
(e) At each Delivery Date, there shall not have been, since the date hereof or since
the respective dates as of which information is given in the Prospectus or the Disclosure
Package (exclusive of any amendments or supplements thereto subsequent to the date of this
Agreement), any 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,
and, at such Delivery Date, the Representatives shall have received a certificate of the
Chairman, the President, the Chief Executive Officer or an Executive Vice President or
Senior Vice President of each of the Legacy Parties (or persons holding similar positions,
as applicable) and of the Chief Financial Officer or Chief Accounting Officer of each of the
Legacy Parties (or persons holding similar positions, as applicable), dated as of such
Delivery Date, to the effect that (i) there has been no such material adverse change, (ii)
the representations and warranties of the Legacy Parties in this Agreement are true and
correct with the same force and effect as though expressly made at and as of such Delivery
Date, (iii) the Legacy Parties have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to such Delivery Date under
or pursuant to this Agreement, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to their knowledge, are contemplated by the Commission.
(f) At the time of the execution of this Agreement, the Representatives shall have
received from each of BDO USA, LLP and the Reserve Engineer a letter, dated the date of this
Agreement and in form and substance satisfactory to the Representatives, together with
signed or reproduced copies of such letters for each of the other Underwriters, (i) in the
case of the letters of BDO USA, LLP, containing statements and information of the type
ordinarily included in accountants comfort letters to underwriters with respect to the
financial statements and certain financial information of the Partnership contained in or
incorporated by reference into the Registration Statement, the Disclosure Package or the
Prospectus and (ii) in the case of the letter of the Reserve Engineer, containing statements
and information ordinarily included in reserve engineers comfort letters to underwriters
with respect to the Reserve Report and related information contained in or incorporated by
reference into the Registration Statement, the Disclosure Package or the Prospectus.
(g) At each Delivery Date, the Representatives shall have received from each of BDO
USA, LLP and the Reserve Engineer a letter, dated as of such Initial Delivery Date and in
form and substance satisfactory to the Representatives, to the effect that they reaffirm the
statements made in the letters furnished pursuant to subsection (f) of this Section, except
that the specified date referred to shall be a date not more than three business days prior
to such Delivery Date.
26
(h) Prior to the date of this Agreement, the Representatives shall have received an
agreement substantially in the form of Exhibit B hereto signed by each of the
persons listed on Exhibit A hereto.
(i) Additional Documents. At each Delivery Date, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein contemplated,
or in order to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, contained in this Agreement; and all proceedings taken
by the Partnership in connection with the issuance and sale of the Securities as herein
contemplated and in connection with the other transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Representatives and counsel for the
Underwriters.
(j) Termination of Agreement. If any condition specified in this Section 6 shall not
have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of
any condition to the purchase of Option Securities on an Option Security Delivery Date which
is after the Initial Delivery Date, the obligations of the several Underwriters to purchase
the relevant Option Securities, may be terminated by the Representatives by notice to the
Partnership at any time on or prior to the Initial Delivery Date or such Option Security
Delivery Date, as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 5 hereof and except that Sections 1,
5, 7, 8 and 9 hereof shall survive any such termination and remain in full force and effect.
7. Indemnification.
(a) Indemnification by the Legacy Parties. The Legacy Parties agree, jointly and
severally, to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of any Underwriter, affiliates of any Underwriter who have, or who are
alleged to have, participated in the distribution of the Units as underwriters, and each
person, if any, who controls any Underwriter or any such affiliate within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising out
of any untrue statement or alleged untrue statement of a material fact included in
any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Disclosure
Package or the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made,
not misleading;
27
(ii) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission; provided
that (subject to Section 7(d) below) any such settlement is effected with the
written consent of the Partnership; and
(iii) against any and all expense whatsoever, as incurred (including the fees
and disbursements of counsel chosen by UBS), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under (i) or
(ii) above,
provided, however, that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written information furnished to
the Partnership by any Underwriter through UBS expressly for use in the Registration Statement (or
any amendment thereto), or in any Preliminary Prospectus, any Issuer Free Writing Prospectus, the
Disclosure Package or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification by the Underwriters. Each Underwriter severally agrees to indemnify
and hold harmless the Partnership, its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Partnership within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section 7, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or any Preliminary Prospectus, any Issuer Free Writing Prospectus,
the Disclosure Package or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Partnership by
such Underwriter through UBS expressly for use in the Registration Statement (or any
amendment thereto) or such Preliminary Prospectus, any Issuer Free Writing Prospectus, the
Disclosure Package or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve such indemnifying party from any liability hereunder
to the extent it is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of this indemnity
agreement. Counsel to the indemnified parties shall be selected as follows: counsel to the
Underwriters and each person, if any, who controls any
28
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall be selected by UBS; and, counsel to the Partnership, its directors, each of its
officers who signed the Registration Statement and each person, if any, who controls the
Partnership within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall be selected by the Partnership. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be liable for
the fees and expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and the fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for the Partnership, its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the Partnership
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, in each case
in connection with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7(a) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
8. Contribution.
(a) If the indemnification provided for in Section 7 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (a) in such proportion as is
appropriate to reflect the relative benefits received by the Legacy
29
Parties on the one hand and the Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (b) if the allocation provided by clause (a) is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but also the relative fault of the Legacy
Parties on the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
(b) The relative benefits received by the Legacy Parties on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Partnership and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear
to the aggregate initial public offering price of the Securities as set forth on such cover.
(c) The relative fault of the Legacy Parties on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by any of the Legacy Parties or by the
Underwriters and the parties relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(d) The Legacy Parties and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters or the Legacy Parties were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 8. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
(e) Notwithstanding the provisions of this Section 8, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged omission.
(f) No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
30
(g) For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Underwriter, and each director of the
Partnership, each officer of the Partnership who signed the Registration Statement, and each
person, if any, who controls the Partnership within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as the
Partnership. The Underwriters respective obligations to contribute pursuant to this
Section 8 are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule I hereto and not joint.
9. Representations, Warranties and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or in certificates of officers of the Legacy
Parties or any of their subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Partnership, and shall survive delivery of the
Securities to the Underwriters.
10. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this Agreement, by notice
to the Partnership, at any time on or prior to the Initial Delivery Date (and, if any Option
Securities are to be purchased on an Option Security Delivery Date which occurs after the
Initial Delivery Date, the Representatives may terminate the obligations of the several
Underwriters to purchase such Option Securities, by notice to the Partnership, at any time
on or prior to such Option Security Delivery Date) (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which information is given
in the Prospectus or the Disclosure Package, any 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, or (ii) if there has occurred any material adverse change in
the financial markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any securities of
the Partnership has been suspended or materially limited by the Commission or the NASDAQ, or
if trading generally on the NYSE Amex LLC or the New York Stock Exchange or in the NASDAQ
has been suspended or materially limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of said exchanges or by such
system or by order of the Commission, FINRA or any other governmental authority, or a
material disruption has occurred in commercial banking or securities settlement or clearance
services in the United States or in Europe, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities or (v) if there shall have occurred,
since the time of execution of this Agreement, any downgrading in the rating of any debt
securities or Partnership by any nationally recognized statistical rating
31
organization (as defined by the Commission for purposes of Rule 436 under the 1933
Act) or any public announcement that any such organization has under surveillance or review
its ratings on any such debt securities, (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible downgrading, of such
rating) or any announcement by any such organization that the Partnership has been placed on
negative outlook.
(b) Liabilities. If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party except as provided in
Section 5 hereof, and provided further that Sections 1, 5, 7, 8 and 9 hereof shall survive
such termination and remain in full force and effect.
11. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail
at the Initial Delivery Date or an Option Security Delivery Date to purchase the Securities which
it or they are obligated to purchase under this Agreement (the Defaulted Securities), the
Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or
more of the non defaulting Underwriters, or any other underwriters, to purchase all, but not less
than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representatives shall not have completed such arrangements
within such 24 hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number of
Securities to be purchased on such date, each of the non defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the underwriting
obligations of all non defaulting Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the number of Securities to be
purchased on such date, this Agreement or, with respect to any Option Security Delivery Date
which occurs after the Initial Delivery Date, the obligation of the Underwriters to purchase
and of the Partnership to sell the Option Securities that were to have been purchased and
sold on such Option Security Delivery Date, shall terminate without liability on the part of
any non defaulting Underwriter.
No action taken pursuant to this Section 11 shall relieve any defaulting Underwriter from
liability in respect of its default.
In the event of any such default which does not result in a termination of this Agreement or,
in the case of an Option Security Delivery Date which is after the Initial Delivery Date, which
does not result in a termination of the obligation of the Underwriters to purchase and the
Partnership to sell the relevant Option Securities, as the case may be, the Representatives shall
have the right to postpone the Initial Delivery Date or the relevant Option Security Delivery Date,
as the case may be, for a period not exceeding seven days in order to effect any required changes
in the Registration Statement or Prospectus or in any other documents or arrangements. As used
herein, the term Underwriter includes any person substituted for an Underwriter under this
Section 11.
32
12. Notices. All notices or communications hereunder, except as herein otherwise specifically
provided, shall be in writing and if sent to the Representatives shall be mailed, delivered or sent
by facsimile transmission and confirmed c/o UBS Securities LLC, 1285 6th Avenue,
9th Floor, New York, New York, 10019, Attention: Syndicate Department/Michael Ryan, Fax:
(212) 713-3371; Raymond James Financial Center, 880 Carillon Parkway, Saint Petersburg. FL 33716,
Attention: Kent Nelson, Fax: (727) 567-8274; and Citigroup Global Markets Inc., 388 Greenwich
Street, New York, NY 10013, Attention: General Counsel, Fax: (212) 816-7912; or if sent to the
Partnership shall be mailed, delivered, sent by facsimile transmission, or emailed and confirmed to
the Partnership at Legacy Reserves LP, 303 W. Wall Street, Suite 1400, Midland, TX, 79701,
Attention: Steven H. Pruett, Fax: (432) 689-5299; and if sent to any other party, shall be given at
the address set forth on the signature page hereof.
13. Information Furnished by Underwriters. The statements under the heading Underwriting in
the Prospectus related to (i) concessions and reallowances and (ii) price stabilization, short
positions and penalty bids constitute the only information furnished by or on behalf of the
Underwriters, as such information is referred to in Section 1(c), (d), (e) and (g) and Sections 7,
8 and 9 hereof.
14. Parties. This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Legacy Parties and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Legacy Parties and their respective successors and
the controlling persons and officers and directors referred to in Sections 7 and 8 and their heirs
and legal representatives, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriters and the
Partnership and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
16. Effect of Headings. The Section and Exhibit headings herein are for convenience only and
shall not affect the construction hereof
17. Definitions. As used in this Agreement, the following terms have the respective meanings
set forth below:
(a) Hydrocarbon Interests means all rights, titles, interests and estates now owned
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases (including
subleases), oil, gas and casinghead gas leases, or other liquid or gaseous hydrocarbon
leases, mineral fee or lease interests, other oil, gas and mineral leasehold fee or term
interests, farm outs, overriding royalty and royalty interests, net profits interests,
33
net revenue interests, carried interests, oil payments, production payment interests
and similar mineral interests, including any reserved, reversionary or residual interest of
whatever nature.
(b) Lien means any security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(c) Oil and Gas Properties means all of the Partnerships Hydrocarbon Interests;
personal property and/or real property now or hereafter pooled or unitized with Hydrocarbon
Interests; currently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including all units created under orders,
regulations and rules of any governmental body having jurisdiction) which may affect all or
any portion of the Hydrocarbon Interests; pipelines, gathering lines, compression
facilities, tanks and processing plants; oil wells, gas wells, water wells, injection wells,
platforms, spars or other offshore facilities, casings, rods, tubing, pumping units and
engines, Christmas trees, derricks, separators, gun barrels, flow lines, gas systems (for
gathering, dehydration, treating and compression), and water systems (for treating, disposal
and injection); interests held in royalty trusts whether currently existing or hereafter
created; hydrocarbons in and under and which may be produced, saved, processed or
attributable to the Hydrocarbon Interests, the lands covered thereby and all hydrocarbons in
pipelines, gathering lines, tanks and processing plants and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; tenements, hereditaments, appurtenances and personal property and/or real
property in any way appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests, and all rights, titles, interests and estates described or referred to above,
including any and all real property, now owned or hereafter acquired, used or held for use
in connection with the operating, working or development of any of such Hydrocarbon
Interests or personal property and/or real property and including any and all surface
leases, rights-of-way, easements and servitudes together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing.
(d) Organizational Documents means (a) in the case of a corporation, its charter and
by laws; (b) in the case of a limited or general partnership, its partnership certificate,
certificate of formation or similar organizational document and its partnership agreement;
(c) in the case of a limited liability company, its articles of organization, certificate of
formation or similar organizational documents and its operating agreement, limited liability
company agreement, membership agreement or other similar agreement; (d) in the case of a
trust, its certificate of trust, certificate of formation or similar organizational document
and its trust agreement or other similar agreement; and (e) in the case of any other entity,
the organizational and governing documents of such entity.
(e) Partnership Documents means any contracts, indentures, mortgages, deeds of trust,
loan or credit agreements, bonds, notes, debentures, evidences of indebtedness, leases or
other instruments or agreements to which the Partnership or any of its subsidiaries is a
party or by which the Partnership or any of its subsidiaries is bound or to which any of the
property or assets of the Partnership or any of its subsidiaries is subject.
34
(f) Repayment Event means any event or condition which gives the holder of any bond,
note, debenture or other evidence of indebtedness (or any person acting on such holders
behalf) the right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Partnership or any subsidiary of the Partnership.
(g) Subject Instruments means the Credit Agreement and all other instruments,
agreements and documents filed as an exhibit to or incorporated by reference into the
Registration Statement pursuant to Rule 601(b)(10) of Regulation S-K of the Commission;
provided that if any instrument, agreement or other document filed as an exhibit to or
incorporated by reference into the Registration Statement as aforesaid has been redacted or
if any portion thereof has been deleted or is otherwise not included as part of such exhibit
(whether pursuant to a request for confidential treatment or otherwise), the term Subject
Instruments shall nonetheless mean such instrument, agreement or other document, as the
case may be, in its entirety, including any portions thereof which shall have been so
redacted, deleted or otherwise not filed.
(h) Working Interest means each Partnership Entitys undivided operating and
expense-bearing interest under a Hydrocarbon Interest.
18. Research Independence. The Partnership acknowledges that the Underwriters research
analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that such
Underwriters research analysts may hold and make statements or investment recommendations and/or
publish research reports with respect to the Partnership and/or the offering that differ from the
views of its investment bankers. The Partnership hereby waives and releases, to the fullest extent
permitted by law, any claims that the Partnership may have against the Underwriters with respect to
any conflict of interest that may arise from the fact that the views expressed by their independent
research analysts and research departments may be different from or inconsistent with the views or
advice communicated to the Partnership by such Underwriters investment banking divisions. The
Partnership acknowledges that each of the Underwriters is a full service securities firm and as
such from time to time, subject to applicable securities laws, may effect transactions for its own
account or the account of its customers and hold long or short positions in debt or equity
securities of the companies that may be the subject of the transactions contemplated by this
Agreement.
19. Absence of Fiduciary Relationship. Each of the Legacy Parties acknowledges and agrees
that:
(a) Each of the Underwriters is acting solely as an underwriter in connection with the
public offering of the Securities and no fiduciary, advisory or agency relationship between
the Legacy Parties, on the one hand, and any of the Underwriters, on the other hand, has
been or will be created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether or not any of the Underwriters have advised or is
advising the Legacy Parties on other matters and none of the Underwriters has any obligation
to the Legacy Parties with respect to the transactions contemplated by this Agreement except
the obligations expressly set forth in this Agreement;
35
(b) the public offering price of the Securities and the price to be paid by the
Underwriters for the Securities set forth in this Agreement were established by the
Partnership following discussions and arms-length negotiations with the Representatives;
(c) it is capable of evaluating and understanding, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Agreement;
(d) in connection with each transaction contemplated by this Agreement and the process
leading to such transactions, each Underwriter is and has been acting solely as principal
and not as fiduciary, advisor or agent of the Legacy Parties or any of their affiliates, or
any of their respective unitholders (or other equity holders), creditors or employees or any
other party;
(e) none of the Underwriters has provided any legal, accounting, regulatory or tax
advice with respect to the transactions contemplated by this Agreement and it has consulted
its own legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate;
(f) it is aware that the Underwriters and their respective affiliates are engaged in a
broad range of transactions which may involve interests that differ from those of the Legacy
Parties and that none of the Underwriters has any obligation to disclose such interests and
transactions to the Legacy Parties by virtue of any fiduciary, advisory or agency
relationship; and
(g) it waives, to the fullest extent permitted by law, any claims it may have against
any of the Underwriters for breach of fiduciary duty or alleged breach of fiduciary duty and
agrees that none of the Underwriters shall have any liability (whether direct or indirect,
in contract, tort or otherwise) to it in respect of such a fiduciary duty claim or to any
person asserting a fiduciary duty claim on its behalf or in right of it or the Legacy
Parties or any affiliates, unitholders (or other equity holders), employees or creditors of
the Legacy Parties.
20. Counterparts. This Agreement may be executed (including by facsimile transmission) with
the counterpart signature page or by any one or more of the parties hereto in any number of
counterparts, each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
21. Time of Essence. Time shall be of the essence of this Agreement.
[Signature Pages Follow]
36
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Partnership a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement between the Underwriters and the Partnership in
accordance with its terms.
Legacy Reserves GP, LLC |
||||
By: | /s/ Steven H. Pruett | |||
Name: | Steven H. Pruett | |||
Title: | President and Chief Financial Officer | |||
Legacy Reserves LP
By: Legacy Reserves GP, LLC, its general partner |
||||
By: | /s/ Steven H. Pruett | |||
Name: | Steven H. Pruett | |||
Title: | President and Chief Financial Officer | |||
Legacy Reserves Operating GP LLC
By: Legacy Reserves, LP, its sole member By: Legacy Reserves GP, LLC, its general partner |
||||
By: | /s/ Steven H. Pruett | |||
Name: | Steven H. Pruett | |||
Title: | President and Chief Financial Officer | |||
Legacy Reserves Operating LP
By: Legacy Reserves Operating GP LLC, its general partner By: Legacy Reserves, LP, its sole member By: Legacy Reserves GP, LLC, its general partner |
||||
By: | /s/ Steven H. Pruett | |||
Name: | Steven H. Pruett | |||
Title: | President and Chief Financial Officer | |||
[Signature Page to Underwriting Agreement]
ACCEPTED in New York, New York, as of the date first above written. UBS Securities LLC |
||||
By: | /s/ Bimal Amin | |||
Name: | Bimal Amin | |||
Title: | Associate Director | |||
By: | /s/ Michael Buckingham | |||
Name: | Michael Buckingham | |||
Title: | Executive Director | |||
Raymond James & Associates, Inc. |
||||
By: | /s/ Mike Ames | |||
Name: | Mike Ames | |||
Title: | Managing Director | |||
Citigroup Global Markets Inc. |
||||
By: | /s/ Robert Waldron | |||
Name: | Robert Waldron | |||
Title: | Vice President | |||
For itself and the other several Underwriters named in Schedule I to the foregoing Agreement.
[Signature Page to Underwriting Agreement]
SCHEDULE I
Allocation of Firm Securities
Name | Number of Firm Securities | |||
UBS Securities LLC |
935,000 | |||
Raymond James & Associates, Inc. |
867,000 | |||
Citigroup Global Markets Inc. |
714,000 | |||
RBC Capital Markets, LLC |
340,000 | |||
Robert W. Baird & Co. Incorporated |
204,000 | |||
Stifel, Nicolaus & Company, Incorporated |
204,000 | |||
Wunderlich Securities, Inc. |
136,000 | |||
Total |
3,400,000 | |||
Schedule I
SCHEDULE II
Issuer Free Writing Prospectus
None.
Pricing Information | ||
Number of Units:
|
3,400,000 Firm Units or, if the Underwriters exercise in full their option to purchase additional Units granted in Section 3 hereof, 3,910,000 Units. | |
Public offering price for the Units: |
$28.85 per Unit |
Schedule II
Schedule III
Subsidiaries
Entity: | Foreign Qualifications: | |
Binger Operations, L.L.C. (Oklahoma) |
||
(50% non-controlling interest)
|
N/A | |
Legacy Reserves Services, Inc. (Texas)
|
N/A | |
Legacy Reserves Finance Corporation (Delaware)
|
N/A |
Legacy Parties
Entity: | Foreign Qualifications: | |
Legacy Reserves GP, LLC (Delaware)
|
Texas | |
Legacy Reserves LP (Delaware)
|
Texas, Mississippi, Oklahoma | |
Legacy Reserves Operating GP LLC (Delaware) |
Texas | |
Legacy Reserves Operating LP (Delaware)
|
Texas, Mississippi, New Mexico, Oklahoma, Kansas, Wyoming |
Schedule III
Exhibit A
Director and Officers of Legacy Reserves GP, LLC
Cary D. Brown
Kyle A. McGraw
Dale A. Brown
G. Larry Lawrence
William D. Sullivan
William R. Granberry
Kyle D. Vann
Steven H. Pruett
Paul T. Horne
William M. Morris
James R. Lawrence
Kyle A. McGraw
Dale A. Brown
G. Larry Lawrence
William D. Sullivan
William R. Granberry
Kyle D. Vann
Steven H. Pruett
Paul T. Horne
William M. Morris
James R. Lawrence
Exhibit A
Exhibit B
Form of Lock-Up Letter
November [], 2011
UBS Securities LLC
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
As Representatives of the several Underwriters
named in Schedule I
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
As Representatives of the several Underwriters
named in Schedule I
c/o UBS Securities LLC
1285 6th Avenue, 9th Floor
New York, New York 10019
1285 6th Avenue, 9th Floor
New York, New York 10019
Dear Sirs:
The undersigned understands that you, as Representatives (the Representatives) of the
Underwriters (the Underwriters) named in Schedule I of the Underwriting Agreement (hereinafter
defined), propose to enter into an Underwriting Agreement (the Underwriting Agreement) with the
Legacy Parties providing for the purchase by the Underwriters of units (the Securities)
representing limited partner interests in the Partnership (the Units), and that the Underwriters
propose to reoffer the Securities to the public (the Offering). Capitalized terms used but not
defined herein have the meanings given to them in the Underwriting Agreement.
In order to induce you and the other Underwriters to enter into the Underwriting Agreement,
and in light of the benefits that the offering of the Securities will confer upon the undersigned
in its capacity as a securityholder and/or an officer, director or employee of the Partnership or
one of its affiliates, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the undersigned agrees with each Underwriter that, during the
period beginning on and including the date of the Underwriting Agreement through and including the
date that is the 45th day after the date of the Underwriting Agreement (the Lock-up Period), the
undersigned will not, without the prior written consent of UBS Securities LLC (UBS), directly or
indirectly:
(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any Units or any securities convertible into or
exercisable or exchangeable for Units, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires the power of
disposition, or
Exhibit B 1
(ii) enter into any swap or other agreement, arrangement or transaction that
transfers to another, in whole or in part, directly or indirectly, any of the economic
consequences of ownership of any Units or any securities convertible into or exercisable or
exchangeable for any Units.
whether any transaction described in clause (i) or (ii) above is to be settled by delivery of
Units, other securities, in cash or otherwise.
Notwithstanding the provisions set forth in the immediately preceding paragraph, the
undersigned may, without the prior written consent of UBS:
(1) if the undersigned is a natural person, as a bona fide gift or gifts, or by will or
intestacy, to any member of the immediate family (as defined below) of the undersigned or to
a trust the beneficiaries of which are exclusively the undersigned or members of the
undersigneds immediate family or to a charity or educational institution, and
(2) if the undersigned is, or directly or indirectly controls, a partnership or a
limited liability company, to a partner or member, as the case may be, of such partnership
or limited liability company if, in any such case, such transfer is not for value.
provided, however, that in the case of any transfer described in clause (1) or (2) above, it shall
be a condition to the transfer that (A) the transferee executes and delivers to UBS acting on
behalf of the Underwriters, not later than one business day prior to such transfer, a written
agreement, in substantially the form of this agreement (it being understood that any references to
immediate family in the agreement executed by such transferee shall expressly refer only to the
immediate family of the undersigned and not to the immediate family of the transferee) and
otherwise satisfactory in form and substance to UBS, and (B) if the undersigned is required to file
a report under Section 16(a) of the Securities Exchange Act of 1934 reporting a reduction in
beneficial ownership of Units or any securities convertible into or exercisable or exchangeable for
Units by the undersigned during the Lock-up Period (as the same may be extended as described
above), the undersigned shall include a statement in such report to the effect that such transfer
or distribution is not a transfer for value and, in the case of any transfer pursuant to clause
(1), that such transfer is being made as a gift or by will or intestacy, as the case may be, and,
in the case of any transfer pursuant to clause (2), that such transfer is being made to the
partners or members, as the case may be, of the applicable partnership or limited liability
company, as the case may be, and is not a transfer for value. For purposes of this paragraph,
immediate family shall mean a spouse, child, grandchild or other lineal descendant (including by
adoption), father, mother, brother or sister of the undersigned.
The undersigned further agrees that (i) it will not, during the Lock-up Period (as the same
may be extended as described above), make any demand for or exercise any right with respect to the
registration under the Securities Act of 1933 (the 1933 Act), of any Units or any securities
convertible into or exercisable or exchangeable for Units, and (ii) the Partnership may, with
respect to any Units or any securities convertible into or exercisable or exchangeable for Units
owned or held (of record or beneficially) by the undersigned, cause the transfer agent or other
Exhibit B 2
registrar to enter stop transfer instructions and implement stop transfer procedures with
respect to such securities during the Lock-up Period (as the same may be extended as described
above).
In addition, the undersigned hereby waives any and all notice requirements and rights with
respect to the registration of any securities pursuant to any agreement, instrument, understanding
or otherwise, including any registration rights agreement or similar agreement, to which the
undersigned is a party or under which the undersigned is entitled to any right or benefit and any
tag-along rights or other similar rights to have any securities (debt or equity) included in the
Offering contemplated by the Underwriting Agreement or sold in connection with the sale of
Securities pursuant to the Underwriting Agreement, provided that such waiver shall apply only to
the Offering of Securities pursuant to the Underwriting Agreement and each registration statement
filed under the 1933 Act in connection therewith.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this agreement and that this agreement has been duly authorized (if the
undersigned is not a natural person), executed and delivered by the undersigned and is a valid and
binding agreement of the undersigned. This agreement and all authority herein conferred are
irrevocable and shall survive the death or incapacity of the undersigned (if a natural person) and
shall be binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
The undersigned acknowledges and agrees that whether or not any public offering of Units
actually occurs depends on a number of factors, including market conditions.
[Signature Page Immediately Follows]
Exhibit B 3
IN WITNESS WHEREOF, the undersigned has executed and delivered this agreement as of the date
first set forth above.
Yours very truly, |
||||
Print Name: | ||||
Exhibit B 4
Exhibit C
Form of Opinion of Partnership Counsel
1. | Each of the Legacy Parties has been duly formed or organized, as applicable, and is validly existing as a limited partnership or limited liability company, as applicable, in good standing under the laws of the State of Delaware. |
2. | Each of the Legacy Parties has the partnership or limited liability company power and authority, as applicable, necessary to own, lease and operate their respective properties and to conduct their respective businesses as described in the Registration Statement, the Disclosure Package and the Prospectus and to enter into and perform its obligations under the Underwriting Agreement. |
3. | Each of the Legacy Parties is duly registered or qualified as a foreign partnership or limited liability company, as applicable, to transact business and each of the Legacy Parties is in good standing in each jurisdiction set forth opposite its name on Schedule III to the Underwriting Agreement. |
4. | Moriah Properties, Ltd., DAB Resources, Ltd., Brothers Production Properties, Ltd., Brothers Production Company, Inc., Brothers Operating Company, Inc., J&W McGraw Properties, Ltd., SHP Capital LP and H2K Holdings, Ltd. (collectively, the Founders) 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 (to the extent required by the GP LLC Agreement) and non-assessable (except as such non-assessability may be limited by Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act (the Delaware LLC Act); and the Founders own such membership interests free and clear of all Liens (A) other than restrictions on transfer under the General Partner LLC Agreement or applicable securities laws, (B) in respect of which a financing statement under the Uniform Commercial Code of the State of Texas naming any of the Founders, as a debtor is on file in the office of the Secretary of State of the State of Texas or (C) otherwise known to us without independent investigation, other than those created or arising under Section 18-607 of the Delaware LLC Act. |
5. | The General Partner is the sole general partner of the Partnership with an approximate 0.04% 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 (to the extent required by the Partnership Agreement); and the General Partner owns such general partner interest free and clear of all Liens (A) other than restrictions on transfer under the Partnership Agreement or applicable securities laws, (B) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the General Partner as a debtor is on file in the office of the Secretary of State of the State of Delaware or (C) otherwise known to us without independent investigation, other than those created or arising under Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act (the Delaware LP |
Exhibit C 1
Act); and the General Partner owns no assets, and has no business, other than with respect to its general partner interest in the Partnership. |
6. | As of the date hereof, after giving effect to the offering contemplated by the Underwriting Agreement (assuming the option to purchase Option Securities is not exercised), the issued and outstanding limited partner interests of the Partnership will consist of [43,760,533] Units. All of the issued and outstanding 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 by 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). |
7. | The Securities to be issued and sold by the Partnership pursuant to the Underwriting Agreement, and the limited partner interests represented thereby, are 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 the Underwriting Agreement, will be validly issued, fully paid (to the extent required by 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). |
8. | 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 LLC Agreement, and are fully paid (to the extent required by the Operating GP LLC Agreement) 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 security documents (the Security Documents) entered into in connection with the Second Amended and Restated Credit Agreement, dated March 10, 2011, by and between the Partnership and BNP Paribas, as administrative agent (the Credit Agreement) and (A) other than restrictions on transfer under the Operating GP LLC Agreement or applicable securities laws, (B) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Partnership as a debtor is on file in the office of the Secretary of State of the State of Delaware or (C) otherwise known to us without independent investigation, other than those created or arising under Section 18-607 of the Delaware LLC Act). |
9. | 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 (to the extent required by the Operating Partnership Agreement); 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 Credit Agreement and (A) other than restrictions on transfer under the Operating Partnership Agreement or applicable securities laws, (B) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Operating GP as a debtor is on file in the office of the Secretary of State of the State of Delaware or (C) |
Exhibit C 2
otherwise known to us without independent investigation, other than those created or arising under Sections 17-303, 17-607 and 17-804 of the Delaware LP Act. |
10. | 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 by 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 the Partnership owns such limited partner interest free and clear of all Liens, except for the pledge of such limited partner interest under the Security Documents and (A) other than restrictions on transfer under the Operating Partnership Agreement or applicable securities laws, (B) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Partnership as a debtor is on file in the office of the Secretary of State of the State of Delaware or (C) otherwise known to us without independent investigation, other than those created or arising under Sections 17-303, 17-607 and 17-804 of the Delaware LP Act. |
11. | The Underwriting Agreement has been duly authorized, executed and delivered by each of the Legacy Parties. |
12. | Except as described in the Disclosure Package, the issuance of the Securities to be sold by the Partnership pursuant to the Underwriting Agreement is not subject to any preemptive rights, rights of first refusal or other similar rights of any securityholder of the Partnership or any other person arising under Organizational Documents of any of the Legacy Parties, the Delaware LLC Act, the Delaware LP Act, or any of the agreements listed on Schedule 1 attached hereto (the Applicable Agreements). |
13. | The opinion of Andrews Kurth LLP that is filed as Exhibit 8.1 to the Partnerships Form 8-K filed between the date hereof and the Initial Delivery Date is confirmed, and the Underwriters may rely upon such opinion as if it were addressed to them. |
14. | The form of certificate used to evidence the Units complies in all material respects with all applicable requirements of the Delaware LP Act, with any applicable requirements of the Partnership Agreement of the Partnership and with any applicable requirements of the NASDAQ. |
15. | To such counsels knowledge (based solely upon an opinion support certificate), except as otherwise disclosed in the Disclosure Package, there is not pending or threatened any action, suit, proceeding, inquiry or investigation to which the Partnership or any subsidiary is a party, or to which the property of the Partnership or any subsidiary is subject, before or brought by any court or governmental agency or body which might reasonably be expected to result in a Material Adverse Effect or which might reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in the Underwriting Agreement or the performance by the Partnership of its obligations thereunder. |
Exhibit C 3
16. | The statements made in the Disclosure Package under the captions Description of Our Units, Material Provisions of Our Partnership Agreement, Conflicts of Interest and Fiduciary Duties and Material Tax Considerations, in each case to the extent that they purport to constitute summaries of the terms of statutes, rules or regulations, legal and governmental proceedings or contracts or other documents (including, but not limited to the Organizational Documents), constitute fair summaries of the terms of such statutes, rules and regulations, legal and governmental proceedings and contracts and other documents in all material respects. |
17. | (A) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency (other than under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, which have been obtained, or as may be required under the securities or blue sky laws of the various states, as to which such counsel not been called upon to express an opinion), (B) no authorization, approval, vote or other consent of any unitholder or creditor of the Partnership pursuant to any Applicable Agreement, (C) no waiver or consent under any Applicable Agreement, and (D) to the knowledge of such counsel, no authorization, approval, vote or other consent of any other person or entity, is necessary or required in connection with the due authorization, execution and delivery of the Underwriting Agreement, for the offering, issuance, sale or delivery of the Securities. |
18. | None of (i) the offering, issuance and sale by the Partnership of the Securities, (ii) the execution, delivery and performance of the Underwriting Agreement by the Legacy Parties, or (iii) the consummation of the transactions contemplated by the Underwriting Agreement, (A) conflicts with or will conflict with or constitutes or will constitute a violation of the Organizational Documents, (B) conflicts with or will conflict with or constitutes or will constitute a breach or violation of, or a default (or an event that, with notice or lapse of time or both, would constitute such a default) under the Applicable Agreements, (C) results or will result in any violation of the Delaware LP Act, the Delaware LLC Act, the applicable laws of the State of Texas, the applicable laws of the State of New York or the applicable laws of the United States of America, (D) violates or will violate any order, judgment, decree or injunction of any court or governmental agency or other authority of or with any court, governmental agency or body of the State of Texas or the United States of America or known to such counsel having jurisdiction over any of the Legacy Parties or any of their properties or assets in a proceeding to which any of them or their property is a party or (E) results or will result in the creation or imposition of any Lien upon any property or assets of any of the Legacy Parties pursuant to any Applicable Agreements. |
19. | The Partnership is not and, immediately after giving effect to the issuance and sale by the Partnership of the Securities and the application of the net proceeds thereof as described in the Disclosure Package, will not be an investment company, as such term is defined in the Investment Company Act of 1940, as amended. |
Partnership Counsel shall state that:
Exhibit C 4
(a) in such counsels opinion, each of the Registration Statement, as of the most
recent effective date and the Initial Delivery Date, the Disclosure Package, as of the time
of first sale and the Initial Delivery Date, the Prospectus, as of its date and the Initial
Delivery Date, and each of the Incorporated Documents, when they were filed with the SEC,
appeared on its face to be appropriately responsive in all material respects to the
requirements of the 1933 Act or 1934 Act, as applicable and the rules and regulations
promulgated thereunder (except that in each case such counsel need not express any
statement or belief as to Regulation S-T),
(b) such counsel is not aware of any documents that are required to be filed as
exhibits to the Registration Statement or any of the Incorporated Documents and are not so
filed or of any documents that are required to be summarized in the Disclosure Package, the
Prospectus or any of the Incorporated Documents, and are not so summarized,
(c) no facts have come to such counsels attention that have led such counsel to
believe that (i) the Registration Statement, as of the most recent effective date, contained
an untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii) the
Disclosure Package, as of the time of first sale, contained an untrue statement of any
material fact or omitted 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, or
(iii) the Prospectus, as of its date and the Initial Delivery Date, contained or contains an
untrue statement of a material fact or omitted or omits to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading; it being understood that such counsel need not express any
opinion, statement or belief in this letter with respect to (A) the historical financial
statements and related schedules, including the notes and schedules thereto and the
auditors report thereon, (B) any other financial or accounting data, and the information
pertaining to oil and gas reserves included or incorporated or deemed incorporated by
reference in, or excluded from, the Registration Statement, the Disclosure Package or the
Prospectus, and (C) representations and warranties and other statements of fact included in
the exhibits to the Registration Statement or to the Incorporated Documents.
Partnership Counsel shall state that the Registration Statement automatically became effective
under the 1933 Act on May 24, 2011; and, to Partnership Counsels knowledge (based solely upon oral
communication with the Commission), no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
In the event that such opinion shall define the term Registration Statement, Disclosure
Package, Prospectus or Issuer Free Writing Prospectus (rather than indicating that such terms,
as used in such opinion, have the respective meanings given thereto in the Underwriting Agreement),
such opinion shall define the terms Registration Statement to include the Rule 430A Information,
shall define the term Disclosure Package as the Disclosure Package in the form furnished to the
Underwriters for use in connection with the offering of the Securities, shall
Exhibit C 5
define the term Prospectus as the Prospectus in the form furnished to the Underwriters for
use in connection with the offering of the Securities and such opinion shall state that if any
Prospectus is delivered pursuant to Rule 173(d), such Prospectus shall be identical to the
electronically transmitted copy thereof filed with the Commission pursuant to Rule 424(b), and
shall define Issuer Free Writing Prospectus as the Issuer Free Writing Prospectus in the form
furnished to the Underwriters for use in connection with the offering of the Securities (and not as
the form of Issuer Free Writing Prospectus filed with the Commission pursuant to Rule 433).
In rendering such opinion, Partnership Counsel shall state that such opinion covers matters
arising under the applicable laws of the State of Texas, applicable laws of the State of New York,
applicable laws of the United States of America, the Delaware Revised Uniform Limited Partnership
Act, the Delaware Limited Liability Company Act and certain other specified laws of the United
States of America to the extent referred to specifically herein. In rendering such opinion,
Partnership Counsel may rely as to matters involving the laws of any other state upon the opinion
of local counsel satisfactory to the Representatives; provided that such opinion shall be addressed
to the Representatives, shall state that Partnership Counsel may rely on such opinion as if it were
addressed to them in rendering their opinion pursuant to the Underwriting Agreement, shall be dated
the same date as the opinion of Partnership Counsel, shall be delivered to the Representatives at
the same time that the opinion of Partnership Counsel is delivered, and shall be satisfactory in
form and substance to counsel for the Underwriters. In rendering such opinion, Partnership Counsel
may rely, as to matters of fact (but not as to legal conclusions), to the extent they deem proper,
on certificates of responsible officers of the Partnership and public officials. Such opinion
shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
Exhibit C 6