Download LEGACY RESERVES LP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2014
Legacy Reserves LP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation)
1-33249
(Commission File Number)
1 6-1751069
(I.R.S. Employer Identification No.)
303 W. Wall, Suite 1800
Midland, Texas
(Address of principal executive offices)
79701
(Zip Code)
Registrant’s telephone number, including area code: (432) 689-5200
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:




Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01
Entry into a Material Definitive Agreement.
Purchase Agreement
On May 8, 2014, Legacy Reserves LP, a Delaware limited partnership (the “ Partnership ”), Legacy Reserves Finance Corporation, a
Delaware corporation (“ Legacy Finance ” and, together with the Partnership, the “ Issuers ”), and certain restricted subsidiaries of the
Partnership, as guarantors (the “ Guarantors ”), entered into a Purchase Agreement (the “ Purchase Agreement ”) with the initial purchasers as
named therein (collectively, the “ Initial Purchasers ”), pursuant to which the Issuers agreed to sell an additional $300 million in aggregate
principal amount (the “ Additional Notes ”) of the Issuers’ 6.625% Senior Notes due 2021 (the “ Notes ”) to the Initial Purchasers in a private
placement exempt from the registration requirements under the Securities Act of 1933, as amended (the “ Securities Act ”). The Notes are
jointly and severally, and unconditionally, guaranteed (the “ Guarantees ”) on a senior unsecured basis initially by all of the Partnership’s
material restricted subsidiaries (other than Legacy Finance) that guarantee a material amount of the Partnership’s other indebtedness. The
Additional Notes were issued pursuant to an indenture, dated May 28, 2013, among the Issuers, the Guarantors and Wells Fargo Bank, National
Association, as trustee and incorporated by reference herein (the “ Indenture ”).
The Initial Purchasers intend to resell the Additional Notes and Guarantees (i) inside the United States to “qualified institutional buyers,”
as defined in Rule 144A (“ Rule 144A ”) under the Securities Act, in private sales exempt from registration under the Securities Act in
accordance with Rule 144A, and (ii) to other eligible purchasers pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act (“ Regulation S ”) in accordance with Regulation S. The Additional Notes and Guarantees
have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The purchase price for the Additional Notes and Guarantees was 99% of their principal amount. The Partnership expects to use the net
proceeds of this offering of approximately $291.5 million (after deducting estimated fees and offering expenses and disregarding accrued
interest payable by purchasers of the Additional Notes) to fund a portion of the cash consideration of its previously announced pending
acquisition of assets in the Piceance Basin of Colorado and for general partnership purposes. Pending the use of the proceeds for these
purposes, the Partnership intends to apply the net proceeds to reduce outstanding borrowings under its revolving credit facility.
The Purchase Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions
under which the Issuers and the Guarantors, on one hand, and the Initial Purchasers, on the other, have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. In addition, the Purchase Agreement requires the execution of a registration
rights agreement.
The description set forth above is qualified in its entirety by reference to the Purchase Agreement, which is being filed as Exhibit 1.1
hereto and is incorporated herein by reference.
Registration Rights Agreement
On May 13, 2014, the Issuers entered into a Registration Rights Agreement (the “ Registration Rights Agreement ”), with the Guarantors
and the Initial Purchasers in connection with the private placement of the Additional Notes.
Under the Registration Rights Agreement, the Issuers and the Guarantors shall cause to be filed with the Securities and Exchange
Commission a registration statement with respect to an offer to exchange the Additional Notes for substantially identical notes that are
registered under the Securities Act. The Issuers and the Guarantors will use their commercially reasonable efforts to cause such exchange offer
registration statement to become effective under the Securities Act. In addition, the Issuers and the Guarantors will use their commercially
reasonable efforts to cause the exchange offer to be consummated not later than 365 days after the issuance of the notes. Under some
circumstances, in lieu of, or in addition to, a registered exchange offer, the Issuers and the Guarantors have agreed to file a shelf registration
statement with respect to the Additional Notes. The Issuers and the Guarantors are
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required to pay additional interest if they fail to comply with their obligations to register the Additional Notes within the specified time periods.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On May 13, 2104, the Issuers issued an additional $300 million aggregate principal amount of their 6.625% Senior Notes due 2021
under the Indenture.
Interest and Maturity
The Notes will mature on December 1, 2021. The interest payment dates are June 1 and December 1 of each year, beginning on
December 1, 2013.
Optional Redemption
At any time prior to June 1, 2016, the Issuers may, at any time or from time to time, redeem up to 35% of the aggregate principal
amount of the Notes with the net proceeds of a public or private equity offering at a redemption price of 106.625% of the principal amount of
the Notes, plus any accrued and unpaid interest to the date of redemption, if at least 65% of the aggregate principal amount of the Notes
originally issued under the Indenture remains outstanding after such redemption and the redemption occurs within 180 days of the date of the
closing of such equity offering. Prior to June 1, 2017, the Issuers may redeem all or a part of the Notes at a redemption price equal to the sum
of (i) the principal amount thereof, plus (ii) a make whole premium at the redemption date, plus accrued and unpaid interest, if any, to the
redemption date. On or after June 1, 2017, the Issuers may redeem all or a part of the Notes at redemption prices (expressed as percentages of
principal amount) equal to 103.313% for the twelve-month period beginning on June 1, 2017, 101.656% for the twelve-month period beginning
June 1, 2018, and 100.000% for the period beginning on June 1, 2019 and at any time thereafter, plus accrued and unpaid interest, if any, to the
applicable redemption date on the Notes.
Certain Covenants
The Indenture contains customary covenants that restrict the Partnership’s ability and the ability of certain of its subsidiaries to, among
other things: (i) sell assets including equity interests in its subsidiaries; (ii) pay distributions on, redeem or repurchase its units or redeem or
repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional indebtedness or issue preferred units; (v) create or
incur certain liens; (vi) enter into agreements that restrict distributions or other payments from the Partnership’s restricted subsidiaries to the
Partnership; (vii) consolidate, merge or transfer all or substantially all of the Partnership’s assets; (viii) engage in transactions with affiliates;
(ix) create unrestricted subsidiaries; or (x) engage in certain business activities. These covenants are subject to a number of important
exceptions and qualifications. If the Notes achieve an investment grade rating from each of Moody’s Investors Service, Inc. and Standard &
Poor’s Ratings Services and no Default (as defined in the Indenture) has occurred and is continuing, many of these covenants will terminate.
Events of Default
The Indenture also contains customary Events of Defaults. Each of the following is an Event of Default: (i) default for 30 days in the
payment when due of interest on the Notes; (ii) default in payment when due of the principal of, or premium, if any, on the Notes; (iii) failure
by the Partnership to comply with certain covenants relating to merger, consolidation, sale of assets or change of control; (iv) failure by the
Partnership for 180 days after notice to comply with its reporting obligations under the Securities Exchange Act of 1934, as amended;
(v) failure by the Partnership for 60 days after notice to comply with any of the other agreements in the Indenture; (vi) default under any
mortgage, indenture or instrument governing any indebtedness for money borrowed or guaranteed by the Partnership or any of its restricted
subsidiaries, whether such indebtedness or guarantee now exists or is created after the date of the Indenture, if such default: (a) is caused by a
payment default; or (b) results in the acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of the
indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or acceleration
of maturity, aggregates $15.0 million or more, subject to a cure provision; (vii) failure by the Partnership or any of its
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restricted subsidiaries to pay final judgments aggregating in excess of $15.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (viii) except as permitted by the Indenture, any subsidiary guarantee is held in any judicial proceeding to be unenforceable or
invalid or ceases for any reason to be in full force or effect, or any Guarantor, or any person acting on behalf of any Guarantor, denies or
disaffirms its obligations under its subsidiary guarantee; and (ix) certain events of bankruptcy, insolvency or reorganization described in the
Indenture with respect to the Issuers or any of the Partnership’s restricted subsidiaries that is a significant subsidiary or any group of restricted
subsidiaries that, taken together, would constitute a significant subsidiary of the Partnership. Upon a continuing Event of Default, the Trustee,
by notice to the Issuers, or the holders of at least 25% in principal amount of the then outstanding Notes, by notice to the Issuers and the
Trustee, may declare the Notes immediately due and payable, except that an Event of Default resulting from certain events of bankruptcy,
insolvency or reorganization with respect to the Issuers, any restricted subsidiary of the Partnership that is a significant subsidiary or any group
of its restricted subsidiaries that, taken together, would constitute a significant subsidiary of the Partnership, will automatically cause the Notes
to become immediately due and payable.
Item 8.01
Other Events.
On May 8, 2014, Stifel Nicolaus & Company, Incorporated, Barclays Capital Inc. and MLV & Co. LLC, as representatives of the several
underwriters in the Partnership’s offering of up to 2,300,000 8% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred
Units (the “ Series A Preferred Units ”), delivered notice to the Partnership of their intention to exercise in full their option to purchase up to
an additional 300,000 Series A Preferred Units (the “ Option Units ”) at a purchase price per Series A Preferred Unit equal to the $25.00
liquidation preference per Series A Preferred Unit, less underwriting discounts and commissions of $0.7875 per unit. The closing of the sale of
Option Units occurred on May 12, 2013. The Partnership intends to use the net proceeds of approximately $7.3 million from the sale of the
Option Units to fund a portion of the consideration for the Partnership’s previously announced acquisitions of oil-weighted properties in
Chaves County, New Mexico and Sheridan County, Montana and for general partnership purposes. Pending the use of the proceeds for other
purposes, the Partnership intends to apply the net proceeds from the sale of the Option Units to reduce outstanding borrowings under its
revolving credit facility.
Item 9.01.
Financial Statements and Exhibits.
Exhibit
No.
Document
1.1
Purchase Agreement, dated as of May 8, 2014, by and among Legacy Reserves LP, Legacy Reserves Finance Corporation,
the Guarantors named therein and the Initial Purchasers named therein.
4.1
Indenture, dated as of May 28, 2013, among Legacy Reserves LP, Legacy Reserves Finance Corporation, the Guarantors
named therein and Wells Fargo Bank, National Association, as trustee (including form of the 6.625% senior notes due
2021) (Incorporated by reference to Legacy Reserves LP’s current report on Form 8-K (File No. 001-33249) filed May 31,
2013, Exhibit 4.1).
4.2
Registration Rights Agreement, dated as of May 13, 2014, by and among Legacy Reserves LP, Legacy Reserves Finance
Corporation, the Guarantors named therein and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, RBC Capital Markets, LLC, UBS Securities LLC, Citigroup Global Markets Inc., Barclays Capital Inc. and
J.P. Morgan Securities LLC as representatives of the Initial Purchasers named therein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
LEGACY RESERVES LP
Dated: May 13, 2014
By:
Legacy Reserves GP, LLC,
its general partner
By:
/s/ Dan G. LeRoy
Dan G. LeRoy
Vice President, General Counsel and Secretary
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EXHIBIT INDEX
Exhibit
No.
Document
1.1
Purchase Agreement, dated as of May 8, 2014, by and among Legacy Reserves LP, Legacy Reserves Finance Corporation,
the Guarantors named therein and the Initial Purchasers named therein.
4.1
Indenture, dated as of May 28, 2013, among Legacy Reserves LP, Legacy Reserves Finance Corporation, the Guarantors
named therein and Wells Fargo Bank, National Association, as trustee (including form of the 6.625% senior notes due
2021) (Incorporated by reference to Legacy Reserves LP’s current report on Form 8-K (File No. 001-33249) filed May 31,
2013, Exhibit 4.1).
4.2
Registration Rights Agreement, dated as of May 13, 2014, by and among Legacy Reserves LP, Legacy Reserves Finance
Corporation, the Guarantors named therein and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, RBC Capital Markets, LLC, UBS Securities LLC, Citigroup Global Markets Inc., Barclays Capital Inc. and
J.P. Morgan Securities LLC as representatives of the Initial Purchasers named therein.
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Exhibit 1.1
Execution Version
PURCHASE AGREEMENT
May 8, 2014
WELLS FARGO SECURITIES, LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
RBC CAPITAL MARKETS, LLC
UBS SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
BARCLAYS CAPITAL INC.
J.P. MORGAN SECURITIES LLC
As representatives of the
several Initial Purchasers listed
in Schedule A hereto
c/o Wells Fargo Securities, LLC
375 Park Avenue
4 th Floor
New York, New York 10152
Ladies and Gentlemen:
Introductory . Legacy Reserves LP, a Delaware limited partnership (the “ Partnership ”), and Legacy Reserves Finance
Corporation, a Delaware corporation (“ Legacy Finance ,” and together with the Partnership, the “ Issuers ”), propose to issue and sell to the
Initial Purchasers named in Schedule A (the “ Initial Purchasers ”), acting severally and not jointly, the respective amounts set forth in such
Schedule A of $300,000,000 aggregate principal amount of the Issuers’ 6.625% Senior Notes due 2021 (the “ Notes ”). Wells Fargo
Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, LLC, UBS Securities LLC, Citigroup Global
Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC have agreed to act as the Representatives of the several Initial Purchasers
(the “ Representatives ”) in connection with the offering and sale of the Securities (as defined below).
Legacy Reserves GP, LLC, a Delaware limited liability company (the “ General Partner ”), is the Partnership’s sole general
partner. Legacy Reserves Operating GP LLC, a Delaware limited liability company and a wholly owned subsidiary of the Partnership (“
Operating GP ”), is the sole general partner of Legacy Reserves Operating LP, a Delaware limited partnership (the “ Operating Partnership
”) .
The Securities will be issued pursuant to the Indenture, dated as of May 28, 2013 (the “ Indenture ”), among the Issuers, the
Guarantors (as defined below) and Wells Fargo Bank, National Association, as trustee (the “ Trustee ”). The Securities will be issued only in
book-entry form in the name of Cede & Co., as nominee of The Depository Trust Company (the “ Depository ”), pursuant to a letter of
representations, dated November 27, 2012 (the “ DTC Agreement ”) among the Issuers and the Depositary. The Issuers have previously issued
$250,000,000 in aggregate principal amount of its 6.625% Senior Notes due 2021 (the “ Existing Notes ”) under the Indenture on May 28,
2013. The Securities and the Existing Notes will be treated as a single class for all purposes under the Indenture. The Existing Notes were
exchanged for notes registered under the Securities Act of 1933, as amended (the “ Securities Act ,” which term, as used herein, includes the
rules and regulations of the Commission promulgated thereunder) in March 2014.
The holders of the Securities will be entitled to the benefits of a registration rights agreement, to be dated as of the Closing Date (as
defined below) (the “ Registration Rights Agreement ”), among the Issuers, the Guarantors and the Initial Purchasers, pursuant to which the
Issuers and the Guarantors will be required to file with the Commission (as defined below), under the circumstances set forth therein, (i) a
registration statement under the Securities Act relating to another series of debt securities of the Issuers with terms substantially identical to the
Notes, except with respect to limitations on the transfer thereof and any provisions for additional interest thereon (the “ Exchange Notes ”), to
be offered in exchange for the Notes (the “ Exchange Offer ”) or (ii) a shelf registration statement pursuant to Rule 415 of the Securities Act,
relating to the resale by certain holders of the Notes, and in each case, to use its best efforts to cause such registration statement to be declared
effective. All references herein to the Exchange Notes and the Exchange Offer are only applicable if the Issuers and the Guarantors are in fact
required to consummate the Exchange Offer pursuant to the terms of the Registration Rights Agreement.
The payment of principal of, premium, if any, and interest on the Notes will be fully and unconditionally guaranteed on a senior
unsecured basis, jointly and severally, by (i) the entities listed on the signature pages hereof as “Guarantors” and (ii) any subsidiary of the
Partnership formed or acquired after the Closing Date that executes a supplement to the Indenture to guarantee the Notes, and their respective
successors and assigns (collectively, the “ Guarantors ”), pursuant to their guarantees (the “ Guarantees ”). The Notes and the Guarantees
related thereto are herein collectively referred to as the “ Securities ;” and the Exchange Notes and the Guarantees related thereto are herein
collectively referred to as the “ Exchange Securities .”
It is understood and agreed to by the parties hereto that on May 2, 2014, WPX Energy Rocky Mountain, LLC, a Delaware limited
liability company (“ WPX Energy ”), the Partnership, the General Partner and the Operating Partnership entered into a Purchase and Sale
Agreement (the “ Rocky Mountain Purchase Agreement ”), pursuant to which the Operating Partnership agreed to purchase from WPX
certain assets described in the Rocky Mountain Purchase Agreement including, but not limited to, certain oil and gas properties located in
Garfield County, Colorado, for $355 million and other consideration, subject to the conditions to closing and adjustments as described in the
Rocky Mountain Purchase Agreement.
The Issuers and the Guarantors are herein referred to collectively as the “ Legacy Parties ,” and together with the General Partner, are
herein referred to collectively as the “ Legacy Entities .”
This Agreement, the Registration Rights Agreement, the Indenture, the Securities and the Exchange Securities are referred to herein as
the “ Transaction Documents .”
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The Issuers understand that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set
forth herein and in the Pricing Disclosure Package (as defined below) and agree that the Initial Purchasers may resell, subject to the conditions
set forth herein, all or a portion of the Securities to purchasers (the “ Subsequent Purchasers ”) on the terms set forth in the Pricing Disclosure
Package (the first time when sales of the Securities are made is referred to as the “ Time of Sale ”). The Securities are to be offered and sold
to or through the Initial Purchasers without being registered with the Securities and Exchange Commission (the “ Commission ”) under the
Securities Act, in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and the Indenture, investors who acquire
Securities shall be deemed to have agreed that Securities may only be resold or otherwise transferred, after the date hereof, if such Securities
are registered for sale under the Securities Act or if an exemption from the registration requirements of the Securities Act is available
(including the exemptions afforded by Rule 144A under the Securities Act (“ Rule 144A ”) or Regulation S under the Securities Act (“
Regulation S ”)).
The Issuers have prepared and delivered to each Initial Purchaser copies of a Preliminary Offering Memorandum, dated May 8, 2014
(the “ Preliminary Offering Memorandum ”), and have prepared and delivered to each Initial Purchaser copies of a Pricing Supplement,
dated May 8, 2014 (the “ Pricing Supplement ”), describing the terms of the Securities, each for use by such Initial Purchaser in connection
with its solicitation of offers to purchase the Securities. The Preliminary Offering Memorandum and the Pricing Supplement are herein
referred to as the “ Pricing Disclosure Package .” Promptly after this Agreement is executed and delivered, the Issuers will prepare and
deliver to each Initial Purchaser a final offering memorandum dated the date hereof (the “ Final Offering Memorandum ”).
All references herein to the terms “Pricing Disclosure Package” and “Final Offering Memorandum” shall be deemed to mean and
include all information filed under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ,” which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder) prior to the Time of Sale and incorporated by reference in the
Pricing Disclosure Package (including the Preliminary Offering Memorandum) or the Final Offering Memorandum (as the case may be), and
all references herein to the terms “ amend ,” “ amendment ” or “ supplement ” with respect to the Final Offering Memorandum shall be
deemed to mean and include all information filed under the Exchange Act after the Time of Sale and incorporated by reference in the Final
Offering Memorandum.
The Legacy Parties hereby confirm their agreements with the Initial Purchasers as follows:
SECTION 1.
Representations and Warranties . Each of the Legacy Parties, jointly and severally, hereby represents, warrants
and covenants to each Initial Purchaser that, as of the date hereof and as of the Closing Date (references in this Section 1 to the “ Offering
Memorandum ” are to (x) the Pricing Disclosure Package in the case of representations and warranties made as of the date hereof and (y) the
Pricing Disclosure Package and the Final Offering Memorandum in the case of representations and warranties made as of the Closing Date):
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(a)
No Registration Required. Subject to compliance by the Initial Purchasers with the representations and
warranties set forth in Section 2 hereof and with the procedures set forth in Section 7 hereof, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this
Agreement and the Offering Memorandum to register the Securities under the Securities Act or, until such time as the Exchange
Securities are issued pursuant to an effective registration statement, to qualify the Indenture under the Trust Indenture Act of 1939 (the
“ Trust Indenture Act ,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).
(b)
No Integration of Offerings or General Solicitation. None of the Issuers, their respective affiliates (as such
term is defined in Rule 501 under the Securities Act) (each, an “ Affiliate ”), or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Issuers make no representation or warranty) has, directly or indirectly, solicited any offer to
buy or offered to sell, or will, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States
citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the
Securities to be registered under the Securities Act. None of the Issuers, their respective Affiliates, or any person acting on its or any
of their behalf (other than the Initial Purchasers, as to whom the Issuers make no representation or warranty) has engaged or will
engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning
of Rule 502 under the Securities Act. With respect to those Securities sold in reliance upon Regulation S, (i) none of the Issuers, their
respective Affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Issuers make no
representation or warranty) has engaged or will engage in any directed selling efforts within the meaning of Regulation S and (ii) each
of the Issuers and their respective Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to whom
the Issuers make no representation or warranty) has complied and will comply with the offering restrictions set forth in Regulation S.
(c)
Eligibility for Resale under Rule 144A. The Securities are eligible for resale pursuant to Rule 144A and will
not be, at the Closing Date, of the same class as securities listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated interdealer quotation system.
(d)
The Pricing Disclosure Package and Offering Memorandum. Neither the Pricing Disclosure Package, as of the
Time of Sale, nor the Final Offering Memorandum, as of its date or (as amended or supplemented in accordance with Section 3(a), as
applicable) as of the Closing Date, contains or represents an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not apply to statements in or omissions from the Pricing Disclosure
Package, the Final Offering Memorandum or any amendment or supplement thereto made in reliance upon and in conformity with
written information furnished to the Issuers by or on behalf of any Initial Purchaser
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expressly for use in the Pricing Disclosure Package, the Final Offering Memorandum or amendment or supplement thereto, as the case
may be. The Pricing Disclosure Package contains, and the Final Offering Memorandum will contain, all the information specified in,
and meeting the requirements of, Rule 144A. The Partnership has not distributed and will not distribute, prior to the later of the
Closing Date and the completion of the Initial Purchasers’ distribution of the Securities, any offering material in connection with the
offering and sale of the Securities other than the Pricing Disclosure Package and the Final Offering Memorandum.
(e)
Issuer Additional Written Communications. The Legacy Parties have not prepared, made, used, authorized,
approved or distributed and will not prepare, make, use, authorize, approve or distribute any written communication that constitutes an
offer to sell or solicitation of an offer to buy the Securities other than (i) the Pricing Disclosure Package, (ii) the Final Offering
Memorandum and (iii) any electronic road show or other written communications, in each case used in accordance with
Section 3(a). Each such communication by the Issuers or their agents and representatives pursuant to clause (iii) of the preceding
sentence (each, a “ Issuer Additional Written Communication ”), when taken together with the Pricing Disclosure Package, did not
as of the Time of Sale, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not apply to statements in or omissions from each such Issuer
Additional Written Communication made in reliance upon and in conformity with written information furnished to the Issuers by or
on behalf of any Initial Purchaser expressly for use in any Issuer Additional Written Communication.
(f)
Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the
Offering Memorandum at the time they were or hereafter are filed with the Commission (collectively, the “ Incorporated Documents
”) complied and will comply in all material respects with the requirements of the Exchange Act.
(g)
Authorization of this Agreement.
the Legacy Parties.
This Agreement has been duly authorized, executed and delivered by each of
(h)
Authorization of the Rocky Mountain Purchase Agreement . The Rocky Mountain Purchase Agreement has
been duly authorized, executed and delivered by the Partnership and, assuming the due authorization, delivery and execution thereof
by all other parties thereto, constitutes a valid and binding agreement of the Partnership, enforceable against the Partnership in
accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles (regardless of
whether such enforcement is considered in a proceeding in equity or law) and (ii) public policy, applicable law relating to
indemnification and contribution and an implied covenant of good faith and fair dealing (the exceptions in (i) and (ii), together the “
Enforceability Exceptions ”).
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(i)
The Registration Rights Agreement and DTC Agreement. The Registration Rights Agreement has been duly
authorized and, on the Closing Date, will have been duly executed and delivered by, and (assuming the valid execution and delivery
thereof by the Initial Purchasers) will constitute a valid and binding agreement of, the Legacy Parties, enforceable against the Legacy
Parties in accordance with its terms, except as the enforcement thereof may be limited by the Enforceability Exceptions and except as
rights to indemnification may be limited by applicable law. The DTC Agreement has been duly authorized, executed and delivered
by the Partnership, and constitutes a valid and binding agreement of, the Partnership, enforceable against the Partnership in
accordance with its terms, except as the enforcement thereof may be limited by the Enforceability Exceptions.
(j)
Authorization of the Notes and the Exchange Notes. The Notes to be purchased by the Initial Purchasers from
the Issuers will on the Closing Date be in the form contemplated by the Indenture, have been duly authorized for issuance and sale
pursuant to this Agreement and the Indenture and, at the Closing Date, will have been duly executed by the Issuers and, when
authenticated by the Trustee in the manner provided for in the Indenture and issued and delivered against payment of the purchase
price therefor, will constitute valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their
terms, except as the enforcement thereof may be limited by the Enforceability Exceptions, and will be entitled to the benefits of the
Indenture. The Exchange Notes have been duly and validly authorized for issuance by the Issuers, and when authenticated by the
Trustee in the manner provided for in the Indenture and issued and delivered in exchange for the Notes in the Exchange Offer, will
constitute valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms, except as the
enforcement thereof may be limited by the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(k)
Authorization of the Guarantees. Each Guarantor has all requisite corporate, limited liability company or
partnership, as applicable, power and authority to issue its Guarantee with respect to the Notes and the Exchange Notes. The
Guarantees with respect to the Notes have been duly and validly authorized by the Guarantors and, when the Notes have been duly
executed by the Issuers, authenticated by the Trustee in the manner provided for in the Indenture and issued and delivered against
payment of the purchase price therefor, will constitute valid and binding obligations of the Guarantors, enforceable against the
Guarantors in accordance with their terms, except as the enforcement thereof may be limited by the Enforceability Exceptions. The
Guarantees with respect to the Exchange Notes have been duly and validly authorized by the Guarantors and, when the Exchange
Notes have been duly executed by the Issuers, authenticated by the Trustee in the manner provided for in the Indenture and issued and
delivered in exchange for the Notes in the Exchange Offer, will constitute valid and binding obligations of the Guarantors, entitled to
the benefits of the Indenture, enforceable against the Guarantors in accordance with their terms, except as the enforcement thereof
may be limited by the Enforceability Exceptions.
(l)
Authorization of the Indenture.
Parties and constitutes a valid and
The Indenture has been duly authorized, executed and delivered by the Legacy
6
binding agreement of the Legacy Parties enforceable against the Legacy Parties in accordance with its terms, except as the
enforcement thereof may be limited by the Enforceability Exceptions.
(m)
Description of the Transaction Documents. The Transaction Documents will conform in all material respects
to the respective statements relating thereto contained in the Offering Memorandum, to the extent included therein.
(n)
No Material Adverse Change. Except as otherwise disclosed in the Offering Memorandum (exclusive of any
amendment or supplement thereto), subsequent to the respective dates as of which information is given in the Offering Memorandum
(exclusive of any amendment or supplement thereto): (i) there has been no material adverse change in the condition (financial or
otherwise), business affairs or business prospects of the Legacy Parties, considered as one enterprise (any such change is called a “
Material Adverse Change ”), whether or not arising in the ordinary course of business, (ii) there have been no transactions entered
into by any Legacy Party that are material with respect to the Legacy Parties, considered as one enterprise, and (iii) except for regular
quarterly distributions on the units representing limited partner interests in the Partnership (“ 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)
Independent Accountants. BDO USA LLP, which has audited the audited financial statements included or
incorporated by reference in the Offering Memorandum, is an independent public accounting firm with respect to the Partnership and
the General Partner within the meaning of the Securities Act and the Public Company Accounting Oversight Board (United States).
(p)
Preparation of the Financial Statements. The financial statements of the Partnership included or incorporated by
reference in the Offering Memorandum, 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; 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 Securities Act and the
Exchange Act. The supporting schedules, if any, included or incorporated by reference in the Offering Memorandum present fairly,
in all material respects in accordance with GAAP, the information required to be stated therein. The information in the Offering
Memorandum under the captions “Offering Memorandum Summary — Summary Historical Consolidated Financial Data” present
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 Offering Memorandum. All information contained
in the Offering Memorandum 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
7
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 Offering Memorandum that are not so included or incorporated, as applicable, as required. The
interactive data in eXtensible Business Reporting Language incorporated by reference in the Offering Memorandum fairly presents the
information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto.
(q)
Reserve Engineer . LaRoche Petroleum Consultants Ltd. (the “ Reserve Engineer ”), whose report dated
January 24, 2014 (the “ Reserve Report ”) is referenced in the Offering Memorandum, was as of the date of such report, and is, as of
the date hereof, an independent petroleum 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 the Reserve Report.
(r)
Information Underlying Reserve Report . The information underlying the estimates of the Partnership’s 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 Offering Memorandum, 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 Offering Memorandum and future net cash flow
reflected in the Reserve Report referenced therein have been prepared in a manner that complies with the applicable requirements of
the Securities Act. Other than normal production of the reserves, product price fluctuations, and fluctuations of demand for such
products, and except as disclosed in the Offering Memorandum, the Partnership is not 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 Offering Memorandum and as reflected in the Reserve Report.
(s)
Formation and Qualification of the Legacy Entities. Each of the Legacy Entities has been duly organized,
formed or incorporated, as applicable, and is validly existing as a limited partnership, limited liability company or corporation, as
applicable, in good standing under the laws of the state of its organization, formation or incorporation, as applicable, and has full
limited partnership, limited liability company or corporate, as applicable, power and authority, to own, lease and operate its properties
and to conduct its business in all material respects, in each case as described in the Offering Memorandum and, in the case of each of
the Legacy Parties, to enter into and perform its obligations under each of the Transaction Documents to which it is a party and the
Rocky Mountain Purchase Agreement. Each of the Legacy Entities is duly qualified as a foreign limited partnership, limited liability
company or corporation, as applicable, to transact business and is in good standing or equivalent status in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of property or the
8
conduct of business, except to the extent that the failure to be so qualified or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change. The Partnership and the General Partner have registered for the carrying on of
business in the province of Ontario in Canada where the Securities are proposed to be sold by the Initial Purchasers.
(t)
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. 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 the General
Partner (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,
encumbrances, security interests, charges or claims (“ Liens ”).
(ii)
The General Partner is the sole general partner of the Partnership with an approximate 0.03% general
partner interest in the Partnership; such general partner interest has been duly authorized and validly issued in accordance
with the Second 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.
(iii)
As of the date hereof, the issued and outstanding limited partner interests of the Partnership consist
of 57,564,767 Units and 2,000,000 8% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units
(the “ Series A Units ”), and all of such Units and Series A Units 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 ”)).
(u)
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
9
pledge of such membership interests under the Third Amended and Restated Credit Agreement, dated April 1, 2014, by and among the
Partnership, as borrower, Wells Fargo Bank, National Association, as administrative agent, Compass Bank, as syndication agent, UBS
Securities LLC and U.S. Bank National Association, as co-documentation agents, and the other lenders from time to time party
thereto, as amended (the “ Credit Agreement ”).
(v)
Operating Partnership Ownership . 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.
(w)
Ownership of Legacy Finance . The Partnership owns 100% of the capital stock of Legacy Finance; such capital
stock is duly authorized and validly issued in accordance with the charter and bylaws of Legacy Finance (the “ Legacy Finance
Charter Documents ”) and is fully paid and nonassessable; and the Partnership owns such capital stock free and clear of all Liens,
except for the pledge of such limited partner interest under the Credit Agreement.
(x)
No Other Entities . The Partnership does not own or control, directly or indirectly, any corporation, association or
other entity that, considered individually or in the aggregate as a single subsidiary, would constitute a “significant subsidiary” as
defined in Rule 1-02 of Regulation S-X under the Securities Act, other than the entities listed in Schedule B hereto.
(y)
Absence of Violations or Defaults . None of the Legacy Entities is in breach or violation of or default under (i) its
charter, bylaws, partnership certificate, certificate of formation, partnership agreement, articles of organization, operating agreement,
limited liability company agreement, membership agreement or similar organizational document (“ Organizational Documents ”);
(ii) 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 (“ Partnership Documents ”), (iii) any applicable law, statute, rule,
10
regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Legacy 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 Change, 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 the Transaction Documents and the
consummation of the transactions contemplated thereby (including the issuance and delivery of the Securities and the Exchange
Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum 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 any event or
condition which gives the holder of any bond, note, debenture or other evidence of indebtedness (or any person acting on such
holder’s 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 (a “ 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, for such conflicts, breaches, defaults or Liens that would not result in a Material Adverse Change, 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 Change.
(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 Legacy Entities or any of their
respective properties is required in connection with the offering, issuance and sale by the Legacy Parties 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, except for such Consents as may be required under the Securities Act, the Exchange Act
and state securities or “Blue Sky” laws and applicable rules and regulations under such laws.
11
(bb)
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 Legacy Entity that is required to be disclosed in the Offering Memorandum (other than as disclosed therein), or which
would reasonably be expected to result in a Material Adverse Change, 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 Legacy Entity is a party or of which any of their respective property or assets is the subject, which are not
described in the Offering Memorandum, including ordinary routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Change.
(cc)
Intellectual Property Rights. The Partnership and its subsidiaries own or possess or have the right to use on
reasonable terms all patents, patent rights, patent applications, licenses, inventions, copyrights, know how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade
names, service names and other intellectual property (collectively, “ Intellectual Property ”) necessary to carry on their respective
businesses as described in the Offering Memorandum 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 Change; 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 that 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 Change.
(dd)
Permits. The Legacy Entities and their subsidiaries 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, result in a Material Adverse Change; the
Legacy Entities and their subsidiaries 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, result in a Material Adverse Change; 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, result in a Material Adverse
Change; and none of the Legacy Entities or any of their subsidiaries 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 Change.
12
(ee)
Title to Properties. Each of the Legacy Parties 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 Offering Memorandum, (ii) good and marketable
title in fee simple to all real property other 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 Offering Memorandum
or such as do not materially affect the value of the property of the Legacy Parties, taken as a whole, and do not materially interfere
with the use made of such property by any of the Legacy Parties; all real property and buildings held under lease by any of the Legacy
Parties 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 Legacy Parties. The Working Interests
derived from the Oil and Gas Properties evidence in all material respects the right of the Legacy Parties 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 Legacy Parties operate for acquiring or procuring oil and gas leases and interests therein to explore, develop or produce
hydrocarbons.
(ff)
Tax Law Compliance. The Legacy 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 Change, 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 Change.
(gg)
Investment Company Act . No Legacy 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 Offering Memorandum, no
Legacy 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.
(hh)
Insurance . The Legacy Entities are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as, in management’s judgment, are prudent and customary in the businesses in which they are engaged;
all policies of insurance and any fidelity or surety bonds insuring any Legacy Entity or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Legacy Entities are in compliance with the terms of such policies and instruments
in all material respects; there are no claims by any Legacy 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 Legacy Entity has been refused any insurance
coverage sought or applied for; and no Legacy Entity has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such
13
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 Change.
(ii)
No Price Stabilization or Manipulation. No Legacy 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.
(jj)
Solvency. Each of the Issuers and the Guarantors is, and immediately after the Closing Date will be, Solvent. As
used herein, the term “ Solvent ” means, with respect to any person on a particular date, that on such date (i) the fair market value of
the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present
fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such
person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital.
(kk)
Compliance with Sarbanes-Oxley. There is and has been no failure on the part of the General Partner or any of
the General Partner’s 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.
(ll)
Company’s Accounting System. The Legacy 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 Exchange Act) and a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s 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 management’s general
or specific authorization, (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, and (E) the interactive data in eXtensible Business Reporting Language
incorporated by reference in the Offering Memorandum is in compliance with the Commission’s published rules and guidelines
applicable thereto.
(mm)
Statistical, Demographic or Market-Related Data . Any statistical, demographic, market-related,
customer-related or production-related data included in the Offering Memorandum is based on or derived from sources that the
Partnership believes to be reliable and accurate and all such data included in the Offering Memorandum accurately reflects the
materials upon which it is based or from which it was derived.
14
(nn)
Description of Recent Developments . The statements regarding the estimates of proved reserves related to the
properties to be acquired by the Partnership pursuant to the Rocky Mountain Purchase Agreement to be added to the Partnership from
such properties and the underlying assumptions, contained in the Offering Memorandum under the caption “Summary—Legacy
Reserves LP—Recent Developments—Pending Piceance Basin Acquisition” were prepared in good faith and, in the informed
judgment of the management of the Partnership, on a reasonable basis reflecting the best currently available estimates of management
of the Partnership. As of the date hereof, the management of the Partnership is not aware of any facts with respect to historical or
anticipated financial or operational performance of the properties to be acquired pursuant to the Rocky Mountain Acquisition
Agreement that would result in a material variance from such estimates of proved reserves, included in the Offering Memorandum
under the caption “Summary—Legacy Reserves LP—Recent Developments—Pending Piceance Basin Acquisition.”
(oo)
Disclosure Controls and Procedures. (i) The Partnership has established and maintains disclosure controls and
procedures (as defined in Rule 13a-15 under the Exchange Act), (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 Exchange 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 Offering Memorandum, such disclosure controls and procedures are effective in all material respects to
perform the functions for which they were established.
(pp)
Regulations T, U, X. None of the Legacy Entities nor any agent thereof acting on their behalf has taken, and none
of them will take, any action that might cause this Agreement or the issuance or sale of the Securities to violate Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.
(qq)
Compliance with and Liability Under Environmental Laws. Except as described in Offering Memorandum
and except as would not, individually or in the aggregate, result in a Material Adverse Change, (i) no Legacy 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 Legacy 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, demands,
15
demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law
against any Legacy 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 Legacy Entity relating to Hazardous Materials or any Environmental Laws.
(rr)
ERISA Compliance. Except as otherwise disclosed in the Offering Memorandum, the Legacy Entities and any
“employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974 (as amended, “ ERISA, ” which
term, as used herein, includes the regulations and published interpretations thereunder)) established or maintained by the Legacy
Entities or their ERISA Affiliates (as defined below) are in compliance in all material respects with ERISA and, to the knowledge of
the Partnership, each “multiemployer plan” (as defined in Section 4001 of ERISA) to which the Legacy Entities or an ERISA Affiliate
contributes (a “ Multiemployer Plan ”) is in compliance in all material respects with ERISA. “ ERISA Affiliate ” means, with
respect to the Legacy Entities, any member of any group of organizations described in Section 414 of the Internal Revenue Code of
1986 (as amended, the “ Code, ” which term, as used herein, includes the regulations and published interpretations thereunder) of
which the Partnership or such subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any “employee benefit plan” established or maintained by the Legacy Entities or any of their ERISA
Affiliates. No “single employer plan” (as defined in Section 4001 of ERISA) established or maintained by the Legacy Entities or any
of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA). Neither Legacy Entities nor any of their ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Legacy Entities or any of their
ERISA Affiliates that is intended to be qualified under Section 401 of the Code is so qualified and to the knowledge of the Legacy
Entities nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
(ss)
Absence of Labor Dispute. No labor dispute with the employees of any Legacy 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 Legacy Entity which,
in any such case, would reasonably be expected to result in a Material Adverse Change.
(tt)
Related Party Transactions . Except as described in the Offering Memorandum, no relationship, direct or
indirect, exists between or among any Legacy Entity, on the one hand, and the directors, managers, officers, members, partners,
stockholders, customers or suppliers of any Legacy Entity, on the other hand, that would be required to be described in a registration
statement pursuant to the Securities Act.
16
(uu)
No Unlawful Contributions or Other Payments. 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.
(vv)
No Conflict with Money Laundering Laws. The operations of each of the Legacy Parties, Legacy Reserves
Services, Inc., a Texas corporation (“ Services ”), and 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.
(ww)
No Conflict with Sanctions Laws. None of the Legacy Entities, nor, to the knowledge of the Partnership, any
officer, agent, employee or affiliate of any of the Legacy 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, 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.
(xx)
Regulation S. The Legacy Parties and their respective affiliates and all persons acting on their behalf (other than
the Initial Purchasers, as to whom the Legacy Parties make no representation) have complied with and will comply with the offering
restriction requirements of Regulation S in connection with the offering of the Securities outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required by Rule 902.
17
Any certificate signed by an officer of the Legacy Parties and delivered to the Initial Purchasers or to counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by such entity to each Initial Purchaser as to the matters set forth therein.
SECTION 2.
Purchase, Sale and Delivery of the Securities .
(a)
The Securities. Each of the Issuers and the Guarantors agrees to issue and sell to the Initial Purchasers, severally
and not jointly, all of the Securities, and subject to the conditions set forth herein, each Initial Purchaser agrees, severally and not
jointly, to purchase from the Issuers and the Guarantors the aggregate principal amount of Securities set forth opposite the name of
such Initial Purchaser on Schedule A, at a purchase price of 97.25% of the principal amount thereof (together with an amount equal
to the interest that would have accrued on such principal amount of Securities if the Securities has been issued on December 1,
2013, the “ Purchase Price ”) payable on the Closing Date, in each case, on the basis of the representations, warranties and
agreements herein contained, and upon the terms herein set forth. None of the Issuers or the Guarantors shall be obligated to deliver
any of the Securities to be delivered hereunder except upon payment of the Purchase Price therefor.
(b)
The Closing Date. Delivery of certificates for the Securities in global form to be purchased by the Initial
Purchasers and payment of the Purchase Price therefor shall be made at the offices of Andrews Kurth LLP, 600 Travis Street,
Suite 4200, Houston, Texas 77002 counsel for the Partnership at 9:00 a.m. Houston time, on May 13, 2014, or such other place, time
or date as the Representatives and the Issuers may agree upon (such time and date of delivery against payment being herein referred to
as the “ Closing Date ”). The certificates for the Securities shall be in such denominations and registered in the name of Cede & Co.,
as nominee of the Depositary, pursuant to the DTC Agreement, and shall be delivered at the Closing Date to the Trustee, as custodian
for the Depositary. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to
the obligations of the Initial Purchasers.
(c)
Delivery of the Securities. The Issuers and the Guarantors shall deliver, or cause to be delivered through the
facilities of the Depository, to the Representatives for the accounts of the several Initial Purchasers the Securities at the Closing Date
against the irrevocable release of a wire transfer of immediately available funds for the amount of the Purchase Price therefor.
(d)
Initial Purchasers as Qualified Institutional Buyers. Each Initial Purchaser severally and not jointly represents
and warrants to, and agrees with, the Issuers that:
(i)
it has solicited offers to buy or offered to sell, and will offer and sell, Securities only to (a) persons who it
reasonably believes are “qualified institutional buyers” within the meaning of Rule 144A (“ Qualified Institutional Buyers
”) in transactions meeting the requirements of Rule 144A or (b) upon the terms and conditions set forth in Annex I to this
Agreement;
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(ii)
it is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act; and
(iii)
it has not and will not offer or sell Securities by any form of general solicitation or general advertising,
including but not limited to the methods described in Rule 502(c) under the Securities Act.
SECTION 3.
Additional Covenants.
severally, with each Initial Purchaser as follows:
Each of the Issuers and the Guarantors further covenants and agrees, jointly and
(a)
Preparation of Final Offering Memorandum; Initial Purchasers’ Review of Proposed Amendments and
Supplements and Issuer Additional Written Communications . As promptly as practicable following the Time of Sale and in any
event not later than the second business day following the date hereof, the Issuers will prepare and deliver to the Initial Purchasers the
Final Offering Memorandum, which shall consist of the Preliminary Offering Memorandum as modified only by the information
contained in the Pricing Supplement unless otherwise consented to by the Representatives. The Issuers will not amend or supplement
the Preliminary Offering Memorandum or the Pricing Supplement unless the Representatives shall previously have been furnished a
copy of the proposed amendment or supplement and shall not have reasonably objected in writing to such amendment or supplement
or unless the Issuers are advised by counsel that they are required by law to so amend or supplement the Preliminary Offering
Memorandum or Pricing Supplement. The Issuers will not amend or supplement the Final Offering Memorandum prior to the
Closing Date unless the Representatives shall previously have been furnished a copy of the proposed amendment or supplement and
shall not have reasonably objected in writing to such amendment or supplement (unless the Issuers are advised by counsel that they
are required by law to so amend or supplement the Final Offering Memorandum). Before making, preparing, using, authorizing,
approving or distributing any Issuer Additional Written Communication, the Issuers will furnish to the Representatives a copy of such
written communication for review and will not make, prepare, use, authorize, approve or distribute any such written communication to
which the Representatives reasonably object in writing (unless the Issuers are advised by counsel that they are required by law to so
amend or supplement such written communication).
(b)
Amendments and Supplements to the Final Offering Memorandum and Other Securities Act Matters. If at
any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Pricing Disclosure
Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or
(ii) it is necessary to amend or supplement any of the Pricing Disclosure Package to comply with law, the Issuers and the Guarantors
will immediately notify the Initial Purchasers thereof and forthwith prepare and (subject to Section 3(a) hereof) furnish to the Initial
Purchasers such amendments or supplements to any of the Pricing Disclosure Package as may be necessary so that the statements in
any of the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances under
19
which they were made, be misleading or so that any of the Pricing Disclosure Package will comply with all applicable law. If, prior to
the completion of the placement of the Securities by the Initial Purchasers with the Subsequent Purchasers, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Final Offering Memorandum, as then amended or
supplemented, in order to make the statements therein, in the light of the circumstances when the Final Offering Memorandum is
delivered to a Subsequent Purchaser, not misleading, or if in the judgment of the Representatives or counsel for the Initial Purchasers
it is otherwise necessary to amend or supplement the Final Offering Memorandum to comply with law, the Issuers and the Guarantors
agree to promptly prepare (subject to Section 3 hereof), and furnish at their own expense to the Initial Purchasers, amendments or
supplements to the Final Offering Memorandum so that the statements in the Final Offering Memorandum as so amended or
supplemented will not, in the light of the circumstances at the Closing Date and at the time of sale of the Securities, be misleading or
so that the Final Offering Memorandum, as amended or supplemented, will comply with all applicable law.
(c)
Copies of the Offering Memorandum. The Issuers agree to furnish the Initial Purchasers, without charge, as
many copies of the Pricing Disclosure Package and the Final Offering Memorandum (excluding the Incorporated Documents) and any
amendments and supplements thereto as they shall reasonably request.
(d)
Blue Sky Compliance. Each of the Issuers and the Guarantors shall cooperate with the Representatives and
counsel for the Initial Purchasers to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the
Securities for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other
jurisdictions reasonably designated by the Representatives, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution of the Securities. Except as contemplated in
Section 1(r) hereof, none of the Issuers or Guarantors shall be required to qualify as a foreign entity or to take any action that would
subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign entity. The Issuers will advise the Representatives promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or
exemption, each of the Issuers and the Guarantors shall use its reasonable best efforts to obtain the withdrawal thereof at the earliest
possible moment.
(e)
Use of Proceeds. The Issuers shall apply the net proceeds from the sale of the Securities in the manner described
under the caption “Use of Proceeds” in the Pricing Disclosure Package.
(f)
The Depositary . The Issuers will cooperate with the Initial Purchasers and use their reasonable best efforts to
permit the Securities to be eligible for clearance and settlement through the facilities of the Depositary.
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(g)
Additional Issuer Information. Prior to the completion of the placement of the Securities by the Initial
Purchasers with the Subsequent Purchasers, the Issuers shall file, on a timely basis, with the Commission and the NASDAQ Global
Select Market all reports and documents required to be filed under Section 13 or 15 of the Exchange Act. Additionally, at any time
when the Issuers are not subject to Section 13 or 15 of the Exchange Act and the Securities are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, for the benefit of holders and beneficial owners from time to time of the
Securities, the Issuers shall furnish, at their expense, upon request, to holders and beneficial owners of Securities and prospective
purchasers of Securities information (“ Additional Issuer Information ”) satisfying the requirements of Rule 144A(d) under the
Securities Act.
(h)
Agreement Not To Offer or Sell Additional Securities. During the period of 60 days following the date
hereof, the Issuers will not, without the prior written consent of Wells Fargo Securities, LLC, directly or indirectly, sell, offer, contract
or grant any option to sell, pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1 under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any registration statement under the Securities
Act in respect of, any debt securities of the Issuers or securities exchangeable for or convertible into debt securities of the Partnership
(other than as contemplated by this Agreement, the Registration Rights Agreement and to register the Exchange Securities).
(i)
No Integration. The Issuers agree that they will not and will cause their Affiliates not to make any offer or
sale of securities of the Partnership of any class if, as a result of the doctrine of “integration” referred to in Rule 502 under the
Securities Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Securities by the Issuers to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the Securities by
such Subsequent Purchasers to others) the exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise.
(j)
No General Solicitation or Directed Selling Efforts . The Issuers agree that they will not and will not
permit any of their Affiliates or any other person acting on their behalf (other than the Initial Purchasers, as to which no covenant is
given) to (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within
the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act or (ii) engage in any directed selling efforts with respect to the Securities within the meaning of Regulation S, and the
Issuers will and will cause all such persons to comply with the offering restrictions requirement of Regulation S with respect to the
Securities.
(k)
No Restricted Resales. During the period of one year after the Closing Date, the Issuers will not, and will
not permit any of their affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Securities that constitute
“restricted
21
securities” under Rule 144 under the Securities Act that have been reacquired by any of them other than pursuant to an effective
registration statement under the Securities Act.
(l)
Legended Securities. Each certificate for a Security will bear the legend contained in “Notice to Investors”
in the Preliminary Offering Memorandum for the time period and upon the other terms stated in the Preliminary Offering
Memorandum.
The Representatives, on behalf of the several Initial Purchasers, may, in their sole discretion, waive in writing the performance by an
Issuer or any Guarantor of any one or more of the foregoing covenants or extend the time for their performance.
SECTION 4.
Payment of Expenses. The Issuers and the Guarantors agree to pay, jointly and severally, all costs, fees and
expenses incurred in connection with the performance of their obligations hereunder and in connection with the transactions contemplated
hereby, including, without limitation, (i) all expenses incident to the issuance and delivery of the Securities (including all printing and
engraving costs), (ii) all necessary issue, transfer and other stamp taxes in connection with the original issuance and sale of the Securities to the
Initial Purchasers, (iii) all fees and expenses of the Issuers’ and the Guarantors’ counsel, independent public or certified public accountants and
other advisors, (iv) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Pricing
Disclosure Package and the Final Offering Memorandum (including financial statements and exhibits), and all amendments and supplements
thereto, and the Transaction Documents, (v) all filing fees, reasonable attorneys’ fees and expenses incurred by the Issuers and the Guarantors
or the Initial Purchasers in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or
any part of the Securities for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or other
jurisdictions reasonably designated by the Initial Purchasers (including, without limitation, the cost of preparing, printing and mailing
preliminary and final blue sky or legal investment memoranda and any related supplements to the Pricing Disclosure Package or the Final
Offering Memorandum, (vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection
with the Indenture, the Securities and the Exchange Securities, (vii) any fees payable in connection with the rating of the Securities or the
Exchange Securities with the ratings agencies, (viii) all fees and expenses (including reasonable fees and expenses of counsel) of the Issuers
and the Guarantors in connection with approval of the Securities by the Depositary for “book-entry” transfer, and the performance by the
Issuers and the Guarantors of their respective other obligations under this Agreement and (ix) all of the Legacy Entities’ expenses incident to
the “road show” for the offering of the Securities, including one-half of the cost of any chartered airplane used in connection with the “road
show.” Except as provided in this Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchasers shall pay their own expenses, including the
fees and disbursements of their counsel and reimburse the Issuers and the Guarantors for the other half of the cost of any chartered airplane
used in connection with the “road show” for the offering of the Securities incurred by the Issuers or the Guarantors for which the Issuers or the
Guarantors are not responsible under clause (ix) above.
SECTION 5.
Conditions of the Obligations of the Initial Purchasers. The obligations of the several Initial Purchasers to
purchase and pay for the Securities as provided herein on the Closing Date shall be subject to the accuracy of the representations and warranties
22
on the part of the Issuers and the Guarantors set forth in Section 1 hereof as of the date hereof and as of the Closing Date as though then made
and to the timely performance by the Issuers of their covenants and other obligations hereunder, and to each of the following additional
conditions:
(a)
Accountants’ Comfort Letter. On the date hereof, the Initial Purchasers shall have received from BDO USA
LLP, the independent registered public accounting firm for the Partnership, a “comfort letter” dated the date hereof addressed to the
Initial Purchasers, in form and substance satisfactory to the Representatives, covering the financial information in the Pricing
Disclosure Package and other customary matters. In addition, on the Closing Date, the Initial Purchasers shall have received from
such accountants a “bring-down comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance
satisfactory to the Representatives, in the form of the “comfort letter” delivered on the date hereof, except that (i) it shall cover the
financial information in the Final Offering Memorandum and any amendment or supplement thereto and (ii) procedures shall be
brought down to a date no more than three days prior to the Closing Date.
(b)
No Material Adverse Change or Ratings Agency Change.
Agreement and prior to the Closing Date:
(i)
For the period from and after the date of this
in the judgment of the Representatives there shall not have occurred any Material Adverse Change;
and
(ii)
there shall not have occurred any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in
the rating accorded the Partnership, Legacy Finance or any of the Guarantors or any of their respective securities by any
“nationally recognized statistical rating organization” as such term is defined in Section 3(a)(62) of the Exchange Act.
(c)
Opinion of Counsel for the Partnership. On the Closing Date the Initial Purchasers shall have received the
favorable opinion of (i) Andrews Kurth LLP, counsel for the Partnership, dated as of such Closing Date, and in substantially the form
and substance as set forth in Exhibit A and (ii) Dan G. LeRoy, General Counsel of the General Partner dated as of such Closing Date,
and in substantially the form and substance as set forth in Exhibit B .
(d)
Opinion of Counsel for the Initial Purchasers. On the Closing Date the Initial Purchasers shall have
received the favorable opinion of Vinson & Elkins L.L.P., counsel for the Initial Purchasers, dated as of such Closing Date, with
respect to such matters as may be reasonably requested by the Initial Purchasers.
(e)
Officers’ Certificate. On the Closing Date the Initial Purchasers shall have received a written certificate
executed by the Chief Executive Officer, President, Chief Financial Officer or any executive or senior vice president, or any other
person with an office of equal or greater status than any of the foregoing of the General Partner
23
and each Guarantor, dated as of the Closing Date, to the effect set forth in Section 5(b)(ii) hereof, and further to the effect that:
(i)
for the period from and after the date of this Agreement and prior to the Closing Date there has not
occurred any Material Adverse Change;
(ii)
the representations, warranties and covenants of the Issuers and the Guarantors set forth in Section 1
hereof were true and correct as of the Time of Sale and are true and correct as of the Closing Date with the same force and
effect as though expressly made on and as of the Closing Date; and
(iii)
the Issuers and the Guarantors have complied with all the agreements and satisfied all the conditions
on their part to be performed or satisfied at or prior to the Closing Date.
(f)
Registration Rights Agreement . The Issuers and the Guarantors shall have executed and delivered the
Registration Rights Agreement, in form and substance reasonably satisfactory to the Initial Purchasers, and the Initial Purchasers shall
have received such executed counterparts.
(g)
Reserve Letters . On the date hereof and on the Closing Date, the Initial Purchasers shall have received from
the Reserve Engineer a letter, in form and substance satisfactory to the Representatives, confirming certain matters concerning their
engagement and the use of their Reserve Report and information derived from their Reserve Report in the Pricing Disclosure Package
and the Offering Memorandum.
(h)
Additional Documents. On or before the Closing Date, the Initial Purchasers and counsel for the Initial
Purchasers shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by
the Representatives by notice to the Partnership at any time on or prior to the Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Sections 4, 6, 8 and 9 hereof shall at all times be effective and shall survive such termination.
SECTION 6.
Reimbursement of Initial Purchasers’ Expenses. If this Agreement is terminated by the Representatives
pursuant to Section 5 or 10 hereof, including if the sale to the Initial Purchasers of the Securities on the Closing Date is not consummated
because of any refusal, inability or failure on the part of the Partnership to perform any agreement herein or to comply with any provision
hereof, the Partnership agrees to reimburse the Initial Purchasers, severally, upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Initial Purchasers in connection with the proposed purchase and the offering and sale of the Securities, including,
without limitation, fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.
24
SECTION 7.
Offer, Sale and Resale Procedures. Each of the Initial Purchasers, on the one hand, and the Issuers and the
Guarantors, on the other hand, hereby agree to observe the following procedures in connection with the offer and sale of the Securities:
(a)
Offers and sales of the Securities will be made only by the Initial Purchasers or Affiliates thereof qualified to
do so in the jurisdictions in which such offers or sales are made. Each such offer or sale shall only be made to persons whom the
offeror or seller reasonably believes to be Qualified Institutional Buyers or non-U.S. persons outside the United States to whom the
offeror or seller reasonably believes offers and sales of the Securities may be made in reliance upon Regulation S upon the terms and
conditions set forth in Annex I hereto, which Annex I is hereby expressly made a part hereof.
(b)
No general solicitation or general advertising (within the meaning of Rule 502 under the Securities Act) will
be used in the United States in connection with the offering of the Securities.
(c)
Upon original issuance by the Issuers and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities (and all securities issued in exchange therefor or in substitution thereof,
other than the Exchange Securities) shall bear the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE, NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES NOT TO
OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE “RESALE RESTRICTION
TERMINATION DATE”), EXCEPT THAT THE NOTES MAY BE TRANSFERRED (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A
PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S
25
RIGHT PRIOR TO ANY SUCH OFFER, SALE, OR TRANSFER (1) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE
40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR
PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION, AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (2) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE
Following the sale of the Securities by the Initial Purchasers to Subsequent Purchasers pursuant to the terms hereof, the Initial
Purchasers shall not be liable or responsible to the Issuers for any losses, damages or liabilities suffered or incurred by the Issuers, including
any losses, damages or liabilities under the Securities Act, arising from or relating to any resale or transfer of any Security.
SECTION 8.
Indemnification .
(a)
Indemnification of the Initial Purchasers. Each of the Issuers and the Guarantors, jointly and severally,
agrees to indemnify and hold harmless each Initial Purchaser, its affiliates, directors, officers and employees, and each person, if any,
who controls any Initial Purchaser within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Initial Purchaser, affiliate, director, officer, employee or controlling person may
become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Issuers or in
accordance with Section 8(d) hereof), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, the Pricing Supplement, any Issuer Additional Written Communication or the Final Offering
Memorandum (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; and to
reimburse each Initial Purchaser and each such affiliate, director, officer, employee or controlling person for any and all expenses
(including the reasonable fees and disbursements of counsel chosen by Wells Fargo Securities, LLC) as such expenses are reasonably
incurred by such Initial Purchaser or such affiliate, director, officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Partnership by such Initial Purchaser through the
26
Representatives expressly for use in the Preliminary Offering Memorandum, the Pricing Supplement, any Issuer Additional Written
Communication or the Final Offering Memorandum (or any amendment or supplement thereto). The indemnity agreement set forth in
this Section 8(a) shall be in addition to any liabilities that the Issuers may otherwise have.
(b)
Indemnification of the Issuers and the Guarantors. Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless each Issuer, each Guarantor, each of their respective directors, officers, employees and each person, if
any, who controls either Issuer or any Guarantor within the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which either Issuer, any Guarantor or any such director, officer, employee or
controlling person may become subject under the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written
consent of such Initial Purchaser or in accordance with Section 8(d) hereof), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum, the Pricing Supplement, any Issuer Additional Written
Communication or the Final Offering Memorandum (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, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Preliminary Offering Memorandum, the Pricing Supplement, any Issuer Additional
Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Issuers by such Initial Purchaser through the Representatives expressly for use
therein; and to reimburse each Issuer, any Guarantor and each such director, officer, employee or controlling person for any and all
expenses (including the reasonable fees and disbursements of counsel) as such expenses are reasonably incurred by each Issuer, any
Guarantor or such director, officer, employee or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action. Each of the Issuers and the Guarantors hereby
acknowledge that the only information that the Initial Purchasers through the Representatives have furnished to the Issuers expressly
for use in the Preliminary Offering Memorandum, the Pricing Supplement, any Issuer Additional Written Communication or the Final
Offering Memorandum (or any amendment or supplement thereto) are (i) the fourth and fifth sentences of the paragraph under the
heading “Summary—The Offering—Absence of Established Trading Market for the Notes” and the fifth and sixth sentences of the
paragraph under the heading “Plan of Distribution—No Active Trading Market” and (ii) the first and second sentences of the first
paragraph, and the first sentence of the third paragraph, under the heading “Plan of Distribution—Short Positions,” in each case in the
Preliminary Offering Memorandum and the Final Offering Memorandum. The indemnity agreement set forth in this Section 8(b) shall
be in addition to any liabilities that each Initial Purchaser may otherwise have.
27
(c)
Notifications and Other Indemnification Procedures . Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof;
provided that the failure to so notify the indemnifying party will not relieve it from any liability that it may have to any indemnified
party under this Section 8 except to the extent that it has been materially prejudiced by such failure (through the forfeiture of
substantive rights and defenses) and shall not relieve the indemnifying party from any liability that the indemnifying party may have
to an indemnified party other than under this Section 8. In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate
in and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8
for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the proviso to the immediately preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel
(together with local counsel (in each jurisdiction)), which shall be selected by Wells Fargo Securities, LLC (in the case of counsel
representing the Initial Purchasers or their related persons), representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be
at the expense of the indemnifying party.
(d)
Settlements. The indemnifying party under this Section 8 shall not be liable for any settlement of any
proceeding effected without its written consent, which will not be unreasonably withheld, but if settled with such consent or if there be
a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees
28
and expenses of counsel as contemplated by this Section 8, the indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request or disputed in good faith the indemnified party’s entitlement to such reimbursement prior to the date of
such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (i) includes an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding and (ii) does not include any statements as to or any findings of
fault, culpability or failure to act by or on behalf of any indemnified party.
SECTION 9.
Contribution. If the indemnification provided for in Section 8 hereof is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect
the relative benefits received by the Issuers and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties herein that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers and the Guarantors, on the one hand, and the Initial Purchasers, 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
Issuers, and the total discount received by the Initial Purchasers bear to the aggregate initial offering price of the Securities, in each case
without giving effect to any prepaid interest. The relative fault of the Issuers and the Guarantors, on the one hand, and the Initial Purchasers,
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 or any such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Issuers and the Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or inaccuracy.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8 hereof, any legal or other fees or expenses reasonably incurred by such party
in
29
connection with investigating or defending any action or claim. The provisions set forth in Section 8 hereof with respect to notice of
commencement of any action shall apply if a claim for contribution is to be made under this Section 9; provided, however, that no additional
notice shall be required with respect to any action for which notice has been given under Section 8 hereof for purposes of indemnification.
The Issuers and the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to contribute any amount in excess of the
discount received by such Initial Purchaser in connection with the Securities distributed by it. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers’ obligations to contribute pursuant to this Section 9 are several, and not joint, in proportion to their
respective commitments as set forth opposite their names in Schedule A. For purposes of this Section 9, each affiliate, director, officer and
employee of an Initial Purchaser and each person, if any, who controls an Initial Purchaser within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as such Initial Purchaser, and each director, officer and employee of either of the
Issuers or any Guarantor, and each person, if any, who controls either of the Issuers or any Guarantor within the meaning of the Securities Act
and the Exchange Act shall have the same rights to contribution as the Issuers and the Guarantors, as applicable.
SECTION 10.
Termination of this Agreement. Prior to the Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Issuers if at any time: (i) trading or quotation in any of the Partnership’s securities shall have been
suspended or materially limited by the Commission or by the NASDAQ Global Select Market, or trading in securities generally on either the
NASDAQ Global Select Market or the New York Stock Exchange shall have been suspended or materially limited, or minimum or maximum
prices shall have been generally established on any of such quotation system or stock exchange by the Commission or the Financial Industry
Regulatory Authority; (ii) a general banking moratorium shall have been declared by any of federal, New York or Delaware authorities; or
(iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the
United States or international financial markets, or any substantial change or development involving a prospective change in United States or
international political, financial or economic conditions, as in the judgment of the Representatives is material and adverse as to make it
impracticable or inadvisable to proceed with the placement of the Securities with the Subsequent Purchasers in the manner and on the terms
contemplated in the Pricing Disclosure Package and the Final Offering Memorandum or to enforce contracts for the sale of securities. Any
termination pursuant to this Section 10 shall be without liability on the part of (i) either Issuer or any Guarantor to any Initial Purchaser, except
that the Issuers and the Guarantors shall be obligated to reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6 hereof,
(ii) any Initial Purchaser to the Issuers, or (iii) any party hereto to any
30
other party except that the provisions of Sections 8 and 9 hereof shall at all times be effective and shall survive such termination.
SECTION 11.
Representations and Indemnities to Survive Delivery. The respective indemnities, agreements,
representations, warranties and other statements of the Issuers, the Guarantors, their respective officers and the several Initial Purchasers set
forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any
Initial Purchaser, the Issuers, any Guarantor or any of their partners, officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement.
SECTION 12.
Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered, couriered or
facsimiled and confirmed to the parties hereto as follows:
If to the Initial Purchasers:
Wells Fargo Securities, LLC
475 Park Avenue, 4 th Floor
New York, New York 10152
Attention: Transaction Management Department
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
counsel for the Initial Purchasers
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Facsimile: (713) 615-5962
Attention: Jim Prince
If to the Partnership:
Legacy Reserves LP
303 W. Wall Street, Suite 1400
Midland, TX, 79701
Facsimile: (432) 689-5299
Attention: Dan G. LeRoy
with a copy (which shall not constitute notice) to:
Andrews Kurth LLP
counsel for the Partnership
600 Travis, Suite 4200
Houston, Texas 77002
Facsimile: (713) 220-4285
Attention: George J. Vlahakos
31
Any party hereto may change the address or facsimile number for receipt of communications by giving written notice to the others.
SECTION 13.
Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and to the
benefit of the indemnified parties referred to in Sections 8 and 9 hereof, and in each case their respective successors, and no other person will
have any right or obligation hereunder. The term “successors” shall not include any Subsequent Purchaser or other purchaser of the Securities
as such from any of the Initial Purchasers merely by reason of such purchase.
SECTION 14.
Authority of the Representatives. Any action by the Initial Purchasers hereunder may be taken by Wells
Fargo Securities, LLC on behalf of the Initial Purchasers, and any such action taken by Wells Fargo Securities, LLC shall be binding upon the
Initial Purchasers.
SECTION 15.
Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and enforceable.
SECTION 16.
Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
SECTION 17.
Consent to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby (“ Related Proceedings ”) may be instituted in the federal courts of the United States of America located
in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York
(collectively, the “ Specified Courts ”), and each party irrevocably submits to the exclusive jurisdiction (except for suits, actions, or
proceedings instituted in regard to the enforcement of a judgment of any Specified Court in a Related Proceeding (a “ Related Judgment ”) as
to which such jurisdiction is non-exclusive) of the Specified Courts in any Related Proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective service of process for any Related Proceeding brought in any
Specified Court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any Related Proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that any Related Proceeding
brought in any Specified Court has been brought in an inconvenient forum
SECTION 18.
Default of One or More of the Several Initial Purchasers. If any one or more of the several Initial
Purchasers shall fail or refuse to purchase Securities that it or they have agreed to purchase hereunder on the Closing Date, and the aggregate
number of Securities
32
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase does not exceed 10% of the aggregate
number of the Securities to be purchased on such date, the other Initial Purchasers shall be obligated, severally, in the proportions that the
number of Securities set forth opposite their respective names on Schedule A bears to the aggregate number of Securities set forth opposite the
names of all such non-defaulting Initial Purchasers, or in such other proportions as may be specified by the Initial Purchasers with the consent
of the non-defaulting Initial Purchasers, to purchase the Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on the Closing Date. If any one or more of the Initial Purchasers shall fail or refuse to purchase Securities and the
aggregate number of Securities with respect to which such default occurs exceeds 10% of the aggregate number of Securities to be purchased
on the Closing Date, and arrangements satisfactory to the Initial Purchasers and the Partnership for the purchase of such Securities are not made
within 48 hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of
Sections 4, 6, 8 and 9 hereof shall at all times be effective and shall survive such termination. In any such case either the Initial Purchasers or
the Issuers shall have the right to postpone the Closing Date, as the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Final Offering Memorandum or any other documents or arrangements may be effected.
As used in this Agreement, the term “ Initial Purchaser ” shall be deemed to include any person substituted for a defaulting Initial
Purchaser under this Section 18. Any action taken under this Section 18 shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement.
SECTION 19.
No Advisory or Fiduciary Responsibility. Each of the Issuers and the Guarantors acknowledges and agrees
that: (i) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the offering price of the Securities
and any related discounts and commissions, is an arm’s-length commercial transaction between the Issuers and the Guarantors, on the one
hand, and the several Initial Purchasers, on the other hand, and the Issuers and the Guarantors are capable of evaluating and understanding and
understand and accept the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction each Initial Purchaser is and has been acting solely as a principal
and is not the agent or fiduciary of the Issuers and the Guarantors or their respective affiliates, equityholders, creditors or employees or any
other party; (iii) no Initial Purchaser has assumed or will assume an advisory or fiduciary responsibility in favor of the Issuers and the
Guarantors with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether such Initial
Purchaser has advised or is currently advising the Issuers and the Guarantors on other matters) or any other obligation to the Issuers and the
Guarantors except the obligations expressly set forth in this Agreement; (iv) the several Initial Purchasers and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from those of the Issuers and the Guarantors, and the several Initial
Purchasers have no obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship; and (v) the Initial Purchasers
have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby, and the Issuers and the
Guarantors have consulted their own legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.
33
The Issuers and the Guarantors hereby waive and release, to the fullest extent permitted by law, any claims that the Issuers and the
Guarantors may have against the several Initial Purchasers with respect to any breach or alleged breach of fiduciary duty.
SECTION 20.
General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by
telecopier, facsimile or other electronic transmission ( e.g. , a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart
thereof. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The section headings herein are for
the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
SECTION 21.
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, 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)
“ Oil and Gas Properties ” means all of the Partnership’s 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
34
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.
(c)
“ Working Interest ” means each Legacy Entity’s undivided operating and expense-bearing interest under a
Hydrocarbon Interest.
35
If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Partnership the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours,
ISSUERS:
LEGACY RESERVES LP
By:
By:
Legacy Reserves GP, LLC,
its general partner
/s/ James Daniel Westcott
Name:
James Daniel Westcott
Title:
Executive Vice President and Chief
Financial Officer
LEGACY RESERVES FINANCE CORPORATION
By:
/s/ James Daniel Westcott
Name:
James Daniel Westcott
Title:
Executive Vice President and Chief
Financial Officer
GUARANTORS:
LEGACY RESERVES OPERATING GP LLC
By:
Legacy Reserves, LP,
its sole member
By:
Legacy Reserves GP, LLC,
its general partner
By:
/s/ James Daniel Westcott
Name:
James Daniel Westcott
Title:
Executive Vice President and Chief
Financial Officer
Signature Page to the Purchase Agreement
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/ James Daniel Westcott
Name:
James Daniel Westcott
Title:
Executive Vice President and Chief
Financial Officer
LEGACY RESERVES SERVICES INC.
By:
/s/ James Daniel Westcott
Name:
James Daniel Westcott
Title:
Executive Vice President and Chief
Financial Officer
Signature Page to the Purchase Agreement
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
WELLS FARGO SECURITIES, LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
RBC CAPITAL MARKETS, LLC
UBS SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
BARCLAYS CAPITAL INC.
J.P. MORGAN SECURITIES LLC
Acting on behalf of themselves and as the
Representatives of the several Initial Purchasers
By:
WELLS FARGO SECURITIES, LLC
By:
By:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
By:
/s/ John Pantalena
Name: John Pantalena
Title: Director
RBC CAPITAL MARKETS, LLC
By:
By:
/s/ Daniel Morris
Name: Daniel Morris
Title: Vice President
/s/ Scott Schlossel
Name: Scott Schlossel
Title: Managing Director
UBS SECURITIES LLC
By:
/s/ Derek Deas
Name: Derek Deas
Title: Associate Director
By:
/s/ Jane Dabney
Name: Jane Dabney
Title: Managing Director
Signature Page to the Purchase Agreement
By:
CITIGROUP GLOBAL MARKETS INC.
By:
By:
BARCLAYS CAPITAL INC.
By:
By:
/s/ Bradley Epstein
Name: Bradley Epstein
Title: Vice President
/s/ Paul Cugno
Name: Paul Cugno
Title: Managing Director
J.P. MORGAN SECURITIES LLC
By:
/s/ Jack D. Smith
Name: Jack D. Smith
Title: Managing Director
Signature Page to the Purchase Agreement
SCHEDULE A
Aggregate
Principal Amount
of Securities to be
Purchased
Initial Purchasers
Wells Fargo Securities, LLC
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
RBC Capital Markets, LLC
UBS Securities LLC
Citigroup Global Markets Inc.
Barclays Capital Inc.
J.P. Morgan Securities LLC
BBVA Compass Bank
U.S. Bancorp Investments, Inc.
Scotia Capital (USA) Inc.
KeyBanc Capital Markets Inc.
Mitsubishi UFJ Securities (USA), Inc.
BMO Capital Markets Corp.
Credit Agricole Securities (USA), Inc.
SG Americas Securities, LLC
$
66,000,000
45,000,000
45,000,000
24,000,000
15,000,000
15,000,000
15,000,000
15,000,000
15,000,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
Total
$
Schedule A-1
300,000,000
SCHEDULE B
Entities
Jurisdiction of
Formation/Incorporation
Entity:
Legacy Reserves Operating GP LLC
Legacy Reserves Operating LP
Legacy Reserves Services Inc.
Legacy Reserves Finance Corporation
Delaware
Delaware
Texas
Delaware
Schedule B-1
EXHIBIT A
Opinion of counsel for the Partnership to be delivered pursuant to Section 5 of the Purchase Agreement.
For purposes of this exhibit, the following terms shall have the meanings provided below:
“ Applicable Agreements ” means those agreements and other instruments identified on Schedule 1 to the Opinion Support
Certificate, which have been certified by officers of the Issuers as being every indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease or other agreement that is material in relation to the business, operations, affairs, financial condition, assets, or
properties of the Issuers and their subsidiaries, considered as a single enterprise.
“ Applicable Orders ” means those orders or decrees of governmental authorities identified on Schedule 2 to the Opinion
Support Certificate that have been certified by officers of the Issuers as being every order or decree of any governmental authority by
which the Issuer or any of its subsidiaries or any of their respective properties is bound, that is material in relation to the business,
operations, affairs, financial condition, assets, or properties of the Issuer and its subsidiaries, considered as a single
enterprise. [However, officers of the Issuer have certified in the Opinion Support Certificate that there are no Applicable Orders.]
“ Obligor Organizational Documents ” means, collectively, the following instruments, each in the form reviewed by us: [List
of organizational documents of the Issuers and the Guarantors]
“ Transaction Documents ” means collectively, the Purchase Agreement, the Registration Rights Agreement, the Indenture,
the Initial Securities and the Exchange Securities.
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 Amended and Restated General Partner LLC Agreement and are fully paid (to
the extent required by the Amended and Restated General Partner 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 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. Under the Delaware
Limited Liability Company Act, the Founders have (i) no obligation to make further payments for their respective membership interests in, or
the status of each of them as a member of, General Partner, and (ii) no liability for the liabilities of the General Partner, solely by reason of
being a member of the General Partner, in each case except as may be affected by Sections 18-607 and 18-804 of the Delaware Limited
Liability Company Act (the “ Delaware LLC Act ”).
The General Partner is the sole general partner of the Partnership with an approximate 0.03% general partner interest in the
Partnership; such general partner interest has been duly
Exhibit A-1
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 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.
The Partnership owns 100% of the issued and outstanding membership interests in Operating GP, free and clear of all liens 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 officer of the Secretary of State of the State of Delaware, other than those liens that are created pursuant to a pledge of such membership
interests under the security documents (the “ Security Documents ”) entered into in connection with the Credit Agreement. Under the
Delaware Limited Liability Company Act, the Partnership has (i) no obligation to make further payments for its membership interests in, or its
status as a member of, Operating GP, and (ii) no liability for the liabilities of Operating GP, solely by reason of being a member of Operating
GP, in each case except as may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act.
Operating GP is the sole general partner of the Operating Company and owns a 0.1% general partner interest in the Operating
Company, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware
naming Operating GP as debtor is on file in the office of the Secretary of State of the State of Delaware, except for the pledge of such general
partner interests under the Security Documents.
The Partnership is the sole limited partner of the Operating Company and owns a 99.9% limited partner interest in the Operating
Company, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware
naming the Partnership as debtor is on file in the office of the Secretary of State of the State of Delaware, except for the pledge of such limited
partner interest under the Security Documents. Under the Delaware LP Act, the Partnership has (i) no obligation to make further payments for
its limited partner interest in, or its status as a limited partner of, the Operating Company and (ii) no liability for the liabilities of the Operating
Company solely by reason of being a limited partner of the Operating Company, in each case except as may be affected by Sections 17-303,
17-607 and 17-804 of the Delaware LP Act.
The Partnership is validly existing as a limited partnership and in good standing under the laws of the State of Delaware. Legacy
Finance is validly existing as a corporation and in good standing under the laws of the State of Delaware. Each of the Guarantors listed in
Exhibit B hereto is validly existing as a corporation, limited liability company or limited partnership as indicated in such Exhibit and in good
standing under the laws of its jurisdiction of organization or formation indicated in such Exhibit.
The Partnership has the limited partnership power and limited partnership authority under the laws of the State of Delaware to
(i) execute and deliver, and incur and perform all of its obligations under, the Transaction Documents and (ii) carry on its business and own its
properties as described in the Disclosure Package and Offering Memorandum. Legacy Finance has the corporate power and corporate authority
under the laws of the State of Delaware to (i) execute and deliver, and incur and perform all of its obligations under, the Transaction
Exhibit A-2
Documents and (ii) carry on its business and own its properties as described in the Disclosure Package and Offering Memorandum. Operating
GP has the limited liability company power and authority under the laws of the State of Delaware to (i) execute and deliver, and to incur and
perform all of its obligations under, the Transaction Documents to which it is a party and (ii) carry on its business and own its properties as
described in the Disclosure Package and Offering Memorandum. The Operating Company has the limited partnership power and authority
under the laws of the State of Delaware to (i) execute and deliver, and to incur and perform all of its obligations under, the Transaction
Documents to which it is a party and (ii) carry on its business and own its properties as described in the Disclosure Package and Offering
Memorandum. Services has the corporate power and authority under the laws of the State of Texas to (i) execute and deliver, and to incur and
perform all of its obligations under, the Transaction Documents to which it is a party and (ii) carry on its business and own its properties as
described in the Disclosure Package and Offering Memorandum.
Each of the Purchase Agreement, the Registration Rights Agreement, the Indenture and the Initial Securities has been duly authorized,
executed and delivered by each of the Issuers. The Exchange Securities have been duly authorized by each of the Issuers. Each of the
Purchase Agreement, the Registration Rights Agreement and the Indenture has been duly authorized, executed and delivered by each of the
Guarantors.
None of (i) the execution and delivery of, or the incurrence or performance by the Obligors of their respective obligations under, each
of the Transaction Documents to which it is a party, each in accordance with its terms, (ii) the offering, issuance, sale and delivery of the Initial
Securities pursuant to the Purchase Agreement, (iii) the offering, issuance, exchange and delivery of the Exchange Securities pursuant to the
Exchange Offer contemplated by the Registration Rights Agreement in the manner therein contemplated, (iv) the issuance of the guaranties of
the Initial Securities by the Guarantors, as set forth in the Indenture, or (v) the issuance of the guaranties of the Exchange Securities by the
Guarantors, as set forth in the Indenture, at such time as the Exchange Securities are issued pursuant to the Exchange Offer contemplated by the
Registration Rights Agreement in the manner therein contemplated, (A) constituted, constitutes or will constitute a violation of the Obligor
Organizational Documents, (B) constituted, constitutes or will constitute a breach or violation of, or a default (or an event which, with notice or
lapse of time or both, would constitute such a default), under any Applicable Agreement, (C) resulted, results or will result in the creation of
any security interest in, or lien upon, any of the property or assets of any Obligor pursuant to any Applicable Agreement, (D) resulted, results or
will result in any violation of (i) applicable laws of the State of New York, (ii) applicable laws of the State of Texas, (iii) applicable laws of the
United States of America, (iv) the General Corporation Law of the State of Delaware, (v) the Delaware LP Act, (vi) the Delaware LLC Act or
(vii) Regulation T, U or X of the Board of Governors of the Federal Reserve System, or (E) resulted, results or will result in the contravention
of any Applicable Order.
No Governmental Approval or Filing, which has not been obtained or made and is not in full force and effect, is required to authorize,
or is required for the execution and delivery by each of the Obligors of, the Transaction Documents to which it is a party or the incurrence or
performance of its obligations thereunder, or the enforceability of any of such Transaction Documents against any of the Obligors that is a
party thereto. As used in this paragraph,
Exhibit A-3
“ Governmental Approval or Filing ” means any consent, approval, license, authorization or validation of, or filing, recording or registration
with, any executive, legislative, judicial, administrative or regulatory body of the State of New York, the State of Delaware or the United States
of America, pursuant to (i) applicable laws of the State of New York, (ii) applicable laws of the State of Texas, (iii) applicable laws of the
United States of America, (iv) the General Corporation Law of the State of Delaware, (v) the Delaware LP Act or (vi) the Delaware LLC Act.
The statements under the caption “Description of Notes” in the Preliminary Offering Memorandum as supplemented by the Pricing
Term Sheet and the Offering Memorandum, insofar as such statements purport to summarize certain provisions of documents referred to
therein and reviewed by us as described above, fairly summarize such provisions in all material respects, subject to the qualifications and
assumptions stated therein.
The statements under the caption “Certain United States Federal Income Tax Consequences,” in the Preliminary Offering
Memorandum and the Offering Memorandum insofar as they refer to statements of law or legal conclusions, fairly summarize the matters
referred to therein in all material respects, subject to the qualifications and assumptions stated therein.
The Indenture constitutes a valid and binding obligation of each of the Obligors, enforceable against each of them in accordance with
its terms, under applicable laws of the State of New York.
When authenticated by the Trustee in the manner provided in the Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the Purchase Agreement, the Initial Securities will constitute valid and binding obligations of each of the Issuers, entitled to
the benefits of the Indenture and enforceable against each of the Issuers in accordance with their terms, under applicable laws of the State of
New York.
When the Initial Securities have been authenticated by the Trustee in the manner provided in the Indenture and delivered to and paid
for by the Initial Purchasers in accordance with the Purchase Agreement, the guarantee of the Initial Securities included in the Indenture will
constitute a valid and binding obligation of the Guarantors, enforceable against the Guarantors in accordance with the terms of the Indenture,
under applicable laws of the State of New York.
When validly executed by each of the Issuers and authenticated by the Trustee in the manner provided in the Indenture and delivered
in exchange for Initial Securities pursuant to the Exchange Offer contemplated by the Registration Rights Agreement, the Exchange Securities
will constitute valid and binding obligations of each of the Issuers, entitled to the benefits of the Indenture and enforceable against each of the
Issuers in accordance with their terms, under applicable laws of the State of New York.
When the Exchange Securities have been validly executed by each of the Issuers and authenticated by the Trustee in accordance with
the provisions of the Indenture and delivered in exchange for Initial Securities pursuant to the Exchange Offer contemplated by the Registration
Exhibit A-4
Rights Agreement, the guarantee included in the Indenture of the Exchange Securities will constitute a valid and binding obligation of the
Guarantors, enforceable against the Guarantors in accordance with the terms of the Indenture, under applicable laws of the State of New York.
The Registration Rights Agreement constitutes a valid and binding obligation of each of the Obligors, enforceable against each of
them in accordance with its terms, under applicable laws of the State of New York.
Assuming (i) the accuracy of the representations and warranties of the Obligors set forth in Sections 1(b) and 1(vv) of the Purchase
Agreement, (ii) the due performance by the Obligors and the Initial Purchasers of the covenants and agreements set forth in the Purchase
Agreement, (iii) the compliance by the Initial Purchasers with the offering and transfer procedures and the restrictions described in the Offering
Memorandum, (iv) the accuracy of the representations and warranties of the Initial Purchasers set forth in Section 2(d) of the Purchase
Agreement, (v) that purchasers to whom the Initial Purchasers initially resell the Initial Securities have been made aware of the information set
forth in the Offering Memorandum under the caption “Notice to Investors,” (A) the offer, issue, sale and delivery of the Initial Securities (and
the guaranties thereof by the Guarantors) to the Initial Purchasers and the initial resale of the Initial Securities (and the guaranties thereof by the
Guarantors) by the Initial Purchasers, each in the manner contemplated by the Purchase Agreement and the Offering Memorandum, do not
require registration under the Securities Act, and (B) prior to the consummation of the Exchange Offer or the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights Agreement), such offer, issue, sale and delivery of the Initial Securities (and the
guaranties thereof by the Guarantors) and such initial resale of the Initial Securities (and the guaranties thereof by the Guarantors) do not
require qualification of the Indenture under the Trust Indenture Act of 1939, as amended, provided, however , that we express no opinion as to
any subsequent resale of any Initial Security (and the guaranties thereof by the Guarantors) or any Exchange Security (and the guaranties
thereof by the Guarantors).
Each of the Obligors is not, and immediately after giving effect to the issuance and sale of the Initial Securities occurring today and
the application of proceeds therefrom as described in the Disclosure Package and the Offering Memorandum will not be, an “ investment
company ” within the meaning of said term as used in the Investment Company Act of 1940, as amended.
In addition, we have participated in conferences with officers and other representatives of the Obligors, the independent registered
public accounting firm and the reserve engineer for the Obligors, your counsel and your representatives at which the contents of the Disclosure
Package and the Offering Memorandum (including the Incorporated Documents) and related matters were discussed and, although we have not
independently verified and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Disclosure Package and the Offering Memorandum (except as and to the extent set
forth in paragraphs (11) and (12) above), on the basis of the foregoing (relying with respect to factual matters to the extent we deem appropriate
upon statements by officers and other representatives of the Obligors), no facts have come to our attention that have led us to believe that (i) the
Disclosure Package (including the Incorporated Documents), as of 3:30 p.m. (Houston Time) on May 22, 2013 (which you have informed us is
a time prior to the time of the first sale of the Initial Securities by any Initial Purchaser), contained an untrue
Exhibit A-5
statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or (ii) the Offering Memorandum (including the Incorporated Documents), as of its date and as of the
date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, it being understood that we express no opinion,
statement or belief in this letter with respect to (a) the historical and pro forma financial statements and related schedules, including the notes
and schedules thereto and the auditor’s report thereon, and (b) any other financial, accounting or oil and gas reserve data, included or
incorporated or deemed incorporated by reference in, or excluded from, the Offering Memorandum or the Disclosure Package. Without
limiting the foregoing, we call to your attention that (x) the Offering Memorandum has been prepared in the context of a Rule 144A transaction
and not as part of a registration statement under the Securities Act, and (y) the Offering Memorandum does not contain all information that
would be required in a registration statement under the Securities Act.
We express no opinion as to the laws of any jurisdiction other than (i) applicable laws of the State of New York, (ii) applicable laws of
the State of Texas, (iii) applicable laws of the United States of America, (iv) certain other specified laws of the United States of America to the
extent referred to specifically herein, (v) the General Corporation Law of the State of Delaware, (vi) the Delaware LP Act and (vii) the
Delaware LLC Act. References herein to “applicable laws” mean those laws, rules and regulations that, in our experience, are normally
applicable to transactions of the type contemplated by the Transaction Documents, without our having made any special investigation as to the
applicability of any specific law, rule or regulation, and that are not the subject of a specific opinion herein referring expressly to a particular
law or laws; provided however , that such references (including without limitation those appearing in paragraphs (9) and (10) above) do not
include any municipal or other local laws, rules or regulations, or any antifraud, environmental, labor, securities, tax, insurance or antitrust,
laws, rules or regulations.
Exhibit A-6
EXHIBIT B
Form of Opinion of Dan G. LeRoy
to be delivered pursuant to Section 5(b) of the Purchase Agreement.
May 13 , 2014
To each of the Initial Purchasers named
in the Purchase Agreement referenced herein
c/o
Wells Fargo Securities, LLC
375 Park Avenue
4th Floor
New York, New York 10152
Re:
6.625% Senior Notes due 2021 issued by Legacy Reserves LP and Legacy Reserves Finance Corporation
Ladies and Gentlemen:
I am furnishing this letter to you pursuant to Section 5(b) of the Purchase Agreement dated as of May 8, 2014 (the “ Purchase
Agreement ”) among Legacy Reserves LP, a Delaware limited partnership (the “ Partnership ”), Legacy Reserves Finance Corporation, a
Delaware corporation (“ Legacy Finance ” and, together with the Partnership, the “ Issuers ”), Legacy Reserves Operating GP LLC, a Delaware
limited liability company (“ Operating GP ”), Legacy Reserves Operating LP, a Delaware limited partnership (“ Operating LP ”), and Legacy
Reserves Services Inc., a Texas corporation (“ Services ” and together with the Issuers, Operating GP and Operating LP, the “ Legacy Parties ”)
and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, LLC, UBS Securities LLC,
Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, as representatives of the several initial purchasers named
therein (the “ Initial Purchasers ”), relating to the sale by the Issuers to the Initial Purchasers of $300 million aggregate principal amount of the
Issuers’ 6.625% Senior Notes due 2021 (the “ Notes ”). Capitalized terms used but not defined herein have the respective meanings ascribed
to such terms in the Purchase Agreement.
I am Vice President, General Counsel and Secretary of Legacy Reserves GP, LLC, a Delaware limited liability company and the
general partner of the Partnership (the “ General Partner ”), and have acted in such capacity in connection with the Purchase Agreement and the
transactions contemplated thereby.
In expressing the statements set forth herein, I have examined the Pricing Disclosure Package, the Final Offering Memorandum and
the Incorporated Documents to the extent related to the opinion set forth herein. As to any facts material to the statements expressed herein
that I did not independently establish or verify, I have relied, to the extent I deem appropriate, upon statements and certifications of public
officials, officers of the General Partner and others.
Based on the foregoing, and subject to the qualifications and limitations set forth herein, to my knowledge, except as otherwise
disclosed in the Pricing Disclosure Package and the Final
Exhibit B-1
Offering Memorandum, there is not pending or threatened any action, suit, proceeding, inquiry or investigation to which any of the Legacy
Parties is a party, or to which the property of any of the Legacy Parties is subject, before or brought by any court or governmental agency or
body that would reasonably be expected to result in a material adverse effect on the condition (financial or otherwise), business affairs or
business prospects of the Legacy Parties taken as a whole, or that would reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions contemplated in the Purchase Agreement or the performance by the
Partnership of its obligations thereunder.
Statements in this letter as to my knowledge of any matter have been made after such internal inquiry posed to the General Partner’s
executive management as I have deemed appropriate, and such statements do not indicate any external investigation of the existence or
non-existence of any facts or circumstances. Furthermore, as used herein, the phrase “to my knowledge” means only my actual knowledge
after such internal inquiry.
I am furnishing this letter only to the Initial Purchasers in connection with the sale of the Notes under the Purchase Agreement
occurring today, and this letter is solely for the benefit of the Initial Purchasers and is not to be used, circulated, quoted or otherwise referred to
for any other purpose or relied upon by any other person or entity, including any purchaser of any Note from any of the Initial Purchasers and
any subsequent purchaser of any Note or Exchange Note, without my express written permission. The statements expressed herein are as of the
date hereof only and are based on facts as of such date, and I disclaim any obligation to revise or update this letter subsequent to the date hereof
or to advise the Initial Purchasers or any other person or entity of any matter subsequent to the date hereof that would cause me to modify the
statements herein in whole or in part.
Very truly yours,
Exhibit B-2
ANNEX I
Resale Pursuant to Regulation S or Rule 144A . Each Initial Purchaser understands that:
Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell the Securities in the United States or to, or for the
benefit or account of, a U.S. person (other than a distributor), in each case, as defined in Rule 902 of Regulation S (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement of the offering of the Securities pursuant hereto and the
Closing Date, other than in accordance with Regulation S or another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any advertisement with respect to the Securities (including
any “tombstone” advertisement) to be published in any newspaper or periodical or posted in any public place and will not issue any circular
relating to the Securities, except such advertisements as are permitted by and include the statements required by Regulation S.
Such Initial Purchaser agrees that, at or prior to confirmation of a sale of the Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day restricted period referred to in Rule 903 of Regulation S, it will
send to such distributor, dealer or person receiving a selling concession, fee or other remuneration a confirmation or notice to substantially the
following effect:
“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part
of your distribution at any time or (ii) otherwise until 40 days after the later of the date the Securities were first offered to
persons other than distributors in reliance upon Regulation S and the Closing Date, except in either case in accordance with
Regulation S under the Securities Act (or in accordance with Rule 144A under the Securities Act or to accredited investors in
transactions that are exempt from the registration requirements of the Securities Act), and in connection with any subsequent
sale by you of the Securities covered hereby in reliance on Regulation S under the Securities Act during the period referred to
above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice
to substantially the foregoing effect. Terms used above have the meanings assigned to them in Regulation S under the
Securities Act.”
Such Initial Purchaser agrees that the Securities offered and sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until the expiration of the 40-day restricted period referred to in Rule 903 of
Regulation S and only upon certification of beneficial ownership of such Securities by non-U.S. persons or U.S. persons who purchased such
Securities in transactions that were exempt from the registration requirements of the Securities Act.
Annex I-1
Exhibit 4.2
Execution Version
REGISTRATION RIGHTS AGREEMENT
by and among
Legacy Reserves LP,
Legacy Reserves Finance Corporation,
the Guarantors party hereto,
and
Wells Fargo Securities, LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
RBC Capital Markets, LLC,
UBS Securities LLC,
Citigroup Global Markets Inc.,
Barclays Capital Inc.,
J.P. Morgan Securities LLC
as Representatives of the Initial Purchasers
Dated as of May 13, 2014
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of May 13, 2014, by and among Legacy
Reserves LP, a Delaware limited partnership (the “ Company ”), Legacy Reserves Finance Corporation, a Delaware corporation (“ Legacy
Finance ,” and together with the Company, the “ Issuers ”), the entities listed on Schedule A hereto (collectively, the “ Guarantors ”), and
Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, LLC, UBS Securities LLC,
Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, as representatives of the initial purchasers listed on
Schedule A to the Purchase Agreement (each an “ Initial Purchaser ” and, collectively, the “ Initial Purchasers ”), each of whom has agreed
to purchase the Issuers’ 6.625% Senior Notes due 2021 (the “ Initial Notes ”), fully and unconditionally guaranteed by the Guarantors (the “
Guarantees ”) pursuant to the Purchase Agreement (as defined below). The Initial Notes and the Guarantees related thereto are herein
collectively referred to as the “ Initial Securities .”
This Agreement is made pursuant to the Purchase Agreement, dated May 8, 2014 (the “ Purchase Agreement ”), by and among the
Issuers, the Guarantors and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to
time of Initial Securities, including the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Securities, the Issuers
have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 5(f) of the Purchase Agreement.
The parties hereby agree as follows:
1.
Definitions . As used in this Agreement, the following capitalized terms shall have the following meanings:
Additional Interest: As defined in Section 5 hereof.
Advice : As defined in Section 6(c) hereof.
Affiliate: As defined in Rule 144 promulgated by the Commission.
Agreement: As defined in the preamble hereto.
Blackout Period : As defined in the last paragraph of Section 4(a) hereof.
Broker-Dealer : Any broker or dealer registered under the Exchange Act.
Business Day : Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust
companies located in New York, New York are authorized or obligated to be closed.
Closing Date : May 13, 2014.
1
Commission : The Securities and Exchange Commission.
Company : As defined in the preamble hereto.
Consummate : A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of
(i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be
issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer
open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuers to the
Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial
Securities that were tendered by Holders thereof pursuant to the Exchange Offer.
Controlling Person : As defined in Section 8(a) hereof.
Exchange Act : The Securities Exchange Act of 1934, as amended.
Exchange Date : The date that Exchange Securities are delivered by the Issuers to the Registrar under the Indenture of Exchange
Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof
pursuant to the Exchange Offer.
Exchange Deadline : As defined in Section 3(b) hereof.
Exchange Offer : An offer registered under the Securities Act by the Issuers and the Guarantors pursuant to a Registration Statement
pursuant to which the Issuers offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such
outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders with terms that are identical
in all respects to the Transfer Restricted Securities (except that Exchange Securities will not contain terms with respect to any increase in
annual interest rate as described herein and the transfer restrictions).
Exchange Offer Registration Statement : The Registration Statement relating to the Exchange Offer, including the related
Prospectus, as defined in Section 3(a) hereof.
Exchange Securities : The 6.625% Senior Notes due 2021, of the same series under the Indenture as the Initial Securities, including
the Guarantees related thereto, to be offered to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.
FINRA : The Financial Industry Regulatory Authority, Inc., an independent regulatory organization.
Guarantees : As defined in the preamble hereto.
Holder : As defined in Section 2(b) hereof.
2
Indemnified Holder : As defined in Section 8(a) hereof.
Indenture : The Indenture, dated as of May 28, 2013, by and among the Issuers, the Guarantors and Wells Fargo Bank, National
Association, as trustee (the “ Trustee ”), pursuant to which the Initial Securities and the Exchange Securities are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with the terms thereof.
Initial Notes : As defined in the preamble hereto.
Initial Placement : The issuance and sale by the Issuers of the Initial Securities to the Initial Purchasers pursuant to the Purchase
Agreement.
Initial Purchaser : As defined in the preamble hereto.
Initial Securities : As defined in the preamble hereto.
Issuers : As defined in the preamble hereto.
Legacy Finance: As defined in the preamble.
Person : An individual, partnership, corporation, limited liability company, trust, unincorporated organization or other legal entity, or
a government or agency or political subdivision thereof.
Prospectus : The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by
all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.
Registration Default : As defined in Section 5 hereof.
Registration Statement : Any Exchange Offer Registration Statement or Shelf Registration Statement, which is filed pursuant to the
provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by reference therein.
Securities Act : The Securities Act of 1933, as amended.
Shelf Filing Deadline : As defined in Section 4(a) hereof.
Shelf Registration Statement : As defined in Section 4(a)(x) hereof.
Transfer Restricted Securities : Each Initial Security, until the earliest to occur of (a) the date on which such Initial Security is
exchanged in the Exchange Offer for an Exchange Security and entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act; (b) the date on which such Initial Security has been effectively registered under the
Securities Act and disposed of in accordance with a Shelf Registration Statement; (c) if a Shelf Registration Statement is required to be filed in
accordance with Section 4 hereof, one year from the effective date of such Shelf Registration
3
Statement; (d) the date two years after the date hereof; (e) the date upon which such Initial Security is distributed to the public by a
Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the
Prospectus contained therein) and (f) the date on which such Initial Security ceases to be outstanding.
Trust Indenture Act : The Trust Indenture Act of 1939, as amended.
Underwritten Registration or Underwritten Offering : A registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.
2.
(a)
Securities.
Securities Subject to this Agreement .
Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted
(b)
Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (a “
Holder ”) whenever such Person owns Transfer Restricted Securities.
3.
Registered Exchange Offer .
(a)
Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures
set forth in Section 6(a) hereof have been complied with), the Issuers and the Guarantors shall (i) cause to be filed with the Commission
sufficiently promptly so as to avoid a Registration Default with respect to the Exchange Offer, a Registration Statement under the Securities
Act relating to the Exchange Securities and the Exchange Offer (the “ Exchange Offer Registration Statement ”), (ii) use their commercially
reasonable efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act sufficiently promptly so
as to avoid a Registration Default with respect to the Exchange Offer, (iii) in connection with the foregoing, file (A) all pre-effective
amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement
to become effective, (B) if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under
the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made
under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon
the effectiveness of such Exchange Offer Registration Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to
permit resales of Transfer Restricted Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.
(b)
The Issuers and the Guarantors shall cause the Exchange Offer Registration Statement to be effective continuously and
shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws
to Consummate the Exchange Offer; provided, however , that in no event shall such period be less than 20 Business Days after the date notice
of the Exchange Offer is mailed to the Holders. The
4
Issuers shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange
Securities shall be included in the Exchange Offer Registration Statement. The Issuers and the Guarantors shall use commercially reasonable
efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 365 days after the Closing Date (or if such 365 th day is not a Business Day, the next succeeding
Business Day) (such 365 th day herein referred to as the “ Exchange Deadline ”).
(c)
The Issuers shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange
Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities that were acquired for
its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly
from the Issuers), may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an
“underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the
Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such
Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission.
The Issuers and the Guarantors shall use commercially reasonable efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it
is available for resales of Transfer Restricted Securities acquired by Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on
which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to
deliver a prospectus in connection with market-making or other trading activities.
The Issuers shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any
time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.
4.
Shelf Registration .
(a)
Shelf Registration. If (i) the Issuers and the Guarantors are not required to file an Exchange Offer Registration
Statement or to consummate the Exchange Offer for the Initial Securities because the Exchange Offer is not permitted by applicable law or
Commission policy; (ii) for any reason the Exchange Offer for the Initial Securities is not Consummated by the Exchange Deadline; or
(iii) with respect to any Holder of Transfer Restricted Securities that is not an Affiliate of the Issuer or Guarantors (A) such Holder is prohibited
by applicable law or
5
Commission policy from participating in the Exchange Offer, (B) such Holder may not resell the Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial Securities acquired directly
from the Issuers or one of their Affiliates, then, upon such Holder’s request, the Issuers and the Guarantors shall (1) if permitted by law, cause
the Transfer Restricted Securities of such Holder to be reissued in a form that does not bear any restrictive legends relating to the Securities Act
or a restrictive CUSIP number so that such Securities may be sold to the public in accordance with Rule 144 under the Securities Act by a
person that is not an Affiliate of the Issuer or any of the Guarantors where no conditions of Rule 144 are then applicable (other than the holding
period requirement in paragraph (d)(1)(ii) of Rule 144 so long as such holding period requirement is satisfied at such time of such reissue) and
(2) in the event the Issuers cannot or do not comply with the provisions of the foregoing clause within 20 Business Days of the later of (I) the
date of receipt by the Issuer of such notice of such Holder and (II) the first to occur of the Exchange Date and the Exchange Deadline (such
later date being a “ Shelf Filing Deadline ”), then the Issuers and the Guarantors shall:
(x)
cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an
amendment to the Exchange Offer Registration Statement (in either event, the “ Shelf Registration Statement ”) on or prior to the
Shelf Filing Deadline, which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to Section 4(b) hereof; and
(y)
use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the
Commission on or before the 90th day after the Shelf Filing Deadline (or if such 90th day is not a Business Day, the next succeeding
Business Day).
Each of the Issuers and the Guarantors shall keep any such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Transfer
Restricted Securities by the Holders entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one
year following the effective date of such Shelf Registration Statement (or such shorter period that will terminate when all the Transferred
Registered Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement). Each of the
Issuers and the Guarantors shall be deemed not to have used commercially reasonable efforts to keep the Shelf Registration Statement effective
during the requisite period if any of the Issuers or the Guarantors voluntarily takes any action that would result in Holders of Transfer
Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless (X) such
action is required by applicable law; or (Y) such action is taken by any of the Issuers or Guarantors in good faith and for valid business reasons
(not including avoidance of the Issuers or the Guarantors obligations hereunder) including, but not
6
limited to, the acquisition or divestiture of assets, so long as the Issuers and the Guarantors promptly thereafter comply with the requirements of
the last paragraph of Section 6(c) hereof (the period during which the Shelf Registration Statement is not available under clauses (X) or
(Y) above, the “ Blackout Period ”). The Blackout Period shall not exceed 45 days in any three-month period or 90 days in any twelve-month
period.
(b)
Provision by Holders of Certain Information in Connection with the Shelf Registration Statement . No Holder of
Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Issuers in writing, within ten Business Days after receipt of a request therefor, such
information as the Issuers may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the
Issuers all information required to be disclosed in order to make the information previously furnished to the Issuers by such Holder not
materially misleading.
5.
Additional Interest . If (a) the Exchange Offer is not Consummated on or prior to the Exchange Deadline, (b) a Shelf
Registration Statement applicable to the Transfer Restricted Securities required to be filed by the terms of this Agreement is not declared
effective (or does not automatically become effective) on or prior to the 90th calendar day following any Shelf Filing Deadline (or if such 90th
day is not a Business Day, the next succeeding Business Day), or (c) a Shelf Registration Statement applicable to the Transfer Restricted
Securities required to be filed by the terms of this Agreement is declared effective (or automatically becomes effective) as required but
thereafter fails to remain effective or becomes unusable in connection with resales for more than 30 calendar days, excluding any Blackout
Period (each such event referred to in clauses (a) through (c) above, a “ Registration Default ”), the Issuers hereby agree that the interest rate
borne by the Transfer Restricted Securities shall be increased by 1.0% per annum (“ Additional Interest ”) for the period of occurrence of the
Registration Default until the earlier of the consummation of the Exchange Offer and such time as no Registration Default is in
effect. Following the cure of all Registration Defaults, Additional Interest will cease to accrue and the interest rate on the Transfer Restricted
Securities will revert to the original rate; provided , however , that, if after the date such Additional Interest ceases to accrue, another
Registration Default occurs, Additional Interest will again commence accruing pursuant to the foregoing provisions.
All obligations of the Issuers and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with
respect to such security shall have been satisfied in full.
6.
Registration Procedures .
(a)
Exchange Offer Registration Statement. In connection with the Exchange Offer, the Issuers and the Guarantors shall
comply with all of the applicable provisions of Section 6(c) hereof, shall use commercially reasonable efforts to effect such exchange to permit
the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof. As a condition
to its participation in the Exchange Offer pursuant to the
7
terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuers, prior to the Consummation
thereof, a written representation to the Issuers (which may be contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate (within the meaning of Rule 405 under the Securities Act) of the Issuers or the
Guarantors, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate
in, a distribution (within the meaning of the Securities Act) of the Exchange Securities to be issued in the Exchange Offer and (C) it is
acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Issuers’ preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could
not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley
and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s
letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters, and (2) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction
should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by
such Holder directly from the Issuers.
(b)
Shelf Registration Statement . In connection with any Shelf Registration Statement, each of the Issuers and the
Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use commercially reasonable efforts to effect such registration
to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto each of the Issuers and the Guarantors will as expeditiously as possible prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale
of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof.
(c)
General Provisions . In connection with any Registration Statement and any Prospectus required by this Agreement to
permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus
required to permit resales of Initial Securities by Broker-Dealers), each of the Issuers and the Guarantors shall:
(i)
use commercially reasonable efforts to keep such Registration Statement continuously effective and provide
all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the
Guarantors) for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuers shall file promptly
8
an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the
case of either clause (A) or (B), use commercially reasonable efforts to cause such amendment to be declared effective and such Registration
Statement and the related Prospectus to become usable for their intended purposes as soon as practicable thereafter;
(ii)
prepare and file with the Commission such amendments and post-effective amendments to the applicable
Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4
hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424, 430A and 430B under the Securities Act
in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii)
advise the underwriters, if any, and selling Holders promptly and, if requested by such Persons, to confirm
such advice in writing, (A) when the Prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to
any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein (with respect to the Prospectus, in light of the circumstances under which
they were made) not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or blue sky laws, each of the Issuers and the Guarantors shall use
commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;
(iv)
furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration
Statement, and each underwriter, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Registration Statement),
9
which documents will be subject to the review and comment of such Holders and underwriters in connection with such sale, if any, for a period
of at least five Business Days, and the Issuers will not file any such Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of
Transfer Restricted Securities covered by such Registration Statement or the underwriters, if any, shall reasonably object in writing within five
Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such
period); provided, that this clause (iv) shall not apply to any filing by the Company of any annual report on Form 10-K, quarterly report on
Form 10-Q or Current Report on Form 8-K with respect to matters unrelated to the Initial Securities, the Transfer Restricted Securities and the
Exchange Securities and the offering or exchange therefor. The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be
reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission;
(v)
in the case of a Shelf Registration Statement, make available at during normal business hours for inspection by
the Initial Purchasers, the managing underwriters, if any, participating in any disposition pursuant to such Registration Statement and any
attorney or accountant retained by such Initial Purchasers or any of the underwriters, all financial and other records, pertinent corporate
documents and properties of each of the Issuers and the Guarantors and cause the Issuers’ and the Guarantors’ officers, directors and employees
to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing thereof (and each such person shall agree that it will keep such
information confidential and not disclose any such records, documents, properties or information unless (A) the disclosure of such records,
documents, properties or information is, in the opinion of counsel to such person, necessary to avoid or correct a misstatement or omission in
such Registration Statement, (B) the release of such records, documents, properties or information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (C) the records, documents, properties or information in such records is public or has been made
generally available to the public other than as a result of a disclosure or failure to safeguard by such person or (D) disclosure of such records,
documents, properties or information is, in the opinion of counsel for any such person, necessary or advisable in connection with any action,
claim, suit or proceeding, directly or indirectly, involving such person and arising out of, based upon, related to, or involving this Agreement,
or any transaction contemplated hereby or arising hereunder) and prior to its effectiveness and to participate in meetings with investors to the
extent requested by the managing underwriters, if any;
(vi)
if requested by any selling Holders or the underwriters, if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and
underwriters, if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of
Distribution” of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold
to such underwriters, the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
10
supplement or post-effective amendment as soon as practicable after the Issuers are notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(vii)
in the case of a Shelf Registration Statement, furnish to each Initial Purchaser, each selling Holder and each of
the underwriters, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each
amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(viii)
deliver to each selling Holder and each of the underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of
the Issuers and the Guarantors hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriters, if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(ix)
in the case of a Shelf Registration Statement, enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to
such extent as may be requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with
any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten Registration, each of the Issuers and the Guarantors shall:
(A)
furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance
and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness
of the Shelf Registration Statement:
(1)
a certificate, dated the date of effectiveness of the Shelf Registration Statement signed by
(y) the Chief Executive Officer, the President or any Vice President (or persons holding similar positions, as applicable) and (z) the Chief
Financial Officer or Chief Accounting Officer (or persons holding similar positions, as applicable) of the Issuers and the Guarantors,
confirming, as of the date thereof, the matters set forth in Section 5(e) of the Purchase Agreement and such other matters as such parties may
reasonably request;
(2)
an opinion, dated the date of effectiveness of the Shelf Registration Statement, as the case
may be, of counsel for the Issuers and the Guarantors, covering the matters set forth in Section 5(c) of the Purchase Agreement and including a
statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuers and the
Guarantors, representatives of the independent public accountants for the Issuers and the Guarantors, representatives of the underwriters, if any,
and counsel to the underwriters, if any, in connection with the preparation of such Shelf Registration Statement and the related Prospectus and
have considered the matters required to be stated
11
therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel’s attention that caused such
counsel to believe that the Shelf Registration Statement, at the time such Shelf Registration Statement became effective, and 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, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or
omitted 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. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial, accounting
and reserve data included in any Shelf Registration Statement contemplated by this Agreement or the related Prospectus; and
(3)
a customary comfort letter, dated the date of effectiveness of the Shelf Registration
Statement, from the Issuers’ independent accountants, in the customary form and covering matters of the type customarily requested to be
covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in
the comfort letters delivered pursuant to Section 5(a) of the Purchase Agreement, without exception;
(B)
set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and
(C)
deliver such other documents and certificates as may be reasonably requested by such parties to
evidence compliance with Section 6(c)(ix)(A) hereof and with any customary conditions contained in the underwriting agreement or other
agreement entered into by the Issuers or any of the Guarantors pursuant to this Section 6(c)(ix), if any. If at any time the representations and
warranties of the Issuers and the Guarantors contemplated in Section 6(c)(ix)(A)(1) hereof cease to be true and correct, the Issuers or the
Guarantors shall so advise the Initial Purchasers and the underwriters, if any, and each selling Holder promptly and, if requested by such
Persons, shall confirm such advice in writing;
(x)
prior to any public offering of Transfer Restricted Securities pursuant to a Shelf Registration Statement,
cooperate with the selling Holders, the underwriters, if any, and their respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriters, if any,
may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement; provided, however , that none of the Issuers nor the Guarantors shall be
required to register or qualify as a foreign entity where it is not then so qualified or to take any action that would subject it to the service of
process in suits or to taxation in any jurisdiction where it is not then so subject;
12
(xi)
shall issue, in connection with the Consummation of the Exchange Offer and in accordance with the Indenture,
Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the
Issuers by the Holders in exchange therefore;
(xii)
cooperate with the selling Holders and the underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the Holders or the underwriters, if any, may request at least two
Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriters;
(xiii)
use commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other domestic governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso
contained in Section 6(c)(xii) hereof;
(xiv)
if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not
contain an 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;
(xv)
provide a CUSIP number for all Exchange Securities not later than the effective date of the Registration
Statement covering such Exchange Securities and provide the Trustee under the Indenture with printed certificates for such Exchange
Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such
Exchange Securities are eligible for deposit with the Depository Trust Company;
(xvi)
cooperate and assist in any filings required to be made with the FINRA and in the performance of any due
diligence investigation by any underwriter (including any “qualified independent underwriter” as that term is defined within the rules and
regulations of the FINRA) that is required to be retained in accordance with the rules and regulations of the FINRA;
(xvii)
otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 under the Securities Act (which need not be audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with the first month of the Issuers’ first fiscal quarter commencing after the
effective date of the Registration Statement;
13
(xviii)
cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first
Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of the Initial
Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the
Trust Indenture Act; and to execute and use commercially reasonable efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xix)
in the case of a Shelf Registration Statement, cause all Transfer Restricted Securities covered by such Shelf
Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Issuers
are then listed if requested by the Holders of a majority in aggregate principal amount of Initial Securities or the managing underwriters, if any.
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuers of the existence
of any fact of the kind described in Section 6(c)(iii)(D) hereof or any Blackout Period described in Section 4(a) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder’s receipt
of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof, or until it is advised in writing (the “
Advice ”) by the Issuers that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Issuers, each Holder will deliver to the Issuers (at the Issuers’ expense)
all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Securities
that was current at the time of receipt of such notice. In the event the Issuers shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof or notice of any Blackout Period to
and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xiv) hereof or shall have received the Advice.
7.
Registration Expenses .
(a)
All expenses incident to the Issuers’ and the Guarantors’ performance of or compliance with this Agreement will be
borne by the Issuers and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including,
without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the FINRA
(and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and
regulations of the FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all
expenses of printing (including printing of Prospectuses), if any, messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Issuers, the Guarantors and, subject to Section 7(b) hereof, the Holders of Transfer Restricted
14
Securities; and (v) all fees and disbursements of independent certified public accountants of the Issuers and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to such performance).
Each of the Issuers and the Guarantors will, in any event, bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of
any Person, including special experts, retained by the Issuers or the Guarantors.
(b)
In connection with any Shelf Registration Statement required by this Agreement, the Issuers and the Guarantors, jointly
and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being registered pursuant to the Shelf
Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Vinson & Elkins
L.L.P. or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
8.
Indemnification .
(a)
The Issuers and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and
(ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder
(any of the Persons referred to in this clause (ii) being hereinafter referred to as a “ controlling person ”) and (iii) the respective officers,
directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an “ Indemnified Holder ”), to the fullest extent lawful, from and against any and all losses, claims,
damages or liabilities (or actions in respect thereof) including, without limitation, and as incurred, reimbursement of each such Indemnified
Holder for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim damage,
liability or action, joint or several, directly or indirectly arising out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be stated therein (in the case of the Registration Statement) or necessary to make the
statements therein (with respect to the Prospectus, in light of the circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities or actions are caused by an untrue statement or omission or alleged untrue statement or omission that is
made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Issuers by any of the
Holders expressly for use therein. This indemnity agreement shall be in addition to any liability which the Issuers or any of the Guarantors
may otherwise have.
In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted
against any of the Indemnified Holders with respect to which indemnity may be sought against the Issuers or the Guarantors, such Indemnified
Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Issuers and the Guarantors in writing;
provided, however, that the failure to give such notice shall not relieve the Issuers or any of the Guarantors of their respective obligations
pursuant to
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this Agreement. Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such
counsel shall be paid, as incurred, by the Issuers and the Guarantors (regardless of whether it is ultimately determined that an Indemnified
Holder is not entitled to indemnification hereunder). The Issuers and the Guarantors shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Issuers and the Guarantors shall be
liable for any settlement of any such action or proceeding effected with the Issuers’ and the Guarantors’ prior written consent, and each of the
Issuers and the Guarantors agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability
or expense by reason of any settlement of any action effected with the written consent of the Issuers and the Guarantors. The Issuers and the
Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent
or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b)
Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Issuers, the Guarantors and their
respective directors, officers of the Issuers and the Guarantors who sign a Registration Statement, and any Person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Issuers or any of the Guarantors, and the respective
officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the
Issuers and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such
Holder furnished in writing by such Holder expressly for use in any Registration Statement or Prospectus. In case any action or proceeding
shall be brought against the Issuers, the Guarantors or their respective directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given the Issuers and
the Guarantors, and the Issuers, the Guarantors, their respective directors and officers and such controlling person shall have the rights and
duties given to each Holder by the preceding paragraph.
(c)
If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or
(b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities or actions
referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the
relative benefits received by the Issuers and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement
(which in the case of the Issuers and the Guarantors shall be deemed to be equal to the total gross proceeds to the Issuers and the Guarantors
from the Initial Placement without giving effect to any prepaid interest), the amount of Additional Interest
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which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities or
actions, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Issuers and the
Guarantors, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Issuers and the Guarantors on the
one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers or
any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and actions referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph
of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any
action or claim.
The Issuers, the Guarantors and each Holder agree that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, liabilities or actions referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8,
none of the Holders shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received
by such Holder with respect to the Initial Securities exceeds the amount of any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Holders’ obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal
amount of Initial Securities held by each of the Holders hereunder and not joint.
9.
Rule 144A . Each of the Issuers and the Guarantors hereby agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any
sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A
under the Securities Act.
10.
Participation in Underwritten Registrations . No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder’s Transfer
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Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up
letters and other documents required under the terms of such underwriting arrangements.
11.
Selection of Underwriters . The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who
desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment
bankers and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering; provided, however , that such investment banker(s) and managing
underwriters must be reasonably satisfactory to the Issuers.
12.
Miscellaneous .
(a)
Remedies . Each of the Issuers and the Guarantors hereby agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b)
No Inconsistent Agreements . Each of the Issuers and the Guarantors will not on or after the date of this Agreement
enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuers’ or any of the Guarantors’ securities under any agreement in effect on the date hereof.
(c)
Adjustments Affecting the Securities . The Issuers will not take any action, or permit any change to occur, with respect
to the Initial Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.
(d)
Amendments and Waivers . The provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be given unless the Issuers have (i) in the case of Section 5 hereof and
this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other
provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities
(excluding any Transfer Restricted Securities held by the Issuers or its Affiliates). Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the
Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being
tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser
hereunder, the Issuers shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification,
supplement, waiver, consent or departure is to be effective.
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(e)
Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:
(i)
under the Indenture; and
(ii)
if to a Holder, at the address set forth on the records of the Trustee under the Indenture, with a copy to the Trustee
if to the Issuers:
Legacy Reserves LP
303 W. Wall Street, Suite 1400
Midland, TX 79701
Facsimile: (432) 689-5299
Attention: Dan G. LeRoy
with a copy (which shall not constitute notice) to:
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
Facsimile: (713) 220-4285
Attention: George J. Vlahakos
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the
Trustee at the address specified in the Indenture.
(f)
Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Transfer Restricted
Securities; provided, however , that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.
(g)
Counterparts . This Agreement may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the
same agreement.
(h)
meaning hereof.
Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the
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(i)
Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF.
(j)
Severability . In the event that any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be affected or impaired thereby.
(k)
Entire Agreement . This Agreement is intended by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the
registration rights granted by the Issuers with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
[ signature page follows ]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
ISSUERS:
LEGACY RESERVES LP
By:
Legacy Reserves GP, LLC,
its general partner
By:
Name:
Title:
/s/ James Daniel Westcott
James Daniel Westcott
Executive Vice President and Chief Financial Officer
LEGACY RESERVES FINANCE CORPORATION
By:
Name:
Title:
/s/ James Daniel Westcott
James Daniel Westcott
Executive Vice President and Chief Financial Officer
GUARANTORS:
LEGACY RESERVES OPERATING GP LLC
By:
Legacy Reserves LP,
its sole member
By:
Legacy Reserves GP, LLC,
its general partner
By:
Name:
Title:
/s/ James Daniel Westcott
James Daniel Westcott
Executive Vice President and Chief Financial Officer
Registration Rights Agreement Signature Page
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:
Name:
Title:
/s/ James Daniel Westcott
James Daniel Westcott
Executive Vice President and Chief Financial Officer
LEGACY RESERVES SERVICES, INC.
By:
Name:
Title:
/s/ James Daniel Westcott
James Daniel Westcott
Executive Vice President and Chief Financial Officer
Registration Rights Agreement Signature Page
The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.
WELLS FARGO SECURITIES, LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
RBC CAPITAL MARKETS, LLC
UBS SECURITIES LLC
BARCLAYS CAPITAL INC.
CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES LLC
Acting on behalf of themselves and as the
Representatives of the several Initial Purchasers
By:
WELLS FARGO SECURITIES, LLC
By:
By:
/s/ J. Lex Maultsby
Name:
J. Lex Maultsby
Title:
Managing Director
RBC CAPITAL MARKETS, LLC
By:
By:
Kevin J. Scotto
Director
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
By:
/s/ Kevin J. Scotto
Name:
Title:
/s/ Scott Schlossel
Name:
Title:
Scott Schlossel
Managing Director
UBS SECURITIES LLC
By:
By:
/s/ John Stroll
Name:
Title:
John Stroll
Director
/s/ Luke Bartolone
Name:
Luke Bartolone
Title:
Director
Registration Rights Agreement Signature Page
By:
CITIGROUP GLOBAL MARKETS INC.
By:
By:
BARCLAYS CAPITAL INC.
By:
By:
/s/ Stuart Dickson
Name: Stuart Dickson
Title:
Managing Director
/s/ Paul Cugno
Name: Paul Cugno
Title:
Managing Director
J.P. MORGAN SECURITIES LLC
By:
/s/ Jack D. Smith
Name: Jack D. Smith
Title:
Managing Director
Registration Rights Agreement Signature Page
SCHEDULE A
Guarantors
Legacy Reserves Operating GP LLC
Legacy Reserves Operating LP
Legacy Reserves Services, Inc.