Equity Distribution Agreement (Common Units and Series A Preferred Units)

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, N.Y. 10010-3629

    

UBS Securities LLC

299 Park Avenue

New York, New York 10171-0026

    

BMO Capital Markets Corp.

Three Times Square, 27th Floor

New York, New York 10119    

 

MLV & Co. LLC

1251 Avenue of the Americas, 41st Floor

New York, New York 10020

Ladies and Gentlemen:

Vanguard Natural Resources, LLC, a Delaware limited liability company (the “Company”), confirms its agreement (this “Agreement”) with Credit Suisse Securities (USA) LLC, UBS Securities LLC, BMO Capital Markets Corp. and MLV & Co. LLC (each a “Manager” and collectively, the “Managers”), with respect to the issuance and sale from time to time by the Company, in the manner and subject to the terms and conditions described below, of a combination of or either: (1) up to an aggregate number of common units representing limited liability company interests in the Company (the “Common Units”) having an aggregate Gross Sales Price (as defined in Section 3(b) herein) of $500,000,000 (the “Maximum Number of Common Units”) or (2) up to an aggregate number of 7⅞% Series A Cumulative Redeemable Perpetual Series A Preferred Units (the “Series A Preferred Units”) having an aggregate Gross Sales Price (as defined in Section 3(b) herein) of $250,000,000 (the “Maximum Number of Series A Preferred Units”). The Common Units and Series A Preferred Units are described in the Prospectus referred to below.

The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-179050) (as amended, the “registration statement”), for registration of the Common Units and Series A Preferred Units under the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the “Act”), which sets forth the terms of the offering, sale and plan of distribution of the Common Units and Series A Preferred Units and additional information concerning the Company and its business. Except where the context otherwise requires, “Registration Statement,” as used herein, means the registration statement, as amended at the time of such registration statement’s effectiveness for purposes of Section 11 of the Act, as such section applies to the Managers, including (1) all documents filed as a part thereof or incorporated or deemed to be incorporated by reference therein, (2) any information contained or incorporated by reference in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act, to the extent such information is deemed, pursuant to Rule 430B or Rule 430C under the Act, to be part of the registration statement at the effective time, and (3) any registration statement filed to register the offer and sale of Common Units and Series A Preferred Units pursuant to Rule 462(b) under the Act. Except where the context otherwise requires, as used herein, (i) “Basic Prospectus” means the prospectus dated January 18, 2012 filed as part of the Registration Statement, together with any amendments or supplements thereto as of the date of this Agreement; (ii) “Prospectus Supplement” means the final prospectus supplement dated November 26, 2013, relating to the Common Units and Series A Preferred Units, filed by the Company

with the Commission pursuant to Rule 424(b) under the Act on or before the second business day after the date hereof (or such earlier time as may be required under the Act), in the form furnished by the Company to the Managers in connection with the offering of the Common Units and Series A Preferred Units; (iii) “Prospectus” means the Prospectus Supplement together with the Basic Prospectus; and (iv) “Permitted Free Writing Prospectuses” means the documents listed on Exhibit G hereto and any other “issuer free writing prospectus” (as defined in Rule 433 of the Act) that relates to the Common Units or Series A Preferred Units, as the case may be, and which the Company and the Managers reasonably agree from time to time is a Permitted Free Writing Prospectus. Any reference herein to the registration statement, the Registration Statement, the Basic Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free Writing Prospectus shall, unless stated otherwise, be deemed to refer to and include the documents incorporated by reference, or deemed to be incorporated by reference, therein (the “Incorporated Documents”), including, unless the context otherwise requires, the documents, if any, filed as exhibits to such Incorporated Documents. Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Basic Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free Writing Prospectus shall, unless stated otherwise, be deemed to refer to and include the filing of any document under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”), on or after the initial effective date of the Registration Statement, or the date of Basic Prospectus, the Prospectus Supplement, the Prospectus or such Permitted Free Writing Prospectus, as the case may be, and deemed to be incorporated therein by reference.

As of the date hereof:

The Company, VNG, VNR Finance and the Operating Subsidiaries are sometimes referred to herein collectively as the “Vanguard Parties.” As used herein, “Operative Agreements” means collectively, the Company LLC Agreement (as defined in Section 4(d) hereof), the VNG LLC Agreement (as defined in Section 4(f) hereof), the Certificate of Incorporation and Bylaws of VNR Finance (the “VNR Finance Organizational Documents”), and each Operating Subsidiary LLC Agreement (as defined in Section 4(h)  hereof), as they may be amended or restated at or prior to any Closing Date (as defined below).

The Company and each Manager agree as follows:

1.Issuance and Sale.

such Manager as agent for the Company and the manner in which and other terms upon which such placement is to occur (each such transaction being referred to as a “Transaction”). As used in this Agreement, (i) the “Term” shall be the period commencing on the date hereof and ending on the earliest of (x) November 26, 2016, (y) the date on which both the Maximum Number of Common Units and the Maximum Number of Series A Preferred Units have been issued and sold pursuant to this Agreement, and (z) the termination of this Agreement pursuant to Sections 9 or 10 hereof (the “Termination Date”), (ii) an “Exchange Business Day” means any day during the Term that is a trading day for the Exchange other than a day on which trading on the Exchange (as defined below) is scheduled to close prior to its regular weekday closing time, and (iii) “Exchange” means the NASDAQ Global Select Market or such other exchange registered with the Commission under Section 6(a) of the Exchange Act on which the Company’s Common Units or Series A Preferred Units are trading at such time. Notwithstanding the foregoing, without the prior written consent of each of the Company and the applicable Manager, the Company shall not request the sale of any Common Units or Series A Preferred Units that would be sold, and the applicable Manager need not make any sale of Common Units or Series A Preferred Units, (i) during any period in which the Company is in possession of material non-public information, or (ii) during the period beginning on the 14th day prior to the publication of a press release containing, or public announcement of, its earnings, revenues or other results of operations for such fiscal year or fiscal quarter, and ending at the time that is 24 hours after the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q for such fiscal year or quarter, as applicable, is filed with the Commission.

accuracy of the representations and warranties of the Company herein, to the performance by the Company of the covenants in Sections 5 and 7 hereof and elsewhere in this Agreement and to the continuing satisfaction of the additional conditions specified in Sections 6 and 8 hereof.

2.No Purchases as Principal. Neither the Company nor any Manager shall enter into, or have any obligation to enter into, any transaction in which such Manager would be obligated to purchase Common Units or Series A Preferred Units as principal pursuant to this Agreement.

3.Transaction Notices and Sales Process.

A Transaction Notice shall not set forth a Specified Number of Common Units that, when added to the aggregate number of Common Units previously purchased and to be purchased pursuant to pending

Transaction Notices (if any) hereunder, results in a total that exceeds the Maximum Number of Common Units or a Specified Number of Series A Preferred Units that, when added to the aggregate number of Series A Preferred Units previously purchased and to be purchased pursuant to pending Transaction Notices (if any) hereunder, results in a total that exceeds the Maximum Number of Series A Preferred Units. The Company shall have responsibility for maintaining records with respect to the aggregate dollar amount of Common Units and Series A Preferred Units sold, or for otherwise monitoring the availability of Common Units and Series A Preferred Units for sale under the Registration Statement. There shall be no more than one Transaction Notice and one related Transaction with respect to any Purchase Date for either Common Units or Series A Preferred Units. A Transaction Notice conforming to the foregoing requirements, once accepted by the Company, shall be irrevocable, and (i) the Company shall be obligated, subject to the terms of, and satisfaction of the conditions set forth in, this Agreement and such Transaction Notice, including, but not limited to, Section 3(c) hereof, to sell the Specified Number of Common Units or Specified Number of Series A Preferred Units, as applicable, and (ii) such Manager shall be obligated, subject to the terms of, and satisfaction of the conditions set forth in, this Agreement and such Transaction Notice, including, but not limited to, Sections 1(c), (d) and (e) and Section 3(e) hereof, to use its commercially reasonable efforts to solicit offers for the Common Units or Series A Preferred Units, as applicable. Notwithstanding the foregoing, if the terms of any Transaction contemplate that Common Units or Series A Preferred Units, as applicable, shall be sold on more than one Purchase Date, then the Company and such Manager shall agree to such additional terms and conditions as they deem necessary in respect of such multiple Purchase Dates, and such additional terms and conditions shall be set forth in the relevant Transaction Notice and be binding to the same extent as any other terms contained therein.

Company shall indemnify such Manager and its successors and assigns and hold them harmless from and against any loss, damage, expense, liability or claim that such Manager may incur as a result of such failure.

4.Representations and Warranties of the Company. The Company represents and warrants to each Manager, on and as of (i) the date hereof, (ii) each date on which the Company accepts a Transaction Notice (a “Time of Acceptance”), (iii)  each Purchase Date or Time of Sale (each as defined below), if different, and (iv) each Closing Date (each such date listed in (i) through (iv), a “Representation Date”) that:

Units or Series A Preferred Units, as applicable, did or will any Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and at no time during such periods did or will any Prospectus, as then amended or supplemented, together with any combination of one or more of the then issued Permitted Free Writing Prospectuses, if any, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (vi) each of the Prospectus Supplement and the Basic Prospectus will comply, as of the date that it is filed with the Commission, the date of the Prospectus Supplement, the time of purchase, each additional time of purchase, if any, and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Common Units or Series A Preferred Units, as applicable, in all material respects, with the requirements of the Act (in the case of the Prospectus, including, without limitation, Section 10(a) of the Act); (vii) as of the date that it is filed with the Commission, the date of the Permitted Free Writing Prospectus, the time of purchase, each additional time of purchase, if any, and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Common Units or Series A Preferred Units, as applicable, did or will any Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (viii) as of the date that it is filed with the Commission, the date of the Permitted Free Writing Prospectus, the time of purchase, each additional time of purchase, if any, and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Common Units or Series A Preferred Units, as applicable, did or will any Permitted Free Writing Prospectus include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty with respect to any statement contained in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in conformity with information concerning any Manager and furnished in writing by or on behalf of such Manager expressly for use in the Registration Statement, the Prospectus or such Permitted Free Writing Prospectus; and (ix) each Incorporated Document, at the time such document was filed with the Commission or at the time such document became effective, as applicable, complied, in all material respects, with the requirements of the Exchange Act and did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (x) in the past 12 calendar months, the Company has filed all documents required to be filed by it prior to the date hereof with the Commission pursuant to the reporting requirements of the Exchange Act. “Time of Sale” means, with respect to each sale of Common Units or Series A Preferred Units, as applicable, pursuant to a Transaction Notice, the time after the Time of Acceptance as to such Common Units or Series A Preferred Units, as applicable, and immediately prior to such Manager’s initial entry into contracts with investors for the sale of such Common Units or Series A Preferred Units, as applicable.

sale of Common Units or Series A Preferred Units, in each case other than the Prospectus and the Permitted Free Writing Prospectuses, if any; the Company has not, directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus except in compliance with Rules 164 and 433 under the Act; assuming that such Permitted Free Writing Prospectus is so sent or given after the Registration Statement was filed with the Commission (and after such Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act, filed with the Commission), the sending or giving, by any Manager, of any Permitted Free Writing Prospectus will satisfy the provisions of Rule 164 or Rule 433 (without reliance on subsections (b), (c) and (d) of Rule 164); the conditions set forth in one or more of subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the Act are satisfied, and the registration statement relating to the offering of the Common Units and Series A Preferred Units, contemplated hereby, as initially filed with the Commission, includes a prospectus that, other than by reason of Rule 433 or Rule 431 under the Act, satisfies the requirements of Section 10 of the Act; neither the Company nor any Manager is disqualified, by reason of subsection (f) or (g) of Rule 164 under the Act, from using, in connection with the offer and sale of Common Units or Series A Preferred Units, as applicable, “free writing prospectuses” (as defined in Rule 405 under the Act) pursuant to Rules 164 and 433 under the Act; the Company is not an “ineligible issuer” (as defined in Rule 405 under the Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Act with respect to the offering of Common Units or Series A Preferred Units contemplated by the Registration Statement; the parties hereto agree and understand that the content of any and all “road shows” (as defined in Rule 433 under the Act) related to the offering of Common Units or Series A Preferred Units, contemplated hereby is solely the property of the Company.

Such Common Units, Series A Preferred Units and Class B Units conform in all material respects to the descriptions thereof contained in the Prospectus.

direct ownership of the limited liability company interests in Clear Fork, none of the Vanguard Parties owns directly or indirectly any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity.

operations or prospects of the Vanguard Parties, taken as a whole, whether or not arising from transactions in the ordinary course of business; (iii) none of the Vanguard Parties has incurred any material liability or obligation, direct, indirect or contingent, or entered into any material transaction or agreement; and (iv) there has been no material change in the consolidated capitalization of the Vanguard Parties, taken as a whole.

other real and personal property reflected in the Registration Statement and the Prospectus as assets owned by them, in each case free and clear of all liens, encumbrances and defects except as (i) are described in the Registration Statement and the Prospectus, (ii) are permitted under the Credit Agreement or (iii) would not result in a Material Adverse Effect; any other real property and buildings held under lease by the Vanguard Parties are held by them under valid, subsisting and enforceable leases with such exceptions as could not reasonably be expected to have a Material Adverse Effect; and the working interests derived from oil, natural gas and mineral leases or mineral interests that constitute a portion of the real property held or leased by the Vanguard Parties reflect in all material respects the right of the Vanguard Parties to explore, develop or produce hydrocarbons as described in the Prospectus from such real property, and the care taken by the Vanguard Parties with respect to acquiring or otherwise procuring such leases or mineral interests was generally consistent with standard industry practices in the areas in which the Vanguard Parties operate for acquiring or procuring leases and interests therein to explore, develop or produce hydrocarbons. Each of the Vanguard Parties owns or leases all such properties as are necessary to the conduct of its operations as presently conducted.

primarily for the purpose of protecting the environment) to which a governmental authority is a party and which has the potential to result in monetary sanctions of $100,000 or more.

that would result in, a violation by such persons of the Foreign Corrupt Practices Act of 1977 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 Vanguard Parties and, to the knowledge of the Vanguard Parties, their 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.

Any certificate signed by any officer of the Company and delivered to the Managers or counsel for the Managers in connection with the offering of Common Units or Series A Preferred Units, shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Manager.

5.Certain Covenants of the Company. The Company hereby agrees with each Manager:

effect so long as required for the distribution of Common Units or Series A Preferred Units, as applicable; provided that the Company shall not be required to qualify as a foreign corporation, become a dealer of securities, or become subject to taxation in, or to consent to the service of process under the laws of, any such state (except service of process with respect to the offering and sale of Common Units or Series A Preferred Units, as applicable); and to promptly advise each Manager of the receipt by the Company of any notification with respect to the suspension of the qualification of Common Units or Series A Preferred Units, as applicable, for sale in any jurisdiction or the initiation of any proceeding for such purpose.

and file with the Commission such amendment or supplement, whether by filing documents pursuant to the Act, the Exchange Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement, the Prospectus or any such Permitted Free Writing Prospectus comply with such requirements.

fees and disbursements of the one designated outside counsel to the Managers (A) in an amount not to exceed $25,000 in connection with the negotiation and entry into this Agreement by the parties hereto (which shall include all matters required to be completed as conditions precedent to the parties agreeing to and executing this Agreement and initiating the transactions contemplated hereunder) and (B) in an amount not to exceed $5,000 for each review of the “comfort” letters and other documents referred to in Section 7(b), and (ix) any other costs and expenses of the Company incident to the performance of the Company’s other obligations hereunder. For the avoidance of doubt, each Manger shall have the right to employ its own counsel, but the Company shall only be obligated to reimburse the Managers for the fees and disbursements of one outside counsel, which the Managers have designated as Latham & Watkins LLP.

6.First Closing. The Company and the Managers agree that the documents referred to below will be the only documents delivered in connection with the execution of this Agreement and the first Transaction Notice hereunder:

7.Additional Covenants of the Company. The Company further covenants and agrees with each Manager as follows:

any Permitted Free Writing Prospectus as amended and supplemented to the date of such letter;

provided, however, that the Company will not be required to furnish any of such certificates, opinions, letters or other documents to the Managers in connection with the filing of a Current Report on Form 8-K.

8.Conditions of each Manager’s Obligation with Respect to Sale of the Common Units and Series A Preferred Units. Each Manager’s obligation to solicit purchases on an agency basis for Common Units and Series A Preferred Units pursuant to a Transaction Notice that has been accepted by the Company shall be subject to the satisfaction of the following conditions at the Time of Acceptance, the time of the commencement of trading on the Exchange on the Purchase Date and at the time of closing on the Closing Date:

9.Termination by the Managers.

promptly confirmed by facsimile or email stating in reasonable detail the basis therefor. If a Transaction Notice is pending at the time of termination, such Manager may declare such Transaction Notice void or may require the Company to complete the sale of Common Units or Series A Preferred Units as specified in the Transaction Notice, at such Manager’s sole discretion (to the extent doing so is permitted under applicable law and regulation).

10.Termination by Company. The Company may terminate this Agreement in its sole discretion at any time upon electronic notice to the Managers, which termination is effective upon receipt of such notice by the Managers; provided, however, that if such termination shall occur prior to the Closing Date for any sale of Common Units or Series A Preferred Units, such sale shall settle in accordance with the provisions of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Sections 5(m) and 11 hereof shall remain in full force and effect notwithstanding such termination and the Managers shall be under no obligation or liability to the Company under this Agreement (except to the extent provided in Section 11 hereof).

11.Indemnity and Contribution.

meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to the Managers furnished to the Company in writing by any such Manager expressly for use in the Registration Statement, the Basic Prospectus, the Prospectus (or any amendment or supplement thereto), any Permitted Free Writing Prospectus, it being understood and agreed upon that the only such information furnished by the Managers consists of the information in the Prospectus as specified in Exhibit H hereto.

Notwithstanding the immediately preceding sentence, Indemnifying Person may, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is a party or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, if such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

Notwithstanding the foregoing, Transaction Notices shall be delivered by facsimile or “.pdf” email format as follows:

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, N.Y. 10010-3629

Attention: Craig Wiele and Andrea Kapica

Email: ***@*** and ***@***

Tel: (212) 325-8766

Fax: (212) 322-0739

    

UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

Attention: Syndicate

Fax: 212 ###-###-####

    

BMO Capital Markets Corp.

Three Times Square, 27th Floor

New York, New York 10119

Fax: 713 ###-###-####

Attention: Stewart Frankel and Clare Pierce

Email: ***@*** and ***@***

Tels: 713 ###-###-#### and ###-###-####

MLV & Co. LLC

1251 Avenue of the Americas, 41st Floor

New York, New York 10020

Fax: 212 ###-###-####

Attention: Dean Colucci, President

Email: ***@***

Tel: 212 ###-###-####

13.No Fiduciary Relationship. The Company acknowledges and agrees that each Manager is acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Common Units and Series A Preferred Units contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, each Manager is not advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and except as provided in Section 11, each Manager shall have no responsibility or liability to the Company with respect thereto. Any review by a Manager of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of such Manager and shall not be on behalf of the Company.

14.Adjustments for Unit Splits. The parties acknowledge and agree that all numbers related to the Common Units and Series A Preferred Units contained in this Agreement and any Transaction Notice shall be adjusted to take into account any split effected with respect to Common Units or Series A Preferred Units, as applicable.

15.Manager as Market Maker. Each Manager and one or more of its affiliates may make markets in Common Units or Series A Preferred Units or other securities of the Company, in connection with which they may buy and sell, as agent or principal, for long or short account, Common Units, Series A Preferred Units or other securities of the Company, at the same time that such Manager is acting as agent pursuant to this Agreement; provided that such Manager acknowledges and agrees that any such transactions are not being, and shall not be deemed to have been, undertaken at the request or direction of, or for the account of, the Company, and that the Company has and shall have no control over any decision by such Manager and its affiliates to enter into any such transactions.

16.Governing Law; Construction. This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (“Claim”), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York, other than rules governing choice of applicable law. The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.

17.Submission to Jurisdiction. Except as set forth below, no Claim may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have nonexclusive jurisdiction over the adjudication of such matters, and the Company consents to the jurisdiction of such courts and personal service with respect thereto. Each of the Managers and the Company, on its behalf and, to the extent permitted by applicable law, on behalf of its equity holders and affiliates, waives all right to trial by jury in any action, proceeding or counterclaim, whether based upon contract, tort or otherwise, in any way arising out of or relating to this Agreement.

The Company agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other courts in the jurisdiction of which the Company is or may be subject, by suit upon such judgment.

18.Parties in Interest. This Agreement herein set forth has been and is made solely for the benefit of the Managers and the Company and to the extent provided in Section 11 hereof the controlling persons, directors and officers referred to in such section, and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any Manager) shall acquire or have any right under or by virtue of this Agreement.

19.Successors and Assigns. This Agreement shall be binding upon each Manager and the Company and their successors and assigns and any successor or assign of any substantial portion of the Company’s and such Manager’s respective businesses and/or assets.

20.Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Managers contained in this Agreement or made by or on behalf of the Company or the Managers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for Common Units or Series A Preferred Units, as applicable, and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Managers.

21.Certain Defined Terms. For purposes of this Agreement, except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under Act.

22.Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

23.Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

If the foregoing correctly sets forth the understanding among the Company and the Managers, please so indicate in the space provided below for the purpose, whereupon this agreement and your acceptance shall constitute a binding agreement between the Company and the Managers.

Credit Suisse Securities (USA) LLC    
UBS Securities LLC    
BMO Capital Markets Corp.    
MLV & Co. LLC

___________, 20__

Vanguard Natural Resources, LLC

5847 San Felipe, Suite 3000

Houston, Texas 77057

Attention:    Richard A. Robert

Executive Vice President and Chief Financial Officer

Dear ___________:

This Notice sets forth the terms of the agreement of [         ] (the “Manager”) with Vanguard Natural Resources, LLC, a Delaware limited liability company (the “Company”), relating to the issuance of the Company’s [common units representing limited liability company interests in the Company (the “Common Units”)][7⅞% Series A Cumulative Redeemable Perpetual Series A Preferred Units representing preferred equity interests in the Company (the “Series A Preferred Units”)], pursuant to the Equity Distribution Agreement among the Company and the Managers, dated November 26, 2013 (the “Agreement”). Terms used but not defined in this Notice have the meanings ascribed to them in the Agreement.

By countersigning or otherwise indicating in writing the Company’s acceptance of this Notice (an “Acceptance”), the Company shall have agreed with the Manager to engage in the following agency transaction:

The Transaction set forth in this Notice will not be binding on the Company or the Manager unless and until the Company delivers its Acceptance; provided, however, that neither the Company nor the Manager will be bound by the terms of this Notice unless the Company delivers its Acceptance by ____ [am][pm] (New York time) on [the date hereof][___________, 20__].

The Transaction, if it becomes binding on the parties, shall be subject to all of the representations, warranties, covenants and other terms and conditions of the Agreement, except to the extent amended or modified hereby, all of which are expressly incorporated herein by reference. Each of the representations and warranties set forth in the Agreement shall be deemed to have been made at and as of the date of the Company’s acceptance and on any Purchase Date and any Closing Date, except for representations and warranties that address matters only as of a certain date.

If the foregoing conforms to your understanding of our agreement, please so indicate by providing your Acceptance in the manner contemplated by the Agreement.

Statement nor the offering or sale of the Common Units and Series A Preferred Units as contemplated by the Equity Distribution Agreement gives rise to any rights for or relating to the registration of any Common Units, Series A Preferred Units or other securities of any of the Vanguard Parties, in the case of clauses (A) and (C), under the Company LLC Agreement, the VNR Holdings LLC Agreement, the VNR Permian LLC Agreement, the Encore Pipeline LLC Agreement, the Encore Operating LLC Agreement, the Vanguard Operating LLC Agreement, the VNR Finance Bylaws, the Delaware LLC Act, the Delaware General Corporation Law or any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which any of the Vanguard Parties is a party or bound or to which their property is subject and that is filed as an exhibit to the Registration Statement, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 or any Quarterly Report on Form 10-Q or any Current Report on Form 8-K filed by the Company since January 1, 2013;

In addition, such counsel shall state that, because it has not conducted any independent investigation or verification with regard to the information set forth in the Registration Statement or the Prospectus (except to the extent set forth in paragraphs (6) above), such counsel is not (except as aforesaid) passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained therein. Such counsel shall state it has participated, however, in conferences with officers and other representatives of the Company, representatives of the independent registered public accounting firm of the Company and the Managers, at which the contents of the Registration Statement and the Prospectus and related matters were discussed. Based on the foregoing (reasonably relying as to factual matters in respect of the determination of materiality to a significant extent upon statements made by officers and other representatives of the Company), such counsel shall state no facts have come to such counsel’s attention that lead such counsel to believe that (i) the Registration Statement (other than (A) the financial statements and related schedules included or incorporated by reference therein, including the notes and schedules thereto and the auditors’ reports thereon, (B) the other financial, accounting and reserve data included or incorporated by reference therein and (C) representations and warranties and other statements of fact included in the exhibits therein, as to which such counsel need not comment), as of the most recent Effective Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) the Prospectus (other than (A) the financial statements and related schedules included or incorporated by reference therein, including the notes and schedules thereto and the auditors’ reports thereon, (B) the other financial, accounting and reserve data included or incorporated by reference therein and (C) representations and warranties and other statements of fact included in the exhibits therein, as to which such counsel need not comment), as of its date and as of the date of such opinion, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Such counsel’s opinion may be limited to matters governed by the Delaware LLC Act, the Delaware General Corporation Law, the laws of the State of Texas and to the extent specifically referred to herein, the laws of the State of New York and the federal laws of the United States of America. Such counsel need not express any opinion as to the law of any other jurisdiction. Such counsel need not express any opinion with respect to (i) the title of any of the Vanguard Parties to any of their respective real or personal property, and such counsel need not express any opinion with respect to (ii) any permits to own or operate any real or personal property or (iii) state or local taxes or tax statutes to which any of the members or shareholders of any of the Vanguard Parties may be subject.

which we express no opinion, or (iv) the failure of which to obtain would not, individually or in the aggregate, have a Material Adverse Effect;

DeGolyer and MacNaughton confirms that they are independent petroleum engineers with respect to the Company and its subsidiaries and that they have evaluated the estimates of proved reserves and future net revenue (including discounted values thereof) attributable to interests of the Company and its subsidiaries in certain oil and gas properties, as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 201_ (the “D&M Reserve Report”), and states in effect that:

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