Common use of Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures Clause in Contracts

Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures. (a) TexStar has delivered to Buyer the following: (i) the audited consolidated balance sheets (the “Consolidated Balance Sheet”) and related audited consolidated income statements, statements of cash flows and statements of changes in partners’ equity of TexStar and its Subsidiaries for the five months ended December 31, 2004 and the year ended December 31, 2005, together with the notes thereto and the related audit reports of PricewaterhouseCoopers thereon (such financial statements for the five months ended December 31, 2004 and the year ended December 31, 2005 being the “Audited Financial Statements”); and (ii) the unaudited consolidated balance sheet and related unaudited consolidated income statements, statements of cash flows and statements of changes in partners’ equity of TexStar and its Subsidiaries (for the four-month period ended April 30, 2006) together with the notes thereto (the “Interim Financial Statements”) and together with the comparable unaudited financial statements of TexStar and its Subsidiaries for the five-month period ended May 31, 2005. The Audited Financial Statements and the Interim Financial Statements are hereinafter referred to, collectively, as the “Financial Statements.” (b) The Financial Statements have been prepared in accordance with the books and records of TexStar and the TexStar Subsidiaries in all material respects. Each of the balance sheets included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated financial position of TexStar and the TexStar Subsidiaries, as of the date thereof, and each of the consolidated income statements, statements of cash flows and statements of changes in partners’ equity included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, cash flows and changes in member interests, as the case may be, of TexStar and the TexStar Subsidiaries for the periods set forth therein, in each case in accordance with GAAP, subject, in the case of the Interim Financial Statements, to normal year-end adjustments and the absence of notes or other textual disclosures required under GAAP that are not, indirectly or in the aggregate, material. TexStar has informed the Partnership and Buyer that: (i) imbalances and line losses or line gains may occur from time to time, causing the sums or gas volumes payable or receivable under the Contracts of the TexStar Companies to increase or decrease after the date of invoice (collectively, “Future Adjustments”), (ii) it is common industry practice to discover Future Adjustments through meter readings, calculations, integrations and adjustments performed substantially after a particular gas purchase, sale, transportation, gathering, processing or treating transaction has been completed, invoiced for and settled by payment, (iii) when a Future Adjustment is discovered, it is common in gas industry contracts to require the parties to correct the Future Adjustment by making adjusted deliveries or payments as required to settle all accounts based on the actual volumes delivered, transported, gathered, processed, treated or received, and (iv) the Financial Statements were prepared based on the TexStar Companies’ invoiced volumes and have not been adjusted for, and no amounts have been reserved for, Future Adjustments that may be required under any TexStar Company’s Contracts; provided, however, all Future Adjustments that were known or estimable as of the dates of the Financial Statements are reflected in such Financial Statements; and provided, further, nothing contained in this sentence shall limit or otherwise affect the rights of the Partnership and Buyer to rely (without qualification or limitation by this sentence) on the representations and warranties otherwise set forth in this Section 3.17 or shall limit or otherwise affect any rights or remedies of any Buyer Indemnitee under Article IX. (c) Except as set forth in Section 3.17(c) of the TexStar Disclosure Schedule, there are no Liabilities of TexStar or any TexStar Subsidiaries that are not reflected or reserved against in the Interim Financial Statements, other than Liabilities that are (i) current liabilities incurred in the ordinary course of business and consistent with past practices of the TexStar Companies since April 30, 2006, (ii) not required to be presented in unaudited interim financial statements prepared in conformity with GAAP and that are not, individually or in the aggregate, material to the TexStar Companies, taken as a whole, (iii) Liabilities under this Agreement or (iv) Liabilities for Expenses. (d) Each of the TexStar Companies maintains books and records reflecting in all material respects its assets and liabilities and that in reasonable detail accurately and fairly reflect in all material respects the transactions and dispositions of the assets of the TexStar Companies, and maintains proper and adequate internal accounting controls that provide reasonable assurance that (A) transactions are executed with management’s authorization; (B) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the TexStar Companies and to maintain accountability for the consolidated assets; (C) access to the TexStar Companies’ assets is permitted only in accordance with management’s authorization; (D) the reporting of the TexStar Companies’ assets is compared with existing assets at regular intervals; and (E) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. (e) Seller’s accountants have not advised the Seller of any material deficiencies in Seller’s disclosure controls and procedures, which controls and procedures are designed to require disclosure of information of the type that would be required to be disclosed in reports filed under the Exchange Act if TexStar FS had a class of securities registered under Section 12 of the Exchange Act. (f) Seller has made available to Buyer and the Partnership a summary of (A) any significant deficiencies in the design or operation of internal controls which could, to Seller’s Knowledge, materially adversely affect the TexStar Companies’ ability to record, process, summarize and report financial data, (B) any material weaknesses in the TexStar Companies’ internal controls, (C) any fraud, whether or not material, that involves management or other employees who have a significant role in the TexStar Companies’ internal controls and (D) any change in the internal controls or disclosure controls and procedures of the TexStar Companies effected since January 1, 2006.

Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures. (a) TexStar Crude JV has delivered to Buyer the following: (i) the audited consolidated balance sheets sheet (the “Consolidated Balance Sheet”) and related audited consolidated income statementsstatement of operations, statements of cash flows and statements statement of changes in partnersmembers’ equity capital and statement of TexStar and its Subsidiaries cash flow of Crude JV for the five months ended December 31, 2004 and the year ended December 31, 2005, 2012 together with the notes thereto and the related audit reports of PricewaterhouseCoopers thereon (such financial statements for the five months ended December 31, 2004 and the year ended December 31, 2005 being the “Audited Year End Financial Statements”); and (ii) the unaudited consolidated balance sheet and related unaudited consolidated income statements, statements statement of cash flows and statements of changes in partners’ equity of TexStar and its Subsidiaries Crude JV (for the foursix-month period ended April June 30, 20062013) together with the notes thereto (the “Interim Financial Statements”) and together with the comparable unaudited financial statements of TexStar and its Subsidiaries for the five-month period ended May 31, 2005). The Audited Year End Financial Statements and the Interim Financial Statements are hereinafter referred to, collectively, as the “Financial Statements.” (b) The Financial Statements have been prepared in accordance with the books and records of TexStar and the TexStar Subsidiaries Crude JV in all material respects. Each of the balance sheets sheet included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated financial position of TexStar and the TexStar SubsidiariesCrude JV, as of the date thereof, and each statement of the consolidated operations, income statementsstatement, statements of cash flows and statements statement of changes in partnersmembers’ equity capital and statement of cash flow included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, cash flows and changes in member interestsmembers’ capital and cash flow, as the case may be, of TexStar and the TexStar Subsidiaries Crude JV for the periods set forth therein, in each case in accordance with GAAP, subject, in the case of the Interim Financial Statements, to normal year-end adjustments and the absence of notes or other textual disclosures required under GAAP that are not, indirectly individually or in the aggregate, material. TexStar has informed the Partnership and Buyer that: (i) imbalances and line losses or line gains may occur from time to time, causing the sums or gas volumes payable or receivable under the Contracts of the TexStar Companies to increase or decrease after the date of invoice (collectively, “Future Adjustments”), (ii) it is common industry practice to discover Future Adjustments through meter readings, calculations, integrations and adjustments performed substantially after a particular gas purchase, sale, transportation, gathering, processing or treating transaction has been completed, invoiced for and settled by payment, (iii) when a Future Adjustment is discovered, it is common in gas industry contracts to require the parties to correct the Future Adjustment by making adjusted deliveries or payments as required to settle all accounts based on the actual volumes delivered, transported, gathered, processed, treated or received, and (iv) the Financial Statements were prepared based on the TexStar Companies’ invoiced volumes and have not been adjusted for, and no amounts have been reserved for, Future Adjustments that may be required under any TexStar Company’s Contracts; provided, however, all Future Adjustments that were known or estimable as of the dates of the Financial Statements are reflected in such Financial Statements; and provided, further, nothing contained in this sentence shall limit or otherwise affect the rights of the Partnership and Buyer to rely (without qualification or limitation by this sentence) on the representations and warranties otherwise set forth in this Section 3.17 or shall limit or otherwise affect any rights or remedies of any Buyer Indemnitee under Article IX. (c) Except as set forth in Section 3.17(c) of the TexStar Disclosure Schedule, there There are no Liabilities of TexStar or any TexStar Subsidiaries Crude JV that are not reflected or reserved against in the Interim Financial Statements, other than Liabilities that are (i) current liabilities incurred in the ordinary course of business and consistent with past practices of the TexStar Companies since April 30, 2006, (ii) not required to be presented in unaudited interim financial statements prepared in conformity with GAAP and that are notGAAP, (ii) current liabilities incurred in the ordinary course of business since June 30, 2013, (iii) individually or in the aggregate, not material to the TexStar CompaniesCrude JV, taken as a wholewhole and which, in any event, do not exceed $250,000 in the aggregate, (iiiiv) Liabilities expressly contemplated under this Agreement or (ivv) Liabilities for Expenses. Crude JV does not have any Indebtedness for borrowed money. (d) Each of the TexStar Companies maintains books and records reflecting Crude JV is not engaged in all material respects its assets and liabilities and that in reasonable detail accurately and fairly reflect in all material respects the transactions and dispositions of the assets of the TexStar Companies, and maintains proper and adequate internal accounting controls that provide reasonable assurance that (A) transactions are executed with management’s authorization; (B) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the TexStar Companies and to maintain accountability for the consolidated assets; (C) access to the TexStar Companies’ assets is permitted only in accordance with management’s authorization; (D) the reporting of the TexStar Companies’ assets is compared with existing assets at regular intervals; and (E) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. (e) Seller’s accountants have not advised the Seller of any material deficiencies in Seller’s disclosure controls and procedures, which controls and procedures are designed to require disclosure of information of the type that would be required to be disclosed in reports filed under the Exchange Act if TexStar FS had a class of securities registered under Section 12 of the Exchange Act. (f) Seller has made available to Buyer and the Partnership a summary of (A) any significant deficiencies in the design or operation of internal controls which could, to Seller’s Knowledge, materially adversely affect the TexStar Companies’ ability to record, process, summarize and report financial data, (B) any material weaknesses in the TexStar Companies’ internal controls, (C) any fraud, whether or not material, that involves management natural gas or other employees who have futures or options trading or a significant role in the TexStar Companies’ internal controls and (D) party to any change in the internal controls price swaps, xxxxxx, futures or disclosure controls and procedures of the TexStar Companies effected since January 1, 2006similar instruments.

Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures. (a) TexStar Bear Cub has delivered to Buyer Buyers the following: (i) the audited unaudited consolidated balance sheets (the “Consolidated Balance Sheet”) and related audited unaudited consolidated income statements, statements of operations and statements of cash flows and statements of changes in partners’ equity of TexStar Pueblo and its Subsidiaries Subsidiary for the five months ended December 31, 2004 and the year ended December 31, 20052004, together with the notes thereto December 31, 2005 and the related audit reports of PricewaterhouseCoopers thereon December 31, 2006 (such financial statements for the five months ended December 31, 2004 and the year ended December 31, 2004, December 31, 2005 and December 31, 2006 being the “Audited Financial Statements”); and (ii) the unaudited consolidated balance sheet and related unaudited consolidated income statements, statements of cash flows and statements of changes in partners’ equity of TexStar and its Subsidiaries (for the four-month period ended April 30, 2006) together with the notes thereto (the “Interim Financial Statements”) and together with the comparable unaudited financial statements of TexStar and its Subsidiaries for the five-month period ended May 31, 2005. The Audited Financial Statements and the Interim Financial Statements are hereinafter referred to, collectively, as the “Financial Statements.” (b) The Financial Statements have been prepared in accordance with the books and records of TexStar Pueblo and the TexStar Pueblo Subsidiaries in all material respects. Each of the balance sheets included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated financial position of TexStar and the TexStar SubsidiariesPueblo Companies, as of the date thereof, and each of the consolidated income statements, statements and statements of cash flows and statements of changes in partners’ equity included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, operations and cash flows and changes in member interestsflows, as the case may be, of TexStar and the TexStar Subsidiaries Pueblo Companies for the periods set forth therein, in each case in accordance with GAAP, subject, in the case of the Interim Financial Statements, subject to normal year-end adjustments and the absence of notes or other textual disclosures required under GAAP that are not, indirectly or in the aggregate, material. TexStar has informed the Partnership and Buyer that: (i) imbalances and line losses or line gains may occur from time to time, causing the sums or gas volumes payable or receivable under the Contracts of the TexStar Companies to increase or decrease after the date of invoice (collectively, “Future Adjustments”), (ii) it is common industry practice to discover Future Adjustments through meter readings, calculations, integrations and adjustments performed substantially after a particular gas purchase, sale, transportation, gathering, processing or treating transaction has been completed, invoiced for and settled by payment, (iii) when a Future Adjustment is discovered, it is common in gas industry contracts to require the parties to correct the Future Adjustment by making adjusted deliveries or payments as required to settle all accounts based on the actual volumes delivered, transported, gathered, processed, treated or received, and (iv) the Financial Statements were prepared based on the TexStar Companies’ invoiced volumes and have not been adjusted for, and no amounts have been reserved for, Future Adjustments that may be required under any TexStar Company’s Contracts; provided, however, all Future Adjustments that were known or estimable as of the dates of the Financial Statements are reflected in such Financial Statements; and provided, further, nothing contained in this sentence shall limit or otherwise affect the rights of the Partnership and Buyer to rely (without qualification or limitation by this sentence) on the representations and warranties otherwise set forth in this Section 3.17 or shall limit or otherwise affect any rights or remedies of any Buyer Indemnitee under Article IX. (c) Except as set forth in Section 3.17(c) of the TexStar Disclosure Schedule, there There are no Liabilities of TexStar Pueblo or any TexStar Pueblo Subsidiaries that are not reflected or reserved against in the Interim Financial Statements, other than Liabilities that are (i) current liabilities incurred in the ordinary course of business and consistent with past practices of the TexStar Pueblo Companies since April 30December 31, 2006, (ii) not required to be presented in unaudited interim year end financial statements prepared in conformity with GAAP and that are not, individually or in the aggregate, material to the TexStar Pueblo Companies, taken as a wholewhole and which, in any event, do not exceed $25,000 in the aggregate, (iii) Liabilities under this Agreement or (iv) Liabilities for Expenses. Neither Pueblo Company has any Liability for funded indebtedness. (d) Each of the TexStar Pueblo Companies maintains books and records reflecting in all material respects its assets and liabilities and that in reasonable detail accurately and fairly reflect in all material respects the transactions and dispositions of the assets of the TexStar Pueblo Companies, and maintains proper and adequate internal accounting controls that provide reasonable assurance that (Ai) transactions are executed with management’s authorization; (Bii) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the TexStar Pueblo Companies and to maintain accountability for the consolidated assets; (Ciii) access to the TexStar Pueblo Companies’ assets is permitted only in accordance with management’s authorization; (Div) the reporting of the TexStar Pueblo Companies’ assets is compared with existing assets at regular intervals; and (Ev) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. (e) SellerBear Cub has delivered to the Buyers all unaudited financial statements of the Pueblo Companies prepared to date. (f) Pueblo’s accountants have not advised the Seller Pueblo of any material deficiencies in SellerPueblo’s disclosure controls and procedures, which controls and procedures are designed to require disclosure of information of the type that would be required to be disclosed in reports filed under the Exchange Act if TexStar FS had a class of securities registered under Section 12 of the Exchange Act. (f) Seller has made available to Buyer and the Partnership a summary of (A) any significant deficiencies in the design or operation of internal controls which could, to Seller’s Knowledge, materially adversely affect the TexStar Companies’ ability to record, process, summarize and report financial data, (B) any material weaknesses in the TexStar Companies’ internal controls, (C) any fraud, whether or not material, that involves management or other employees who have a significant role in the TexStar Companies’ internal controls and (D) any change in the internal controls or disclosure controls and procedures of the TexStar Companies effected since January 1, 2006.

Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures. (a) TexStar has Sellers have delivered to Buyer true and correct copies of the following: (i) the audited consolidated balance sheets (the “Consolidated Balance SheetSheets”) and related audited consolidated income statementsstatements of operations, statements of cash flows and statements of changes in partnersmembers’ equity of TexStar and its Subsidiaries the FrontStreet Companies for the five months years ended December 31, 2004 and the year ended 2004, December 31, 20052005 and December 31, 2006, together with the notes thereto and the related audit reports of PricewaterhouseCoopers Deloitte & Touche LLP thereon (such financial statements for the five months ended December 31, 2004 and the year ended December 31, 2005 being the “Audited Financial Statements”), as set forth in Section 4.12(a)(i) of the Disclosure Schedule; and (ii) the unaudited consolidated balance sheet and related unaudited consolidated income statementsstatements of operations, statements of cash flows and statements of changes in partnersmembers’ equity of TexStar and its Subsidiaries the FrontStreet Companies (for the fournine-month period ended April September 30, 20062007) together with the notes thereto (the “Interim Financial Statements”) and together with the comparable unaudited financial statements of TexStar and its Subsidiaries the FrontStreet Companies for the fivenine-month period ended May 31September 30, 20052006, as set forth in Section 4.12(a)(ii) of the Disclosure Schedule. The Audited Financial Statements and the Interim Financial Statements are hereinafter referred to, collectively, as the “Financial Statements.” (b) The Financial Statements have been prepared in accordance with the books and records of TexStar and the TexStar Subsidiaries in all material respectsFrontStreet Companies. Each of the balance sheets included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated financial position of TexStar and the TexStar SubsidiariesFrontStreet Companies, as of the date thereof, and each of the consolidated income statementsstatements of operations, statements of cash flows and statements of changes in partnersmembers’ equity included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, cash flows and changes in member interests, as the case may be, of TexStar and the TexStar Subsidiaries FrontStreet Companies for the periods set forth therein, in each case in accordance with GAAP, subject, in the case of the Interim Financial Statements, to normal normal, recurring year-end adjustments and the absence of notes or other textual disclosures required under GAAP that are not, indirectly or in the aggregate, material. TexStar has informed the Partnership and Buyer that: (i) imbalances and line losses or line gains may occur from time to time, causing the sums or gas volumes payable or receivable under the Contracts of the TexStar Companies to increase or decrease after the date of invoice (collectively, “Future Adjustments”), (ii) it is common industry practice to discover Future Adjustments through meter readings, calculations, integrations and adjustments performed substantially after a particular gas purchase, sale, transportation, gathering, processing or treating transaction has been completed, invoiced for and settled by payment, (iii) when a Future Adjustment is discovered, it is common in gas industry contracts to require the parties to correct the Future Adjustment by making adjusted deliveries or payments as required to settle all accounts based on the actual volumes delivered, transported, gathered, processed, treated or received, and (iv) the Financial Statements were prepared based on the TexStar Companies’ invoiced volumes and have not been adjusted for, and no amounts have been reserved for, Future Adjustments that may be required under any TexStar Company’s Contracts; provided, however, all Future Adjustments that were known or estimable as of the dates of the Financial Statements are reflected in such Financial Statements; and provided, further, nothing contained in this sentence shall limit or otherwise affect the rights of the Partnership and Buyer to rely (without qualification or limitation by this sentence) on the representations and warranties otherwise set forth in this Section 3.17 or shall limit or otherwise affect any rights or remedies of any Buyer Indemnitee under Article IX. (c) Except as set forth in Section 3.17(c) of the TexStar Disclosure Schedule, there There are no Liabilities of TexStar or any TexStar Subsidiaries either FrontStreet Company that are not reflected or reserved against in the Interim Financial Statements, other than Liabilities that are (i) current liabilities incurred since September 30, 2007 in the ordinary course of business and consistent with past practices of the TexStar Companies since April 30, 2006FrontStreet Companies, (ii) not required to be presented in unaudited interim financial statements prepared in conformity with GAAP and that are not, individually or in the aggregate, material to the TexStar FrontStreet Companies, taken as a whole, and which in any event, do not exceed $500,000 in the aggregate, (iii) Liabilities under this Agreement or (iv) Liabilities for Expenses. Neither FrontStreet Company has any Liabilities for Third-Party Debt except for Third-Party Debt incurred to fund Capital Expenditures, if any. (d) Each of the TexStar FrontStreet Companies maintains accurate books and records reflecting in all material respects its assets and liabilities and that in reasonable detail accurately and fairly reflect in all material respects the its transactions and dispositions of the assets of the TexStar Companiesits assets, and maintains proper and adequate internal accounting controls that provide reasonable assurance that (A) transactions are executed with management’s authorization; (B) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the TexStar FrontStreet Companies and to maintain accountability for the consolidated assets; (C) access to the TexStar FrontStreet Companies’ assets is permitted only in accordance with management’s authorization; (D) the reporting of the TexStar FrontStreet Companies’ assets is compared with existing assets at regular intervals; and (E) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. (e) SellerThe Company’s accountants have not advised the Seller Company of any material deficiencies in Sellerthe Company’s disclosure controls and procedures, which controls and procedures are designed to require disclosure of information of the type that would be required to be disclosed in reports filed under the Exchange Act if TexStar FS had a class of securities registered under Section 12 of the Exchange Act. (f) Seller has Sellers have made available to Buyer and the Partnership a summary of (A) any significant deficiencies in the design or operation of internal controls which that could, to Seller’s Sellers’ Knowledge, materially adversely affect the TexStar FrontStreet Companies’ ability to record, process, summarize and report financial datadata in any material respect, (B) any material weaknesses in the TexStar FrontStreet Companies’ internal controls, (C) any fraud, whether or not material, that involves management or other employees who have a significant role in the TexStar FrontStreet Companies’ internal controls and (D) any change in the internal controls or disclosure controls and procedures of the TexStar FrontStreet Companies effected since January 1, 20062007.