KUNZMAN & BOLLINGER, INC.
ATTORNEYS-AT-LAW
5100 N. BROOKLINE, SUITE 600
OKLAHOMA CITY, OKLAHOMA 73112
Telephone (405) 942-3501
Fax (405) 942-3527
June 14, 2006
ELECTRONIC
FILING
Ms. Tangela S. Richter
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
RE: Atlas America Series 26-2005 L.P.
Registration Statement on Form 10
Filed April 28, 2006
File No. 0-51945
Dear Ms. Richter:
This letter is submitted on behalf of Atlas America Series 26-2005 L.P.
(the "Partnership") in response to your letter dated June 1, 2006 with respect
to the above referenced Registration Statement on Form 10 for the Partnership.
For your convenience, we have first restated your two comments in bold and
then provided our responses.
General
1. PLEASE BE ADVISED THAT YOUR FORM 10 REGISTRATION STATEMENT WILL
AUTOMATICALLY BECOME EFFECTIVE 60 DAYS FROM THE DATE OF THE FIRST FILING.
UPON EFFECTIVENESS YOU WILL BECOME SUBJECT TO THE REPORTING REQUIREMENTS OF
THE SECURITIES EXCHANGE ACT OF 1934.
We acknowledge your comment.
2. WE NOTE YOUR DISCLOSURE THAT YOU SOLD UNITS TO 579 INVESTORS IN A PRIVATE
PLACEMENT BEGINNING JULY 15, 2005 AND ENDING AUGUST 31, 2005. PLEASE TELL
HOW MANY POTENTIAL INVESTORS WERE CONTACTED AND HOW YOU WERE ABLE TO DO SO
WITHOUT CONDUCTING A GENERAL SOLICITATION. IN ADDITION, TELL US HOW YOUR
MANAGING GENERAL PARTNER WAS ABLE TO DETERMINE THAT THE PARTICIPANTS WERE
ACCREDITED INVESTORS AT THE TIME OF SALE.
Your first question asks how many offerees were contacted in the
offering of units in the Partnership. Anthem Securities, Inc.
("Anthem"), which is a broker/dealer member firm of the National
Association of Securities Dealers, Inc. (the "NASD") and an affiliate
of Atlas Resources, LLC ("Atlas Resources"), the managing general
partner of the Partnership, acted as dealer-manager of the offering.
Anthem has advised us that:
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 2
o Anthem distributed a total of 4,252 private placement memorandum
kits to the selling agents and their registered representatives
(each private placement memorandum kit was composed of the
private placement memorandum and sales literature prepared by
Atlas Resources for use in the offering); and
o a total of 4,052 offerees in the offering were reported to Anthem
by the persons who directly offered and sold units in the
Partnership as discussed below.
Anthem, acting as dealer-manager of the offering, formed a selling
group consisting of 71 other NASD member broker/dealer firms (the
"selling agents") to offer and sell units in the offering. Each
selling agent executed a selling agent agreement, the standard form of
which was attached as Exhibit "B" to Anthem's dealer-manager agreement
with the Partnership. The dealer-manager agreement and selling agent
agreement are sometimes referred to together in this letter as the
"selling agreements." Anthem, however, acted only as dealer-manager,
not as a selling agent, and it did not directly offer or sell any
units to offerees or investors, respectively, in the offering. In
addition, Atlas Resources, acting as the managing general partner of
the Partnership, offered and sold units to three investors without
receiving a commission or any other transaction-based compensation for
those sales. Also, Atlas Resources believes that all of the sales that
it made on behalf of the Partnership were made in compliance with SEC
Release No. 34-22172, which is the safe harbor from broker/dealer
registration under Section 15(a) of the Securities Exchange Act of
1934 for officers and directors of the issuer making sales of
securities. In this regard, Atlas Resources' right to offer and sell
units was fully disclosed in the private placement memorandum.
Your second question asked for an explanation of how the potential
investors were contacted without conducting a general solicitation,
noting that there were 579 investors. In this regard, the Partnership
offered its units under the exemption provided by Rule 506 of
Regulation D, and compliance with Rule 502(c) of Regulation D is one
of the requirements that must be met by an offering claiming the
exemption from securities registration under Rule 506. Rule 502(c)
provides in part that "neither the issuer nor any person acting on its
behalf may offer or sell the securities by any form of general
solicitation or general advertising..."
Atlas Resources believes, based on the SEC interpretive letters and
no-action letters that have addressed the issue of general
solicitation under Rule 502(c) of Regulation D, that a solicitation in
a Rule 506 offering is not a prohibited general solicitation merely
because there is a relatively large number of offerees as compared
with offerings that rely solely on the exemption provided under
Section 4(2) of the Securities Act of 1933, as amended. For example,
the SEC staff had no objection to a proposed offering of partnership
interests by the general partner of a new partnership to 330 previous
investors in the general partner's prior partnership offerings.
Woodtrails-Seattle, Ltd., SEC Interpretive Letter (available August 9,
1982). Nor did the staff comment on the number of proposed offerees
where a company proposed to offer securities to 600 persons who were
existing clients of an officer of the company who was an insurance
broker. Mineral Lands Research & Marketing Corp. (dated December 4,
1985).
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 3
Instead of looking at the number of offerees or investors, neither of
which is limited by Rule 506 of Regulation D, the staff responses in
the interpretive letters cited above, and many others, have focused on
whether there was a pre-existing substantive relationship between the
issuer (or its agents) and the prospective offerees. With regard to a
"pre-existing" relationship, the staff determined that "sufficient
time" had elapsed between the establishment of the relationship and an
offer, and that Rule 502(c) would not be violated, where the
relationship was established before the broker/dealer began
participating in a Regulation D offering. E.F. Hutton & Co. (available
December 3, 1985). The staff's response in E.F. Hutton & Co. also
stated that a substantive relationship would be established if the
broker/dealer had sufficient information to evaluate the prospective
offeree's sophistication and financial circumstances. This description
of a pre-existing substantive relationship is consistent with the
staff's descriptions of a pre-existing substantive relationship in
Woodtrails-Seattle and Mineral Lands, cited above. Based on the
foregoing, Atlas Resources believes that a solicitation of an offeree
is permitted under Rule 502(c) if the issuer (or its agent) has a
pre-existing substantive relationship with the offeree, regardless of
the number of offerees, assuming the other requirements of Rule 502(c)
are satisfied (e.g., no general advertising).
The Partnership and Atlas Resources, as the Partnership's managing
general partner, relied on the dealer-manager agreement and the
selling agent agreement to ensure that the offering of units in the
Partnership was not made by means of a general solicitation. These
selling agreements imposed legal obligations on the selling agents to:
o conduct the offerings in accordance with Regulation D;
o comply with the prohibition of general solicitation and general
advertising set forth in Rule 502(c) of Regulation D (in fact,
Rule 502(c) was repeated essentially verbatim in the selling
agent agreement as set forth below); and
o distribute to potential investors only the offering materials
that had been approved by the managing general partner and were
provided to the selling agent by the dealer-manager or the
managing general partner.
For example, Section 1 of the selling agent agreement contained the
following representations and warranties of the selling agents, among
others, to the dealer-manager:
"...
(e) Pursuant to your appointment as a Selling Agent, you shall
comply with all the provisions of Regulation D, insofar as
Regulation D applies to your activities under this Agreement.
Further, you shall not engage in any activity which would cause
the offer and/or sale of the Units not to comply with Regulation
D, the Act, the Act of 1934, the applicable rules and regulations
of the Securities and Exchange Commission, which is referred to
as the "Commission," the applicable state securities laws and
regulations, this Agreement, and the NASD Conduct Rules including
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 4
Rules 2420, 2730, 2740, and 2750, and specifically you agree as
set forth below.
....
(ii) Units shall not be offered and/or sold by you by means
of any form of general solicitation or general
advertising, including, but not limited to, the
following:
(1) any advertisement, article, notice, or other
communication published in any newspaper,
magazine, or similar media or broadcast over
television or radio;
(2) any seminar or meeting whose attendees have been
invited by any general solicitation or general
advertising; or
(3) any letter, circular, notice or other written
communication constituting a form of general
solicitation or general advertising."
....
(iii) ...Further, you shall keep file memoranda, indicating
by the number of the Private Placement Memorandum
enclosed in the Private Placement Memorandum Kit, to
whom each Private Placement Memorandum Kit, which must
contain, without exception, all of the Sales
Literature, was delivered.
....
(v) In connection with any offer or sale of the Units, you
agree to the following:
....
(4) not to provide any written information,
statements, or sales materials other than the
Private Placement Memorandum, the Sales
Literature, and any supplements or amendments to
the Private Placement Memorandum unless approved
in writing by the Managing General Partner.
(viii) Before the sale of any of the Units you shall have
reasonable grounds to believe that each subscriber is
an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D.
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 5
(ix) Units shall not be sold by you to anyone whom you
reasonably believe is not an accredited investor.
....
(g) You agree and covenant that you will not distribute a Private
Placement Memorandum Kit to any offeree with whom you do not have
a pre-existing substantive relationship as defined from time to
time by the Commission. As of the date of this Agreement, you
agree that the term "pre-existing substantive relationship" with
a potential offeree means the following:
(i) your relationship with the offeree was established
before the beginning of the offering of Units in the
Partnership, which is July 15, 2005; and
(ii) you have sufficient information concerning the offeree
to determine the offeree's current sophistication and
financial circumstances, including that the offeree (or
the offeree and its purchaser representative) has such
knowledge and experience in financial and business
matters that the offeree is capable of evaluating the
merits and risks of an investment in the Partnership."
Prior to the Partnership's offering, Anthem had developed business
relationships with many broker/dealer firms. Anthem was formed in 1997
to serve as the dealer-manager of Atlas Resources' natural gas and oil
drilling programs. Since Anthem's formation in 1997, it has served as
dealer-manager in 23 public or private limited partnerships sponsored
by Atlas Resources as managing general partner. All of those
partnerships were offered and sold nationwide through selling agents
selected by Anthem from the broker/dealer community. As set forth
above, Anthem has advised us that in the case of the Partnership, 71
broker/dealer firms participated as selling agents in offering and
selling units. These participating broker/dealer firms varied in size.
Some of these selling agents had only a few registered
representatives, while others had hundreds or even thousands of
registered representatives. In addition, some of the selling agents
were licensed as selling agents in only a few states, but Anthem has
advised us that 45 of the 71 selling agents were licensed in all 50
states.
The end result was that hundreds of registered representatives
participated in offering units in the Partnership under the selling
agent agreements their respective broker/dealer firms signed with
Anthem, serving as dealer-manager. In doing so, those registered
representatives brought with them their customers with whom they had
established a pre-existing substantive relationship as that term has
been described by the SEC in its interpretive letters and no-action
letters as described above. This, in turn, created a large pool of
qualified potential offerees as discussed below.
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 6
As discussed above, Atlas Resources believes that each registered
representative could properly offer an investment in the Partnership
to each of his or her customers with whom the registered
representative had a pre-existing substantive relationship. Of course,
the determination as to whether a selling agent had sufficient
information concerning its customers' financial condition and
sophistication to form the type of relationship required under the SEC
staff's interpretive letters and no-action letters, before it could
properly offer units in the Partnership to those customers, was a
decision that had to be made by each selling agent on a
customer-by-customer basis. Thus, Anthem, as dealer-manager, and Atlas
Resources, as managing general partner, necessarily relied on the
selling agents' representations and contractual obligations under the
selling agreements and the selling agents' duty to comply with their
applicable regulatory obligations (e.g., NASD Conduct Rules), to
properly determine which of their customers could be offered
investments in the Partnership. Also, the selling agent agreements
required the selling agents to report the number of their respective
offerees of units in the Partnership to Anthem as set forth above.
Thus, each selling agent represented to the Partnership, among other
representations in their respective selling agent agreements, as
follows:
o They would comply with all the provisions of Regulation D and the
units would not be offered and/or sold by them by means of any
form of general solicitation or general advertising, including,
but not limited to, the following: any advertisement, article,
notice, or other communication published in any newspaper,
magazine, or similar media or broadcast over television or radio;
any seminar or meeting whose attendees were invited by any
general solicitation or general advertising; or any letter,
circular, notice, or other written communication constituting a
form of general solicitation or general advertising.
o They would provide each offeree with a complete and numbered copy
of the private placement memorandum.
o They would provide the dealer-manager a file memorandum
indicating each offeree who received a private placement
memorandum kit from them.
With respect to the last bullet point, the dealer-manager required
each selling agent's registered representatives to provide a list
directly to Anthem naming the offerees with whom they had pre-existing
substantive relationships and who would receive a private placement
memorandum kit from them PRIOR TO THE DISTRIBUTION OF THE PRIVATE
PLACEMENT MEMORANDUM [emphasis added].
Also, the Execution Page that was signed by each investor, along with
the investor's Subscription Agreement, included the following
representation:
"I represent, warrant, and confirm that I was not solicited by
any form of general solicitation or general advertising,
including, but not limited to:
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 7
(a) any advertisement, article, notice or other
communication published in any newspaper, magazine, or
similar media or broadcast over television or radio; or
(b) any seminar or meeting whose attendees had been invited
by any general solicitation or general advertising."
Based on the foregoing, the Partnership believes that the offering of
its units was conducted in compliance with Rule 502(c) of Regulation D
and, in particular, the offering was conducted without a general
solicitation.
Your third question asked how Atlas Resources, as managing general
partner, was able to determine that the participants were accredited
investors at the time of sale. First, each registered representative
of a selling agent was required to sign the following representations
that were set forth in the Subscription Agreement for each investor:
"I hereby represent that I have discharged my affirmative
obligations under the NASD's Conduct Rules concerning determining
the suitability of the investor and specifically have obtained
information from the above-named investor consistent with Rule
2810(b)(2)(B) and (b)(3)(D) of the NASD Conduct Rules concerning
his/her age, net worth, annual income, federal income tax
bracket, investment objectives, investment portfolio, and other
financial information and have determined that an investment in
the Partnership is suitable for such investor, that such investor
is or will be in a financial position to realize the benefits of
this investment, and that such investor has a fair market net
worth sufficient to sustain the risks for this investment. I have
also informed the investor of all pertinent facts relating to the
liquidity and marketability of an investment in the Partnership,
of the risks of unlimited liability regarding an investment as an
Investor General Partner, and of the passive loss limitations for
tax purposes of an investment as a Limited Partner."
In addition to the suitability determinations made by the selling
agents, Atlas Resources has confirmed to us that it made its own
determination with respect to whether to accept or reject, as an
investor, each offeree who subscribed for units in the Partnership,
including its determination, at the time of sale, that it had a
"reasonable belief" (as required under Rule 506(b)(2)(i) of Regulation
D) as to whether or not each subscriber was an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D. This
determination was based on the review by Anthem's Chief Compliance
Officer of the Subscription Packet, which is composed of the
Subscription Agreement, the Execution Page and the Purchaser
Questionnaire, provided by each prospective investor to Atlas
Resources.
In this regard, each investor who submitted a Subscription Agreement
to Atlas Resources also signed the Execution Page that included:
o the following disclosure to the investor:
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 8
o "Units are being sold only to certain classes of qualified
investors. To become an investor, you must demonstrate that
you:
o are an "Accredited Investor," as that term is defined
in Regulation D as promulgated by the SEC under the
Securities Act of 1933, as amended; and
o have the knowledge and experience in business, tax, and
financial matters that you are capable of evaluating
the merits and risks of this investment"; and
o the following representations from the investor:
o "I represent, warrant, and confirm that the information
contained in this Execution Page and in the Purchaser
Questionnaire attached to this Execution Page is complete,
accurate, and may be relied on by the partnership and the
managing general partner."
o "I understand that the representations contained in this
Section B are made for the purpose of qualifying me as an
"accredited investor" as that term is defined by the SEC for
the purpose of exempting a sale of securities to me from the
registration requirements of the Securities Act of 1933, as
amended. I hereby represent, warrant, and confirm that the
statement or statements marked below are true and correct in
all respects."
o "I hereby represent, warrant, and confirm that I am an
"accredited investor" because (PLEASE MARK EACH APPLICABLE
STATEMENT):
o [_] I am a corporation, partnership, trust, or other
entity with total assets in excess of $5,000,000.
Additionally, I was not formed for the purpose of
investing in the partnership.
o [_] I have an individual "net worth" (the fair market
value of total assets, including home and personal
property, minus total liabilities), or joint net
worth with my spouse, in excess of $1,000,000.
o [_] I had an "annual income" (as defined below) in
excess of $200,000, or a joint annual income with
my spouse in excess of $300,000, in each of 2003
and 2004 and reasonably expect to have the same
income level in 2005.
o [_] I am an entity (including a corporation or
partnership) in which all the equity owners
individually are accredited investors as
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 9
described in either subparagraph (b) or (c) above.
If this statement is marked, then each equity owner
must also complete a copy of this execution page
and the purchaser questionnaire.
"Annual income" means adjusted gross income, as reported for
Federal income tax purposes, less any income attributable to
a spouse or to property owned by a spouse, increased by the
following amounts (but not including any amounts
attributable to a spouse or to property owned by a spouse):
o the amount of any tax-exempt interest income received;
o the amount of losses claimed as a limited partner in a
limited partnership;
o any deduction claimed for depletion;
o amounts contributed to an IRA or Keogh retirement plan;
and
o alimony paid."
o "I hereby represent, warrant, and confirm that I have such
knowledge and experience in financial and business matters and in
tax-oriented investments in particular that I am capable of
evaluating the merits and risks of an investment in the
partnership."
In the "Interpretive Release on Regulation D," Release No. 33-6455
(March 3, 1983), the SEC staff's discussion of Rule 501(a) of
Regulation D included the following:
"The definition of "accredited investor" includes any person who
comes within OR "WHO THE ISSUER REASONABLY BELIEVES" comes within
one of the enumerated categories "at the time of the sale of the
securities to that person." WHAT CONSTITUTES "REASONABLE" BELIEF
WILL DEPEND ON THE FACTS OF EACH PARTICULAR CASE. FOR THIS
REASON, THE STAFF GENERALLY WILL NOT BE IN A POSITION TO EXPRESS
VIEWS OR OTHERWISE ENDORSE ANY ONE METHOD FOR ASCERTAINING
WHETHER AN INVESTOR IS ACCREDITED." [EMPHASIS ADDED]
In this regard, Atlas Resources believed the likelihood that all of
the Partnership's investors would be accredited investors would be
substantially increased to the extent that the selling agents and
their registered representatives, and the potential investors, clearly
understood that:
o only accredited investors would be accepted by Atlas Resources as
investors in the offering; and
o the financial suitability standards that the potential investors
in the Partnership had to meet in order to qualify as accredited
investors.
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 10
To help ensure that the selling agents, their registered
representatives and potential investors understood those two items,
the Partnership took the following measures:
o the selling agreements imposed contractual obligations on the
part of the selling agents to:
o obtain reasonable grounds to believe that each of their
customers who subscribed for units was an accredited
investor; and
o not to sell the Partnership's units to anyone unless they
had a reasonable belief that the subscriber was an
accredited investor;
o the Subscription Agreement provided by each potential investor to
Atlas Resources required the registered representative of a
selling agent to represent that he or she met his obligations
under the NASD Conduct Rule concerning the suitability of the
investor, which Atlas Resources believes includes the suitability
requirement set forth in the private placement memorandum that
each investor must be an accredited investor;
o the inside front cover of the private placement memorandum
includes the following notice: "ACCREDITED INVESTORS ONLY";
o page two of the private placement memorandum includes the
following notice under the heading "Summary of the Offering -
Terms of the Offering":
"Units will be offered only to "accredited investors," as
defined in the SEC's Regulation D. See "Terms of the
Offering - Suitability Standards - In General," for the
definition of "accredited investor.'"
o the "Terms of the Offering - Suitability Standards - In General"
section of the private placement memorandum includes the
following disclosure:
"This offering is being conducted under Regulation D, which
was adopted by the SEC under the Securities Act of 1933.
Regulation D sets forth restrictions on the persons from
whom subscriptions may be accepted, and this offering is
made only to accredited investors as defined in Regulation
D. Your suitability compliance will be evidenced by your
completion of the Purchaser Questionnaire and your
completion and signing of the Execution Page, which are
included in the Subscription Packet as Exhibit (C) to this
private placement memorandum. As of the date of this private
placement memorandum an accredited investor includes "any
person who comes within any of the following categories, or
who the issuer reasonably believes
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 11
comes within any of the following categories, at the time of
the sale of the securities to that person:
o Any bank as defined in section 3(a)(2) of the Act,
or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or
fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the
Securities Exchange Act of 1934; any insurance
company as defined in section 2(13) of the Act;
any investment company registered under the
Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48)
of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration
under section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its
political subdivisions for the benefit of its
employees, if such plan has total assets in excess
of $5,000,000; employee benefit plan within the
meaning of the Employee Retirement Income Security
Act of 1974 if the investment decision is made by
a plan fiduciary, as defined in section 3(21) of
such Act, which is either a bank, savings and loan
association, insurance company, or registered
investment advisor, or if the employee benefit
plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions
made solely by persons that are accredited
investors;
o Any private business development company as
defined in section 202(a)(22) of the Investment
Advisors Act of 1940;
o Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose
of acquiring the securities offered, with total
assets in excess of $5,000,000;
o Any director, executive officer, or general
partner of the issuer of the securities being
offered or sold, or any director, executive
officer, or general partner of a general partner
of that issuer;
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 12
o Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the
time of his purchase exceeds $1,000,000;
o Any natural person who had an individual income in
excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in
excess of $300,000 in each of those years and has
a reasonable expectation of reaching the same
income level in the current year;
o Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase
is directed by a sophisticated person as described
in Section 230.506(b)(2)(ii); and
o Any entity in which all of the equity owners are
accredited investors."
o Atlas Resources attached a yellow sticker to the Subscription
Packet distributed with each private placement memorandum that
included, among other instructions, the following notice: "NOTE:
ONLY ACCREDITED INVESTORS ARE BEING ACCEPTED.";
o the Execution Page disclosed to each offeree that he could
subscribe for units only if he was an accredited investor; and
o the Execution Page included the written representation of each
potential investor that he was an accredited investor, including
the potential investor's representation that he met one or more
of the four financial tests for accredited investor status set
forth in the Execution Page, which Atlas Resources believes,
based on its past experience, are the most common tests
applicable to typical investors in oil and gas drilling programs.
Also, Regulation D provides a "reasonable belief" standard regarding
accredited investor status. Atlas Resources believes that it satisfied
that standard with respect to each investor in the Partnership since
it fully disclosed the accredited investor suitability standard to
both the selling agents and the potential investors, required the
selling agents to comply with that standard through the selling agent
agreements, obtained written representations from each investor that
he or she was an accredited investor, including the specific financial
test(s) that qualified the investor as an accredited investor, and had
Anthem's Chief Compliance Officer review every Subscription Packet
provided to Atlas Resources with respect to the potential investor's
status as an accredited investor.
KUNZMAN & BOLLINGER, INC.
Ms. Tangela S. Richter
Securities and Exchange Commission
June 14, 2006
Page 13
Based on the provisions of the selling agreements and the private
placement memorandum, including the Subscription Packet, Atlas
Resources believes that:
o every selling agent and every registered representative
participating in the offering understood that every investor in
the Partnership had to be an accredited investor;
o every offeree understood:
o that only accredited investors would be accepted as
investors in the Partnership; and
o the financial requirements under Rule 501(a) of Regulation D
that the offeree had to meet in order to qualify as an
accredited investor.
Thus, Atlas Resources could then reasonably rely on:
o the contractual representations and obligations of each selling
agents to sell units in the Partnership only to persons who the
selling agent determined were accredited investors; and
o the representations of each investor in the Partnership that the
investor satisfied one or more of the financial suitability
requirements under Rule 501(a) of Regulation D to qualify as an
accredited investor.
Based on the foregoing, and on the review of each investor's
Subscription Agreement, Execution Page and Purchaser Questionnaire as
set forth above, Atlas Resources believes that it had a "reasonable
belief" at the time of each sale of units that each person accepted by
it as an investor in the Partnership was an accredited investor as
defined in Rule 501(a) of Regulation D.
Please direct any questions or comments regarding the enclosed to the
undersigned or Mr. Gerald A. Bollinger at the captioned number.
Very truly yours,
KUNZMAN & BOLLINGER, INC.
/s/ Wallace W. Kunzman, Jr.
Wallace W. Kunzman, Jr.
cc: Mr. Freddie Kotek
Ms. Nancy McGurk