Exhibit 1.1
UNDERWRITING AGREEMENT
DECEMBER 7, 1998
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Cornerstone Propane Partners, L.P.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Dear Sirs and Mesdames:
We (the "Manager") are acting on behalf of the underwriters (including
ourselves) named below (such underwriters being herein called the
"Underwriters"), and we understand that Cornerstone Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), proposes to issue and sell
3,000,000 common units representing limited partner interests in the Partnership
(the "Firm Units").
It is further understood and agreed by all parties that the following
transactions will occur on or before the Closing Date (and are therefore deemed
to be conditions to closing):
(i) pursuant to a Stock Purchase and Contribution Agreement
(the "Stock Purchase Agreement") dated October 27, 1998 between the
Partnership, Cornerstone Holding Corp., a Delaware corporation ("CHC")
and a wholly-owned subsidiary of the Partnership, Propane Continental,
Inc., a Delaware corporation ("PCI"), and the holders (the "Holders")
of all outstanding stocks and warrants of PCI, the Partnership will
acquire from the Holders certain shares of the outstanding stock of
PCI, and CHC will purchase from the Holders the entire remaining equity
interest in PCI represented by the other outstanding shares of stock
and all outstanding warrants (the "PCI Acquisition");
(ii) pursuant to a Senior Secured Note Purchase Agreement (the
"Note Agreement") dated December 11, 1998, between Cornerstone Propane,
L.P., a Delaware limited partnership (the "Operating Partnership"),
Cornerstone Propane GP, Inc., a California corporation (the "Managing
General Partner"), SYN Inc., a Delaware corporation (the "Special
General Partner"), and certain purchasers (listed on Schedule A
attached to the Note Agreement), the Operating Partnership will issue
$85 million of Senior Secured Notes (the "Senior Notes") which will be
privately placed to certain institutional investors; and
(iii) the General Partners will make the capital contributions
required by Section 5.2(d) of the Partnership Agreement and the
corresponding provisions of the Operating Partnership Agreement.
Subject to the terms and conditions set forth or incorporated by
reference herein, the Partnership hereby agrees to sell to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Partnership the number of Firm Units opposite their names
(set forth on Schedule A below) at a purchase price of $19.00 per Unit.
SCHEDULE A
NAME NUMBER OF FIRM UNITS
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Xxxxxx Xxxxxxx & Co. Incorporated 700,000
CIBC Xxxxxxxxxxx Corp. 700,000
PaineWebber Incorporated 700,000
Chatsworth Securities LLC 100,000
X.X. Xxxxxxx & Sons, Inc. 100,000
Xxxxxxxxxx & Co. Inc. 100,000
Xxxxxx Xxxxxxxxxx Xxxxx Inc. 100,000
Xxxxxx X. Xxxxx & Co., L.P. 100,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 100,000
McDonald Investments, Inc. 100,000
Xxxxx Xxxxxxx Inc. 100,000
Prudential Securities Incorporated 100,000
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TOTAL 3,000,000
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The Underwriters will pay for the Firm Units upon delivery thereof at the
offices of Xxxxxxx & Xxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
at 9:00 a.m. (New York City time) on December 11, 1998, or at such other time,
not later than 5:00 p.m. (New York City time) on December 17, 1998, as shall be
designated by the Manager. The time and date of such payment and delivery are
hereinafter referred to as the "Closing Date."
The Underwriters will pay for any Additional Units upon deliver thereof at
Xxxxxxx & Xxxxx L.L.P. at 9:00 a.m. (New York City time) on the date specified
in the notice described in Section 2 of this Agreement or at such other time on
the same or on such other date, in any event not later than January 11, 1999, as
shall be designated in writing by the Manager. The time and date of such
payment and delivery are hereinafter referred to as the "Option Closing Date."
The Units shall have the terms set forth in the Prospectus dated October
14, 1998, and the Prospectus Supplement dated December 7, 1998, including the
following:
NUMBER OF UNITS:
2
Number of Firm Units: 3,000,000
Maximum Number of Additional Units: 450,000
INITIAL OFFERING PRICE TO PUBLIC:
$19.00 per Unit
PURCHASE PRICE BY UNDERWRITERS:
$17.95 per Unit
FORM OF UNITS:
Definitive form, to be made available for checking and packaging at least
twenty-four hours prior to the Closing Date at the office of the Depository
Trust Company.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Wire transfer of same day funds
ADDITIONAL BLACKOUT PROVISIONS:
In addition to the lock-up provisions described in Section 2 and Section 5(g) of
the Agreement, the recipients of Common Units in the PCI Acquisition will be
required to execute a Lock-Up Letter, a form of which is attached hereto as
Exhibit A.
CLOSING DATE:
9:00 a.m. (New York City time), December 11, 1998
CLOSING LOCATION:
Xxxxxxx & Xxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
NAMES AND ADDRESSES OF MANAGER:
Designated Manager: Xxxxxx Xxxxxxx & Co. Incorporated
Address for Notices, etc.: Attn: Xxxxxxx X. Xxxxx
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
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ADDITIONAL TERMS AND CONDITIONS
All provisions contained in the document entitled Cornerstone Propane
Partners, L.P. Underwriting Agreement Standard Provisions dated December 7,
1998, a copy of which is attached hereto, are herein incorporated by reference
in their entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein, except that (i)
if any term defined in such document is otherwise defined herein, the definition
set forth herein shall control, (ii) all references in such document to a type
of security that is not a Common Unit shall not be deemed to be a part of this
Agreement, and (iii) all references in such document to a type of agreement that
has not been entered into in connection with the transactions contemplated
hereby shall not be deemed to be a part of this Agreement.
(a) In addition to the terms of Section 5(d) of the
Agreement, the Underwriters shall have received on the Closing Date the
following additional opinions of XxXxxxxxx Xxxxx, outside counsel for the
Partnership, the Operating Partnership, the Managing General Partner and the
Special General Partner, dated the Closing Date, to the effect that:
(i) PCI is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own or lease its properties and
to conduct its business in each case in all material respects as
described in the Registration Statement and the Prospectus.
(ii) PCI is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the
states listed on Schedule IV to such opinion; and to the knowledge of
such counsel, such jurisdictions are the only jurisdictions in which
the character of the business conducted by PCI or the location of the
properties owned or leased by it makes such qualification or
registration necessary (except where the failure to so qualify or so
register would not (A) have a material adverse effect on the financial
condition, business or results of operations of the Partnership
Entities taken as a whole or (B) subject the limited partners of the
Partnership to any material liability).
(iii) All of the issued and outstanding shares of
capital stock of PCI have been duly authorized and validly issued and
are fully paid and nonassessable and, upon the consummation of the PCI
Acquisition, will be owned by CHC free and clear of all liens,
encumbrances, security interests, charges or claims known to such
counsel, without independent investigation, other than those created by
or arising under the Delaware General Corporation Act and other than
the pledge of such shares to the purchasers under the Note Agreement.
(iv) The Stock Purchase Agreement has been duly authorized
and validly executed and delivered by each of the Partnership, CHC and,
to the knowledge of such counsel, PCI and each of the Holders. The
Stock Purchase Agreement constitutes the valid and legally binding
agreement of each of the Partnership, CHC, PCI and the Holders,
enforceable against such parties in accordance with its terms, subject
to bankruptcy,
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insolvency, fraudulent transfer, reorganization, moratorium and similar
laws relating to or affecting creditors' rights generally and to
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(v) The Note Agreement has been duly authorized and
validly executed and delivered by the Operating Partnership, and the
Note Agreement constitutes a valid and legally binding agreement of the
Operating Partnership, enforceable against the Operating Partnership in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(vi) The consummation of the PCI Acquisition is not subject
to any further pre-merger notification and waiting period requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
(vii) None of the offering, issuance and sale by the
Operating Partnership of the Senior Notes, the execution, delivery and
performance of the Note Agreement and the Stock Purchase Agreement by
any of the Partnership Entities, nor the consummation of the
transactions contemplated hereby and thereby (including the PCI
Acquisition) (A) will constitute a violation of the certificate or
articles of incorporation or bylaws or other organizational documents
of the Partnership Entities, the Managing General Partner or the
Special General Partner, (B) will constitute a breach or violation of,
or a default under (or an event which, with notice or lapse of time or
both, would constitute such an event), any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument (other
than the Partnership Agreements) known to such counsel to which any of
the Partnership Entities, the Managing General Partner or the Special
General Partner is a party or by which any of them or any of their
respective properties may be bound, (C) will violate any order,
judgment, decree or injunction of any court or governmental agency or
body known to such counsel directed to any of the Partnership Entities,
the Managing General Partner or the Special General Partner or any of
their properties in a proceeding to which any of the Partnership
Entities, the Managing General Partner or the Special General Partner
or their property is a party, (D) violates or will violate any federal
statute, law or regulation applicable to any of the Partnership
Entities, the Managing General Partner or the Special General Partner
or any of their respective properties or (E) will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of any of the Partnership Entities, the Managing
General Partner or the Special General Partner except as contemplated
by the Note Agreement.
(viii) No permit, consent, approval, authorization or
order of any federal, Delaware or California court, governmental agency
or body or any financial institution is required in connection with the
execution and delivery of, or the consummation of the transactions
contemplated by, the Note Agreement or the Stock Purchase Agreement, or
the consummation by the Partnership Entities of the PCI Acquisition,
except (A) as may be
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required under state securities or "Blue Sky" laws, as to which such
counsel need not express any opinion, (B) for such permits, consents,
approvals and similar authorizations which have been obtained, (C) for
such permits, consents, approvals and similar authorizations which (1)
are of a routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of transactions
such as those contemplated by the Note Agreement or the Stock Purchase
Agreement and (3) are expected in the reasonable judgment of the
Managing General Partner to be obtained in the ordinary course of
business subsequent to the consummation of the PCI Acquisition.
The Underwriters shall also have received on the Closing Date, a copy of
the opinion of XxXxxxxxx Xxxxx delivered pursuant to the Note Agreement,
substantially in the form attached as an exhibit to the Note Agreement,
accompanied by a letter dated the Closing Date and addressed to the Underwriters
from such counsel stating that they are entitled to rely on such opinion as if
it were addressed to them.
(b) In addition to the terms of Section 1 of the Agreement, each of
the Partnership, the Operating Partnership and the Managing General Partner
represents and warrants to and agrees with each of the Underwriters that:
(i) PCI is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own or lease its properties and
to conduct its business, in each case in all material respects as
described in the Registration Statement and the Prospectus, and PCI is,
or at the Closing Date will be, duly registered or qualified as a
foreign corporation to conduct its business and is in good standing in
each jurisdiction or place where the nature or location of its
properties or the conduct of its business requires such registration or
qualification, except where failure so to register or qualify (A) would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business or operations of the Partnership
Entities taken as a whole, and (B) would not subject the limited
partners of the Partnership to any material liability.
(ii) At the Closing Date, PCI will not have any
subsidiaries which, individually or taken as a whole, would be deemed
to be a significant subsidiary of the Partnership (as such term is
defined in Section 1-02 of Regulation S-X of the Commission).
(iii) All of the issued and outstanding shares of capital
stock of PCI have been duly authorized and validly issued and are fully
paid and nonassessable; and at the Closing Date all of such shares will
be owned of record by CHC free and clear of all liens, encumbrances,
security interests, charges or claims known to such counsel, without
independent investigation, other than those created by or arising under
the Delaware General Corporation Law and other than the pledge of such
shares to the purchaser under the Note Agreement.
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(iv) The Stock Purchase Agreement has been duly authorized
and validly executed and delivered by each of the Partnership, CHC and,
to the knowledge of the Partnership, PCI and each of the Holders. The
Stock Purchase Agreement constitutes the valid and legally binding
agreement of each of the Partnership, CHC, PCI and the Holders,
enforceable against such parties in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(v) The Note Agreement has been duly authorized and
validly executed and delivered by the Operating Partnership, and the
Note Agreement constitutes a valid and legally binding agreement of the
Operating Partnership, enforceable against the Operating Partnership in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(vi) The consummation of the PCI Acquisition is not
subject to any further pre-merger notification and waiting period
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
(vii) None of the offering, issuance and sale by the
Operating Partnership of the Senior Notes, the execution, delivery and
performance of the Note Agreement and the Stock Purchase Agreement by
any of the Partnership Entities, nor the consummation of the
transactions contemplated hereby and thereby (including the PCI
Acquisition) (A) will constitute a violation of the certificate or
articles of incorporation or bylaws or other organizational documents
of the Partnership Entities, the Managing General Partner or the
Special General Partner, (B) will constitute a breach or violation of,
or a default under (or an event which, with notice or lapse of time or
both, would constitute such an event), any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument (other
than the Partnership Agreements) known to the Partnership to which any
of the Partnership Entities, the Managing General Partner or the
Special General Partner is a party or by which any of them or any of
their respective properties may be bound, (C) will violate any order,
judgment, decree or injunction of any court or governmental agency or
body known to the Partnership directed to any of the Partnership
Entities, the Managing General Partner or the Special General Partner
or any of their properties in a proceeding to which any of the
Partnership Entities, the Managing General Partner or the Special
General Partner or their property is a party, (D) violates or will
violate any federal statute, law or regulation applicable to any of the
Partnership Entities, the Managing General Partner or the Special
General Partner or any of their respective properties or (E) will
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of any of the Partnership Entities, the
Managing General Partner or the Special General Partner, except as
contemplated by the Note Agreement.
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(viii) No permit, consent, approval, authorization or
order of any federal, Delaware or California court, governmental agency
or body or any financial institution is required in connection with the
execution and delivery of, or the consummation of the transactions
contemplated by, the Note Agreement or the Stock Purchase Agreement, or
the consummation by the Partnership Entities of the PCI Acquisition,
except (A) as may be required under state securities or "Blue Sky"
laws, as to which the Partnership does not give any representation, (B)
for such permits, consents, approvals and similar authorizations which
have been obtained, (C) for such permits, consents, approvals and
similar authorizations which (1) are of a routine or administrative
nature, (2) need not be or are not customarily obtained or made prior
to the consummation of transactions such as those contemplated by the
Note Agreement or the Stock Purchase Agreement and (3) are expected in
the reasonable judgment of the Managing General Partner to be obtained
in the ordinary course of business subsequent to the consummation of
the PCI Acquisition.
(ix) To the best of the Partnership's and the Operating
Partnership's knowledge, PCI is not in (i) breach or violation of the
provisions of its certificate or articles of incorporation or bylaws or
other organizational documents, or of any law, statute, ordinance,
administrative or governmental rule or regulation applicable to it or
of any decree of any court or governmental agency or body having
jurisdiction over it, or (ii) breach, default (and no event has
occurred which, with notice or lapse of time or both, would constitute
such an event) or violation in the performance of any term, covenant or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties may be
subject, which (x) would have a material adverse effect on the
condition, financial or otherwise, or in the earnings, business or
operations of PCI and its subsidiaries taken as a whole, (y) could
impair the ability of the Partnership Entities or PCI to perform their
obligations under the Stock Purchase Agreement or the Partnership
Entities to perform their obligations under the Note Agreement or (z)
could impair the ability of PCI or the Partnership Entities to
consummate the PCI Acquisition. To the knowledge of the Partnership
and the Operating Partnership no third party to any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which PCI or any of its subsidiaries is a party or by
which any of them is bound or to which any of their properties is
subject, is in default under any such agreement, which breach, default
or violation would, if continued, have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business or
operations PCI and its subsidiaries taken as a whole.
(x) Ernst & Young LLP, who have expressed their opinions
on the audited consolidated financial statements of Propane
Continental, Inc. included in the Registration Statement and the
Prospectus, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder.
(c) In addition to the delivery of the "comfort letter" from Xxxxxx
Xxxxxxxx LLP as described in Section 5(f) of the Agreement, the Underwriters
shall have received, on the date of
8
the Underwriting Agreement and the Closing Date, a letter dated the date of
the Underwriting Agreement and the Closing Date, in form and substance
satisfactory to the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in or
incorporated by reference into the Prospectus; provided that the letters
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date of the Underwriting Agreement.
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Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
PAINEWEBBER INCORPORATED
CIBC XXXXXXXXXXX CORP.
Acting severally on behalf of themselves and
the several Underwriters named herein
By: XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Principal
Accepted:
CORNERSTONE PROPANE GP, INC.
By: /s/ XXXXXX X. XXXXXX
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X.X. Xxxxxx
EVP/CFO
CORNERSTONE PROPANE PARTNERS, L.P.
By: Cornerstone Propane GP, Inc.,
its Managing General Partner
By: /s/ XXXXXX X. XXXXXX
--------------------------------
X.X. Xxxxxx
EVP/CFO
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CORNERSTONE PROPANE, L.P.
By: Cornerstone Propane GP, Inc.,
its Managing General Partner
By: /s/ XXXXXX X. XXXXXX
-------------------------------
X.X. Xxxxxx
EVP/CFO
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EXHIBIT A
[FORM OF LOCK-UP LETTER]
______________, 199_
Xxxxxx Xxxxxxx & Co. Incorporated
PaineWebber Incorporated
CIBC Xxxxxxxxxxx Corp.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Cornerstone Propane Partners, L.P., a Delaware limited
partnership (the "Partnership") providing for the public offering (the "Public
Offering") by several Underwriters, including Xxxxxx Xxxxxxx (the
"Underwriters"), of _________ common units representing limited partner
interests in the Partnership (the "Common Units").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus
supplement relating to the Public Offering (the "Prospectus Supplement"), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Common Units, Subordinated Units or any securities convertible into or
exercisable or exchangeable for Common Units or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Units or Subordinated Units, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Units, Subordinated Units or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Common Units to the Underwriters pursuant to the Underwriting Agreement or (b)
transactions relating to Common Units or other securities acquired in open
market transactions after the completion of the Public Offering. In addition,
the undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx
on behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the Prospectus Supplement,
make any demand for or exercise any right with respect to, the registration of
any Common Units or any security convertible into or exercisable or exchangeable
for Common Units.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Partnership and the Underwriters.
Very truly yours,
-----------------------------
(Name)
-----------------------------
(Address)
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CORNERSTONE PROPANE PARTNERS, L.P.
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COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
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FORM OF UNDERWRITING AGREEMENT
STANDARD PROVISIONS
DECEMBER 7, 1998
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From time to time, Cornerstone Propane Partners, L.P., a Delaware
limited partnership (the "Partnership"), may enter into one or more
underwriting agreements that provide for the sale of common units
representing limited partner interests in the Partnership (the "Firm Units")
to the several underwriters named therein (the "Underwriters"). If specified
in such underwriting agreement, the Partnership may also grant to the
Underwriters the right to purchase at their election an additional amount of
common units representing limited partner interests in the Partnership (the
"Additional Units") as provided in Section 2 hereof. The Firm Units and the
Additional Units are hereinafter collectively referred to as the "Units."
The common units representing limited partner interests in the Partnership to
be outstanding after giving effect to such contemplated sales are hereinafter
referred to as the "Common Units." The standard provisions set forth herein
may be incorporated by reference in any such underwriting agreement (an
"Underwriting Agreement") as set forth in Annex I, or as may otherwise be
agreed with the Underwriters. The Underwriting Agreement, including the
provisions incorporated therein by reference is herein sometimes referred to
as this Agreement. Terms defined in the Underwriting Agreement are used
herein as therein defined.
The Partnership has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3, including a prospectus,
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act") and relating to the Common Units and has filed with, or
transmitted for filing to, or shall promptly hereafter file with or transmit for
filing to, the Commission a prospectus supplement (the "Prospectus Supplement")
specifically relating to the Common Units pursuant to Rule 424 under the
Securities Act. The term "Registration Statement" means the registration
statement, including the exhibits thereto, as amended to the date of this
Agreement. The term "Basic Prospectus" means the prospectus included in the
Registration Statement. The term "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. The term "preliminary prospectus"
means a preliminary prospectus supplement specifically relating to the Common
Units, together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus," "Prospectus" and "preliminary prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"supplement," "amendment," and "amend" as used herein shall include all
documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Basic Prospectus by the Partnership with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Cornerstone Propane GP, Inc., a California corporation, is the general
partner (the "Managing General Partner") of both the Partnership and Cornerstone
Propane, L.P., a Delaware limited partnership (the "Operating Partnership").
SYN Inc., a Delaware corporation, is the special general partner (the "Special
General Partner") of the Partnership and the Operating Partnership. The
Partnership and the Operating Partnership, and Flame Inc., an Arizona
corporation, and Cornerstone Sales & Service Corporation, a Delaware
corporation, wholly owned subsidiaries of the Operating Partnership (the
"Corporate Subs"), are collectively referred to herein as the "Partnership
Entities."
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1. REPRESENTATIONS AND WARRANTIES. Each of the Partnership, the
Operating Partnership and the Managing General Partner represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the knowledge of
the Partnership, the Operating Partnership, or the Managing General Partner,
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) each part of
the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iv) the Prospectus does not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter furnished
to the Partnership in writing by such Underwriter through the Manager expressly
for use therein.
(c) None of the Partnership Entities, the Managing General
Partner or the Special General Partner has taken, and none of them will take,
directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in the stabilization or manipulation of the price of
the Common Units, and the Partnership has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Units, will not distribute, any prospectus (as defined under the
Securities Act) in connection with the offering and sale of the Units other than
the Registration Statement, any Preliminary Prospectus, the Prospectus or other
materials, if any, permitted by the Securities Act, including Rule 134 of the
general rules and regulations thereunder.
(d) Each of the Partnership and the Operating Partnership is a
limited partnership duly formed, validly existing and in good standing under the
Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") with full
partnership power and authority to own or lease its properties and to conduct
its business in all material respects as described in the Registration Statement
and the Prospectus, and each of the Partnership and the Operating Partnership is
duly registered or qualified as a foreign limited partnership to conduct its
business and in good standing in each jurisdiction or place where the nature or
location of its properties or the conduct of its
3
business requires such registration or qualification, except where the
failure so to register or qualify (i) would not have a material adverse
effect on the Partnership Entities taken as a whole, and (ii) would not
subject the limited partners of the Partnership to any material liability.
(e) The Managing General Partner is a corporation duly organized
and validly existing in good standing under the laws of the State of California,
with full corporate power and authority to own or lease its properties and to
conduct its business and to act as managing general partner of the Partnership
and of the Operating Partnership, in each case in all material respects as
described in the Registration Statement and the Prospectus, and the Managing
General Partner is duly registered or qualified as a foreign corporation to
conduct its business and in good standing in each jurisdiction or place where
the nature or location of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to register or
qualify (i) would not have a material adverse effect on the Partnership Entities
taken as a whole, and (ii) would not subject the limited partners of the
Partnership to any material liability.
(f) Each subsidiary of the Operating Partnership is a
corporation duly organized and validly existing in good standing under the
laws of the state of its incorporation, with full corporate power and
authority to own or lease its properties and to conduct its business, in each
case in all material respects as described in the Registration Statement and
the Prospectus, and each subsidiary of the Operating Partnership is duly
registered or qualified as a foreign corporation to conduct its business and
in good standing in each jurisdiction or place where the nature or location
of its properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or qualify (i)
would not have a material adverse effect on the Partnership Entities taken as
a whole, and (ii) would not subject the limited partners of the Partnership
to any material liability; all of the issued shares of capital stock of each
subsidiary of the Operating Partnership have been duly and validly authorized
and issued, are fully paid and nonassessable and are owned directly by the
Operating Partnership, free and clear of all liens, encumbrances, equities or
claims.
(g) The authorized interests in the Partnership outstanding
prior to the issuance of the Units have been duly authorized and are validly
issued, fully paid and non-assessable, except as described in the Prospectus.
(h) The Units have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, except as described in the Prospectus;
and, except as described in the Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any limited partner interests in the Partnership or the
Operating Partnership pursuant to the Partnership Agreement, the Operating
Partnership Agreement or any agreement or other instrument to which the
Partnership or the Operating Partnership is a party or by which either of them
may be bound. Except as described in the Prospectus, there are no outstanding
options or warrants to purchase any Common Units or Subordinated Units. The
Units, when issued and delivered against payment therefor as provided herein,
will conform in all material respects to the
4
descriptions thereof contained in the Prospectus. The Partnership has all
requisite power and authority to issue, sell and deliver the Units, in
accordance with and upon the terms and conditions set forth in this Agreement
and in the Prospectus. At the Closing Date and the Option Closing Date, all
corporate and partnership action, as the case may be, required to be taken by
any of the Partnership Entities, the Managing General Partner, the Special
General Partner or any of their shareholders or partners for the
authorization, issuance, sale and delivery of the Units contemplated by this
Agreement shall have been validly taken.
(i) This Agreement has been duly authorized, executed and
delivered by each of the Partnership, the Operating Partnership and the Managing
General Partner.
(j) The Partnership Agreement is a valid and legally binding
agreement of the Managing General Partner and the Special General Partner,
enforceable against the Managing General Partner and the Special General Partner
in accordance with its terms.
(k) None of the offering, issuance and sale by the Partnership
of the Units, the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby (i) will conflict with or
will constitute a violation of the agreement of limited partnership, certificate
or articles of incorporation or bylaws or other organizational documents of any
of the Partnership Entities, the Managing General Partner or the Special General
Partner, (ii) will conflict with or will constitute a breach or violation of, or
a default (or an event which, with notice or lapse of time or both, would
constitute such an event) under any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of the
Partnership Entities, the Managing General Partner, or the Special General
Partner is a party or by which any of them or any of their respective properties
may be bound, (iii) violates or will violate any order, judgment, decree or
injunction of any court or governmental agency or body directed to any of the
Partnership Entities, the Managing General Partner or the Special General
Partner or any of their properties in a proceeding to which any of them or their
property is a party, (iv) violates or will violate any statute, law or
regulation applicable to any of the Partnership Entities, the Managing General
Partner or the Special General Partner or any of their respective properties, or
(v) will result in the creation or imposition of any lien, charge or encumbrance
(except as contemplated by the Note Agreement and the Bank Credit Agreement)
upon any property or assets of any of the Partnership Entities, the Managing
General Partner or the Special General Partner, or in the case of clause (ii),
(iii), (iv) or (v) which conflicts, breaches, violations or defaults would have
a material adverse effect upon the Partnership Entities taken as a whole.
(l) No permit, consent approval, authorization or order of any
court, governmental agency or body or financial institution is required in
connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement except (i) for such permits,
consents, approvals and similar authorizations required under the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the securities or "Blue Sky" laws of certain jurisdictions, (ii) for such
permits, consents, approvals and similar authorizations which have been, or on
or prior to the Closing Date will be, obtained, (iii) for such
5
permits, consents, approvals and similar authorizations which, if not
obtained, would not, individually or in the aggregate, have a material
adverse effect upon the Partnership Entities taken as a whole and (iv) as set
forth or contemplated in the Prospectus.
(m) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions on
the audited consolidated financial statements of the Partnership and SYN Inc.
included in the Registration Statement and the Prospectus, are independent
public accountants as required by the Securities Act and the rules and
regulations thereunder.
(n) As of the date for which capitalization information is
presented in the Prospectus, the Partnership had the capitalization set forth
in the Prospectus. The financial statements (including the related notes and
supporting schedules) included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position,
results of operations and cash flows of the entities purported to be shown
thereby on the basis stated therein at the respective dates or for the
respective periods to which they apply and have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except to the extent disclosed therein. The
information set forth in the Registration Statement and the Prospectus under
the captions "Selected Historical and Pro Forma Financial and Operating Data"
is accurately presented in all material respects and has been prepared on a
basis consistent with the audited and unaudited historical consolidated
financial statements included in the Registration Statement and the
Prospectus.
(o) The Units have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance.
(p) From the date of the most recent financial statements
included in the Prospectus, there has not occurred any material adverse change,
or any development involving a prospective material adverse change, or any
development involving a prospective material adverse change (compared with the
immediately preceding twelve month period), in the condition, financial or
otherwise, or in the earnings, business or operations of the Partnership
Entities taken as a whole from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement).
(q) There are no legal or governmental proceedings pending or
threatened to which any of the Partnership Entities is a party or to which any
of the properties of the Partnership Entities is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed as required.
(r) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the
6
Securities Act, complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(s) None of the Partnership Entities or the Managing General
Partner is now, or after the sale of the Units to be sold by the Partnership
hereunder and the application of the net proceeds from such sale as described in
the Prospectus under the caption "Use of Proceeds" will be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(t) After sale of the Units to be sold by the Partnership
hereunder and application of the net proceeds from such sale as described in
the Prospectus under the caption "Use of Proceeds," the Operating Partnership
will not be a "gas utility company" and none of the Partnership Entities, the
Managing General Partner or the Special General Partner will be a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or subject to regulation thereunder.
(u) All of the Partnership Entities (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect upon the Partnership Entities taken as a whole.
(v) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a material adverse effect on the
Partnership Entities, taken as a whole.
(w) There are no contracts, agreements or understandings between
the Partnership Entities, the Managing General Partner or the Special General
Partner and any person granting such person the right to require the Partnership
to file a registration statement under the Securities Act with respect to any
securities of the Partnership or to require the Partnership to include such
securities with the Units registered pursuant to the Registration Statement.
(x) Each of the Partnership Entities maintains insurance against
such losses and risks and in such amounts as is reasonably adequate to protect
the Partnership Entities, the Managing General Partner, the Special General
Partner and their businesses; none of the Partnership Entities (or their
predecessors) has within the last two years been refused any insurance coverage
sought or
7
applied for; and none of the Partnership Entities has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition (financial or otherwise), business or
operations of the Partnership Entities taken as a whole, except as described in
or contemplated by the Prospectus.
(y) Each of the Partnership Entities maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) Each of the Partnership Entities, the Managing General
Partner and the Special General Partner has complied with all provisions of
Section 517.075, Florida Statutes relating to issuers doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
2. AGREEMENTS TO SELL AND PURCHASE. Upon the execution of the
Underwriting Agreement applicable to any Units and authorization by the Manager
of the release of the Firm Units, the several Underwriters propose to offer the
Firm Units for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented.
The Partnership may specify in the Underwriting Agreement applicable
to any Units that the Partnership thereby grants to the Underwriters the right
(an "Overallotment Option") to purchase at their election up to the number of
Additional Units set forth in such Underwriting Agreement, on the terms set
forth in the paragraph above, for the sole purpose of covering over-allotments
in the sale of the Firm Units. Any such election to purchase Additional Units
may be exercised by written notice from the Manager to the Partnership, given
within a period specified in the Underwriting Agreement, setting forth the
aggregate number of Additional Units to be purchased and the date on which such
Additional Units are to be delivered, as determined by the Manager but in no
event earlier than the Closing Date or, unless the Manager and the Partnership
otherwise agree in writing, earlier than or later than the respective number of
business days after the date of such notice set forth in such Underwriting
Agreement.
Each of the Partnership Entities and the Managing General Partner
agrees that, without the prior written consent of the lead Manager on behalf of
the Underwriters, it will not, during the period ending 180 days after the date
of the Prospectus Supplement, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer or
dispose of, directly or indirectly, any Common Units, Subordinated Units or any
securities convertible into or exercisable or exchangeable for
8
Common Units or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of
ownership of Common Units or Subordinated Units, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Units, Subordinated Units or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (A) the Units to be sold hereunder
or (B) the issuance by the Partnership of Common Units upon the exercise of
an option or warrant or the conversion of a security outstanding on the date
hereof of which the Underwriters have been advised in writing.
3. TERMS OF PUBLIC OFFERING. The Partnership will be advised, as of
the date of the Underwriting Agreement, by the Manager that the Underwriters
propose to make a public offering of their respective portions of the Units as
soon after the Registration Statement and this Agreement has been entered into
as in the Manager's judgment is advisable. The terms of the public offering of
the Units are set forth in the Prospectus.
4. PAYMENT AND DELIVERY. Payment for the Units shall be made to the
Partnership in Federal or other funds immediately available at the time and
place set forth in the Underwriting Agreement upon delivery to the Manager for
the respective accounts of the several Underwriters of the Units registered in
such names and in such denominations as the Manager shall request in writing not
less than two full business days prior to the date of delivery, with any
transfer taxes payable in connection with the transfer of the Units to the
Underwriters duly paid.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Units on the Closing
Date are subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any of the securities of the Partnership Entities by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations of the
Partnership Entities taken as a whole from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in the Manager's
judgment, is material and adverse and that makes it, in the Manager's
judgment, impracticable to market the Units on the terms and in the
manner contemplated in the Prospectus.
9
(b) The representations and warranties of the Partnership, the
Operating Partnership and the Managing General Partner contained in this
Agreement shall be true and correct as of the Closing Date and the Partnership,
the Operating Partnership and the Managing General Partner shall have complied
in all material respects with all of the agreements and satisfied in all
material respects all of the conditions on their part to be performed or
satisfied hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Managing General Partner, to the effect set forth in clause (b) above.
(d) The Underwriters shall have received on the Closing Date, an
opinion of McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP ("XxXxxxxxx Xxxxx"), outside
counsel for the Partnership, the Operating Partnership, the Managing General
Partner and the Special General Partner, dated the Closing Date, to the effect
that:
(i) Each of the Partnership and the Operating Partnership
has been duly formed and is validly existing in good standing as a
limited partnership under the Delaware Act with all necessary
partnership power and authority to own or lease its properties, and to
conduct its business, in each case in all material respects as
described in the Prospectus.
(ii) The Units to be issued and sold to the Underwriters
by the Partnership pursuant to this Agreement and the limited partner
interests represented thereby are duly authorized under the Partnership
Agreement and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid (to the
extent required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters described
in the Prospectus under the caption "The Partnership Agreement--Limited
Liability").
(iii) The Partnership Agreement constitutes a valid and
legally binding agreement of the Managing General Partner and the
Special General Partner, enforceable against the Managing General
Partner and the Special General Partner in accordance with its terms,
except as the enforceability thereof may be limited by (A) bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership,
moratorium and similar laws of general application relating to or
affecting creditors' rights generally and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (B) public policy, applicable law
relating to fiduciary duties and an implied covenant of good faith and
fair dealing.
(iv) The Operating Partnership Agreement constitutes a
valid and legally binding agreement of the Managing General Partner,
the Special General Partner and the Partnership, enforceable against
the Managing General Partner, the Special General Partner and the
Partnership in accordance with its terms, except as the enforceability
thereof may be
10
limited by (A) bankruptcy, fraudulent transfer, reorganization,
receivership, moratorium and similar laws of general application
relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (B) public policy,
applicable law relating to fiduciary duties and an implied covenant of
good faith and fair dealing.
(v) The opinion of XxXxxxxxx Xxxxx that is filed as
Exhibit 8.1 to the Registration Statement is confirmed and the
Underwriters may rely upon such opinion as if it were addressed to them.
(vi) The Registration Statement was declared effective
under the Securities Act on October 29, 1998; to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by such Rule.
(vii) Upon delivery to the Underwriters of certificates
evidencing the Units issued in the name of the Underwriters and payment
by the Underwriters of the purchase price for the Units, the
Underwriters will acquire the Units free of any adverse claim (as such
term is defined in Section 8-302 of the New York Uniform Commercial
Code), assuming that the Underwriters are acting in good faith and
without notice of any adverse claim.
(viii) The Partnership has all requisite power and
authority under the Delaware Act and the Partnership Agreement to
issue, sell and deliver the Units, in accordance with and upon the
terms and conditions set forth in this Agreement and in the
Registration Statement and Prospectus.
(ix) The Managing General Partner is a corporation duly
organized and validly existing in good standing under the laws of the
State of California, with full corporate power and authority to own or
lease its properties and to conduct its business and to act as managing
general partner of the Partnership and of the Operating Partnership, in
each case in all material respects as described in the Registration
Statement and the Prospectus.
(x) The Special General Partner is a corporation duly
organized and validly existing in good standing under the laws of the
State of Delaware, with full corporate power and authority to own or
lease its properties and to conduct its business and to act as special
general partner of the Partnership and the Operating Partnership, in
each case in all material respects as described in the Registration
Statement and the Prospectus.
(xi) Each Corporate Sub is a corporation duly organized
and validly existing in good standing under the laws of the state of
its incorporation (Flame Inc. was incorporated in Arizona and
Cornerstone Sales & Services Corporation was incorporated in
11
Delaware), with full corporate power and authority to own or lease its
properties and to conduct its business as contemplated by the
Registration Statement and the Prospectus.
(xii) Each of the Partnership and the Operating
Partnership is duly qualified or registered as a foreign limited
partnership for the transaction of business under the laws of the
states listed on Schedule I to such opinion; and to the knowledge of
such counsel, such jurisdictions are the only jurisdictions in which
the character of the business conducted by the Partnership and the
Operating Partnership or the location of the properties owned or leased
by either of them makes such qualification or registration necessary
(except where the failure to so qualify or so register would not (A)
have a material adverse effect on the Partnership Entities taken as a
whole or (B) subject the limited partners of the Partnership to any
material liability).
(xiii) Each of the Managing General Partner and the
Special General Partner is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the
states listed on Schedule II to such opinion; and to the knowledge of
such counsel, such jurisdictions are the only jurisdictions in which
the character of the business conducted by the Managing General Partner
and the Special General Partner or the location of the properties owned
or leased by either of them makes such qualification or registration
necessary (except where the failure to so qualify or so register would
not (A) have a material adverse effect on the Partnership Entities
taken as a whole or (B) subject the limited partners of the Partnership
to any material liability).
(xiv) Each of the Corporate Subs is duly qualified or
registered as a foreign corporation for the transaction of business
under the laws of the states listed on Schedule III to such opinion;
and to the knowledge of such counsel, such jurisdictions are the only
jurisdictions in which the character of the business conducted by the
Corporate Subs or the location of the properties owned or leased by
them makes such qualification or registration necessary (except where
the failure to so qualify or so register would not (A) have a material
adverse effect on the Partnership Entities taken as a whole or (B)
subject the limited partners of the Partnership to any material
liability).
(xv) All of the issued and outstanding shares of capital
stock of the Corporate Subs have been duly authorized and validly
issued and are fully paid and nonassessable; and all of such shares are
owned of record by the Operating Partnership free and clear of all
liens, encumbrances, security interests, charges or claims known to
such counsel, without independent investigation, other than those
created by or arising under the Delaware General Corporation Law.
(xvi) This Agreement has been duly authorized, executed
and delivered by each of the Partnership, the Operating Partnership and
the Managing General Partner.
12
(xvii) The statements (A) in the Prospectus under the
captions "Plan of Distribution", "The Partnership Agreement" and
"Description of Common Units" and (B) in "Item 7--Management's
Discussion and Analysis of Financial Condition and Results of
Operations--The Partnership--Liquidity and Capital Resources--Financing
and Sources of Liquidity," of the Partnership's most recent annual
report on Form 10-K incorporated by reference in the Prospectus insofar
as they constitute descriptions of the operative agreements or refer to
statements of law or legal conclusions, are accurate and complete in
all material respects.
(xviii) After due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to which
any of the Partnership Entities is a party or to which any of the
properties of any of the Partnership Entities is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated
by reference as exhibits to the Registration Statement that are not
described, filed or incorporated as required.
(xix) To the knowledge of such counsel, other than as
described or contemplated in the Prospectus, there is no litigation,
proceeding or governmental investigation pending or threatened against
any of the Partnership Entities, the Managing General Partner or the
Special General Partner which, if adversely determined, (x) would have
a material adverse effect on the Partnership Entities taken as a whole
or (y) would impair or call into question the validity of this
Agreement or the performance by any of the Partnership Entities or the
Managing General Partner of their obligations under this Agreement.
(xx) None of the Partnership Entities or the Managing
General Partner is now, or after sale of the Units to be sold by the
Partnership hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds"
none of them will be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(xxi) After sale of the Units to be sold by the
Partnership hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of
Proceeds," the Operating Partnership will not be a "gas utility
company" and none of the Partnership Entities, the Managing General
Partner or the Special General Partner will be a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or subject to regulation thereunder.
(xxii) Neither the offering, issuance and sale by the
Partnership of the Units, nor the execution, delivery and performance
of this Agreement by any of the Partnership, the Operating Partnership
or the Managing General Partner, nor the consummation of the
13
transactions contemplated hereby (A) will constitute a violation of the
certificate or articles of incorporation or bylaws or other
organizational documents of the Partnership Entities, the Managing
General Partner or the Special General Partner, (B) will constitute a
breach or violation of, or a default under (or an event which, with
notice or lapse of time or both, would constitute such an event), any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument (other than the Partnership Agreements) known
to such counsel to which any of the Partnership Entities, the Managing
General Partner or the Special General Partner is a party or by which
any of them or any of their respective properties may be bound, (C)
will violate any order, judgment, decree or injunction of any court or
governmental agency or body known to such counsel directed to any of
the Partnership Entities, the Managing General Partner or the Special
General Partner, or any of their properties in a proceeding to which
any of the Partnership Entities, the Managing General Partner or the
Special General Partner or any of their property is a party, (D)
violates or will violate any federal statute, law or regulation
applicable to any of the Partnership Entities, the Managing General
Partner or the Special General Partner or any of their respective
properties, or (E) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of any of the
Partnership Entities except as contemplated by the Note Agreement and
the Bank Credit Agreement.
(xxiii) No permit consent, approval, authorization or
order of any federal court, governmental agency or body or any
financial institution is required in connection with the execution and
delivery of, or the consummation of the transactions contemplated by,
this Agreement except (A) as may be required under state securities or
"Blue Sky" laws, as to which such counsel need not express any opinion,
and (B) for such permits, consents, approvals and similar
authorizations which have been obtained.
(xxiv) Except as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any limited partner
interests in the Partnership or the Operating Partnership or shares of
capital stock of the Managing General Partner or the Special General
Partner pursuant to the certificate of incorporation or bylaws of the
Managing General Partner or the Special General Partner or, to the
knowledge of such counsel, pursuant to any agreement or instrument to
which any Partnership Entity, the Managing General Partner or the
Special General Partner is a party or by which any of them may be
bound. To such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Units as
contemplated hereby gives rise to any rights for or relating to the
registration of any Units or other securities of the Partnership. To
such counsel's knowledge, except as disclosed in the Prospectus, there
are no outstanding options or warrants to purchase any Units or
Subordinated Units or other partnership interests in the Partnership or
the Operating Partnership. All corporate and partnership action
required to be taken by the Partnership Entities, the Managing General
Partner, the Special General Partner and their shareholders or partners
for the authorization, issuance, sale and delivery of the Units has
been validly taken.
14
(xxv) Such counsel (A) is of the opinion that each
document, if any, filed pursuant to the Exchange Act and incorporated
by reference in the Prospectus (except for financial statements and
schedules, and other historical pro forma and projected financial and
statistical data included therein as to which such counsel need not
express any belief) complied when so filed as to form in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder, (B) is of the opinion that the
Registration Statement and Prospectus (except for financial statements
and schedules and other historical, pro forma and projected financial
and statistical data included therein as to which such counsel need not
express any belief) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (C) has no reason to believe that (except for
financial statements and schedules and other historical, pro forma and
projected financial and statistical data as to which such counsel need
not express any belief) each part of the Registration Statement, when
such part became effective, contained, and as of the date such opinion
is delivered, contains any 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.
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx & Xxxxx L.L.P., counsel for the Underwriters, dated the
Closing Date, with respect to such matters as the Manager may reasonably
request.
(f) The Underwriters shall have received, on the date of the
Underwriting Agreement and the Closing Date, a letter dated the date of the
Underwriting Agreement and the Closing Date, in form and substance satisfactory
to the Underwriters, from Xxxxxx Xxxxxxxx LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Prospectus; provided that the letters delivered on the
Closing Date shall use a "cut-off date" not earlier than the date of the
Underwriting Agreement.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A to the Underwriting Agreement (Annex I) and as described in Section 2
of this Agreement, between the Manager and certain unitholders, officers and
directors of the Partnership relating to the sales and certain other
dispositions of Common Units or certain other securities, delivered to the
Manager on or before the date hereof, shall be in full force and effect on the
Closing Date.
(h) The Units shall have been approved for listing on the New
York Stock Exchange.
The several obligations of the Underwriters to purchase Additional Units
hereunder are subject to the delivery to the Manager on the Option Closing Date
of such documents as the Manager may reasonably request with respect to the good
standing of the Partnership, the due authorization and issuance of the
Additional Units and other matters related to the issuance of the Additional
Units
15
and the satisfaction of the foregoing conditions to the several obligations
of the Underwriters to purchase and pay for the Firm Units on the Closing
Date, except that all references to the Firm Units and the Closing Date shall
be deemed to refer to the Additional Units and the Option Closing Date,
respectively.
6. COVENANTS OF THE PARTNERSHIP. In further consideration of the
agreements of the Underwriters herein contained, each of the Partnership, the
Operating Partnership and the Managing General Partner covenants with each
Underwriter as follows:
(a) To furnish the Manager, without charge, three signed copies
of the Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish the Manager in New York City, without charge,
prior to 10:00 A.M., New York City time, on the business day next succeeding the
date of this Agreement and during the period mentioned in paragraph 6(c) below,
as many copies of the Prospectus, any documents incorporated by reference
therein and any supplements and amendments thereto or to the Registration
Statement as the Manager may reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to the Manager a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which the Manager reasonably objects, and to file with the
Commission within the applicable period specified in Rule 424(b) under the
Securities Act any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Units as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses the Manager will furnish to the Partnership) to which Units may
have been sold by the Manager on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) To endeavor to qualify the Units for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Manager shall
reasonably request; PROVIDED, HOWEVER, that neither the Partnership, the
Managing General Partner nor the Special General Partner shall be
16
required to qualify to do business or to file a general consent to service of
process in any such jurisdictions.
(e) To make generally available to the Partnership's security
holders and to the Manager as soon as practicable an earning statement covering
a twelve month period beginning on the first day of the first full fiscal
quarter after the date of the Underwriting Agreement, which earning statement
shall satisfy the provisions of Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder. If such fiscal quarter is
the last fiscal quarter of the Partnership's fiscal year, such earning statement
shall be made available not later than 90 days after the close of the period
covered thereby and in all other cases shall be made available not later than 45
days after the close of the period covered thereby.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Partnership's counsel and the Partnership's accountants in connection with the
registration and delivery of the Units under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Units to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Units under state securities laws and
all expenses in connection with the qualification of the Units for offer and
sale under state securities laws as provided in Section 6(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with the Blue Sky or Legal Investment memorandum,
(iv) all filing fees and disbursements of counsel to the Underwriters incurred
in connection with the review and qualification of the offering of the Units by
the National Association of Securities Dealers, Inc., (v) all costs and expenses
incident to listing the Units on the New York Stock Exchange, (vi) the cost of
printing certificates representing the Units, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) the costs and expenses of the
Partnership relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Offering of the Units, including, without
limitation expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Partnership, travel and
lodging expenses of the representatives and officers of the Partnership and any
such consultants, and the cost of any aircraft chartered in connection with the
road show, and (ix) other costs and expenses incident to the performance of the
obligations of the Partnership hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 7 entitled "Indemnity and Contribution," and the last
paragraph of Section 9 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock transfer
taxes payable on resale of any of the Units by them and any advertising expenses
connected
17
with any offers they may make. Notwithstanding anything to the contrary
provided in the foregoing, each of the parties to this Agreement shall bear
its own expenses in connection with road show presentations.
(g) The Partnership Entities will use the net proceeds received
by them from the sale of the Units in the manner specified in the Prospectus
under "Use of Proceeds."
7. INDEMNITY AND CONTRIBUTION.
(a) Each of the Partnership, the Operating Partnership and the
Managing General Partner, jointly and severally, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Partnership shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished to the
Partnership in writing by such Underwriter through the Manager expressly for use
therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Units, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Partnership shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Units to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Partnership with
Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Partnership, the Operating Partnership and the
Managing General Partner, their respective directors and officers who sign the
Registration Statement and each person, if any, who controls the Partnership
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Partnership, the Operating Partnership and the Managing General Partner to such
Underwriter, but only with reference to information relating to such Underwriter
furnished to the Partnership in writing by such Underwriter through the Manager
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
18
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 7,
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by the Manager, in the case of
parties indemnified pursuant to paragraph (a) of this Section 7, and by the
Managing General Partner, in the case of parties indemnified pursuant to
paragraph (b) of this Section 7. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Partnership, the Operating Partnership and the
Managing General Partner on the one hand and the Underwriters on the other hand
from the offering of the Units or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Partnership, the Operating Partnership and the
Managing General Partner on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received
19
by the Partnership, the Operating Partnership and the Managing General
Partner on the one hand and the Underwriters on the other hand in connection
with the offering of the Units shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Units (before
deducting expenses) received by the Partnership and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate
Public Offering Price of the Units. The relative fault of the Partnership,
the Operating Partnership and the Managing General Partner on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Partnership, the Operating Partnership
and the Managing General Partner or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in
proportion to the respective number of Units they have purchased hereunder,
and not joint.
(e) The Partnership, the Operating Partnership and the Managing
General Partner and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 7. The
amount paid or payable by an indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by an indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Partnership, the Operating Partnership and the Managing General Partner
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Partnership, the Operating Partnership and the Managing
General Partner, or the respective officers or directors or any person
controlling the Partnership and (iii) acceptance of and payment for any of the
Units.
20
8. TERMINATION. This Agreement shall be subject to termination by
notice given by the Manager to the Partnership, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date, (i) trading
generally shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American Stock Exchange,
the National Association of Securities Dealers, Inc., the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of the Partnership shall have been
suspended on any exchange or in any over-the-counter market (iii) a general
moratorium on commercial banking activities in New York shall have been
declared by either federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that in the Manager's judgment,
is material and adverse and (b) in the case of any of the events specified in
clauses 8(a)(i) through (iv), such event, singly or together with any other
such event, makes it, in the Manager's judgment, impracticable to market the
Units on the terms and in the manner contemplated in the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Units
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Units which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Units to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number
of Firm Units set forth opposite their respective names on the Underwriting
Agreement bears to the aggregate number of Firm Units set forth opposite the
names of all such nondefaulting Underwriters, or in such other proportions as
the Manager may specify, to purchase the Units which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Units that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one ninth of such number
of Units without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Units and the aggregate number of Firm Units with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Units
to be purchased, and arrangements satisfactory to the Manager and the
Partnership for the purchase of such Firm Units are not made within 48 hours
after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Partnership. In any such case
either the Manager or the Partnership shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus
or in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Units and the aggregate number of Additional Units with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Units to be purchased, the nondefaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Units or (ii)
21
purchase not less than the number of Additional Units that such nondefaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Partnership, the
Operating Partnership or the Managing General Partner to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Partnership, the Operating Partnership or the Managing General
Partner shall be unable to perform their obligations under this Agreement,
the Partnership, the Operating Partnership and the Managing General Partner
will reimburse the Underwriters or such Underwriters as have so terminated
this Agreement with respect to themselves, severally, for all out-of-pocket
expenses (including the fees and disbursements of their counsel) reasonably
incurred by such Underwriters in connection with this Agreement or the
offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. HEADINGS. The heading of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
22
ANNEX I
UNDERWRITING AGREEMENT
------------------
Cornerstone Propane Partners, L.P.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Dear Sirs and Mesdames:
We (the "Manager") are acting on behalf of the underwriter or
underwriters (including ourselves) named below (such underwriter or underwriters
being herein called the "Underwriters"), and we understand that Cornerstone
Propane Partners, L.P., a Delaware limited partnership (the "Partnership"),
proposes to issue and sell _________ common units representing limited partner
interests in the Partnership (the "Firm Units").
Subject to the terms and conditions set forth or incorporated by
reference herein, the Partnership hereby agrees to sell to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Partnership the number of Firm Units set forth below opposite
their names at a purchase price of $__ per Unit.
NAME NUMBER OF FIRM UNITS
---------------------------------------- -----------------------------
Xxxxxx Xxxxxxx & Co. Incorporated
-----------------------------
Total
-----------------------------
-----------------------------
The Underwriters will pay for the Firm Units upon delivery thereof at
[office] at _________ a.m. (New York City time) on _________, ___, or at such
other time, not later than 5:00 p.m. (New York City time) on _________, __, as
shall be designated by the Manager. The time and date of such payment and
delivery are hereinafter referred to as the "Closing Date."
The Underwriters will pay for any Additional Units upon deliver
thereof at [office] at ____ a.m. (New York City time) on the date specified in
the notice described in Section 2 of this Agreement or at such other time on the
same or on such other date, in any event not later than
1
____________, _____, as shall be designated in writing by the Manager. The
time and date of such payment and delivery are hereinafter referred to as the
"Option Closing Date."
The Units shall have the terms set forth in the Prospectus dated
_________, __, and the Prospectus Supplement dated _________, __, including the
following:
NUMBER OF UNITS:
Number of Firm Units:
Maximum Number of Additional Units:
INITIAL OFFERING PRICE TO PUBLIC:
$........ per Unit
PURCHASE PRICE BY UNDERWRITERS:
$........ per Unit
FORM OF UNITS:
Definitive form, to be made available for checking [and packaging] at least
twenty-four hours prior to the Closing Date at the office of [The Depository
Trust Company or its designated custodian] [the Manager]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Wire transfer of same day funds
[DESCRIBE ANY BLACKOUT PROVISIONS WITH RESPECT TO THE UNITS]
CLOSING DATE:
......... a.m. (New York City time), .................., 19..
CLOSING LOCATION:
2
NAMES AND ADDRESSES OF MANAGER:
Designated Manager:
Address for Notices, etc.:
[OTHER TERMS](*)
All provisions contained in the document entitled Cornerstone Propane
Partners, L.P. Underwriting Agreement Standard Provisions dated _________, 1998,
a copy of which is attached hereto, are herein incorporated by reference in
their entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein, except that (i)
if any term defined in such document is otherwise defined herein, the definition
set forth herein shall control, (ii) all references in such document to a type
of security that is not a Common Unit shall not be deemed to be a part of this
Agreement, and (iii) all references in such document to a type of agreement that
has not been entered into in connection with the transactions contemplated
hereby shall not be deemed to be a part of this Agreement.
--------------------------
(*)A description of particular tax, accounting or other unusual
features (including any event risk provisions) of the Units should be set forth,
or referenced to an attached or accompanying description, if necessary, to
ensure agreement as to the terms of the Units to be purchased and sold. Such a
description might appropriately be in the form in which such features will be
described in the Prospectus Supplement for the offering.
3
EXHIBIT A
[FORM OF LOCK-UP LETTER]
______________, 199_
Xxxxxx Xxxxxxx & Co. Incorporated
[NAMES OF OTHER CO-MANAGERS]
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx") proposes to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Cornerstone Propane Partners, L.P., a Delaware
limited partnership (the "Partnership") providing for the public offering
(the "Public Offering") by several Underwriters, including Xxxxxx Xxxxxxx
(the "Underwriters"), of _________ common units representing limited partner
interests in the Partnership (the "Common Units").
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering,
the undersigned hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the final
prospectus supplement relating to the Public Offering (the "Prospectus
Supplement"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any Common Units, Subordinated Units or any
securities convertible into or exercisable or exchangeable for Common Units
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Common
Units or Subordinated Units, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Units, Subordinated
Units or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (a) the sale of any Common Units to the Underwriters
pursuant to the Underwriting Agreement or (b) transactions relating to Common
Units or other securities acquired in open market transactions after the
completion of the Public Offering. In addition, the undersigned agrees that,
without the prior written consent of Xxxxxx Xxxxxxx on behalf of the
Underwriters, it will not, during the period commencing on the date hereof
and ending 180 days after the date of the Prospectus Supplement, make any
demand for or exercise any right with respect to, the registration of any
Common Units or any security convertible into or exercisable or exchangeable
for Common Units.
Whether or not the Public Offering actually occurs depends on a
number of factors, including market conditions. Any Public Offering will
only be made pursuant to an Underwriting Agreement, the terms of which are
subject to negotiation between the Partnership and the Underwriters.
Very truly yours,
-----------------------------------
(Name)
-----------------------------------
(Address)
4
ANNEX II
[SIGNATURE PAGE WHERE
XXXXXX XXXXXXX & CO. INCORPORATED
OR XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
IS A CO-LEAD MANAGER]
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
[Name of Other Lead Managers]
Acting severally on behalf of themselves
and the several Underwriters named
herein
By: [XXXXXX XXXXXXX & CO. INCORPORATED]
By:
---------------------------------------
Name:
Title:
Accepted:
CORNERSTONE PROPANE GP, INC.
By:
--------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive
Officer
5
CORNERSTONE PROPANE PARTNERS, L.P.
By: Cornerstone Propane GP, Inc.,
its Managing General Partner
By:
-----------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive
Officer
CORNERSTONE PROPANE, L.P.
By: Cornerstone Propane GP, Inc.,
its Managing General Partner:
By:
-----------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive
Officer
6
