6
EXHIBIT 1.1
CORNERSTONE PROPANE PARTNERS, L.P.
8,540,000 COMMON UNITS REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
December 11, 1996
7
December 11, 1996
Xxxxxx Xxxxxxx & Co.
Incorporated
Xxxx Xxxxxx Xxxxxxxx Inc.
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
c/x Xxxxxx Xxxxxxx & Co.
Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Cornerstone Propane Partners, L.P., a Delaware limited
partnership (the "Partnership"), proposes to issue and sell to the
several Underwriters named in Schedule I hereto (the "Underwriters")
8,540,000 common units representing limited partner interests in the
Partnership (the "Firm Units"). The Partnership also proposes to
issue and sell to the several Underwriters not more than an additional
1,281,000 common units representing limited partner interests in the
Partnership (the "Additional Units") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such Additional Units
granted to the Underwriters 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 the sales
contemplated hereby are hereinafter referred to as the "Common Units."
The Partnership has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, including a
prospectus, relating to the Units. The registration statement as
amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act of
1933, as amended (the "Securities Act"), is hereinafter referred to as
the "Registration Statement;" the prospectus in the form first used to
confirm sales of Units is hereinafter referred to as the "Prospectus;"
each of the preliminary prospectus dated November 21, 1996 filed as
part of the registration statement and each preliminary prospectus
filed as a part of any subsequent amendment thereto, or filed pursuant
to Rule 424 under the Securities Act prior to the Prospectus, is
hereinafter referred to as a "Preliminary Prospectus." If the
Partnership has filed an abbreviated registration statement to
register additional Common Units pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement.
8
It is understood and agreed to by all parties that the
Partnership was formed to acquire and operate the business and assets
of (a) SYN Inc., a Delaware corporation ("Synergy"), and Empire Energy
Corporation, a Tennessee corporation ("Empire Energy"), each of which
is a subsidiary of Northwestern Growth Corporation, a South Dakota
corporation ("NGC"), which is a subsidiary of Northwestern Public
Service Company, a Delaware corporation ("NPS"), (b) Xxxxx Propane Gas
Company, a Delaware corporation ("Xxxxx"), which is a subsidiary of
NPS, (c) CGI Acquisition Corporation, a Delaware corporation
("Acquisition Corp."), which is a subsidiary of NGC, and (d) CGI
Holdings, Inc., a Delaware corporation ("Coast"), which will be
acquired by NGC prior to the closing of the offering of the Units
contemplated hereby. Cornerstone Propane GP, Inc., a Delaware
corporation ("Newco"), is the general partner (the "Managing General
Partner") of both the Partnership and Cornerstone Propane, L.P., a
Delaware limited partnership (the "Operating Partnership"). Upon the
closing of the offering of the Units, Synergy will be the special
general partner (the "Special General Partner") of the Partnership and
the Operating Partnership. Synergy, Empire Energy, Xxxxx, Coast and
their respective subsidiaries are collectively referred to herein as
the "Predecessor Entities." The Partnership, the Operating
Partnership and Cornerstone Sales & Service Corporation, a Delaware
corporation and a wholly owned subsidiary of the Operating Partnership
(the "Corporate Sub"), are collectively referred to herein as the
"Partnership Entities."
It is further understood and agreed to by all parties that
prior to or concurrently with the closing of the offering of the Units
contemplated hereby, (1)(a) NGC will purchase stock of (and certain
rights related to) Synergy and Xxxxx owned by Empire Gas Corporation,
a Missouri corporation currently known as "All Star Gas Corporation"
("Empire Gas"), (b) NGC will cause Acquisition Corp. to merge with and
into Coast, (c) NPS will contribute all the outstanding shares of
capital stock of Xxxxx owned by NPS to NGC as a capital contribution
(and not in exchange for stock of NGC), (d) pursuant to a Contribution
and Assumption Agreement between NGC and Coast (the "NGC Contribution
Agreement"), NGC will contribute all of the outstanding shares of
capital stock of (and certain rights related to) Synergy, Xxxxx,
Empire Energy and Newco owned by NGC and a promissory note of Empire
Energy in the outstanding principal amount of $8.0 million (the
"Empire Energy Promissory Note"), including accrued interest, to Coast
and Coast will assume approximately $85.0 million in outstanding
principal amount of indebtedness of NGC and the Predecessor Entities
and (e) pursuant to a Contribution and Assumption Agreement between
Coast and Coast Gas (the "Coast Contribution Agreement"), Coast will
contribute all of the outstanding shares of capital stock of (and
certain rights related to) Synergy, Xxxxx, Empire Energy and Newco
owned by Coast and the Empire Energy Promissory Note (including
accrued interest) and the assets acquired as a result of the merger of
Coast with CGI Acquisition to Coast Gas, Inc., a California
corporation and a wholly owned subsidiary of Coast ("Coast Gas"), and
Coast Gas will assume the outstanding indebtedness of Coast on such
2
9
date (including the indebtedness assumed by Coast as described in
clause (d)), (2)(a) all of the subsidiaries of Synergy (other than
Claremont Gas Corporation) will merge into Synergy, (b) all of the
subsidiaries of Empire Energy, other than Empire Energy SC
Corporation, a Delaware corporation ("SC"), will merge into Empire
Energy, (c) Empire Energy and Xxxxx will merge into Coast Gas,
(d) Coast Energy Group, Inc., a Delaware corporation and the sole
subsidiary of Coast Gas ("CEG"), will merge into Coast Gas, (e) Coast
will merge into NGC and (f) Newco will merge into Coast Gas (in
connection with which Coast Gas will change its name to "Cornerstone
Propane GP, Inc." and will become the "Managing General Partner"),
(3) pursuant to a Contribution, Conveyance and Assumption Agreement
(the "Contribution Agreement"), (a) Synergy will convey substantially
all of its assets to the Operating Partnership in exchange for a
0.2337% general partner interest and a limited partner interest in the
Operating Partnership and the assumption by the Operating Partnership
of substantially all of the liabilities of Synergy, (b) SC will convey
all of its assets to the Operating Partnership in exchange for a
limited partner interest in the Operating Partnership and the
assumption by the Operating Partnership of all of the liabilities of
SC, and (c) Coast Gas will convey substantially all of its assets
(other than approximately $34.3 million principal amount promissory
note of SC and the shares of the capital stock of Synergy and SC) to
the Operating Partnership in exchange for a limited partner interest
in the Operating Partnership, a 0.7764% general partner interest in
the Operating Partnership and the assumption by the Operating
Partnership of all of the liabilities of Coast Gas (other than
approximately $34.3 million in outstanding principal amount of
indebtedness of SC) (the assets to be conveyed to the Operating
Partnership pursuant to the Contribution Agreement (including, without
limitation, the assets to be acquired by Coast Gas pursuant to the
transactions listed in clauses (1) and (2) of this sentence) are
collectively referred to as the "Transferred Assets"), (4) the
Operating Partnership will enter into a Bank Credit Agreement (the
"Bank Credit Agreement") providing for a $50.0 million working capital
facility and a $75.0 million acquisition facility, (5)(a) the
Operating Partnership will issue $220.0 million in Senior Secured
Notes (the "Senior Notes") to certain institutional investors pursuant
to a Note Purchase Agreement (the "Note Agreement"), which Senior
Notes will be secured pursuant to a Security Agreement (the "Security
Agreement"), (b) the Operating Partnership will borrow approximately
$12.8 million under the working capital facility provided for in the
Bank Credit Agreement and (c) the proceeds from the issuance of the
Senior Notes and the borrowing under the working capital facility will
be used to repay approximately $156.1 million principal amount of
indebtedness assumed by the Operating Partnership and to distribute an
aggregate of approximately $58.7 million to the Special General
Partner and approximately $17.9 million to the General Partners,
(6) pursuant to the Contribution Agreement, (a) Synergy will convey
all of its limited partner interest in the Operating Partnership to
the Partnership in exchange for a maximum of 1,822,750 subordinated
units representing limited partner interests in the Partnership
3
10
("Subordinated Units") (assuming no Additional Units are issued under
the terms of this Agreement), a 0.2314% general partner interest in
the Partnership and 2,314 rights representing non-voting limited
partner interests in the Partnership entitling the holder to certain
incentive distribution rights (the "Incentive Distribution Rights")
and (b) Coast Gas and SC will convey all of their limited partner
interests in the Operating Partnership to the Partnership in exchange
for a maximum of 6,055,869 Subordinated Units (assuming no Additional
Units are issued under the terms of this Agreement), a 0.7686% general
partner interest in the Partnership and 7,686 Incentive Distribution
Rights (as a result of which the Partnership will own a 98.9899%
limited partner interest in the Operating Partnership), (7) the
Partnership will contribute the proceeds from the sale of the Units to
the Underwriters to the Operating Partnership, which will use such
proceeds to repay approximately $175.8 million principal amount of
indebtedness and will use borrowings of approximately $17.9 million
from NPS to pay expenses associated with the Transactions (as defined
below), (8)(a) the Special General Partner will redeem a portion of
its preferred stock and (b) pursuant to a Conveyance and Assumption
Agreement (the "Service Assets Conveyance Agreement"), the Operating
Partnership will convey its appliance sales, installation and service
assets to the Corporate Sub, in exchange for shares of its common
stock, (c) the Managing General Partner will repay approximately $34.3
million of indebtedness and (d) SC will merge into the Managing
General Partner (such merger and the mergers described in clause (2)
above are collectively referred to herein as the "Northwestern
Mergers") (the transactions described in clauses (1) through (8) above
are collectively referred to as the "Transactions"). In connection
with the consummation of the Transactions, the Predecessor Entities,
the Partnership Entities, Newco and NGC will enter into various
agreements and certificates of merger, bills of sale, conveyances,
deeds and other assignments pursuant to the Contribution Agreement
(collectively with the NGC Contribution Agreement, the Coast
Contribution Agreement, the Contribution Agreement and the Service
Assets Conveyance Agreement, the "Merger and Conveyance Documents").
1. REPRESENTATIONS AND WARRANTIES. Each of the
Partnership, the Operating Partnership, the Managing General Partner
and Synergy 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,
Newco or Synergy, threatened by the Commission.
(b) (i) The Registration Statement, when it became
effective, did 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 required to be stated therein or
necessary to make the statements therein not misleading, (ii) the
4
11
Registration Statement, any Preliminary Prospectus 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 (iii) any Preliminary
Prospectus and the Prospectus do 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 1(b) do not apply to statements
or omissions in the Registration Statement, any Preliminary Prospectus
or the Prospectus, as amended or supplemented, if applicable, based
upon information relating to any Underwriter furnished to the
Partnership in writing by such Underwriter through you expressly for
use therein.
(c) None of the Predecessor Entities, the Partnership
Entities, Newco, NGC and NPS 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 (as defined in Section 4 hereof) 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 to be owned or leased at the Closing Date, to
assume the liabilities being assumed by it pursuant to the Merger and
Conveyance Documents and to conduct its business to be conducted at
the Closing Date in all material respects as described in the
Registration Statement and the Prospectus, and each of the Partnership
and the Operating Partnership is, or at the Closing Date will be, 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
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 condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as
a whole, and (ii) would not subject the limited partners of the
Partnership to any material liability.
(e) Corporate Sub is a corporation duly organized and
validly existing in good standing under the laws of the State of
5
12
Delaware with full corporate power and authority to own or lease its
properties to be owned or leased at the Closing Date and to conduct
its business to be conducted at the Closing Date in all material
respects as described in the Registration Statement and the
Prospectus, and Corporate Sub 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 the
failure so to register or qualify (i) would not have a material
adverse effect on the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as
a whole, and (ii) would not subject the limited partners of the
Partnership to any material liability.
(f) Newco 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 a 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 Newco is 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 the failure so to register or qualify
(i) would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject
the limited partners of the Partnership to any material liability.
(g) Coast Gas is a corporation duly organized, validly
existing and 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 Coast Gas is 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 the failure so to
register or qualify (i) would not have a material adverse effect on
the condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole, and
(ii) would not subject the limited partners of the Partnership to any
material liability.
(h) Synergy 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 a special general partner of the
6
13
Partnership and the Operating Partnership in each case in all material
respects as described in the Registration Statement and the
Prospectus, and Synergy is 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 the failure so to register or qualify
(i) would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject
the limited partners of the Partnership to any material liability.
(i) NGC is a corporation duly organized and validly
existing in good standing under the laws of the State of South Dakota,
with full corporate power and authority to perform the Transactions to
which it is a party (the "NGC Transactions").
(j) NPS 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 contribute the stock of
Xxxxx to NGC (the "NPS Transaction").
(k) At the Closing Date, neither the Managing General
Partner, the Special General Partner, the Partnership, the Operating
Partnership nor the Corporate Sub will have any subsidiaries (other
than the Special General Partner, the Partnership, the Operating
Partnership and the Corporate Sub themselves in their capacities as
subsidiaries) which, individually or taken as a whole, would be deemed
to be a significant subsidiary (as such term is defined in Section 1-
02 of Regulation S-X of the Commission).
(l) At the Closing Date, the Managing General Partner will
be the sole managing general partner of the Partnership with a 0.7686%
general partner interest in the Partnership; such general partner
interest will have been duly authorized by the Amended and Restated
Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement") among the Managing General Partner, the Special General
Partner and NGC, as organizational limited partner (the
"Organizational Limited Partner"), and will have been validly issued
to the Managing General Partner; and the Managing General Partner will
own such managing general partner interest free and clear of all
liens, encumbrances, security interests, equities, charges or claims,
except as set forth in the Partnership Agreement.
(m) At the Closing Date, the Managing General Partner will
be the sole managing general partner of the Operating Partnership with
a 0.7764% general partner interest in the Operating Partnership; such
general partner interest will have been duly authorized by the Amended
and Restated Agreement of Limited Partnership of the Operating
Partnership (the "Operating Partnership Agreement," and together with
the Partnership Agreement, the "Partnership Agreements") among the
Managing General Partner, the Special General Partner and the
7
14
Partnership, and will have been validly issued to the Managing General
Partner; and the Managing General Partner will own such general
partner interest free and clear of all liens, encumbrances, security
interests, equities, charges or claims, except as set forth in the
Operating Partnership Agreement.
(n) At the Closing Date, the Special General Partner will
be the sole special general partner of the Partnership with a 0.2314%
general partner interest in the Partnership; such general partner
interest will have been duly authorized by the Partnership Agreement
and will have been validly issued to the Special General Partner; and
the Special General Partner will own such general partner interest
free and clear of all liens, encumbrances, security interests,
equities, charges or claims, except as set forth in the Partnership
Agreement.
(o) At the Closing Date, the Special General Partner will
be the sole special general partner of the Operating Partnership with
a 0.2337% general partner interest in the Operating Partnership; such
general partner interest will have been duly authorized by the
Operating Partnership Agreement and will have been validly issued to
the Special General Partner; and the Special General Partner will own
such general partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except
as set forth in the Operating Partnership Agreement.
(p) At the Closing Date, the Managing General Partner will
own limited partner interests in the Partnership represented by a
maximum of 6,055,869 Subordinated Units (assuming no Additional Units
are issued under the terms of this Agreement) and 7,686 Incentive
Distribution Rights; at the Closing Date, the Special General Partner
will own limited partner interests in the Partnership represented by a
maximum of 1,822,750 Subordinated Units (assuming no Additional Units
are issued under the terms of this Agreement) and 2,314 Incentive
Distribution Rights; at the Closing Date, there will be issued to the
Underwriters the Firm Units (assuming no purchase by the Underwriters
of Additional Units); at the Closing Date or the Option Closing Date
(as defined in Section 4 hereof), as the case may be, the Firm Units
or the Additional Units, as the case may be, and the limited partner
interests represented thereby will be duly authorized by the
Partnership Agreement and, when issued and delivered to the
Underwriters against payment therefor as provided herein, 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"); and other than such Subordinated Units and such Incentive
Distribution Rights owned by the Managing General Partner and the
Special General Partner at the Closing Date or the Option Closing
Date, as the case may be, the Units will be the only limited partner
interests of the Partnership issued and outstanding.
8
15
(q) At the Closing Date and the Option Closing Date, (i)
the Partnership will be the sole limited partner of the Operating
Partnership, with a limited partner interest in the Operating
Partnership of 98.9899%; (ii) such limited partner interest will be
duly authorized by the Operating Partnership Agreement, will be
validly issued in accordance with the Operating Partnership Agreement
and will be fully paid (to the extent required under the Operating
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters similar to those described
in the Prospectus under the caption "The Partnership Agreement Limited
Liability"); and (iii) the Partnership will own such limited partner
interest in the Operating Partnership free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except
as set forth in the Operating Partnership Agreement.
(r) At the Closing Date and the Option Closing Date, all of
the outstanding shares of capital stock of Corporate Sub will have
been duly authorized and validly issued and will be fully paid and
nonassessable; and all of the issued shares of capital stock of
Corporate Sub will be registered on its books in the name of the
Operating Partnership, free and clear of all liens, encumbrances,
security interests, equities, charges or claims, except pursuant to
the Note Agreement, the Security Agreement or the Bank Credit
Agreement.
(s) All of the outstanding shares of capital stock of Newco
have been duly authorized and validly issued and are fully paid and
nonassessable; and all of the issued shares of capital stock of Newco
are registered on its books in the name of NGC free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(t) At the Closing Date and the Option Closing Date, all of
the outstanding shares of capital stock of Coast Gas will have been
duly authorized and validly issued and will be fully paid and
nonassessable; and all of the issued shares of capital stock of Coast
Gas will be registered on its books in the name of NGC, free and clear
of all liens, encumbrances, security interests, equities, charges or
claims.
(u) At the Closing Date and the Option Closing Date, the
outstanding shares of capital stock of Synergy will consist of 100,000
shares of common stock, all of which will have been duly authorized
and validly issued and will be fully paid and nonassessable; and
82,500 shares of common stock of Synergy will be registered on its
books in the name of Coast Gas, free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(v) Except as described in the Prospectus and except as
provided in Section 5.2(e) of the Partnership Agreement, 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
9
16
either of the Partnership Agreements 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, and
the Subordinated Units, when issued and delivered in accordance with
the terms of the Partnership Agreement and the Contribution Agreement,
will conform in all material respects to the descriptions thereof
contained in the Prospectus. The Partnership has all requisite power
and authority to issue, sell and deliver (i) the Units, in accordance
with and upon the terms and conditions set forth in this Agreement and
in the Prospectus, and (ii) the Subordinated Units, in accordance with
the terms and conditions set forth in the Partnership Agreement and
the Contribution Agreement. 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 Predecessor Entities, the
Partnership Entities, Newco, NGC and NPS or any of their shareholders
or partners for the authorization, issuance, sale and delivery of the
Units and the Subordinated Units and the consummation of the
transactions (including the Transactions) contemplated by this
Agreement and the Operative Agreements (as defined in Section 1(x)
hereof) shall have been validly taken.
(w) This Agreement has been duly authorized, executed and
delivered by each of the Partnership, the Operating Partnership, the
Managing General Partner and Synergy.
(x) At or before the Closing Date, the Partnership
Agreement will have been duly authorized, executed and delivered by
the Managing General Partner, the Special General Partner and the
Organizational Limited Partner and will be a valid and legally binding
agreement of the Managing General Partner, the Special General Partner
and the Organizational Limited Partner, enforceable against the
Managing General Partner, the Special General Partner and the
Organizational Limited Partner in accordance with its terms; at or
before the Closing Date, the Operating Partnership Agreement will have
been duly authorized, executed and delivered by the Managing General
Partner, the Special General Partner and the Partnership and will be 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; at or before the Closing
Date, each of the Merger and Conveyance Documents will have been duly
authorized, executed and delivered by the parties thereto and, as
applicable, (i) will be a valid and legally binding agreement of the
parties thereto enforceable against such parties in accordance with
its terms or (ii) will have been duly filed with all appropriate state
authorities and shall be in full force and effect in accordance with
its terms; at or before the Closing Date, each of NGC and NPS will
have taken all corporate action necessary to duly authorize the NGC
Transactions and the NPS Transaction, respectively, and such
10
17
authorizations shall remain in full force and effect; at or before the
Closing Date, the Senior Notes and the Note Agreement will have been
duly authorized, executed and delivered by the Operating Partnership
and will be valid and legally binding agreements of the Operating
Partnership enforceable against the Operating Partnership in
accordance with their respective terms; at or before the Closing Date,
the Bank Credit Agreement will have been duly authorized, executed and
delivered by the Operating Partnership and will be a valid and legally
binding agreement of the Operating Partnership enforceable against the
Operating Partnership in accordance with its terms; provided that,
with respect to each agreement described in this Section 1(x), the
enforceability thereof may be limited by 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 provided further, that
indemnification, contribution and exoneration provisions provided in
any such agreement may be limited by public policy and applicable law
relating to fiduciary duties. The Partnership Agreements, the Merger
and Conveyance Documents, the Senior Notes, the Note Agreement, the
Security Agreement and the Bank Credit Agreement are herein
collectively referred to as the "Operative Agreements."
(y) None of the offering, issuance and sale by the
Partnership of the Units, the offering, issuance and sale by the
Operating Partnership of the Senior Notes, the execution, delivery and
performance of this Agreement and the Operative Agreements by any of
the Predecessor Entities, the Partnership Entities or Newco which are
parties thereto, nor the consummation of the transactions contemplated
hereby and thereby (including the Transactions) (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 Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS, (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 Predecessor
Entities, the Partnership Entities, Newco, NGC or NPS 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 Predecessor Entities, the Partnership Entities, Newco, NGC or
NPS 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 Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS 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 Predecessor Entities, the Partnership Entities or Newco,
11
18
in the case of clause (ii), (iii), (iv) or (v) which conflicts,
breaches, violations or defaults would have a material adverse effect
upon the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities taken as a whole.
(z) 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 or
the Operative Agreements, or the consummation by any of the
Predecessor Entities, the Partnership Entities, Newco, NGC or NPS of
the Transactions, 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 permits, consents, approvals and similar authorizations
which, if not obtained, would not, individually or in the aggregate,
have a material adverse effect upon the condition, financial or
otherwise, or in the earnings, business or operations of the
Partnership Entities taken as a whole and (iv) as set forth or
contemplated in the Prospectus.
(aa) Except as described in the Prospectus, none of the
Predecessor Entities, the Partnership Entities, Newco, NGC and NPS is
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 the Partnership Entities
taken as a whole, (y) could impair the ability of the Predecessor
Entities, the Partnership Entities or Newco to perform their
obligations under the Operative Agreements or (z) could impair the
ability of NGC to consummate the NGC Transactions or the ability of
NPS to consummate the NPS Transaction. To the knowledge of the
Partnership, the Operating Partnership, Newco and Synergy, no third
party to any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which any of the Predecessor
Entities, the Partnership Entities or Newco 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,
12
19
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole. Neither the conduct of the
business currently operated by the Predecessor Entities nor the
conduct of the business as described or contemplated in the Prospectus
to be operated by the Partnership Entities immediately following the
Transactions violates or will violate any agreement limiting the
ability of any of the Predecessor Entities or any of the Partnership
Entities to compete in their businesses, including, without
limitation, the Non-Competition Agreement dated May 7, 1994 by and
among Empire Gas Corporation, a Missouri corporation ("Empire Gas"),
Empire Energy, Xx. Xxxxxx X. Xxxxxxx, Xx. Xxxxxxx X. Xxxxxxx, Xx.
Xxxxxx Xxxxxxxx and Xx. Xxxx X. Xxxxxxx, Xx. and the Management
Agreement dated May 17, 1995 among Empire Gas, NGC and Synergy, as
amended, and as further amended by the Termination Agreement among
Empire Gas, NGC and Synergy dated September 28, 1996 (collectively,
the "Empire Non-Competition Agreements").
(bb) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions
on the pro forma consolidated financial statements of the Partnership
and the audited consolidated financial statements of the Partnership,
Newco and Synergy included in the Registration Statement and the
Prospectus, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder.
(cc) Xxxxx, Xxxxx & Xxxxxx, who have expressed their
opinions on the audited consolidated financial statements of Empire
Energy and Synergy Group, Incorporated included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Securities Act and the rules and regulations
thereunder.
(dd) Price Waterhouse LLP, who have expressed their opinion
on the audited consolidated financial statements of Coast included in
the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the rules and
regulations thereunder.
(ee) At September 30, 1996, the Partnership would have had,
on the pro forma basis indicated in the Prospectus, the capitalization
set forth therein. 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 Pro Forma Financial and Operating Data" and
"Selected Historical Financial and Operating Data" is accurately
presented in all material respects and has been prepared on a basis
13
20
consistent with the unaudited pro forma financial statements and the
audited and unaudited historical consolidated financial statements
from which it has been derived. The pro forma financial statements of
the Partnership included in the Registration Statement and the
Prospectus have been prepared in all material respects in accordance
with the applicable accounting requirements of Article 11 of
Regulation S-X of the Commission; the assumptions used in the
preparation of such pro forma financial statements are, in the opinion
of the management of the Managing General Partner, reasonable; and the
pro forma adjustments reflected in such pro forma financial statements
have been properly applied in all material respects to the historical
amounts in the compilation of such pro forma financial statements.
(ff) Except as described in the Prospectus, each of the
Predecessor Entities has, and, upon consummation of the Transactions,
on the Closing Date each of the Operating Partnership and Corporate
Sub will have, good and marketable title in fee simple to all real
property and good title to all personal property described in the
Prospectus to be owned by it, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made of such property by
the Predecessor Entities and proposed to be made of such property by
the Partnership Entities; and all real property and buildings held
under lease by the Predecessor Entities and proposed to be held by the
Operating Partnership or the Corporate Sub are held by the Predecessor
Entities, and, upon consummation of the Transactions, on the Closing
Date will be held by the Operating Partnership or Corporate Sub under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made of such property
and buildings by the Predecessor Entities and proposed to be made of
such property and buildings by the Partnership Entities, in each case
except as described in or contemplated by the Prospectus. The Merger
and Conveyance Documents will be, as of the Closing Date, legally
sufficient to transfer or convey to the Operating Partnership or
Corporate Sub all properties that are, individually or in the
aggregate, required to enable the Operating Partnership or Corporate
Sub to conduct its operations (in all material respects as
contemplated by the Prospectus), subject to the conditions,
reservations and limitations contained in the Merger and Conveyance
Documents and those set forth in the Prospectus. The Operating
Partnership and Corporate Sub will, upon execution, delivery and
effectiveness of the Merger and Conveyance Documents, succeed in all
material respects to the business, assets, properties, liabilities and
operations reflected by the pro forma financial statements of the
Partnership, except as disclosed in the Prospectus. On the Closing
Date, each of the Northwestern Mergers will have become effective.
(gg) Each of the Predecessor Entities possesses, and at the
Closing Date and the Option Closing Date each of the Partnership
Entities will possess, all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
14
21
authorities necessary to conduct its business as described in the
Prospectus, including, without limitation, the business currently
conducted by CEG, except for such certificates, authorizations and
permits which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the ability of the
Partnership Entities, taken as a whole, to conduct their businesses as
described in the Prospectus; and none of the Predecessor Entities or
the Partnership Entities has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of the Partnership Entities,
taken as a whole, except as described in or contemplated by the
Prospectus.
(hh) Each of the Predecessor Entities has filed all material
tax returns required to be filed through the date hereof, which
returns are complete and correct in all material respects, and has
timely paid all taxes shown to be due pursuant to such returns, other
than those (i) which, if not paid, would not have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities taken as a whole,
or (ii) which are being contested in good faith.
(ii) Each of the Predecessor Entities owns or possesses, and
at the Closing Date and the Option Closing Date each of the
Partnership Entities will own, possess, have the right to use or be
able to acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by the Predecessor Entities
in connection with the business now operated by them other than those
which if not so owned or possessed would not have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities, taken as a whole;
and none of the Predecessor Entities has received any notice of
infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the
Partnership Entities, taken as a whole.
(jj) None of the Predecessor Entities, the Partnership
Entities or Newco, 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" will be, an "investment company" or a company "controlled
by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
15
22
(kk) 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.
(ll) No material labor dispute with the employees of the
Predecessor Entities exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of any of the Partnership, the
Operating Partnership, Newco or Synergy, is imminent.
(mm) At each of the Closing Date and the Option Closing
Date, as the case may be, the Managing General Partner and the Special
General Partner will have (excluding their interests in the
Partnership and the Operating Partnership and any notes receivable
from or payable to the Partnership or the Operating Partnership) a
combined net worth of at least $15 million. For purposes of this
representation, assets will be valued at fair market value, and the
interests of the Managing General Partner and the Special General
Partner in the Partnership and the Operating Partnership (as general
partner, limited partner and creditor) shall not be taken into account
except as an offset to the Partnership's or the Operating
Partnership's liabilities that are taken into account in computing
such net worth.
(nn) Each of the offer, sale and issuance of the
Subordinated Units to the Managing General Partner, the Special
General Partner and SC pursuant to the Contribution Agreement and the
Partnership Agreement and the offer, sale and issuance of the Senior
Notes pursuant to the Note Agreement is exempt from the registration
requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect thereto, and none of the
Predecessor Entities, the Partnership Entities or Newco has taken or
will take any action that would cause the loss of such exemption.
(oo) The Units have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance.
(pp) There has not occurred any material adverse change, or
any development involving a prospective material adverse 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).
(qq) There are no legal or governmental proceedings pending
or threatened to which any of the Predecessor Entities or the
Partnership Entities is a party or to which any of the properties of
the Predecessor Entities or the Partnership Entities is subject that
16
23
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.
(rr) All of the Predecessor Entities and 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
condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole.
(ss) Each of the Predecessor 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
Predecessor Entities has within the last two years been refused any
insurance coverage sought or applied for; and none of the Predecessor
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.
(tt) Each of the Predecessor Entities maintains a system of
internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(uu) Except for the Partnership Agreement, there are no
contracts, agreements or understandings between any of the Predecessor
Entities, the Partnership Entities, Newco, NGC or NPS and any person
17
24
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.
(vv) Each of the Predecessor Entities, the Partnership
Entities and Newco 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.
(ww) On the date hereof and at the Closing Date, (i) Xxxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxxx X.
XxXxxxxx will be duly qualified and acting officers of Newco and
(ii) Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xx. Xxxxxx and Xxxxxx X.
Xxxxxx will be members of the Board of Directors of Newco.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership
hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from the Partnership
the respective number of Firm Units set forth in Schedule I hereto
opposite its name, at $19.53 a Unit (the "Purchase Price").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the
Partnership agrees to sell to the Underwriters the Additional Units,
and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to 1,281,000 Additional Units at the
Purchase Price. If you, on behalf of the Underwriters, elect to
exercise such option, you shall so notify the Partnership in writing
not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Units to be purchased by the
Underwriters and the date on which such Units are to be purchased.
Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days
after the date of such notice. Additional Units may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Units. If
any Additional Units are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Units
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of
Additional Units to be purchased as the number of Firm Units set forth
in Schedule I hereto opposite the name of such Underwriter bears to
the total number of Firm Units.
Each of the Partnership, the Managing General Partner and
the Special General Partner hereby agrees that, without the prior
written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the
18
25
date of the Prospectus, (i) offer, issue, 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 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 Subordinated 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 the Common Units or such other securities, whether any
such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Units or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Units
to be sold hereunder, (B) the Subordinated Units to be issued on the
Closing Date as provided in the Partnership Agreement, (C) the
issuance or redemption of Subordinated Units by the Partnership in
connection with the sale by the Partnership of Additional Units as
described in Section 5.2(e) of the Partnership Agreement,
(D) issuances of Common Units pursuant to employee benefit plans
described in the Prospectus or (E) the issuance of Common Units in
connection with Acquisitions or Capital Improvements (each as defined
in the Partnership Agreement); provided that the Subordinated Units
may be transferred without such consent to an affiliate of the
Managing General Partner who agrees to be bound by the transfer
restrictions contained in this paragraph.
3. TERMS OF PUBLIC OFFERING. The Partnership is advised
by you 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 have become effective as in your judgment
is advisable. The Partnership is further advised by you that the
Units are to be offered to the public initially at $21.00 a Unit (the
"Public Offering Price") and to certain dealers selected by you at a
price that represents a concession not in excess of $.85 a Unit under
the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $.10 a Unit,
to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Units shall
be made to the Partnership in federal or other funds immediately
available in New York City against delivery of such Firm Units for the
respective accounts of the several Underwriters at 9:00 A.M., New York
City time, on December 17, 1996, or at such other time on the same or
such other date, not later than December 24, 1996, as shall be
designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Units shall be made to the
Partnership in federal or other funds immediately available in New
York City against delivery of such Additional Units for the respective
accounts of the several Underwriters at 9:00 A.M., New York City time,
on the date specified in the notice described in Section 2 or at such
other time on the same or on such other date, in any event not later
19
26
than January 24, 1997, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the
"Option Closing Date."
Certificates for the Firm Units and the Additional Units
shall be in definitive form and registered in such names and in such
denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the Option Closing Date, as
the case may be. The certificates evidencing the Firm Units and the
Additional Units shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, for the respective accounts
of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Units to the Underwriters duly
paid, against payment of the Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Partnership to sell the Units to the Underwriters
and the several obligations of the Underwriters to purchase and pay
for the Units on the Closing Date are subject to the condition that
the Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date hereof.
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 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 your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Units on the terms and in the manner
contemplated in the Prospectus.
(b) The representations and warranties of the Partnership,
the Operating Partnership, the Managing General Partner and Synergy
contained in this Agreement shall be true and correct as of the
Closing Date and the Partnership, the Operating Partnership, the
Managing General Partner and Synergy 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 each of the Managing General Partner and the Special
General Partner, to the effect set forth in clause (b) above.
20
27
(d) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxx & Xxxxx L.L.P., special 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, to assume the liabilities being
assumed by it pursuant to the Operative Agreements and to
conduct its business, in each case in all material respects
as described in the Prospectus.
(ii) The Managing General Partner is the sole managing
general partner of the Partnership and the Operating
Partnership with a general partner interest in the
Partnership of 0.7686% and a general partner interest in the
Operating Partnership of 0.7764%; such general partner
interests are duly authorized by the Partnership Agreement
and the Operating Partnership Agreement, respectively, and
were validly issued.
(iii) The Special General Partner is the sole
special general partner of the Partnership and the Operating
Partnership with a general partner interest in the
Partnership of 0.2314% and a general partner interest in the
Operating Partnership of 0.2337%; such general partner
interests are duly authorized by the Partnership Agreement
and the Operating Partnership Agreement, respectively, and
were validly issued.
(iv) The 6,055,869 Subordinated Units and the 7,686
Incentive Distribution Rights to be issued to the Managing
General Partner and SC and the 1,822,750 Subordinated Units
and the 2,314 Incentive Distribution Rights to be issued to
the Special General Partner pursuant to the Contribution
Agreement and the Partnership Agreement and the limited
partner interests represented thereby are duly authorized by
the Partnership Agreement and, when issued and delivered
pursuant to the terms of the Contribution Agreement and the
Partnership 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
Partnership Agreement Limited Liability").
(v) The Partnership is the sole limited partner of the
Operating Partnership, with a limited partner interest of
98.9899%; such limited partner interest is duly authorized
by the Operating Partnership Agreement and is validly
21
28
issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters similar to those
described in the Prospectus under the caption "The
Partnership Agreement Limited Liability").
(vi) The 8,540,000 Common 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 by 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").
(vii) Other than the 6,055,869 Subordinated Units
(assuming no Additional Units are issued under the terms of
this Agreement) and the 7,686 Incentive Distribution Rights
that will be owned by the Managing General Partner and SC
and the 1,822,750 Subordinated Units (assuming no Additional
Units are issued under the terms of this Agreement) and the
2,314 Incentive Distribution Rights that will be owned by
the Special General Partner, the Firm Units will be the only
limited partner interests of the Partnership issued at the
Closing Date, unless the Option Closing Date and the Closing
Date are the same date.
(viii) The Partnership Agreement constitutes a valid
and legally binding agreement of the Managing General
Partner, the Special General Partner and the Organizational
Limited Partner, enforceable against the Managing General
Partner, the Special General Partner and the Organizational
Limited 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.
(ix) 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
22
29
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.
(x) The Senior Notes, the Note Agreement and the
Security Agreement have been duly authorized and validly
executed and delivered by the Operating Partnership; and the
Senior Notes, the Note Agreement and the Security Agreement
constitute valid and legally binding agreements of the
Operating Partnership, enforceable against the Operating
Partnership in accordance with their 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).
(xi) The Managing General Partner owns its general
partner interests in the Partnership and the Operating
Partnership, and will own, together with SC, the 6,055,869
Subordinated Units and will own the 7,686 Incentive
Distribution Rights to be issued to them pursuant to the
Partnership Agreement and the Contribution Agreement, in
each case free and clear of all liens, encumbrances,
security interests, charges or claims (A) in respect of
which a financing statement under the Uniform Commercial
Code of California or Delaware naming the Managing General
Partner as debtor is on file in the office of the Secretary
of State of the State of California or Delaware as of a
recent date or (B) otherwise known to such counsel, without
independent investigation, other than those created by or
arising under the Delaware Act or the Partnership Agreement.
(xii) The Special General Partner owns its general
partner interest in the Partnership and the Operating
Partnership and will own the 1,822,750 Subordinated Units
(assuming no Additional Units are issued under the terms of
this Agreement) and the 2,314 Incentive Distribution Rights
to be issued to it pursuant to the Partnership Agreement and
the Contribution Agreement, in each case free and clear of
all liens, encumbrances, security interests, charges or
claims (A) in respect of which a financing statement under
the Uniform Commercial Code of the State of Missouri or
Delaware naming the Special General Partner as debtor is on
file in the office of the Secretary of State of the State of
Missouri or Delaware as of a recent date or (B) otherwise
known to such counsel, without independent investigation,
23
30
other than those created by or arising under the Delaware
Act or the Partnership Agreement.
(xiii) The Partnership owns its limited partner
interest in the Operating Partnership free and clear of all
liens, encumbrances, security interests, charges or claims
(A) in respect of which a financing statement under the
Uniform Commercial Code of the State of California or
Delaware naming the Partnership as debtor is on file in the
office of the Secretary of State of the State of California
or Delaware as of a recent date or (B) otherwise known to
such counsel, without independent investigation, other than
those created by or arising under the Delaware Act or the
Operating Partnership Agreement.
(xiv) The statements in the Registration Statement
and Prospectus under the captions "The Transactions," "Cash
Distribution Policy" (other than the table under the
subsection " Incentive Distributions Hypothetical Annualized
Yield," as to which such counsel need not express any
opinion), "Conflicts of Interest and Fiduciary
Responsibilities," "Description of the Common Units," "The
Partnership Agreement," "Units Eligible for Future Sale" and
"Underwriters" and in the Registration Statement in Items 14
and 15, in each case insofar as such statements constitute
descriptions of this Agreement and the Partnership
Agreements or summaries of the legal matters, documents or
proceedings referred to therein, fairly present the
information called for with respect to this Agreement and
such Partnership Agreements, legal matters, documents and
proceedings and fairly summarize the matters referred to
therein, and the Units and the Subordinated Units conform in
all material respects to the descriptions thereof contained
in the Registration Statement and Prospectus under the
captions "Prospectus Summary Risk Factors Risks Interest in
an Investment in the Partnership," " Risk Factors Conflicts
of Interest and Fiduciary Responsibilities," " Partnership
Structure and Management," " The Offering," "Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Conflicts of Interest and Fiduciary Responsibilities,"
"Cash Distribution Policy," "Conflicts of Interest and
Fiduciary Responsibilities," "Description of the Common
Units," "The Partnership Agreement" and "Units Eligible for
Future Sale."
(xv) None of the offering, issuance and sale by the
Partnership of the Units, the offering, issuance and sale by
the Operating Partnership of the Senior Notes, the
execution, delivery and performance of this Agreement and
the Operative Agreements by any of the Predecessor Entities,
the Partnership Entities or Newco, which are parties
thereto, nor the consummation of the transactions
24
31
contemplated hereby and thereby (including the Transactions)
(A) 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, (B) will violate the Delaware Act or
the Delaware General Corporation Law or (C) 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.
(xvi) None of the offering, issuance and sale by
the Partnership of the Units, the execution, delivery and
performance of this Agreement or the Partnership Agreements
by any of the Predecessor Entities, the Partnership Entities
or Newco, which are parties thereto, nor the consummation of
the transactions contemplated hereby and thereby constitutes
or will constitute a violation of, or a default under (or an
event which, with notice or lapse of time or both, would
constitute such an event) the Note Agreements or of the Bank
Credit Agreement.
(xvii) No permit, consent, approval, authorization
or order of any federal or Delaware court, governmental
agency or body is required in connection with the execution
and delivery of, or the consummation of the transactions
contemplated by, this Agreement or the issuance and sale of
the Common Units and the Subordinated Units under the
Partnership Agreement, except (A) for such permits,
consents, approvals and similar authorizations required
under the Securities Act and the Exchange Act, (B) as may be
required under state securities or "Blue Sky" laws, as to
which such counsel need not express any opinion, (C) for
permits, consents, approvals and similar authorizations as
may be required by the Interstate Commerce Commission or the
U.S. Department of Transportation (or their successor
agencies or departments, as the case may be) or under the
Public Utility Holding Company Act of 1935 or the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as to which
such counsel need not express any opinion, (D) for such
permits, consents, approvals and similar authorizations
which have been obtained, (E) 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 hereby 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 Transactions and
(F) as set forth or contemplated in the Prospectus.
25
32
(xviii) The opinion of Xxxxxxx & Xxxxx L.L.P. 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.
(xix) The Registration Statement was declared
effective under the Securities Act on December 11, 1996; 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.
(xx) 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.
(xxi) Except as described in the Prospectus and
except as provided in Section 5.2(e) of the Partnership
Agreement, 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
pursuant to either of the Partnership Agreements. The
Partnership has all requisite power and authority under the
Delaware Act and the Partnership Agreement to issue, sell
and deliver (A) the Units, in accordance with and upon the
terms and conditions set forth in this Agreement and in the
Registration Statement and Prospectus, and (B) the
Subordinated Units, in accordance with the terms and
conditions set forth in the Contribution Agreement and the
Partnership Agreement.
(xxii) The Units have been approved for listing on
the New York Stock Exchange, subject only to official notice
of issuance.
(xxiii) The offer, sale and issuance of the
Subordinated Units to the Managing General Partner, SC and
the Special General Partner pursuant to the Contribution
Agreement and the Partnership Agreement are exempt from the
registration requirements of the Securities Act and the
securities laws of any state having jurisdiction with
respect thereto.
(xxiv) Such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for historical
26
33
and pro forma 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 opinion) comply as to form in all
material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (B) has
no reason to believe that (except for historical and pro
forma 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) the statements in the Registration Statement and
the prospectus included therein at the time the Registration
Statement became effective under the captions "Prospectus
Summary Risk Factors Risks Inherent in an Investment in the
Partnership," " Risk Factors Conflicts of Interest and
Fiduciary Responsibilities," " Cash Available for
Distribution," " Partnership Structure and Management,"
" The Offering," " Summary of Tax Considerations," "Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Conflicts of Interest and Fiduciary Responsibilities,"
" Tax Risks," "The Transactions," "Use of Proceeds," "Cash
Distribution Policy" (other than the table under the
subsection " Incentive Distributions Hypothetical Annualized
Yield," as to which such counsel need not comment), "Cash
Available for Distribution," "Conflicts of Interest and
Fiduciary Responsibilities," "Description of the Common
Units," "The Partnership Agreement," "Units Eligible for
Future Sale," "Tax Considerations" and "Investment in the
Partnership by Employee Benefit Plans" contained 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 and (C) has no reason to
believe that (except for historical and pro forma 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) the statements in the
Prospectus under the captions "Prospectus Summary Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Risk Factors Conflicts of Interest and Fiduciary
Responsibilities," " Cash Available for Distribution,"
" Partnership Structure and Management," " The Offering,"
" Summary of Tax Consideration," "Risk Factors Risks
Inherent in an Investment in the Partnership," " Conflicts
of Interest and Fiduciary Responsibilities," " Tax Risks,"
"The Transactions," "Use of Proceeds," "Cash Distribution
Policy" (other than the table under the subsection
" Incentive Distributions Hypothetical Annualized Yield," as
to which such counsel need not comment), "Cash Available for
Distribution," "Conflicts of Interest and Fiduciary
Responsibilities," "Description of the Common Units," "The
Partnership Agreement," "Units Eligible for Future Sale,"
"Tax Considerations" and "Investment in the Partnership by
27
34
Employee Benefit Plans" contain any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Underwriters shall have received on the Closing
Date, an opinion of Xxxxxx Xxxxxx & 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) Coast Gas 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.
(ii) Synergy 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.
(iii) Corporate Sub 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
as contemplated by the Registration Statement and the
Prospectus.
(iv) NGC is a corporation duly organized and validly
existing in good standing under the laws of the State of
South Dakota, with full corporate power and authority to
perform the NGC Transactions.
(v) NPS 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 perform
the NPS Transaction.
(vi) 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 such counsel's knowledge, such jurisdictions are the
only jurisdictions in which the character of the business
28
35
conducted by the Partnership or the Operating Partnership 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).
(vii) Coast Gas 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 Coast Gas 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).
(viii) Synergy 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 Synergy 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).
(ix) Corporate Sub 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 Corporate Sub 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).
29
36
(x) All of the issued and outstanding shares of
capital stock of Coast Gas have been duly authorized and
validly issued and are fully paid and nonassessable and are
owned by NGC 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 California Corporations Code.
(xi) The outstanding capital stock of Synergy consists
of 100,000 shares of common stock, all of which have been
duly authorized and validly issued and are fully paid and
nonassessable, 82,500 shares of which are owned by the
Managing General Partner 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.
(xii) All of the issued and outstanding shares of
capital stock of Corporate Sub 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.
(xiii) This Agreement has been duly authorized,
executed and delivered by each of the Partnership, the
Operating Partnership, the Managing General Partner and
Synergy.
(xiv) Each of the Merger and Conveyance Documents
has been duly authorized and validly executed and delivered
by each of the Partnership, the Operating Partnership, the
Managing General Partner, NGC, Coast and Synergy, to the
extent a party thereto; each of the Merger and Conveyance
Documents constitutes the valid and legally binding
agreement of the parties thereto, 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). Each of the Northwestern Mergers has
become effective.
(xv) Each of NGC and NPS has taken all corporate action
necessary to duly authorize the NGC Transactions and the NPS
Transaction, respectively, and such authorizations remain in
full force and effect.
30
37
(xvi) The Bank Credit Agreement has been duly
authorized and validly executed and delivered by the
Operating Partnership; and the Bank Credit 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).
(xvii) The statements in the Registration Statement
and the Prospectus under the captions "Management's
Discussion and Analysis of Financial Condition and Results
of Operations Description of Indebtedness," "Business and
Properties Government Regulation," "Business and Properties
Transfer of the Partnership Assets," "Certain Relationships
and Related Transactions Contribution and Conveyance
Agreement," 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 Predecessor Entities or the
Partnership Entities is a party or to which any of the
properties of any of the Predecessor Entities or 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 as exhibits to the Registration Statement that
are not described or filed 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 overtly threatened against any of Synergy, Empire Energy,
Coast and Coast Gas (the "Material Predecessor Entities"),
the Partnership Entities, Newco, NGC or NPS that relates to
any of the transactions contemplated by the Prospectus or
which, if adversely determined, (x) would have a material
adverse effect on the financial condition, business or
results of operations of the Partnership Entities taken as a
whole, (y) would impair or call into question the validity
of this Agreement or the performance by any of the
Partnership Entities or Newco of their obligations under
this Agreement, any of the Operative Agreements or the
Transactions or, (z) would impair or call into question the
31
38
performance by NGC or NPS of the NGC Transactions or the NPS
Transaction, respectively.
(xx) None of the Partnership Entities or Newco 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" or a
company "controlled by" an "investment company" within the
meaning of 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) The consummation of the Transactions is not
subject to any further pre-merger notification and waiting
period requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976.
(xxiii) None of the offering, issuance and sale by
the Partnership of the Units, the offering, issuance and
sale by the Operating Partnership of the Senior Notes, the
execution, delivery and performance of this Agreement and
the Operative Agreements by any of the Material Predecessor
Entities, the Partnership Entities, Newco or NGC which are
parties thereto, nor the consummation of the transactions
contemplated hereby and thereby (including the Transactions)
(A) will constitute a violation of the certificate or
articles of incorporation or bylaws or other organizational
documents of any of the Material Predecessor Entities, Newco
or NGC, (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
Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS 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 Material Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS or any of their
properties in a proceeding to which any of the Material
Predecessor Entities, the Partnership Entities, Newco, NGC
32
39
or NPS or their property is a party, (D) violates or will
violate any federal statute, law or regulation applicable to
any of the Material Predecessor Entities or any of their
respective properties, (E) violates or will violate the
South Dakota Public Utilities Act or (F) 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.
(xxiv) No permit, consent, approval, authorization
or order of any federal or South Dakota 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 or the Operative Agreements or the consummation by
the Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS of the Transactions, except (A) as may be
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 hereby and by the
Operative Agreements 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 Transaction and (D) as set forth or
contemplated in the Prospectus.
(xxv) Except as described in the Prospectus, to the
knowledge of such counsel, none of the Material Predecessor
Entities, Newco, NGC and NPS was immediately prior to the
Transactions, and none of the Partnership Entities, Newco,
NGC and NPS is, in (A) breach or violation of the provisions
of its certificate or articles of incorporation or bylaws or
other organizational documents or (B) breach, default (and
no event has occurred which, with notice or lapse of time or
both, would constitute such a default) or violation in the
due performance of any term, covenant or condition contained
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 are subject, which in either case (x) would have
a material adverse effect on the financial condition,
business or results of operations of the Partnership
Entities taken as a whole, (y) could impair the ability of
any of the Partnership Entities or Newco to perform their
obligations under the Operative Agreements, or (z) could
impair the ability of NGC to consummate the NGC Transactions
33
40
or the ability of NPS to consummate the NPS Transaction.
The conduct of the business as described or contemplated in
the Prospectus to be operated by the Partnership Entities
immediately following the Transactions does not and will not
violate any agreement limiting the ability of any of the
Partnership Entities to compete in their businesses,
including, without limitation, the Empire Non-Competition
Agreements.
(xxvi) Each of the Partnership Entities possesses all
certificates, authorizations and permits issued by the
appropriate federal regulatory authorities necessary to
conduct its business as described in the Prospectus,
including, without limitation, the business conducted by CEG
prior to consummation of the Transactions.
(xxvii) 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 Northwestern Entity,
any Northwestern Party or any Partnership Entity 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 Material Predecessor Entities, the
Partnership Entities, Newco and their shareholders or
partners for the authorization, issuance, sale and delivery
of the Units and Subordinated Units and the consummation of
the transactions contemplated hereby and by the Operative
Agreements (including the Transactions) has been validly
taken.
(xxviii) Such counsel (A) 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 opinion) comply
as to form in all material respects with the Securities Act
and the applicable rules and regulations of the Commission
34
41
thereunder, (B) 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) the
Registration Statement and the prospectus included therein
at the time the Registration Statement became effective
contained 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 and
(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) the Prospectus contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
You shall also have received on the Closing Date, a copy of
the opinion of Xxxxxx Xxxxxx & 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 you from such counsel stating that you are entitled to
rely on the opinion relating to the exemption from the registration
requirements of the Securities Act of the offer, sale and issuance of
the Senior Notes as if it were addressed to you.
(f) The Underwriters shall have received on the Closing
Date, an opinion or opinions of outside counsel to the Partnership,
the Operating Partnership, Newco and Synergy in each of the States of
Alabama, Arkansas, California, Florida, Kentucky, Mississippi,
Missouri, New York and Tennessee, dated the Closing Date, to the
effect that:
(i) Each of the Partnership, the Operating
Partnership, the Managing General Partner, the Special
General Partner and Corporate Sub has been duly qualified or
registered, to the extent required in such state, as a
foreign limited partnership or a foreign corporation, as the
case may be, for the transaction of business under the laws
of such state.
(ii) The Operating Partnership has all requisite
partnership power and authority under the laws of such state
to own or lease its properties and to conduct its business
in such state; Corporate Sub has all requisite corporate
power and authority under the laws of such state to own or
lease its properties and to conduct its business in such
state; and upon the consummation of the Transactions,
assuming that the Partnership will not be liable under the
laws of the State of Delaware for the liabilities of the
Operating Partnership and assuming that the Unitholders will
35
42
not be liable under the laws of the State of Delaware for
liabilities of the Partnership or the Operating Partnership,
the Partnership will not be liable as a limited partner
under the laws of such state for the liabilities of the
Operating Partnership, and the Unitholders will not be
liable as limited partners under the laws of such state for
the liabilities of the Partnership or the Operating
Partnership, except in each case to the same extent as under
the laws of the State of Delaware.
(iii) The execution, delivery and performance of
the Merger and Conveyance Documents relating to the transfer
of property in such state or the merger of one or more
entities organized under the laws of such state in
accordance with the terms thereof will not violate any
statute of such state or any rule, regulation or, to the
knowledge of such counsel, any order of any agency of such
state having jurisdiction over any of the Predecessor
Entities, the Partnership Entities, Newco or any of their
respective properties, except for any such violations which,
individually or in the aggregate, would not have a material
adverse effect upon the holders of Common Units or upon the
operations to be conducted in such state by the Partnership
Entities taken as a whole.
(iv) Each of the Merger and Conveyance Documents
relating to the transfer of property in such state or the
merger of one or more entities organized under the laws of
such state, assuming the due authorization, execution and
delivery thereof by the parties thereto and assuming such
Merger and Conveyance Documents are governed by the laws of
such state notwithstanding any choice of law provisions
thereof, is a valid and legally binding agreement of the
parties thereto under the laws of such state, enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, 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); each of such Merger and Conveyance Documents is in a
form legally sufficient as between the parties thereto to
convey to the transferee thereunder all of the right, title
and interest of the transferor stated therein in and to the
properties located in such state, as described in such
Merger and Conveyance Documents, subject to the conditions,
reservations and limitations contained in such Merger and
Conveyance Documents, except motor vehicles or other
property requiring conveyance of certificated title as to
which such Merger and Conveyance Documents are legally
sufficient to compel delivery of such certificated title.
36
43
(v) Each of the deeds and assignments (including,
without limitation, the form of the exhibits and schedules
thereto) relating to the transfer of property in such state
is in a form legally sufficient for recordation in the
appropriate public offices of such state, to the extent such
recordation is required, and, upon proper recordation of any
of such deeds and assignments in such state, will constitute
notice to all third parties under the recordation statutes
of such state concerning record title to the assets
transferred thereby; recordation in the office of the County
Clerk for each county in which the Operating Partnership or
Corporate Sub owns property is the appropriate public office
in such state for the recordation of deeds and assignments
of interests in real property located in such county.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any governmental
agency or body of such state having jurisdiction over any of
the Predecessor Entities, Partnership Entities or Newco, as
the case may be, or any of their respective properties is
required for the issue and sale of the Units by the
Partnership or for the conveyance of the properties located
in such state purported to be conveyed to the Operating
Partnership or Corporate Sub pursuant to the Merger and
Conveyance Documents, except (A) such permits, consents,
approvals and similar authorizations required under the Act
and the securities or "Blue Sky" laws of such state, (B)
such permits, consents, approvals and similar authorizations
which have been obtained, (C) 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 hereby and by the
Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the
ordinary course of business subsequent to the consummation
of the Transactions or (D) such permits, consents, approvals
and similar authorizations which, if not obtained, would
not, individually or in the aggregate, have a material
adverse effect upon the operations to be conducted in such
state by the Partnership Entities taken as a whole.
(vii) The Predecessor Entities and the Partnership
Entities possess all certificates, authorizations or permits
issued by the appropriate state regulatory agencies or
bodies necessary to conduct the business currently (or, as
described or contemplated in the Prospectus, to be) operated
by them, except (A) with respect to the Partnership, the
Operating Partnership and Corporate Sub for such
certificates, authorizations or permits 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
37
44
transactions such as those contemplated hereby and by the
Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the
ordinary course of business subsequent to the consummation
of the Transactions and (B) such certificates,
authorizations or permits which would not, individually or
in the aggregate, have a material adverse effect upon the
operations to be conducted in such state by the Partnership
Entities taken as a whole.
(g) The Underwriters shall have received on the Closing
Date an opinion of Xxxxx & Xxxxx, L.L.P., counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in subparagraphs (vi) and (xiv) (but only as to the statements in the
Prospectus under "Cash Distribution Policy," "Conflicts of Interest
and Fiduciary Responsibilities," "Description of the Common Units,"
"The Partnership Agreement," "Units Eligible for Future Sale" and
"Underwriters") of paragraph (d) above and subparagraphs (xiii) and
(xxviii) of paragraph (e) above.
With respect to subparagraph (xxiv) of paragraph (d) above
and subparagraph (xxviii) of paragraph (e) above, Xxxxx &
Xxxxx, L.L.P., Xxxxxxx & Xxxxx L.L.P. and Xxxxxx Xxxxxx & Xxxxx may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
The opinions described in paragraphs (d), (e) and (f) above
shall be rendered to the Underwriters at the request of the
Partnership and shall so state therein.
(h) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from each of Xxxxxx Xxxxxxxx LLP,
Xxxxx, Xxxxx & Xxxxxx and Price Waterhouse 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 the Registration Statement and the
Prospectus; provided that the letters delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The Units shall have been approved for listing on the
New York Stock Exchange.
(j) Acquisition Corp. shall have merged with and into Coast
in accordance with the terms of the Stock Purchase and Merger
Agreement dated September 4, 1996 among NGC, Acquisition Corp., Coast
and the holders of all of the preferred stock of Coast.
38
45
(k) Prior to or simultaneously with the sale of the Units
on the Closing Date, the Northwestern Mergers shall have been
consummated.
(l) Prior to the sale of the Units on the Closing Date,
(i) the closing of the offering of the Senior Notes shall have
occurred on the basis set forth in the Prospectus and (ii) the Bank
Credit Agreement shall have been executed and delivered and become
effective in substantially the form filed as an exhibit to the
Registration Statement.
(m) Prior to or simultaneously with the sale of the Units
on the Closing Date, the conveyance of the Transferred Assets to the
Operating Partnership shall have been consummated.
The several obligations of the Underwriters to purchase
Additional Units hereunder are subject to the delivery to you on the
Option Closing Date of such documents as you 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 and the satisfaction
of the foregoing conditions to the several obligations of the
Underwriters to purchase and pay for the Units on the Closing Date
(other than paragraph (f)), 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, the Managing General Partner
and Synergy covenants with each Underwriter as follows:
(a) To furnish to you, 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 to
you in New York City, without charge, prior to 5:00 P.M., New York
City time, on the business day next succeeding the date of this
Agreement and during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably
request; provided that if such request is made nine months or more
after the effective date of the Registration Statement, you shall pay
the expenses of providing such copies.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, 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.
39
46
(c) If, at any time prior to the expiration of nine months
after the effective date of the Registration Statement when, 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 you
will furnish to the Partnership) to which Units may have been sold by
you 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; and, in case any
Underwriter is required to deliver the Prospectus nine months or more
after the effective date of the Registration Statement, the
Partnership upon the request of the Representatives and at the expense
of such Underwriter will prepare promptly such amendment or supplement
to the Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act.
(d) To endeavor to qualify the Units for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request; PROVIDED, HOWEVER, that neither the
Partnership, the Managing General Partner nor Synergy shall be
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 you as soon as practicable an earnings
statement covering the twelve-month period ending December 31, 1997
that satisfies the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder.
(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
40
47
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 such
qualification and 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 fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A
relating to the Common Units and 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) all
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 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) To cause the Predecessor Entities, the Partnership
Entities and the Managing General Partner to accomplish or obtain, as
soon as practicable, all consents, recordings and filings necessary to
perfect, preserve and protect the title of the Operating Partnership
and Corporate Sub to the properties and assets owned by them as a
result of the Transactions.
(h) The Partnership Entities, the Managing General Partner
and the Special General Partner will use the net proceeds received by
them from the sale of the Units and the Senior Notes in the manner
specified in the Prospectus under "Use of Proceeds."
41
48
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 you 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
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(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
42
49
"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 Xxxxxx Xxxxxxx
& Co. Incorporated, 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
43
50
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 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 such
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.
44
51
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other
statements of the Partnership, the Operating Partnership, the Managing
General Partner and Synergy 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, the
Managing General Partner and Synergy, the respective officers or
directors or any person controlling the Partnership and (iii)
acceptance of and payment for any of the Units.
8. TERMINATION. This Agreement shall be subject to
termination by notice given by you 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 of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Partnership or NPS 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 your judgment, is material and adverse and (b) in the
case of any of the events specified in clauses (a)(i) through (iv),
such event, singly or together with any other such event, makes it, in
your 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 in Schedule I bears to the
aggregate number of Firm Units set forth opposite the names of all
such nondefaulting Underwriters, or in such other proportions as you
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-
45
52
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 you 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 you 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) 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, the Managing General Partner
or Synergy 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, the Managing General Partner or Synergy
shall be unable to perform their obligations under this Agreement, the
Partnership, the Operating Partnership, the Managing General Partner
and Synergy 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.
46
53
12. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only and
shall not be deemed a part of this Agreement.
Very truly yours,
CORNERSTONE PROPANE PARTNERS, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
President and Chief Executive
Officer
CORNERSTONE PROPANE, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
President and Chief
Executive Officer
CORNERSTONE PROPANE GP, INC.
By /s/ X.X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
SYN INC.
By /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Vice President
47
54
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxx Xxxxxx Xxxxxxxx Inc.
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Acting severally on behalf
of themselves and the several
Underwriters named herein.
By Xxxxxx Xxxxxxx & Co.
Incorporated
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
Vice President
48
55
SCHEDULE I
Number of
Firm Units
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated 1,123,334
Xxxx Xxxxxx Xxxxxxxx Inc. 1,123,334
X.X. Xxxxxxx & Sons, Inc. 1,123,333
Xxxxxxxxxxx & Co., Inc. 1,123,333
PaineWebber Incorporated 1,123,333
Prudential Securities Incorporated 1,123,333
Bear, Xxxxxxx & Co. Inc. 180,000
Alex. Xxxxx & Sons Incorporated 180,000
Xxxx Xxxxxxxx Incorporated 90,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation 180,000
EVEREN Securities, Inc. 90,000
Xxxxxxxxxx & Co. Inc. 90,000
Xxxxxxx, Xxxxx & Co. 180,000
Xxxxxx Xxxxxxxxxx Xxxxx Inc. 90,000
Xxxxxx X. Xxxxx & Co., L.P. 90,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 90,000
XxXxxxxx & Company Securities, Inc. 90,000
Xxxxx Xxxxxxx Inc. 90,000
Xxxxx XxxXxxxxx Incorporated 90,000
Xxxxxxxx Xxxxxx Refsnes, Inc. 90,000
The Xxxxxxxx-Xxxxxxxx Company, Inc. 90,000
Xxxxx & Xxxxxxxxxxxx, Inc. 90,000
-------
8,540,000
Total....................................... ==========
