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EXHIBIT 1.1
XXXXXX XXXXXX, INC.
Common Stock
(par value $0.01 per share)
UNDERWRITING AGREEMENT
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_________, 1999
Xxxxxxx, Sachs & Co.
PaineWebber Incorporated
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxx Xxxxxx, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters"), for whom Xxxxxxx,
Xxxxx & Co. and PaineWebber Incorporated are acting as representatives (the
"Representatives"), an aggregate of 7,250,000 shares of common stock ("Stock")
of the Company (the "Firm Shares") and, at the election of the Underwriters, up
to 1,087,500 additional shares of Stock (the "Optional Shares") of the Company.
The Firm Shares and the Optional Shares which the Underwriters elect to purchase
pursuant to Section 2 hereof are collectively called the "Shares."
The Company, Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited
partnership, ("KMEP"), Xxxxxx Xxxxxx Operating L.P. "A," a Delaware limited
partnership ("OLP-A"), Xxxxxx Xxxxxx Operating L.P. "B," a Delaware limited
partnership ("OLP-B"), Xxxxxx Xxxxxx Operating L.P. "C," a Delaware limited
partnership ("OLP-C"), Xxxxxx Xxxxxx Operating L.P. "D," a Delaware limited
partnership ("OLP-D" and, together with OLP-A, OLP-B and OLP-C, the "Operating
Partnerships"), SFPP, L.P., a Delaware limited partnership ("SFPP"), Xxxxxx
Xxxxxx Bulk Terminals, Inc., a Louisiana corporation ("XXXX"), Xxxxxx Xxxxxx
Natural Gas Liquids Corporation, a Delaware corporation ("KMNGL Corp."), Xxxxxx
Xxxxxx CO2, LLC, a Delaware limited liability company ("KM-LLC"),
Plantation Pipeline Company, a Delaware and Virginia corporation ("PPLC") and
Kinder Xxxxxx X.X., Inc., a Delaware corporation (the "General Partner"), in its
individual capacity and in its capacity as the general partner of KMEP and each
of the Operating Partnerships, are collectively referred to herein as the
"Xxxxxx Xxxxxx Entities."
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1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-78165) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act is hereinafter called
a "Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the
Act to be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an 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, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit
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to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter through the Representatives expressly for use therein;
(d) None of the Xxxxxx Xxxxxx Entities has sustained since the date
of the latest audited financial statements included in the Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any material change in the capitalization or long-term debt of the
Xxxxxx Xxxxxx Entities or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders' or unitholders' equity or
results of operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(e) Each of the Xxxxxx Xxxxxx Entities has good and marketable title
(or indefeasible title in the State of Texas) in fee simple to all real property
and good and marketable title to all personal property owned by them, 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 materially interfere with the use made and proposed to
be made of such property by the Xxxxxx Xxxxxx Entities; and any real property
and buildings held under lease by a Xxxxxx Xxxxxx Entity is held under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by that Xxxxxx Xxxxxx Entity;
(f) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to conduct the activities conducted by
it, to own or lease all the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus. The
Company was organized for the purpose of acquiring the entire equity interest in
Enron Liquids Pipeline Company, the predecessor company to the General Partner,
on February 14, 1997. Except as described in the Prospectus, the Company has not
engaged in any business activities other than in connection with its
organization, the acquisition and ownership of the General Partner and this
offering. The Company is duly licensed or qualified to do business and is in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted by it or the character of the assets owned or leased
by it makes such licensing or qualification necessary (except where the failure
to be so licensed or qualified would not have a material adverse effect on the
financial condition, results of operations or business of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). Complete and
correct copies of the Certificate of Incorporation of the Company, and all
amendments thereto,
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and of the By-laws of the Company, and all amendments thereto (the "By-laws"),
have been delivered to the Underwriters;
(g) KMEP and each of the Operating Partnerships is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware. KMEP and each of the Operating Partnerships has all
necessary partnership power and authority to conduct the activities conducted by
it, to own or lease all the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus. KMEP and
each of the Operating Partnerships is duly licensed or qualified to do business
and is in good standing as a foreign limited partnership in all jurisdictions in
which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification necessary
(except where the failure to be so licensed or qualified would not have a
Material Adverse Effect. Complete and correct copies of the Certificate of
Limited Partnership of KMEP and each of the Operating Partnerships, and all
amendments thereto, and of the Agreement of Limited Partnership of KMEP, as
amended and restated (the "KMEP Agreement") and the Agreement of Limited
Partnership of OLP-A, as amended and restated (the "OLP-A Agreement"), the
Agreement of Limited Partnership of OLP-B, as amended and restated (the "OLP-B
Agreement"), the Agreement of Limited Partnership of OLP-C, as amended and
restated (the "OLP-C Agreement"), and the Agreement of Limited Partnership of
OLP-D, as amended and restated (the "OLP-D Agreement" and, together with the
OLP-A Agreement, the OLP-B Agreement and the OLP-C Agreement, the "Operating
Partnership Agreements"), have been delivered to the Underwriters;
(h) SFPP is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware. SFPP has all necessary
partnership power and authority to conduct the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. SFPP is duly
licensed or qualified to do business and in good standing as a foreign limited
partnership in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary (except where the failure to be so licensed or
qualified would not have a Material Adverse Effect. Complete and correct copies
of the Certificate of Limited Partnership of SFPP and of the Agreement of
Limited Partnership of SFPP, as amended and restated (the "SFPP Agreement"), and
all amendments thereto have been delivered to the Underwriters;
(i) Each of the General Partner and KMNGL Corp. is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. KM-LLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware. XXXX is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Louisiana. Each of the General Partner, KMNGL Corp., KM-LLC and
XXXX has all necessary corporate or limited liability company power and
authority, as the case may be, to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its business as
described in the Registration
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Statement and the Prospectus. Each of the General Partner, KMNGL Corp., KM-LLC
and XXXX is duly licensed or qualified to do business and is in good standing as
a foreign corporation or foreign limited liability company, as the case may be,
in all jurisdictions in which the nature of the activities conducted by it or
the character of the assets owned or leased by it makes such licensing or
qualification necessary (except where the failure to be so licensed or qualified
would not have a Material Adverse Effect. Complete and correct copies of the
certificate of incorporation and of the by-laws of the General Partner, KMNGL
Corp. and XXXX and the limited liability agreement of KM-LLC and all amendments
to such documents have been delivered to the Underwriters;
(j) To the knowledge of the Company, each of Heartland Company
("Heartland") and Mont Belvieu Associates ("Mont Belvieu") is a general
partnership duly formed and validly existing under the laws of the State of
Texas and Shell CO2 Company Ltd. ("Shell CO2") is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware. PPLC is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. To the knowledge of the Company, each of
Heartland, Mont Belvieu and Shell CO2 has all necessary partnership power and
authority to conduct the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus, except as would not have a Material
Adverse Effect. To the knowledge of the Company, each of Heartland, Mont Belvieu
and Shell CO2 is duly licensed or qualified to do business and is in good
standing as a foreign partnership in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such licensing or qualification necessary (except where the failure to
be so licensed or qualified would not have a Material Adverse Effect);
(k) The only subsidiaries (as such term is defined in the rules and
regulations of the Commission under the Act and the Exchange Act) of the Company
or other entities in which the Company, KMEP, the General Partner, any of the
Operating Partnerships or SFPP has an equity ownership interest of 50% or more
and which own assets or conduct business are those listed on Schedule II hereto;
(l) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description of the Stock contained in the Prospectus. Xxxxxxx
X. Xxxxxx, Xxxxxx Associates, Inc. ("MAI"), First Union Corporation and certain
employees of First Union Corporation and its affiliates ("First Union") are the
sole stockholders of the Company. The Company owns all of the issued and
outstanding shares of capital stock of the General Partner; such shares of
capital stock are duly authorized, validly issued, fully paid and
non-assessable;
(m) The General Partner is the sole general partner of KMEP with a
1% general partner interest in KMEP; such general partner interest is duly
authorized by the KMEP
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Agreement and was validly issued to the General Partner; and, the General
Partner owns such general partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims (except for such
liens, encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material to such ownership or as described in
the Registration Statement or the Prospectus);
(n) The General Partner is the sole general partner of each of the
Operating Partnerships with a 1.0101% general partner interest in each of the
Operating Partnerships; such general partner interests are duly authorized by
the respective Operating Partnership Agreement, and were validly issued to the
General Partner; and the General Partner owns such general partner interests
free and clear of all liens, encumbrances, security interests, equities, charges
or claims (except for such liens, encumbrances, security interests, equities,
charges or claims as are not, individually or in the aggregate, material to such
ownership or as described in the Registration Statement or the Prospectus);
(o) KMEP is the sole limited partner of each of the Operating
Partnerships with a 98.9899% limited partner interest in each of the Operating
Partnerships; such limited partner interests, in each of such partnerships, are
duly authorized by the respective Operating Partnership Agreement, and were
validly issued to KMEP and are fully paid and non-assessable (except as
non-assessability may be affected by certain provisions of the Delaware Revised
Limited Partnership Act (the "Delaware Act")); and KMEP owns such limited
partner interests free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances, security
interests, equities, charges or claims as are not, individually or in the
aggregate, material to such ownership or as described in the Registration
Statement or the Prospectus, including the security interest securing certain
debt of the KMEP and OLP-B);
(p) OLP-A owns all of the issued and outstanding capital stock of
KMNGL Corp. and all of the issued and outstanding member interests of KM-LLC;
all of such capital stock and such member interests are duly authorized, validly
issued, fully paid and non-assessable; OLP-C owns all of the issued and
outstanding capital stock of XXXX; all of such capital stock is duly authorized,
validly issued, fully paid and non-assessable. OLP-A owns all of such capital
stock of KMNGL, OLP-A owns the sole member interest of KM-LLC, and OLP-C owns
all of such capital stock of XXXX, in each case free and clear of all liens,
encumbrances, security interests, equities, charges or claims (except for such
liens, encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material to such ownership or as described in
the Registration Statement or the Prospectus);
(q) OLP-D is the sole general partner of SFPP with a 99.5% general
partner interest; such general partner interest is duly authorized by the SFPP
Agreement, and was validly issued to OLP-D; and OLP-D owns such general partner
interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances, security
interests, equities, charges or claims as are not, individually or in the
aggregate, material to such ownership or as described in the Registration
Statement or the
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Prospectus); Santa Fe Pacific Pipelines, Inc. (the "SF Limited
Partner") is the sole limited partner of SFPP with a 0.5% non-voting, limited
partner interest; such limited partner interest is duly authorized by the SFPP
Agreement, and validly issued to the SF Limited Partner and fully paid and
non-assessable (except as non-assessability may be affected by certain
provisions of the Delaware Act);
(r) OLP-A is a general partner of Heartland with a 50% general
partner interest in Heartland and is an owner of PPLC with a 51% interest in
PPLC. KMNGL Corp. is a general partner of Mont Belvieu with a 50% general
partner interest in Mont Belvieu, and KM-LLC is a limited partner of Shell CO2,
with a 20% limited partner interest in Shell CO2; such general partner interests
and such limited partner interests are duly authorized by the respective
partnership agreements of Heartland, Mont Belvieu and Shell CO2, and were
validly issued by each of Heartland, Mont Belvieu and Shell CO2, respectively,
and in the case of such limited partner interests, are fully paid and
non-assessable (except as such non-assessability may be affected by certain
provisions of the Delaware Act); and, OLP-A and KMNGL Corp. own such general
partner interests in Heartland and Mont Belvieu, respectively, and KM-LLC owns
such limited partner interest, free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material to such ownership or as described in
the Registration Statement or the Prospectus);
(s) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(t) The Company has all necessary corporate power and authority to
enter into this Agreement and consummate the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the Company and is enforceable
against the Company in accordance with the terms hereof;
(u) The issue and sale of the Shares by the Company, the compliance
by the Company with all of the provisions of this Agreement, the consummation of
the transactions contemplated herein and the application by the Company of the
net proceeds from the offering and sale of the Shares in the manner set forth in
the Prospectus under "Use of Proceeds" will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any of the Xxxxxx Xxxxxx Entities is a party or
by which any of the Xxxxxx Xxxxxx Entities is bound or to which any of the
property or assets of the Xxxxxx Xxxxxx Entities are subject, nor will such
action result in any violation of the provisions of the certificate of
incorporation, by-laws, partnership agreement or other organizational documents,
as the case may be, of any of the Xxxxxx Xxxxxx Entities or any statute or any
order, rule or regulation of
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any court or governmental agency or body having jurisdiction over any of the
Xxxxxx Xxxxxx Entities or any of the properties of any such entities, except
where such occurrence will not prevent the consummation of the transactions
contemplated herein or would not have a Material Adverse Effect; and no consent,
approval, authorization, order, registration or qualification of or with any
court or governmental agency or body having jurisdiction over any of the Xxxxxx
Xxxxxx Entities or any of the properties of such entities is required for the
issuance and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration under the
Act of the Shares and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters;
(v) None of the Xxxxxx Xxxxxx Entities is (a) in violation of its
certificate of incorporation, by-laws, partnership agreement or other
organizational documents, as the case may be, or (b) in default in the
performance or observance of any obligation, agreement, 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 or any of
its properties may be bound, except for such violations and defaults as would
not have a Material Adverse Effect;
(w) The statements set forth in the Prospectus under the caption
"Description of Our Capital Stock," insofar as they purport to constitute a
summary of the terms of the capital stock of the Company and the provisions of
the laws and documents referred to therein, are accurate, complete and fair in
all material respects;
(x) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending, or, to the knowledge of the Company,
threatened, to which any of the Xxxxxx Xxxxxx Entities is a party or of which
any property of any Xxxxxx Xxxxxx Entity is the subject which, if determined
adversely to the respective Xxxxxx Xxxxxx Entity, would individually or in the
aggregate have a Material Adverse Effect;
(y) Neither the Company nor the General Partner is, nor after giving
effect to the offering and sale of the Shares will be, (i) a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" thereof,
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or (ii) an "investment company," a person "controlled by" an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(z) Xxxxxx Xxxxxxxx LLP and PricewaterhouseCoopers LLP, who have
certified certain financial statements of the Xxxxxx Xxxxxx Entities, and in the
case of PricewaterhouseCoopers LLP, who has also certified certain financial
statements of SFPP, are each independent public accountants as required by the
Act and the rules and regulations of the Commission thereunder;
(aa) The Company has reviewed its operations and that of its
subsidiaries to
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evaluate the extent to which the business or operations of the Company or any of
its subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, the Company does not believe that the Year 2000 Problem would have a
Material Adverse Effect, or result in any material loss or interference with
their business or operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, transmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000;
(bb) There are no preemptive rights or other rights to subscribe for
or to purchase, nor any restrictions upon the voting or transfer of, any shares
of stock of the Company pursuant to its Certificate of Incorporation or other
governing documents or any agreement or other instrument to which the Company is
a party or by which the Company may be bound except as described in the
Prospectus. The offering and sale of Shares as contemplated by this Agreement
does not give rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any Stock or other securities
of the Company. Except for certain grants made under the Company's 1999 Stock
Awards Plan, there are no outstanding options or warrants to purchase any Shares
or other securities of the Company;
(cc) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company and KMEP as of the respective dates thereof
and the consolidated results of operations and cash flows of the Company and
KMEP for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except as otherwise disclosed in the
Prospectus. No other financial statements or schedules of the Company and KMEP
are required by the Act, the Exchange Act or the rules and regulations of the
Commission under such acts to be included in the Registration Statement or the
Prospectus. The statements included in the Registration Statement with respect
to the accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects; and
(dd) The Company and the General Partner maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not
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jointly, to purchase from the Company, at a purchase price per share of
$________, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this Section
2, that portion of the number of Optional Shares as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 1,087,500 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering sales of
shares in excess of the number of Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. Certificates for the Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company, shall be delivered by or on
behalf of the Company to the Representatives for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified by the Company to Xxxxxxx, Xxxxx & Co. at least forty-eight hours in
advance. The Company will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on _______, 1999 or such
other time and date as Xxxxxxx, Xxxxx & Co. and the Company may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on
the date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional Shares,
or such other time and date as the Representatives and the Company may agree
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upon in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the "Second
Time of Delivery," and each such time and date for delivery is herein called a
"Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of Xxxxxxx & Xxxxx L.L.P. at 000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
12:00 p.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Act; to make no further amendment
or any supplement to the Registration Statement or Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise you
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, to promptly use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify
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as a foreign corporation or to file a general consent to service of process in
any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
Prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a Prospectus in connection with
sales of any of the Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule 158
under the Act);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus not to
directly or indirectly, offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder any securities of the Company that are
substantially similar to the Shares, including but not limited to any securities
that are convertible into or exercisable or exchangeable for, or that represent
the right to receive, Stock or any such substantially similar securities (other
than (i) as contemplated by the Prospectus in connection with the acquisition of
assets, businesses or the capital stock or other ownership interests of
businesses by any of the Xxxxxx Xxxxxx Entities in exchange for any securities
of the Company that are substantially similar to the Shares, if the
recipient(s) of such securities agree(s) not to offer, sell, contract to
sell, or otherwise dispose of during such lock-up period any of such securities
received in connection with such acquisition(s) and (ii) pursuant to employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Agreement), without your prior written consent;
(f) To furnish to its stockholders as soon as reasonably
practicable after the end of each
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fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
reasonably practicable after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the effective
date of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange");
(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b) under the Act,
the Company shall file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date
of this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing any Agreement
among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) any filing fees
and expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, but not
including the fees and disbursements of counsel for the Underwriters in
connection with such qualification; (iv) all fees and expenses in connection
with listing the Shares on the New York Stock Exchange; (v) any filing fees in
connection with securing any required review by the National Association of
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Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing the stock certificates; (vii) the cost and charges of any transfer
agent or registrar; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxxx & Xxxxx L.L.P., counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
with respect to the matters covered in paragraphs (i) (insofar as it relates to
the due formation and good standing of the Company in Delaware and the Company's
power and authority to conduct its business as described in the Registration
Statement and the Prospectus, as amended or supplemented), (xiii), (xvi)
(insofar as it relates to the statements set forth in the Prospectus under the
caption "Underwriting") and (xxii) of subsection (c) below and a letter
substantially similar to the letter required to be delivered by Xxxxxxxxx &
Xxxxxxxxx, L.L.P. pursuant to subsection (c) below as well as such other related
matters as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(c) Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel for the Company shall
have furnished to you its written opinion, dated such Time of Delivery, in form
and substance satisfactory to you, to the collective effect that:
(i) Each of the Company, the General Partner, KMEP, OLP-A,
OLP-B, OLP-C, OLP-D and SFPP has been duly incorporated or formed, as
applicable, and is validly existing and in good standing under the laws
of its jurisdiction of incorporation and each such entity has the
partnership or corporate power and authority,
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as the case may be, to conduct its business as described in the
Registration Statement and the Prospectus, as amended or supplemented.
To the knowledge of such counsel after due inquiry, each of such
entities is duly qualified to do business and is in good standing as a
foreign corporation or foreign limited partnership, as the case may be,
in all jurisdictions in which the nature of the activities conducted by
it or the character of the assets owned or leased by it makes such
licensing or qualification necessary, except in the case where the
failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect;
(ii) The General Partner is the sole general partner of KMEP
with a 1% general partner interest in the KMEP; such general partner
interest is duly authorized by the KMEP Agreement and was validly
issued to the General Partner; and, to the knowledge of such counsel
after due inquiry, the General Partner owns such general partner
interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances,
security interests, equities, charges or claims as are not,
individually or in the aggregate, material to such ownership or as
described in the Registration Statement or the Prospectus, as amended
or supplemented);
(iii) The General Partner is the sole general partner of each
of the Operating Partnerships with a 1.0101% general partner interest
in each of the Operating Partnerships; such general partner interests
are duly authorized by the respective Operating Partnership Agreements
and were validly issued to the General Partner; and to the knowledge
of such counsel after due inquiry, the General Partner owns such
general partner interests free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims as are
not, individually or in the aggregate, material to such ownership or as
described in the Registration Statement or the Prospectus, as amended
or supplemented, and except as provided in the Operating Partnership
Agreements);
(iv) OLP-D is the sole general partner of SFPP with a 99.5%
general partner interest in SFPP; such general partner interest is duly
authorized by the SFPP Agreement and was validly issued to OLP-D; and
to the knowledge of such counsel after due inquiry, OLP-D owns such
general partner interest free and clear of all liens, encumbrances,
security interests, equities, charges or claims as are not,
individually or in the aggregate, material to such ownership or as
described in the Registration Statement or the Prospectus, as amended
or supplemented, or the OLP-D Agreement); the SF Limited Partner is the
sole limited partner of SFPP with a 0.5% non-voting, limited partner
interest in SFPP; and such limited partner interest is duly authorized
by the SFPP Agreement and was validly issued to the SF Limited Partner;
(v) At the Time of Delivery after giving effect to the issuance
of the Firm Shares, to the knowledge of such counsel after due inquiry,
the capitalization of the Company will consist of 40,000,000 Shares
(41,087,500 Shares if all of the Optional Shares are issued); to the
knowledge of such counsel after due inquiry, such Shares will
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be the only equity interests of the Company that are issued and
outstanding at the applicable Time of Delivery; all of such Shares of
the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform as to legal
matters in all material respects to the description thereof contained
in the Prospectus under the caption "Description of Our Capital Stock"
as amended or supplemented;
(vi) KMEP is the sole limited partner of each of the Operating
Partnerships with a 98.9899% limited partner interest in each of the
Operating Partnerships; such limited partnership interests, in the case
of each of the Operating Partnerships, are duly authorized by the
respective Operating Partnership Agreements, were validly issued to
KMEP and are fully paid and non-assessable (except as non-assessability
may be affected by certain provisions of the Delaware Act); and, to the
knowledge of such counsel after due inquiry, KMEP owns such limited
partner interests free and clear of all liens, encumbrances, security
interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims (i) as
are not, individually or in the aggregate, material to such ownership
(ii) as described in the Registration Statement or the Prospectus, as
amended or supplemented, or (iii) arising out of the pledge by KMEP of
the limited partner interests of the Operating Partnerships to secure
certain indebtedness of KMEP and OLP-B);
(vii) None of the Shares, when paid for by the Underwriters in
accordance with the terms of this Agreement, will be subject to any
preemptive or similar right under (i) the Delaware General Corporation
Law (the "DGCL") or (ii) any instrument, document, contract or
agreement filed as an exhibit to the Registration Statement. Except as
described in the Registration Statement or the Prospectus and pursuant
to the Company's 1999 Stock Awards Plan, to the knowledge of such
counsel after due inquiry, there is no commitment or arrangement to
issue, and there are no outstanding options, warrants or other rights
calling for the issuance of, any Shares or share of capital stock of
the Company to any person or any security or other instrument that by
its terms is convertible into, exercisable for and exchangeable into
Shares.
(viii) No consent, approval, authorization, order, registration
or qualification of or with any federal, Delaware or Texas court or
governmental agency or body is required under federal or Texas law, the
DGCL or the Delaware Act for the issue and sale of the Shares being
delivered at such Time of Delivery or the consummation by the Company
of the transactions contemplated by this Agreement, except such as have
been obtained under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws or by the By-laws and rules of
the National Association of Securities Dealers, Inc. in connection with
the purchase and distribution of the Shares by the Underwriters;
(ix) To the knowledge of such counsel after due inquiry, there
are no contracts or other documents of a character required to be filed
as an exhibit to the
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Registration Statement as amended or supplemented that are not filed
as required;
(x) To the knowledge of such counsel after due inquiry, except
as disclosed in the Registration Statement or the Prospectus, as
amended or supplemented, no person or entity has the right to require
the registration under the Act of Shares or other securities of the
Company by reason of the filing or effectiveness of the Registration
Statement, which has not been waived;
(xi) Upon delivery of the certificates evidencing the Shares
against payment therefor as provided in this Agreement, the
Underwriters will acquire the Shares free of all adverse claims (as
such term is defined in Section 8-302 of the Uniform Commercial Code as
in effect in the State of Texas (the "UCC")), assuming (i) the
Underwriters are acting in good faith, (ii) the Underwriters have no
notice of any adverse claim (as such term is used in Section 8-302 of
the UCC) and (iii) the certificates evidencing the Shares are
registered in the names of the Underwriters or endorsed to the
Underwriters or nominees of the Underwriters;
(xii) To the knowledge of such counsel after due inquiry and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending or threatened to which the Xxxxxx
Xxxxxx Entities or any of its subsidiaries is a party or of which any
property of the Xxxxxx Xxxxxx Entities or any of its subsidiaries is
the subject which, if determined adversely to the Xxxxxx Xxxxxx
Entities or any of its subsidiaries, would individually or in the
aggregate reasonably expected to have a Material Adverse Effect;
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company;
(xiv) The issue and sale of the Shares being delivered at such
Time of Delivery to be sold by the Company and the compliance by the
Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated including the use
of proceeds of the sale of the Shares) will not (a) result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument filed or incorporated by reference as
an exhibit to the Registration Statement, (b) result in any violation
of the provisions of the certificate of incorporation, by-laws or other
formation document, as applicable, of any of the Xxxxxx Xxxxxx
Entities, (c) breach or otherwise violate an existing obligation of any
of the Xxxxxx Xxxxxx Entities under any court or administrative order,
judgment or decree of which such counsel has knowledge after due
inquiry, or (d) violate any applicable provisions of the federal laws
of the United States, the laws of the State of Texas, the DGCL or the
Delaware Act;
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(xv) To the knowledge of such counsel after due inquiry, none of
the Xxxxxx Xxxxxx Entities are in violation of their partnership
agreement, certificate of incorporation, by-laws or other formation
documents, as applicable, or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument filed or incorporated by
reference as an exhibit to the Registration Statement to which any of
the Xxxxxx Xxxxxx Entities is a party or by which any of them or any of
their properties may be bound, which violation or default would
reasonably be expected to have a Material Adverse Effect;
(xvi) The statements set forth in the Prospectus under the
captions "Business of Xxxxxx Xxxxxx Energy Partners--Regulation,"
"Description of Our Capital Stock," and "Shares Eligible for Future
Sale" insofar as they purport to constitute a summary of, as
applicable, the provisions of federal law and the DGCL and the Restated
Certificate of Incorporation, Restated Bylaws, Registration Rights
Agreement and Rights Agreement, in each case, accurately presents and
summarizes in all material respects the matters described therein;
(xvii) The Shares have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance;
(xviii) The Company has all necessary corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated thereby. The issuance and sale by the Company
of the Shares to the Underwriters pursuant to this Agreement has been
duly authorized by all necessary corporate action; and the Shares, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth therein, will be validly issued,
fully paid and non-assessable;
(xix) The Registration Statement and the Prospectus and any
further amendment and supplements thereto made by the Company prior to
the applicable Time of Delivery (other than, in each case, the
financial statements and schedules included therein, as to which such
counsel need not express an opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
promulgated thereunder;
(xx) Neither the Company nor the General Partner is (a) a
"holding company" or a "subsidiary company" of a "holding company" or
an "affiliate" thereof, within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or (b) an "Investment Company"
or an entity "controlled" by an "Investment Company," as such terms are
defined in the Investment Company Act;
(xxi) Each of KMEP and SFPP and each of the Operating
Partnerships is classified as a partnership for federal income tax
purposes; and
(xxii) The Registration Statement was declared effective under
the Act by the Commission and to the knowledge of such counsel after
due inquiry, no order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or is pending, threatened or contemplated. Any required
filing of the Prospectus relating to the sale of the Shares pursuant to
Rule 424(b) under the Act has been made in the manner and within the
time period required by such rule.
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Such counsel shall also deliver a letter to the effect that they have
participated in conferences with officers and other representatives of the
Company, representatives of the Company's accountants, representatives of the
Underwriters and counsel for the Underwriters at which conferences the contents
of the Registration Statement and Prospectus and related matters were discussed
and, based upon such participation and review, and relying as to materiality in
part upon the factual statements of officers and other representatives of the
Company and others, no facts have come to their attention that have caused them
to believe that the Registration Statement (other than the financial statements
and related schedules and other financial data, as to which such counsel need
not comment), at the time it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus (other than the financial statements and related schedules and other
financial data contained therein, as to which such counsel need not comment), as
of the date of such Prospectus or as of the date of such letter, contained an
untrue statement of a material fact or omitted 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. Such letter may state
that, because the primary purpose of such counsel's engagement was not to
establish or confirm factual matters or financial matters and because of the
wholly or partially non-legal character of many of the statements contained in
the Registration Statement and the Prospectus, such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (except to the extent expressly set forth in paragraphs (v) and (xvi)
of this Section 7(c)), and they have not independently verified the accuracy,
completeness or fairness of such statements (except as aforesaid); and that,
without limiting the foregoing, they assume no responsibility for, have not
independently verified and have not been asked to comment on the accuracy,
completeness or fairness of the financial statements and related schedules
included in the Registration Statement or the Prospectus or the exhibits to the
Registration Statement, and they have not examined the financial or other
records from which such financial statements and related schedules and other
financial data contained therein were derived. Such counsel also may state that,
although certain portions of the Registration Statement (including financial
statements and related schedules) have been included therein on the authority of
"experts" within the meaning of the Act, they are not experts with respect to
any portion of the Registration Statement, including, without limitation, such
financial statements and related schedules and other financial data contained
therein.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than federal law, Texas law,
the DGCL and the Delaware Act.
(d) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, the independent
accountants of the Company who have certified the financial statements of the
Company and its subsidiaries included in the Registration Statement shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in
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form and substance satisfactory to you, to the effect set forth in Annex I
hereto, and with respect to such letter dated such Time of Delivery, as to such
other matters as you may reasonably request;
(e) (i) None of the Xxxxxx Xxxxxx Entities shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the partners' capital or capital stock, as applicable, or long-term
debt of the Company or any of the other Xxxxxx Xxxxxx Entities, or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' or unitholders' equity or
results of operations of the Company or any of the other Xxxxxx Xxxxxx Entities,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded any of the Xxxxxx Xxxxxx Entities' debt
securities or preferred stock by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Xxxxxx Xxxxxx Entities' debt securities
or preferred stock;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's or in KMEP's securities on the New York
Stock Exchange; (iii) a general moratorium on commercial banking activities
declared by either federal or New York or Texas State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of Delivery
on the terms and in the manner contemplated in the Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on the Exchange;
(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from Xxxxxxx X. Xxxxxx, Xxxxxx Associates, Inc.,
First Union
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Corporation and certain employees of First Union Corporation and its affiliates,
and each of the Company's executive officers substantially to the effect set
forth in subsection 5(e) hereof in form and substance satisfactory to you;
except that the applicable periods shall be two years for Xxxxxxx X. Xxxxxx and
Xxxxxx Associates, Inc. and one year for First Union Corporation and for certain
employees of First Union Corporation and its affiliates rather than the 180 days
set forth in subsection 5(e) hereof.
(j) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (e) of
this Section and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
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was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the
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statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault 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 Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (d) 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 which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include 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 subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which 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 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Xxxxxx Xxxxxx Entities under this Section
8 shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours
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within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
of the Shares to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the number
of Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, the Company, or
any officer or director or controlling person of the Company and shall survive
delivery of and payment for the Shares.
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11. If this Agreement shall be terminated pursuant to Sections 7(b),
7(g) or 9 hereof, the Company shall not then be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but, if for any other
reason any Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company shall then be under no further liability to any Underwriter
except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx &Co. on behalf of you as the
Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls any of the Company or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Shares from any Underwriter shall be deemed a successor
or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and one for each of the Representatives
plus one for each counsel counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
XXXXXX XXXXXX, INC.
By:
Xxxxxxx X. Xxxxxx
Chairman of the Board and Chief
Executive Officer
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
PaineWebber Incorporated
By:
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
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SCHEDULE I
MAXIMUM
NUMBER OF
NUMBER OF FIRM OPTIONAL SHARES
SHARES TO BE WHICH MAY BE
PURCHASED PURCHASED
-------------- ---------------
Xxxxxxx, Xxxxx & Co...................... $
PaineWebber Incorporated.................
Total...........................
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SCHEDULE II
List of subsidiaries (as such term is defined in the rules and
regulations of the Commission under the Act and the Exchange Act) of the Company
or other entities in which the Company, the General Partner, KMEP, any of the
Operating Partnerships or SFPP, L.P. has an equity ownership interest of at
least 50% and which owns assets or conducts business:
Heartland Company
Mont Belvieu Associates
Xxxxxx Xxxxxx Energy Partners, X.X.
Xxxxxx Xxxxxx X.X., Inc.
Xxxxxx Xxxxxx CO2, LLC
Xxxxxx Xxxxxx Natural Gas Liquids Corporation
Xxxxxx Xxxxxx Bulk Terminals, Inc.
Xxxxxx Xxxxxx Operating L.P. "A"
Xxxxxx Xxxxxx Operating L.P. "B"
Xxxxxx Xxxxxx Operating L.P. "C"
Xxxxxx Xxxxxx Operating L.P. "D"
Plantation Pipe Line Company
River Consulting, Inc.
SFPP, L.P.
Western Plant Services, Inc.
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ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiary (the "Company") and Xxxxxx
Xxxxxx Energy Partners, L.P. (the "Partnership") within the meaning of
the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and
included in the Prospectus or the Registration Statement comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial
statements of the Company and the Partnership for the periods specified
in such letter;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and on the basis of specified procedures
including inquiries of officials of the Company and the Partnership who
have responsibility for financial and accounting matters regarding
whether the unaudited condensed consolidated financial statements
referred to in paragraph (vii)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations, nothing came to
their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Partnership for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Partnership's Annual Reports on Form 10-K for such fiscal years;
(v) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company as of and for the year ended December 31, 1998, the period from
February 14, 1997 to December 31, 1997, the period from January 1, 1997
to February 14, 1997, and the year ended December 31, 1996 included in
the Prospectus agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated financial
statements for such periods.
(vi) They have compared the information in the Prospectus under
selected
30
captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302 and
402, respectively, of Regulation S-K;
(vii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and the Partnership,
inspection of the minute books of the Company and the Partnership
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and the
Partnership responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any
material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows
included in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the
Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in
clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred
to in clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the
Prospectus;
(D) as of a specified date not more than five days
prior to the date of
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such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding
on the date of the latest financial statements included in
the Prospectus) or any increase in the consolidated
long-term debt of the Company and the Partnership, or any
decreases in consolidated net current assets or
stockholders' or unitholders' equity or other items
specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(E) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in clause (D) there were any
decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income
or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(viii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vii) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and the Partnership, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and the Partnership and have found
them to be in agreement.
