DRAFT 12/03/96
CORNERSTONE PROPANE PARTNERS, L.P.
8,540,000 COMMON UNITS REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
December ___, 1996
December ___, 1996
Xxxxxx Xxxxxxx & Co.
Incorporated
Xxxx Xxxxxx Xxxxxxxx Inc.
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
c/x Xxxxxx Xxxxxxx & Co.
Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Cornerstone Propane Partners, L.P., a Delaware limited partnership
(the "Partnership"), proposes to issue and sell to the several Underwriters
named in Schedule I hereto (the "Underwriters") 8,540,000 common units
representing limited partner interests in the Partnership (the "Firm Units").
The Partnership also proposes to issue and sell to the several Underwriters not
more than an additional 1,281,000 common units representing limited partner
interests in the Partnership (the "Additional Units") if and to the extent that
you, as Managers of the offering, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such Additional Units granted to the
Underwriters in Section 2 hereof. The Firm Units and the Additional Units are
hereinafter collectively referred to as the "Units." The common units
representing limited partner interests in the Partnership to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "Common Units."
The Partnership has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, including a prospectus, relating to
the Units. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement;" the prospectus in the form first
used to confirm sales of Units is hereinafter referred to as the "Prospectus;"
each of the preliminary prospectus dated November 21, 1996 filed as part of the
registration statement and each preliminary prospectus filed as a part of any
subsequent amendment thereto, or filed pursuant to Rule 424 under the Securities
Act prior to the Prospectus, is hereinafter referred to as a "Preliminary
Prospectus." If the Partnership has filed an abbreviated registration statement
to register additional Common Units pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such
Rule 462 Registration Statement.
It is understood and agreed to by all parties that the Partnership was
formed to acquire and operate the business and assets of (a) SYN Inc., a
Delaware corporation ("Synergy"), and Empire Energy Corporation, a Tennessee
corporation ("Empire Energy"), each of which is a subsidiary of Northwestern
Growth Corporation, a South Dakota corporation ("NGC"), which is a subsidiary of
Northwestern Public Service Company, a Delaware corporation ("NPS"), (b) Xxxxx
Propane Gas Company, an Ohio corporation ("Xxxxx"), which is a subsidiary of
NPS, (c) CGI Acquisition Corporation, a Delaware corporation ("Acquisition
Corp."), which is a subsidiary of NGC, and (d) CGI Holdings, Inc., a Delaware
corporation ("Coast"), which will be acquired by NGC prior to the closing of the
offering of the Units contemplated hereby. Cornerstone Propane GP, Inc., a
Delaware corporation ("Newco"), is the general partner (the "Managing General
Partner") of both the Partnership and Cornerstone Propane, L.P., a Delaware
limited partnership (the "Operating Partnership"). Upon the closing of the
offering of the Units, Synergy will be the special general partner (the "Special
General Partner") of the Partnership and the Operating Partnership. Synergy,
Empire Energy, Xxxxx, Coast and their respective subsidiaries are collectively
referred to herein as the "Predecessor Entities." The Partnership, the
Operating Partnership and Cornerstone Services Corporation, a Delaware
corporation and a wholly owned subsidiary of the Operating Partnership (the
"Corporate Sub"), are collectively referred to herein as the "Partnership
Entities."
It is further understood and agreed to by all parties that prior to or
concurrently with the closing of the offering of the Units contemplated hereby,
(1)(a) NGC will purchase stock of (and certain rights related to) Synergy and
Xxxxx owned by Empire Gas Corporation, a ____________ corporation currently
known as "All Star Gas Corporation" ("Empire Gas"), (b) NGC will cause CGI
Acquisition to merge with and into Coast, (c) NPS will contribute all the
outstanding shares of capital stock of Xxxxx to NGC as a capital contribution
(and not in exchange for stock of NGC), (d) NGC will contribute all of the
outstanding shares of capital stock of (and certain rights related to) Synergy,
Xxxxx, Empire Energy and Newco owned by NGC and a promissory note of Empire
Energy in the outstanding principal amount of $[8,000,000] (the "Empire Energy
Promissory Note"), including accrued interest, to Coast approximately
[$8,000,000 in outstanding principal amount of] indebtedness of NGC and the
Predecessor Entities and (e) Coast will contribute all of the outstanding shares
of capital stock of (and certain rights related to) Synergy, Xxxxx, Empire
Energy and Newco owned by Coast, the Empire Energy Promissory Note (including
accrued interest) and [the assets of CGI Acquisition] to Coast Gas, Inc., a
California corporation and a wholly owned subsidiary of Coast ("Coast Gas"),
indebtedness of [Coast] on such date, (2)(a) all of the subsidiaries of Synergy
will merge into Synergy, (b) all of the subsidiaries of Empire Energy, other
than Empire Service Corporation, a Tennessee corporation ("SC"), will merge into
Empire Energy, (c) Empire Energy and Xxxxx will merge into Coast Gas, (d) Coast
Energy Group, Inc., a Delaware corporation and the sole subsidiary of Coast Gas
("CEG"), will merge into Coast Gas, (e) Coast will merge into NGC and (f) Newco
will merge into Coast Gas (in connection with which Coast Gas will change its
name to "Cornerstone Propane GP, Inc." and will become the Managing General
Partner), (3) pursuant to a Contribution and Conveyance Agreement (the
"Contribution Agreement"),
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(a) Synergy will convey substantially all of its assets to the Operating
Partnership in exchange for a ____% general partner interest and a ____%
limited partner interest in the Operating Partnership and the assumption by
the Operating Partnership of substantially all of the liabilities of Synergy,
(b) SC will convey all of its assets to the Operating Partnership in exchange
for a ____% limited partner interest in the Operating Partnership and the
assumption by the Operating Partnership of all of the liabilities of SC, and
(c) Coast Gas will convey substantially all of its assets (other than
approximately $_______ of amounts receivable due from SC and the shares of
the capital stock of Synergy and SC) to the Operating Partnership in exchange
for a ____% limited partner interest in the Operating Partnership, a ______%
general partner interest in the Operating Partnership and the assumption by
the Operating Partnership of all of the liabilities of Coast Gas (other than
approximately $31.7 million in outstanding principal amount of indebtedness
assumed from Empire Energy) (the assets to be conveyed to the Operating
Partnership pursuant to the Contribution Agreement (including, without
limitation, the assets to be acquired by Coast Gas pursuant to the
transactions listed in clauses (1) and (2) of this sentence) are collectively
referred to as the "Transferred Assets"), (4) the Operating Partnership will
enter into a Bank Credit Agreement (the "Bank Credit Agreement") providing
for a $50.0 million working capital facility and a $75.0 million acquisition
facility, (5)(a) the Operating Partnership will issue $220.0 million in
Senior Secured Notes (the "Senior Notes") to certain institutional investors
pursuant to a Note Purchase Agreement (the "Note Agreement"), which Senior
Notes will be secured pursuant to a Security Agreement (the "Security
Agreement"), (b) the Operating Partnership will borrow
[approximately $12.8 million] under the working capital facility provided for
in the Bank Credit Agreement and (c) the proceeds from the issuance of the
Senior Notes and the borrowing under the working capital facility will be
used to repay approximately [$158.7 million] principal amount of indebtedness
assumed by the Operating Partnership and to distribute an aggregate of
approximately $_______ to the Managing General Partner and $_______ to the
Special General Partner, (6) pursuant to the Contribution Agreement, (a)
Synergy will convey all of its limited partner interest in the Operating
Partnership to the Partnership in exchange for _______ subordinated units
representing limited partner interests in the Partnership ("Subordinated
Units"), a _____% special general partner interest in the Partnership and
________ units representing non-voting limited partner interests in the
Partnership entitling the holder to certain incentive distribution rights
(the "Incentive Distribution Rights"), (b) Coast Gas will convey all of its
limited partner interests in the Operating Partnership to the Partnership in
exchange for _______ Subordinated Units, a __% general partner interest in
the Partnership and _______ Incentive Distribution Rights and (c) SC will
convey all of its limited partner interest in the Operating Partnership to
the Partnership in exchange for _______ Subordinated Units (as a result of
which the Partnership will own a 98.9899% limited partner interest in the
Operating Partnership), (7) the Partnership will contribute the proceeds from
the sale of the Units to the Underwriters to the Operating Partnership, which
will use such proceeds to repay approximately [$172.7 million] principal
amount of indebtedness and will use borrowings of approximately
[$14.8 million] from NPS to pay expenses associated with the Transactions (as
defined below), (8)(a) the Special General Partner will redeem _______ shares
of its preferred stock and (b) pursuant to a Conveyance, Assignment and
Assumption Agreement--Service Assets (the "Service Assets Conveyance
Agreement"), the Operating Partnership will convey its appliance sales,
installation and service assets to the Corporate Sub, in exchange for shares
of its common stock,
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(c) the Managing General Partner will lend $_______ to NGC and redeem ______
shares of its preferred stock, (d) the Managing General Partner will repay
approximately [$31.7 million] of indebtedness and (e) SC will merge into the
Managing General Partner (such merger and the mergers described in clause (2)
above are collectively referred to herein as the "Northwestern Mergers") (the
transactions described in clauses (1) through (8) above are collectively
referred to as the "Transactions"). In connection with the consummation of
the Transactions, the Predecessor Entities, the Partnership Entities, Newco
and NGC will enter into various agreements and certificates of merger, bills
of sale, conveyances, deeds and other assignments pursuant to the
Contribution Agreement (collectively with the Contribution Agreement and the
Service Assets Conveyance Agreement, the "Merger and Conveyance Documents").
1. REPRESENTATIONS AND WARRANTIES. Each of the Partnership, the
Operating Partnership, the Managing General Partner and Synergy represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of the
Partnership, the Operating Partnership, Newco or Synergy, threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement, any Preliminary Prospectus and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) any Preliminary Prospectus
and the Prospectus do not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 1(b) do not apply to
statements or omissions in the Registration Statement, any Preliminary
Prospectus or the Prospectus, as amended or supplemented, if applicable, based
upon information relating to any Underwriter furnished to the Partnership in
writing by such Underwriter through you expressly for use therein.
(c) None of the Predecessor Entities, the Partnership Entities,
Newco, NGC and NPS has taken, and none of them will take, directly or
indirectly, any action designed to or that could reasonably be expected to cause
or result in the stabilization or manipulation of the price of the Common Units,
and the Partnership has not distributed and, prior to the later to occur of (i)
the Closing Date (as defined in Section 4 hereof) and (ii) completion of the
distribution of the Units, will not distribute, any prospectus (as defined under
the Securities Act) in connection with the offering and sale of the Units other
than the Registration Statement, any Preliminary Prospectus, the
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Prospectus or other materials, if any, permitted by the Securities Act,
including Rule 134 of the general rules and regulations thereunder.
(d) Each of the Partnership and the Operating Partnership is a
limited partnership duly formed, validly existing and in good standing under the
Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") with full
partnership power and authority to own or lease its properties to be owned or
leased at the Closing Date, to assume the liabilities being assumed by it
pursuant to the Merger and Conveyance Documents and to conduct its business to
be conducted at the Closing Date in all material respects as described in the
Registration Statement and the Prospectus, and each of the Partnership and the
Operating Partnership is, or at the Closing Date will be, duly registered or
qualified as a foreign limited partnership to conduct its business and in good
standing in each jurisdiction or place where the nature or location of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify (i) would not
have a material adverse effect on the condition, financial or otherwise, or in
the earnings, business or operations of the Partnership Entities taken as a
whole, and (ii) would not subject the limited partners of the Partnership to any
material liability or disability.
(e) Corporate Sub is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own or lease its properties to be owned or
leased at the Closing Date and to conduct its business to be conducted at the
Closing Date in all material respects as described in the Registration Statement
and the Prospectus, and Corporate Sub is, or at the Closing Date will be, duly
registered or qualified as a foreign corporation to conduct its business and is
in good standing in each jurisdiction or place where the nature or location of
its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify (i) would not
have a material adverse effect on the condition, financial or otherwise, or in
the earnings, business or operations of the Partnership Entities taken as a
whole, and (ii) would not subject the limited partners of the Partnership to any
material liability or disability.
(f) Newco is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware with full corporate power
and authority to own or lease its properties and to conduct its business and to
act as a general partner of the Partnership and of the Operating Partnership, in
each case in all material respects as described in the Registration Statement
and the Prospectus, and Newco is duly registered or qualified as a foreign
corporation to conduct its business and is in good standing in each jurisdiction
or place where the nature or location of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify (i) would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject the
limited partners of the Partnership to any material liability or disability.
(g) Coast Gas is a corporation duly organized, validly existing and
in good standing under the laws of the State of California with full corporate
power and authority to own or
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lease its properties and to conduct its business and to act as managing
general partner of the Partnership and of the Operating Partnership in each
case in all material respects as described in the Registration Statement and
the Prospectus, and Coast Gas is duly registered or qualified as a foreign
corporation to conduct its business and is in good standing in each
jurisdiction or place where the nature or location of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify (i) would not have a material
adverse effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities taken as a whole, and (ii)
would not subject the limited partners of the Partnership to any material
liability or disability.
(h) Synergy is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware with full corporate power
and authority to own or lease its properties and to conduct its business and to
act as a general partner of the Partnership and the Operating Partnership in
each case in all material respects as described in the Registration Statement
and the Prospectus, and Synergy is duly registered or qualified as a foreign
corporation to conduct its business and is in good standing in each jurisdiction
or place where the nature or location of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify (i) would not have a material adverse effect on the
condition, financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject the
limited partners of the Partnership to any material liability or disability.
(i) NGC is a corporation duly organized and validly existing in good
standing under the laws of the State of South Dakota, with full corporate power
and authority to perform the Transactions to which it is a party (the "NGC
Transactions").
(j) NPS is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware, with full corporate power and
authority to contribute the stock of Xxxxx to NGC (the "NPS Transaction").
(k) At the Closing Date, neither the Managing General Partner, the
Special General Partner, the Partnership, the Operating Partnership nor the
Corporate Sub will have any subsidiaries (other than the Special General
Partner, the Partnership, the Operating Partnership and the Corporate Sub
themselves in their capacities as subsidiaries) which, individually or taken as
a whole, would be deemed to be a significant subsidiary (as such term is defined
in Section 1-02 of Regulation S-X of the Commission).
(l) The Managing General Partner is the sole managing general partner
of the Partnership with a ___% general partner interest in the Partnership; such
general partner interest is duly authorized by the Agreement of Limited
Partnership of the Partnership (as the same may be amended and restated as of
the Closing Date, the "Partnership Agreement") between Newco and NGC, as
organizational limited partner (the "Organizational Limited Partner"), and was
validly issued to the Managing General Partner; and the Managing General Partner
owns such managing
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general partner interest free and clear of all liens, encumbrances, security
interests, equities, charges or claims, except as set forth in the
Partnership Agreement.
(m) The Managing General Partner is the sole managing general partner
of the Operating Partnership with a _____% general partner interest in the
Operating Partnership; such general partner interest is duly authorized by the
Agreement of Limited Partnership of the Operating Partnership (as the same may
be amended and restated as of the Closing Date, the "Operating Partnership
Agreement," and together with the Partnership Agreement, the "Partnership
Agreements") between Newco and the Partnership, and was validly issued to the
Managing General Partner; and the Managing General Partner owns such general
partner interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims, except as set forth in the Operating Partnership
Agreement.
(n) At the Closing Date, the Special General Partner will be the sole
special general partner of the Partnership with a ___% general partner interest
in the Partnership; such general partner interest will have been duly authorized
by the Partnership Agreement and will have been validly issued to the Special
General Partner; and the Special General Partner will own such general partner
interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims, except as set forth in the Partnership Agreement.
(o) At the Closing Date, the Special General Partner will be the sole
special general partner of the Operating Partnership with a ____% general
partner interest in the Operating Partnership; such general partner interest
will have been duly authorized by the Operating Partnership Agreement and will
have been validly issued to the Special General Partner; and the Special General
Partner will own such general partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except as set
forth in the Operating Partnership Agreement.
(p) At the Closing Date, the Managing General Partner will own
limited partner interests in the Partnership represented by ________
Subordinated Units and ______ Incentive Distribution Rights; at the Closing
Date, the Special General Partner will own limited partner interests in the
Partnership represented by ____ Subordinated Units and ______ Incentive
Distribution Rights; at the Closing Date, there will be issued to the
Underwriters the Firm Units (assuming no purchase by the Underwriters of
Additional Units); at the Closing Date or the Option Closing Date (as defined in
Section 4 hereof), as the case may be, the Firm Units or the Additional Units,
as the case may be, and the limited partner interests represented thereby will
be duly authorized by the Partnership Agreement and, when issued and delivered
to the Underwriters against payment therefor as provided herein, will be validly
issued, fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by matters
described in the Prospectus under the caption "The Partnership
Agreement--Limited Liability"); and other than such Subordinated Units and such
Incentive Distribution Rights owned by the Managing General Partner and the
Special General Partner at the Closing Date or the Option
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Closing Date, as the case may be, the Units will be the only limited partner
interests of the Partnership issued and outstanding.
(q) At the Closing Date and the Option Closing Date, (i) the
Partnership will be the sole limited partner of the Operating Partnership, with
a limited partner interest in the Operating Partnership of 98.9899%; (ii) such
limited partner interest will be duly authorized by the Operating Partnership
Agreement, will be validly issued in accordance with the Operating Partnership
Agreement and will be fully paid (to the extent required under the Operating
Partnership Agreement) and nonassessable (except as such nonassessability may be
affected by matters similar to those described in the Prospectus under the
caption "The Partnership Agreement--Limited Liability"); and (iii) the
Partnership will own such limited partner interest in the Operating Partnership
free and clear of all liens, encumbrances, security interests, equities, charges
or claims, except as set forth in the Operating Partnership Agreement.
(r) At the Closing Date and the Option Closing Date, all of the
outstanding shares of capital stock of Corporate Sub will have been duly
authorized and validly issued and will be fully paid and nonassessable; and all
of the issued shares of capital stock of Corporate Sub will be registered on its
books in the name of the Operating Partnership, free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except pursuant
to the Note Agreement, the Security Agreement or the Bank Credit Agreement.
(s) All of the outstanding shares of capital stock of Newco have been
duly authorized and validly issued and are fully paid and nonassessable; and all
of the issued shares of capital stock of Newco are registered on its books in
the name of NGC free and clear of all liens, encumbrances, security interests,
equities, charges or claims.
(t) At the Closing Date and the Option Closing Date, all of the
outstanding shares of capital stock of Coast Gas will have been duly authorized
and validly issued and will be fully paid and nonassessable; and all of the
issued shares of capital stock of Coast Gas will be registered on its books in
the name of NGC, free and clear of all liens, encumbrances, security interests,
equities, charges or claims.
(u) At the Closing Date and the Option Closing Date, the outstanding
shares of capital stock of Synergy will consist of ______ shares of common
stock, all of which will have been duly authorized and validly issued and will
be fully paid and nonassessable; and _______ shares of common stock of Synergy
will be registered on its books in the name of Coast Gas, free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(v) Except as described in the Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, nor any restriction upon
the voting or transfer of, any limited partner interests in the Partnership or
the Operating Partnership pursuant to either of the Partnership Agreements or
any agreement or other instrument to which the Partnership or the Operating
Partnership is a party or by which either of them may be bound. Except as
described in the
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Prospectus, there are no outstanding options or warrants to purchase any
Common Units or Subordinated Units. The Units, when issued and delivered
against payment therefor as provided herein, and the Subordinated Units, when
issued and delivered in accordance with the terms of the Partnership
Agreement and the Contribution Agreement, will conform in all material
respects to the descriptions thereof contained in the Prospectus. The
Partnership has all requisite power and authority to issue, sell and deliver
(i) the Units, in accordance with and upon the terms and conditions set forth
in this Agreement and in the Prospectus, and (ii) the Subordinated Units, in
accordance with the terms and conditions set forth in the Partnership
Agreement and the Contribution Agreement. At the Closing Date and the Option
Closing Date, all corporate and partnership action, as the case may be,
required to be taken by any of the Predecessor Entities, the Partnership
Entities, Newco, NGC and NPS or any of their shareholders or partners for the
authorization, issuance, sale and delivery of the Units and the Subordinated
Units and the consummation of the transactions (including the Transactions)
contemplated by this Agreement and the Operative Agreements (as defined in
Section 1(v) hereof) shall have been validly taken.
(w) This Agreement has been duly authorized, executed and delivered
by each of the Partnership, the Operating Partnership, the Managing General
Partner and Synergy.
(x) At or before the Closing Date, the Partnership Agreement will
have been duly authorized, executed and delivered by the Managing General
Partner, the Special General Partner and the Organizational Limited Partner and
will be a valid and legally binding agreement of the Managing General Partner,
the Special General Partner and the Organizational Limited Partner, enforceable
against the Managing General Partner, the Special General Partner and the
Organizational Limited Partner in accordance with its terms; at or before the
Closing Date, the Operating Partnership Agreement will have been duly
authorized, executed and delivered by the Managing General Partner, the Special
General Partner and the Partnership and will be a valid and legally binding
agreement of the Managing General Partner, the Special General Partner and the
Partnership, enforceable against the Managing General Partner, the Special
General Partner and the Partnership in accordance with its terms; at or before
the Closing Date, each of the Merger and Conveyance Documents will have been
duly authorized, executed and delivered by the parties thereto and, as
applicable, (i) will be a valid and legally binding agreement of the parties
thereto enforceable against such parties in accordance with its terms or (ii)
will have been duly filed with all appropriate state authorities and shall be in
full force and effect in accordance with its terms; at or before the Closing
Date, each of NGC and NPS will have taken all corporate action necessary to duly
authorize the NGC Transactions and the NPS Transaction, respectively, and such
authorizations shall remain in full force and effect; at or before the Closing
Date, the Senior Notes and the Note Agreement will have been duly authorized,
executed and delivered by the Operating Partnership and will be valid and
legally binding agreements of the Operating Partnership enforceable against the
Operating Partnership in accordance with their respective terms; at or before
the Closing Date, the Bank Credit Agreement will have been duly authorized,
executed and delivered by the Operating Partnership and will be a valid and
legally binding agreement of the Operating Partnership enforceable against the
Operating Partnership in accordance with its terms; provided that, with respect
to each agreement described in this Section 1(v), the enforceability thereof may
be limited
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by bankruptcy, insolvency, fraudulent transfer, reorganization, receivership,
moratorium and similar laws of general application relating to or affecting
creditors' rights generally and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), and provided further, that indemnification, contribution and
exoneration provisions provided in any such agreement may be limited by
public policy and applicable law relating to fiduciary duties. The
Partnership Agreements, the Merger and Conveyance Documents, the Senior
Notes, the Note Agreement, the Security Agreement and the Bank Credit
Agreement are herein collectively referred to as the "Operative Agreements."
(y) None of the offering, issuance and sale by the Partnership of the
Units, the offering, issuance and sale by the Operating Partnership of the
Senior Notes, the execution, delivery and performance of this Agreement and the
Operative Agreements by any of the Predecessor Entities, the Partnership
Entities or Newco which are parties thereto, nor the consummation of the
transactions contemplated hereby and thereby (including the Transactions) (i)
will conflict with or will constitute a violation of the agreement of limited
partnership, certificate or articles of incorporation or bylaws or other
organizational documents of any of the Predecessor Entities, the Partnership
Entities, Newco, NGC or NPS, (ii) will conflict with or will constitute a breach
or violation of, or a default (or an event which, with notice or lapse of time
or both, would constitute such an event) under any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which any of
the Predecessor Entities, the Partnership Entities, Newco, NGC or NPS is a
party or by which any of them or any of their respective properties may be
bound, (iii) violates or will violate any order, judgment, decree or injunction
of any court or governmental agency or body directed to any of the Predecessor
Entities, the Partnership Entities, Newco, NGC or NPS or any of their properties
in a proceeding to which any of them or their property is a party, (iv) violates
or will violate any statute, law or regulation applicable to any of the
Predecessor Entities, the Partnership Entities, Newco, NGC or NPS or any of
their respective properties, or (v) will result in the creation or imposition of
any lien, charge or encumbrance (except as contemplated by the Note Agreement
and the Bank Credit Agreement) upon any property or assets of any of the
Predecessor Entities, the Partnership Entities or Newco, in the case of clause
(ii), (iii), (iv) or (v) which conflicts, breaches, violations or defaults would
have a material adverse effect upon the condition, financial or otherwise, or in
the earnings, business or operations of the Partnership Entities taken as a
whole.
(z) No permit, consent, approval, authorization or order of any
court, governmental agency or body or financial institution is required in
connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement or the Operative Agreements, or the
consummation by any of the Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS of the Transactions, except (i) for such permits, consents,
approvals and similar authorizations required under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
securities or "Blue Sky" laws of certain jurisdictions, (ii) for such permits,
consents, approvals and similar authorizations which have been, or on or prior
to the Closing Date will be, obtained, (iii) for such permits, consents,
approvals and similar authorizations which, if not obtained, would not,
individually or in the aggregate, have a material
10
adverse effect upon the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as a whole
and (iv) as set forth or contemplated in the Prospectus.
(aa) Except as described in the Prospectus, none of the Predecessor
Entities, the Partnership Entities, Newco, NGC and NPS is in (i) breach or
violation of the provisions of its certificate or articles of incorporation or
bylaws or other organizational documents, or of any law, statute, ordinance,
administrative or governmental rule or regulation applicable to it or of any
decree of any court or governmental agency or body having jurisdiction over it,
or (ii) breach, default (and no event has occurred which, with notice or lapse
of time or both, would constitute such an event) or violation in the performance
of any term, covenant or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties may be subject, which (x)
would have a material adverse effect on the condition, financial or otherwise,
or in the earnings, business or operations of the Partnership Entities taken as
a whole, (y) could impair the ability of the Predecessor Entities, the
Partnership Entities or Newco to perform their obligations under the Operative
Agreements or (z) could impair the ability of NGC to consummate the NGC
Transactions or the ability of NPS to consummate the NPS Transaction. To the
knowledge of the Partnership, the Operating Partnership, Newco and Synergy, no
third party to any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any of the Predecessor Entities, the
Partnership Entities or Newco is a party or by which any of them is bound or to
which any of their properties is subject, is in default under any such
agreement, which breach, default or violation would, if continued, have a
material adverse effect on the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as a whole.
Neither the conduct of the business currently operated by the Predecessor
Entities nor the conduct of the business as described or contemplated in the
Prospectus to be operated by the Partnership Entities immediately following the
Transactions violates or will violate any agreement limiting the ability of any
of the Predecessor Entities or any of the Partnership Entities to compete in
their businesses, including, without limitation, the Non-Competition Agreement
dated May 7, 1994 by and among Empire Gas Corporation, a Missouri corporation
("Empire Gas"), Empire Energy, Xx. Xxxxxx X. Xxxxxxx, Xx. Xxxxxxx X. Xxxxxxx,
Xx. Xxxxxx Xxxxxxxx and Xx. Xxxx X. Xxxxxxx, Xx. and the Management Agreement
dated May 17, 1995 among Empire Gas, NGC and Synergy, as amended, and as further
amended by the Termination Agreement among Empire Gas, NGC and Synergy dated
September 28, 1996 (collectively, the "Empire Non-Competition Agreements").
(bb) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions on the pro
forma consolidated financial statements of the Partnership and the audited
consolidated financial statements of the Partnership, Newco and Synergy included
in the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the rules and regulations
thereunder.
(cc) Xxxxx, Xxxxx & Xxxxxx, who have expressed their opinions on the
audited consolidated financial statements of Empire Energy and Synergy Group,
Incorporated included in
11
the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the rules and regulations
thereunder.
(dd) Price Waterhouse LLP, who have expressed their opinion on the
audited consolidated financial statements of Coast included in the Registration
Statement and the Prospectus, are independent public accountants as required by
the Securities Act and the rules and regulations thereunder.
(ee) At September 30, 1996, the Partnership would have had, on the pro
forma basis indicated in the Prospectus, the capitalization set forth therein.
The financial statements (including the related notes and supporting schedules)
included in the Registration Statement and the Prospectus present fairly in all
material respects the financial position, results of operations and cash flows
of the entities purported to be shown thereby on the basis stated therein at the
respective dates or for the respective periods to which they apply and have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except to the extent
disclosed therein. The information set forth in the Registration Statement and
the Prospectus under the captions "Selected Pro Forma Financial and Operating
Data" and "Selected Historical Financial and Operating Data" is accurately
presented in all material respects and has been prepared on a basis consistent
with the unaudited pro forma financial statements and the audited and unaudited
historical consolidated financial statements from which it has been derived.
The pro forma financial statements of the Partnership included in the
Registration Statement and the Prospectus have been prepared in all material
respects in accordance with the applicable accounting requirements of Article 11
of Regulation S-X of the Commission; the assumptions used in the preparation of
such pro forma financial statements are, in the opinion of the management of the
Managing General Partner, reasonable; and the pro forma adjustments reflected in
such pro forma financial statements have been properly applied in all material
respects to the historical amounts in the compilation of such pro forma
financial statements.
(ff) Each of the Predecessor Entities has, and, upon consummation of
the Transactions, on the Closing Date each of the Operating Partnership and
Corporate Sub will have, good and marketable title in fee simple to all real
property and good title to all personal property described in the Prospectus to
be owned by it, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made of such property by the Predecessor Entities and proposed to be made of
such property by the Partnership Entities; and all real property and buildings
held under lease by the Predecessor Entities and proposed to be held by the
Operating Partnership or the Corporate Sub are held by the Predecessor Entities,
and, upon consummation of the Transactions, on the Closing Date will be held by
the Operating Partnership or Corporate Sub under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made of such property and buildings by the Predecessor Entities and
proposed to be made of such property and buildings by the Partnership Entities,
in each case except as described in or contemplated by the Prospectus. The
Merger and Conveyance Documents will be, as of the Closing Date, legally
sufficient to transfer or convey to the Operating Partnership or
12
Corporate Sub all properties that are, individually or in the aggregate,
required to enable the Operating Partnership or Corporate Sub to conduct its
operations (in all material respects as contemplated by the Prospectus),
subject to the conditions, reservations and limitations contained in the
Merger and Conveyance Documents and those set forth in the Prospectus. The
Operating Partnership and Corporate Sub will, upon execution, delivery and
effectiveness of the Merger and Conveyance Documents, succeed in all material
respects to the business, assets, properties, liabilities and operations
reflected by the pro forma financial statements of the Partnership, except as
disclosed in the Prospectus. On the Closing Date, each of the Northwestern
Mergers will have become effective.
(gg) Each of the Predecessor Entities possesses, and at the Closing
Date and the Option Closing Date each of the Partnership Entities will possess,
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct its business as
described in the Prospectus, including, without limitation, the business
currently conducted by CEG, except for such certificates, authorizations and
permits which, if not obtained, would not, individually or in the aggregate,
have a material adverse effect upon the ability of the Partnership Entities,
taken as a whole, to conduct their businesses as described in the Prospectus;
and none of the Predecessor Entities or the Partnership Entities has received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities, taken as a whole,
except as described in or contemplated by the Prospectus.
(hh) Each of the Predecessor Entities has filed all material tax
returns required to be filed through the date hereof, which returns are complete
and correct in all material respects, and has timely paid all taxes shown to be
due pursuant to such returns, other than those (i) which, if not paid, would not
have a material adverse effect on the condition, financial or otherwise, or in
the earnings, business or operations of the Partnership Entities taken as a
whole, or (ii) which are being contested in good faith.
(ii) Each of the Predecessor Entities owns or possesses, and at the
Closing Date and the Option Closing Date each of the Partnership Entities will
own, possess, have the right to use or be able to acquire on reasonable terms,
all material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by the Predecessor Entities in connection with
the business now operated by them other than those which if not so owned or
possessed would not have a material adverse effect on the condition, financial
or otherwise, or in the earnings, business or operations of the Partnership
Entities, taken as a whole; and none of the Predecessor Entities has received
any notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result
13
in any material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of the Partnership Entities, taken as
a whole.
(jj) None of the Predecessor Entities, the Partnership Entities or
Newco, is now, or after sale of the Units to be sold by the Partnership
hereunder and application of the net proceeds from such sale as described in the
Prospectus under the caption "Use of Proceeds" will be, an "investment company"
or a company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(kk) After sale of the Units to be sold by the Partnership hereunder
and application of the net proceeds from such sale as described in the
Prospectus under the caption "Use of Proceeds," the Operating Partnership will
not be a "gas utility company" and none of the Partnership Entities, the
Managing General Partner or the Special General Partner will be a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or subject to regulation thereunder.
(ll) No material labor dispute with the employees of the Predecessor
Entities exists, except as described in or contemplated by the Prospectus, or,
to the knowledge of any of the Partnership, the Operating Partnership, Newco or
Synergy is imminent.
(mm) At each of the Closing Date and the Option Closing Date, as the
case may be, the Managing General Partner and the Special General Partner will
have (excluding their interests in the Partnership and the Operating Partnership
and any notes receivable from or payable to the Partnership or the Operating
Partnership) a combined net worth of at least $15 million. For purposes of this
representation, assets will be valued at fair market value, and the interests of
the Managing General Partner and the Special General Partner in the Partnership
and the Operating Partnership (as general partner, limited partner and creditor)
shall not be taken into account except as an offset to the Partnership's or the
Operating Partnership's liabilities that are taken into account in computing
such net worth.
(nn) Each of the offer, sale and issuance of the Subordinated Units to
the Managing General Partner and the Special General Partner pursuant to the
Contribution Agreement and the Partnership Agreement and the offer, sale and
issuance of the Senior Notes pursuant to the Note Agreement is exempt from the
registration requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect thereto, and none of the Predecessor
Entities, the Partnership Entities, Newco, NGC and NPS has taken or will take
any action that would cause the loss of such exemption.
(oo) The Units have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
(pp) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the
14
earnings, business or operations of the Partnership Entities taken as a whole
from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(qq) There are no legal or governmental proceedings pending or
threatened to which any of the Predecessor Entities or the Partnership Entities
is a party or to which any of the properties of the Predecessor Entities or the
Partnership Entities is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(rr) All of the Predecessor Entities and all of the Partnership
Entities (i) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect upon the condition,
financial or otherwise, or in the earnings, business or operations of the
Partnership Entities taken as a whole.
(ss) Each of the Predecessor Entities maintains insurance against such
losses and risks and in such amounts as is reasonably adequate to protect the
Partnership Entities, the Managing General Partner, the Special General Partner
and their businesses; none of the Predecessor Entities has within the last two
years been refused any insurance coverage sought or applied for; and none of the
Predecessor Entities has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business or operations of the Partnership Entities
taken as a whole, except as described in or contemplated by the Prospectus.
(tt) Each of the Predecessor Entities maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to assets
is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
15
(uu) There are no contracts, agreements or understandings between any
of the Predecessor Entities, the Partnership Entities, Newco, NGC or NPS and any
person granting such person the right to require the Partnership to file a
registration statement under the Securities Act with respect to any securities
of the Partnership or to require the Partnership to include such securities with
the Units registered pursuant to the Registration Statement.
(vv) Each of the Predecessor Entities, the Partnership Entities and
Newco has complied with all provisions of Section 517.075, Florida Statutes
relating to issuers doing business with the Government of Cuba or with any
person or affiliate located in Cuba.
(ww) On the date hereof and at the Closing Date, (i) Xxxxxxx X.
Xxxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx will be duly qualified and acting
officers of Newco and (ii) Xx. Xxxxxxx, Xx. Xxxxxx and Xxxxxx X. Xxxxxx will be
members of the Board of Directors of Newco.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Partnership the respective number of Firm Units set forth in Schedule I hereto
opposite its name, at $_________ a Unit (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Partnership agrees to
sell to the Underwriters the Additional Units, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 1,281,000
Additional Units at the Purchase Price. If you, on behalf of the Underwriters,
elect to exercise such option, you shall so notify the Partnership in writing
not later than 30 days after the date of this Agreement, which notice shall
specify the number of Additional Units to be purchased by the Underwriters and
the date on which such Units are to be purchased. Such date may be the same as
the Closing Date (as defined below) but not earlier than the Closing Date nor
later than ten business days after the date of such notice. Additional Units
may be purchased as provided in Section 4 hereof solely for the purpose of
covering over-allotments made in connection with the offering of the Firm Units.
If any Additional Units are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Additional Units (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Units to be purchased as the
number of Firm Units set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Units.
Each of the Partnership, the Managing General Partner and the Special
General Partner hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 180 days after the date of the Prospectus, (i) offer, issue,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any Common
Units, Subordinated Units or any securities convertible into or exercisable or
exchangeable for Common Units or Subordinated Units
16
or (ii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the
Common Units or such other securities, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Units or
such other securities, in cash or otherwise. The foregoing sentence shall
not apply to (A) the Units to be sold hereunder, (B) the Subordinated Units
to be issued on the Option Closing Date as provided in the Partnership
Agreement, (C) issuances of Common Units pursuant to employee benefit plans
described in the Prospectus, (D) the issuance of Common Units in connection
with Acquisitions or Capital Improvements (each as defined in the Partnership
Agreement) or (E) the issuance of Common Units and Subordinated Units to the
Managing General Partner and the Special General Partner in connection with
the Transactions; provided that the Subordinated Units may be transferred
without such consent to an affiliate of the Managing General Partner who
agrees to be bound by the transfer restrictions contained in this paragraph.
3. TERMS OF PUBLIC OFFERING. The Partnership is advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Units as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Partnership is further
advised by you that the Units are to be offered to the public initially at
$_________ a Unit (the "Public Offering Price") and to certain dealers selected
by you at a price that represents a concession not in excess of $_________ a
Unit under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $__________ a Unit, to
any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Units shall be made
to the Partnership in federal or other funds immediately available in New York
City against delivery of such Firm Units for the respective accounts of the
several Underwriters at 9:00 A.M., New York City time, on ___________, 1996, or
at such other time on the same or such other date, not later than __________,
1996, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Units shall be made to the Partnership in
federal or other funds immediately available in New York City against delivery
of such Additional Units for the respective accounts of the several Underwriters
at 9:00 A.M., New York City time, on the date specified in the notice described
in Section 2 or at such other time on the same or on such other date, in any
event not later than ____________, 1996, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"Option Closing Date."
Certificates for the Firm Units and the Additional Units shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Units and the Additional Units shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Units to the Underwriters duly paid,
against payment of the Purchase Price therefor.
17
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Partnership to sell the Units to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Units on the
Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than 5:30 P.M., New York City time, on
the date hereof.
The several obligations of the Underwriters to purchase and pay for
the Units on the Closing Date are subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Partnership
Entities taken as a whole from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that makes it,
in your judgment, impracticable to market the Units on the terms and in the
manner contemplated in the Prospectus.
(b) The representations and warranties of the Partnership, the
Operating Partnership, the Managing General Partner and Synergy contained in
this Agreement shall be true and correct as of the Closing Date and the
Partnership, the Operating Partnership, the Managing General Partner and
Synergy shall have complied in all material respects with all of the
agreements and satisfied in all material respects all of the conditions on
their part to be performed or satisfied hereunder on or before the Closing
Date.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
each of the Managing General Partner and the Special General Partner, to the
effect set forth in clause (a)(i) and (b) above.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx & Xxxxx L.L.P., special outside counsel for the
Partnership, the Operating Partnership, the Managing General Partner and the
Special General Partner, dated the Closing Date, to the effect that:
(i) Each of the Partnership and the Operating Partnership has been
duly formed and is validly existing in good standing as a limited
partnership under the Delaware Act with all necessary partnership power
and authority to own or lease its properties, to assume the liabilities
being assumed by it pursuant to the Operative Agreements and to conduct
its business, in each case in all material respects as described in the
Prospectus.
(ii) The Managing General Partner is the sole managing general
partner of the Partnership and the Operating Partnership with a general
partner interest in the Partnership of 0.7686% and a general partner
interest in the Operating Partnership of 0.7764%; such general partner
interests are duly authorized by the Partnership
18
Agreement and the Operating Partnership Agreement, respectively, and were
validly issued.
(iii) The Special General Partner is the sole special general
partner of the Partnership and the Operating Partnership with a general
partner interest in the Partnership of 0.2314% and a general partner
interest in the Operating Partnership of 0.2337%; such general partner
interests are duly authorized by the Partnership Agreement and the
Operating Partnership Agreement, respectively, and were validly issued.
(iv) The 6,055,869 Subordinated Units and the 7,686 Incentive
Distribution Rights to be issued to the Managing General Partner and the
1,822,750 Subordinated Units and the 2,314 Incentive Distribution Rights
to be issued to the Special General Partner pursuant to the Contribution
Agreement and the Partnership Agreement and the limited partner
interests represented thereby are duly authorized by the Partnership
Agreement and, when issued and delivered pursuant to the terms of the
Contribution Agreement and the Partnership Agreement, will be validly
issued, fully paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such nonassessability may be
affected by matters described in the Prospectus under "The Partnership
Agreement--Limited Liability").
(v) The Partnership is the sole limited partner of the Operating
Partnership, with a limited partner interest of 98.9899%; such limited
partner interest is duly authorized by the Operating Partnership
Agreement and is validly issued, fully paid (to the extent required
under the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters similar to those described
in the Prospectus under the caption "The Partnership Agreement--Limited
Liability").
(vi) The 8,540,000 Common Units to be issued and sold to the
Underwriters by the Partnership pursuant to the Underwriting Agreement
and the limited partner interests represented thereby are duly
authorized by the Partnership Agreement and, when issued and delivered
against payment therefor as provided in the Underwriting Agreement, will
be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the Prospectus
under the caption "The Partnership Agreement--Limited Liability").
(vii) Other than the 6,055,869 Subordinated Units and the 7,686
Incentive Distribution Rights that will be owned by the Managing General
Partner and the 1,822,750 Subordinated Units and the 2,314 Incentive
Distribution Rights that will be owned by the Special General Partner,
the Firm Units will be the only limited
19
partner interests of the Partnership issued at the Closing Date, unless
the Option Closing Date and the Closing Date are the same date.
(viii) The Partnership Agreement constitutes a valid and legally
binding agreement of the Managing General Partner, the Special General
Partner and the Organizational Limited Partner, enforceable against the
Managing General Partner, the Special General Partner and the
Organizational Limited Partner in accordance with its terms, except as
the enforceability thereof may be limited by (A) bankruptcy, insolvency,
fraudulent transfer, reorganization, receivership, moratorium and
similar laws of general application relating to or affecting creditors'
rights generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) and (B) public policy, applicable law relating to fiduciary
duties and an implied covenant of good faith and fair dealing.
(ix) The Operating Partnership Agreement constitutes a valid and
legally binding agreement of the Managing General Partner, the Special
General Partner and the Partnership, enforceable against the Managing
General Partner, the Special General Partner and the Partnership in
accordance with its terms, except as the enforceability thereof may be
limited by (A) bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium and similar laws of general
application relating to or affecting creditors' rights generally and to
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and (B) public
policy, applicable law relating to fiduciary duties and an implied
covenant of good faith and fair dealing.
(x) The Managing General Partner owns its general partner
interests in the Partnership and the Operating Partnership, and will own
the 6,055,869 Subordinated Units and the 7,686 Incentive Distribution
Rights to be issued to it pursuant to the Partnership Agreement and the
Contribution Agreement, in each case free and clear of all liens,
encumbrances, security interests, charges or claims (A) in respect of
which a financing statement under the Uniform Commercial Code of
California or Delaware naming the Managing General Partner as debtor is
on file in the office of the Secretary of State of the State of South
Dakota or Delaware as of a recent date or (B) otherwise known to such
counsel, without independent investigation, other than those created by
or arising under the Delaware Act or the Partnership Agreement.
(xi) The Special General Partner owns its general partner interest
in the Partnership and the Operating Partnership and will own the 2,314
Subordinated Units and the 1,822,750 Incentive Distribution Rights to be
issued to it pursuant to the Partnership Agreement and the Contribution
Agreement, in each case free and clear of all liens, encumbrances,
security interests, charges or claims (A) in respect of which a
financing statement under the Uniform Commercial Code of the State of
20
Missouri or Delaware naming the Special General Partner as debtor is on
file in the office of the Secretary of State of the State of Missouri or
Delaware as of a recent date or (B) otherwise known to such counsel,
without independent investigation, other than those created by or
arising under the Delaware Act or the Partnership Agreement.
(xii) The Partnership owns its limited partner interest in the
Operating Partnership free and clear of all liens, encumbrances,
security interests, charges or claims (A) in respect of which a
financing statement under the Uniform Commercial Code of the State of
California or Delaware naming the Partnership as debtor is on file in
the office of the Secretary of State of the State of California or
Delaware as of a recent date or (B) otherwise known to such counsel,
without independent investigation, other than those created by or
arising under the Delaware Act or the Operating Partnership Agreement.
(xiii) The statements in the Registration Statement and Prospectus
under the captions "The Transactions," "Cash Distribution Policy" (other
than the table under the subsection "--Incentive
Distributions--Hypothetical Annualized Yield," as to which such counsel
need not express any opinion), "Cash Available for Distribution,"
"Conflicts of Interest and Fiduciary Responsibilities," "Description of
the Common Units," "The Partnership Agreement," "Units Eligible for
Future Sale" and "Underwriters" and in the Registration Statement in
Items 14 and 15, in each case insofar as such statements constitute
descriptions of the Operative Agreements or summaries of the legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such Operative Agreements,
legal matters, documents and proceedings and fairly summarize the
matters referred to therein, and the Units and the Subordinated Units
conform in all material respects to the descriptions thereof contained
in the Registration Statement and Prospectus under the captions
"Prospectus Summary--Risk Factors--Risks Interest in an Investment in
the Partnership," "--Risk Factors--Conflicts of Interest and Fiduciary
Responsibilities," "--Cash Available for Distribution," "--Partnership
Structure and Management," "--The Offering," "Risk Factors--Risks
Inherent in an Investment in the Partnership," "--Conflicts of Interest
and Fiduciary Responsibilities," "Cash Distribution Policy," "Cash
Available for Distribution," "Conflicts of Interest and Fiduciary
Responsibilities," "Description of the Common Units," "The Partnership
Agreement" and "Units Eligible for Future Sale."
(xiv) None of the offering, issuance and sale by the Partnership
of the Units, the offering, issuance and sale by the Operating
Partnership of the Senior Notes, the execution, delivery and performance
of this Agreement and the Operative Agreements by any of the Predecessor
Entities, the Partnership Entities or Newco, which are parties thereto,
nor the consummation of the transactions contemplated hereby and thereby
(including the Transactions) (A) will constitute a violation of the
21
agreement of limited partnership, certificate or articles of incorporation
or bylaws or other organizational documents of any of the Partnership
Entities, (B) will constitute a breach or violation of, or a default
under (or an event which, with notice or lapse of time or both, would
constitute such an event), any Operative Agreement or any other
agreement filed as an exhibit to the Registration Statement, (C) will
violate the Delaware Act or the Delaware General Corporation Law or (D)
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of any of the Partnership
Entities except as contemplated by the Note Agreement and the Bank
Credit Agreement.
(xv) No permit, consent, approval, authorization or order of any
federal or Delaware court, governmental agency or body is required in
connection with the execution and delivery of, or the consummation of
the transactions contemplated by, this Agreement or the issuance and
sale of the Common Units and the Subordinated Units under the
Partnership Agreement, except (A) for such permits, consents, approvals
and similar authorizations required under the Securities Act and the
Exchange Act, (B) as may be required under state securities or "Blue
Sky" laws, as to which such counsel need not express any opinion, (C)
for permits, consents, approvals and similar authorizations as may be
required by the Interstate Commerce Commission or the U.S. Department of
Transportation (or their successor agencies or departments, as the case
may be) or under the Public Utility Holding Company Act of 1935 or the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as to which such
counsel need not express any opinion, (D) for such permits, consents,
approvals and similar authorizations which have been obtained, (E) for
such permits, consents, approvals and similar authorizations which (1)
are of a routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of transactions
such as those contemplated hereby and (3) are expected in the reasonable
judgment of the Managing General Partner to be obtained in the ordinary
course of business subsequent to the consummation of the Transactions
and (F) as set forth or contemplated in the Prospectus.
(xvi) The opinion of Xxxxxxx & Xxxxx L.L.P. that is filed as
Exhibit 8.1 to the Registration Statement is confirmed and the
Underwriters may rely upon such opinion as if it were addressed to them.
(xvii) The Registration Statement was declared effective under the
Securities Act on __________________, 1996; to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by such Rule.
22
(xviii) Upon delivery to the Underwriters of certificates
evidencing the Units issued in the name of the Underwriters and payment
by the Underwriters of the purchase price for the Units, the
Underwriters will acquire the Units free of any adverse claim (as such
term is defined in Section 8-302 of the New York Uniform Commercial
Code), assuming that the Underwriters are acting in good faith and
without notice of any adverse claim.
(xix) Except as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any limited partner
interests pursuant to either of the Partnership Agreements. The
Partnership has all requisite power and authority to issue, sell and
deliver (A) the Units, in accordance with and upon the terms and
conditions set forth in this Agreement and in the Registration Statement
and Prospectus, and (B) the Subordinated Units, in accordance with the
terms and conditions set forth in the Contribution Agreement and the
Partnership Agreement.
(xx) The Units have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
(xxi) The offer, sale and issuance of the Subordinated Units to
the Managing General Partner and the Special General Partner pursuant to
the Contribution Agreement and the Partnership Agreement are exempt from
the registration requirements of the Securities Act and the securities
laws of any state having jurisdiction with respect thereto.
(xxii) Such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for historical and pro forma financial
statements and schedules and other historical and pro forma financial
and statistical data included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) has no reason to believe that (except for
historical and pro forma financial statements and schedules and other
historical and pro forma financial and statistical data as to which such
counsel need not express any belief) the statements in the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective under the captions "Prospectus
Summary--Risk Factors--Risks Inherent in an Investment in the
Partnership," "--Risk Factors--Conflicts of Interest and Fiduciary
Responsibilities," "--Cash Available for Distribution," "--Partnership
Structure and Management," "--The Offering," "--Summary of Tax
Considerations," "Risk Factors--Risks Inherent in an Investment in the
Partnership," "--Conflicts of Interest and Fiduciary Responsibilities,"
"--Tax Risks," "The Transactions," "Use of Proceeds," "Cash Distribution
Policy" (other than the table under the subsection "--Incentive
Distributions--Hypothetical Annualized Yield," as to which such counsel
need not
23
comment), "Cash Available for Distribution," "Conflicts of Interest and
Fiduciary Responsibilities," "Description of the Common Units," "The
Partnership Agreement," "Units Eligible for Future Sale," "Tax
Considerations" and "Investment in the Partnership by Employee Benefit
Plans" contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (C) has no reason to believe
that (except for historical and pro forma financial statements and
schedules and other historical and pro forma financial and statistical
data as to which such counsel need not express any belief) the
statements in the Prospectus under the captions "Prospectus
Summary--Risk Factors Risks Inherent in an Investment in the
Partnership," "--Risk Factors--Conflicts of Interest and Fiduciary
Responsibilities," "--Cash Available for Distribution," "--Partnership
Structure and Management," "--The Offering," "--Summary of Tax
Consideration," "Risk Factors--Risks Inherent in an Investment in the
Partnership," "--Conflicts of Interest and Fiduciary Responsibilities,"
"--Tax Risks," "The Transactions," "Use of Proceeds," "Cash Distribution
Policy" (other than the table under the subsection "--Incentive
Distributions--Hypothetical Annualized Yield," as to which such counsel
need not comment), "Cash Available for Distribution," "Conflicts of
Interest and Fiduciary Responsibilities," "Description of the Common
Units," "The Partnership Agreement," "Units Eligible for Future Sale,"
"Tax Considerations" and "Investment in the Partnership by Employee
Benefit Plans" contain any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(e) The Underwriters shall have received on the ng Date, an opinion of
Xxxxxx Xxxxxx & Xxxxx, outside el for the Partnership, the Operating
Partnership, the ing General Partner and the Special General Partner, dated
losing Date, to the effect that:
(i) Coast Gas is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware, with full
corporate power and authority to own or lease its properties and to
conduct its business and to act as managing general partner of the
Partnership and of the Operating Partnership, in each case in all
material respects as described in the Registration Statement and the
Prospectus.
(ii) Synergy is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware, with full
corporate power and authority to own or lease its properties and to
conduct its business and to act as special general partner of the
Partnership and the Operating Partnership, in each case in all material
respects as described in the Registration Statement and the Prospectus.
24
(iii) Corporate Sub is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own or lease its properties and to
conduct its business as contemplated by the Registration Statement and
the Prospectus.
(iv) NGC is a corporation duly organized and validly existing in
good standing under the laws of the State of South Dakota, with full
corporate power and authority to perform the NGC Transactions.
(v) NPS is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware, with full
corporate power and authority to perform the NPS Transaction.
(vi) Each of the Partnership and the Operating Partnership is duly
qualified or registered as a foreign limited partnership for the
transaction of business under the laws of the states listed on Schedule
I to such opinion; and, to such counsel's knowledge, such jurisdictions
are the only jurisdictions in which the character of the business
conducted by the Partnership or the Operating Partnership or the
location of the properties owned or leased by it makes such
qualification or registration necessary (except where the failure to so
qualify or so register would not (A) have a material adverse effect on
the financial condition, business or results of operations of the
Partnership Entities taken as a whole or (B) subject the limited
partners of the Partnership to any material liability or disability).
(vii) Coast Gas is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the states
listed on Schedule II to such opinion; and to the knowledge of such
counsel, such jurisdictions are the only jurisdictions in which the
character of the business conducted by Coast Gas or the location of the
properties owned or leased by it makes such qualification or
registration necessary (except where the failure to so qualify or so
register would not (A) have a material adverse effect on the financial
condition, business or results of operations of the Partnership Entities
taken as a whole or (B) subject the limited partners of the Partnership
to any material liability or disability).
(viii) Synergy is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the states
listed on Schedule III to such opinion; and to the knowledge of such
counsel, such jurisdictions are the only jurisdictions in which the
character of the business conducted by Synergy or the location of the
properties owned or leased by it makes such qualification or
registration necessary (except where the failure to so qualify or so
register would not (A) have a material adverse effect on the financial
condition, business or results of operations of the Partnership Entities
taken as a whole or (B) subject the limited partners of the Partnership
to any material liability or disability).
25
(ix) Corporate Sub is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the states
listed on Schedule IV to such opinion; and to the knowledge of such
counsel, such jurisdictions are the only jurisdictions in which the
character of the business conducted by Corporate Sub or the location of
the properties owned or leased by it makes such qualification or
registration necessary (except where the failure to so qualify or so
register would not (A) have a material adverse effect on the financial
condition, business or results of operations of the Partnership Entities
taken as a whole or (B) subject the limited partners of the Partnership
to any material liability or disability).
(x) All of the issued and outstanding shares of capital stock of
Coast Gas have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by NGC free and clear of all liens,
encumbrances, security interests, charges or claims known to such
counsel, without independent investigation, other than those created by
or arising under the California Corporations Code.
(xi) The outstanding capital stock of Synergy consists of ______
shares of common stock, all of which have been duly authorized and
validly issued and are fully paid and nonassessable, ______ shares of
which are owned by the Managing General Partner free and clear of all
liens, encumbrances, security interests, charges or claims known to such
counsel, without independent investigation, other than those created by
or arising under the Delaware General Corporation Law.
(xii) All of the issued and outstanding shares of capital stock of
Corporate Sub have been duly authorized and validly issued and are fully
paid and nonassessable; and all of such shares are owned of record by
the Operating Partnership free and clear of all liens, encumbrances,
security interests, charges or claims known to such counsel, without
independent investigation, other than those created by or arising under
the Delaware General Corporation Law.
(xiii) This Agreement has been duly authorized, executed and
delivered by each of the Partnership, the Operating Partnership, the
Managing General Partner and Synergy.
(xiv) Each of the Merger and Conveyance Documents has been duly
authorized and validly executed and delivered by each of the
Partnership, the Operating Partnership, Newco and Synergy, to the extent
a party thereto; each of the Merger and Conveyance Documents
constitutes the valid and legally binding agreement of the parties
thereto, enforceable against such parties in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether
such enforceability is
26
considered in a proceeding in equity or at law). Each of the
Northwestern Mergers has become effective.
(xv) Each of NGC and NPS has taken all corporate action necessary
to duly authorize the NGC Transactions and the NPS Transaction,
respectively, and such authorizations remain in full force and effect.
(xvi) The Senior Notes, the Note Agreement and the Security
Agreement have been duly authorized and validly executed and delivered
by the Operating Partnership; and the Senior Notes, the Note Agreement
and the Security Agreement constitute valid and legally binding
agreements of the Operating Partnership, enforceable against the
Operating Partnership in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws relating to or affecting creditors' rights generally
and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(xvii) The Bank Credit Agreement has been duly authorized and
validly executed and delivered by the Operating Partnership; and the
Bank Credit Agreement constitutes a valid and legally binding agreement
of the Operating Partnership, enforceable against the Operating
Partnership in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(xviii) The statements in the Registration Statement and the
Prospectus under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Description of
Indebtedness," "Business and Properties--Government Regulation,"
"Business and Properties--Transfer of the Partnership Assets," "Certain
Relationships and Related Transactions--Contribution and Conveyance
Agreement," insofar as they constitute descriptions of the Operative
Agreements or refer to statements of law or legal conclusions, are
accurate and complete in all material respects.
(xix) After due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which any of the
Predecessor Entities or the Partnership Entities is a party or to which
any of the properties of any of the Predecessor Entities or the
Partnership Entities is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or of
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
27
(xx) To the knowledge of such counsel, other than as described or
contemplated in the Prospectus, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against any of
Synergy, Empire Energy, Coast and Coast Gas (the "Material Predecessor
Entities"), the Partnership Entities, Newco, NGC or NPS that relates to
any of the transactions contemplated by the Prospectus or which, if
adversely determined, (x) would have a material adverse effect on the
financial condition, business or results of operations of the
Partnership Entities taken as a whole, (y) would impair or call into
question the validity of this Agreement or the performance by any of the
Partnership Entities or Newco of their obligations under this Agreement,
any of the Operative Agreements or the Transactions or, (z) would impair
or call into question the performance by NGC or NPS of the NGC
Transactions or the NPS Transaction, respectively.
(xxi) None of the Partnership Entities or Newco is now, or after
sale of the Units to be sold by the Partnership hereunder and
application of the net proceeds from such sale as described in the
Prospectus under the caption "Use of Proceeds" none of them will be, an
"investment company" or a company "controlled by" an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(xxii) After sale of the Units to be sold by the Partnership
hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds," the
Operating Partnership will not be a "gas utility company" and none of
the Partnership Entities, the Managing General Partner or the Special
General Partner will be a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or subject to
regulation thereunder.
(xxiii) The consummation of the Transactions is not subject to any
further pre-merger notification and waiting period requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
(xxiv) None of the offering, issuance and sale by the Partnership
of the Units, the offering, issuance and sale by the Operating
Partnership of the Senior Notes, the execution, delivery and performance
of this Agreement and the Operative Agreements by any of the Material
Predecessor Entities, the Partnership Entities, Newco, NGC or NPS which
are parties thereto, nor the consummation of the transactions
contemplated hereby and thereby (including the Transactions) (A) will
constitute a violation of the certificate or articles of incorporation
or bylaws or other organizational documents of any of the Material
Predecessor Entities, Newco, NGC or NPS, (B) will constitute a breach or
violation of, or a default under (or an event which, with notice or
lapse of time or both, would constitute such an event), any indenture,
mortgage, deed of trust, loan agreement or
28
other material agreement or instrument (other than the Operative
Agreements) known to such counsel to which any of the Material
Predecessor Entities, the Partnership Entities, Newco, NGC or NPS is a
party or by which any of them or any of their respective properties may
be bound, (C) will violate any order, judgment, decree or injunction of
any court or governmental agency or body known to such counsel directed
to any of the Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS or any of their properties in a proceeding to which
any of the Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS or their property is a party, (D) violates or will
violate any federal statute, law or regulation applicable to any of the
Material Predecessor Entities or any of their respective properties, (E)
violates or will violate the South Dakota Public Utilities Act or (F)
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of any of the Partnership
Entities except as contemplated by the Note Agreement and the Bank
Credit Agreement.
(xxv) No permit, consent, approval, authorization or order of any
federal or South Dakota court, governmental agency or body or any
financial institution is required in connection with the execution and
delivery of, or the consummation of the transactions contemplated by,
this Agreement or the Operative Agreements or the consummation by the
Material Predecessor Entities, the Partnership Entities, Newco, NGC or
NPS of the Transactions, except (A) as may be required under state
securities or "Blue Sky" laws, as to which such counsel need not express
any opinion, (B) for such permits, consents, approvals and similar
authorizations which have been obtained, (C) for such permits, consents,
approvals and similar authorizations which (1) are of a routine or
administrative nature, (2) need not be or are not customarily obtained
or made prior to the consummation of transactions such as those
contemplated hereby and by the Operative Agreements and (3) are expected
in the reasonable judgment of the Managing General Partner to be
obtained in the ordinary course of business subsequent to the
consummation of the Transaction and (D) as set forth or contemplated in
the Prospectus.
(xxvi) Except as described in the Prospectus, to the knowledge of
such counsel, none of the Material Predecessor Entities, Newco, NGC and
NPS was immediately prior to the Transactions, and none of the
Partnership Entities, Newco, NGC and NPS is, in (A) breach or violation
of the provisions of its certificate or articles of incorporation or
bylaws or other organizational documents or (B) breach, default (and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default) or violation in the due performance of any
term, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties are subject, which (x) would have a material adverse effect
on the financial condition, business or results of operations of the
Partnership
29
Entities taken as a whole, (y) could impair the ability of any of the
Partnership Entities or Newco to perform their obligations under the
Operative Agreements, or (z) could impair the ability of NGC to
consummate the NGC Transactions or the ability of NPS to consummate the
NPS Transaction. The conduct of the business as described or
contemplated in the Prospectus to be operated by the Partnership
Entities immediately following the Transactions does not and will not
violate any agreement limiting the ability of any of the Partnership
Entities to compete in their businesses, including, without limitation,
the Empire Non-Competition Agreements.
(xxvii) Each of the Partnership Entities possesses all
certificates, authorizations and permits issued by the appropriate
federal regulatory authorities necessary to conduct its business as
described in the Prospectus, including, without limitation, the business
conducted by CEG prior to consummation of the Transactions.
(xxviii) Except as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any limited partner
interests in the Partnership or the Operating Partnership or shares of
capital stock of the Managing General Partner or the Special General
Partner pursuant to the certificate of incorporation or bylaws of the
Managing General Partner or the Special General Partner or, to the
knowledge of such counsel, pursuant to any agreement or instrument to
which any Northwestern Entity, any Northwestern Party or any Partnership
Entity is a party or by which any of them may be bound. To such
counsel's knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Units as contemplated hereby gives rise
to any rights for or relating to the registration of any Units or other
securities of the Partnership. To such counsel's knowledge, except as
disclosed in the Prospectus, there are no outstanding options or
warrants to purchase any Units or Subordinated Units or other
partnership interests in the Partnership or the Operating Partnership.
All corporate and partnership action required to be taken by the
Material Predecessor Entities, the Partnership Entities, Newco, NGC, NPS
and their shareholders or partners for the authorization, issuance, sale
and delivery of the Units and Subordinated Units and the consummation of
the transactions contemplated hereby and by the Operative Agreements
(including the Transactions) has been validly taken.
(xxix) Such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and schedules
and other financial and statistical data included therein as to which
such counsel need not express any opinion) comply as to form in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (B) has no reason to believe
that (except for financial statements and schedules and other financial
and statistical data as to which such counsel need not express any
belief) the Registration Statement and the prospectus included therein
at the time the Registration Statement
30
became effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (C) has no
reason to believe that (except for financial statements and schedules
and other financial and statistical data as to which such counsel need
not express any belief) the Prospectus contains any untrue statement of
a material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
You shall also have received on the Closing Date, a copy of the
opinion of Xxxxxx Xxxxxx & Xxxxx delivered pursuant to the Note Agreement,
substantially in the form of Exhibit ___ attached to the Note Agreement,
accompanied by a letter dated the Closing Date and addressed to you from such
counsel stating that you are entitled to rely on the opinion expressed in
paragraph ___ of such opinion as if it were addressed to you.
(f) The Underwriters shall have received on the Closing Date, an
opinion or opinions of outside counsel to the Partnership, the Operating
Partnership, Newco and Synergy in each of the States of Alabama, Arkansas,
California, Florida, Kentucky, Mississippi, Missouri, New York and Tennessee,
dated the Closing Date, to the effect that:
(i) Each of the Partnership, the Operating Partnership, the
Managing General Partner, the Special General Partner and Corporate Sub
has been duly qualified or registered, to the extent required in such
state, as a foreign limited partnership or a foreign corporation, as the
case may be, for the transaction of business under the laws of such
state.
(ii) The Operating Partnership has all requisite partnership power
and authority under the laws of such state to own or lease its
properties and to conduct its business in such state; Corporate Sub has
all requisite corporate power and authority under the laws of such state
to own or lease its properties and to conduct its business in such
state; and upon the consummation of the Transactions, assuming that the
Partnership will not be liable under the laws of the State of Delaware
for the liabilities of the Operating Partnership and assuming that the
Unitholders will not be liable under the laws of the State of Delaware
for liabilities of the Partnership or the Operating Partnership, the
Partnership will not be liable as a limited partner under the laws of
such state for the liabilities of the Operating Partnership, and the
Unitholders will not be liable as limited partners under the laws of
such state for the liabilities of the Partnership or the Operating
Partnership, except in each case to the same extent as under the laws of
the State of Delaware.
(iii) The execution, delivery and performance of the Merger and
Conveyance Documents relating to the transfer of property in such state
or the merger of one or more entities organized under the laws of such
state in accordance
31
with the terms thereof will not violate any statute of such state or any
rule, regulation or, to the knowledge of such counsel, any order of any
agency of such state having jurisdiction over any of the Predecessor
Entities, the Partnership Entities, Newco or any of their respective
properties, except for any such violations which, individually or in the
aggregate, would not have a material adverse effect upon the holders of
Common Units or upon the operations to be conducted in such state by the
Partnership Entities taken as a whole.
(iv) Each of the Merger and Conveyance Documents relating to the
transfer of property in such state or the merger of one or more entities
organized under the laws of such state, assuming the due authorization,
execution and delivery thereof by the parties thereto and assuming such
Merger and Conveyance Documents are governed by the laws of such state
notwithstanding any choice of law provisions thereof, is a valid and
legally binding agreement of the parties thereto under the laws of such
state, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general application relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law);
each of such Merger and Conveyance Documents is in a form legally
sufficient as between the parties thereto to convey to the transferee
thereunder all of the right, title and interest of the transferor stated
therein in and to the properties located in such state, as described in
such Merger and Conveyance Documents, subject to the conditions,
reservations and limitations contained in such Merger and Conveyance
Documents, except motor vehicles or other property requiring conveyance
of certificated title as to which such Merger and Conveyance Documents
are legally sufficient to compel delivery of such certificated title.
(v) Each of the deeds and assignments (including, without
limitation, the form of the exhibits and schedules thereto) relating to
the transfer of property in such state is in a form legally sufficient
for recordation in the appropriate public offices of such state, to the
extent such recordation is required, and, upon proper recordation of any
of such deeds and assignments in such state, will constitute notice to
all third parties under the recordation statutes of such state
concerning record title to the assets transferred thereby; recordation
in the office of the County Clerk for each county in which the Operating
Partnership or Corporate Sub owns property is the appropriate public
office in such state for the recordation of deeds and assignments of
interests in real property located in such county.
(vi) No consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body of such state
having jurisdiction over any of the Predecessor Entities, Partnership
Entities or Newco, as the case may be, or any of their respective
properties is required for the issue and sale of the Units by the
Partnership or for the conveyance of the properties located in such
32
state purported to be conveyed to the Operating Partnership or Corporate
Sub pursuant to the Merger and Conveyance Documents, except (A) such
permits, consents, approvals and similar authorizations required under
the Act and the securities or "Blue Sky" laws of such state, (B) such
permits, consents, approvals and similar authorizations which have been
obtained, (C) such permits, consents, approvals and similar
authorizations which (1) are of a routine or administrative nature, (2)
need not be or are not customarily obtained or made prior to the
consummation of transactions such as those contemplated hereby and by
the Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the ordinary
course of business subsequent to the consummation of the Transactions or
(D) such permits, consents, approvals and similar authorizations which,
if not obtained, would not, individually or in the aggregate, have a
material adverse effect upon the operations to be conducted in such
state by the Partnership Entities taken as a whole.
(vii) The Predecessor Entities and the Partnership Entities
possess all certificates, authorizations or permits issued by the
appropriate state regulatory agencies or bodies necessary to conduct the
business currently (or, as described or contemplated in the Prospectus,
to be) operated by them, except (A) with respect to the Partnership, the
Operating Partnership and Corporate Sub for such certificates,
authorizations or permits which (1) are of a routine or administrative
nature, (2) need not be or are not customarily obtained or made prior to
the consummation of transactions such as those contemplated hereby and
by the Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the ordinary
course of business subsequent to the consummation of the Transactions
and (B) such certificates, authorizations or permits which would not,
individually or in the aggregate, have a material adverse effect upon
the operations to be conducted in such state by the Partnership Entities
taken as a whole.
(g) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx & Xxxxx, L.L.P., counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (vi) and
(xiii) (but only as to the statements in the Prospectus under "Cash
Distribution Policy," "Cash Available for Distribution," "Conflicts of
Interest and Fiduciary Responsibilities," "Description of the Common Units,"
"The Partnership Agreement," "Units Eligible for Future Sale" and
"Underwriters") of paragraph (d) above and subparagraphs (xi) and (xxvi) of
paragraph (e) above.
With respect to subparagraph (xxii) of paragraph (d) above and
subparagraph (xxvi) of paragraph (e) above, Xxxxx & Xxxxx, L.L.P., Xxxxxxx &
Xxxxx L.L.P. and Xxxxxx Xxxxxx & Xxxxx may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified.
33
The opinions described in paragraphs (d), (e) and (f) above shall
be rendered to the Underwriters at the request of the Partnership and shall
so state therein.
(h) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from each of Xxxxxx Xxxxxxxx LLP, Xxxxx, Xxxxx & Xxxxxx and
Price Waterhouse LLP, independent public accountants, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus; provided that the letters delivered on the Closing Date shall use
a "cut-off date" not earlier than the date hereof.
(i) The Units shall have been approved for listing on the New York
Stock Exchange.
(j) Acquisition Corp. shall have merged with and into Coast in
accordance with the terms of the Stock Purchase and Merger Agreement dated
September 4, 1996 among NGC, Acquisition Corp., Coast and the holders of all
of the preferred stock of Coast.
(k) Prior to or simultaneously with the sale of the Units on the
Closing Date, the Northwestern Mergers shall have been consummated.
(l) Simultaneously with the sale of the Units on the Closing Date,
(i) the closing of the offering of the Senior Notes shall have occurred on
the basis set forth in the Prospectus and (ii) the Bank Credit Agreement
shall have been executed and delivered and become effective in substantially
the form filed as an exhibit to the Registration Statement.
(m) Prior to or simultaneously with the sale of the Units on the
Closing Date, the conveyance of the Transferred Assets to the Operating
Partnership shall have been consummated.
The several obligations of the Underwriters to purchase Additional
Units hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Partnership, the due authorization and issuance of the
Additional Units and other matters related to the issuance of the Additional
Units and the satisfaction of the foregoing conditions to the several
obligations of the Underwriters to purchase and pay for the Units on the
Closing Date (other than paragraph (f)), except that all references to the
Firm Units and the Closing Date shall be deemed to refer to the Additional
Units and the Option Closing Date, respectively.
34
6. COVENANTS OF THE PARTNERSHIP. In further consideration of the
agreements of the Underwriters herein contained, each of the Partnership, the
Operating Partnership, the Managing General Partner and Synergy covenants
with each Underwriter as follows:
(a) To furnish to you, without charge, three signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge,
prior to 5:00 P.M., New York City time, on the business day next succeeding
the date of this Agreement and during the period mentioned in paragraph (c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request;
provided that if such request is made nine months or more after the effective
date of the Registration Statement, you shall pay the expenses of providing
such copies.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus
required to be filed pursuant to such Rule.
(c) If, at any time prior to the expiration of nine months after
the effective date of the Registration Statement when, in the opinion of
counsel for the Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any event
shall occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses
you will furnish to the Partnership) to which Units may have been sold by you
on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading
or so that the Prospectus, as amended or supplemented, will comply with law;
and, in case any Underwriter is required to deliver the Prospectus nine
months or more after the effective date of the Registration Statement, the
Partnership upon the request of the Representatives and at the expense of
such Underwriter will prepare promptly such amendment or supplement to the
Prospectus as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
(d) To endeavor to qualify the Units for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; PROVIDED, HOWEVER, that neither the Partnership, the Managing
General Partner nor Synergy shall be required to qualify to do business or to
file a general consent to service of process in any such jurisdictions.
35
(e) To make generally available to the Partnership's security
holders and to you as soon as practicable an earnings statement covering the
twelve-month period ending December 31, 1997 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Partnership's counsel and the Partnership's accountants in connection with
the registration and delivery of the Units under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove specified,
(ii) all costs and expenses related to the transfer and delivery of the Units
to the Underwriters, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Units under state
securities laws and all expenses in connection with the qualification of the
Units for offer and sale under state securities laws as provided in Section
6(d) hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Units by the
National Association of Securities Dealers, Inc., (v) all fees and expenses
in connection with the preparation and filing of the registration statement
on Form 8-A relating to the Common Units and all costs and expenses incident
to listing the Units on the New York Stock Exchange, (vi) the cost of
printing certificates representing the Units, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Partnership relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Units,
including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the
Partnership, travel and lodging expenses of the representatives and officers
of the Partnership and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all other costs and
expenses incident to the performance of the obligations of the Partnership
hereunder for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 7
entitled "Indemnity and Contribution," and the last paragraph of Section 9
below, the Underwriters will pay all of their costs and expenses, including
fees and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Units by them and any advertising expenses connected
with any offers they may make. Notwithstanding anything to the contrary
provided in the foregoing, each of the parties to this Agreement shall bear
its own expenses in connection with road show presentations.
(g) To cause the Predecessor Entities, the Partnership Entities
and the Managing General Partner to accomplish or obtain, as soon as
practicable, all consents, recordings and filings
36
necessary to perfect, preserve and protect the title of the Operating
Partnership and Corporate Sub to the properties and assets owned by them as a
result of the Transactions.
(h) The Partnership Entities, the Managing General Partner and the
Special General Partner will use the net proceeds received by them from the
sale of the Units and the Senior Notes in the manner specified in the
Prospectus under "Use of Proceeds."
7. INDEMNITY AND CONTRIBUTION. (a) Each of the Partnership, the
Operating Partnership and the Managing General Partner, jointly and
severally, agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Partnership shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement
or omission (i) based upon information relating to any Underwriter furnished
to the Partnership in writing by such Underwriter through you expressly for
use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased Units, or any person controlling such Underwriter,
if a copy of the Prospectus (as then amended or supplemented if the
Partnership shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Units to such person, and if the Prospectus
(as so amended or supplemented) would have cured the defect giving rise to
such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Partnership with Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Partnership, the Operating Partnership and
the Managing General Partner, their respective directors and officers who
sign the Registration Statement and each person, if any, who controls the
Partnership within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Partnership, the Operating Partnership and the Managing General
Partner to such Underwriter, but only with reference to information relating
to such Underwriter furnished to the Partnership in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
37
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 7,
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated, in the case of parties indemnified pursuant to paragraph (a) of
this Section 7, and by the Managing General Partner, in the case of parties
indemnified pursuant to paragraph (b) of this Section 7. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be
a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Partnership, the
Operating Partnership and the Managing General Partner on the one hand and
the Underwriters on the other hand from the offering of the Units or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Partnership, the Operating Partnership and the Managing General Partner on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received
38
by the Partnership, the Operating Partnership and the Managing General
Partner on the one hand and the Underwriters on the other hand in connection
with the offering of the Units shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Units (before
deducting expenses) received by the Partnership and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate
Public Offering Price of the Units. The relative fault of the Partnership,
the Operating Partnership and the Managing General Partner on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Partnership, the Operating Partnership
and the Managing General Partner or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in
proportion to the respective number of Units they have purchased hereunder,
and not joint.
(e) The Partnership, the Operating Partnership and the Managing
General Partner and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) of this Section 7.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Partnership, the Operating Partnership, the Managing General Partner and
Synergy contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Partnership, the
Operating Partnership, the Managing General Partner and Synergy, the
respective officers or directors or any person controlling the Partnership
and (iii) acceptance of and payment for any of the Units.
39
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Partnership, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date, (i) trading
generally shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American Stock Exchange,
the National Association of Securities Dealers, Inc., the Chicago Board of
Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of the Partnership or NPS shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have
been declared by either federal or New York State authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event, singly or together with any other
such event, makes it, in your judgment, impracticable to market the Units on
the terms and in the manner contemplated in the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Units that it has or they have agreed to purchase hereunder on such date, and
the aggregate number of Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Units to be purchased on such date,
the other Underwriters shall be obligated severally in the proportions that
the number of Firm Units set forth opposite their respective names in
Schedule I bears to the aggregate number of Firm Units set forth opposite the
names of all such nondefaulting Underwriters, or in such other proportions as
you may specify, to purchase the Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Units that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9
by an amount in excess of one-ninth of such number of Units without the
written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Units and
the aggregate number of Firm Units with respect to which such default occurs
is more than one-tenth of the aggregate number of Firm Units to be purchased,
and arrangements satisfactory to you and the Partnership for the purchase of
such Firm Units are not made within 48 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Partnership. In any such case either you or the
Partnership shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Units
and the aggregate number of Additional Units with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Units to be purchased, the nondefaulting Underwriters shall have the option
to (i) terminate their obligation hereunder to purchase Additional Units or
(ii) purchase not less than the number of Additional Units that such
nondefaulting Underwriters would have been obligated to
40
purchase in the absence of such default. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Partnership,
the Operating Partnership, the Managing General Partner or Synergy to comply
with the terms or to fulfill any of the conditions of this Agreement, or if
for any reason the Partnership, the Operating Partnership, the Managing
General Partner or Synergy shall be unable to perform their obligations under
this Agreement, the Partnership, the Operating Partnership, the Managing
General Partner and Synergy will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
CORNERSTONE PROPANE PARTNERS, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By
-------------------------------------
Name:
Title:
41
CORNERSTONE PROPANE, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By
-------------------------------------
Name:
Title:
CORNERSTONE PROPANE GP, INC.
By
-------------------------------------
Name:
Title:
SYN INC.
By
-------------------------------------
Name:
Title:
42
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxx Xxxxxx Xxxxxxxx Inc.
X.X. Xxxxxxx & Sons, Inc.
Xxxxxxxxxxx & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Acting severally on behalf
of themselves and the several
Underwriters named herein.
By Xxxxxx Xxxxxxx & Co. Incorporated
By
-----------------------------------
Name:
Title:
43
SCHEDULE I
Number of
Firm Units
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated................
Xxxx Xxxxxx Xxxxxxxx Inc. .......................
X.X. Xxxxxxx & Sons, Inc. .......................
Xxxxxxxxxxx & Co., Inc. .........................
PaineWebber Incorporated.........................
Prudential Securities Incorporated...............
---------------
Total........................................ 8,540,000
---------------
---------------
