EXHIBIT 1.1
EXECUTION VERSION
700,000 Common Units
UNDERWRITING AGREEMENT
February 27, 2003
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The undersigned, Inergy, L.P., a Delaware limited partnership (the
"Partnership"), Inergy Propane, LLC, a Delaware limited liability company (the
"Operating Company"), New Inergy Propane, LLC, a Delaware limited liability
company ("New Propane"), Inergy Partners, LLC, a Delaware limited liability
company (the "Non-Managing General Partner"), Inergy GP, LLC, a Delaware limited
liability company (the "Managing General Partner") (the Managing General Partner
and the Non-Managing General Partner are sometimes collectively referred to
herein as the "General Partners"), Inergy Sales & Service, Inc., a Delaware
corporation ("Service Sub"), L & L Transportation, LLC, a Delaware limited
liability company ("L & L Transportation"), and Inergy Transportation, LLC, a
Delaware limited liability company ("Inergy Transportation"), hereby address you
as the "Underwriter" and hereby confirm their respective agreements with you as
set forth below. The Partnership, the Operating Company, Service Sub, L & L
Transportation and Inergy Transportation are referred to as the "Partnership
Group." L & L Transportation and Inergy Transportation are sometimes
collectively referred to herein as the "Operating Subs." The Partnership, the
Operating Company, New Propane, the General Partners, Service Sub and the
Operating Subs are referred to as the "Inergy Parties."
1. Description of Common Units. The Partnership proposes to issue
and sell to the Underwriter 700,000 common units (the "Firm Units") representing
limited partner interests in the Partnership (the "Common Units"). The
Partnership further proposes to grant to the Underwriter the right to purchase
up to an additional 105,000 Common Units (the "Option Units"), as provided in
Section 3 of this Agreement. The Firm Units and the Option Units are herein
sometimes referred to as the "Units" and are more fully described in the
Prospectus hereinafter defined.
2. Purchase, Sale and Delivery of Firm Units. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Partnership agrees to sell 700,000
Firm Units to the Underwriter, and the Underwriter agrees, to purchase such
700,000 Firm Units from the Partnership at a purchase price of $29.382 per Unit.
Delivery of the Firm Units will be in book-entry form through the
facilities of The Depository Trust Company, New York, New York ("DTC"). Delivery
of the documents required by Section 6 hereof with respect to the Units shall be
made at or prior to 9:00 a.m., New York City time, on March 5, 2003 at Xxxxxxx
Xxxxxxxx Xxxxxx LLP, 0000 Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, XX 00000 or at such
other place as may be agreed upon between you and the Partnership (the "Place of
Closing"), or at such other time and date not later than five full business days
thereafter as you and the Partnership may agree, such time and date of payment
and delivery being herein called the "Closing Date." Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of the Underwriter hereunder.
The Partnership will deliver the Firm Units to the Underwriter, against
payment of the purchase price therefor in Federal (same day) Funds by wire
transfer to an account at the bank specified by the Partnership.
The Partnership will cause its transfer agent to deposit the Firm Units
pursuant to the Full Fast Delivery Program of the DTC.
It is understood that the Underwriter proposes to offer the Units to the
public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.
3. Purchase, Sale and Delivery of the Option Units. The Partnership
hereby grants an option to the Underwriter to purchase from the Partnership up
to 105,000 Option Units, on the same terms and conditions as the Firm Units;
such option is granted for the purpose of covering any over-allotments in the
sale of the Firm Units. No Option Units shall be sold or delivered unless the
Firm Units previously have been, or simultaneously are, sold and delivered. The
price of any Option Units shall be $29.382 per Unit.
The option is exercisable by you at any time, and from time to time,
before the expiration of 30 days from the date of the Prospectus Supplement (or,
if such 30th day shall be a Saturday or Sunday or a holiday, on the next day
thereunder when The Nasdaq National Market (the "Nasdaq") is open for trading),
for the purchase of all or part of the Option Units covered thereby, by notice
given by you to the Partnership in the manner provided in Section 14 hereof,
setting forth the number of Option Units as to which the Underwriter is
exercising the option, and the date of delivery of said Option Units, which date
shall not be more than five business days after such notice unless otherwise
agreed to by the parties. You may terminate the option at any time, as to any
unexercised portion thereof, by giving written notice to the Partnership to such
effect.
Delivery of the Option Units will be in book-entry form through the
facilities of DTC. Delivery of the documents required by Section 8 hereof with
respect to the Units shall be made at the Place of Closing at or prior to 9:00
a.m., New York City time, on the date designated in the notice given by you as
provided above, or at such other time and date as you and the Partnership may
agree (which may be the same as the Closing Date), such time and date of payment
and delivery being herein called the "Option Closing Date." Time shall be of the
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essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of the Underwriter hereunder. On the
Option Closing Date, the Partnership shall provide the Underwriter such
representations, warranties, agreements, opinions, letters, certificates and
covenants with respect to the Option Units as are required to be delivered on
the Closing Date with respect to the Firm Units.
The Partnership will cause its transfer agent to deposit as original
issue the Option Units pursuant to the Full Fast Delivery Program of the DTC.
4. Representations, Warranties and Agreements of the Inergy
Parties. The Inergy Parties jointly and severally represent and warrant to and
agree with the Underwriter that:
(a) Definitions. The Partnership has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (file number 333-101165), including a prospectus,
relating to the Units and the Partnership has filed with, or transmitted
for filing to, or shall promptly hereafter file with or transmit for
filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Units pursuant to Rule 424
under the Securities Act of 1933, as amended (the "1933 Act"). The
registration statement as amended at the date of the Underwriting
Agreement, including information, if any, deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule
430A under the Securities Act, is hereinafter referred to as the
"Registration Statement." The term "Base Prospectus" means the
prospectus included in the Registration Statement. The term "Prospectus"
means the Base Prospectus together with the Prospectus Supplement. As
used herein, the terms "Registration Statement," "Base Prospectus," and
"Prospectus" shall include in each case the documents, if any,
incorporated by reference therein (the "Incorporated Documents"). The
terms "supplement," "amendment" and "amend" as used herein shall include
the filing of all documents deemed to be incorporated by reference in
the Prospectus that are filed subsequent to the date of the Underwriting
Agreement by the Partnership with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). For
purposes of this Agreement, "Effective Time" means the date and time the
Registration Statement became effective.
(b) Effectiveness. The Registration Statement has become
effective under the Securities Act; 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 Inergy Parties which is deemed to include only the knowledge of the
management of the Managing General Partner (the "Knowledge of the Inergy
Parties"), threatened by the Commission.
(c) No Material Misstatements or Omissions. The Registration
Statement conforms, and any further amendments or supplements to the
Registration Statement will, when they become effective, conform in all
material respects to the requirements of the Securities Act and the
rules and regulations of the Commission thereunder (the
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"1933 Act Rules and Regulations") and do not and will not, as of the
applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus
and any supplement or amendment thereto when filed with the Commission
under Rule 424(b) will conform in all material respects to the
requirements of the 1933 Act and the 1933 Act Rules and Regulations, and
do not or will not include any untrue statement of a material fact or
omit 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. Each forward-looking statement (within the meaning of
Section 27A of the 1933 Act and Section 21E of the 0000 Xxx) made by the
Partnership in such documents, including (but not limited to) any
statements with respect to future available cash or future cash
distributions or earnings of the Partnership or the anticipated ratio of
taxable income to distributions, was made or will be made with a
reasonable basis and in good faith. Notwithstanding the foregoing, no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Partnership by or on behalf of the Underwriter specifically for
inclusion therein. The Incorporated Documents heretofore filed with the
Commission, when they were filed, conformed in all material respects to
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder ("1934 Act Rules and Regulations") and did not, as
of the time each such document was filed, contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Any
further Incorporated Documents so filed will, when they are filed,
conform in all material respects to the requirements of the 1934 Act
Rules and Regulations and will not, as of the time each such document is
filed, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) Other Sales. The Partnership has not sold or issued any
Common Units during the six-month period preceding the date of the
Prospectus other than Common Units issued pursuant to employee benefit
plans, qualified options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants described in the
Prospectus.
(e) Form S-3. The conditions for the use of Form S-3, as set
forth in the General Instructions thereto, have been satisfied.
(f) Formation and Due Qualification of the Partnership. The
Partnership has been duly formed and is validly existing in good
standing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act ("Delaware LP Act") with full partnership power
and authority to own or lease its properties and to conduct its business
in all material respects as described in the Registration Statement and
the Prospectus. The Partnership is duly registered or qualified as a
foreign limited partnership for the transaction of business under the
laws of each jurisdiction in which the character of the business
conducted by it or the nature or location of the properties
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owned or leased by it makes such registration or qualification
necessary, except where the failure so to register or qualify would not
(i) have a material adverse effect on the business, financial condition
or results of operations of the Partnership Group, taken as a whole
("Material Adverse Effect"), or (ii) subject the limited partners of the
Partnership to any material liability or disability.
(g) Formation and Due Qualification of New Propane, the
Operating Company and the Operating Subs. Each of New Propane, the
Operating Company and the Operating Subs has been duly formed and is
validly existing in good standing as a limited liability company under
the Delaware Limited Liability Company Act (the "Delaware LLC Act") with
full limited liability company power and authority to own or lease its
properties and to conduct its business, in each case in all material
respects as described in the Registration Statement and the Prospectus.
Each of New Propane, the Operating Company and the Operating Subs is
duly registered or qualified as a foreign limited liability company for
the transaction of business under the laws of each jurisdiction in which
the character of the business conducted by it or the nature or location
of the properties owned or leased by it makes such registration or
qualification necessary, except where the failure so to register or
qualify would not (i) have a Material Adverse Effect or (ii) subject the
limited partners of the Partnership to any material liability or
disability.
(h) Formation and Due Qualification of the General Partners.
Each of the General Partners has been duly formed and is validly
existing in good standing as a limited liability company under the
Delaware LLC Act with full limited liability company power and authority
to own or lease its properties, to conduct its business and to act as a
general partner of the Partnership, in each case in all material
respects as described in the Registration Statement and the Prospectus.
Each of the General Partners is duly registered or qualified as a
foreign limited liability company for the transaction of business under
the laws of each jurisdiction in which the character of the business
conducted by it or the nature or location of the properties owned or
leased by it makes such registration or qualification necessary, except
where the failure so to register or qualify would not (i) have a
Material Adverse Effect or (ii) subject the limited partners of the
Partnership to any material liability or disability.
(i) Formation and Due Qualification of Service Sub. Service
Sub and has been duly incorporated and is validly existing in good
standing under the Delaware General Corporation Law ("DGCL") with full
corporate power and authority to own or lease its properties and to
conduct its business, in all material respects as described in the
Registration Statement and the Prospectus. Service Sub is duly
registered or qualified as a foreign corporation for the transaction of
business under the laws of each jurisdiction in which the character of
the business conducted by it or the nature or location of the properties
owned or leased by it makes such registration or qualification
necessary, except where the failure so to register or qualify would not
(i) have a Material Adverse Effect or (ii) subject the limited partners
of the Partnership to any material liability or disability.
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(j) Ownership of the General Partner Interests in the
Partnership. The Managing General Partner and the Non-Managing General
Partner are the sole general partners of the Partnership. The
Non-Managing General Partner owns a 2% general partner interest and the
Managing General Partner owns a non-economic, managing general partner
interest; such general partner interests have been duly authorized and
validly issued in accordance with the Partnership Agreement; and each
General Partner owns its general partner interest free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(k) Capitalization. The issued and outstanding limited
partner interests of the Partnership consist of 3,827,176 Common Units,
3,313,367 senior subordinated units ("Senior Subordinated Units")
representing senior subordinated limited partnership interests in the
Partnership, 572,542 junior subordinated units ("Junior Subordinated
Units") representing junior subordinated limited partnership interests
in the Partnership (the Junior Subordinated Units and the Senior
Subordinated Units are collectively referred to herein as the
"Subordinated Units") and the incentive distribution rights, as defined
in the Amended and Restated Agreement of Limited Partnership of the
Partnership (as the same has been and may be amended or restated at or
prior to the Closing Date, the "Partnership Agreement") (the "Incentive
Distribution Rights"). All outstanding Common Units, Senior Subordinated
Units, Junior Subordinated Units and Incentive Distribution Rights and
the limited partner interests represented thereby have been duly
authorized and validly issued in accordance with the Partnership
Agreement and are fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in Section 17-607
of the Delaware LP Act).
(l) Ownership of Subordinated Units, Common Units and
Incentive Distribution Rights. New Propane owns 959,954 Senior
Subordinated Units and 507,063 Junior Subordinated Units and Inergy
Holdings, LLC, a Delaware limited liability company ("Holdings"),
directly or indirectly, through affiliates, owns 404,601 Common Units,
1,807 Senior Subordinated Units and all of the Incentive Distribution
Rights, in each case free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus),
security interests, charges or claims.
(m) Valid Issuance of Firm Units. At the Closing Date, there
will be sold to the Underwriter the Firm Units (assuming no purchase by
the Underwriter of Option Units); at the Closing Date or the Option
Closing Date, as the case may be, the Firm Units or the Option 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 Underwriter against payment therefor in accordance
with the terms hereof, 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 Section
17-607 of the Delaware LP Act).
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(n) Ownership of the Membership Interests in the Operating
Company. The Partnership owns 100% of the issued and outstanding
membership interests in the Operating Company; such membership interests
have been duly authorized and validly issued in accordance with the
limited liability company agreement of the Operating Company (as the
same has been and may be amended or restated at or prior to the Closing
Date, the "Operating Company LLC Agreement") and are fully paid (to the
extent required under the Operating Company LLC Agreement) and
nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware LLC Act); and the Partnership owns its
membership interests free and clear of all liens, encumbrances, security
interests, equities, charges or claims (other than those created by that
certain Fourth Amended and Restated Credit Agreement dated as of
December 20, 2001, as amended, by and among the Operating Company and
the lenders therein (the "Credit Agreement"), and that certain Secured
Notes Purchase Agreement dated as of June 7, 2002 by and among the
Operating Company and the purchasers named therein and the related
documents described therein (the "Secured Notes Purchase Agreement").
(o) Ownership of Service Sub. The Operating Company owns
100% of the issued and outstanding capital stock of Service Sub; such
capital stock has been duly authorized and validly issued and is fully
paid and nonassessable; and the Operating Company owns such capital
stock free and clear of all liens, encumbrances, security interests,
equities, charges or claims (other than those securing the obligations
of the Operating Company under the Credit Agreement and the Secured
Notes Purchase Agreement).
(p) Ownership of the Operating Subs. The Operating Company
owns 100% of the issued and outstanding membership interests in each of
the Operating Subs; such membership interests have been duly authorized
and validly issued in accordance with the limited liability company
agreements of the Operating Subs (as the same have been or may be
amended or restated at or prior to the Closing Date, the "Operating Subs
LLC Agreements") and are fully paid (to the extent required under the
Operating Subs LLC Agreements) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC
Act); and the Operating Company owns such membership interests free and
clear of all liens, encumbrances, security interests, equities, charges
or claims (other than those securing the obligations of the Operating
Company under the Credit Agreement and the Secured Notes Purchase
Agreement).
(q) Ownership of New Propane. The Non-Managing General
Partner owns a 100% common membership interest in New Propane; such
membership interests have been duly authorized and validly issued in
accordance with New Propane's limited liability company agreement (as
the same has been or may be amended or restated at or prior to the
Closing Date, the "New Propane LLC Agreement") and are fully paid (to
the extent required under the New Propane LLC Agreement) and
nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware LLC Act);
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and the Non-Managing General Partner owns such membership interest free
and clear of all liens, encumbrances, security interests, equities,
charges or claims.
(r) Ownership of the Managing General Partner. Holdings owns
100% of the issued and outstanding membership interests in the Managing
General Partner; such membership interests have been duly authorized and
validly issued in accordance with the Managing General Partner's limited
liability company agreement (as the same has been or may be amended or
restated at or prior to the Closing Date, the "Managing General Partner
LLC Agreement") and are fully paid (to the extent required under the
Managing General Partner LLC Agreement) and nonassessable (except as
such nonassessability may be affected by Section 18-607 of the Delaware
LLC Act); and Holdings owns such membership interests free and clear of
all liens, encumbrances, security interests, equities, charges or
claims.
(s) Ownership of the Non-Managing General Partner. Holdings
owns 100% of the issued and outstanding common membership interests in
the Non-Managing General Partner. Such membership interests have been
duly authorized and validly issued in accordance with the Non-Managing
General Partner's limited liability company agreement (as the same has
been or may be amended or restated at or prior to the Closing Date, the
"Non-Managing General Partner LLC Agreement") and are fully paid (to the
extent required under the Non-Managing General Partner LLC Agreement)
and nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware LLC Act); and Holdings owns such
membership interests free and clear of all liens, encumbrances, security
interests, equities, charges or claims.
(t) No Other Subsidiaries. Other than the Partnership's
ownership of its membership interest in the Operating Company and the
Operating Company's ownership of its membership interest in the
Operating Subs and its shares of capital stock of Service Sub, neither
the Partnership nor the Operating Company own, and at the Closing Date
and the Option Closing Date, neither will own, directly or indirectly,
any equity or long-term debt securities of any corporation, partnership,
limited liability company, joint venture, association or other entity.
Other than its ownership of its partnership interests in the
Partnership, the Managing General Partner does not own, and at the
Closing Date and the Option Closing Date will not own, directly or
indirectly, any equity or long-term debt securities of any corporation,
partnership, limited liability company, joint venture, association or
other entity.
(u) No Preemptive Rights, Registration Rights or Options.
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, (i) any limited partner interests of the
Partnership, (ii) any membership interests of the Managing General
Partner, the Operating Company or the Operating Subs or (iii) any shares
of Service Sub, in each case pursuant to the partnership agreement or
limited liability company agreement of such entity (collectively, the
"Organizational Agreements") or
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the certificates of limited partner or formation or incorporation,
bylaws and other organizational documents (together with the
Organization Agreements, the "Organizational Documents") or any other
agreement or instrument to which any of such entities is a party or by
which any one of them may be bound. Neither the filing of the
Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to any rights for or relating
to the registration of any Units or other securities of the Partnership
other than as have been waived. Except as described in the Prospectus,
there are no outstanding options or warrants to purchase (A) any Common
Units, Senior Subordinated Units, Junior Subordinated Units or Incentive
Distribution Rights or other interests in the Partnership, (B) any
membership interests in the Managing General Partner, the Operating
Company, or the Operating Subs or (C) any shares of Service Sub.
(v) Authority and Authorization. The Partnership has all
requisite power and authority to issue, sell and deliver the Units to be
sold by it hereunder in accordance with and upon the terms and
conditions set forth in this Agreement, the Partnership Agreement and
the Registration Statement and the Prospectus. At the Closing Date and
the Option Closing Date, all corporate, partnership and limited
liability company action, as the case may be, required to be taken by
the Inergy Parties or any of their stockholders, members or partners for
the authorization, issuance, sale and delivery of the Units to be sold
by the Partnership hereunder and the consummation of the transactions
contemplated by this Agreement, shall have been validly taken.
(w) Due Authorization of the Underwriting Agreement. This
Agreement has been duly executed and delivered by each of the Inergy
Parties that are parties hereto.
(x) Enforceability of Other Agreements.
(i) The Partnership Agreement has been duly
authorized, executed and delivered by the General Partners and is a
valid and legally binding agreement of the General Partners, enforceable
against the General Partners in accordance with its terms;
(ii) The Operating Company LLC Agreement has been
duly authorized, executed and delivered by the Partnership and is a
valid and legally binding agreement of the Partnership, enforceable
against it in accordance with its terms;
(iii) The Managing General Partner LLC Agreement has
been duly authorized, executed and delivered by Holdings and is a valid
and legally binding agreement of Holdings, enforceable against it in
accordance with its terms;
(iv) The Non-Managing General Partner LLC Agreement
has been duly authorized, executed and delivered by Holdings and is a
valid and legally binding agreement of Holdings, enforceable against it
in accordance with its terms;
provided that, with respect to each agreement described in this Section
4(x), the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer,
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reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law); and provided, further, that the indemnity,
contribution and exoneration provisions contained in any of such
agreements may be limited by applicable laws and public policy.
(y) No Conflicts. None of the offering, issuance and sale by
the Partnership of the Units, the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated
hereby (i) conflicted, conflicts or will conflict with or constituted,
constitutes or will constitute a violation of the Organizational
Documents, (ii) conflicted, conflicts or will conflict with or
constituted, constitutes 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 a default) under any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
any of the Inergy Parties is a party or by which any of them or any of
their respective properties may be bound, (iii) violated, violates or
will violate any statute, law or regulation or any order, judgment,
decree or injunction of any court or governmental agency or body
directed to any of the Inergy Parties or any of their properties in a
proceeding to which any of them or their property is a party or (iv)
resulted, results or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of any of the
Inergy Parties, which conflicts, breaches, violations or defaults, in
the case of clauses (ii), (iii) or (iv), would, individually or in the
aggregate, have a Material Adverse Effect.
(z) No Consents. No permit, consent, approval,
authorization, order, registration, filing or qualification ("consent")
of or with any court, governmental agency or body having jurisdiction
over the Inergy Parties or any of their respective properties is
required for the offering, issuance and sale by the Partnership of the
Units, the execution, delivery and performance of this Agreement or the
consummation by the Inergy Parties of the transactions contemplated by
this Agreement, except for such consents required under the 1933 Act,
the 1933 Act Rules and Regulations, the 1934 Act, the 1934 Act Rules and
Regulations and state securities or "Blue Sky" laws and applicable rules
and regulations under such laws.
(aa) No Default. None of the Inergy Parties is (i) in
violation of its Organizational Documents, or (ii) in violation 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 (iii) in
breach, default (or an event which, with notice or lapse of time or
both, would constitute such a default) or violation in the performance
of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which it is a party
or by which it or any of its properties may be bound, which breach,
default or violation in the case of clause (ii) or (iii) would, if
continued, have a Material Adverse Effect or could materially impair the
ability of any of the Inergy Parties to perform their obligations under
this Agreement. To the Knowledge of the Inergy Parties, no third party
to any indenture,
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mortgage, deed of trust, loan agreement or other agreement or instrument
to which any of the Inergy Parties 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.
(bb) Conformity of Securities to Descriptions in the
Prospectus. The Units, when issued and delivered against payment
therefor as provided herein, and the Subordinated Units and the
Incentive Distribution Rights, will conform in all material respects to
the description thereof contained in the Prospectus or the Partnership
Agreement.
(cc) Independent Public Accountants - Ernst & Young. The
accountants, Ernst & Young LLP, who have certified or shall certify the
audited financial statements contained or incorporated by reference in
the Registration Statement, any Preliminary Prospectus and the
Prospectus (or any amendment or supplement thereto), are independent
public accountants with respect to the Partnership and the General
Partners as required by the 1933 Act and the 1933 Act Rules and
Regulations.
(dd) Financial Statements. At December 31, 2002, the
Partnership would have had, on the consolidated pro forma basis
indicated in the Prospectus (and any amendment or supplement thereto), a
capitalization as set forth therein. The historical financial statements
(including the related notes and supporting schedules) contained or
incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) 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 financial
information contained or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
and the selected historical information is accurately presented in all
material respects and prepared on a basis consistent with the audited
and unaudited historical consolidated financial statements and pro forma
financial statements, as applicable, from which it has been derived. The
pro forma financial statements of the Partnership included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) have been prepared in all material respects in
accordance with the applicable accounting requirements of Article 11 of
Regulation S-X of the SEC; 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 to the historical amounts in compilation of such
pro forma financial statements.
(ee) No Material Adverse Change. No member of the Partnership
Group has sustained since the date of the latest audited financial
statements contained or incorporated by reference in the Registration
Statement and the Prospectus any material
11
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, investigation, order or decree,
otherwise than as set forth or contemplated in the Registration
Statement and the Prospectus. Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given
in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), (i) none of the Inergy Parties has incurred any
liability or obligation, indirect, direct or contingent, or entered into
any transactions, not in the ordinary course of business, that, singly
or in the aggregate, is material to the Partnership Group, (ii) there
has not been any material change in the capitalization, or material
increase in the short-term debt or long-term debt, of the Partnership
Group and (iii) there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve,
singly or in the aggregate, a prospective material adverse change in or
affecting the general affairs, business, prospects, properties,
management, condition (financial or other), partners' capital,
stockholders' equity, net worth or results of operations of the
Partnership Group.
(ff) Legal Proceedings or Contracts to be Described or Filed.
There are no legal or governmental proceedings pending or, to the
Knowledge of the Inergy Parties, threatened, against any of the Inergy
Parties, or to which any of the Inergy Parties is a party, or to which
any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectus but are not
described as required, and there are no agreements, contracts,
indentures, leases or other instruments 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 by the Act.
(gg) Title to Properties. The Operating Company, Service Sub
and the Operating Subs have good and indefeasible title to all real
property and good title to all personal property described in the
Prospectus as owned by the Operating Company, Service Sub and the
Operating Subs, free and clear of all liens, claims, security interests
or other encumbrances except (i) those created, arising under or
securing the Credit Agreement and the Secured Notes Purchase Agreement;
(ii) such as are described in the Registration Statement or Prospectus
or (iii) such as do not materially interfere with the use of such
properties taken as a whole as described in the Registration Statement
and the Prospectus. All real property and buildings held under lease or
license by the Operating Company, Service Sub and the Operating Subs are
held by the Operating Company, Service Sub and the Operating Subs under
valid and subsisting and enforceable leases or licenses with such
exceptions as do not materially interfere with the use of such
properties taken as a whole as they have been used in the past and are
proposed to be used in the future as described in the Registration
Statement and the Prospectus.
(hh) Permits. Each of the Operating Company, Service Sub and
the Operating Subs has such permits, consents, licenses, franchises,
certificates and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its
12
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Registration Statement and the Prospectus and except for such permits
which, if not obtained, would not, individually or in the aggregate,
have a Material Adverse Effect; each of the Operating Company, Service
Sub and the Operating Subs has fulfilled and performed all its material
obligations with respect to such permits which are due to have been
fulfilled and performed by such date and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any impairment of the rights of the
holder of any such permit, except for such revocations, terminations and
impairments that would not, individually or in the aggregate, have a
Material Adverse Effect, subject in each case to such qualifications as
may be set forth in the Registration Statement and the Prospectus; and,
except as described in the Registration Statement and the Prospectus,
none of such permits contains any restriction that is materially
burdensome to the Partnership Group taken as a whole.
(ii) Books and Records. The Partnership (i) makes and keeps
books, records and accounts, which, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of assets and (ii)
maintains systems of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(jj) Disclosure Controls. The Partnership has established and
maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the 1934 Act), which (i) are designed to ensure that
material information relating to the Partnership, including its
consolidated subsidiaries, is made known to the Partnership's principal
executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared; (ii) have
been evaluated for effectiveness as of a date within 90 days prior to
the filing of the Partnership's most recent annual or quarterly report
filed with the Commission; and (iii) are effective in all material
respects to perform the functions for which they were established.
(kk) No Deficiency in Disclosure Controls. Based on the
evaluation of its disclosure controls and procedures, the Partnership is
not aware of (i) any significant deficiency in the design or operation
of internal controls which could adversely affect the Partnership's
ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or
not material, that involves management or other employees who have a
significant role in the Partnership's internal controls.
13
(ll) No Recent Changes to Disclosure Controls. Since the date
of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls
or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
(mm) Tax Returns. Each of the Inergy Parties has filed (or
has obtained extensions with respect to) all material federal, state and
foreign income and franchise 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 are being contested in good faith or
(ii) which, if not paid, would not have a Material Adverse Effect.
(nn) Investment Company/Public Utility Holding Company. None
of the Inergy Parties is now, and 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 the Inergy Parties will be, (i) an "investment company" or a
company "controlled by" an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or (ii) a "public
utility company," "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" thereof, under the Public Utility
Holding Company Act of 1935, as amended.
(oo) No Environmental Problems. The Inergy Parties (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 and the environment or imposing liability or standards of conduct
concerning any Hazardous Material (as hereinafter defined)
("Environmental Laws"), (ii) have received all permits required of them
under applicable Environmental Laws to conduct their respective
businesses, (iii) are in compliance with all terms and conditions of any
such permit, and (iv) to the Knowledge of the Inergy Parties, do not
have any liability in connection with the release into the environment
of any Hazardous Materials, except where such noncompliance with
Environmental Laws, failure to receive required permits, or failure to
comply with the terms and conditions of such permits or liability in
connection with such releases would not, individually or in the
aggregate, have a Material Adverse Effect. The term "Hazardous Material"
means (A) any "hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, (B) any "hazardous waste" as defined in the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or
petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of
any other Environmental Law.
(pp) No Labor Dispute. No material labor dispute with the
employees of the Inergy Parties exists or, to the Knowledge of the
Inergy Parties, is imminent.
14
(qq) Insurance. The Inergy Parties maintain insurance
covering their properties, operations, personnel and businesses against
such losses and risks as are reasonably adequate to protect them and
their businesses in a manner consistent with other businesses similarly
situated. None of the Inergy Parties has received notice from any
insurer or agent of such insurer that substantial capital improvements
or other expenditures will have to be made in order to continue such
insurance, and all such insurance is outstanding and duly in force on
the date hereof and will be outstanding and duly in force on the Closing
Date.
(rr) Litigation. Except as described in the Prospectus, there
is (i) no action, suit or proceeding before or by any court, arbitrator
or governmental agency, body or official, domestic or foreign, now
pending or, to the Knowledge of the Inergy Parties, threatened, to which
any of the Inergy Parties is or may be a party or to which the business
or property of any of the Inergy Parties is or may be subject, (ii) no
statute, rule, regulation or order that has been enacted, adopted or
issued by any governmental agency or proposed by any governmental agency
and (iii) no injunction, restraining order or order of any nature issued
by a federal or state court or foreign court of competent jurisdiction
to which any of the Inergy Parties is or may be subject, that, in the
case of clauses (i), (ii) and (iii) above, is reasonably likely to (A)
individually or in the aggregate have a Material Adverse Effect, (B)
prevent or result in the suspension of the offering and issuance of the
Units, or (C) in any manner draw into question the validity of this
Agreement.
(ss) No Distribution of Other Offering Materials. The
Partnership has not distributed and, prior to the later to occur of (i)
the Closing Date and (ii) completion of the distribution of the Units,
will not distribute, any prospectus (as defined under the 0000 Xxx) in
connection with the offering and sale of the Units other than the
Registration Statement, the Prospectus or other materials, if any,
permitted by the 1933 Act, including Rule 134 of the 1933 Act Rules and
Regulations.
(tt) Listing. The Units have been approved for quotation on
the Nasdaq, subject only to official notice of issuance.
(uu) Stabilization. None of the Inergy Parties (i) has taken,
and none of such persons shall take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Units to facilitate the sale or resale of the
Common Units in violation of any law, rule or regulation or (ii) since
the initial filing of the Registration Statement, except as contemplated
by this Agreement, (A) has sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of the Common Units or (B) has
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Partnership.
Any certificate signed by any officer of any Inergy Party and
delivered to you or to counsel for the Underwriter shall be deemed a
representation and warranty by such Inergy Party to each Underwriter as
to the matters covered thereby.
15
5. Additional Covenants. The Inergy Parties covenant and agree with
the Underwriter that:
(a) The Partnership will timely transmit copies of the
Prospectus, and any amendments or supplements thereto, to the SEC for
filing pursuant to Rule 424(b) of the 1933 Act Rules and Regulations.
(b) The Partnership will deliver or make available to the
Underwriter, and to counsel for the Underwriter (i) a signed copy of the
Registration Statement as originally filed, including copies of exhibits
thereto, of any amendments and supplements to the Registration Statement
and (ii) a signed copy of each consent and certificate included in, or
filed as an exhibit to, the Registration Statement as so amended or
supplemented; the Partnership will deliver to the Underwriter as soon as
practicable after the date of this Agreement as many copies of the
Prospectus as the Underwriter may reasonably request for the purposes
contemplated by the 1933 Act; if there is a post-effective amendment to
the Registration Statement that is not effective under the 1933 Act, the
Partnership will use its best efforts to cause the post-effective
amendment to the Registration Statement to become effective as promptly
as possible, and it will notify you, promptly after it shall receive
notice thereof, of the time when the post-effective amendment to the
Registration Statement has become effective; the Partnership will
promptly advise the Underwriter of any request of the SEC for amendment
of the Registration Statement or for supplement to the Prospectus or for
any additional information, and of the issuance by the SEC or any state
or other jurisdiction or other regulatory body of any stop order under
the 1933 Act or other order suspending the effectiveness of the
Registration Statement (as amended or supplemented) or preventing or
suspending the use of the Prospectus or suspending the qualification or
registration of the Units for offering or sale in any jurisdiction, and
of the institution or threat of any proceedings therefor, of which the
Partnership shall have received notice or otherwise have knowledge prior
to the completion of the distribution of the Units; and the Partnership
will use its best efforts to prevent the issuance of any such stop order
or other order and, if issued, to secure the prompt removal thereof.
(c) The Partnership will not file any amendment or
supplement to the Registration Statement, the Prospectus (or any other
prospectus relating to the Units filed pursuant to Rule 424(b) of the
1933 Act Rules and Regulations that differs from the Prospectus as filed
pursuant to such Rule 424(b)), of which the Underwriter shall not
previously have been advised or to which the Underwriter shall have
reasonably objected in writing after being so advised unless the
Partnership shall have determined based upon the advice of counsel that
such amendment or supplement is required by law; and the Partnership
will promptly notify you after it shall have received notice thereof of
the time when any amendment to the Registration Statement becomes
effective or when any supplement to the Prospectus has been filed.
(d) During the period when a prospectus relating to any of
the Units is required to be delivered under the 1933 Act by any
Underwriter or dealer, the
16
Partnership will comply, at its own expense, with all requirements
imposed by the 1933 Act and the 1933 Act Rules and Regulations, so far
as necessary to permit the continuance of sales of or dealing in the
Units during such period in accordance with the provisions hereof and as
contemplated by the Prospectus.
(e) If, during the period when a prospectus relating to any
of the Units is required to be delivered under the 1933 Act by any
Underwriter or dealer, (i) any event relating to or affecting the
Partnership or of which the Partnership shall be advised in writing by
the Underwriter shall occur as a result of which, in the opinion of the
Partnership or the counsel for the Underwriter, the Prospectus as then
amended or supplemented would include any untrue statement of a material
fact or omit 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 or (ii) it shall be necessary to amend or
supplement the Registration Statement or the Prospectus to comply with
the 1933 Act, the 1933 Act Rules and Regulations, the 1934 Act or the
1934 Act Rules and Regulations, the Partnership will forthwith at its
expense prepare and file with the SEC, and furnish to the Underwriter a
reasonable number of copies of, such amendment or supplement or other
filing that will correct such statement or omission or effect such
compliance.
(f) During the period when a prospectus relating to any of
the Units is required to be delivered under the 1933 Act by any
Underwriter or dealer, the Partnership will furnish such proper
information as may be lawfully required and otherwise cooperate with you
in qualifying the Units for offer and sale under the securities or blue
sky laws of such jurisdictions as the Underwriter may reasonably
designate and will file and make such statements or reports as are or
may be reasonably necessary; provided, however, that the Partnership
shall not be required to qualify as a foreign corporation or to qualify
as a dealer in securities or to file a general consent to service of
process under the laws of any jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and
Rule 158 of the 1933 Act Rules and Regulations, the Partnership will
make generally available to its security holders an earning statement
(which need not be audited) in reasonable detail covering the 12-month
period beginning not later than the first day of the month next
succeeding the month in which occurred the effective date (within the
meaning of Rule 158) of the Registration Statement as soon as
practicable after the end of such period.
(h) The Partnership will furnish to its security holders
annual reports containing financial statements audited by independent
public accountants and furnish or make available quarterly reports
containing financial statements and financial information which may be
unaudited. The Partnership will, for a period of two years from the
Closing Date, furnish or make available to the Underwriter a copy of
each annual report, quarterly report, current report and all other
documents, reports and information furnished by the Partnership to
holders of Units or filed with any securities exchange or market
pursuant to the requirements of such exchange or market or with the SEC
pursuant to the 1933 Act or the 1934 Act. Any report, document or other
17
information required to be furnished under this paragraph (h) shall be
furnished or made available as soon as practicable after such report,
document or information becomes publicly available.
(i) The Inergy Parties that own Common Units will not, for a
period of 90 days from the date of the Prospectus, directly or
indirectly, (i) offer for sale, sell, pledge or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the
future of) any Common Units or securities convertible into, or
exchangeable for Common Units, or sell or grant options, rights or
warrants with respect to any Common Units or securities convertible into
or exchangeable for Common Units (other than the Senior Subordinated
Units and the Junior Subordinated Units), or (ii) enter into any swap or
other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such Common
Units, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Units or other securities,
in cash or otherwise, in each case without the prior written consent of
Xxxxxx Brothers Inc.; provided, however, that the foregoing restrictions
do not apply to issuances (i) pursuant to employee benefit plans as in
existence as of the date of the Prospectus or (ii) in connection with
accretive acquisitions of assets or businesses pursuant to Section
5.7(b) of the Partnership Agreement in which such Common Units are
issued as consideration; provided, however, that with respect to clause
(i) above, any recipient of Common Units will furnish to Xxxxxx Brothers
Inc. a letter substantially similar to that required below and attached
hereto as Exhibit B with respect to the period between the date of any
such issuance and the date 90 days after the date of the Prospectus.
Each executive officer and director of the Partnership shall furnish to
the Underwriter, at or prior to the execution of this Agreement, a
letter or letters, substantially in the form of Exhibit B hereto,
pursuant to which each such person shall agree not to, directly or
indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the
future of) any Common Units or securities convertible into or
exchangeable for Common Units or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such Common Units,
whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Units or other securities, in cash or
otherwise, in each case for a period of 90 days from the date of the
Prospectus, without the prior written consent of Xxxxxx Brothers Inc.
(j) The Partnership will apply the proceeds from the sale of
the Units sold by it as set forth in the description under "Use of
Proceeds" in the Prospectus.
(k) The Partnership will promptly provide you with copies of
all correspondence to and from, and all documents issued to and by, the
SEC in connection with the registration of the Units under the 1933 Act.
(l) The Partnership will use its best efforts to obtain
approval for, and maintain the quotation of the Units on, the Nasdaq.
18
(n) If the Partnership elects to rely on Rule 462(b) under
the 1933 Act, the Partnership shall both file an Abbreviated
Registration Statement with the SEC in compliance with Rule 462(b) and
pay the applicable fees in accordance with Rule 111 of the 1933 Act by
the earlier of (i) 10:00 p.m., New York time, on the date of this
Agreement, and (ii) the time that confirmations are given or sent, as
specified by Rule 462(b)(2).
6. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Units, as provided herein, shall be
subject to the accuracy, as of the date hereof and as of the Closing Date (and,
if applicable, the Option Closing Date), of the representations and warranties
of the Inergy Parties contained herein, to the performance by the Inergy Parties
of their covenants and obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective not later than 5:30 p.m.,
New York time, on the date hereof, or, with your consent, at a later
date and time, not later than 1:00 p.m., New York time, on the first
business day following the date hereof, or at such later date and time
as may be approved by the Underwriter; if the Partnership has elected to
rely on Rule 462(b) under the 1933 Act, the Abbreviated Registration
Statement shall have become effective not later than the time specified
by Rule 462(b). All filings required by Rule 424 and Rule 430A of the
1933 Act Rules and Regulations shall have been made. No stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been initiated
or, to the knowledge of the Partnership or any Underwriter, threatened
or contemplated by the SEC, and any request of the SEC for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Underwriter.
(b) The Underwriter shall not have advised the Partnership
on or prior to the Closing Date (and, if applicable, the Option Closing
Date), that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of fact which, in the
opinion of counsel to the Underwriter, is material, or omits to state a
fact which, in the opinion of such counsel, is material and is required
to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of Xxxxxxx Xxxxxxxx
Xxxxxx LLP, counsel for the Partnership, addressed to you and dated the
Closing Date (and, if applicable, the Option Closing Date), to the
effect that:
(i) The Partnership has been duly formed and is
validly existing in good standing as a limited partnership under
the Delaware LP Act with all necessary partnership power and
authority to own or lease its properties and to
19
conduct its business in all material respects as described in
the Registration Statement and the Prospectus. The Partnership
is duly registered or qualified as a foreign limited partnership
for the transaction of business under the laws of the
jurisdictions set forth on Exhibit A to this Agreement.
(ii) The Operating Company has been duly formed and
is validly existing in good standing as a limited liability
company under the Delaware LLC Act with all necessary limited
liability company power and authority to own or lease its
properties and to conduct its business in all material respects
as described in the Registration Statement and the Prospectus.
The Operating Company is duly registered or qualified as a
foreign limited liability company for the transaction or
business under the laws of the jurisdictions set forth on
Exhibit A to this Agreement.
(iii) The Managing General Partner has been duly
formed and is validly existing in good standing as a limited
liability company under the Delaware LLC Act with all necessary
limited liability company power and authority to own or lease
its properties, to conduct its business and to act as general
partner of the Partnership, in each case in all material
respects as described in the Registration Statement and the
Prospectus. The Managing General Partner is duly registered or
qualified as a foreign limited liability company for the
transaction of business under the laws of the jurisdictions set
forth on Exhibit A to this Agreement.
(iv) The Non-Managing General Partner has been duly
formed and is validly existing in good standing as a limited
liability company under the Delaware LLC Act with all necessary
limited liability company power and authority to own or lease
its properties, to conduct its business and to act as a general
partner of the Partnership, in each case in all material
respects as described in the Registration Statement and the
Prospectus. The Non-Managing General Partner is duly registered
or qualified as a foreign limited liability company for the
transaction of business under the laws of the jurisdictions set
forth on Exhibit A to this Agreement.
(v) Each of New Propane and the Operating Subs has
been duly formed and is validly existing in good standing as a
limited liability company under the Delaware LLC Act with all
necessary limited liability company power and authority to own
or lease its properties and, with respect to the Operating Subs,
to conduct its business, in each case in all material respects
as described in the Registration Statement and the Prospectus.
Each of New Propane and the Operating Subs is duly registered or
qualified as a foreign limited liability company for the
transaction of business under the laws of the jurisdictions set
forth on Exhibit A to this Agreement.
(vi) Service Sub has been duly incorporated and is
validly existing in good standing as a corporation under the
DGCL with all necessary corporate
20
power and authority to own or lease its properties and to
conduct its business, in each case in all material respects as
described in the Registration Statement and the Prospectus.
Service Sub is duly registered or qualified as a foreign
corporation for the transaction of business under the laws of
the jurisdictions set forth on Exhibit A to this Agreement.
(vii) The Managing General Partner and the
Non-Managing General Partner are the sole general partners of
the Partnership. The Non-Managing General Partner owns of record
a 2% general partner interest in the Partnership and the
Managing General Partner owns of record a non-economic, managing
general partner interest in the Partnership; such general
partner interests have been duly authorized and validly issued
in accordance with the Partnership Agreement; and each General
Partner owns its general partner interest free and clear of all
liens, encumbrances, security interests, charges or claims (i)
in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming either of such
General Partners as debtors is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise
known to such counsel, without independent investigation, other
than those created by or arising under the Delaware LP Act.
(viii) The Partnership owns of record 100% of the
issued and outstanding membership interests in the Operating
Company; such membership interests have been duly authorized and
validly issued in accordance with the Operating Company LLC
Agreement and are fully paid (to the extent required under the
Operating Company LLC Agreement) and nonassessable (except as
such nonassessability may be affected by matters described in
Section 18-607 of the Delaware LLC Act); and the Partnership
owns its membership interests free and clear of all liens,
encumbrances, security interests, charges or claims (i) in
respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming the Partnership
as debtor is on file in the office of the Secretary of State of
the State of Delaware or (ii) otherwise known to such counsel,
without independent investigation, other than those created by
or arising under the Delaware LP Act and other than those
created by the Credit Agreement and the Secured Notes Purchase
Agreement.
(ix) The Operating Company owns of record 100% of the
issued and outstanding capital stock of Service Sub; such
capital stock has been duly authorized and validly issued and is
fully paid and nonassessable; and the Operating Company owns
such capital stock free and clear of all liens, encumbrances,
security interests, charges or claims (i) in respect of which a
financing statement under the Uniform Commercial Code of the
State of Delaware naming the Operating Company as debtor is on
file in the office of the Secretary of State of the State of
Delaware or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or
arising under the DGCL and other than those created by the
Credit Agreement and the Secured Notes Purchase Agreement.
21
(x) The Operating Company owns of record 100% of the
issued and outstanding membership interests in each of the
Operating Subs; such membership interests have been duly
authorized and validly issued in accordance with the Operating
Subs LLC Agreements and are fully paid (to the extent required
under the Operating Subs LLC Agreements) and nonassessable
(except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and the Operating Company owns
such membership interests free and clear of all liens,
encumbrances, security interests, charges or claims (i) in
respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming the Operating
Company as debtor is on file in the office of the Secretary of
State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those
created by or arising under the Delaware LLC Act and other than
those created by the Credit Agreement and the Secured Notes
Purchase Agreement.
(xi) The Non-Managing General Partner owns of record
100% of the issued and outstanding common membership interest in
New Propane free and clear of all liens, encumbrances, security
interests, charges or claims (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of
Delaware naming the Non-Managing General Partner as debtor is on
file in the office of the Secretary of State of the State of
Delaware or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or
arising under the Delaware LLC Act.
(xii) Holdings owns of record 100% of the issued and
outstanding membership interests of the Managing General
Partner. Such membership interests have been duly authorized and
validly issued and are fully paid (to the extent required under
the Holdings LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the
Delaware LLC Act); and Holdings owns such membership interests
free and clear of all liens, encumbrances, security interests,
charges or claims (i) in respect of which a financing statement
under the Uniform Commercial Code of the State of Delaware
naming Holdings as debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise
known to such counsel, without independent investigation, other
than those created by or arising under the Delaware LLC Act.
(xiii) Holdings owns of record 100% of the issued and
outstanding common membership interests in the Non-Managing
General Partner; such membership interests have been duly
authorized and validly issued and are fully paid (to the extent
required under the Holdings LLC Agreement) and nonassessable
(except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and Holdings owns such
membership interests free and clear of all liens, encumbrances,
security interests, charges or claims (i) in respect of which a
financing statement under the Uniform Commercial Code
22
of the State of Delaware naming Holdings as debtor is on file in
the office of the Secretary of State of the State of Delaware or
(ii) otherwise known to such counsel, without independent
investigation, other than those created by or arising under the
Delaware LLC Act.
(xiv) All outstanding Common Units, the Subordinated
Units and the Incentive Distribution Rights and the limited
partner interests represented thereby have been duly authorized
and validly issued in accordance with the Partnership Agreement,
and are fully paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such nonassessability
may be affected by matters described in Section 17-607 of the
Delaware LP Act).
(xv) New Propane owns of record 959,954 Senior
Subordinated Units and 507,063 Junior Subordinated Units and
Holdings, directly or indirectly, through affiliates, owns of
record 404,601 Common Units, 1,807 Senior Subordinated Units and
all of the Incentive Distribution Rights, in each case, free and
clear of all liens, encumbrances (except restrictions on
transferability as described in the Prospectus), security
interests, charges or claims (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of
Delaware naming New Propane or Holdings as debtor is on file in
the office of the Secretary of State of the State of Delaware
[except as set forth on Annex A,] or (ii) otherwise known to
such counsel, without independent investigation, other than
those created by or arising under the Delaware LP Act.
(xvi) The Firm Units and the limited partner interests
represented thereby have been duly authorized by the Partnership
Agreement and, when issued and delivered to the Underwriter
against payment therefor in accordance with the terms hereof,
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 Section
17-607 of the Delaware LP Act).
(xvii) Except as described in the Prospectus or for
rights that have been waived, there are no preemptive rights or
other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any partnership or
membership interests or capital stock in the Inergy Parties
pursuant to the Organizational Documents of any such entity or
pursuant to any agreement or other instrument known to such
counsel to which any Inergy Party is a party or by which any of
them may be bound (other than the organizational documents of
such entity). To such counsel's knowledge, neither the filing of
the Registration Statement nor the offering or sale of the Units
as contemplated by this Agreement gives rise to any rights for
or relating to the registration of any Units or other securities
of the Partnership or the Operating Subs, other than as have
been waived. To such counsel's knowledge, except for options
granted pursuant to employee benefits plans, qualified unit
option plans or other employee
23
compensations plans, there are no outstanding options or
warrants to purchase any partnership (A) any Common Units,
Senior Subordinated Units, Junior Subordinated Units or
Incentive Distribution Rights or other partnership interests in
the Partnership, (B) membership interests of the Managing
General Partner, the Non-Managing General Partner, New Propane,
the Operating Company or the Operating Subs or (C) any shares of
Service Sub.
(xviii) The Partnership has all requisite power and
authority to issue, sell and deliver the Units to be sold by it
hereunder in accordance with and upon the terms and conditions
set forth in this Agreement, the Partnership Agreement and the
Registration Statement and the Prospectus.
(xix) This Agreement has been duly executed and
delivered by each of the Inergy Parties that are parties hereto.
(xx) Each of the Partnership Agreement, the Managing
General Partner LLC Agreement and the Operating Company LLC
Agreement has been duly authorized and validly executed and
delivered by Holdings, the Partnership, the Managing General
Partner or the Operating Company party thereto. Each of the
Partnership Agreement, the Managing General Partner LLC
Agreement and the Operating Company LLC Agreement constitutes a
valid and legally binding agreement of the parties thereto,
enforceable against such entity in accordance with its
respective terms, subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) and (ii) public policy, applicable law
relating to fiduciary duties and indemnification and an implied
covenant of good faith and fair dealing.
(xxi) None of the offering, issuance and sale by the
Partnership of the Units to be sold by it hereunder, the
execution, delivery and performance of this Agreement by the
Inergy Parties that are parties hereto, or the consummation by
each of them of the transactions contemplated hereby (i)
constitutes or will constitute a violation of their respective
Organizational Documents, (ii) constitutes 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 a
default) under, any agreement, lease or instrument known to such
counsel (excluding any Organizational Document) to which any of
the Inergy Parties or any of their properties may be bound,
(iii) violates or will violate the Delaware LP Act, the Delaware
LLC Act, the DGCL or federal law (iv) will result, to the
knowledge of such counsel, in any violation of any judgment,
order, decree, rule or regulation of any court or arbitrator or
governmental agency having jurisdiction over the Inergy Parties
or any of their assets or properties or (v) results or will
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Inergy Parties,
which breaches, violations, defaults or liens, in the
24
case of clauses (ii), (iii) or (iv) would, individually or in
the aggregate, have a Material Adverse Effect.
(xxii) No permit, consent, approval, authorization,
order, registration, filing or qualification of or with any
federal or Delaware court, governmental agency or body having
jurisdiction over any of the Inergy Parties is required for the
offering, issuance and sale by the Partnership of the Units, the
execution, delivery and performance of this Agreement by the
Inergy Parties or the consummation by the Inergy Parties of the
transactions contemplated by this Agreement, except for such
consents required under the 1933 Act, the 1933 Act Rules and
Regulations, the 1934 Act, the 1934 Act Rules and Regulations,
and state securities or "Blue Sky" laws and applicable rules and
regulations under such laws, as to which such counsel need not
express any opinion.
(xxiii) The statements in the Registration Statement and
Prospectus under the caption "Description of the Common Units,"
insofar as they constitute descriptions of agreements or refer
to statements of law or legal conclusions, are accurate and
complete in all material respects, and the Common Units conform
in all material respects to the description thereof contained in
the Registration Statement and the Prospectus.
(xxiv) The opinion of Xxxxxxx Xxxxxxxx Xxxxxx LLP that
is filed as Exhibit 8.1 to the Registration Statement is
confirmed and the Underwriter may rely upon such opinion as if
it were addressed to it.
(xxv) The Registration Statement was declared
effective under the 1933 Act on November 22, 2002; 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 SEC; 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.
(xxvi) The Registration Statement and the Prospectus
(except for the financial statements and the notes and the
schedules thereto, and the other financial, statistical and
accounting data included in the Registration Statement or the
Prospectus, as to which such counsel need not express any
opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Rules and
Regulations.
(xxvii) To the knowledge of such counsel after due
inquiry, none of the Inergy Parties is in (i) violation of its
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 which violation would reasonably be
expected to have a Material Adverse Effect or (ii) breach,
default (or an event which, with notice or lapse of time or
both, would constitute such a default) or violation in the
25
performance of any obligation, agreement or condition contained
in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its
properties may be bound, which breach, default or violation
would, if continued, have a Material Adverse Effect or could
materially impair the ability of any of the Inergy Parties to
perform their obligations under this Agreement.
(xxviii) To the knowledge of such counsel after due
inquiry, each of the Inergy Parties has such permits as are
necessary to own its properties and to conduct its business in
the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus and except
for such permits which, if not obtained, would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect and, to the knowledge of such counsel after due
inquiry, none of the Inergy Parties has received any notice of
proceedings relating to the revocation or modification of any
such permits which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
reasonably be expected to have a Material Adverse Effect.
(xxix) To the knowledge of such counsel, (i) there are
no legal or governmental proceedings pending or threatened
against any of the Inergy Parties or to which any of the Inergy
Parties is a party or to which any of their respective
properties is subject that are required to be described in the
Prospectus but are not so described as required and (ii) there
are no agreements, contracts, indentures, leases or other
instruments 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 by the 1933 Act.
(xxx) Except as described in the Prospectus, to the
knowledge of such counsel after due inquiry, there is no
litigation, proceeding or governmental investigation pending or
threatened against any of the Inergy Parties or to which any of
the Inergy Parties is a party or to which any of their
respective properties is subject, which, if adversely determined
to such Inergy Parties, is reasonably likely to have a Material
Adverse Effect.
(xxxi) None of the Inergy Parties is an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
(xxxii) None of the Partnership, the Managing General
Partner or the Operating Company is a "public utility company"
or a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
In addition, such counsel shall state that they have
participated in conferences with officers and other
representatives of the Inergy Parties and the independent public
accountants of the Partnership and the Underwriter, at which the
contents of the Registration Statement and the Prospectus and
related matters
26
were discussed, and although such counsel has not independently
verified, is not passing on, and is not assuming any
responsibility for the accuracy, completeness or fairness of the
statements contained in, the Registration Statement or the
Prospectus (except to the extent specified in the foregoing
opinion), based on the foregoing, no facts have come to such
counsel's attention that cause such counsel to believe that the
Registration Statement (other than (i) the financial statements
included therein, including the notes and schedules thereto and
the auditors' reports thereon, and (ii) the other financial and
statistical data included therein, as to which such counsel need
express no belief), as of its effective date contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other
than (i) the financial statements included therein, including
the notes and schedules thereto and the auditors' reports
thereon, and (ii) the other financial and statistical data
included therein, as to which such counsel need express no
belief), as of its issue date and the Closing Date contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may (A) rely in
respect of matters of fact upon representations of the Inergy
Parties set forth in this Agreement and upon certificates of
officers and employees of the Inergy Parties and upon
information obtained from public officials, (B) assume that all
documents submitted to them as originals are authentic, that all
copies submitted to them conform to the originals thereof, and
that the signatures on all documents examined by them are
genuine, (C) state that their opinion is limited to federal
laws, the Delaware LP Act, the Delaware LLC Act, and the DGCL,
(D) with respect to the opinions expressed in subparagraphs (i)
through (vi) above as to the due qualification or registration
as a foreign limited partnership, corporation or limited
liability company, as the case may be, of Holdings, the
Partnership, the General Partners, the Operating Company, the
Operating Subs, New Propane and Service Sub, state that such
opinions are based upon certificates of foreign qualification or
registration provided by the Secretary of State of the States
listed on Exhibit A to such opinion (each of which shall be
dated as of a date not more than fourteen days prior to the
Closing Date and shall be provided to you), and (E) state that
they express no opinion with respect to state or local taxes or
tax statutes to which any of the limited partners of the
Partnership or any of the other Inergy Parties may be subject.
(d) You shall have received on the Closing Date (and, if
applicable, the Option Closing Date), from Xxxxx Xxxxx L.L.P., counsel
to the Underwriter, such opinion or opinions, dated the Closing Date
(and, if applicable, the Option Closing Date) with respect to such
matters as you may reasonably require; and the Partnership shall have
furnished to such counsel such documents as they reasonably request for
the purposes of enabling them to review or pass on the matters referred
to in this Section 8 and in order
27
to evidence the accuracy, completeness and satisfaction of the
representations, warranties and conditions herein contained.
(e) At the time of execution of this Agreement and on the
Closing Date (and, if applicable, the Option Closing Date), the
Underwriter shall have received from Ernst & Young LLP a letter or
letters, in form and substance satisfactory to the Underwriter,
addressed to the Underwriter and dated the date hereof (i) confirming
that they are independent public accountants within the meaning of the
1933 Act and are in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(f) Except as set forth in the Registration Statement and
the Prospectus, (i) none of the members of the Partnership Group shall
have sustained since the date of the latest audited financial statements
included or in the Registration Statement and in the Prospectus any loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree; and (ii) subsequent to
the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), none of the members of the Partnership Group shall
have incurred any liability or obligation, direct or contingent, or
entered into any transactions, and there shall not have been any change
in the capital stock or short-term or long-term debt of the Partnership
Group or any change, or any development involving or which might
reasonably be expected to involve a prospective change in the condition
(financial or other), net worth, business, affairs, management,
prospects, results of operations or cash flow of the Partnership or its
subsidiaries, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Units being delivered on such Closing Date (and, if
applicable, the Option Closing Date) on the terms and in the manner
contemplated in the Prospectus.
(g) There shall not have occurred any of the following: (i)
trading in securities generally on the Nasdaq shall have been suspended;
(ii) trading in any securities of the Partnership on any exchange or in
the over-the-counter market shall have been suspended, the settlement of
such trading generally shall have been materially disrupted or minimum
prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (iii) a banking moratorium
shall have been declared by federal or state authorities, (iv) the
United States shall have become engaged in hostilities, there shall have
been an escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the
United
28
States or (v) there shall have occurred such a material adverse change
in general economic, political or financial conditions including,
without limitation, as a result of terrorist activities after the date
hereof (or the effect of international conditions on the financial
markets in the United States shall be such), as to make it, in the
judgment of Xxxxxx Brothers Inc., so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or sale
of the Units being delivered on the Closing Date on the terms and in the
manner contemplated by the Prospectus.
(h) You shall have received a certificate, dated the Closing
Date (and, if applicable, the Option Closing Date) and signed by (x) the
President and Chief Executive Officer and (y) the Vice President and
Chief Financial Officer of the Managing General Partner, in their
capacities as such, stating that:
(i) the condition set forth in Section 8(a) has been
satisfied;
(ii) they have examined the Registration Statement
and the Prospectus as amended or supplemented and nothing has
come to their attention that would lead them to believe that
either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective
effective, issue or filing dates, contained, and the Prospectus
as amended or supplemented and at such Closing Date, contains
any untrue statement of a material fact, or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) since the Effective Date, there has occurred no
event required to be set forth in an amendment or supplement to
the Registration Statement or the Prospectus which has not been
so set forth;
(iv) all representations and warranties made herein
by the Inergy Parties are true and correct at such Closing Date,
with the same effect as if made on and as of such Closing Date,
and all agreements herein to be performed or complied with by
the Inergy Parties on or prior to such Closing Date have been
duly performed and complied with by the Inergy Parties;
(v) each of the Inergy Parties has performed all
obligations required to be performed by it pursuant to this
Agreement;
(vi) no stop order with respect to the Registration
Statement has been issued;
(vii) the Units have been approved for listing on the
Nasdaq upon official notice of issuance; and
(viii) covering such other matters as you may
reasonably request.
29
(i) The Inergy Parties shall not have failed, refused, or
been unable, at or prior to the Closing Date (and, if applicable, the
Option Closing Date) to have performed any agreement on their part to be
performed or any of the conditions herein contained and required to be
performed or satisfied by them at or prior to such Closing Date.
(j) The Partnership shall have furnished to you at the
Closing Date (and, if applicable, the Option Closing Date) such further
information, opinions, certificates, letters and documents as you may
have reasonably requested.
(k) The Units shall have been approved for listing on the
Nasdaq upon official notice of issuance.
(l) You shall have received duly and validly executed letter
agreements referred to in Section 5(m) hereof.
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and to your counsel, Xxxxx Xxxxx L.L.P. The
Partnership will furnish you with such signed and conformed copies of
such opinions, certificates, letters and documents as you may request.
If any of the conditions specified above in this Section 6 shall
not have been satisfied at or prior to the Closing Date (and, if
applicable, the Option Closing Date) or waived by you in writing, this
Agreement may be terminated by you on notice to the Partnership.
7. Indemnification and Contribution.
(a) The Inergy Parties jointly and severally, will indemnify
and hold harmless the Underwriter from and against any losses, damages
or liabilities, joint or several, to which the Underwriter may become
subject, under the 1933 Act, or otherwise, insofar as such losses,
damages or liabilities (or actions or claims in respect thereof) arise
out of or are based upon (i) an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
any amendment or supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment or supplement thereto,
or arise out of or are based upon any omission or alleged omission to
state therein a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading,
and will reimburse the Underwriter for any legal or other out-of-pocket
expenses incurred by the Underwriter in connection with investigating,
preparing, pursuing or defending against or appearing as a third party
witness in connection with any such loss, damage, liability or action or
claim, including, without limitation, any
30
investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of
counsel to the indemnified party, as such expenses are incurred
(including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim,
provided that (subject to Section 7(d) hereof) any such settlement is
effected with the written consent of the Partnership); provided,
however, that the Inergy Parties shall not be liable in any such case to
the extent, but only to the extent, that any such loss, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any other prospectus relating
to the Units, or any such amendment or supplement, in reliance upon and
in conformity with written information relating to the Underwriter
furnished to the Partnership by you, expressly for use in the
preparation thereof (as provided in Section 13 hereof).
(b) The Underwriter will indemnify and hold harmless the
Inergy Parties from and against any losses, damages or liabilities to
which the Inergy Parties may become subject, under the 1933 Act or
otherwise, insofar as such losses, damages or liabilities (or actions or
claims in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment or supplement thereto, or
arise out of are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) any untrue statement
or alleged untrue statement of a material fact contained in the
Prospectus or in any amendment or supplement thereto, or arise out of or
are based upon any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus or any such amendment or
supplement, in reliance upon and in conformity with written information
relating to the Underwriter furnished to the Partnership by you,
expressly for use in the preparation thereof (as provided in Section 13
hereof), and will reimburse the Inergy Parties for any legal or other
expenses incurred by the Inergy Parties in connection with investigating
or defending any such action or claim as such expenses are incurred
(including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim,
provided that (subject to Section 7(d) hereof) any such settlement is
effected with the written consent of the Underwriter).
(c) Promptly after receipt by an indemnified party under
Section 7(a) or 7(b) hereof of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under Section 7(a) or 7(b) hereof,
notify each such indemnifying party in writing of the commencement
thereof, but the failure so to notify such indemnifying party shall not
relieve such indemnifying party from any liability except to the extent
that it has been prejudiced in any material respect by such failure or
from any liability that it may have to any such indemnified party
otherwise than under Section 7(a) or 7(b) hereof. In case any such
31
action shall be brought against any such indemnified party and it shall
notify each indemnifying party of the commencement thereof, each such
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
under Section 7(a) or 7(b) hereof similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party
(who shall not, except with the consent of such indemnified party, be
counsel to such indemnifying party), and, after notice from such
indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable
to such indemnified party under Section 7(a) or 7(b) hereof for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. The
indemnified party shall have the right to employ its own counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of counsel
by such indemnified party at the expense of the indemnifying party has
been authorized by the indemnifying party, (ii) the indemnified party
shall have been advised by such counsel that there may be a conflict of
interest between the indemnifying party and the indemnified party in the
conduct of the defense, or certain aspects of the defense, of such
action (in which case the indemnifying party shall not have the right to
direct the defense of such action with respect to those matters or
aspects of the defense on which a conflict exists or may exist on behalf
of the indemnified party) or (iii) the indemnifying party shall not in
fact have employed counsel reasonably satisfactory to such indemnified
party to assume the defense of such action, in any of which events such
fees and expenses to the extent applicable shall be borne, and shall be
paid as incurred, by the indemnifying party. If at any time such
indemnified party shall have requested such indemnifying party under
Section 7(a) or 7(b) hereof to reimburse such indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 7(a) or
7(b) hereof effected without its written consent if (i) such settlement
is entered into more than 60 days after receipt by such indemnifying
party of such request for reimbursement, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 45
days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement. No such indemnifying party shall, without the written
consent of such indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not such indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of such indemnified party from all liability arising out of such
action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any such indemnified party. In no event shall such indemnifying parties
be liable for the fees and expenses of more than one counsel, including
any local counsel, for all such indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances.
32
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to indemnify or hold harmless an
indemnified party under Section 7(a) or 7(b) hereof in respect of any
losses, damages or liabilities (or actions or claims in respect thereof)
referred to therein, then each indemnifying party under Section 7(a) or
7(b) hereof shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages or liabilities (or
actions or claims in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Inergy
Parties on the one hand, and the Underwriter on the other hand, from the
offering of the Units. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section
7(c) hereof and such indemnifying party was prejudiced in a material
respect by such failure, then each such indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault, as applicable, of the Inergy
Parties on the one hand, and the Underwriter, on the other hand in
connection with the statements or omissions that resulted in such
losses, damages or liabilities (or actions or claims in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by, as applicable, the Inergy Parties on the
one hand and the Underwriter, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from such offering
(before deducting expenses) received by the Partnership bear to the
total underwriting discounts and commissions received by the
Underwriter. The relative fault, as applicable, of the Inergy Parties,
on the one hand and the Underwriter, 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
Inergy Parties on the one hand, or the Underwriter, on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Inergy
Parties and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above in
this Section 7(d). The amount paid or payable by such an indemnified
party as a result of the losses, damages or liabilities (or actions or
claims in respect thereof) referred to above in this Section 7(d) shall
be deemed to include any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(d),
the Underwriter shall not 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 the 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 0000 Xxx)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
33
(e) The obligations of the Inergy Parties under this Section
7 shall be in addition to any liability that the Inergy Parties may
otherwise have and shall extend, upon the same terms and conditions, to
each officer, director, employee, agent or other representative and to
each person, if any, who controls the Underwriter within the meaning of
the 1933 Act; and the obligations of the Underwriter under this Section
7 shall be in addition to any liability that the Underwriter may
otherwise have and shall extend, upon the same terms and conditions, to
each officer and director of the Partnership and the Managing General
Partner who signed the Registration Statement and to each person, if
any, who controls the Inergy Parties within the meaning of the 1933 Act.
8. Representations and Agreements to Survive Delivery.
The respective representations, warranties, agreements and statements of the
Inergy Parties, and the Underwriter, as set forth in this Agreement or made by
or on behalf of them pursuant to this Agreement, shall remain operative and in
full force and effect regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Underwriter or any controlling
person of the Underwriter, the Inergy Parties or any of their officers,
directors or any controlling persons and shall survive delivery of and payment
for the Units hereunder.
9. Termination.
(a) This Agreement may be terminated by you at any time at
or prior to the Closing Date by notice to the Partnership if any
condition specified in Section 6 hereof shall not have been satisfied on
or prior to the Closing Date. Any such termination shall be without
liability of any party to any other party except as provided in Sections
7 and 10 hereof.
(b) This Agreement also may be terminated by you, by notice
to the Partnership, as to any obligation of the Underwriter to purchase
the Option Units, if any condition specified in Section 6 hereof shall
not have been satisfied at or prior to the Option Closing Date.
If you terminate this Agreement as provided in Sections 9(a) or
9(b), you shall notify the Partnership by telephone or telegram,
confirmed by letter.
10. Costs and Expenses. The Partnership will bear and pay the costs
and expenses incident to the registration of the Units and public offering
thereof, including, without limitation, (a) all expenses (including stock
transfer taxes) incurred in connection with the delivery to the Underwriter of
the Units, the filing fees of the SEC, the fees and expenses of the
Partnership's counsel and accountants, (b) the preparation, printing, filing,
delivery and shipping of the Registration Statement, the Prospectus and any
amendments or supplements thereto (except as otherwise expressly provided in
Section 6(d) hereof) and the printing, delivery and shipping of this Agreement
and other underwriting documents, including the Agreement Among Underwriters,
the Selected Dealer Agreement, Underwriters' Questionnaires and Blue Sky
Memoranda, and any instruments or documents related to any of the foregoing, (c)
the furnishing of copies of such documents (except as otherwise expressly
provided in Section 6(d)
34
hereof) to the Underwriter, (d) the registration or qualification of the Units
for offering and sale under the securities laws of the various states and other
jurisdictions, including the fees and disbursements of counsel to the
Underwriter relating to such registration or qualification and in connection
with preparing any Blue Sky Memoranda or related analysis, (e) the filing fees
of the National Association of Securities Dealers, Inc. (if any), (f) all
printing and engraving costs related to preparation of the certificates for the
Units, including transfer agent and registrar fees, (g) all fees and expenses
relating to the authorization of the Units for trading on the Nasdaq, (h) all
travel expenses, including air fare and accommodation expenses, of
representatives of the Partnership in connection with the offering of the Units,
and (i) all of the other costs and expenses incident to the performance by the
Partnership of the registration and offering of the Units; provided, that
(except as otherwise provided in this Section 10) the Underwriter will bear and
pay all of its own costs and expenses, including the fees and expenses of
counsel, the Underwriter's transportation expenses and any advertising costs and
expenses incurred by the Underwriter incident to the public offering of the
Units.
If this Agreement is terminated by you in accordance with the
provisions of Section 9(a) (other than pursuant to Section 6(g)(i) or
6(g)(iii-v)), the Partnership shall reimburse you for all of your reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel to the Underwriter.
11. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to the
Underwriter shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed to Xxxxxx Brothers Inc., 000 0xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Syndicate Department (Fax: 000-000-0000) with a copy, in
the case of any notice pursuant to Section 7, to the Director of Litigation,
Office of the General Counsel, Xxxxxx Brothers Inc., 000 0xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (Fax: 000-000-0000) and if sent to the Partnership shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to the Partnership at Inergy, L.P., 0 Xxxxx Xxxxx Xxxx., Xxxxxx Xxxx, Xxxxxxxx
00000, facsimile number (000) 000-0000, with a copy to Xxxxx Xxxxxxxxxx, General
Counsel, 0 Xxxxx Xxxxx Xxxx., Xxxxxx Xxxx, Xxxxxxxx 00000, facsimile number
(000) 000-0000 and a copy to Xxxx XxXxxxxxxx, Xxxxxxx Xxxxxxxx Xxxxxx LLP, 0000
Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxx 00000, facsimile number (816)
691-3495.
12. Information Furnished by the Underwriter. The statements set
forth in the table on the cover page of the Prospectus Supplement, the selling
concessions and reallowance numbers in the fourth paragraph and the statements
in the seventh, eighth, twelfth, fifteenth and sixteenth paragraphs under the
caption "Underwriting" in the Prospectus constitute the only information
furnished by or on behalf of the Underwriter through you as such information is
referred to in Section 4(c) hereof.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriter, the Inergy Parties and, to the extent provided in
Sections 7 and 8, the officers and directors of the Managing General Partner and
each person who controls the Partnership or the Underwriter and their respective
heirs, executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
35
person, corporation or other entity any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained;
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and said controlling persons and said officers
and directors, and for the benefit of no other person, corporation or other
entity. No purchaser of any of the Units from the Underwriter shall be construed
a successor or assign by reason merely of such purchase.
14. Counterparts. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
15. Pronouns. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
16. Time of Essence. Time shall be of the essence of this Agreement.
18. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to the choice of law or conflict of laws principles thereof.
36
If the foregoing is in accordance with your understanding, please
so indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Inergy Parties and the
Underwriter.
INERGY, L.P.
By: Inergy GP, LLC (its General Partner)
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx, President
INERGY PARTNERS, LLC INERGY PROPANE, LLC
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------------- --------------------------------------
Xxxx X. Xxxxxxx, President Xxxx X. Xxxxxxx, President
INERGY GP, LLC L & L TRANSPORTATION, LLC
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------------- --------------------------------------
Xxxx X. Xxxxxxx, President Xxxx X. Xxxxxxx, President
NEW INERGY PROPANE, LLC INERGY TRANSPORTATION, LLC
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------------- --------------------------------------
Xxxx X. Xxxxxxx, President Xxxx X. Xxxxxxx, President
INERGY SALES & SERVICE, INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx, President
37
Accepted in New York,
New York as of the date
first above written
XXXXXX BROTHERS INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
38
Exhibit A
GOOD STANDING AND FOREIGN QUALIFICATION
Inergy Propane, LLC
Alabama
Arkansas
Florida
Georgia
Illinois
Indiana
Kentucky
Michigan
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
South Carolina
Tennessee
Texas
Virginia
West Virginia
Inergy Partners, LLC
Missouri
Illinois
Mississippi
North Carolina
Texas
Inergy GP, LLC
Missouri
Pennsylvania
Alabama
Illinois
Indiana
Kentucky
Michigan
New York
North Carolina
South Carolina
West Virginia
Ohio
Texas
Inergy Sales & Services Sub
Illinois
Indiana
North Carolina
Tennessee
L & L Transportation, LLC
Florida
Georgia
Illinois
Indiana
Kentucky
Michigan
Ohio
Texas
West Virginia
Inergy Transportation, LLC
Indiana
Michigan
Ohio
Inergy, L.P.
Illinois
Missouri
Exhibit B
FORM OF LOCK-UP LETTER AGREEMENT
February ___, 2003
Xxxxxx Brothers Inc.
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you, as underwriter (the
"Underwriter"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with the Inergy Parties providing for the purchase by
you of common units, each representing a limited partner interest (the "Common
Units") in the Partnership, and that the Underwriters propose to reoffer the
Common Units to the public (the "Offering"). Capitalized terms used but not
defined herein have the meanings given to them in the Underwriting Agreement.
In consideration of the execution of the Underwriting Agreement
by you, and for other good and valuable consideration, the undersigned hereby
irrevocably agrees that, without the prior written consent of Xxxxxx Brothers
Inc, the undersigned will not, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any Common Units (including, without limitation,
Common Units that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and Common Units that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Units owned
by the undersigned on the date of execution of this Lock-up Letter Agreement or
on the date of the completion of the Offering, or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such Common Units, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Units or other securities, in cash or otherwise, for a period
of 90 days from the date of the Prospectus.
In furtherance of the foregoing, the Partnership and its
Transfer Agent are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Letter Agreement.
It is understood that, if the Partnership notifies you that it
does not intend to proceed with the Offering, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than the
provisions thereof that survive termination) shall terminate or be terminated
prior to payment for and delivery of the Common Units, the undersigned will be
released from [his/her] obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Partnership and the
Underwriters will proceed with the Offering in reliance on this Lock-Up Letter
Agreement.
Whether or not the Offering actually occurs depends on a number
of factors, including market conditions. Any Offering will only be made pursuant
to an Underwriting Agreement, the terms of which are subject to negotiation
between the Partnership and the Underwriter.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the [heirs and personal
representatives] (for individuals) [successors and assigns] (for nonnatural
persons) of the undersigned.
Yours very truly,
