7,000,000 Common Units Representing Limited Partner Interests UNDERWRITING AGREEMENT
Exhibit
1.1
CDM
RESOURCE PARTNERS, L.P.
7,000,000
Common Units
Representing Limited Partner Interests
Representing Limited Partner Interests
[ ],
2007
Xxxxxx Brothers Inc.
Merrill Lync |
h, Xxxxxx,
Xxxxxx & Xxxxx Incorporated |
As Representatives of the several
Underwriters named in Schedule I attached hereto
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
CDM Resource Partners, L.P., a Delaware limited partnership (the
“Partnership”), proposes to sell to the several
underwriters named in Schedule I hereto (the
“Underwriters”) 7,000,000 common units (the
“Common Units”) representing limited partner
interests in the Partnership (the “Firm
Units”). In addition, the Partnership proposes to grant
to the Underwriters an option to purchase up to 1,050,000
additional Common Units (the “Option Units”),
on the terms and for the purposes set forth in Section 2
hereto. The Firm Units and, if purchased, the Option Units, are
hereinafter referred to collectively as the
“Units.”
This is to confirm the agreement among the Partnership, CDM RP
GP, L.P. (the “General Partner”), a Delaware
limited partnership and the general partner of the Partnership,
CDM GP, LLC (“GP LLC”), a Delaware limited
liability company and the general partner of the General
Partner, CDMR Holdings, LLC (“Holdings”), a
Delaware limited liability company and the sole member of GP
LLC, and the Underwriters concerning the purchase of the Units
from the Partnership by the Underwriters.
It is understood and agreed to by all parties hereto that:
A. the Partnership was formed to acquire and own (i) a
52.999% limited partner interest in CDM Resource Management,
Ltd. (“CDM”), a Texas limited partnership that
provides natural gas contract compression services as described
in the Prospectus (as defined below) and (ii) 100% of the
limited liability company interests in CDM OLP GP, LLC
(“OLP GP”), a Delaware limited liability
company, formed to acquire and own a 0.001% general partner
interest in CDM.
B. As of the date hereof:
(i) C/R Holdings II, L.P., a Delaware limited partnership,
C/R CDM Investment Partnership III, L.P., a Delaware limited
partnership, C/R CDM XX XX, LP, a Delaware limited partnership,
CDM Compression, LLC, a Delaware limited liability company, and
CDM Investments, Ltd., a Delaware limited partnership, own CDM
as set forth in the Contribution Agreement (as defined below);
(ii) CDM owns 100% of the limited liability company
interests in CDM MAX, LLC (“CDM MAX”), a
Delaware limited liability company;
(iii) CDM Compression, LLC owns 100% of the limited
liability company interests in each of Holdings and OLP GP;
(iv) Holdings owns 100% of the limited liability company
interests in GP LLC;
(v) GP LLC owns a 0.001% general partner interest, and
Holdings owns a 99.999% limited partner interest, in the General
Partner; and
(vi) the General Partner owns a 2.0% general partner
interest, and Holdings owns a 98.0% limited partner interest, in
the Partnership.
It is further understood and agreed by all parties hereto that
on or prior to the date hereof, CDM will borrow
$27.3 million under its credit facility, which it will use
to exercise purchase options under compressor operating leases
and capital leases to which it is a party.
It is further understood and agreed by all parties hereto that
the following transactions will occur on the Initial Delivery
Date (as defined below):
A. C/R CDM Holdings II, L.P., C/R CDM Investment
Partnership III, L.P., C/R CDM XX XX, LP, CDM Compression, LLC,
CDM Investments, Ltd. and the CDM Parties (as defined below)
will enter into a Contribution Agreement (the
“Contribution Agreement”) pursuant to which:
(i) CDM Compression, LLC and C/R CDM XX XX, LP will convey
all of their general partner interests in CDM to the OLP GP as a
capital contribution;
(ii) CDM Compression, LLC and C/R CDM XX XX, LP will convey
all of their limited partner interests in OLP GP to Holdings in
exchange for [ ]% and
[ ]% limited liability company
interests in Holdings, respectively;
(iii) C/R CDM Holdings II, L.P., C/R CDM Investment
Partnership III, L.P. and CDM Investments, Ltd. will convey all
of their limited partner interests in CDM to Holdings, in each
case in exchange for [ ]%,
[ ]% and
[ ]% limited liability company
interests in Holdings, respectively;
(iv) Holdings will assume from CDM and repay
$40.0 million of debt outstanding under CDM’s credit
facility (the “Credit Facility”);
(v) CDM and its lenders will enter into an amended Credit
Facility increasing CDM’s credit limit to $300 million
and providing for a maturity date that is three years after the
date of amendment;
(vi) CDM will distribute all of its limited liability
company interests in CDM MAX to Holdings;
(vii) Holdings will convey a portion of its limited partner
interest in CDM having an aggregate value equal to 2.0% of the
equity value of the Partnership at the Initial Delivery Date
(the “Interest”) to the General Partner;
(viii) The General Partner will convey the Interest to the
Partnership in exchange for (a) the continuation of its
2.0% general partner interest in the Partnership (represented by
[277,586] general partner units, or “GP Units”)
representing general partner interests in the Partnership) and
(b) all of the incentive distribution rights in the
Partnership (the “Incentive Distribution
Rights”); and
(ix) Holdings will convey all of its limited liability
company interests in OLP GP and 52.999% of its limited partner
interest in CDM to the Partnership in exchange for [1,050,000]
Common Units and [5,551,724] subordinated units representing
limited partner interests in the Partnership (the
“Subordinated Units”) representing a [47.6]%
limited partner interest in the Partnership;
B. the public, through the Underwriters, will contribute
$[ ] million in cash to the
Partnership, less the Underwriters’ spread of
$[ ] million, in exchange for
[7,000,000] Common Units;
C. the Partnership will use the net proceeds from its
issuance and sale of the Firm Units to (a) pay transaction
expenses, estimated to be $[ ]
associated with the transactions contemplated by this Agreement
and (b) contribute the balance, approximately
$[ ] million, to CDM, which
will in turn retire
$[ ] million of debt
outstanding under the Credit Facility;
2
D. the Partnership will amend and restate its agreement of
limited partnership (as so amended and restated, the
“Partnership Agreement”);
E. GP LLC will amend and restate its limited liability
company agreement (as so amended and restated, the “GP
LLC Agreement”);
F. the General Partner will amend and restate its agreement
of limited partnership (as so amended and restated, the
“General Partner LP Agreement”);
G. the OLP GP will amend and restate its limited liability
company agreement (as so amended and restated, the “OLP
GP LLC Agreement”);
H. CDM will amend and restate its agreement of limited
partnership (as so amended and restated, the “CDM LP
Agreement”);
I. the CDM Parties will enter into an Omnibus Agreement
consistent with the description thereof set forth in the
Prospectus under the caption “Certain Relationships and
Related Party Transactions — Omnibus Agreement”
(the “Omnibus Agreement”); and
The transactions contemplated in paragraphs A through I
above are hereinafter referred to collectively as the
“Transactions.” In connection with the
Transactions, the parties to the Transactions have entered or
will enter into various bills of sale, assignments, conveyances,
contribution agreements and related documents (collectively with
the Contribution Agreement, the “Contribution
Documents”). The Contribution Documents and the Omnibus
Agreement shall be hereinafter referred to collectively as the
“Transaction Agreements.” The
“Organizational Documents” shall mean the
Partnership Agreement, GP LLC Agreement, General Partner LP
Agreement, OLP GP LLC Agreement and CDM LP Agreement. The
“Operative Agreements” shall mean the
Transaction Agreements and the Organizational Documents,
collectively. Holdings, GP LLC, the General Partner, the
Partnership, OLP GP and CDM are hereinafter referred to
collectively as the “CDM Parties.” GP LLC, the
General Partner, the Partnership, OLP GP and CDM are hereinafter
referred to collectively as the “Partnership
Parties.”
The CDM Parties wish to confirm as follows their agreement with
you in connection with the purchase of the Units from the
Partnership by the Underwriters.
1. Representations, Warranties and Agreements of the CDM
Parties. Each of the CDM Parties, jointly and
severally, represents and warrants to, and agrees with, each of
the Underwriters that:
(a) Registration; Definitions; No Stop
Order. A registration statement on
Form S-1
(Registration
No. 333-144971)
relating to the Units has (i) been prepared by the
Partnership in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities
Act”), and the rules and regulations (the
“Rules and Regulations”) of the Securities and
Exchange Commission (the “Commission”)
thereunder; (ii) been filed with the Commission under the
Securities Act; and (iii) become effective under the
Securities Act. Copies of such registration statement and any
amendment thereto have been delivered by the Partnership to you
as the representatives (the “Representatives”)
of the Underwriters. As used in this Agreement:
(i) “Applicable Time” means
[ ] p.m.
(New York City time) on
[ ],
2007;
(ii) “Effective Date” means each date and
time as of which such registration statement, any post-effective
amendment thereto and any registration statement or amendment
thereto filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the offering of the Units was or is
declared effective by the Commission;
(iii) “Issuer Free Writing Prospectus”
means each “free writing prospectus” (as defined in
Rule 405 of the Rules and Regulations) prepared by or on
behalf of the Partnership or used or referred to by the
Partnership in connection with the offering of the Units;
3
(iv) “Preliminary Prospectus” means any
preliminary prospectus relating to the Units included in such
registration statement or filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations;
(v) “Pricing Disclosure Package” means, as
of the Applicable Time, the most recent Preliminary Prospectus,
together with the information included in Schedule III
hereto, each Issuer Free Writing Prospectus filed with the
Commission or used by the Partnership on or before the
Applicable Time, other than a “road show” that is an
Issuer Free Writing Prospectus but is not required to be filed
under Rule 433 of the Rules and Regulations.
(vi) “Prospectus” means the final
prospectus relating to the Units, as filed with the Commission
pursuant to Rule 424(b) of the Rules and
Regulations; and
(vii) “Registration Statement” means the
registration statement on
Form S-1
(Registration
No. 333-144971)
relating to the Units, as amended as of the Effective Date,
including any Preliminary Prospectus, the Prospectus and all
exhibits to such registration statement.
Any reference to the “most recent Preliminary
Prospectus” shall be deemed to refer to the latest
Preliminary Prospectus included in the Registration Statement or
filed pursuant to Rule 424(b) of the Rules and Regulations
on or prior to the date hereof. The Commission has not issued
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending the effectiveness of
the Registration Statement, and no proceeding or examination for
such purpose has been instituted or threatened by the Commission.
(b) Partnership Not an “Ineligible
Issuer.” The Partnership was not at the
time of initial filing of the Registration Statement and at the
earliest time thereafter that the Partnership or another
offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) of the Rules and Regulations) of
the Units, is not on the date hereof and will not be on the
applicable Delivery Date an “ineligible issuer” (as
defined in Rule 405 of the Rules and Regulations).
(c) Registration Statement and Prospectus Conform to the
Requirements of the Securities Act. The
Registration Statement conformed in all material respects on the
Effective Date and will conform in all material respects on the
applicable Delivery Date, and any amendment to the Registration
Statement filed after the date hereof will conform in all
material respects when filed, to the requirements of the
Securities Act and the Rules and Regulations. The most recent
Preliminary Prospectus conformed, and the Prospectus will
conform, in all material respects when filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and on
the applicable Delivery Date to the requirements of the
Securities Act and the Rules and Regulations.
(d) No Material Misstatements or Omissions in
Registration Statement. The Registration
Statement did not, as of the 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; provided that no
representation or warranty is made as to information contained
in or omitted from the Registration Statement in reliance upon
and in conformity with written information furnished to the
Partnership through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein, which
information is specified in Section 8(e).
(e) No Material Misstatements or Omissions in
Prospectus. The Prospectus will not, as of its
date and on the applicable Delivery Date, contain an 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;
provided that no representation or warranty is made as to
information contained in or omitted from the Prospectus in
reliance upon and in conformity with written information
furnished to the Partnership through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein,
which information is specified in Section 8(e).
(f) No Material Misstatements or Omissions in Pricing
Disclosure Package. The Pricing Disclosure
Package did not, as of the Applicable Time, contain an untrue
statement of a material fact or omit to state
4
a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from
the Pricing Disclosure Package in reliance upon and in
conformity with written information furnished to the Partnership
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is
specified in Section 8(e).
(g) No Material Misstatements or Omissions in Issuer
Free Writing Prospectuses. Each Issuer Free
Writing Prospectus (including, without limitation, any
“road show” that is a free writing prospectus under
Rule 433 of the Rules and Regulations), when considered
together with the Pricing Disclosure Package as of the
Applicable Time, did not contain an 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.
(h) Issuer Free Writing Prospectuses Conform to the
Requirements of the Securities Act. Each Issuer
Free Writing Prospectus conformed or will conform in all
material respects to the requirements of the Securities Act and
the Rules and Regulations on the date of first use, and the
Partnership has complied with all prospectus delivery
requirements, any filing requirements and record keeping
requirements applicable to such Issuer Free Writing Prospectus
pursuant to the Rules and Regulations. The Partnership has not
made any offer relating to the Units that would constitute an
Issuer Free Writing Prospectus without the prior written consent
of the Representatives. The Partnership has retained in
accordance with the Rules and Regulations all Issuer Free
Writing Prospectuses that were not required to be filed pursuant
to the Rules and Regulations. The Partnership has taken all
actions necessary so that any “road show” (as defined
in Rule 433 of the Rules and Regulations) in connection
with the offering of the Units will not be required to be filed
pursuant to the Rules and Regulations.
(i) Formation, Qualification and
Authority. Each of the CDM Parties has been duly
formed, is validly existing and is in good standing under the
laws of its jurisdiction of formation with all limited liability
company or partnership, as the case may be, power and authority
necessary to own, lease and operate its properties and conduct
the businesses in which it is engaged. Each of the CDM Parties
is duly registered or qualified to do business and is in good
standing as a foreign limited partnership or limited liability
company, as applicable, in each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such qualification or registration, except where the
failure to be so qualified, registered or in good standing could
not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), securityholders’ equity, results of operations,
properties, business or prospects of the CDM Parties taken as a
whole (a “Material Adverse Effect”), or subject
the limited partners of the Partnership to any material
liability or disability.
(j) Power and Authority to Act as a General
Partner. Each of GP LLC, the General Partner and
OLP GP has, and as of each Delivery Date will have, full limited
partnership or limited liability company, as the case may be,
power and authority to act as the general partner of the General
Partner, the Partnership and CDM, respectively, in each case in
all material respects as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus.
(k) Ownership of GP LLC. At each Delivery
Date, Holdings will be the sole member of GP LLC and will own
100% of the limited liability company interests in GP LLC; such
limited liability company interests will be duly authorized and
validly issued in accordance with the GP LLC Agreement and will
be fully paid (to the extent required under the GP LLC
Agreement) and non-assessable (except as such non-assessability
may be affected by matters described in
Sections 18-607
and 18-804
of the Delaware Limited Liability Company Act (the
“Delaware LLC Act”)); and Holdings will own
such limited liability company interests free and clear of all
liens, encumbrances, security interests, charges or claims
(“Liens”).
(l) Ownership of the General Partner. At
each Delivery Date, GP LLC will own a 0.001% general partner
interest, and Holdings will own a 99.999% limited partner
interest, in the General Partner; such general and limited
partner interests will be duly authorized and validly issued in
accordance with the
5
General Partner LP Agreement and will be fully paid (to the
extent required under the General Partner LP Agreement) and, in
the case of Holdings’ limited partner interest,
non-assessable (except as such non-assessability may be affected
by matters described in
Sections 17-607
and 17-804
of the Delaware Revised Uniform Limited Partnership Act (the
“Delaware LP Act”)); and GP LLC will own such
general partner interest, and Holdings will own such limited
partner interest, free and clear of all Liens.
(m) Ownership of the General Partner Interest and the
Incentive Distribution Rights in the
Partnership. At each Delivery Date, the General
Partner will be the sole general partner of the Partnership and
will own a 2.0% general partner interest in the Partnership,
represented by [277,586] GP Units, and all of the incentive
distribution rights (as defined in the Partnership Agreement,
the “Incentive Distribution Rights”); the GP
Units and the Incentive Distribution Rights will be duly
authorized and validly issued in accordance with the Partnership
Agreement and will be fully paid (to the extent required under
the Partnership Agreement) and, in the case of the Incentive
Distribution Rights, non-assessable (except as such
non-assessability may be affected by matters described in
Sections 17-607
and 17-804
of the Delaware LP Act); and the General Partner will own such
general and limited partner interests free and clear of all
Liens.
(n) Ownership of the Sponsor
Units. Assuming no purchase by the Underwriters
of the Option Units on the Initial Delivery Date, at the Initial
Delivery Date, after giving effect to the Transactions, Holdings
will own [1,050,000] Common Units and [5,551,724] Subordinated
Units (collectively, the “Sponsor Units”); the
Sponsor Units and the limited partner interests represented
thereby will be duly authorized and validly issued in accordance
with the Partnership Agreement and will be fully paid (to the
extent required under Partnership Agreement) and non-assessable
(except as such non-assessability may be affected by matters
described in
Sections 17-607
and 17-804
of the Delaware LP Act); and Holdings will own the Sponsor Units
free and clear of all Liens.
(o) Capitalization of the Partnership. At
the Initial Delivery Date, after giving effect to the Offering,
the issued and outstanding partnership interests of the
Partnership will consist of [8,050,000] Common Units,
[5,551,724] Subordinated Units, [277,586] GP Units and the
Incentive Distribution Rights. Other than the Sponsor Units and
the Incentive Distribution Rights, the Units will be the only
limited partner interests in the Partnership issued and
outstanding at each Delivery Date.
(p) Valid Issuance of the Units. At each
Delivery Date, the Firm Units or the Option Units, as the case
may be, and the limited partner interests represented thereby,
will be duly authorized in accordance with the Partnership
Agreement and, when issued and delivered to the Underwriters
against payment therefor in accordance with this Agreement, will
be validly issued, fully paid (to the extent required under the
Partnership Agreement) and non-assessable (except as such
non-assessability may be affected by matters described in
Sections 17-607
and 17-804
of the Delaware LP Act).
(q) Ownership of OLP GP by the
Partnership. At each Delivery Date, the
Partnership will be the sole member of OLP GP and will own 100%
of the limited liability company interests in OLP GP; such
limited liability company interests will be duly authorized and
validly issued in accordance with the OLP GP LLC Agreement and
will be fully paid (to the extent required under OLP GP LLC
Agreement) and non-assessable (except as such non-assessability
may be affected by matters described in
Sections 18-607
and 18-804
of the Delaware LLC Act); and the Partnership will own such
limited liability company interests free and clear of all Liens.
(r) Ownership of CDM. At each Delivery
Date, (i) OLP GP will be the sole general partner of CDM
and will own a 0.001% general partner interest in CDM; such
general partner interest will be duly authorized and validly
issued in accordance with the CDM LP Agreement and will be fully
paid; and OLP GP will own such general partner interest free and
clear of all Liens; (ii) the Partnership and Holdings will
be the limited partners of CDM, owning 52.999% and 47.0% limited
partner interests in CDM, respectively; such limited partner
interests will be duly authorized and validly issued in
accordance with the CDM LP Agreement and will be fully paid (to
the extent required under the CDM LP Agreement) and
non-assessable (except as such non-assessability may be affected
by
Section 17-607
and 17-804
of the Delaware LP Act); and each of the Partnership and
Holdings will own such limited partner
6
interests free and clear of all Liens [(except for restrictions
on transferability described in the Pricing Disclosure Package,
including under the Credit Facility)].
(s) No Other Subsidiaries. Other than its
ownership of its 2.0% general partner interest in the
Partnership and the Incentive Distribution Rights, the General
Partner does not own, and at each Delivery 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. Other than the
Partnership’s ownership of its 52.999% limited partnership
interest in CDM and its 100% limited liability company interest
in OLP GP, neither the Partnership nor CDM owns, and at each
Delivery 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.
(t) No Preemptive Rights, Registration Rights or
Options. Except as described in the most recent
Preliminary Prospectus, there are no (i) preemptive rights
or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any equity interests
or (ii) outstanding options or warrants to purchase any
securities of the Partnership, the General Partner, GP LLC, OLP
GP or CDM. Neither the filing of the Registration Statement nor
the consummation of the transactions contemplated by this
Agreement or the Operative Agreements (including the
Transactions) gives rise to any rights for or relating to the
registration of any Units or other securities of the
Partnership, the General Partner, OLP GP or CDM.
(u) Authority and Authorization. Each of
the CDM Parties has all requisite power and authority to execute
and deliver this Agreement and perform its obligations
hereunder. The Partnership has all requisite partnership power
and authority to issue, sell and deliver (i) the Units, in
accordance with and upon the terms and conditions set forth in
this Agreement, the Partnership Agreement, the most recent
Preliminary Prospectus and the Prospectus, and (ii) the
Sponsor Units, the GP Units and the Incentive Distribution
Rights, in accordance with and upon the terms and conditions set
forth in the Partnership Agreement and the Contribution
Agreement. At each Delivery Date, all partnership and limited
liability company action, as the case may be, required to be
taken by any of the CDM Parties or any of their respective
unitholders, members or partners for the authorization,
issuance, sale and delivery of the Units, the Sponsor Units, the
GP Units and the Incentive Distribution Rights, the execution
and delivery of the Operative Agreements and the consummation of
the transactions (including the Transactions) contemplated by
this Agreement and the Operative Agreements, shall have been
validly taken.
(v) Authorization, Execution and Delivery of this
Agreement. This Agreement has been duly
authorized and validly executed and delivered by the CDM Parties.
(w) Authorization, Execution, Delivery and
Enforceability of Certain Agreements. At or
before the Initial Delivery Date:
(i) each of the Transaction Agreements will have been duly
authorized, executed and delivered by the parties thereto, and
each will be a valid and legally binding agreement of the
parties thereto, enforceable against such parties in accordance
with its terms;
(ii) the Partnership Agreement will have been duly
authorized, executed and delivered by the General Partner and
Holdings and will be a valid and legally binding agreement of
the General Partner and Holdings, enforceable against each of
them in accordance with its terms;
(iii) the GP LLC Agreement will have been duly authorized,
executed and delivered by Holdings and will be a valid and
legally binding agreement of Holdings, enforceable against
Holdings in accordance with its terms;
(iv) the General Partner LP Agreement will have been duly
authorized, executed and delivered by GP LLC and Holdings and
will be a valid and legally binding agreement of GP LLC and
Holdings, enforceable against each of them in accordance with
its terms;
7
(v) the OLP GP LLC Agreement will have been duly
authorized, executed and delivered by the Partnership and will
be a valid and legally binding agreement of the Partnership,
enforceable against the Partnership in accordance with its terms;
(vi) the CDM LP Agreement will have been duly authorized,
executed and delivered by OLP GP, the Partnership and Holdings
and will be a valid and legally binding agreement of OLP GP, the
Partnership and CDM, enforceable against each of them in
accordance with its terms;
provided, however, that, with respect to each agreement
described in this Section 1(w), the enforceability thereof
may be limited by (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 at law or in
equity), and (ii) public policy, applicable laws relating
to fiduciary duties and indemnification and an implied covenant
of good faith and fair dealing.
(x) Sufficiency of the Contribution
Documents. The Contribution Documents will be
legally sufficient to transfer or convey to the Partnership and
its subsidiaries satisfactory title to, or valid rights to use
or manage, all properties not already held by them that are,
individually or in the aggregate, required to enable the
Partnership and its subsidiaries to conduct their operations in
all material respects as contemplated by the Disclosure Package
and the Prospectus, subject to the conditions, reservations,
encumbrances and limitations described therein or contained in
the Contribution Documents. The Partnership and its
subsidiaries, upon execution and delivery of the Contribution
Documents, will succeed in all material respects to the
business, assets, properties, liabilities and operations
reflected in the pro forma financial statements of CDM Resource
Management Predecessor (as defined in the most recent
Preliminary Prospectus), except as disclosed in the Prospectus
and the Contribution Documents.
(y) No Conflicts. None of (i) the
offering, issuance and sale by the Partnership of the Units and
the application of the proceeds from the sale of the Units as
described under “Use of Proceeds” in the most recent
Preliminary Prospectus, (ii) the execution, delivery and
performance of this Agreement or the Operative Agreements by the
CDM Parties party hereto or thereto and (iii) the
consummation of the transactions contemplated hereby and thereby
(including the Transactions) (A) conflicts or will conflict
with or constitutes or will constitute a violation of the
partnership agreement, limited liability company agreement,
certificate of formation or conversion or other constituent
document of any of the CDM Parties, (B) conflicts or will
conflict with or constitutes or will constitute a breach or
violation of, or a default (or an event that, with notice or
lapse of time or both, would constitute such a default) under
any indenture, mortgage, deed of trust, loan agreement, lease,
license or other agreement or instrument to which any of the CDM
Parties is a party or by which any of them or any of their
respective properties may be bound, (C) 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 CDM Parties or any of their properties in
a proceeding to which any of them or their property is a party
or (D) results or will result in the creation or imposition
of a Lien upon any property or assets of any of the CDM Parties
(other than Liens created pursuant to the Credit Facility),
which conflicts, breaches, violations, defaults or Liens, in the
case of clauses (B), (C) or (D), would, individually or in
the aggregate, have a Material Adverse Effect or would
materially impair the ability of any of the CDM Parties to
consummate the transactions (including the Transactions)
provided for in this Agreement or the Operative Agreements.
(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 any of the
CDM Parties or any of their properties or assets is required in
connection with (i) the offering, issuance or sale by the
Partnership of the Units, (ii) the application of the
proceeds therefrom as described under “Use of
Proceeds” in the most recent Preliminary Prospectus,
(iii) the execution, delivery and performance of this
Agreement or the Operative Agreements by the CDM Parties party
hereto or thereto or (iv) the consummation of the
transactions contemplated hereby and thereby (including the
Transactions), except for registration of the Units under the
Securities Act and Consents as may be required under the
Securities Act, the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and state
8
securities or “Blue Sky” laws in connection with the
purchase and distribution of the Units by the Underwriters.
(aa) Private Placement. The sale and
issuance of (i) the Sponsor Units to Holdings and
(ii) the Incentive Distribution Rights and the GP Units to
the General Partner are exempt from the registration
requirements of the Securities Act and the Rules and Regulations
and securities laws of any state having jurisdiction with
respect thereto, and none of the CDM Parties has taken or will
take any action that would cause the loss of such exemption. The
Partnership has not sold or issued any securities that would be
integrated with the offering of the Units contemplated by this
Agreement pursuant to the Securities Act, the Rules and
Regulations or the interpretations thereof by the Commission.
(bb) No Material Adverse Effect. None of
the Partnership Parties has sustained since the date of the
latest audited financial statements included in the most recent
Preliminary 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, investigation, order or decree, and
since such date, there has not been any change in the
capitalization or the short-term or long-term debt of any of the
Partnership Parties or any adverse change in or affecting the
condition (financial or otherwise), results of operations,
securityholders’ equity, properties, management, business
or prospects of the Partnership Parties taken as a whole, in
each case except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(cc) Conduct of Business. Except as
disclosed in the Registration Statement, the Prospectus and the
most recent Preliminary Prospectus (or any amendment or
supplement thereto), subsequent to the respective dates as of
which information is given in the Registration Statement, the
Prospectus and the most recent Preliminary Prospectus (or any
amendment or supplement thereto), (i) none of the
Partnership Parties has incurred any liability or obligation,
indirect, direct or contingent, other than liabilities and
obligations that were incurred in the ordinary course of
business, or entered into any material transactions not in the
ordinary course of business, (ii) there has not been any
material change in the capitalization or increase in the
short-term or long-term debt, of the Partnership Parties and
(iii) there has not been any material adverse change, or
any development involving or that may reasonably be expected to
involve, individually or in the aggregate, a prospective
material adverse change, in or affecting the condition
(financial or otherwise), results of operations,
securityholders’ equity, properties, management, business
or prospects of the Partnership Parties taken as a whole, in
each case except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(dd) Conformity of Units to Description in the Most
Recent Preliminary Prospectus and Prospectus. The
Units, when issued and delivered in accordance with the terms of
the Partnership Agreement and this Agreement against payment
therefor as provided therein and herein, will conform in all
material respects to the description thereof contained in the
Registration Statement, the most recent Preliminary Prospectus
and the Prospectus.
(ee) Financial Statements. The historical
financial statements (including the related notes and supporting
schedules) included in the most recent Preliminary Prospectus
comply as to form in all material respects with the requirements
of
Regulation S-X
under the Securities Act and present fairly the financial
condition, 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 indicated and
have been prepared in conformity with accounting principles
generally accepted in the United States applied on a consistent
basis throughout the periods involved, except to the extent
disclosed therein. The summary historical and pro forma
financial and operating data included in the most recent
Preliminary Prospectus under the caption
“Summary — Summary Historical and Pro Forma
Financial and Operating Data” in the most recent
Preliminary Prospectus and the selected historical and pro forma
financial and operating data set forth under the caption
“Selected Historical and Pro Forma Financial and Operating
Data” included in the most recent Preliminary Prospectus
are fairly presented in all material respects and prepared on a
basis consistent with the audited and unaudited historical
financial statements and pro forma financial statements, as
applicable, from which they have been derived. The other
financial information of the
9
General Partner and the Partnership and its subsidiaries,
including non-GAAP financial measures, if any, contained in the
Registration Statement and the most recent Preliminary
Prospectus (and any amendment or supplement thereto) has been
derived from the accounting records of the General Partner, the
Partnership and its subsidiaries, and fairly presents the
information purported to be shown thereby.
(ff) Pro Forma Financial Statements. The
pro forma financial statements included in the most recent
Preliminary Prospectus include assumptions that provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions and events described therein,
the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma adjustments reflect the
proper application of those adjustments to the historical
financial statement amounts in the pro forma financial
statements included in the most recent Preliminary Prospectus.
The pro forma financial statements included in the most recent
Preliminary Prospectus comply as to form in all material
respects with the applicable requirements of
Regulation S-X
under the Securities Act.
(gg) Independent Registered Public Accounting
Firm. KPMG LLP, who has audited the audited
financial statements contained in the Registration Statement and
the most recent Preliminary Prospectus and the Prospectus (or
any amendment or supplement thereto), whose reports appear in
the most recent Preliminary Prospectus and the Prospectus and
who has delivered the initial letter referred to in
Section 7(g) hereof, is, and was during the periods covered
by the financial statements covered by such reports, an
independent registered public accounting firm as required by the
Securities Act and the Rules and Regulations.
(hh) Title to Properties. At each
Delivery Date, the Partnership Parties will have good and
indefeasible title in fee simple to all real property and good
title to all personal property described in the most recent
Preliminary Prospectus as being owned by the Partnership
Parties, free and clear of all Liens, except (i) as
described in the most recent Preliminary Prospectus or
(ii) such as do not materially affect the value of such
properties and do not materially interfere with the use made and
proposed to be made of such properties by the Partnership
Parties; all assets held under lease by the Partnership Parties
are held by them under valid, subsisting and enforceable leases,
with such exceptions as do not materially interfere with the use
made and proposed to be made of such assets by the Partnership
Parties.
(ii) Insurance. The Partnership Parties
carry, or are covered by, insurance from insurers of recognized
financial responsibility in such amounts and covering such risks
as is adequate for the conduct of their respective businesses
and the value of their respective properties and as is customary
for companies engaged in similar businesses in similar
industries. All policies of insurance of the Partnership Parties
are in full force and effect; the Partnership Parties are in
compliance with the terms of such policies in all material
respects; and none of the Partnership Parties has received
notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to
be made in order to continue such insurance; there are no claims
by the Partnership Parties under any such policy or instrument
as to which any insurance company is denying liability or
defending under a reservation of rights clause; and the
Partnership Parties have no reason to believe that they will not
be able to renew their existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their businesses at a
cost that could not reasonably be expected to have a Material
Adverse Effect.
(jj) Statistical and Market-Related
Data. The statistical and market-related data
included under the captions “Summary,”
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” “Natural Gas
Compression Industry” and “Business” in the most
recent Preliminary Prospectus are based on or derived from
sources that the CDM Parties believe to be reliable and accurate
in all material respects.
(kk) Investment Company. None of the
Partnership Parties is now, or after sale of the Units to be
sold by the Partnership hereunder and application of the net
proceeds from such sale as described in the most recent
Preliminary Prospectus under the caption “Use of
Proceeds” will be, (i) an “investment
company” or a company “controlled by” an
“investment company” within the meaning of the
Investment
10
Company Act of 1940, as amended (the “Investment Company
Act”), and the Rules and Regulations or (ii) a
“business development company” (as defined in
Section 2(a)(48) of the Investment Company Act).
(ll) Litigation. There are no legal or
governmental proceedings pending to which any of the Partnership
Parties is a party or of which any property or assets of the
Partnership Parties is or may be the subject that could, in the
aggregate, reasonably be expected to have a Material Adverse
Effect or could, in the aggregate, reasonably be expected to
have a material adverse effect on the performance of this
Agreement or the consummation of the transactions contemplated
hereby; and to the CDM Parties’ knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or others.
(mm) Legal Proceedings or Contracts to be Described or
Filed. There are no legal or governmental
proceedings or contracts or other documents of a character
required to be described in the Registration Statement or the
most recent Preliminary Prospectus or, in the case of documents,
to be filed as exhibits to the Registration Statement, that are
not described and filed as required. None of the CDM Parties has
knowledge that any other party to any such contract, agreement
or arrangement has any intention not to render full performance
as contemplated by the terms thereof; and that statements made
in the most recent Preliminary Prospectus insofar as they
purport to constitute summaries of the terms of statutes, rules
or regulations, legal or governmental proceedings or contracts
and other documents, constitute accurate summaries of the terms
of such statutes, rules and regulations, legal and governmental
proceedings and contracts and other documents in all material
respects.
(nn) Certain Relationships and Related Party
Transactions. Except as described in the most
recent Preliminary Prospectus, no relationship, direct or
indirect, exists between or among the Partnership Parties on the
one hand, and the directors, officers, unitholders, partners,
customers or suppliers of any of the CDM Parties on the other
hand, which is required to be described in the most recent
Preliminary Prospectus or the Prospectus and is not so described.
(oo) No Labor Dispute. No labor
disturbance by the employees of any of the Partnership Parties
exists or, to the knowledge of the CDM Parties, is imminent or
threatened, that could reasonably be expected to have a Material
Adverse Effect.
(pp) ERISA. (i) Each “employee benefit
plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended
(“ERISA”)) for which any of the Partnership
Parties or any entity treated as a “single employer”
with any of the Partnership Parties (as determined within the
meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”) would have any
liability (each a “Plan”) has been maintained
in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and
the Code; (ii) with respect to each Plan subject to
Title IV of ERISA (a) no “reportable event”
(within the meaning of Section 4043(c) of ERISA) has
occurred or is reasonably expected to occur, (b) no
“accumulated funding deficiency” (within the meaning
of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, has occurred or is reasonably expected to
occur, (c) the fair market value of the assets under each
Plan exceeds the present value of all benefits accrued under
such Plan (determined based on those assumptions used to fund
such Plan) and (d) none of the Partnership Parties has
incurred, or reasonably expects to incur, any liability under
Title IV of ERISA (other than contributions to the Plan or
premiums to the PBGC in the ordinary course and without default)
in respect of a Plan (including a “multiemployer
plan,” within the meaning of Section 4001(a)(3) of
ERISA); and (iii) each Plan that is intended to be
qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified
and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(qq) Tax Returns. Each of the CDM Parties
has filed all federal, state, local and foreign income and
franchise tax returns required to be filed through the date
hereof, subject to permitted extensions, which returns are
complete and correct in all material respects, and has timely
paid all taxes due pursuant to such returns; and no tax
deficiency has been determined adversely to any of the CDM
Parties and none of the CDM Parties has any knowledge of any tax
deficiencies that could, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
11
(rr) Transfer Taxes. There are no
transfer taxes or other similar fees or charges under federal
law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the
Partnership or sale by the Partnership of the Units.
(ss) No Default. None of the CDM Parties
is (i) in violation of its certificate or agreement of
limited partnership, limited liability company agreement or
other organizational documents, (ii) in violation of any
law, statute, ordinance, administrative or governmental rule or
regulation applicable to it or of any order, judgment, decree or
injunction 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), could, if continued, reasonably be
expected to have a Material Adverse Effect, or could materially
impair the ability of any of the CDM Parties to perform their
obligations under this Agreement or the Operative Agreements.
(tt) Books and Records. Each of the
Partnership Parties and CDM Resource Management Predecessor
(i) makes and keeps books, records and accounts that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets and (ii) maintains
and has maintained effective internal control over financial
reporting sufficient to provide reasonable assurance 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
accounting principles generally accepted in the United States
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.
(uu) No Changes in Internal
Controls. Since the date of the most recent
balance sheet of CDM Resource Management Predecessor reviewed or
audited by KPMG LLP, (i) none of the Partnership Parties
has been advised of (A) any significant deficiencies in the
design or operation of internal controls that could adversely
affect the ability of any of the Partnership Parties to record,
process, summarize and report financial data, or any material
weaknesses in internal controls and (B) any fraud, whether
or not material, that involves management or other employees who
have a significant role in the internal controls of any of the
Partnership Parties, and (ii) since that date, 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.
(vv) Xxxxxxxx-Xxxxx Act of 2002. There is
and has been no failure on the part of the Partnership or any of
its respective directors or officers, in their capacities as
such, to comply with the provisions of the Xxxxxxxx-Xxxxx Act of
2002 and the rules and regulations promulgated in connection
therewith applicable to the Partnership.
(ww) Critical Accounting Policies. The
section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations —
Critical Accounting Policies and Estimates” in the most
recent Preliminary Prospectus accurately and fully describes
(A) the accounting policies that the Partnership believes
are the most important in the portrayal of the financial
condition and results of operations of the Partnership and CDM
Resource Management Predecessor and that require
management’s most difficult, subjective or complex
judgments; (B) the judgments and uncertainties affecting
the application of critical accounting policies; and
(C) the likelihood that materially different amounts would
be reported under different conditions or using different
assumptions and an explanation thereof.
(xx) Permits. Each of the Partnership
Parties has such permits, consents, licenses, franchises,
certificates and other approvals or authorizations of
governmental or regulatory authorities
(“Permits”) as are necessary under applicable
law to own or lease its properties and to conduct its business
in the manner described in the most recent Preliminary
Prospectus, except for any of the foregoing that could
12
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect; each of the Partnership Parties has fulfilled
and performed all its obligations with respect to such Permits
and no event has occurred that would prevent the Permits from
being renewed or reissued or which allows, or after notice or
lapse of time would allow, revocation or termination thereof or
results or would result in any other impairment of the rights of
the holder of any such Permits, except for any of the foregoing
that could not reasonably be expected to have a Material Adverse
Effect.
(yy) Intellectual Property. Each of
Partnership Parties, with respect to the assets to be owned or
leased by the Partnership Parties at the Initial Delivery Date,
owns or possesses adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights,
licenses, know-how, software, systems and technology (including
trade secrets and other unpatented
and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective
businesses and has no reason to believe that the conduct of its
business will conflict with, and has not received any notice of
any claim of conflict with, any such rights of others.
(zz) Environmental Compliance. Except as
disclosed in the most recent Preliminary Prospectus, and except
as would not, individually or in the aggregate, have a Material
Adverse Effect, the Partnership Parties (i) are in
compliance with any and all laws, regulations, ordinances,
rules, orders, judgments, decrees, permits or other legal
requirements of any governmental authority, including without
limitation any international, national, state, provincial,
regional, or local authority, relating to the protection of
human health and safety, the environment, natural resources, or
hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”) applicable
to such entity, which compliance includes, without limitation,
obtaining, maintaining and complying with all permits and
authorizations and approvals required by Environmental Laws to
conduct their respective businesses, (ii) have received all
permits required of them under applicable Environmental Laws to
conduct their respective businesses as they are currently being
conducted, (iii) are in compliance with all terms and
conditions of any such permits and (iv) have not received
any written notice of any actual or alleged violation of
Environmental Law, or of any potential liability for or other
obligation concerning the presence, disposal or release of
hazardous or toxic substances or wastes, pollutants or
contaminants. Except as described in the most recent Preliminary
Prospectus, and to the knowledge of the CDM Parties
(A) there are no proceedings that are pending, or known to
be contemplated, against the Partnership Parties under
Environmental Laws in which a governmental authority is also a
party, other than such proceedings regarding which it is
reasonably believed no monetary sanctions of $100,000 or more
will be imposed, (B) there are no issues regarding
compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or
toxic substances or wastes, pollutants or contaminants, that
could reasonably be expected to have a material effect on the
capital expenditures, earnings or competitive position of the
Partnership Parties, and (C) none of the Partnership
Parties anticipates material capital expenditures relating to
Environmental Laws.
(aaa) No Workforce Discrimination. None of the
Partnership Parties is in violation of or has received notice of
any violation with respect to any federal or state law relating
to discrimination in the hiring, promotion or pay of employees,
nor any applicable federal or state wage and hour laws, nor any
state law precluding the denial of credit due to the
neighborhood in which a property is situated, the violation of
any of which could reasonably be expected to have a Material
Adverse Affect.
(bbb) Distribution Restrictions. No subsidiary
of the Partnership is currently prohibited, directly or
indirectly, from paying any distributions to the Partnership,
from making any other distribution on such subsidiary’s
equity interests, from repaying to the Partnership any loans or
advances to such subsidiary from the Partnership or from
transferring any of such subsidiary’s property or assets to
the Partnership or any other subsidiary of the Partnership,
except as described in the most recent Preliminary Prospectus.
(ccc) Foreign Corrupt Practices Act. None
of the Partnership Parties nor, to the knowledge of the CDM
Parties, any director, officer, agent, employee or other person
associated with or acting on behalf of the Partnership or any of
the Partnership Parties, has (i) used any Partnership funds
for any unlawful
13
contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated
or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977 or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment.
(ddd) Anti-Money Laundering Laws. The
operations of the Partnership Parties are and have been
conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or
any arbitrator involving the Partnership Parties with respect to
the Money Laundering Laws is pending or, to the knowledge of the
CDM Parties threatened, except, in each case, as would not
reasonably be expected to have a Material Adverse Effect.
(eee) Office of Foreign Assets Control. None
of the Partnership Parties nor, to the knowledge of the CDM
Parties, any director, officer, agent, employee or affiliate of
the Partnership or any of its subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department
(“OFAC”); and the Partnership will not directly
or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(fff) No Distribution of Other Offering
Materials. None of the CDM Parties has
distributed and, prior to the later to occur of any Delivery
Date and completion of the distribution of the Units, will
distribute any offering material in connection with the offering
and sale of the Units other than any Preliminary Prospectus, the
Prospectus and any Issuer Free Writing Prospectus to which the
Representatives have consented in accordance with
Section 1(h) or 5(a)(vi).
(ggg) Market Stabilization. None of the CDM
Parties or any of their affiliates has taken, or will take,
directly or indirectly, any action designed to or that has
constituted or that could reasonably be expected to cause or
result in the stabilization or manipulation of the price of any
security of the Partnership to facilitate the sale or resale of
the Units.
(hhh) Listing on the New York Stock
Exchange. The Units have been approved for
listing on the New York Stock Exchange
(“NYSE”), subject only to official notice of
issuance.
Any certificate signed by any officer of the CDM Parties and
delivered to the Representatives or counsel for the Underwriters
in connection with the offering of the Units shall be deemed a
representation and warranty by such entity, as to matters
covered thereby, to each Underwriter.
2. Purchase of the Units by the
Underwriters. On the basis of the representations
and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Partnership agrees to sell
the Firm Units to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase the
number of Firm Units set forth opposite that Underwriter’s
name in Schedule I hereto. The respective purchase
obligations of the Underwriters with respect to the Firm Units
shall be rounded among the Underwriters to avoid fractional
units, as the Representatives may determine.
In addition, the Partnership grants to the Underwriters an
option to purchase up to [1,050,000] Option Units. Such option
(the “Option”) is exercisable in the event that
the Underwriters sell more Common Units than the number of Firm
Units in the offering and as set forth in Section 4 hereof.
Each Underwriter agrees, severally and not jointly, to purchase
the number of Option Units (subject to adjustments to eliminate
fractional units as the Representatives may determine) that
bears the same proportion to the total number of Option Units to
be sold on such Delivery Date as the number of Firm Units set
forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Units.
14
The price of both the Firm Units and any Option Units purchased
by the Underwriters shall be $[ ]
per Unit. The Partnership shall not be obligated to deliver any
of the Units to be delivered on the Initial Delivery Date or the
Option Unit Delivery Date (as hereinafter defined), as the case
may be, except upon payment for all the Units to be purchased on
the Delivery Date as provided herein.
3. Offering of Units by the
Underwriters. Upon authorization by the
Representatives of the release of the Firm Units, the
Underwriters propose to offer the Firm Units for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the
Units. Delivery of and payment for the Firm
Units shall be made at the offices of Xxxxxx & Xxxxxx
L.L.P. at [10:00 A.M.], New York City time, on
[ ],
2007, or at such other date or place as shall be determined by
agreement between the Representatives and the Partnership. This
date and time are sometimes referred to as the “Initial
Delivery Date.” Delivery of the Firm Units shall be
made to the Representatives for the account of each Underwriter
against payment by the several Underwriters through the
Representatives and of the respective aggregate purchase prices
of the Firm Units being sold by the Partnership to or upon the
order of the Partnership of the purchase price by wire transfer
in immediately available funds to the accounts specified by the
Partnership. 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 each Underwriter hereunder. The
Partnership shall deliver the Firm Units through the facilities
of The Depository Trust Company unless the Representatives
shall otherwise instruct.
The Option granted in Section 2 will expire 30 days
after the date of this Agreement and may be exercised in whole
or in part from time to time by written notice being given to
the Partnership by the Representatives; provided that, if
such date falls on a day that is not a business day, the Option
granted in Section 2 will expire on the next succeeding
business day. Such notice shall set forth the aggregate number
of Option Units as to which the Option is being exercised, the
names in which the Option Units are to be registered, the
denominations in which the Option Units are to be issued and the
date and time, as determined by the Representatives, when the
Option Units are to be delivered; provided, however, that
this date and time shall not be earlier than the Initial
Delivery Date nor earlier than the second business day after the
date on which the Option shall have been exercised nor later
than the fifth business day after the date on which the Option
shall have been exercised. The date and time the Option Units
are delivered are sometimes referred to as the “Option
Unit Delivery Date,” and the Initial Delivery Date and
the Option Unit Delivery Date are sometimes each referred to as
a “Delivery Date.”
Delivery of the Option Units by the Partnership and payment for
the Option Units by the several Underwriters through the
Representatives shall be made at the place specified in the
first sentence of the first paragraph of this Section 4 (or
at such other place as shall be determined by agreement between
the Representatives and the Partnership) at [10:00 A.M.],
New York City time, on the Option Unit Delivery Date. On the
Option Unit Delivery Date, the Partnership shall deliver or
cause to be delivered the Option Units to the Representatives
for the account of each Underwriter against payment by the
several Underwriters through the Representatives and of the
respective aggregate purchase prices of the Option Units being
sold by the Partnership to or upon the order of the Partnership
of the purchase price by wire transfer in immediately available
funds to the accounts specified by the Partnership. 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 each Underwriter hereunder. The Partnership shall
deliver the Option Units through the facilities of The
Depository Trust Company unless the Representatives shall
otherwise instruct.
5. Further Agreements of the Partnership
Parties.
(a) Each of the Partnership Parties, jointly and severally,
covenants and agrees with the Underwriters:
(i) Preparation of Prospectus and Registration
Statement. (i) To prepare the Prospectus in
a form approved by the Representatives and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission’s close of business on the
second business day following the execution and delivery of this
Agreement; (ii) to make no further amendment or any
supplement to the Registration Statement or to the Prospectus
prior to the last Delivery Date except as provided herein;
(iii) to advise the
15
Representatives, promptly after it receives notice thereof, of
the time when any amendment or supplement to the Registration
Statement has been filed or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; (iv) to advise the
Representatives, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus, of the suspension of the qualification
of the Units for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding or examination for
any such purpose or of any request by the Commission for the
amending or supplementing of a Registration Statement, the
Prospectus or any Issuer Free Writing Prospectus or for
additional information; and (v) in the event of the
issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or Issuer Free Writing
Prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal.
(ii) Signed Copies of Registration
Statement. To furnish promptly to each of the
Representatives and to counsel for the Underwriters a signed
copy of the Registration Statement as originally filed with the
Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(iii) Copies of Documents to the
Underwriters. To deliver promptly to the
Underwriters such number of the following documents as the
Underwriters shall reasonably request: (i) conformed copies
of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding
exhibits); (ii) each Preliminary Prospectus, the Prospectus
and any amended or supplemented Prospectus; (iii) each
Issuer Free Writing Prospectus; and (iv) conformed copies
of such opinions, certificates, letters and other documents as
they shall reasonably request; and, if the delivery of a
prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Units or any other
securities relating thereto and if at such time any events shall
have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall
be necessary to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representatives
and, upon their request, to file such document and to prepare
and furnish without charge to each Underwriter and to any dealer
in securities as many copies as the Representatives may from
time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or
effect such compliance.
(iv) Filing of Amendment or
Supplement. To file promptly with the Commission
any amendment to a Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Partnership or the Representatives, be required by the
Securities Act or requested by the Commission. Prior to filing
with the Commission any amendment to a Registration Statement or
supplement to the Prospectus, to furnish a copy thereof to the
Underwriters and counsel for the Underwriters and obtain the
consent of the Representatives to the filing.
(v) Issuer Free Writing Prospectus. Not
to make any offer relating to the Units that would constitute an
Issuer Free Writing Prospectus without the prior written consent
of the Representatives; to retain in accordance with the Rules
and Regulations all Issuer Free Writing Prospectuses not
required to be filed pursuant to the Rules and Regulations; and
if at any time after the date hereof any events shall have
occurred as a result of which any Issuer Free Writing
Prospectus, as then amended or supplemented, would conflict with
the information in the Registration Statement, the most recent
Preliminary Prospectus or the Prospectus or would include an
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made,
not misleading, or, if for any other reason it shall be
necessary to amend or supplement any Issuer Free Writing
Prospectus, to notify the Representatives and, upon their
request, to file such document and to prepare and furnish
without charge to each Underwriter as many copies as the
Representatives may from time to time reasonably request of an
amended or supplemented Issuer Free Writing Prospectus that will
correct such conflict, statement or omission or effect such
compliance.
16
(vi) Reports to Security Holders. As
soon as practicable after the Effective Date (it being
understood that the Partnership shall have until at least 410
or, if the fourth quarter following the fiscal quarter that
includes the Effective Date is the last fiscal quarter of the
Partnership’s fiscal year, 455 days after the end of
the Partnership’s current fiscal quarter), to make
generally available to the Partnership’s securityholders
and to deliver to the Representatives an earnings statement of
the Partnership and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the
Partnership, Rule 158).
(vii) Blue Sky Qualifications. Promptly
from time to time to take such action as the Representatives may
reasonably request to qualify the Units for offering and sale
under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Units; provided that in no event
shall the Partnership or the General Partner be obligated in
connection therewith to qualify as a foreign limited partnership
or as a foreign limited liability company, to file a general
consent to service of process in any jurisdiction, or to subject
itself to taxation in any jurisdiction in which it would not
otherwise be subject.
(viii) Lock-up
Period;
Lock-up
Letters. For a period commencing on the date
hereof and ending on the 180th day after the date of the
Prospectus (the
“Lock-Up
Period”), 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 other Common Units or securities
convertible into or exchangeable for Common Units (other than
the Units and Common Units issued pursuant to employee benefit
plans, option plans or other employee compensation plans
existing on the date hereof), 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 grant of options or restricted units pursuant to plans
existing on the date hereof), (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, (3) file or cause to be filed a registration
statement, including any amendments, with respect to the
registration of any Common Units or securities convertible,
exercisable or exchangeable into Common Units or any other
securities of the Partnership (other than any registration
statement on
Form S-8
relating to a plan existing on the date hereof) or
(4) publicly disclose the intention to do any of the
foregoing, in each case without the prior written consent of the
Representatives on behalf of the Underwriters, and to cause each
officer, director and securityholder set forth on
Schedule II hereto to furnish to the Representatives, prior
to the Initial Delivery Date, a letter or letters, substantially
in the form of Exhibit B hereto (the
“Lock-Up
Agreements”); notwithstanding the foregoing, if
(1) during the last 17 days of the
Lock-Up
Period, the Partnership issues an earnings release or material
news or a material event relating to the Partnership occurs or
(2) prior to the expiration of the
Lock-Up
Period, the Partnership announces that it will release earnings
results during the
16-day
period beginning on the last day of the
Lock-Up
Period, then the restrictions imposed in this
Section 5(a)(viii) shall continue to apply until the
expiration of the
18-day
period beginning on the issuance of the earnings release or the
announcement of the material news or the occurrence of the
material event, unless the Representatives, on behalf of the
Underwriters, waives such extension in writing
The Lock-Up
Period will not apply to the following:
(i) an issuance of Common Units in connection with an
acquisition that, had it occurred one year prior to the first
day of the quarter in which it actually occurred, would have
resulted, on an estimated pro forma basis, in an increase in the
amount of Adjusted Operating Surplus (as defined in the
Partnership Agreement) generated by the Partnership per Unit
over such one-year period; and
(ii) pledges of Common Units and Subordinated Units owned
by Holdings as collateral for loans.
(ix) Application of Proceeds. To apply
the net proceeds from the sale of the Units being sold by the
Partnership as set forth in the Prospectus.
17
(b) Each Underwriter severally agrees that such Underwriter
shall not include any “issuer information” (as defined
in Rule 433 of the Rules and Regulations) in any “free
writing prospectus” (as defined in Rule 405 of the
Rules and Regulations) used or referred to by such Underwriter
without the prior consent of the Partnership (any such issuer
information with respect to whose use the Partnership has given
its consent, “Permitted Issuer Information”);
provided that (i) no such consent shall be required
with respect to any such issuer information contained in any
document filed by the Partnership with the Commission prior to
the use of such free writing prospectus and
(ii) “issuer information,” as used in this
Section 5(b), shall not be deemed to include information
prepared by or on behalf of such Underwriter on the basis of or
derived from issuer information.
6. Expenses. Each of the CDM Parties
covenants and agrees, jointly and severally, whether or not the
transactions contemplated by this Agreement are consummated or
this Agreement is terminated, that the CDM Parties will pay or
cause to be paid all costs, expenses, fees and taxes incident to
and in connection with (a) the authorization, issuance,
sale and delivery of the Units and any stamp duties or other
taxes payable in that connection, and the preparation and
printing of certificates for the Units; (b) the
preparation, printing and filing under the Securities Act of the
Registration Statement (including any exhibits thereto), any
Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus and any amendment or supplement thereto; (c) the
distribution of the Registration Statement (including any
exhibits thereto), any Preliminary Prospectus, the Prospectus,
any Issuer Free Writing Prospectus and any amendment or
supplement thereto, all as provided in this Agreement;
(d) the production and distribution of this Agreement, any
supplemental agreement among Underwriters, and any other related
documents in connection with the offering, purchase, sale and
delivery of the Units; (e) any required review by the FINRA
of the terms of sale of the Units; (f) the listing of the
Units on the NYSE or any other exchange; (g) the
qualification of the Units under the securities laws of the
several jurisdictions as provided in Section 5(a)(vii) and
the preparation, printing and distribution of a Blue Sky
Memorandum (including related fees and expenses of counsel to
the Underwriters); (h) the investor presentations on any
“road show” undertaken in connection with the
marketing of the Units, including, without limitation, expenses
associated with any electronic road show, travel and lodging
expenses of the representatives and officers of the General
Partner and the cost of any aircraft chartered in connection
with the road show; and (i) all other costs and expenses
incident to the performance of the obligations of the
Partnership under this Agreement; provided that, except
as provided in this Section 6 and in Section 11, the
Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on
the Units that it may sell and the expenses of advertising any
offering of the Units made by the Underwriters.
7. Conditions of Underwriters’
Obligations. The respective obligations of the
Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties
of the CDM Parties contained herein, to the performance by the
CDM Parties as applicable, of their respective obligations
hereunder and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a)(i); the
Partnership Parties shall have complied with all filing
requirements applicable to any Issuer Free Writing Prospectus
used or referred to after the date hereof; no stop order
suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus shall have been issued and no proceeding
or examination for such purpose shall have been initiated or
threatened by the Commission; and any request of the Commission
for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been
complied with.
(b) No Underwriter shall have discovered and disclosed to
the Partnership Parties on or prior to such Delivery Date that
the Registration Statement, the Prospectus or the Pricing
Disclosure Package, or any amendment or supplement thereto,
contains an untrue statement of a fact which, in the opinion of
Xxxxx Xxxxx L.L.P., counsel for the Underwriters, 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 not misleading.
18
(c) All corporate, partnership and limited liability
company proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Units,
the Operative Agreements, the Registration Statement, the
Prospectus and any Issuer Free Writing Prospectus and all other
legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the
Partnership shall have furnished to such counsel all documents
and information that they may reasonably request to enable them
to pass upon such matters.
(d) Each of the Transaction Agreements shall have been duly
authorized, executed and delivered by the parties thereto, and
each shall be a valid and legally binding agreement of the
parties thereto, enforceable against such parties in accordance
with its terms.
(e) Xxxxxx & Xxxxxx L.L.P. shall have furnished
to the Representatives their written opinion, as counsel for the
Partnership, addressed to the Representatives and dated such
Delivery Date, in form and substance reasonably satisfactory to
the Representatives, substantially in the form attached hereto
as Exhibit A.
(f) The Representatives shall have received from Xxxxx
Xxxxx L.L.P., counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the issuance
and sale of the Units, the Registration Statement, the
Prospectus and the Pricing Disclosure Package and other related
matters as the Representatives may reasonably require, and the
Partnership shall have furnished to such counsel such documents
as they may reasonably request for the purpose of enabling them
to pass upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from KPMG LLP one or more
letters, in form and substance satisfactory to the
Representatives, addressed to the Representatives and dated the
date hereof (i) confirming that they are independent
registered public accountants within the meaning of the
Securities 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 most recent Preliminary Prospectus,
as of a date not more than three 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.
(h) With respect to the letter(s) of KPMG LLP referred to
in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the
“initial letters”), the Partnership shall have
furnished to the Representatives one or more letters (the
“bring-down letters”) of such accountants,
addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent registered public
accountants within the meaning of the Securities 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, (ii) stating, as of the date of the
bring-down letters (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 three days prior to the date of the
bring-down letters), the conclusions and findings of such firm
with respect to the financial information and other matters
covered by the initial letters and (iii) confirming in all
material respects the conclusions and findings set forth in the
initial letters.
(i) The Partnership Parties shall have furnished to the
Representatives a certificate, dated such Delivery Date, signed
on behalf of the Partnership by (i) the Chief Executive
Officer of GP LLC and (ii) the Chief Financial Officer of
GP LLC, stating that:
(a) The representations, warranties and agreements of the
Partnership Parties in Section 1 are true and correct on
and as of such Delivery Date, and the Partnership Parties have
complied with all agreements contained herein and satisfied all
the conditions to be performed or satisfied by the Partnership
Parties hereunder at or prior to such Delivery Date;
19
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued; and no proceedings or
examination for that purpose have been instituted or, to the
knowledge of such officers, threatened; and
(c) They have carefully examined the Registration
Statement, the Prospectus and the Pricing Disclosure Package,
and, in their opinion (A) (1) the Registration Statement,
as of the Effective Date, (2) the Prospectus, as of its
date and on the applicable Delivery Date, or (3) the
Pricing Disclosure Package, as of the Applicable Time, did not
contain any untrue statement of a material fact and did not omit
to state a material fact required to be stated therein or
necessary to make the statements therein (except in the case of
the Registration Statement, in the light of the circumstances
under which they were made) not misleading, and (B) since
the Effective Date, no event has occurred that should have been
set forth in a supplement or amendment to the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus
that has not been so set forth;
(j) Except as described in the most recent Preliminary
Prospectus, (i) none of the Partnership Parties shall have
sustained since the date of the latest audited financial
statements included in the most recent Preliminary Prospectus
any loss or interference with its business from fire, flood,
explosion or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree; (ii) nor shall there have been a
change in the partners’ capital, capital stock, short-term
or long-term debt of any of the Partnership Parties or change,
or any development involving a prospective change, in or
affecting the condition (financial or otherwise), results of
operations, securityholders’ equity, properties,
management, business or prospects of the Partnership Parties
taken as a whole, the effect of which, in any such case
described in clause (i) or (ii), in the judgment of the
Representatives is so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering
or the delivery of the Units being delivered on such Delivery
Date on the terms and in the manner contemplated in the
Prospectus.
(k) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the
rating accorded the Partnership’s debt by any
“nationally recognized statistical rating
organization” (as that term is defined by the Commission
for purposes of Rule 436(g)(2) of the Rules and
Regulations), and (ii) no such organization shall have
publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the
Company’s debt securities or preferred stock.
(l) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Global
Market or in the over-the-counter market, or trading in any
securities of the Partnership on any exchange or in the
over-the-counter market, shall have been suspended or materially
limited or 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, (ii) a banking
moratorium shall have been declared by federal or state
authorities, (iii) 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
States, (iv) a material disruption shall have occurred in
commercial banking or securities settlement or clearance
services in the United 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 the Representatives, impracticable or
inadvisable to proceed with the public offering or delivery of
the Units being delivered on such Delivery Date on the terms and
in the manner contemplated in the Prospectus.
(m) The New York Stock Exchange shall have approved the
Units for listing, subject only to official notice of issuance
and evidence of satisfactory distribution.
20
(n) The
Lock-Up
Agreements between the Representatives and each person or entity
set forth on Schedule II delivered to the Representatives
on or before the date of this Agreement, shall be in full force
and effect on such Delivery Date.
All such opinions, certificates, letters and documents mentioned
above or elsewhere in this Agreement shall be in compliance with
the provisions hereof only if they are in form and substance
reasonably satisfactory to the Representatives and to counsel
for the Underwriters.
8. Indemnification and Contribution.
(a) Each of the CDM Parties, jointly and severally, shall
indemnify and hold harmless each Underwriter, its directors,
officers and employees and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and
against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited to,
any loss, claim, damage, liability or action relating to
purchases and sales of the Units), to which that Underwriter,
director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in (A) any
Preliminary Prospectus, the Registration Statement, the
Prospectus or in any amendment or supplement thereto,
(B) any Issuer Free Writing Prospectus or in any amendment
or supplement thereto or (C) any Permitted Issuer
Information used or referred to in any “free writing
prospectus” (as defined in Rule 405 of the Rules and
Regulations) used or referred to by any Underwriter, or
(D) any “road show” (as defined in Rule 433
of the Rules and Regulations) not constituting an Issuer Free
Writing Prospectus (a “Non-Prospectus Road
Show”) or (E) any Blue Sky application or other
document prepared or executed by the Partnership Parties (or
based upon any written information furnished by the Partnership
Parties for use therein) specifically for the purpose of
qualifying any or all of the Units under the securities laws of
any state or other jurisdiction (any such application, document
or information being hereinafter called a “Blue Sky
Application”), or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information, any Non-Prospectus Road Show or
any Blue Sky Application, any material fact required to be
stated therein or necessary to make the statements therein not
misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Units or the offering
contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the CDM Parties shall not be
liable under this clause (iii) to the extent that they are
determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse
each Underwriter and each such director, officer, employee or
controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter, director,
officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the CDM Parties
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free
Writing Prospectus or in any such amendment or supplement
thereto or in any Permitted Issuer Information, Non-Prospectus
Road Show or any Blue Sky Application, in reliance upon and in
conformity with written information concerning such Underwriter
fur nished to the CDM Parties through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein,
which information consists solely of the information specified
in Section 8(e). The foregoing indemnity agreement is in
addition to any liability that the CDM Parties may otherwise
have to any Underwriter or to any director, officer, employee or
controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless each of the CDM Parties, their
respective directors (including any person who, with his or her
consent, is named in the Registration Statement as about to
become a director of the General Partner), managers, officers
and
21
employees, and each person, if any, who controls any of the CDM
Parties within the meaning of Section 15 of the Securities
Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
CDM Parties or any such director, manager, officer, employee or
controlling person may become subject, under the Securities Act
or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or
in any amendment or supplement thereto or in any Non-Prospectus
Road Show or Blue Sky Application, or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show or Blue Sky Application, any material
fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter
furnished to the Partnership through the Representatives by or
on behalf of that Underwriter specifically for inclusion
therein, which information is limited to the information set
forth in Section 8(e). The foregoing indemnity agreement is
in addition to any liability that any Underwriter may otherwise
have to any of the CDM Parties or any such director, manager,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action;
provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which
it may have under this Section 8 except to the extent it
has been materially prejudiced by such failure and, provided,
further, that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to an
indemnified party otherwise than under Sections 8(a) and
8(b). If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the
Representatives shall have the right to employ counsel to
represent jointly the Representatives and those other
Underwriters and their respective directors, managers, officers,
employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity
may be sought by the Underwriters against the CDM Parties under
this Section 8 if (i) the Underwriters and the CDM
Parties shall have so mutually agreed; (ii) the CDM Parties
have failed within a reasonable time to retain counsel
reasonably satisfactory to the Underwriters; (iii) the
Underwriters and their respective directors, officers, employees
and controlling persons shall have reasonably concluded that
there may be legal defenses available to them that are different
from or in addition to those available to the CDM Parties; or
(iv) the named parties in any such proceeding (including
any impleaded parties) include both the Underwriters or their
respective directors, officers, employees or controlling
persons, on the one hand, and the CDM Parties, on the other
hand, and representation of both sets of parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them, and in any such event the fees
and expenses of such separate counsel shall be paid by the CDM
Parties. No indemnifying party shall (i) without the prior
written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding and does not include
any findings of fact or admissions of fault or culpability as to
the indemnified party, or (ii) be liable for any settlement
of any such action effected without its written consent, but if
settled with the consent of the indemnifying party or if there
be a final judgment for the plaintiff in any such action,
22
the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this
Section 8 shall for any reason be unavailable to or
insufficient to hold harmless an indemnified party under
Section 8(a), 8(b) or 8(f) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect
the relative benefits received by the CDM Parties, on the one
hand, and the Underwriters, on the other, from the offering of
the Units or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also
the relative fault of the CDM Parties, on the one hand, and the
Underwriters, on the other, with respect to the statements or
omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits
received by the CDM Parties, on the one hand, and the
Underwriters, on the other, with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds
from the offering of the Units purchased under this Agreement
(before deducting expenses) received by the CDM Parties, as set
forth in the table on the cover page of the Prospectus, on the
one hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the Units purchased
under this Agreement, as set forth in the table on the cover
page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the CDM Parties or the Underwriters, the intent of
the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The CDM Parties and the Underwriters agree that it
would not be just and equitable if contributions pursuant to
this Section 8(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in
respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purposes of this
Section 8(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the net proceeds from the sale of the
Units underwritten by it exceeds the amount of any damages that
such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The Underwriters’ obligations to contribute as provided in
this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the CDM Parties
acknowledge and agree that the statements regarding the delivery
of the Units by the Underwriters set forth on the cover page of,
and the concession and reallowance figures and the paragraph
relating to “Stabilization, Short Positions and Penalty
Bids” by the Underwriters appearing under the caption
“Underwriting” in the most recent Preliminary
Prospectus and the Prospectus are correct and constitute the
only information concerning the Underwriters furnished in
writing to the Partnership by or on behalf of the Underwriters
specifically for inclusion in any Preliminary Prospectus,
Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show.
9. Defaulting Underwriters. If, on any
Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the
Units that the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions
which the number of Firm Units set forth opposite the name of
each remaining non-defaulting Underwriter in Schedule I
hereto bears to the total number of Units set forth opposite the
names of all the remaining non-defaulting Underwriters in
Schedule I hereto; provided, however, that the
remaining non-
23
defaulting Underwriters shall not be obligated to purchase any
of the Units on such Delivery Date if the total number of Units
that the defaulting Underwriter or Underwriters agreed but
failed to purchase on such date exceeds 9.09% of the total
number of Units to be purchased on such Delivery Date, and any
remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the number of Units that it agreed to
purchase on such Delivery Date pursuant to the terms of
Section 2. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree,
shall have the right, but shall not be obligated, to purchase,
in such proportion as may be agreed upon among them, all the
Units to be purchased on such Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the Units that the
defaulting Underwriter or Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect
to any Option Unit Delivery Date, the obligation of the
Underwriters to purchase, and of the Partnership to sell, the
Option Units) shall terminate without liability on the part of
any non-defaulting Underwriter or any of the CDM Parties, except
that the Partnership will continue to be liable for the payment
of expenses to the extent set forth in Sections 6 and 11.
As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule I
hereto who, pursuant to this Section 9, purchases Units
that a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have to the CDM Parties for damages
caused by its default. If other Underwriters are obligated or
agree to purchase the Units of a defaulting or withdrawing
Underwriter, either the Representatives or the Partnership may
postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for
the Partnership or counsel for the Underwriters may be necessary
in the Registration Statement, the Prospectus or in any other
document or arrangement.
10. Termination. The obligations of the
Underwriters hereunder may be terminated by the Representatives
by notice given to and received by the Partnership prior to
delivery of and payment for the Firm Units if, prior to that
time, any of the events described in Sections 7(j), 7(k) or
7(l) shall have occurred or if the Underwriters shall decline to
purchase the Units for any reason permitted under this Agreement.
11. Reimbursement of Underwriters’
Expenses. If (a) the Partnership shall fail
to tender the Units for delivery to the Underwriters by reason
of any failure, refusal or inability on the part of any of the
CDM Parties to perform any agreement on its part to be
performed, or because any other condition of the
Underwriters’ obligations hereunder required to be
fulfilled by the CDM Parties is not fulfilled for any reason or
(b) the Underwriters shall decline to purchase the Units
for any reason permitted under this Agreement, the CDM Parties
will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred
by the Underwriters in connection with this Agreement and the
proposed purchase of the Units, and upon demand the CDM Parties
shall pay the full amount thereof to the Underwriters, as
appropriate. If this Agreement is terminated pursuant to
Section 9 by reason of the default of one or more
Underwriters, the CDM Parties shall not be obligated to
reimburse any defaulting Underwriter on account of those
expenses.
12. Research Analyst Independence. Each
of the CDM Parties acknowledges that the Underwriters’
research analysts and research departments are required to be
independent from their respective investment banking divisions
and are subject to certain regulations and internal policies,
and that such Underwriters’ research analysts may hold
views and make statements or investment recommendations or
publish research reports with respect to the Partnership or the
offering of the Units that differ from the views of their
respective investment banking divisions. Each of the CDM Parties
hereby waives and releases, to the fullest extent permitted by
law, any claims that the CDM Parties may have against the
Underwriters with respect to any conflict of interest that may
arise from the fact that the views expressed by their
independent research analysts and research departments may be
different from or inconsistent with the views or advice
communicated to the CDM Parties by such Underwriters’
investment banking divisions. Each of the CDM Parties
acknowledges that each of the Underwriters is a full service
securities firm and as such from time to time, subject to
applicable securities laws, may effect transactions for its own
account or the account of its customers and hold long or
24
short positions in debt or equity securities of the companies
that may be the subject of the transactions contemplated by this
Agreement.
13. No Fiduciary Duty. Each of the CDM
Parties acknowledges and agrees that in connection with this
offering and sale of the Units or any other services the
Underwriters may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or
otherwise, between the parties or any oral representations or
assurances previously or subsequently made by the Underwriters:
(i) no fiduciary or agency relationship between any of the
CDM Parties and any other person, on the one hand, and the
Underwriters, on the other, exists; (ii) the Underwriters
are not acting as advisors, expert or otherwise, to any of the
CDM Parties, including, without limitation, with respect to the
determination of the public offering price of the Units, and
such relationship between the CDM Parties, on the one hand, and
the Underwriters, on the other, is entirely and solely
commercial, based on arms-length negotiations; (iii) any
duties and obligations that the Underwriters may have to any of
the CDM Parties shall be limited to those duties and obligations
specifically stated herein; and (iv) the Underwriters and
their respective affiliates may have interests that differ from
those of the CDM Parties. Each of the CDM Parties hereby waives
any claims that any such entity may have against the
Underwriters with respect to any breach of fiduciary duty in
connection with this offering of Units.
14. Notices. All statements, requests,
notices and agreements hereunder shall be in writing, and:
(a) if to any of the CDM Parties, shall be delivered or
sent by mail, telex or facsimile transmission to such CDM Party
at 00000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxxx, Xx., Chief Financial
Officer;
(b) if to the Underwriters, shall be delivered or sent by
mail or facsimile transmission to Xxxxxx Brothers Inc., 000
Xxxxx Xxxxxx, 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Syndicate Registration (Fax:
000-000-0000),
with a copy, in the case of any notice pursuant to
Section 8(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Fax:
000-000-0000)
and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000,
Attention: Syndicate Department.
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The CDM Parties shall be
entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by the
Representatives and the Underwriters shall be entitled to act
and rely upon any request, consent, notice or agreement given or
made on behalf of the CDM Parties by the Partnership.
15. Persons Entitled to Benefit of
Agreement. This Agreement shall inure to the
benefit of and be binding upon the Underwriters, the CDM Parties
and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those
persons, except that (A) the representations, warranties,
indemnities and agreements of the CDM Parties contained in this
Agreement shall also be deemed to be for the benefit of the
directors, officers and employees of the Underwriters and each
person or persons, if any, who control any Underwriter within
the meaning of Section 15 of the Securities Act, and
(B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for
the benefit of directors and managers of the General Partner,
officers of the General Partner who have signed the Registration
Statement and any person controlling any of the CDM Parties
within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this
Section 15, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained
herein.
16. Survival. The respective indemnities,
representations, warranties and agreements of the CDM Parties
and the Underwriters contained in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement,
shall survive the delivery of and payment for the Units and
shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person
controlling any of them.
17. Definition of the Terms “Business Day” and
“Subsidiary.” For purposes of
this Agreement, (a) “business day” means
each Monday, Tuesday, Wednesday, Thursday or Friday that is not
a day on which
25
banking institutions in New York are generally authorized or
obligated by law or executive order to close and
(b) “subsidiary” has the meaning set forth
in Rule 405 of the Rules and Regulations.
18. Governing Law. This Agreement
shall be governed by and construed in accordance with the laws
of the State of New York.
19. Counterparts. This Agreement may be
executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall
together constitute one and the same instrument.
20. Headings. The headings herein are
inserted for convenience of reference only and are not intended
to be part of, or to affect the meaning or interpretation of,
this Agreement.
26
If the foregoing correctly sets forth the agreement among the
CDM Parties and the Underwriters, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
CDMR HOLDINGS, LLC
By: |
Name |
Title
CDM GP, LLC
By: |
Name |
Title
CDM RP GP, L.P.
By: |
Name |
Title
CDM RESOURCE PARTNERS, L.P.
By: | CDM RP GP, L.P., its general partner |
By: |
Name |
Title
Company Signature Page
27
CDM OLP GP, LLC
By: | CDM Resource Partners, L.P., its sole member |
By: | CDM RP GP, L.P., its general partner |
By: |
Name Title |
CDM RESOURCE MANAGEMENT, LTD.
By: | CDM OLP GP, LLC, its general partner |
By: |
CDM Resource Partners, L.P., its sole member |
By: | CDM RP GP, L.P., its general partner |
By: |
Name Title |
28
Xxxxxx Brothers Inc. | ||
Merrill Lync |
h, Xxxxxx,
Xxxxxx & Xxxxx Incorporated |
|
Xxxxxxx, Sachs & Co. Wachovia Capital Markets, LLC Tudor, Xxxxxxxxx & Co. Securities, Inc. |
Accepted:
For themselves and as Representatives
of the several Underwriters named
in Schedule I hereto:
of the several Underwriters named
in Schedule I hereto:
By: XXXXXX BROTHERS INC.
By: |
Authorized Representative |
By: | MERRILL LYNC | H, XXXXXX, XXXXXX & XXXXX INCORPORATED |
By: |
Authorized Representative |
Representatives’ Signature Page
29
SCHEDULE I
Number of Firm |
||||
Units to be Purchased | ||||
Xxxxxx Brothers Inc.
|
||||
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
|
||||
Xxxxxxx, Sachs & Co.
|
||||
Wachovia Capital Markets, LLC
|
||||
Tudor, Xxxxxxxxx & Co. Securities, Inc.
|
||||
7,000,000 | ||||
Schedule I
SCHEDULE II
[Persons or Entities to Sign
Lock-Up
Agreement]
Schedule II
SCHEDULE III
Additional
Information in Pricing Disclosure Package
1. | Number of Units: |
2. | Price to the Public: |
Schedule III
EXHIBIT A
[FORM OF
OPINION OF XXXXXX & XXXXXX L.L.P.]
A-1
EXHIBIT B
[FORM OF LOCK-UP
AGREEMENT]
B-1