QR ENERGY, LP [•] Common Units Representing Limited Partner Interests UNDERWRITING AGREEMENT
Exhibit 1.1
[•] Common Units
Representing Limited Partner Interests
Dated: , 201
Table of Contents
Page | ||||
SECTION 1. Representations and Warranties |
4 | |||
SECTION 2. Sale and Delivery to Underwriters; Closing |
20 | |||
SECTION 3. Covenants of the Partnership Parties |
21 | |||
SECTION 4. Payment of Expenses |
25 | |||
SECTION 5. Conditions of Underwriters’ Obligations |
26 | |||
SECTION 6. Indemnification |
29 | |||
SECTION 7. Contribution |
32 | |||
SECTION 8. Representations, Warranties and Agreements to Survive Delivery |
33 | |||
SECTION 9. Termination of Agreement |
33 | |||
SECTION 10. Default by One or More of the Underwriters |
34 | |||
SECTION 11. Notices |
35 | |||
SECTION 12. Parties |
35 | |||
SECTION 13. GOVERNING LAW AND TIME |
35 | |||
SECTION 14. Effect of Headings |
35 | |||
SECTION 15. Definitions |
35 | |||
SECTION 16. Permitted Free Writing Prospectuses |
38 | |||
SECTION 17. Absence of Fiduciary Relationship |
38 |
EXHIBITS
Schedule 1
|
— | Underwriters | ||
Schedule 2
|
— | Persons Delivering Lock-Up Agreements | ||
Schedule 3
|
— | Subsidiaries of the Partnership | ||
Schedule 4
|
— | List of Directors and Officers | ||
Schedule 5
|
Breakdown of the Sponsor Units | |||
Exhibit A
|
— | Form of Lock-Up Letter Agreement | ||
Exhibit B
|
— | Form of Opinion of Partnership Counsel | ||
Exhibit C
|
— | Price-Related Information | ||
Exhibit D
|
— | Issuer Free Writing Prospectuses |
i
[•] Common Units
Representing Limited Partner Interests
Representing Limited Partner Interests
, 201
Xxxxx Fargo Securities, LLC
X.X. Xxxxxx Securities LLC
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets, LLC
As Representatives of the several Underwriters
named in Schedule 1 hereto
X.X. Xxxxxx Securities LLC
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets, LLC
As Representatives of the several Underwriters
named in Schedule 1 hereto
c/o Wells Fargo Securities, LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
QR Energy, LP, a Delaware limited partnership (the “Partnership”), confirms its
agreement with Xxxxx Fargo Securities, LLC (“Xxxxx Fargo Securities”), X.X. Xxxxxx
Securities LLC (“XX Xxxxxx”), Xxxxxxx Xxxxx & Associates, Inc (“Xxxxxxx Xxxxx”) and
RBC Capital Markets, LLC (“RBC”) and each of the other Underwriters named in
Schedule 1 hereto (collectively, the “Underwriters,” which term shall also include
any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Xxxxx
Fargo Securities, XX Xxxxxx, Xxxxxxx Xxxxx and RBC are acting as representatives (in such capacity,
the “Representatives”), with respect to the issuance and sale by the Partnership of a total
of [•] common units (the “Initial Securities”) representing limited partner interests in
the Partnership (the “Common Units”), and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of Initial Securities set forth in said
Schedule 1 hereto, and with respect to the grant by the Partnership to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of [•] additional Common Units to cover over-allotments, if any. The
Initial Securities to be purchased by the Underwriters and all or any part of the [•] Common Units
subject to the option described in Section 2(b) hereof (the “Option Securities”)
are hereinafter called, collectively, the “Securities.” Certain terms used in this
Agreement are defined in Section 15 hereof.
The Partnership understands that the Underwriters propose to make a public offering of the
Securities as soon as the Representatives deem advisable after this Agreement has been executed and
delivered.
Promptly after the execution of this Agreement, the Partnership will prepare and file with the
Commission a prospectus in accordance with the provisions of Rule 430A and Rule 424(b), and the
Partnership has previously advised you of all information (financial and other) that will
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be set forth therein. Such prospectus in the form first furnished to the Underwriters for use
in connection with the offering of the Securities is herein called the “Prospectus.” Any
Prospectus delivered pursuant to Rule 173(d) shall be identical to the electronically transmitted
copy thereof filed with the Commission pursuant to Rule 424(b), except to the extent permitted by
Regulation S-T.
QRE GP, LLC, a Delaware limited liability company (the “General Partner”), is the sole
general partner of the Partnership. The General Partner and the Partnership are together referred
to herein as the “Partnership Parties.” The Partnership is the direct owner of QRE
Operating, LLC, a Delaware limited liability company, the sole subsidiary of the Partnership (the
“Operating Subsidiary” and together with the Partnership Parties, the “Partnership
Entities”). QA Global GP, LLC, a Delaware limited liability company (“QA Global”), is
the general partner of QA Holdings, LP, a Delaware limited partnership (“QA Holdings”),
which is (i) the sole general partner of QA GP, LLC, a Delaware limited liability company and the
sole general partner of The Quantum Aspect Partnerships, LP, a Delaware limited partnership and the
sole general partner of each of Quantum Resources A1, LP, a Delaware limited partnership
(“QRA”), Quantum Resources B, LP, a Delaware limited partnership (“QRB”), and
Quantum Resources C, LP, a Delaware limited partnership (“QRC”); (ii) the sole owner of
each of QAB Carried WI, LP, a Delaware limited partnership (“QAB”), QAC Carried WI, LP, a
Delaware limited partnership (“QAC”), and Black Diamond Resources, LLC, a Delaware limited
liability company (“Black Diamond” and collectively with QRA, QRB, QRC, QAB and QAC, the
“Fund Group” and each, individually, a “Fund Entity”); and (iii) the sole owner of
Quantum Resources Management, LLC, a Delaware limited liability company (“Quantum Resources
Management”). The Partnership Entities, [insert QR Parties] are collectively referred to herein
as the “QR Parties” and each, individually, as a “QR Party”.
It is understood and agreed by all parties that the Partnership was recently formed by the
Fund Group and QA Holdings to own and acquire producing oil and natural gas properties in North
America. Prior to the date hereof, the Partnership Parties and the Fund Group entered into an
agreement (the “Stakeholders’ Agreement”) relating to certain rights and obligations of the
Partnership Parties and the Fund Group.
It is further understood and agreed by all parties that at the Closing Date, the following
transactions (the “Formation Transactions”) will occur:
(a) The Fund Group will contribute to the Partnership (i) specified oil and natural gas
properties, certain wellbore assignments and an overriding oil royalty interest (collectively, the
“Partnership Properties”), and (ii) certain derivative contracts covering the Partnership’s
future oil and natural gas production (collectively, the “Derivative Contracts”);
(b) The Partnership will issue to the Fund Group [•] Common Units and [•] subordinated units,
representing limited partner interests in the Partnership (“Subordinated Units”),
collectively representing an aggregate [•]% limited partner interest in the Partnership;
(c) The Partnership will issue to the General Partner [•] general partner units, representing
a 0.1% general partner interest in the Partnership, and provide for the General
2
Partner’s management incentive fee in the Partnership Agreement (as defined in Section
1(a)(10) hereof);
(d) The Partnership will enter into a $500 million revolving credit facility (the “Credit
Facility”);
(e) The Partnership will use the net proceeds, after deducting underwriting discounts,
structuring fees and expenses, from the issuance and sale of the Initial Securities (the “Net
Proceeds”) and concurrent borrowings under the Credit Agreement to make a cash distribution to
the Fund Group, as described under the heading “Use of Proceeds” in the Prospectus (as defined
below);
(f) The Partnership Entities and Quantum Resources Management will enter into a services
agreement (the “Services Agreement”), pursuant to which Quantum Resources Management will
agree to provide the Partnership Entities with the services necessary to manage and operate the
Partnership’s business, including the management and operation of the Partnership Properties;
(g) The QR Parties will enter into an omnibus agreement (the “Omnibus Agreement”) that
will address certain competition and indemnification matters, as well as the Partnership’s right to
purchase certain properties that the Fund Group may offer for sale in future periods and the
Partnership’s right to acquire 25% of certain acquisitions available to the Fund Group in future
periods;
(h) The Partnership and the Fund Group will enter into a contribution, conveyance and
assumption agreement (the “Contribution Agreement”), pursuant to which the Fund Group will
contribute the Partnership Properties, the Derivative Contracts and certain related rights and
obligations to the Partnership;
(i) The General Partner and [ ] will enter into a tax sharing agreement (the “Tax
Sharing Agreement”) to establish the general principles under which they will allocate and
share various taxes and related liabilities;
(j) The Partnership Parties will enter into certain indemnification agreements (collectively,
the “Indemnification Agreements”) with the directors and certain of the executive officers
of the General Partner;
(k) The General Partner LLC Agreement (as defined in Section 1(a)(9) hereof) will be
amended and restated to the extent necessary to reflect the foregoing transactions and any other
transactions contemplated by the Contribution Documents (as so amended and restated, the
“Amended and Restated General Partner LLC Agreement”); and
(l) The Partnership Agreement (as defined in Section 1(a)(10) hereof) will be amended
and restated to the extent necessary to reflect the foregoing transactions and any other
transactions contemplated by the Contribution Documents (as so amended and restated, the
“Amended and Restated Partnership LLC Agreement”).
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In connection with the Fund Group’s contribution of the Partnership Properties and Derivative
Contracts to the Partnership, the parties will enter into various agreements, assignments,
conveyances, contribution agreements and related documents, including the Contribution Agreement
(collectively, the “Contribution Documents” and, collectively with the Stakeholders’
Agreement, the Services Agreement, the Omnibus Agreement, the Tax Sharing Agreement, the
Indemnification Agreements, the Organizational Documents (as defined in Section 15 hereof)
and the Credit Facility, collectively the “Operative Documents”).
If the Underwriters do not exercise the option described in Section 2(b) hereof to
purchase the Option Securities, we will issue the Option Securities to the Fund Group at the
expiration of the Option Period. To the extent the Underwriters exercise their option to purchase
the Option Securities, the number of Option Securities purchased by the Underwriters pursuant to
such exercise will be issued to the public, and the remainder of the Option Securities, if any,
will be issued to the Fund Group at the expiration of the Option Period. The proceeds from any
exercise of the Underwriters’ option to purchase Option Securities will be paid to the Fund Group.
SECTION 1. Representations and Warranties. |
(a) Representations and Warranties by the QR Parties. Each of the QR Parties, jointly and
severally, represents and warrants to each Underwriter as of the date hereof, as of the Applicable
Time, as of the Closing Date referred to in Section 2(c) hereof, and as of each Option
Closing Date, if any, referred to in Section 2(b) hereof, or as of such other time or times
as may be specified herein, and agrees with each Underwriter, as follows:
(1) Compliance with Registration Requirements. The offer and sale of the
Securities have been duly registered under the 1933 Act pursuant to the Registration
Statement. Each of the Initial Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order suspending the
effectiveness of the Initial Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Partnership, are contemplated by the
Commission, and any request on the part of the Commission for additional information has
been complied with.
At the respective times the Initial Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became or become effective
and at the Closing Date (and, if any Option Securities are purchased, at the applicable
Option Closing Date), the Initial Registration Statement, any Rule 462(b) Registration
Statement and any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did
not and will not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements thereto, as of its
date, at the Closing Date (and, if any Option Securities are
purchased, at the applicable Option Closing Date), and at any time when a prospectus is
required by applicable law to be delivered in connection with sales of Securities
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(including, without limitation, pursuant to Rule 173(d)), included or will include an untrue
statement of a material fact or omitted or will 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.
As of the Applicable Time, each Issuer Free Writing Prospectus issued at or prior to
the Applicable Time, the Statutory Prospectus and the information included on Exhibit
C hereto, all considered together (collectively, the “General Disclosure
Package”), did not and will not contain any untrue statement of a material fact or
omitted or will 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.
The representations and warranties set forth in the two immediately preceding
paragraphs shall not apply to statements in or omissions from the Registration Statement,
the Prospectus or any General Disclosure Package made in reliance upon and in conformity
with the Underwriting Information (as defined in Section 6(a) hereof) furnished to
the Partnership in writing by any Underwriter through the Representatives expressly for use
therein.
Each preliminary prospectus and prospectus filed as part of the Registration Statement
as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424(b) in
connection with the offering of the Securities (including, without limitation, the Statutory
Prospectus and the Prospectus), complied and will comply when so filed in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations.
The copies of the Initial Registration Statement and any Rule 462(b) Registration
Statement and any amendments thereto and the copies of the Statutory Prospectus, any other
preliminary prospectus, each Issuer Free Writing Prospectus that is required to be filed
with the Commission pursuant to Rule 433 and the Prospectus and any amendments or
supplements thereto delivered and to be delivered to the Underwriters (electronically or
otherwise) in connection with the offering of the Securities were and will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
The Partnership has made available a “bona fide electronic road show” (as defined in
Rule 433(h)) in compliance with Rule 433(d)(8)(ii) such that no filing with the Commission
of any “road show” (as defined in Rule 433(h)) is required in connection with the offering
of the Securities.
Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offering and sale of the Securities, did not, does not
and will not include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, the Statutory Prospectus or
the Prospectus and any preliminary or other prospectus deemed to be a part thereof that
has not been superseded or modified.
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At the time of filing the Initial Registration Statement, any 462(b) Registration
Statement and any post-effective amendments thereto, as of the earliest time after the
effective date of the Initial Registration Statement that the Partnership or any other
offering participant made a bona fide offer of the Securities within the meaning of Rule
164(h)(2), and at the date hereof, the Partnership was not and is not an “ineligible issuer”
as defined in Rule 405, in each case without taking into account any determination made by
the Commission pursuant to paragraph (2) of the definition of such term in Rule 405; and,
without limiting the foregoing, the Partnership has at all relevant times met, meets and
will at all relevant times meet the requirements of Rule 164 for the use of a free writing
prospectus (as defined in Rule 405) in connection with the offering contemplated hereby.
(2) Independent Accountants. The accountants who certified the financial
statements and supporting schedules included in the Registration Statement, the Statutory
Prospectus and the Prospectus are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(3) Financial Statements. The financial statements of the Partnership and QA
Holdings included in the Registration Statement, the General Disclosure Package and the
Prospectus, together with the related schedules (if any) and notes, present fairly the
financial position of the Partnership and QA Holdings, as applicable, at the dates indicated
and the results of operations, changes in unitholders’ equity and cash flows of the
Partnership and QA Holdings, as applicable, for the periods specified; the financial
statements of any other entities or businesses included in the Registration Statement, the
General Disclosure Package or the Prospectus, together with the related schedules, if any,
and notes, present fairly the financial position of each such entity or business, as the
case may be, and its consolidated subsidiaries (if any) at the dates indicated and the
results of operations, changes in unitholders’ (or other owners’) equity and cash flows of
such entity or business, as the case may be, and its consolidated subsidiaries (if any) for
the periods specified; and all such financial statements have been prepared in conformity
with GAAP applied on a consistent basis throughout the periods involved and comply with all
applicable accounting requirements under the 1933 Act and the 1933 Act Regulations. The
supporting schedules, if any, included in the Registration Statement present fairly, in
accordance with GAAP, the information required to be stated therein. The information (other
than the pro forma information) in the Statutory Prospectus and the Prospectus under the
captions “[Summary Historical and Pro Forma Financial Data]” and “[Selected Historical and
Pro Forma Financial Data]” presents fairly the information shown therein and has been
compiled on a basis consistent with the audited financial statements included in the
Registration Statement, the Statutory Prospectus and the Prospectus. The pro forma
financial statements and the related notes and the pro forma and pro forma as adjusted
financial information and related notes (if any) included in the Registration Statement, the
General Disclosure Package and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the Commission’s rules and guidelines with respect to
pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions included therein
provide a reasonable basis for presenting the significant effects directly attributable to
the transaction and events disclosed therein, the related pro forma adjustments give
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appropriate effect to those assumptions and have been properly applied to the historical
financial statement amounts in the pro forma financial statements included in the
Registration Statement, the General Disclosure Package and the Prospectus; and the pro forma
information appearing in the Statutory Prospectus and the Prospectus under the captions
“[Summary Historical and Pro Forma Financial Data]” and “[Selected Historical and Pro Forma
Financial Data]” presents fairly the information shown therein and has been compiled on a
basis consistent with that of the pro forma financial statements included in the
Registration Statement, the Statutory Prospectus and the Prospectus. All information
contained in the Registration Statement, the General Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as defined in Regulation G of the Commission)
complies with Regulation G and Item 10 of Regulation S-K of the Commission, to the extent
applicable. There are no financial statements (historical or pro forma) that are required
to be included in the Registration Statement, the General Disclosure Package or the
Prospectus that are not so included.
(4) Independent Reserve Engineers. Xxxxxx & Xxxxx, Ltd., the reserve engineers
who audited the estimates of the of the proved reserves of the Partnership Properties
disclosed in the Registration Statement, the General Disclosure Package and the Prospectus,
are independent petroleum engineers.
(5) Information Underlying Reserve Report. The information underlying the
estimates of the Partnership’s proved reserves that was supplied to Xxxxxx & Xxxxx, Ltd. for
the purposes of auditing the estimates of the proved reserves of the Partnership Properties
disclosed in the Registration Statement, the General Disclosure Package and the Prospectus,
including, production, costs of operation, and, to the QR Parties’ knowledge, future
operations and sales of production, was true and correct in all material respects on the
dates such estimates were made, and such information was supplied and was prepared in
accordance with customary industry practices; and the estimates of such reserves and
standardized measure thereof as described in the Registration Statement, the General
Disclosure Package and the Prospectus and future net cash flows reflected in the reserve
reports referenced therein have been prepared in a manner that complies with the applicable
requirements of the 1933 Act and the 1933 Act Regulations. Other than normal production of
the reserves, product price fluctuations, and fluctuations of demand for such products, and
except as disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, the QR Parties are not aware of any facts or circumstances that would result in
a materially adverse change in the estimates of reserves in the aggregate, or the aggregate
present value of the future net cash flows therefrom, as described in the Registration
Statement, the General Disclosure Package and the Prospectus.
(6) No Material Adverse Change in Business. Since the respective dates as of
which information is given in the Registration Statement, the General Disclosure Package and
the Prospectus (in each case exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement), except as otherwise stated
therein, (A) there has been no material adverse change in the condition, financial or
otherwise, or in the results of operations, business affairs or business prospects of the
Partnership Entities or the Partnership Properties taken as a whole, whether or not arising
7
in the ordinary course of business (a “Material Adverse Effect”), (B) there have
been no transactions entered into by any of the QR Parties that are material with respect to
the Partnership Entities, taken as a whole, (C) none of the QR Parties has incurred any
liability or obligation, direct or contingent, that, individually or in the aggregate, is
material to the Partnership Entities, taken as a whole, and (D) there has been no dividend
or distribution of any kind declared, paid or made by the Partnership.
(7) Formation and Good Standing of the QR Parties. Each of the QR Parties has
been duly formed and is validly existing as a limited partnership or limited liability
company, as the case may be, and is in good standing under the laws of the State of
Delaware, with full partnership or limited liability company power and authority to own,
lease and operate its properties and conduct its business as described in the Registration
Statement, the General Disclosure Package and the Prospectus, and (A) to execute and deliver
this Agreement and consummate the transactions contemplated hereby, (B) in the case of the
Partnership, to issue, sell and deliver the Securities, (C) in the case of the General
Partner, to act as the general partner of the Partnership, and (D) in the case of each of
the QR Parties that is a party to an Operative Document, to execute and deliver such
Operative Document and consummate the transactions contemplated thereby.
(8) Foreign Qualification and Registration of the QR Parties. Each of the QR
Parties is duly qualified to transact business as a foreign limited partnership or limited
liability company, as the case may be, and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing would not,
individually or in the aggregate, result in a Material Adverse Effect. Schedule 3
accurately sets forth the jurisdiction of organization, each jurisdiction of foreign
qualification and the names of the managing members of the Operating Subsidiary.
(9) Ownership of the General Partner. The General Partner is (A) 50% owned by
QR Holdings (QRE) GP, LLC, a _______ limited liability company (“QR Holdings GP”),
and (B) 50% owned by QR Energy Holdings, LLC, a _______ limited liability company (“QR
Energy Holdings”). QR Holdings GP and QR Energy Holdings are collectively referred to
herein as the “GP Members.” The GP Members directly own all of the issued and
outstanding membership interests in the General Partner; such membership interests have been
duly authorized and validly issued in accordance with the Limited Liability Company
Agreement of the General Partner, as in effect on the date hereof (the “General Partner
LLC Agreement”), and, at the Closing Date and each Option Closing Date, if any, will be
duly authorized and validly issued in accordance with the Amended and Restated General
Partner LLC Agreement, and are fully paid (to the extent required by the General Partner LLC
Agreement) and non-assessable (except as such non-assesssability may be limited by Sections
18-607 and 18-804 of the Delaware Limited Liability Company Act (the “Delaware LLC
Act”)); and the GP Members own such membership interests free and clear of all Liens.
(10) Ownership of the General Partner Interest in the Partnership. The General
Partner is and, after giving effect to the Formation Transactions, at the Closing
8
Date and
each Option Closing Date, if any, will be, the sole general partner of the Partnership, with
a 0.1% general partner interest in the Partnership; such general partner interest has been
duly authorized and validly issued in accordance with the Agreement of Limited Partnership
of the Partnership, as in effect on the date hereof (the “Partnership Agreement”),
and, at the Closing Date and each Option Closing Date, if any, will be duly authorized and
validly issued in accordance with the Amended and Restated Partnership Agreement; and the
General Partner owns such general partner interest free and clear of all Liens.
(11) Ownership of Sponsor Units. At the Closing Date, after giving effect to
the Formation Transactions (and assuming no purchase of Option Securities by the
Underwriters on the Closing Date), the Fund Group will own [•] Common Units and [•]
Subordinated Units, in such proportions as are reflected on Schedule [5] hereto, and
the right to receive additional Common Units in an amount equal to [•] less the number of
Option Securities, if any, purchased by the Underwriters pursuant to the Over-Allotment
Option described in Section 2(b) hereof (such Common Units and Subordinated Units
and any Common Units issuable pursuant to the right to receive additional Common Units
described in this Section 1(a)(11) being collectively referred to herein as the
“Sponsor Units”); the Sponsor Units and the limited partner interests represented
thereby will have been 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 non-assessable (except as such non-assessability may be affected by Sections 17-303,
17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware
LP Act”)); and the Fund Group will own the Sponsor Units free and clear of all Liens.
(12) Ownership of the Operating Subsidiary. At the Closing Date and each
Option Closing Date, if any, after giving effect to the Formation Transactions, the
Partnership will own, directly or indirectly, all of the issued and outstanding membership
interests in the Operating Subsidiary; such membership interests will be duly authorized and
validly issued in accordance with the Organizational Document of the Operating Subsidiary,
as in effect at such time, fully paid (to the extent required by the Organizational Document
of the Operating Subsidiary) and nonassessable (except as nonassessability may be affected
by Sections 18-607 and 18-804 of the Delaware LLC Act); and the Partnership will own all
such membership interests free and clear of all Liens.
(13) No Other Subsidiaries. Other than its ownership interests in the
Operating Subsidiary, the Partnership does not own, and at the Closing Date and each Option
Closing Date, if any, will not own, directly or indirectly, an equity interest in any
corporation, partnership, limited liability company, joint venture, association or other
entity. Other than its ownership interest in the Partnership and its indirect ownership
interests in the Operating Subsidiary, the General Partner does not own, and at the Closing
Date and each Option Closing Date, if any, will not own, directly or indirectly,
an equity interest in any corporation, partnership, limited liability company, joint
venture, association or other entity.
9
(14) Authorization, Execution and Delivery of this Agreement and the Partnership
Parties’ Organizational Documents.
(A) This Agreement has been duly authorized and validly executed and delivered
by or on behalf of each of the QR Parties that is party hereto.
(B) The General Partner LLC Agreement has been duly authorized, executed and
delivered by the GP Members and is a valid and legally binding agreement of the GP
Members, enforceable against the GP Members in accordance with its terms.
(C) The Partnership Agreement has been duly authorized, executed and delivered
by the General Partner and The Quantum Aspect Partnerships, LP and is a valid and
legally binding agreement of the General Partner and The Quantum Aspect
Partnerships, LP, enforceable against the General Partner in accordance with its
terms.
(15) Authorization, Execution and Delivery of the Operative Documents. At or
before the Closing Date:
(A) The Amended and Restated General Partner LLC Agreement will be duly
authorized, executed and delivered by the GP Members and will be a valid and legally
binding agreement of the GP Members, enforceable against the GP Members in
accordance with its terms;
(B) The Amended and Restated Partnership Agreement will be duly authorized,
executed and delivered by the General Partner and The Quantum Aspect Partnerships,
LP and will be a valid and legally binding agreement of the General Partner and The
Quantum Aspect Partnerships, LP, enforceable against each of them in accordance with
its terms;
(C) The Organizational Document of the Operating Subsidiary will be duly
authorized, executed and delivered by the Partnership and will be valid and legally
binding agreements of the Partnership, enforceable against the Partnership in
accordance with their terms;
(D) The Stakeholders’ Agreement will have been duly authorized, executed and
delivered by the each of the Partnership Parties and each Fund Entity and will be a
valid and legally binding agreement of each of them, enforceable against each of
them in accordance with its terms;
(E) The Services Agreement will be duly authorized, executed and delivered by
the Partnership Entities and Quantum Resources Management
and will be a valid and legally binding agreement of each of them, enforceable
against each of them in accordance with its terms;
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(F) The Omnibus Agreement will be duly authorized, executed and delivered by
the QR Parties and will be a valid and legally binding agreement of each of them,
enforceable against each of them in accordance with its terms;
(G) The Contribution Documents will be duly authorized, executed and delivered
by the Partnership and each Fund Entity and will be valid and legally binding
agreements of each of them, enforceable against each of them in accordance with
their terms;
(H) The Tax Sharing Agreement will be duly authorized, executed and delivered
by the General Partner and [________] and will be a valid and legally binding
agreement of each of them, enforceable against each of them in accordance with its
terms;
(I) Each Indemnification Agreement will be duly authorized, executed and
delivered by the Partnership Parties and will be a valid and legally binding
agreement of each of them, enforceable against each of them in accordance with its
terms; and
(J) The Credit Facility will be duly authorized, executed and delivered by the
Partnership Entities that are parties thereto and each of the other parties thereto
and will be a valid and legally binding agreement of each of the Partnership
Entities that is parties thereto, enforceable against each of them in accordance
with its terms.
(16) Authorization of Securities. At the Closing Date and each Option Closing
Date, if any, the Securities to be sold by the Partnership pursuant to this Agreement, and
the limited partner interests represented thereby, will be duly authorized in accordance
with the Partnership Agreement and, when issued by the Partnership 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 Section 17-303, 17-607
or 17-804 of the Delaware LP Act).
(17) Description of Securities. The Common Units and the Amended and Restated
Partnership Agreement conform in all material respects to all of the statements relating
thereto contained in the Registration Statement, the General Disclosure Package and the
Prospectus, and such statements conform in all material respects to the rights set forth in
the instruments and agreements defining the same.
(18) Absence of Defaults and Conflicts. None of the QR Parties is in violation
of its Organizational Documents or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any Partnership Document, except
(solely in the case of Partnership Documents other than Subject Instruments) for such
defaults that would not result in a Material Adverse Effect. The
execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and in the Registration Statement, the General
11
Disclosure
Package and the Prospectus (including the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described in the Statutory Prospectus and
the Prospectus under the caption “Use of Proceeds”) and compliance by the QR Parties with
their obligations under this Agreement do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event under, or result in the creation or imposition of any Lien upon
any property or assets of any of the QR Parties pursuant to, any Partnership Documents,
except (solely in the case of Partnership Documents other than Subject Instruments) for such
conflicts, breaches, defaults or Liens that would not result in a Material Adverse Effect,
nor will such action result in any violation of the provisions of the Organizational
Documents of any of the QR Parties or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over any of the QR Parties or any of their
respective assets, properties or operations, except for such violations of any applicable
law, statute, rule, regulations, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction over any of
the QR Parties or any of their respective assets, properties or operations that would not,
individually or in the aggregate, result in a Material Adverse Effect.
(19) Absence of Labor Dispute. None of the QR Parties has, as of the date of
this Agreement, or will have, as of the Closing Date and each Option Closing Date, if any,
any employees. Pursuant to the Services Agreement, Quantum Resources Management will provide
the General Partner with the services necessary to manage and operate the Partnership’s
business. To the knowledge of the QR Parties, no labor dispute with the employees of
Quantum Resources Management exists or is imminent, and the QR Parties are not aware of any
existing or imminent labor disturbance by the employees of any of the principal suppliers,
manufacturers, customers or contractors of any of the QR Parties that, in any such case, may
reasonably be expected to result in a Material Adverse Effect.
(20) Absence of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the QR Parties, threatened, against or
affecting any of the QR Parties that is required to be disclosed in the Registration
Statement, the Statutory Prospectus or the Prospectus (other than as disclosed therein), or
that would reasonably be expected to result in a Material Adverse Effect, or that would
reasonably be expected to materially and adversely affect the Partnership Properties or
Derivative Contracts or the consummation of the transactions contemplated in this Agreement
or the performance by the QR Parties of their respective obligations under this Agreement;
the aggregate of all pending legal or governmental proceedings to which any of the QR
Parties is a party or of which any of their respective property or assets is the subject
that are not described in the Registration Statement, the Statutory Prospectus or the
Prospectus, including ordinary routine litigation incidental to the business, would not
reasonably be expected to result in a Material Adverse Effect.
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(21) Accuracy of Descriptions and Exhibits. The information in the Statutory
Prospectus and the Prospectus under the captions “Our Cash Distribution Policy and
Restrictions on Distributions,” “Provisions of our Partnership Agreement Relating to Cash
Distributions and the Management Incentive Fee,” “Business—Environmental Matters and
Regulation,” “Business—Other Regulation of the Oil and Natural Gas Industry,” “Management,”
“Certain Relationships and Related Party Transactions,” “Conflicts of Interest and Fiduciary
Duties,” “Description of the Common Units,” “The Partnership Agreement,” “Material Tax
Consequences” and “Underwriting” (and any similar information contained in each Permitted
Free Writing Prospectus), in each case to the extent that it constitutes matters of law,
summaries of legal matters, summaries of provisions of the Operative Documents or any other
instruments or agreements, summaries of legal proceedings, or legal conclusions, is correct
in all material respects; all descriptions in the Registration Statement, the General
Disclosure Package and the Prospectus of any Partnership Documents are accurate in all
material respects; and there are no franchises, contracts, indentures, mortgages, deeds of
trust, loan or credit agreements, bonds, notes, debentures, evidences of indebtedness,
leases or other instruments, agreements or documents required to be described or referred to
in the Registration Statement, the Statutory Prospectus or the Prospectus or to be filed as
exhibits to the Registration Statement that have not been so described and filed as
required.
(22) Possession of Intellectual Property. Each of the Partnership Entities
owns or possesses or has the right to use, or at the Closing Date and each Option Closing
Date, if any, after giving effect to the Formation Transactions, each of the Partnership
Entities will own or possess or have the right to use, on reasonable terms all patents,
patent rights, patent applications, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names, service names and other
intellectual property (collectively, “Intellectual Property”) necessary to conduct
its business in the manner described in the Registration Statement, the General Disclosure
Package and the Prospectus, except where the failure to own, possess or have the right to
use would not, individually or in the aggregate, result in a Material Adverse Effect; and
none of the QR Parties has received any notice or is otherwise aware of any infringement of
or conflict with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances that would render any Intellectual Property invalid or inadequate
to protect the interest of the Partnership Entities therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, individually or in the aggregate, would result in a Material Adverse Effect.
(23) Absence of Further Requirements. (A) No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, (B) no waiver or consent under any
Subject Instrument, and (C) no authorization, approval, vote or other consent of any other
person or entity, is necessary or required for the execution, delivery or performance by any
of the QR Parties of this Agreement, for the offering, issuance, sale or delivery by the
Partnership of the Securities hereunder, or for the consummation
13
of any of the other transactions contemplated by this Agreement, in each case on the
terms contemplated by the Registration Statement, the General Disclosure Package and the
Prospectus, except such as have been obtained under the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations or such as may be required under state securities
laws.
(24) Possession of Licenses and Permits. Each of the Partnership Entities
possesses, or at the Closing Date and each Option Closing Date, if any, after giving effect
to the Formation Transaction, will possess, such permits, licenses, approvals, consents and
other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies necessary to
conduct its business in the manner described in the Registration Statement, the General
Disclosure Package and the Prospectus; the Partnership Entities are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure so to
comply would not, individually or in the aggregate, have a Material Adverse Effect; the
Governmental Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in full force
and effect would not, individually or in the aggregate, have a Material Adverse Effect; and
none of the QR Parties has received any notice of proceedings relating to the revocation or
modification of any Governmental Licenses that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(25) Title to Properties and Assets. At the Closing Date and each Option
Closing Date, if any, after giving effect to the Formation Transactions, the Partnership
Entities will have (A) legal, valid and defensible title to the interests in the Partnership
Properties supporting the estimates of its net proved reserved contained in the Registration
Statement, the General Disclosure Package and the Prospectus, (B) good and marketable title
in fee simple to all real property owned by them, and (C) good and marketable title to all
other property and assets owned by them, in each case free and clear of all Liens, except
such as described in the Registration Statement, the General Disclosure Package and the
Prospectus or such as do not, individually or in the aggregate, materially affect the value
of such property and do not materially interfere with the use made and proposed to be made
of such property by the Partnership Entities; all real property, buildings and other
improvements, and equipment and other property to be held under lease or sublease by any of
the Partnership Entities will be held by them under valid, subsisting and enforceable leases
or subleases, as the case may be, with, solely in the case of leases or subleases relating
to real property and buildings or other improvements, such exceptions as are not material
and do not interfere with the use made or proposed to be made of such property and buildings
or other improvements by the Partnership Entities, and all such leases and subleases will be
in full force and effect; and none of the QR Parties has any notice of any claim of any sort
that has been asserted by anyone adverse to the rights of the QR Parties under any of the
leases or subleases mentioned above or affecting or questioning the rights of the QR Parties
to the continued possession of the leased or subleased premises under any such lease or
sublease except for such claims that, if successfully asserted, would not, individually or
in the aggregate, have a Material Adverse Effect.
14
(26) Rights of Way. At the Closing Date and each Option Closing Date, if any,
after giving effect to the Formation Transactions, each of the Partnership Entities will
have such consents, easements, rights-of-way or licenses from any person (collectively,
“rights-of-way”) as are necessary to conduct its business in the manner described in
the Registration Statement, the General Disclosure Package and the Prospectus, subject to
such qualifications as may be set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, except for such rights-of-way the failure of which to
obtain, would not result in, individually or in the aggregate, a Material Adverse Effect;
and each of the Partnership Entities will have fulfilled and performed all of its material
obligations with respect to such rights-of-way and no event shall have occurred that allows,
or after notice or lapse of time would allow, revocation or termination thereof or would
result in any impairment of the rights of the holder of any such rights-of-way, except for
such failures to perform, revocations, termination and impairments that would not reasonably
be expected to have a Material Adverse Effect upon the ability of the Partnership Entities,
taken as a whole, to conduct their businesses in all material respects as currently
conducted and as contemplated in the General Disclosure Package, subject in each case to
such qualifications as may be set forth in the General Disclosure Package.
(27) Investment Company Act. None of the Partnership Entities is, and upon the
issuance and sale of the Securities to the Underwriters as herein contemplated and the
application of the net proceeds therefrom as described in the Statutory Prospectus and the
Prospectus under “Use of Proceeds,” none of the Partnership Entities will be, an “investment
company” or an entity “controlled” by an “investment company” as such terms are defined in
the 1940 Act.
(28) Environmental Laws. Except as described in the Registration Statement,
the General Disclosure Package and the Prospectus and except as would not, individually or
in the aggregate, result in a Material Adverse Effect, (A) none of the QR Parties or, to the
knowledge of the QR Parties, Quantum Resources Management is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without limitation,
laws and regulations relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, “Environmental Laws”), (B) the QR Parties and, to the
knowledge of the QR Parties, Quantum Resources Management have all permits, authorizations
and approvals required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any Environmental Law against any of
the QR Parties or, to the knowledge of the QR Parties, Quantum Resources Management and (D)
15
there are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting any of the QR Parties or,
to the knowledge of the QR Parties, Quantum Resources Management relating to Hazardous
Materials or any Environmental Laws.
(29) Absence of Registration Rights. Except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, there are no persons with
registration rights or other similar rights to have any securities (debt or equity)
registered pursuant to the Registration Statement or included in the offering contemplated
by this Agreement or otherwise registered by the Partnership under the 1933 Act, and there
are no persons with tag-along rights or other similar rights (other than any such rights
that have been waived in writing) to have any securities (debt or equity) included in the
offering contemplated by this Agreement or sold in connection with the sale of Securities
pursuant to this Agreement.
(30) Parties to Lock-Up Agreements. Each of the parties listed on Schedule
2 hereto has executed and delivered to the Representatives a lock-up agreement in the
form attached as Exhibit A hereto (the “Lock-Up Agreement”). Schedule
4 hereto contains a true, complete and correct list of all directors and officers of the
General Partner.
(31) Listing on the New York Stock Exchange. The Securities have been approved
for listing on the NYSE, subject to official notice of issuance.
(32) FINRA Matters. All of the information provided to the Underwriters or to
counsel for the Underwriters by the Partnership and the officers and directors of the
General Partner in connection with letters, filings or other supplemental information
provided to the Financial Industry Regulatory Authority, Inc. (“FINRA”), formerly
known as the National Association of Securities Dealers, Inc. (“NASD”), pursuant to
FINRA Rules 2310 and 5110 and NASD Conduct Rule 2720 is true, complete and correct.
(33) Tax Returns. The QR Parties have filed all foreign, federal, state and
local tax returns that are required to be filed or have requested extensions thereof, except
where the failure so to file would not, individually or in the aggregate, have a Material
Adverse Effect, and have paid all taxes required to be paid by them and any other
assessment, fine or penalty levied against any of them, to the extent that any of the
foregoing is due and payable, except for any such tax, assessment, fine or penalty that is
currently being contested in good faith by appropriate actions and except for such taxes,
assessments, fines or penalties the nonpayment of which would not, individually or in the
aggregate, have a Material Adverse Effect.
(34) Insurance. At the Closing Date and each Option Closing Date, if any,
after giving effect to the Formation Transactions, the Partnership Entities will be insured
by insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
16
engaged; all policies of insurance and any fidelity or surety bonds insuring the
Partnership Entities or their respective businesses, assets, employees, officers and
directors will be in full force and effect; the Partnership Entities will be in compliance
with the terms of such policies and instruments in all material respects; there are
currently no claims by any of the QR Parties under any insurance policy or instrument as to
which any insurance company is denying liability or defending under a reservation of rights
clause; none of the QR Parties has been refused any insurance coverage sought or applied
for; and none of the QR Parties has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(35) Accounting Controls. Each of the QR Parties (A) makes and keeps books,
records and accounts that, in reasonable detail, accurately and fairly reflect transactions
and dispositions of assets and; (B) maintains and has maintained effective internal control
over financial reporting as defined in Rule 13a-15 under the 1934 Act Regulations and a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for their assets; (iii) access to assets
is permitted only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as
described in the Registration Statement, the Statutory Prospectus and the Prospectus, since
December 31, 2009, none of the QR Parties (A) has been advised by PriceWaterhouseCoopers LLP
of (i) any significant deficiencies in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect the ability of any of the
QR Parties to record, process, summarize and report financial data, or any material
weaknesses in internal controls over financial reporting affecting any of the QR Parties, or
(ii) any fraud, whether or not material, that involves management or other employees who
have a significant role in the internal controls over financial reporting of the QR Parties,
and (B) there has been no change in any of the QR Parties’ internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, such
QR Party’s internal control over financial reporting.
(36) Disclosure Controls. (A) The Partnership has established and maintains
disclosure controls and procedures (to the extent required by and as such term is defined in
Rule 13a-15 under the Exchange Act), (B) such disclosure controls and procedures are
designed to ensure that the information required to be disclosed by the Partnership in the
reports it files or will file or submit under the Exchange Act, as applicable, is
accumulated and communicated to management of the Partnership, including the General
Partner’s respective principal executive officers and principal financial officers, as
appropriate, to allow timely decisions regarding required disclosure to be made and (C) such
disclosure controls and procedures are effective in all material respects to perform the
functions for which they were established to the extent required by Rule 13a-15 of the
Exchange Act.
17
(37) Compliance with the Xxxxxxxx-Xxxxx Act. Upon and at all times after
filing the Registration Statement, the Partnership and each of the officers and directors of
the General Partner, in their capacities as such, have been and will be in compliance in all
material respects with all applicable provisions of the Xxxxxxxx-Xxxxx Act with which any of
them is required to comply, including Section 402 related to loans.
(38) Absence of Manipulation. None of the QR Parties has taken and none of the
QR Parties will take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security to facilitate the sale or resale of the
Securities.
(39) No Right of First Refusal. None of the QR Parties has nor, to the
knowledge of the QR Parties, does any other person have any preemptive right, right of first
refusal or other similar right to purchase or otherwise acquire any of the Securities to be
sold by the Partnership to the Underwriters pursuant to this Agreement.
(40) Statistical, Demographic or Market-Related Data. Any statistical,
demographic or market-related data included in the Registration Statement, the General
Disclosure Package or the Prospectus is based on or derived from sources that the
Partnership Parties believe to be reliable and accurate and all such data included in the
Registration Statement, the General Disclosure Package or the Prospectus accurately reflects
the materials upon which it is based or from which it was derived.
(41) Foreign Corrupt Practices Act. None of the QR Parties nor, to the
knowledge of the QR Parties, any director, officer, agent, employee, affiliate or other
person acting on behalf of any of the QR Parties is aware of or has taken any action,
directly or indirectly, that has resulted or would result in a violation by such persons of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (collectively, the “FCPA”), including, without limitation, making use of
the mails or any means or instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign political party or
official thereof or any candidate for foreign political office, in contravention of the
FCPA, and the QR Parties and, to the knowledge of the QR Parties, the other affiliates of
the QR Parties have conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and that are reasonably
expected to continue to ensure, continued compliance therewith.
(42) Money Laundering Laws. The operations of the QR 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 applicable jurisdictions, the rules and regulations
thereunder and any related or similar applicable rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, “Money Laundering
Laws”) and no action, suit or proceeding by or
18
before any court or governmental agency, authority or body or any arbitrator involving
the QR Parties with respect to the Money Laundering Laws is pending or, to the knowledge of
the QR Parties, threatened.
(43) OFAC. None of the QR Parties nor, to the knowledge of the QR Parties, any
director, officer, agent, employee, affiliate or other person acting on behalf of any of the
QR Parties 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 any of the proceeds received by the Partnership from the sale
of Securities contemplated by this Agreement, or lend, contribute or otherwise make
available any 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.
(44) Lending Relationship. Except as disclosed in the Registration Statement,
the Statutory Prospectus and the Prospectus, (A) none of the QR Parties has any outstanding
borrowings from or any material lending or other relationship with any bank or other lending
institution affiliated with any of the Underwriters, and (B) none of the QR Parties intends
to use any of the proceeds from the sale of the Securities to repay any debt owed to any
Underwriter or any affiliate of any Underwriter.
(45) Related Party Transactions. There are no business relationships or
related party transactions involving any of the QR Parties or, to the knowledge of the QR
Parties, any other person or entity that are required to be described in the Statutory
Prospectus or the Prospectus that have not been described as required.
(46) ERISA. (A) Each “employee benefit plan” (within the meaning of Section
3(3) of the Employee Retirement Security Act of 1974, as amended (“ERISA”), for
which the Partnership or any member of its “Controlled Group” (defined as an
organization that is a member of a controlled group of corporations 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; (B) with respect to each Plan subject to Title IV of ERISA (i) no “reportable
event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably
expected to occur, (ii) 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, (iii) 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 (iv) neither the Partnership or any member of its
Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV
of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty
Corporation in the ordinary course and without default) in respect of a Plan (including a
“multiemployer plan,” within the meaning of Section 4001(c)(3) of ERISA); and (C) each Plan
that is intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, that would cause the loss of
such qualification.
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(47) No Prohibition on Dividends by Subsidiaries. None of the Partnership
Entities is prohibited, directly or indirectly, from making distributions with respect to
its equity securities, from repaying any debt owed to any other Partnership Entity, or from
transferring any of its property or assets to the Partnership or any other Partnership
Entity, except as described in the Registration Statement, General Disclosure Package and
the Prospectus.
(b) Certificates. Any certificate signed by any officer of the General Partner and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a representation and
warranty by the Partnership, the General Partner, or both of them, as applicable, to each
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Partnership agrees to sell to each
Underwriter and each Underwriter, severally and not jointly, agrees to purchase from the
Partnership the respective number of Initial Securities set forth opposite the name of such
Underwriter on Schedule 1 hereto, plus any additional number of Initial Securities that
such Underwriter may become obligated to purchase pursuant to the provisions of Section 10
hereof, subject, in each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of fractional Common Units, in
each case at the public offering price set forth on Exhibit C hereto.
(b) Option Securities. In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the Partnership hereby
grants to the Underwriters, severally and not jointly, an option to purchase, ratably in accordance
with the number of Initial Securities to be purchased by each Underwriter, all or a portion of the
Option Securities at a price equal to the public offering price set forth on Exhibit C
hereto (the “Over-Allotment Option”); provided that the price per unit for any Option
Securities shall be reduced by an amount per unit equal to any dividends or distributions declared
by the Partnership and payable or paid on the Initial Securities but not payable on such Option
Securities. The Over-Allotment Option will expire at the close of business on the 30th day after
the date hereof (such thirty-day period, the “Option Period”) and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments that may be made in
connection with the offering and distribution of the Initial Securities upon notice by the
Representatives to the Partnership setting forth the number of Option Securities as to which the
Underwriters are then exercising the Over-Allotment Option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (an “Option Closing
Date”) shall be determined by the Representatives, but shall not be later than seven full
business days after the exercise of the Over-Allotment Option, nor in any event prior to the
Closing Date, as hereinafter defined. If the Over-Allotment Option is exercised as to all or any
portion of the Option Securities, the Partnership will sell to the Underwriters that number of
Option Securities as to which the Underwriters are exercising the Over-Allotment Option, and the
Underwriters’ respective obligations to purchase any such Option Securities are several in
proportion to the
number of Initial Securities set forth opposite their respective names on Schedule 1
hereto, including any additional number of Initial Securities that such Underwriter was obligated
to
20
purchase pursuant to the provisions of Section 10 hereof, subject to such adjustments as
the Representatives in their discretion shall make to eliminate any sales or purchases of
fractional Common Units.
(c) Payment. Payment of the purchase price for, and delivery of certificates for, the Initial
Securities shall be made at the offices of Xxxxxxx Xxxxx LLP, 000 Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000, or at such other place as shall be agreed upon by the Representatives and the
Partnership, at 9:00 A.M. (Eastern time) on ________, 201_ (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days after such
date as shall be agreed upon by the Representatives and the Partnership (such time and date of
payment and delivery being herein called “Closing Date”).
In addition, in the event that any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates for, such Option
Securities shall be made at 9:00 A.M. (Eastern time) at the above-mentioned offices, or at such
other place as shall be agreed upon by the Representatives and the Partnership, on each Option
Closing Date as specified in the notice from the Representatives to the Partnership.
Payment for the Initial Securities and the Option Securities, if any, shall be made to the
Partnership by wire transfer of immediately available funds to a single bank account designated by
the Partnership against delivery to the Representatives for the respective accounts of the
Underwriters of the Securities to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and the Option Securities, if any, that
it has agreed to purchase. Xxxxx Fargo Securities, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any Underwriter whose funds
have not been received by the Closing Date or the relevant Option Closing Date, as the case may be,
but such payment shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities and the Option
Securities, if any, shall be in such denominations and registered in such names as the
Representatives may request in writing at least one full business day before the Closing Date or
the relevant Option Closing Date, as the case may be. The certificates for the Initial Securities
and the Option Securities, if any, will be made available for examination and packaging by the
Representatives in Houston, Texas not later than noon (Central time) on the business day prior to
the Closing Date or the relevant Option Closing Date, as the case may be.
SECTION 3. Covenants of the Partnership Parties. Each of the QR Parties, jointly and
severally, covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The Partnership, subject
to Section 3(b), will comply with the requirements of Rule 430A and Rule 433 and will
notify the Representatives immediately, and confirm the notice in writing, (i) when
the Initial Registration Statement, any Rule 462(b) Registration Statement or any
post-effective amendment to the Registration Statement shall become effective, and when the
Statutory Prospectus, any other preliminary prospectus, the Prospectus or any Issuer Free Writing
21
Prospectus or any amendments or supplements thereto shall have been filed, (ii) of the receipt of
any comments from the Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Statutory Prospectus, any other
preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus or for additional
information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the use of the Statutory
Prospectus, any other preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus,
or of the suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the loss or suspension of any exemption from any such qualification, or of the
initiation or threatening of any proceedings for any of such purposes, or of any examination
pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the
Partnership becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with
the offering of the Securities. The Partnership will make every reasonable effort to prevent the
issuance of any stop order, the suspension of any qualification of the Securities for offering or
sale and any loss or suspension of any exemption from any such qualification, and if any such stop
order is issued or any such suspension or loss occurs, to obtain the lifting thereof at the
earliest possible moment.
(b) Filing of Amendments. The Partnership will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement (including any filing
under Rule 462(b)) or any amendment, supplement or revision to the prospectus included in the
Registration Statement at the time it became effective, the Statutory Prospectus, any other
preliminary prospectus, the Prospectus, whether pursuant to the 1933 Act or otherwise, or (without
limitation to the provisions of Section 16 of this Agreement) any Issuer Free Writing
Prospectus or any amendment or supplement thereto, and will furnish the Representatives with copies
of any such documents within a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the Representatives or counsel
for the Underwriters shall object.
(c) Delivery of Registration Statements. The Partnership has furnished or will deliver to the
Representatives and counsel for the Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including exhibits filed therewith)
and signed copies of all consents and certificates of experts.
(d) Delivery of Prospectuses. The Partnership has delivered to each Underwriter, without
charge, as many copies of the Statutory Prospectus, each other preliminary prospectus and any
Issuer Free Writing Prospectuses prepared prior to the date of this Agreement and amendments or
supplements thereto prepared prior to the date of this Agreement as such Underwriter reasonably
requested, and the Partnership hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Partnership will furnish to each Underwriter, without charge, such number of
copies of the documents constituting the General Disclosure Package, any Issuer Free Writing
Prospectuses prepared on or after the date of this Agreement and the Prospectus (and any amendments
or supplements thereto) as such Underwriter may reasonably request.
(e) Continued Compliance with Securities Laws. The Partnership will comply with the 1933 Act,
the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so as
to
22
permit the completion
of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If
at any time when a prospectus is required by the 1933 Act, the 1933 Act Regulations, the 1934 Act
or the 1934 Act Regulations to be delivered in connection with sales of the Securities (including,
without limitation, pursuant to Rule 173), any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Underwriters or for the
Partnership, to amend the Registration Statement or amend or supplement the General Disclosure
Package or the Prospectus in order that such General Disclosure Package or the Prospectus, as the
case may be, will not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of such counsel, at any such time to amend the Registration Statement or amend or
supplement the General Disclosure Package or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Partnership will promptly prepare and
file with the Commission, subject to Section 3(b) hereof, such amendment or supplement as
may be necessary to correct such statement or omission or to make the Registration Statement, the
General Disclosure Package or the Prospectus comply with such requirements, and the Partnership
will furnish to the Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request. If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted, conflicts or would conflict with the information contained in the
Registration Statement or included, includes or would include an untrue statement of a material
fact or omitted, omits or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances, prevailing at that subsequent time, not
misleading, the Partnership will promptly notify the Representatives, and the Partnership will,
subject to Section 3(b) hereof, promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
(f) Blue Sky Qualifications. The Partnership will use its best efforts, in cooperation with
the Underwriters, to qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions (domestic or foreign) as the Representatives may
designate and to maintain such qualifications in effect for so long as required for the
distribution of the Securities (but in no event for less than one year from the date of this
Agreement); provided, however, that the Partnership shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Partnership will file such
statements and reports as may be required by the laws of such jurisdiction to continue such
qualification for so long as required for the distribution of the Securities (but in no event for
less than one year from the date of this Agreement).
(g) Rule 158. The Partnership will timely file such reports pursuant to the 1934 Act as are
necessary in order to make generally available to its securityholders as soon as practicable
an earnings statement for the purposes of, and to provide to the Underwriters the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
23
(h) Use of Proceeds. The Partnership will use the Net Proceeds received by it from the sale
of the Securities in the manner specified in the Statutory Prospectus and the Prospectus under “Use
of Proceeds.”
(i) Listing. The Partnership will use its best efforts to effect the listing of the
Securities on the NYSE.
(j) Restriction on Sale of Securities. During the period beginning on and including the date
of this Agreement through and including the date that is the 180th day after the date of this
Agreement (such period, as the same may be extended pursuant to the provisions set forth in the
next sentence, is hereinafter called the “Lock-Up Period”), the QR Parties will not,
without the prior written consent of Xxxxx Fargo Securities, directly or indirectly:
(1) offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any Common Units or any securities convertible into
or exercisable or exchangeable for Common Units,
(2) file or cause the filing of any registration statement under the 1933 Act with
respect to any Common Units or any securities convertible into or exercisable or
exchangeable for any Common Units (other than any Rule 462(b) Registration Statement filed
to register Securities to be sold to the Underwriters pursuant to this Agreement and any
registration statement on Form S-8 to register Common Units or options to purchase Common
Units pursuant to the long-term incentive plan described in the Statutory Prospectus and the
Prospectus under the caption “Management—Long-Term Incentive Plan,” as such plan is in
effect on the date of this Agreement (the “LTIP”)), or
(3) enter into any swap or other agreement, arrangement or transaction that transfers
to another, in whole or in part, directly or indirectly, any of the economic consequences of
ownership of any Common Units or any securities convertible into or exercisable or
exchangeable for any Common Units,
whether any transaction described in (1) or (3) above is to be settled by delivery of Common Units,
other securities, in cash or otherwise. Moreover, 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 or becomes aware that material news or a material event will
occur during the 16-day period beginning on the last day of the Lock-Up Period,
the Lock-Up Period shall be extended and the restrictions imposed by this Section 3(j)
shall continue to apply until the expiration of the 18-day period beginning on the date of issuance
of the earnings release or the occurrence of the material news or material event, as the case may
be, unless Xxxxx Fargo Securities waives, in writing, such extension.
24
Notwithstanding the provisions set forth in the immediately preceding paragraph, the
Partnership may, without the prior written consent of Xxxxx Fargo Securities:
(1) issue the Securities to the Underwriters pursuant to this
Agreement,
(2) issue Common Units, and options to purchase Common Units, pursuant to the LTIP, and
(3) issue Common Units upon the exercise of options outstanding on the date of this
Agreement or issued after the date of this Agreement under the LTIP, as such options and
plan are in effect on the date of this Agreement.
(k) Reporting Requirements. The Partnership, during the period when the Prospectus is
required to be delivered under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934
Act Regulations (including, without limitation, pursuant to Rule 173), will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the time periods required
by the 1934 Act and the 1934 Act Regulations.
(l) Preparation of Prospectus. Immediately following the execution of this Agreement, the
Partnership will, subject to Section 3(b) hereof, prepare the Prospectus containing the
Rule 430A Information and other selling terms of the Securities, the plan of distribution thereof
and such other information as may be required by the 1933 Act or the 1933 Act Regulations or as the
Representatives and the Partnership may deem appropriate, and will file the Prospectus with the
Commission in the manner and within the time period required by Rule 424(b) (without reliance on
Rule 424(b)(8)).
SECTION 4. Payment of Expenses.
(a) Expenses. The Partnership will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as originally filed and of
each amendment thereto, (ii) the word processing, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the Underwriters,
including any stock or other transfer taxes and any capital duties, stamp duties or other duties or
taxes payable upon the sale, issuance or delivery of the Securities to the Underwriters, (iv) the
fees and disbursements of the counsel, accountants and other advisors to the Partnership, (v) the
qualification of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in connection with
the preparation of the Blue Sky Survey and any supplements thereto, (vi) the printing and delivery
to the Underwriters of copies of the Statutory Prospectus, any other preliminary prospectus, any
Permitted Free Writing Prospectus, the documents constituting each General Disclosure Package, and
the Prospectus and any amendments or supplements thereto and any costs associated with electronic
delivery of any of the foregoing by the Underwriters to investors,
25
(vii) the preparation, printing
and delivery to the Underwriters of copies of the Blue Sky Survey and any supplements thereto,
(viii) the fees and expenses of the transfer agent and registrar for the Securities, (ix) the
filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters
in connection with, the review by FINRA of the terms of the sale of the Securities, (x) the costs
and expenses relating to investor presentations and any roadshow undertaken in connection with the
marketing of Securities, including, without limitation, expenses associated with the production of
roadshow slides and graphics and any electronic roadshows, fees and expenses of any consultants
engaged in connection with the roadshow presentation or any persons or entities engaged to host any
electronic roadshow, travel and other travel expenses (including the costs and expenses of any
aircraft chartered in connection with the roadshow) and lodging expense of the representatives and
officers of the Company and any such consultants, (xi) the fees and expenses incurred in connection
with the listing of the Securities on the NYSE, and (xii) the disbursements of counsel for the
Underwriters in connection with the copying and delivery of closing documents delivered by the
Partnership or the Partnership’s accountants or counsel.
(b) Termination of Agreement. If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Partnership shall reimburse the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several
Underwriters hereunder are subject to the accuracy of the representations and warranties of
the QR Parties contained in this Agreement or in certificates of any officer of any of the QR
Parties delivered pursuant to the provisions hereof, to the performance by the QR Parties of
their respective covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Initial Registration Statement, and any
Rule 462(b) Registration Statement, shall have become effective and at the Closing Date (or the
applicable Option Closing Date, as the case may be) no stop order suspending the effectiveness of
the Initial Registration Statement or any Rule 462(b) Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or, to the knowledge of the Partnership,
threatened by the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of the Underwriters. The
Prospectus shall have been filed with the Commission in the manner and within the time period
required by Rule 424(b) (without reliance upon Rule 424(b)(8)) and each Issuer Free Writing
Prospectus required to be filed with the Commission shall have been filed in the manner and within
the time period required by Rule 433, and prior to the Closing Date, the
Partnership shall have provided evidence satisfactory to the Representatives of such timely
filing.
(b) Opinion of Counsel for Partnership. At the Closing Date, the Representatives shall have
received the favorable opinion, dated as of the Closing Date, of Xxxxxx & Xxxxxx LLP, counsel for
the Partnership (“Partnership Counsel”), in form and substance satisfactory to counsel for
the Underwriters, together with signed or reproduced copies of such opinion for each
26
of the other
Underwriters, to the effect set forth in Exhibit B hereto and to such further effect as
counsel to the Underwriters may reasonably request.
(c) Opinion of Counsel for Underwriters. At the Closing Date, the Representatives shall have
received the favorable opinion, dated as of the Closing Date, of Xxxxxxx Xxxxx LLP, counsel for the
Underwriters, together with signed or reproduced copies of such opinion for each of the other
Underwriters, with respect to such matters as the Underwriters may reasonably require. In giving
such opinion such counsel may rely without investigation, as to all matters governed by the laws of
any jurisdictions other than the law of the State of New York, the federal law of the United States
and the Delaware Revised Uniform Limited Partnership Act, upon the opinions of counsel satisfactory
to the Representatives.
(d) Officers’ Certificate. At the Closing Date and each Option Closing Date, if any, there
shall not have been, since the date hereof or since the respective dates as of which information is
given in the Registration Statement, the General Disclosure Package and the Prospectus (in each
case, exclusive of any amendments or supplements thereto subsequent to the date of this Agreement),
any material adverse change in the condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Partnership and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of business, and, at
the Closing Date, the Representatives shall have received a certificate of the Chairman, the
President, the Chief Executive Officer or an Executive Vice President or Senior Vice President of
the General Partner (or persons holding similar positions, as applicable) and of the Chief
Financial Officer or Chief Accounting Officer of the General Partner (or persons holding similar
positions, as applicable), dated as of Closing Date, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties of the QR Parties in this
Agreement are true and correct with the same force and effect as though expressly made at and as of
Closing Date, (iii) the QR Parties have complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to the Closing Date under or pursuant to this
Agreement, and (iv) no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are pending or, to their
knowledge, are contemplated by the Commission.
(e) Comfort Letters. At the time of the execution of this Agreement, the Representatives
shall receive from each of KPMG LLP, PricewaterhouseCoopers LLP and Xxxxxx & Xxxxx, Ltd. a letter,
dated the date of this Agreement and in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letters for each of the other Underwriters,
containing (i) in the case of the letters of KPMG LLP and PricewaterhouseCoopers LLP, statements
and information of the type ordinarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial information contained in the
Registration Statement, the Statutory Prospectus, any
Issuer Free Writing Prospectus and the Prospectus, and any amendments or supplements thereto,
and (ii) in the case of the letter of Xxxxxx & Xxxxx, Ltd., statements and information of the type
ordinarily included in reserve engineers’ “comfort letters” to underwriters with respect to the
Reserve Report and related reserve information contained in the Registration Statement, the
Statutory Prospectus, any Issuer Free Writing Prospectus and the Prospectus, and any amendments or
supplements thereto.
27
(f) Bring-down Comfort Letters. At the Closing Date, the Representatives shall have received
from each of KPMG LLP, PricewaterhouseCoopers LLP and Xxxxxx & Xxxxx, Ltd. a letter, dated as of
Closing Date and in form and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letters for each of the other Underwriters, to the effect that they
reaffirm the statements made in the letters furnished pursuant to subsection (e) of this
Section, except that the specified date referred to shall be a date not more than three business
days prior to the Closing Date.
(g) Approval of Listing. At the Closing Date and each Option Closing Date, if any, the
Securities shall have been approved for listing on the NYSE, subject only to official notice of
issuance.
(h) Lock-Up Agreements. Prior to the date of this Agreement, the Representatives shall have
received Lock-Up Agreements signed by each of the parties listed on Schedule 2.
(i) No Objection. Prior to the date of this Agreement, FINRA shall have confirmed in writing
that it has no objection with respect to the fairness and reasonableness of the underwriting terms
and arrangements.
(j) Conditions to Purchase of Option Securities. In the event that the Underwriters exercise
their Over-Allotment Option to purchase all or any portion of the Option Securities on any Option
Closing Date that is after the Closing Date, the obligations of the several Underwriters to
purchase the applicable Option Securities shall be subject to the conditions specified in the
introductory paragraph of this Section 5 and to the further condition that, at the
applicable Option Closing Date, the Representatives shall have received:
(1) Officers’ Certificate. A certificate, dated such Option Closing Date, to
the effect set forth in, and signed by two of the officers specified in, Section
5(d) hereof, except that the references in such certificate to the Closing Date shall be
changed to refer to such Option Closing Date.
(2) Opinion of Counsel for the Partnership. The favorable opinion of Xxxxxx &
Xxxxxx LLP, counsel for the Partnership, in form and substance satisfactory to the
Representatives and dated such Option Closing Date, relating to the Option Securities to be
purchased on such Option Closing Date and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(3) Opinion of Counsel for the Underwriters. The favorable opinion of Xxxxxxx
Xxxxx LLP, counsel for the Underwriters, in form and substance satisfactory to the
Representatives and dated such Option Closing Date, relating to the Option
Securities to be purchased on such Option Closing Date and otherwise to the same effect
as the opinion required by Section 5(c) hereof.
(4) Bring-down Comfort Letters. Letters from KPMG LLP, PricewaterhouseCoopers
LLP and Xxxxxx & Xxxxx, Ltd., in form and substance satisfactory to the Representatives and
dated such Option Closing Date, substantially in the same form and substance as the letter
furnished to the Representatives pursuant to Section 5(f) hereof, except that the
“specified date” in the letter furnished pursuant to this
28
paragraph shall be a date not more
than three business days prior to such Option Closing Date.
(k) Additional Documents. At the Closing Date and each Option Closing Date, if any, counsel
for the Underwriters shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, contained in this Agreement; and all proceedings taken by
the QR Parties in connection with the issuance and sale of the Securities as herein contemplated
and in connection with the other transactions contemplated by this Agreement shall be satisfactory
in form and substance to the Representatives.
(l) Termination of Agreement. If any condition specified in this Section 5 shall not
have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any
condition to the purchase of Option Securities on an Option Closing Date that is after the Closing
Date, the obligations of the several Underwriters to purchase the relevant Option Securities, may
be terminated by the Representatives by notice to the Partnership at any time on or prior to the
Closing Date or such Option Closing Date, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4 hereof and except
that, in the case of any termination of this Agreement, Sections 1, 6, 7,
8 and 17 hereof shall survive such termination and remain in full force and effect
and except that, in the case of the termination of the obligations of the several Underwriters to
purchase any Option Securities on an Option Closing Date that is after the Closing Date, this
Agreement shall otherwise survive such termination and remain in full force and effect.
SECTION 6. Indemnification. |
(a) Indemnification by the QR Parties. The QR Parties agree, jointly and severally, to
indemnify and hold harmless each Underwriter, the affiliates of each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact included in the Statutory
Prospectus, any other preliminary prospectus, any Issuer Free Writing Prospectus, any
General Disclosure Package or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(2) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
29
litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(e)
below) any such settlement is effected with the written consent of the Partnership; and
(3) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by Xxxxx Fargo Securities, reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under (i) or (ii)
above,
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with written
information furnished to the Partnership by any Underwriter through the Representatives expressly
for use in the Registration Statement (or any amendment thereto), or in the Statutory Prospectus,
any other preliminary prospectus, any Issuer Free Writing Prospectus, any General Disclosure
Package or the Prospectus (or any amendment or supplement thereto). The Underwriters severally
confirm and the QR Parties acknowledge and agree that the statements regarding the delivery of the
Securities by the Underwriters set forth on the cover page of the Prospectus, and the statements in
the first paragraph under the subheading “Discounts and Commissions,” the second paragraph under
the subheading “Lock-Up Agreements,” the statements set forth under the subheadings “Stabilization”
and “Discretionary Accounts,” and the third sentence under the subheading “Pricing of this
Offering,” in each case, appearing under the caption “Underwriting” in the Registration Statement,
the General Disclosure Package and the Prospectus are correct and constitute the only information
concerning such Underwriters furnished in writing to the Partnership by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement, or in the Statutory
Prospectus, any other preliminary prospectus, any Issuer Free Writing Prospectus, any General
Disclosure Package or the Prospectus (or any amendment or supplement thereto) (such information,
the “Underwriting Information”); and provided, further, that with respect
to any indemnification obligation of the Fund Group under this Section 6, each Fund Entity
shall be liable, severally, in proportion to its respective Property Contributor Percentage.
(b) Indemnification by the Underwriters. Each Underwriter severally agrees to indemnify and
hold harmless the Partnership, the directors and each of the officers of the General Partner who
signed the Registration Statement, and each person, if any, who controls the Partnership within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in subsection (a)
of this Section 6, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or any amendment
thereto), or the Statutory Prospectus, any other any preliminary prospectus, any Issuer Free
Writing Prospectus, any General Disclosure Package or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with
30
the Underwriting Information furnished
to the Partnership by such Underwriter through the Representatives expressly for use therein.
(c) Actions against Parties; Notification. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it from any liability
that it may have otherwise than on account of this indemnity agreement. Counsel to the indemnified
parties shall be selected as follows: counsel to the Underwriters and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall be selected by Xxxxx Fargo Securities, and counsel to the Partnership, the directors and
each of the officers of the General Partner that signed the Registration Statement, and each
person, if any, who controls the Partnership within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall be selected by the Partnership. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for the Underwriters and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, the
fees and expenses of more than one counsel (in addition to any local counsel) separate from their
own counsel for the Partnership, the directors and each of the officers of the General Partner who
signed the Registration Statement, and each person, if any, who controls the Partnership within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, in each case in connection
with any one action or separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section 7
hereof (whether or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(2) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with such request prior to the date of
such settlement.
31
(e) Other Agreements with Respect to Indemnification and Contribution. The provisions of this
Section 6 and in Section 7 hereof shall not affect any agreements among the QR
Parties with respect to indemnification of each other or contribution between themselves.
SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the QR Parties, on
the one hand, and the Underwriters, on the other hand, from the offering of the Securities
pursuant to this Agreement, or (ii) if the allocation provided by clause (i) 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 QR Parties, on the
one hand, and of the Underwriters, on the other hand, in connection with the statements or
omissions, that resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the QR Parties, on the one hand, and the Underwriters, on
the other hand, in connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received by the Partnership
and the total underwriting discounts and commissions received by the Underwriters, in each case as
set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of
the Securities as set forth on such cover.
The relative fault of the QR Parties, on the one hand, and the Underwriters, on the other
hand, shall be determined by reference to, among other things, whether any such 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 QR Parties or by the Underwriters and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission.
The QR Parties and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in investigating, preparing
or defending against any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public exceeds the amount of
32
any damages that such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section 7, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as such Underwriter, and each director of the General Partner, each officer
of the General Partner who signed the Registration Statement, and each person, if any, who controls
the Partnership within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Partnership. The Underwriters’ respective
obligations to contribute pursuant to this Section 7 are several in proportion to the
number of Initial Securities set forth opposite their respective names in Schedule 1 hereto
and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in
this Agreement or in certificates of officers of the QR Parties
submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on
behalf of the QR Parties and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this Agreement, by notice to the
Partnership, at any time on or prior to the Closing Date (and, if any Option Securities are to be
purchased on an Option Closing Date that occurs after the Closing Date, the Representatives may
terminate the obligations of the several Underwriters to purchase such Option Securities, by notice
to the Partnership, at any time on or prior to such Option Closing Date) (i) if there has been,
since the time of execution of this Agreement or since the respective dates as of which information
is given in the Prospectus or any General Disclosure Package, any
material adverse change in the condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Partnership and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the effect of which is such
as to make it, in the judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Partnership has been suspended or limited by the Commission or the NYSE, or if
trading generally on the American Stock Exchange, the NYSE or the Nasdaq Global Market has been
suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges
for prices have been required, by any of said exchanges or by order of the Commission, FINRA or any
other governmental authority, or a material disruption has occurred in commercial
33
banking or
securities settlement or clearance services in the United States or in Europe, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as provided in
Section 4 hereof, and except that, in the case of any termination of this Agreement,
Sections 1, 6, 7, 8 and 17 hereof shall survive such
termination and remain in full force and effect and except that, in the case of the termination of
the obligations of the several Underwriters to purchase any Option Securities on an Option Closing
Date that occurs after the Closing Date, this Agreement shall otherwise survive such termination
and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters
shall fail at the Closing Date or an Option Closing Date, if any, to purchase the Securities
that it or they are obligated to purchase under this Agreement (the “Defaulted
Securities”), the Representatives shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any other
Underwriters, to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the number of
Securities to be purchased on such date, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters; or
(ii) if the number of Defaulted Securities exceeds 10% of the number of Securities to
be purchased on such date, this Agreement or, with respect to any Option Closing Date that
occurs after the Closing Date, the obligation of the Underwriters to purchase and of the
Partnership to sell the Option Securities that were to have been
purchased and sold on such Option Closing Date, shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter
from liability in respect of its default.
In the event of any such default that does not result in a termination of this Agreement or,
in the case of an Option Closing Date that is after the Closing Date, that does not result in a
termination of the obligation of the Underwriters to purchase and the Partnership to sell the
relevant Option Securities, as the case may be, the Representatives shall have the right to
postpone the Closing Date or the relevant Option Closing Date, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Registration Statement, the
General Disclosure Packages or the Prospectus or in any other documents or arrangements. As used
herein, the term “Underwriter” includes any person substituted for an Underwriter under this
Section 10.
34
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be
directed to the Representatives at Xxxxx Fargo Securities,
LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of
Equity Syndicate, and notices to the Partnership shall be
directed to it at 5 Houston Center, 0000 XxXxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention of Xxxxxxx X.
Xxxxx.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the QR Parties and their
respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs
and legal representatives. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and
the QR Parties and their respective successors, and said
controlling persons and officers and directors and their heirs
and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the QR Parties and
their respective successors, and said controlling persons and
officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely
of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Section and Exhibit headings herein
are for convenience only and shall not affect the construction
hereof.
SECTION 15. Definitions. As used in this Agreement, the following terms
have the respective meanings set forth below:
“Applicable Time” means _____ (New York time) on _____, 201_.
“Commission” means the Securities and Exchange Commission.
“XXXXX” means the Commission’s Electronic Data Gathering, Analysis and Retrieval System.
“FINRA” means Financial Industry Regulatory Authority, Inc.
“GAAP” means generally accepted accounting principles.
“Initial Registration Statement” means the Partnership’s registration statement on Form S-1
(Registration No. 333-169664), as amended, at the time it became effective, including the Rule 430A
Information.
35
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433, relating to the Securities that (i) is required to be filed with the Commission by the
Partnership, (ii) is a “road show” that is a “written communication” within the meaning of Rule
433(d)(8)(i) whether or not required to be filed with the Commission, or (iii) is exempt from
filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the
offering that does not reflect the final terms, and all free writing prospectuses that are listed
in Exhibit D hereto, in each case in the form furnished (electronically or otherwise) to
the Underwriters for use in connection with the offering of the Securities.
“Lien” means any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
“NASD” means the National Association of Securities Dealers, Inc.
“NYSE” means the New York Stock Exchange.
“Organizational Documents” means (a) in the case of a corporation, its charter and by-laws;
(b) in the case of a limited or general partnership, its partnership certificate, certificate of
formation or similar organizational document and its partnership agreement; (c) in the case of a
limited liability company, its articles of organization, certificate of formation or similar
organizational documents and its operating agreement, limited liability company agreement,
membership agreement or other similar agreement; (d) in the case of a trust, its certificate of
trust, certificate of formation or similar organizational document and its trust agreement or other
similar agreement; and (e) in the case of any other entity, the organizational and governing
documents of such entity.
“Partnership Documents” means any contracts, indentures, mortgages, deeds of trust, loan or
credit agreements, bonds, notes, debentures, evidences of indebtedness, leases or other instruments
or agreements to which any of the QR Parties is a party or by which any of the QR Parties is bound
or to which any of the property or assets of any of the QR Parties is subject including, without
limitation, all Subject Instruments.
“preliminary prospectus” means the Statutory Prospectus and any other prospectus used in
connection with the offering of the Securities that was used before the Initial Registration
Statement became effective or that omitted the Rule 430A Information or that was captioned “Subject
to Completion”.
“Property Contributor Percentage” means (i) with respect to QRA, 91.464282%, (ii) with
respect to QRB, 1.64885%, (iii) with respect to QRC, 2.926868%, (iv) with respect to QAB, 0.03365%,
(v) with respect to QAC, 0.059732% and (vi) with respect to Black Diamond, 3.866618%.
“Registration Statement” means the Initial Registration Statement; provided that,
if a Rule 462(b) Registration Statement is filed with the Commission, then the term “Registration
Statement” shall also include such Rule 462(b) Registration Statement.
“Repayment Event” means any event or condition that gives the holder of any bond, note,
debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Partnership or the Operating Subsidiary.
36
“Rule 164,” “Rule 172,” “Rule 173,” “Rule 405,” “Rule
424(b),” “Rule 430A,” “Rule 430C,” “Rule 433” and “Rule 462(b)”
refer to such rules under the 1933 Act.
“Rule 430A Information” means the information included in the Prospectus that was omitted
from the Initial Registration Statement at the time it became effective but that is deemed to be a
part of the Initial Registration Statement at the time it became effective pursuant to Rule 430A.
“Rule 462(b) Registration Statement” means a registration statement filed by the
Partnership pursuant to Rule 462(b) for the purpose of registering any of the Securities under the
1933 Act, including the documents incorporated by reference therein and the Rule 430A
Information.
“Xxxxxxxx-Xxxxx Act” means the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated thereunder or implementing the provisions thereof.
“Statutory Prospectus” means the preliminary prospectus dated ________, 20__, relating to
the Securities in the form first furnished to the Underwriters for use in connection with the
offering of the Securities.
“Subject Instruments” means all instruments, agreements and documents filed as exhibits to
the Registration Statement pursuant to Rule 601(b)(10) of Regulation S-K of the Commission;
provided that if any instrument, agreement or other document filed as an exhibit to the
Registration Statement as aforesaid has been redacted or if any portion thereof has been deleted or
is otherwise not included as part of such exhibit (whether pursuant to a request for confidential
treatment or otherwise), the term “Subject Instruments” shall nonetheless mean such instrument,
agreement or other document, as the case may be, in its entirety, including any portions thereof
that shall have been so redacted, deleted or otherwise not filed.
“1933 Act” means the Securities Act of 1933, as amended.
“1933 Act Regulations” means the rules and regulations of the Commission under the 1933
Act.
“1934 Act” means the Securities Exchange Act of 1934, as amended.
“1934 Act Regulations” means the rules and regulations of the Commission under the 1934
Act.
“1940 Act” means the Investment Company Act of 1940, as amended.
All references in this Agreement to the Registration Statement, the Initial Registration Statement,
any Rule 462(b) Registration Statement, the Statutory Prospectus, any other preliminary prospectus,
the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to XXXXX; all references in this Agreement to any
Issuer Free Writing Prospectus (other than any Issuer Free Writing Prospectuses that, pursuant to
Rule 433, are not required to be filed with the Commission) shall be deemed to include the copy
thereof filed with the Commission pursuant to XXXXX; and all references in this Agreement to
“supplements” to the Statutory Prospectus, any other preliminary prospectus, any General Disclosure
Package or the Prospectus shall include, without limitation, any supplements, “wrappers” or similar
materials prepared in connection with any offering, sale or private placement of any Securities by
the Underwriters outside of the United States.
37
SECTION 16. Permitted Free Writing Prospectuses. The Partnership
represents, warrants and agrees that, unless it obtains the
prior consent of the Representatives, and each Underwriter,
severally and not jointly, represents, warrants and agrees
that, unless it obtains the prior consent of the Partnership
and the Representatives, it has not made and will not make any
offer relating to the Securities that would constitute an
“issuer free writing prospectus,” as defined in Rule 433, or
that would otherwise constitute a “free writing prospectus,”
as defined in Rule 405, required to be filed with the
Commission. Any such free writing prospectus consented to by
the Representatives or by the Partnership and the
Representatives, as the case may be, is hereinafter referred
to as a “Permitted Free Writing Prospectus.” The Partnership
represents and warrants that it has treated and agrees that it
will treat each Permitted Free Writing Prospectus as an
“issuer free writing prospectus,” as defined in Rule 433, and
has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including
timely filing with the Commission where required, legending
and record keeping. For the purposes of clarity, the parties
hereto agree that all free writing prospectuses, if any,
listed in Exhibit D hereto are Permitted Free Writing
Prospectuses.
SECTION 17. Absence of Fiduciary Relationship. Each of the QR Parties,
jointly and severally, acknowledges and agrees that:
(a) each of the Underwriters is acting solely as an underwriter in connection with the public
offering of the Securities and no fiduciary, advisory or agency relationship between the QR
Parties, on the one hand, and any of the Underwriters, on the other hand, has been or will be
created in respect of any of the transactions contemplated by this Agreement, irrespective of
whether or not any of the Underwriters has advised or is advising the QR Parties on other matters,
and none of the Underwriters has any obligation to the QR Parties with respect to the transactions
contemplated by this Agreement except the obligations expressly set forth in this Agreement;
(b) the public offering price of the Securities and the price to be paid by the Underwriters
for the Securities set forth in this Agreement were established by the Partnership following
discussions and arms-length negotiations with the Representatives;
(c) it is capable of evaluating and understanding, and understands and accepts, the terms,
risks and conditions of the transactions contemplated by this Agreement;
(d) in connection with each transaction contemplated by this Agreement and the process leading
to such transactions, each of the Underwriters is and has been acting solely as principal and not
as fiduciary, advisor or agent of the QR Parties or any of their respective affiliates,
stockholders (or other equity holders), creditors or employees or any other party;
(e) none of the Underwriters has provided any legal, accounting, regulatory or tax advice with
respect to the transactions contemplated by this Agreement and it has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate;
(f) it is aware that the Underwriters and their respective affiliates are engaged in a broad
range of transactions that may involve interests that differ from those of the QR Parties
38
and that
none of the Underwriters has any obligation to disclose such interests and transactions to the QR
Parties by virtue of any fiduciary, advisory or agency relationship or otherwise; and
(g) it waives, to the fullest extent permitted by law, any claims it may have against any of
the Underwriters for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that
none of the Underwriters shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to it in respect of such a fiduciary duty claim or to any person asserting a fiduciary
duty claim on its behalf or in right of it or to any stockholders (or other equity holders),
employees or creditors of the QR Parties.
[Signature Page Follows]
39
If the foregoing is in accordance with your understanding of our agreement, please sign and return
to the Partnership a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the Underwriters and the QR Parties in accordance with its
terms.
Very truly yours, QRE GP, LLC |
||||
By | ||||
Name: | ||||
Title: | ||||
QR ENERGY, LP |
||||
By: | QRE GP, LLC, | |||
its general partner | ||||
By | ||||
Name: | ||||
Title: | ||||
QRE OPERATING, LLC |
||||
By | ||||
Name: | ||||
Title: | ||||
[Insert other QR Parties] |
||||
40
CONFIRMED AND ACCEPTED, as of the date first above written: | ||||
XXXXX FARGO SECURITIES, LLC |
||||
By | ||||
Authorized Signatory | ||||
X.X. XXXXXX SECURITIES LLC |
||||
By | ||||
Authorized Signatory | ||||
XXXXXXX XXXXX & ASSOCIATES, INC. |
||||
By | ||||
Authorized Signatory | ||||
RBC CAPITAL MARKETS CORPORATION |
||||
By | ||||
Authorized Signatory | ||||
For themselves and as Representatives of the Underwriters named in Schedule 1 hereto.
41
SCHEDULE 1
UNDERWRITERS
Number of | ||||
Initial | ||||
Name of Underwriter |
Securities | |||
Xxxxx Fargo Securities, LLC |
||||
X.X. Xxxxxx Securities LLC |
||||
Xxxxxxx Xxxxx & Associates, Inc. |
||||
RBC Capital Markets Corporation |
||||
[Other Underwriters] |
||||
Total |
||||
Schedule 1
SCHEDULE 2
PERSONS DELIVERING LOCK-UP AGREEMENTS
The Partnership
The General Partner
The Operating Subsidiary
QA Holdings
QA Global
Each Fund Entity
Each of the directors and officers named on Schedule 4 hereto
Schedule 2
SCHEDULE 3
SUBSIDIARIES OF THE PARTNERSHIP
Jurisdictions | ||||||
Jurisdiction of | of Foreign | General Partner or | ||||
Name of Entity | Organization | Qualification | Managing Members | |||
QRE Operating, LLC
|
Delaware |
Schedule 3
SCHEDULE 4
LIST OF DIRECTORS AND OFFICERS
LIST OF DIRECTORS AND OFFICERS
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Schedule 4
SCHEDULE 5
BREAKDOWN OF THE SPONSOR UNITS
The Fund Group | Common Units(1) | Subordinated Units | ||||||
Quantum Resources A1, LP (QRA) |
||||||||
Quantum Resources B, LP (QRB) |
||||||||
Quantum Resources C, LP (QRC) |
||||||||
QAB Carried WI, LP (QAB) |
||||||||
QAC Carried WI, LP (QAC) |
||||||||
Black Diamond Resources, LLC
(Black Diamond) |
||||||||
TOTAL |
(1) | Assumes that the Underwriters do not exercise their Over-Allotment Option. |
Schedule 5
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
Public Offering of Common Units Representing Limited Partner Interests
Dated as of
Xxxxx Fargo Securities, LLC
X.X. Xxxxxx Securities LLC
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets, LLC
As Representatives of the several Underwriters
X.X. Xxxxxx Securities LLC
Xxxxxxx Xxxxx & Associates, Inc.
RBC Capital Markets, LLC
As Representatives of the several Underwriters
c/o Wells Fargo Securities, LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This agreement is being delivered to you in connection with the proposed Underwriting
Agreement (the “Underwriting Agreement”) between QR Energy, LP, a Delaware limited
partnership (the “Partnership”), QRE GP, LLC, a Delaware limited liability company, QA
Holdings, LP, a Delaware limited partnership, QA Global GP, LLC, a Delaware limited liability
company, QRE Operating, LLC, a Delaware limited liability company, Quantum Resources A1, LP, a
Delaware limited partnership, Quantum Resources B, LP, a Delaware limited partnership, Quantum
Resources C, LP, a Delaware limited partnership, QAB Carried WI, LP, a Delaware limited
partnership, QAC Carried WI, LP, a Delaware limited partnership, and Black Diamond Resources, LLC,
a Delaware limited liability company, and Xxxxx Fargo Securities, LLC (“Xxxxx Fargo
Securities”), X.X. Xxxxxx Securities LLC (‘XX Xxxxxx”), Xxxxxxx Xxxxx & Associates,
Inc. (“Xxxxxxx Xxxxx”) and RBC Capital Markets, LLC (“RBC”), as the
representatives (the “Representatives”) of a group of underwriters (the
“Underwriters”), relating to a proposed underwritten public offering of common units
representing limited partner interests in the Partnership (the “Common Units”).
In order to induce you and the other Underwriters to enter into the Underwriting Agreement,
and in light of the benefits that the offering of the Common Units will confer upon the
undersigned, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned agrees with each Underwriter that, during the period
beginning on and including the date of the Underwriting Agreement through and including the date
that is the 180th day after the date of the Underwriting Agreement (the “Lock-
Up Period”), the undersigned will not, without the prior written consent of Xxxxx
Fargo Securities, directly or indirectly:
(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any Common Units or any securities convertible into
or exercisable or exchangeable for Common Units, whether now owned or hereafter acquired by
the undersigned or with respect to which the undersigned has or hereafter acquires the power
of disposition, or
(ii) enter into any swap or other agreement, arrangement or transaction that transfers
to another, in whole or in part, directly or indirectly, any of the economic consequences of
ownership of any Common Units or any securities convertible into or exercisable or
exchangeable for any Common Units,
whether any transaction described in clause (i) or (ii) above is to be settled by delivery of
Common Units, other securities, in cash or otherwise. Moreover, 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 or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the Lock-Up Period, |
the Lock-Up Period shall be extended and the restrictions imposed by this agreement shall continue
to apply until the expiration of the 18-day period beginning on the date of issuance of the
earnings release or the occurrence of the material news or material event, as the case may be,
unless Xxxxx Fargo Securities waives, in writing, such extension.
The undersigned hereby acknowledges and agrees that written notice of any extension of the
Lock-Up Period pursuant to the provisions of the previous paragraph will be delivered by Xxxxx
Fargo Securities to the Partnership and that any such notice properly delivered will be deemed to
have been given to, and received by, the undersigned. The undersigned further agrees that, prior
to engaging in any transaction or taking any other action that is subject to the terms of this
agreement during the period from and including the date of this agreement through and including the
34th day following the expiration of the Lock-Up Period, the undersigned will give prior
notice thereof to the Partnership and will not consummate any such transaction or take any such
action unless it has received written confirmation from the Partnership that such restricted period
(as the same may have been extended pursuant to the previous paragraph) has expired.
Notwithstanding the provisions set forth in the second preceding paragraph, the undersigned
may, without the prior written consent of Xxxxx Fargo Securities, transfer any Common Units or any
securities convertible into or exchangeable or exercisable for Common Units
A-2
(1) if the undersigned is a natural person, as a bona fide gift or gifts, or by will or
intestacy, to any member of the immediate family (as defined below) of the undersigned or to
a trust the beneficiaries of which are exclusively the undersigned or members of the
undersigned’s immediate family, or as a bona fide gift or gifts to a charity or educational
institution, and
(2) if the undersigned is a partnership or a limited liability company, to a partner or
member, as the case may be, of such partnership or limited liability company if, in any such
case, such transfer is not for value,
provided, however, that in the case of any transfer described in clause (1) or (2)
above, it shall be a condition to the transfer that (A) the transferee executes and delivers to
Xxxxx Fargo Securities, acting on behalf of the Underwriters, not later than one business day prior
to such transfer, a written agreement, in substantially the form of this agreement (it being
understood that any references to “immediate family” in the agreement executed by such transferee
shall expressly refer only to the immediate family of the undersigned and not to the immediate
family of the transferee) and otherwise satisfactory in form and substance to Xxxxx Fargo
Securities, and (B) if the undersigned is required to file a report under Section 16(a) of the
Securities Exchange Act of 1934, as amended, reporting a reduction in beneficial ownership of
Common Units or any securities convertible into or exercisable or exchangeable for Common Units by
the undersigned during the Lock-Up Period (as the same may be extended as described above), the
undersigned shall include a statement in such report to the effect that such transfer or
distribution is not a transfer for value and, in the case of any transfer pursuant to clause (1),
that such transfer is being made as a gift or by will or intestacy, as the case may be, and, in the
case of any transfer pursuant to clause (2), that such transfer is being made to the partners or
members, as the case may be, of the applicable partnership or limited liability company, as the
case may be. For purposes of this paragraph, “immediate family” shall mean a spouse, child,
grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of
the undersigned.
The undersigned further agrees that (i) it will not, during the Lock-Up Period (as the same
may be extended as described above), make any demand or request for or exercise any right with
respect to the registration under the Securities Act of 1933, as amended (the “1933 Act”),
of any Common Units or any securities convertible into or exercisable or exchangeable for Common
Units, and (ii) the Partnership may, with respect to any Common Units or any securities convertible
into or exercisable or exchangeable for Common Units owned or held (of record or beneficially) by
the undersigned, cause the transfer agent or other registrar to enter stop transfer instructions
and implement stop transfer procedures with respect to such securities during the Lock-Up Period
(as the same may be extended as described above).
In addition, the undersigned hereby waives any and all notice requirements and rights with
respect to the registration of any securities pursuant to any agreement, instrument, understanding
or otherwise, including any registration rights agreement or similar agreement, to which the
undersigned is a party or under which the undersigned is entitled to any right or benefit and any
tag-along rights, co-sale rights or other rights to have any securities (debt or equity) included
in the offering contemplated by the Underwriting Agreement or sold in connection with the sale of
Common Units pursuant to the Underwriting Agreement, provided that such waiver shall apply only to
the public offering of Common Units pursuant to the
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Underwriting Agreement and each registration statement filed under the 1933 Act in connection
therewith.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this agreement and that this agreement has been duly authorized (if the
undersigned is not a natural person), executed and delivered by the undersigned and is a valid and
binding agreement of the undersigned. This agreement and all authority herein conferred are
irrevocable and shall survive the death or incapacity of the undersigned (if a natural person) and
shall be binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
The undersigned acknowledges and agrees that whether or not any public offering of Common
Units actually occurs depends on a number of factors, including market conditions.
[Signature Page Immediately Follows]
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IN WITNESS WHEREOF, the undersigned has executed and delivered this agreement as of the date
first set forth above.
Yours very truly, |
||||
Name: | ||||
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EXHIBIT B
FORM OF OPINION OF PARTNERSHIP COUNSEL
[TO COME]
B-1
EXHIBIT C
PRICE-RELATED INFORMATION
Public offering price: $ per Common Unit
Underwriting discounts and commissions: $ per Common Unit
Common Units offered:
Over-Allotment Option:
C-1
EXHIBIT D
ISSUER FREE WRITING PROSPECTUSES
[List or state “None”]
D-1