1
EXHIBIT 1.1
2,500,000 CLASS C UNITS
HALLWOOD ENERGY PARTNERS, L.P.
LIMITED PARTNERSHIP UNITS
--------
UNDERWRITING AGREEMENT
Chicago, Illinois
__________, 1998
EVEREN Securities, Inc.
Wheat, First Securities, Inc.
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
Hallwood Energy Partners, L.P., a Delaware limited partnership (the
"Partnership"), proposes to issue and sell to the underwriters named in
Schedule I annexed hereto (the "Underwriters") an aggregate of 2,500,000 Class
C Units (the "Class C Units") of limited partner interest in the Partnership.
The aggregate of 2,500,000 Class C Units to be purchased from the Partnership
are herein called the "Firm Units." In addition, the Partnership has agreed to
sell to the Underwriters, upon the terms and conditions set forth herein, up to
375,000 additional Class C Units (the "Additional Units") to cover
over-allotments by the Underwriters, if any. The Firm Units and, to the extent
such option is exercised, the Additional Units are hereinafter collectively
referred to as the "Units." EVEREN Securities, Inc., Wheat, First Securities,
Inc. and Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. are acting as the representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives."
The Partnership wishes to confirm as follows its agreement with you
and the other several Underwriters, on whose behalf you are acting, in
connection with the several purchases of the Units from the Partnership.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Partnership has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-3 (Registration No. 333-38973), including a
2
prospectus subject to completion, relating to the Units. Such registration
statement (including all financial schedules and exhibits), as amended at the
time when it becomes effective and as thereafter amended by any post-effective
amendment or document incorporated by reference, is referred to in this
Agreement as the "Registration Statement." The term "Prospectus" as used in
this Agreement means (i) the prospectus in the form included in the
Registration Statement, or (ii) if the prospectus included in the Registration
Statement omits information in reliance upon Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act or as part of a post-effective amendment to the
Registration Statement after the Registration Statement becomes effective, the
prospectus as so filed, or (iii) if the prospectus included in the Registration
Statement omits information in reliance upon Rule 430A under the Act and such
information is included in a term sheet (as described in Rule 434(b) under the
Act) filed with the Commission pursuant to Rule 424(b) under the Act, the
prospectus included in the Registration Statement and such term sheet, taken
together. The prospectus subject to completion in the form included in the
Registration Statement dated October 28, 1997, and as such prospectus is
amended from time to time until the date upon which the Registration Statement
is declared effective by the Commission is referred to in this Agreement as the
"Prepricing Prospectus." Any registration statement filed by the Partnership
pursuant to Rule 462(b) of the Act to register a portion of the Units is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership hereby agrees to sell
2,500,000 Firm Units to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Partnership herein contained
and subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Partnership at a
purchase price of $_______ per Unit (the "purchase price per Unit"), the number
of Firm Units set forth opposite the name of such Underwriter in Schedule I
hereto (or such number of Firm Units as adjusted pursuant to Section 10
hereof).
The Partnership also agrees to sell up to 375,000 Additional Units to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Partnership herein contained and subject to all the terms and
conditions set forth herein, the Underwriters shall have the right for 30 days
from the date of this Agreement to purchase from the Partnership up to 375,000
Additional Units at the purchase price per Unit for the Firm Units. The
Additional Units may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Units. If any
Additional Units are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Units (subject to such
adjustments as you may determine to avoid fractional units) which bears the
same proportion to the number of Additional Units to be sold as the number of
Firm Units set forth opposite the name of such Underwriter in Schedule I hereto
(or such number of Firm Units as adjusted pursuant to Section 10 hereof) bears
to 2,500,000.
3. TERMS OF PUBLIC OFFERING. The Partnership has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Units as soon after the
-2-
3
Registration Statement and this Agreement have become effective as in your
judgment is advisable and initially to offer the Units upon the terms set forth
in the Prospectus.
4. DELIVERY OF THE UNITS AND PAYMENT THEREFOR. Delivery to the
Underwriters of the Firm Units and payment therefor shall be made at such place
as you shall designate at 10:00 a.m., New York City time, three (or four, if
priced after 4:30 p.m. New York time on the relevant date) business days after
the date hereof (the "Closing Date"). The place of delivery for the Firm Units
and the Closing Date may be varied by agreement between you and the
Partnership.
Delivery to the Underwriters of and payment for any Additional Units
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 a.m., New York City time, on such date or dates (the
"Additional Closing Date") (which may be the same as the Closing Date but shall
in no event be earlier than the Closing Date nor earlier than three nor later
than 10 business days after the giving of the notice hereinafter referred to),
as shall be specified in a written notice from you on behalf of the
Underwriters to the Partnership, of the Underwriters' determination to purchase
a number, specified in such notice, of Additional Units. Such notice may be
given to the Partnership by you at any time within 30 days after the date of
this Agreement. The place of delivery for the Additional Units and the
Additional Closing Date may be varied by agreement between you and the
Partnership.
Certificates for the Firm Units and for any Additional Units to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 p.m., New York City time, on the second
business day preceding the Closing Date or the Additional Closing Date, as the
case may be. Such certificates shall be made available to you at such place as
you shall designate for inspection and packaging not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date or
the Additional Closing Date, as the case may be. The certificates evidencing
the Firm Units and any Additional Units to be purchased hereunder shall be
delivered to you on the Closing Date or the Additional Closing Date, as the
case may be, against payment of the purchase price therefor by wire transfer in
immediately available funds, to the account specified by the Partnership to the
Underwriters no later than the business day prior to the Closing Date.
5. AGREEMENTS OF THE PARTNERSHIP. The Partnership agrees with the several
Underwriters as follows:
(a) The Partnership will use commercially reasonable efforts to cause
the Registration Statement to become effective and will advise you
promptly and, if requested by you, will confirm such advice in writing
(i) when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective, (ii) if Rule 430A
under the Act is employed, when the Prospectus or term sheet (as
described in Rule 434(b) under the Act) has been timely filed pursuant
to Rule 424(b) under the Act, (iii) of any request by the Commission
for amendments or supplements to the Registration Statement, any
Prepricing Prospectus or the Prospectus or for additional information,
(iv) of the issuance by the
-3-
4
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Units for offering or sale in any jurisdiction or the initiation (or
threatened initiation) of any proceeding for such purposes, and (v)
within the period of time referred to in Section 5(e) below, of any
change in the Partnership's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of any
event that comes to the attention of the Partnership that makes any
statement made in the Registration Statement or the Prospectus (as
then amended or supplemented) untrue in any material respect or that
requires the making of any additions thereto or changes therein in
order to make the statements therein not misleading in any material
respect (in light of the circumstances under which they were made,
with respect to the Prospectus), or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply
with the Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Partnership will use commercially reasonable efforts to
obtain the withdrawal of such order at the earliest possible time.
(b) The Partnership will furnish to you, without charge, three signed
copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto as you may
reasonably request.
(c) The Partnership will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of
which you shall not previously have been advised (with a reasonable
opportunity to review such amendment or supplement) or to which you
have reasonably objected after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Partnership has delivered or will deliver to you, without charge, in
such quantities as you have requested or may hereafter reasonably
request, copies of each form of the Prepricing Prospectus. The
Partnership consents to the use, in accordance with the provisions of
the Act and with the securities or Blue Sky laws of the jurisdictions
in which the Units are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus so furnished by the Partnership.
(e) As soon after the execution and delivery of this Agreement as is
reasonably practicable and thereafter from time to time for such
period as in the reasonable opinion of counsel for the Underwriters a
prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or a dealer, the Partnership will deliver to
each Underwriter and each dealer, without charge, as many copies of
the Prospectus (and of any amendment or supplement thereto) as they
may reasonably request. The Partnership consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance
with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which
-4-
5
the Units are offered by the several Underwriters and by all dealers
to whom Units may be sold, both in connection with the offering and
sale of the Units and for such period of time thereafter as the
Prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or dealer. If during such period of time any
event shall occur that in the judgment of the Partnership or in the
opinion of counsel for the Underwriters is required to be set forth in
the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with the
Act or any other law, the Partnership will forthwith prepare and file
with the Commission an appropriate supplement or amendment thereto,
and will furnish to each Underwriter and to each dealer who has
previously requested Prospectuses, without charge, a reasonable number
of copies thereof.
(f) The Partnership will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of
the Units for offering and sale by the several Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as
you may reasonably designate and will file such consents to service of
process or other documents as may be reasonably necessary in order to
effect such registration or qualification; provided that in no event
shall the Partnership be obligated to qualify to do business in any
jurisdiction where it is not now so qualified, to subject itself to
taxation as a result of doing business in any jurisdiction where it is
not now so subject to taxation, to qualify as a dealer in securities
in any jurisdiction or to take any action which would subject it to
service of process in suits, other than those arising out of the
offering or sale of the Units, in any jurisdiction where it is not now
so subject. In the event that the qualification of the Units in any
jurisdiction is suspended, the Partnership shall so advise you
promptly in writing.
(g) The Partnership will make generally available to its security
holders a consolidated earnings statement, which need not be audited,
covering a period of at least 12 months commencing after the effective
date of the Registration Statement and ending not later than 15 months
thereafter, as soon as reasonably practicable after the end of such
period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 promulgated
thereunder.
(h) During the period of five years hereafter, the Partnership will
furnish to you as soon as practicable after the end of each fiscal
year, a copy of its annual report to unitholders for such year; and
the Partnership will furnish to you (i) as soon as available, a copy
of each report or definitive proxy statement of the Partnership filed
with the Commission under the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder (the "Exchange Act"), or
mailed to partners, and (ii) from time to time such other information
concerning the Partnership as you may reasonably request.
-5-
6
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (other than as a result of
a failure by the Representatives or any Underwriter to fulfill their
or its obligations hereunder) or if this Agreement shall be terminated
by the Underwriters because of any failure or refusal on the part of
the Partnership to comply with the terms or fulfill any of the
conditions of this Agreement, the Partnership agrees to reimburse the
Representatives for all out-of-pocket expenses (including fees and
expenses of counsel for the Underwriters but excluding wages and
salaries paid by the Representatives) reasonably incurred by you in
connection herewith, up to a maximum of $75,000.
(j) The Partnership will apply the net proceeds from the sale of the
Units to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus under the caption "Use of
Proceeds."
(k) If Rule 430A under the Act is employed, the Partnership will
timely file the Prospectus or term sheet (as described in Rule 434(b)
under the Act) pursuant to Rule 424(b) under the Act.
(l) The Partnership will not (i) offer, sell, contract to sell or
otherwise dispose of or announce the offering of any Class C Units or
any securities that are convertible into or exercisable or
exchangeable for Class C Units or any securities that are senior to or
pari passu with Class C Units or (ii) grant any options or warrants to
purchase Class C Units, except to the Underwriters pursuant to this
Agreement, for a period of 180 days from the date of the Prospectus
without the prior written consent of EVEREN Securities, Inc.
(m) The Partnership will not, directly or indirectly, take any action
which would constitute, or any action designed or which might
reasonably be expected to cause or result in or constitute, under the
Act or otherwise, stabilization or manipulation of the price of any
security of the Partnership to facilitate the sale or resale of the
Units.
(n) If at any time during the 25-day period after the first date that
any of the Units are released by you for sale to the public, any
publication or event relating to or affecting the Partnership shall
occur as a result of which in your opinion the market price of the
Class C Units has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Partnership will,
after written notice from you advising the Partnership to the effect
set forth above, forthwith consult with you concerning the
advisability and substance of, and, if appropriate, disseminate, a
press release or other public statement responding to or commenting on
such publication or event.
(o) The Partnership will maintain a transfer agent and, if necessary
under the jurisdiction of its organization or the rules of the
American Stock Exchange or any other national
-6-
7
securities exchange on which the Class C Units are listed, a registrar
(which, if permitted by applicable laws and rules, may be the same
entity as the transfer agent) for its Class C Units.
(p) The Partnership will use its best efforts to cause, on or before
the Closing Date, the Units to be issued in connection with the
offering and sale thereof to be approved for listing on the American
Stock Exchange, subject to official notice of issuance.
(q) The Partnership will timely file all reports required to be filed
with the United States Securities and Exchange Commission (the
"Reports"). Such reports will be filed via ▇▇▇▇▇ in accordance with
Regulation S-T.
6. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The Partnership
represents and warrants to each Underwriter on the date hereof, and shall be
deemed to represent and warrant to each Underwriter on the Closing Date and the
Additional Closing Date, as the case may be, that:
(a) At the time of filing of the Registration Statement, the
Partnership met all of the eligibility requirements for Form S-3. All
Reports required by the Exchange Act have been timely filed and were
in compliance with the Exchange Act at the time of their filing. All
Reports required to be filed via ▇▇▇▇▇ have been filed in compliance
with Regulation S-T.
(b) Each Prepricing Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424(a) under the Act,
complied when so filed with the provisions of the Act and did not
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that this representation and
warranty does not apply to statements in such Prepricing Prospectus
(or any amendment or supplement thereto) made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Partnership in writing by or on behalf of any Underwriter through
you expressly for use therein.
(c) The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus, and the Prepricing Prospectus
included as part of the Registration Statement declared effective by
the Commission complies as to form with the requirements of the Act.
The Registration Statement, in the form in which it becomes effective
and also in such form as it may be when any post-effective amendment
thereto shall become effective or when amended or supplemented through
incorporation by reference, and the Prospectus, and any supplement or
amendment thereto when filed with the Commission under Rule 424(b)
under the Act, will comply with the provisions of the Act and will not
at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
amendment or supplement thereto) made in reliance upon and in
-7-
8
conformity with information relating to any Underwriter furnished to
the Partnership in writing by or on behalf of any Underwriter through
you expressly for use therein.
(d) The capitalization of the Partnership is as set forth in the
Prospectus as of the date set forth therein. All the outstanding Class
C Units of the Partnership have been duly authorized by all necessary
partnership action on the part of the Partnership and validly issued,
are fully paid and nonassessable (subject to the obligation of a
limited partner to repay the amount of any distribution wrongly
received from the Partnership for a period of three years from the
date of the distribution) and were not issued in violation of or
subject to any preemptive rights arising under the Partnership's
certificate of limited partnership or partnership agreement or under
the Delaware Revised Uniform Limited Partnership Act or similar
rights; the Units to be issued and sold to the Underwriters by the
Partnership hereunder have been duly authorized by all necessary
partnership action on the part of the Partnership and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable and will not have been issued in violation of or subject
to any preemptive rights arising under the Partnership's certificate
of limited partnership or partnership agreement or under the Delaware
Revised Uniform Limited Partnership Act or similar rights; the
securities of the Partnership conform to the description thereof in
the Registration Statement and the Prospectus (or any amendment or
supplement thereto); and upon delivery of certificates for the Units
pursuant to the terms of this Agreement and payment for the Units, the
Underwriters will receive valid and marketable title to the Units,
free and clear of any voting trust arrangements, liens, encumbrances,
equities, claims or defects in title to the several Underwriters
purchasing the Units in good faith and without notice of any lien,
claim or encumbrance.
(e) The Partnership is duly organized and validly existing in good
standing under the laws of the State of Delaware as a limited
partnership with full partnership power and authority to own, lease
and operate its properties and to conduct its business as presently
conducted and as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly
registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its
properties or conduct of its business requires such registration or
qualification, except where the failure to so register or qualify does
not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net worth or results of
operations of the Partnership, taken as a whole.
(f) Each of the Partnership's corporate subsidiaries (the "Corporate
Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Partnership's subsidiaries that is a
limited partnership (the "Partnership Subsidiaries") has been duly
formed and is validly existing as a limited partnership under the laws
of the state of its formation. Each of the Partnership's subsidiaries
that is a limited liability company (the "LLC Subsidiaries") has been
duly formed and is validly existing as a limited liability company
under the laws of the state of
-8-
9
its formation. (The Corporate Subsidiaries, the Partnership
Subsidiaries, and the LLC Subsidiaries are hereinafter sometimes
referred to as the "Subsidiaries" or individually a "Subsidiary.")
Each of the Partnership's Subsidiaries is duly qualified and in good
standing as a foreign corporation, limited partnership or limited
liability company in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature
or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will
not in the aggregate have a material adverse effect on the Partnership
and its Subsidiaries taken as a whole. Each of the Subsidiaries has
all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications,
licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus other than
those, the failure of which to possess, would not have a material
adverse effect on the condition (financial or other), business,
prospects, properties, net worth or results of operations of the
Partnership, taken as a whole, and no such consent, approval,
authorization, order, registration, qualification, license or permit
contains a materially burdensome restriction not adequately disclosed
in the Registration Statement and the Prospectus other than those
which would not result in a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Partnership, taken as a whole. Except as
set forth in Schedule 6(f), all of the issued and outstanding shares
of capital stock of each Corporate Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and
are owned by the Partnership, directly or through Subsidiaries, free
from liens, encumbrances, claims, security interests, restrictions on
transfer, voting trust or similar agreements, and any other defect of
title. Except as set forth in Schedule 6(f), all of the partnership
interests of each Partnership Subsidiary have been duly and validly
authorized and issued in accordance with the terms of the governing
partnership agreement and are owned by the Partnership, directly or
through Subsidiaries, free from liens, encumbrances, claims, security
interests, restrictions on transfer, voting trust or similar
agreements, and any other defect of title. Except as set forth in
Schedule 6(f), all of the membership interests of each LLC Subsidiary
have been duly and validly authorized and issued in accordance with
the terms of the governing limited liability company agreement (or
regulations) and are owned by the Partnership, directly or through its
Subsidiaries, free from liens, encumbrances, claims, security
interests, restrictions on transfer, voting trusts or similar
agreements, and any other defect of title.
(g) The offering and sale of the Units has been carried out in
compliance with all federal and state securities laws, and each
contract, agreement or arrangement to effect the offering and sale of
the Units to which the Partnership or any of its Subsidiaries is a
party or by which it is bound, or to which any of the property or
assets of the Partnership or any of its Subsidiaries is subject has
been duly and validly authorized, executed and delivered by the
Partnership or such Subsidiary, as applicable, and neither the
Partnership nor any Subsidiary is in breach or default of any
obligation, agreement, covenant or condition contained in any such
contract, agreement or arrangement other than those which would not
result in a
-9-
10
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Partnership, taken as a whole.
(h) There are no legal or governmental proceedings pending or, to the
knowledge of the Partnership, threatened, against the Partnership or
any Subsidiary or to which any of their property, is subject, that are
required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) but are not
described as required. Except as required to be described in the
Prospectus (or any amendment or supplement thereto), there is no
action, suit, inquiry, proceeding or investigation by or before any
court or governmental or other regulatory or administrative agency or
commission pending or, to the best knowledge of the Partnership,
threatened against or involving the Partnership or any Subsidiary,
nor, to the best knowledge of the Partnership, is there any basis for
such action, suit, inquiry, proceeding or investigation, that are not
described. There are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required. All agreements,
contracts, indentures, leases or other instruments described in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto) or filed as an exhibit to the Registration
Statement have been duly authorized, executed and delivered by the
Partnership or a Subsidiary, constitute valid and binding agreements
of the Partnership or such Subsidiary and are enforceable against the
Partnership or such Subsidiary in accordance with the terms thereof,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
laws affecting creditors' rights and remedies generally, (ii)
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), (iii) standards of
commercial reasonableness and good faith and (iv) public policy.
(i) Neither the Partnership nor any Subsidiary is in violation of its
certificate of limited partnership or partnership agreement, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Partnership or any
Subsidiary or of any decree of any court or governmental agency or
body having jurisdiction over the Partnership or any Subsidiary, or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other
instrument to which the Partnership or any Subsidiary is a party or by
which any of their respective properties may be bound, except for such
violations or defaults which would not have a material adverse effect
on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Partnership and
its Subsidiaries, taken as a whole.
(j) The execution and delivery of this Agreement and the performance
by the Partnership of its obligations under this Agreement have been
duly and validly authorized by the Partnership, and this Agreement has
been duly executed and delivered by the Partnership.
-10-
11
(k) None of the issuance and sale of the Units, the execution,
delivery or performance of this Agreement by the Partnership nor the
consummation by the Partnership of the transactions contemplated
hereby (i) is or may be void or voidable by any person or entity, (ii)
requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except such as may be required for the registration of the Units
under the Act and compliance with the securities or Blue Sky laws of
various jurisdictions and the clearance of the offering of the Units
with the National Association of Securities Dealers, Inc. (the
"NASD"), all of which will be, or have been, effected in accordance
with this Agreement) or conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, the certificate of
limited partnership, or other organizational documents, of the
Partnership or any Subsidiary, or (iii) conflicts or will conflict
with or constitutes a breach of, or a default under, any agreement,
contract, indenture, lease or other instrument to which the
Partnership or any Subsidiary is a party or by which any of them or
any of their respective properties may be bound, or violates any
statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Partnership or any Subsidiary or any of their
respective properties, or results in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Partnership or any Subsidiary pursuant to the terms of any agreement
or instrument to which any of them is a party or by which any of them
may be bound or to which any of their property or assets is subject,
other than those which would not result in a material adverse effect
on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Partnership,
taken as a whole.
(l) Each contract, agreement or arrangement to which the Partnership
or any Subsidiary is a party or by which it is bound, or to which any
of the property or assets of the Partnership or any Subsidiary is
subject, which is material to the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Partnership and its Subsidiaries, taken as a whole, has been duly
and validly authorized, executed and delivered by the Partnership or
such Subsidiary, as applicable, and neither the Partnership nor any
Subsidiary is in breach or default of any obligation, agreement,
covenant or condition contained in any such contract, agreement or
arrangement, except for such breaches or defaults as would not have a
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results or operations of
the Partnership and its Subsidiaries, taken as a whole; the
Partnership knows of no present condition or fact which would prevent
compliance by the Partnership or any Subsidiary or any other party
thereto with the terms of any such contract, agreement or arrangement
in all material respects; neither the Partnership nor any Subsidiary
has any present intention to exercise any rights that it may have to
cancel any such contract, agreement or arrangement or otherwise to
terminate its rights and obligations thereunder, and none of them has
any knowledge that any other party to any such contract, agreement or
arrangement has any intention not to render full performance in all
material respects as contemplated by the terms thereof.
-11-
12
(m) Except as described in the Prospectus, the Partnership does not
have outstanding and at the Closing Date (and the Additional Closing
Date, if applicable) will not have outstanding any options to
purchase, or any warrants to subscribe for, or any securities or
obligations convertible into or exchangeable for, or any contracts or
commitments to issue or sell, any Class C Units or any such warrants
or convertible or exchangeable securities or obligations. No holder of
securities of the Partnership has rights to the registration of any
securities of the Partnership because of the filing of the
Registration Statement, except (i) with respect to the Units and (ii)
any such rights for which the Partnership has received valid and
enforceable waivers.
(n) Deloitte & Touche LLP, the certified public accountants who have
certified the financial statements filed as part of the Registration
Statement and the Prospectus (or any amendment or supplement thereto)
are independent public accountants as required by the Act.
(o) The financial statements, together with related schedules and
notes, forming part of the Registration Statement and the Prospectus
(and any amendment or supplement thereto), present fairly in all
material respects both the historical and pro forma consolidated
financial position, results of operations and changes in financial
position of the Partnership and its Subsidiaries on the basis stated
in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial
and statistical information and data (including the reserve data) set
forth in the Registration Statement and Prospectus (and any amendment
or supplement thereto) has been prepared on a basis consistent with
such financial statements and the books and records of the
Partnership.
(p) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), neither the Partnership nor any Subsidiary has
incurred any liability or obligation, direct or contingent, or entered
into any transactions, not in the ordinary course of business, that is
material to the Partnership and its Subsidiaries, taken as a whole,
and there has not been any material change in the units of limited
partner interest for the Partnership and each Subsidiary which is a
Limited Partnership, the capital structure for each Corporate
Subsidiary, or membership interests for each LLC Subsidiary, or
material increase in the short-term debt or long-term debt, of the
Partnership or any Subsidiary, or any development involving or which
may reasonably be expected to involve a potential future material
adverse change, in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the
Partnership and its Subsidiaries, taken as a whole.
-12-
13
(q) The Partnership or each Subsidiary, as the case may be, has (i)
generally satisfactory title to all their interests in the oil and gas
properties described in the Prospectus as being owned by them, title
investigations having been carried out by the Partnership in
accordance with the customary practice in the oil and gas industry,
and (ii) good and marketable title to all other real property and all
property described in the Prospectus as being owned by them, in each
case free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration
Statement and the Prospectus or in a document filed as an exhibit to
the Registration Statement or such as are not materially burdensome
and do not interfere in any material respect with the use of the
property or the conduct of the business of the Partnership and its
Subsidiaries, taken as a whole, and the property (real and personal)
held under lease by each of the Partnership or any Subsidiary, as the
case may be, is held by it under valid, subsisting and enforceable
leases with only such exceptions as in the aggregate are not
materially burdensome and do not interfere in any material respect
with the conduct of the business of the Partnership and its
Subsidiaries, taken as a whole.
(r) The Partnership has not distributed and will not distribute prior
to the Closing Date any offering material in connection with the
offering and sale of the Units other than the Prepricing Prospectus,
the Registration Statement, the Prospectus and such other materials
permitted by the Act.
(s) The Partnership has not taken, directly or indirectly, any action
which constituted, or any action designed or which might reasonably be
expected to cause or result in or constitute, under the Act or
otherwise, stabilization or manipulation of the price of any security
of the Partnership to facilitate the sale or resale of the Units.
(t) The Partnership is not an "investment company," an "affiliated
person" of, or "promoter" or "principal underwriter" for an investment
company within the meaning of the Investment Company Act of 1940.
(u) The Partnership and each of its Subsidiaries have all permits,
licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities or private persons or entities
(hereinafter "permit" or "permits") as are necessary to own its
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, except where the failure to have obtained any such permit
has not had and could not reasonably be expected to have a material
adverse effect upon the condition (financial or other), business,
prospects, properties, net worth or results of operations of the
Partnership and its Subsidiaries, taken as a whole; the Partnership
and each of the Subsidiaries have fulfilled and performed all of their
material obligations with respect to each such permit and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination of any such permit or result in any other
material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the
-13-
14
Prospectus, such permits contain no restrictions that are materially
burdensome to the Partnership or any Subsidiary.
(v) The Partnership and each Subsidiary are 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 it is engaged; and neither the Partnership nor any Subsidiary
has 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 comparable cost, except as disclosed in the
Registration Statement and the Prospectus.
(w) Hallwood Petroleum, Inc. has complied and will comply in all
material respects with wage and hour determinations issued by the U.S.
Department of Labor under the Service Contract Act of 1965 and the
Fair Labor Standards Act in paying its employees' salaries, fringe
benefits and other compensation for the performance of work or other
duties in connection with contracts with the U.S. government, and have
complied and will comply in all material respects with the
requirements of the Americans with Disabilities Act of 1990, the
Family and Medical Leave Act of 1993, the Employee Retirement Income
Security Act of 1974, the Civil Rights Act of 1964 (Title VII), the
Age Discrimination in Employment Act and state labor laws, each as
amended, except where the failure to comply with any such requirements
has not, and could not reasonably be expected to, have a material
adverse effect on the condition (financial or other) business,
prospects, properties, net worth or results of operations of the
Partnership and its Subsidiaries, taken as a whole.
(x) The Partnership and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorizations; 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.
(y) Neither the Partnership nor any Subsidiary has directly or
indirectly, at any time during the past five years (i) made any
unlawful contribution to any candidate for political office, nor, to
the best knowledge of the Partnership or any Subsidiary, failed to
disclose fully any contribution in violation of law, or (ii) made any
payment to any federal, state or foreign governmental official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States
or any jurisdiction thereof or applicable foreign jurisdictions.
(z) The Partnership and each of the Subsidiaries have obtained all
required permits, licenses and other authorizations, if any, which are
required under federal, state, regional,
-14-
15
county, local and foreign statutes, codes, ordinances and other laws
relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases, spilling, injecting,
leaching or disposing into the environment or threatened releases of
pollutants, contaminants, chemicals or industrial, hazardous or toxic
materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface, or
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, discharge
into the environment, transport or handling of pollutants,
contaminants, chemicals or industrial, hazardous or toxic materials or
wastes, or any regulation, rule, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder ("Environmental Laws"), except for such permits,
licenses and other authorizations which if not obtained would not have
a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Partnership and its Subsidiaries taken as a whole. The Partnership
and each of the Subsidiaries are in material compliance with all terms
and conditions of all required permits, licenses and authorizations,
and are also in material compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws. There is no pending or, to the best knowledge of the
Partnership, threatened civil or criminal litigation, notice of
violation, warning letter or administrative proceeding relating in any
way to the Environmental Laws (including, without limitation, notices,
demand letters or claims under the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), as amended by the Superfund Amendments Reauthorization Act
of 1987 ("▇▇▇▇"), the Toxic Substances Control Act of 1976, the
Emergency Planning and Community Right-to-Know Act of 1986, the Clean
Water Act of 1977, and the Clear Air Act of 1966, all as amended, and
similar foreign, state or local laws) involving the Partnership or any
Subsidiary which, if determined adversely, could reasonably be
expected to result in a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or
operations of the Partnership, taken as a whole. To the best knowledge
of the Partnership, there have not been and there are not any past,
present or reasonably foreseeable future events, conditions,
circumstances, activities, practices, incidents, actions or plans
involving the Partnership or any Subsidiary which may interfere with
or prevent continued compliance, or which may give rise to any common
law or legal liability, or otherwise form the basis of any present or
future claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, arrangement for
disposal, transport, arrangement for transport or handling, or the
emission, discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical or industrial,
hazardous or toxic material or waste, including, without limitation,
any liability arising, or any claim, action, demand, suit, proceeding,
hearing, study or investigation which may be brought, under RCRA,
CERCLA, ▇▇▇▇, or similar foreign, state, regional, county, or local
laws.
-15-
16
(aa) All offers and sales of the Partnership's units of limited
partner interest and debt or other securities prior to the date hereof
were made in compliance with or were the subject of an available
exemption from the Act and all other applicable state and federal laws
or regulations, or any actions under the Act or any state or federal
laws or regulations in respect of any such offers or sales are
effectively barred by effective waivers or statutes of limitation.
(bb) All federal, state and local tax returns required to be filed by
or on behalf of the Partnership and each Subsidiary with respect to
all periods ended prior to the date of this Agreement have been filed
(or are the subject of valid extensions) with the appropriate federal,
state and local authorities and all such tax returns, as filed, are
accurate in all material respects. All federal, state and local taxes
(including estimated tax payments) required to be shown on all such
tax returns or claimed to be due from or with respect to the business
of the Partnership and each Subsidiary has been paid or reflected as a
liability on the financial statements of the Partnership and the
Subsidiaries for appropriate periods. All deficiencies asserted as a
result of any federal, state or local tax audits have been paid or
finally settled and, except as previously disclosed to the
Representatives in writing, no issue has been raised in any such audit
which by application reasonably could be expected to result in a
proposed material deficiency for any other period not so audited. To
the best knowledge of the Partnership, no state of facts exists or has
existed which could reasonably be expected to constitute grounds for
the assessment of any tax liability with respect to the periods which
have not been audited by appropriate federal, state or local
authorities. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or
local tax return for any period.
(cc) ▇▇▇▇▇▇▇▇▇▇ Petroleum Consultants, Inc. (Houston, Texas), is an
independent petroleum engineer with respect to the Partnership and its
Subsidiaries.
(dd) Except as described or reflected in the financial statements set
forth in the Prospectus, as of the date hereof, (1) all royalties,
rentals, deposits and other amounts due on the oil and gas properties
of the Partnership or any Subsidiary have been properly and timely
paid, and no proceeds from the sale or production attributable to the
oil and gas properties of the Partnership or any Subsidiary are
currently being held in suspense by any purchaser thereof, except
where such amounts due would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Partnership and its Subsidiaries, taken as a whole, and (2) there
are no claims under take-or-pay contracts pursuant to which natural
gas purchasers have any make-up rights affecting the interest of the
Partnership or any Subsidiary in their oil and gas properties, except
where such claims would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Partnership its Subsidiaries, taken as a whole.
(ee) As of the date hereof, the net aggregate undiscounted monetary
liability of the Partnership or any Subsidiary for petroleum taken or
received under any operating or gas
-16-
17
balancing and storage agreement relating to its oil and gas properties
that permits any person to receive any portion of the interest of the
Partnership or any Subsidiary in any petroleum or to receive cash or
other payments to balance any disproportionate allocation of petroleum
would not, singly or in the aggregate, have a material adverse effect
on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Partnership and
its Subsidiaries, taken as a whole.
(ff) No relationship, direct or indirect, exists between or among the
Partnership or any Subsidiary on the one hand, and HEPGP, Ltd., the
general partner of the Partnership (the "General Partner") or the
partners of the General Partner, or the directors and officers of the
partners of the General Partner, or customers or suppliers of the
Partnership or any Subsidiary on the other hand, which is required by
the Act to be described in the Registration Statement and the
Prospectus which is not so described.
(gg) Except as disclosed in the Prospectus, there are no contracts,
agreements, or understandings between the Partnership and any person
that would give rise to a valid claim against the Partnership or any
Underwriters for a brokerage commission, finders fee or other like
payment in relation to the offer and sale of the Units.
7. EXPENSES. The Partnership hereby agrees with the several Underwriters
that the Partnership will pay or cause to be paid the costs and expenses
associated with the following: (i) the preparation, printing or reproduction,
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Prepricing Prospectus, the Prospectus, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Units; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Units, including
any stamp taxes in connection with the offering of the Units; (iv) the printing
(or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Units; (v)
the registration of the Units under the Exchange Act and the listing of the
Units on the American Stock Exchange; (vi) the registration or qualification of
the Units for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 5(f) hereof (including the reasonable
fees and expenses of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification); (vii) the filing fees
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. in connection with the offering; (viii)
the transportation and other expenses to the extent incurred by or on behalf of
representatives of the Partnership in connection with the presentations to
prospective purchasers of the Units; (ix) the fees and expenses of the
Partnership's accountants and the fees and expenses of counsel for the
Partnership; and (x) the performance by the Partnership of its other
obligations under this Agreement. Notwithstanding the foregoing, in the event
that the
-17-
18
proposed offering is terminated for the reasons set forth in Section 5(i)
hereof, the Partnership agrees to reimburse the Underwriters as provided in
Section 5(i).
8. INDEMNIFICATION AND CONTRIBUTION. The Partnership agrees to indemnify
and hold harmless you and each other Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual
materials used in connection with the marketing of the Units, including,
without limitation, slides, videos, films and tape recordings, provided that
such materials were approved by the Partnership, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon an
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to an Underwriter furnished in writing to the
Partnership by or on behalf of any Underwriter through you expressly for use in
connection therewith or arise out of materials prepared solely by the
Underwriters without the knowledge of the Partnership or any of its
representatives based upon material information obtained from sources other
than, directly or indirectly, the Partnership or its representatives.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Partnership, such Underwriter or such controlling person shall
promptly notify in writing the party or parties against whom indemnification is
being sought (the "indemnifying party" or "indemnifying parties"), and such
indemnifying party or parties shall assume the defense thereof, including the
employment of counsel reasonably acceptable to such Underwriter or such
controlling person and payment of all fees and expenses. Such Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of one such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the indemnifying party or parties has or
have agreed in writing to pay such fees and expenses, (ii) the indemnifying
party or parties has or have failed to assume the defense and employ counsel
reasonably acceptable to the Underwriter or such controlling person within a
reasonable period of time following notice from such Underwriter or such
controlling person, or (iii) the named parties to any such action (including
any impleaded parties) include both such Underwriter or such controlling person
and the indemnifying party or parties, and such Underwriter or such controlling
person shall have been advised by such counsel that representation of such
indemnified party and any indemnifying party or parties by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
indemnifying
-18-
19
party or parties shall not have the right to assume the defense of such action
on behalf of such Underwriter or such controlling person). The indemnifying
party or parties shall not be liable for any settlement of any such action
effected without its or their prior written consent, but if settled with such
prior written consent, or if there be a final judgment for the plaintiff in any
such action, the indemnifying party or parties agree to indemnify and hold
harmless any Underwriter and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment, but in the case of a judgment only to the extent stated in the
immediately preceding paragraph.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Partnership, and the General Partner and the directors and
officers of the general partner of the General Partner who sign the
Registration Statement, and any person who controls the Partnership and the
General Partner within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from the
Partnership to each Underwriter, but only with respect to information relating
to such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action or claim shall be brought or asserted against the Partnership, or the
General Partner or any of its directors, any such officers or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph, such Underwriter shall have the rights and duties given to the
Partnership by the preceding paragraph (except that if the Partnership shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Partnership, and the General Partner and its
directors, any such officers and any such controlling persons shall have the
rights and duties given to the Underwriters by the immediately preceding
paragraph.
In any event, the Partnership will not, without the prior written
consent of the Representatives, settle or compromise or consent to the entry of
any judgment in any proceeding or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not the
Representatives or any person who controls the Representatives within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party
to such claim, action, suit or proceeding) unless such settlement, compromise
or consent includes an unconditional release of all Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
If the indemnification provided for in this Section 8 is unavailable
to an indemnified party in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Partnership on the one hand and the
Underwriters on the other hand from the offering of the ▇▇▇▇▇
-▇▇-
▇▇
▇▇ (▇▇) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Partnership on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Partnership on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Partnership bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus (or any related term sheet used in
reliance on Rule 434(b) under the Act); provided that, in the event that the
Underwriters shall have purchased any Additional Units hereunder, any
determination of the relative benefits received by the Partnership or the
Underwriters from the offering of the Units shall include the net proceeds
(before deducting expenses) received by the Partnership, and the underwriting
discounts and commissions received by the Underwriters, from the sale of such
Additional Units, in each case computed on the basis of the respective amounts
set forth in the notes to the table on the cover page of the Prospectus (or any
related term sheet used in reliance on Rule 434(b) under the Act). The relative
fault of the Partnership on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Partnership on
the one hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Partnership and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 8 was determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in this
Section 8 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Units underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective numbers of Firm Units set forth opposite their names in
Schedule I hereto (or such numbers of Firm Units increased as set forth in
Section 10 hereof) and not joint.
Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the
-20-
21
indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this Section 8
and the representations and warranties of the Partnership set forth in this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Partnership, the General Partner its directors
or officers or any person controlling the Partnership, (ii) acceptance of any
Units and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Partnership, its directors or officers, or any person
controlling the Partnership, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
8.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Firm Units hereunder are subject to the following
conditions:
(a) The Registration Statement shall have become effective not later
than 12:00 noon, New York City time, on the date hereof, or at such
later date and time as shall be consented to in writing by you, and
all filings required by Rules 424(b) and 430A under the Act shall have
been timely made.
(b) Subsequent to the effective date of the Registration Statement
there shall not have occurred any change, or any development
involving, or which might reasonably be expected to involve, a
potential future material adverse change, in the condition (financial
or other), business, prospects, properties, net worth or results of
operations of the Partnership, not contemplated by the Prospectus (or
any supplement thereto), that in your reasonable opinion, as
Representatives of the several Underwriters, would materially and
adversely affect the market for the Units.
(c) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of Jenkens & ▇▇▇▇▇▇▇▇▇, a
Professional Corporation, counsel for the Partnership, dated the
Closing Date (and the Additional Closing Date, if any), satisfactory
to you, to the effect that:
(i) The Partnership is duly formed and validly
existing in good standing under the laws of the State of
Delaware as a limited partnership with full partnership power
and authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its
business in good standing in the States of Arkansas, Colorado,
Louisiana, Michigan, Mississippi, Montana, New Mexico, North
Dakota, Oklahoma, Texas, Utah and Wyoming as a foreign
limited partnership.
(ii) The authorized Class C Units of the Partnership
conform in all material respects as to legal matters to the
description thereof contained in the Prospectus under the
caption "Description of Units."
-21-
22
(iii) All units of limited partner interest of the
Partnership outstanding prior to the issuance of the Units to be
issued and sold by the Partnership hereunder have been duly
authorized and validly issued, are fully paid and nonassessable
(subject to the obligation of a limited partner to repay the
amount of any distribution wrongly received from the Partnership
for a period of three years from the date of the distribution)
and have not been issued in violation of or subject to any
preemptive rights arising under the Partnership's certificate of
limited partnership or its partnership agreement or under the
Delaware Revised Uniform Limited Partnership Act or, to the
knowledge of such counsel, similar rights that entitle or will
entitle any person to acquire any Units upon issuance of such
Units by the Partnership.
(iv) All offers and sales of the Partnership's units
of limited partner interest within three years of the date
hereof were made in compliance with or were the subject of an
available exemption from the registration provisions of the Act
and the registration provisions of all other applicable state
and federal laws or regulations or any actions under the Act or
any state or federal laws or regulations in respect of any such
offers or sales are effectively barred by effective waivers or
statutes of limitation.
(v) The Units to be issued and sold to the
Underwriters by the Partnership hereunder have been duly
authorized by all necessary partnership action on the part of
the Partnership and, when issued and delivered to the
Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and
nonassessable (subject to the obligation of a limited partner to
repay the amount of any distribution wrongly received from the
Partnership for a period of three years from the date of the
distribution) and will have not been issued in violation of or
subject to any preemptive rights under the Partnership's
certificate of limited partnership or partnership agreement or
under the Delaware Revised Uniform Limited Partnership Act or,
to the knowledge of such counsel, similar rights that entitle or
will entitle any person to acquire any Units upon the issuance
of such Units of limited partner interest by the Partnership.
(vi) The form of certificates for the Units conforms
to the requirements of the applicable partnership laws of the
State of Delaware.
(vii) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the knowledge of such counsel,
no proceedings for that purpose are pending before or
contemplated by the Commission.
(viii) The Partnership has all requisite partnership
power and authority to enter into this Agreement and to issue,
sell and deliver the Units to be sold by it to
-22-
23
the Underwriters as provided herein, and this Agreement has been
duly authorized, executed and delivered by the Partnership.
(ix) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency
or official is required on the part of the Partnership (except
such as have been obtained under the Act or such as may be
required under state securities or Blue Sky laws governing the
purchase and distribution of the Units) for the valid issuance
and sale of the Units to the Underwriters under this Agreement.
(x) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the
financial statements and the schedules (including the notes
thereto and the auditors report thereon) included therein, the
reserve review letter of ▇▇▇▇▇▇▇▇▇▇ Petroleum Consultants, Inc.,
the other financial, reserve and statistical information
included therein, and the exhibits thereto as to which such
counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act.
(xi) To the knowledge of such counsel, (A) other
than as described or contemplated in the Registration Statement
or the Prospectus (or any amendment or supplement thereto),
there are no legal or governmental proceedings pending or
threatened against the Partnership or any Subsidiary or to which
the Partnership or any Subsidiary or any of their respective
property, is subject, that are required to be described in the
Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required therein,
and (B) there are no agreements, contracts, indentures or other
instruments, that are required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or
filed as required or incorporated therein by reference, as the
case may be.
(xii) Such counsel has no reason to believe that the
descriptions in the Prospectus under the caption "Business --
Regulation" of statutes, regulations or legal or governmental
proceedings are other than accurate or fail to present fairly
the information required to be shown.
(xiii) The Partnership is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940.
(xiv) The Partnership meets the eligibility requirements
for Form S-3 at the time of filing the Registration Statement.
-23-
24
In rendering such opinion, counsel may rely, to the extent they deem
such reliance proper, as to matters of fact upon certificates of officers of
the General Partner and of government officials and in rendering the opinion
set forth in paragraph (vii) above, state that they have relied on oral advice
of the Commission that the Commission has declared the Registration Statement
effective under the Act. Copies of all such certificates shall be furnished to
you and your counsel on the Closing Date (and the Additional Closing Date, if
applicable). Such counsel shall also be entitled to state that its opinion is
limited to the federal laws of the United States of America, the laws of the
State of Texas and the Delaware Revised Uniform Limited Partnership Act.
In rendering such opinion, in each case where such opinion is
qualified by "the best knowledge of such counsel," "the knowledge of such
counsel," "known to such counsel" and/or "know" and words of similar import,
such counsel may rely as to matters of fact upon certificates of executive and
other officers and employees of the General Partner as you and such counsel
shall deem are appropriate and such other procedures as you and such counsel
shall mutually agree; provided, however, in each such case, such counsel shall
state that it has no knowledge contrary to the information contained in such
certificates or developed by such procedures and knows of no reason why you
should not reasonably rely upon the information contained in such certificates
or developed by such procedures.
In addition to the opinion set forth above, such counsel shall state
the following: Such counsel has participated in conferences with officers and
other representatives of the Partnership, representatives of the independent
public accountants of the Partnership and your representatives at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed. Although such counsel is not passing upon, and does not assume
any responsibility for and have not verified, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, such counsel advises you that, on the basis of the foregoing
(relying as to materiality to a large extent upon officers and other
representatives of the General Partner and your representatives), no facts have
come to the attention of such counsel which lead such counsel to believe that
the Registration Statement (other than (i) the financial statements and
schedules (including the notes thereto and the auditors' reports thereon)
included therein, (ii) the reserve review letter of ▇▇▇▇▇▇▇▇▇▇ Petroleum
Consultants, Inc. included therein, (iii) the other financial, reserve and
statistical information included therein and (iv) the exhibits thereto, as to
which such counsel has not been asked to comment), as of the time it became
effective, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (other than (i) the
financial statements (including the notes thereto and the auditors' report
thereon) including therein, (ii) the reserve review letter of ▇▇▇▇▇▇▇▇▇▇
Petroleum Consultants, Inc. included therein and (iii) the other financial,
reserve and statistical information included therein, as to which such counsel
has not been asked to comment), as of the issue date thereof, contained any
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
-24-
25
(d) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, general
counsel of the General Partner, dated the Closing Date (and the
Additional Closing Date, if any), satisfactory to you, to the effect
that:
(i) The Partnership is duly registered and qualified
to conduct business and is in good standing in each jurisdiction
or place set forth opposite its name on Schedule II hereto.
(ii) Each of the Corporate Subsidiaries has been
duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation.
Each of the Partnership Subsidiaries has been duly formed and is
validly existing as a limited partnership under the laws of the
state of its formation. Each of the LLC Subsidiaries has been
duly formed and is validly existing as a limited liability
company under the laws of the state of its formation. Each of
the Partnership's Subsidiaries is duly qualified and in good
standing as a foreign corporation, limited partnership or
limited liability company, as the case may be, in each
jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will
not in the aggregate have a material adverse effect on the
Partnership and its Subsidiaries, taken as a whole. Each of the
Subsidiaries has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from
all public, regulatory or governmental agencies and bodies, to
own, lease and operate its properties and conduct its business
as now being conducted and as described in the Registration
Statement and the Prospectus, except where the failure to
possess such items could not reasonably be expected to result in
a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or operations of the
Partnership, taken as a whole. Based solely on a review of such
Subsidiaries' books and records, all of the issued and
outstanding shares of capital stock of each Corporate Subsidiary
have been duly authorized and validly issued and are fully paid
and nonassessable. Based solely on a review of such
Subsidiaries' books and records, all of the partnership
interests of each Partnership Subsidiary have been duly and
validly authorized and issued in accordance with the terms of
the governing partnership agreement and are owned by the
Partnership, directly or through Subsidiaries, free from liens,
encumbrances, claims, security interests, restrictions on
transfer, voting trust or similar agreements, and any other
defect of title. Based solely on a review of such Subsidiaries'
books and records, all of the membership interests of each LLC
Subsidiary have been duly and validly authorized and issued in
accordance with the terms of the governing limited liability
company agreement (or regulations) and are owned by the
Partnership, directly or through its Subsidiaries, free form
liens, encumbrances, claims, security interests, restrictions on
transfer, voting trusts or similar agreements, and any other
defect of title. The Partnership,
-25-
26
directly or through its Subsidiaries owns, free from liens,
encumbrances, claims, security interests, restrictions on
transfer, stockholders' agreement, voting trust and any other
defects of title the securities of each Subsidiary as disclosed
in the Registration Statement.
(iii) Neither the offer, sale or delivery of the
Units, the execution, delivery or performance of this Agreement,
compliance by the Partnership with all provisions hereof nor
consummation by the Partnership of the transactions contemplated
hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate of
limited partnership or partnership agreement, or other
organizational documents, of the Partnership or any Subsidiary
or any agreement, indenture, lease or other instrument to which
the Partnership or any Subsidiary is a party or by which it or
any of their properties is bound that is made an exhibit to the
Registration Statement, or results or will result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Partnership or any Subsidiary,
other than those that would not result in a material adverse
effect on the condition (financial or other), business,
prospects, properties, net worth or operations of the
Partnership, taken as a whole, nor will any such action result
in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and
Blue Sky laws), judgment, injunction, order or decree known to
such counsel, applicable to the Partnership, its Subsidiary or
any of their respective properties, other than those that would
not result in a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth
or operations of the Partnership, taken as a whole.
(iv) To the knowledge of such counsel, (A) other
than as described or contemplated in the Registration Statement
or the Prospectus (or any amendment or supplement thereto),
there are no legal or governmental proceedings pending or
threatened against the Partnership or any Subsidiary or to which
the Partnership or any Subsidiary or any of their respective
property, is subject, that are required to be described in the
Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required therein,
and (B) there are no agreements, contracts, indentures or other
instruments, that are required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or
filed as required or incorporated therein by reference, as the
case may be.
(v) Such counsel has reviewed all agreements,
contracts, indentures, leases or other documents or instruments
described in the Registration Statement and the Prospectus
(other than routine contracts entered into by the Partnership or
any Subsidiary for the purchase of materials or the sale of
products, entered into in the normal course of business) and
such agreements, contracts, indentures, leases or
-26-
27
other documents or instruments are fairly summarized or
described therein, and filed as exhibits thereto as required.
(vi) Neither the Partnership nor any Subsidiary is
in violation of its certificate of limited partnership or
partnership agreement, or other organizational documents, or to
the best knowledge of such counsel after reasonable inquiry, is
in default in the performance of any material obligation,
agreement or condition contained in any bond, indenture, note or
other evidence of indebtedness or in any other agreement
material to the Partnership and its Subsidiaries taken as a
whole, except as has been disclosed in the Prospectus and except
where such violation or default does not and will not have a
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of
operation of the Partnership and its Subsidiaries taken as a
whole.
(vii) To the best knowledge of such counsel after
reasonable inquiry, neither the Partnership nor any Subsidiary
is in material violation of any law, ordinance, administrative
or governmental rule or regulation applicable to the Partnership
or any Subsidiary or any of their respective properties, or of
any decree of any court or governmental agency or body having
jurisdiction over the Partnership or any Subsidiary or any of
their respective properties, except where such violation does
not and will not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth
or results of operation of the Partnership and its Subsidiaries
taken as a whole.
(viii) To the best knowledge of such counsel after
reasonable inquiry, the Partnership and each Subsidiary has such
permits, licenses franchises, approvals, consents and
authorizations of governmental or regulatory authorities
("permits"), as are necessary to own their properties and to
conduct their business in the manner described in the
Prospectus, subject to such qualifications as may be set forth
in the Prospectus, except where the failure to have obtained any
such permit has not and will not have a material adverse effect
on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the
Partnership and its Subsidiaries, taken as a whole; the
Partnership and each Subsidiary has fulfilled and performed all
of their obligations with respect to such permits, except where
such violation does not and will not have a material adverse
effect on the condition (financial or other), business,
prospects, properties, net worth or results of operation of the
Partnership and its Subsidiaries taken as a whole, and no event
has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any
other material impairment of the rights of the holder of any
such permit, subject in each case to such qualification as may
be set forth in the Prospectus; and, except as described in the
Prospectus, such permits contain no restrictions that are
materially burdensome to the Partnership or any Subsidiary.
-27-
28
(e) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel
for the Underwriters, dated the Closing Date (and the Additional
Closing Date, if any), with respect to the issuance and sale of the
Firm Units, the Registration Statement and other related matters as
you may reasonably request and the Partnership and its counsel shall
have furnished to your counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(f) You shall have received letters addressed to you and dated the
date hereof and the Closing Date (and the Additional Closing Date, if
any) from Deloitte & Touche LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the
Partnership, shall be contemplated by the Commission at or prior to
the Closing Date; (ii) there shall not have been any change in the
units of limited partner interest of the Partnership nor any material
increase in the short-term or long-term debt of the Partnership (other
than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any
amendment or supplement thereto), or any development involving or
which may reasonably be expected to involve a potential future
material adverse change (present or potential future) in the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Partnership and its Subsidiaries, taken
as a whole; (iii) the Partnership and its Subsidiaries shall not have
any liabilities or obligations, direct or contingent (whether or not
in the ordinary course of business) that are material to the
Partnership and its Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); and (iv) the representations and
warranties of the Partnership contained in this Agreement shall be
true and correct in all material respects on and as of the date hereof
and on and as of the Closing Date (and the Additional Closing Date, if
any) as if made on and as of the Closing Date (and the Additional
Closing Date, if any), and you shall have received a certificate,
dated the Closing Date (and the Additional Closing Date, if any) and
signed by the chief executive officer or president and the chief
financial officer or treasurer of the general partner of the General
Partner (or such other officers as are acceptable to you) to the
effect set forth in this Section 9(g) and in Section 9(h) hereof.
(h) The Partnership shall not have failed in any material respect at
or prior to the Closing Date (and the Additional Closing Date, if any)
to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date (and the Additional Closing
Date, if any).
(i) The Partnership shall have furnished or caused to have been
furnished to you such further certificates and documents as you shall
have reasonably requested.
-28-
29
(j) The provisions of the Partnership's partnership agreement as
filed as an exhibit to the Registration Statement shall be in full
force and effect. At or prior to the Closing Date, you shall have
received the written commitment of each of the General Partner's
directors and executive officers and certain other Unitholders not to
offer, sell, contract to sell or otherwise dispose of any Class C
Units or rights to purchase Class C Units or any securities
convertible into or exercisable or exchangeable for, Class C Units
other than in accordance with this Agreement for a period of 180 days
after commencement of the public offering of the Units by the
Underwriters without the prior written consent of EVEREN Securities,
Inc.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you.
The several obligations of the Underwriters to purchase Additional
Units hereunder are subject to the satisfaction on and as of the Additional
Closing Date of the conditions set forth in this Section 9, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (i) shall be dated
as of the Additional Closing Date and the opinions called for by paragraphs
(c), (d) and (e) shall be revised to reflect the sale of Additional Units.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective
upon the later of (a) the execution and delivery hereof by the parties hereto,
or (b) release of oral notification of the effectiveness of the Registration
Statement by the Commission.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Units which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Firm Units, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Firm Units set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Units set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
the Agreement Among Underwriters, to purchase the Firm Units which such
defaulting Underwriter or Underwriters agreed, but failed or refused, to
purchase. If any Underwriter or Underwriters shall fail or refuse to purchase
Firm Units and the aggregate number of Firm Units with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Units and
arrangements satisfactory to you and the Partnership for the purchase of such
Firm Units are not made within 96 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Partnership. In any such case which does not result in termination of this
Agreement, either you or the Partnership shall have the right to postpone the
Closing Date, but in no event for longer than seven (7) days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement.
-29-
30
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Partnership by notice to the Partnership, if prior to the
Closing Date or the Additional Closing Date (if different from the Closing Date
and then only as to the Additional Units), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq Stock Market shall have been suspended or materially limited, (ii)
trading of any securities of the Partnership, including the Units, on the
American Stock Exchange shall have been suspended or materially limited,
whether as the result of a stop order by the Commission or otherwise, (iii) a
general moratorium on commercial banking activities in Texas or Colorado shall
have been declared by either federal or state authorities, (iv) there shall
have occurred any outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political, financial or economic
conditions or other material event the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to market the Units or to enforce contracts for the sale of the
Units, or (v) the Partnership or any Subsidiary shall have, in the sole
judgment of the Representatives, sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident, or other calamity, whether or not covered by insurance, or from any
labor disputes or any legal or governmental proceeding, or there shall have
been any material adverse change (including, without limitation, a material
change in management or control of the Partnership) in the condition (financial
or other), business, prospects, properties, net worth or results of operations
of the Partnership and its Subsidiaries taken as a whole, except in each case
as described in, or contemplated by, the Prospectus (excluding any amendment or
supplement thereto). Notice of such cancellation shall be promptly given to the
Partnership and its counsel by facsimile or telephone and shall be subsequently
confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The Partnership acknowledges
that the paragraph of text immediately following footnote (3) on the front
cover page of the Prospectus, the stabilizing legend appearing as the first
paragraph of text on page 2 of the Prospectus, the information set forth in the
table on page ____ of the Prospectus under the caption "Underwriting" and the
information set forth in the _____ paragraph on page ___ of the Prospectus
under the caption "Underwriting," constitute all the information furnished by
or on behalf of the Underwriters through you or on your behalf as such
information is referred to in Sections 6(a), 6(b) and 8 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any of the provisions of this Agreement shall
be in writing and shall be delivered
(a) to the Partnership or the General Partner:
Hallwood Energy Partners, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-30-
31
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇, Shareholder
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) to the Underwriters:
EVEREN Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Syndicate Department
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with copy to: General Counsel, EVEREN Securities,
Inc.
Wheat, First Securities, Inc.
Address
City, State Zip
Attention: Contact, Title
Facsimile:
with copy to:
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc.
Address
City, State Zip
Attention: Contact, Title
Facsimile:
with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Partner
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
-31-
32
This Agreement has been and is solely for the benefit of the several
Underwriters, the Partnership, and the General Partner and its directors and
officers, and the other controlling persons referred to in Section 8 hereof,
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither of the terms "successor" and "successors and assigns" as
used in this Agreement shall include a purchaser from you of any of the Units
in his status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without
reference to choice of law principles thereunder. This Agreement may be signed
in various counterparts which together shall constitute one and the same
instrument. This Agreement shall be effective when, but only when, at least one
counterpart hereof shall have been executed on behalf of each party hereto.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
HALLWOOD ENERGY PARTNERS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title
-------------------------------
CONFIRMED as of the date first above
mentioned, on behalf of itself and the other
several Underwriters named in Schedule I
hereto.
EVEREN SECURITIES, INC.
Co-Manager
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
WHEAT, FIRST SECURITIES, INC.
Co-Manager
-32-
33
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
LADENBURG ▇▇▇▇▇▇▇▇ & CO. INC.
Co-Manager
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-33-
34
SCHEDULE I
Number of
Underwriter Firm Units
----------- ----------
EVEREN Securities, Inc.
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc.
Wheat, First Securities, Inc.
---------
Total..... 2,500,000
-34-
