EXHIBIT 1.1
Draft May 3, 2001
1,500,000 Common Units
UNDERWRITING AGREEMENT
----------------------
__________________, 2001
X.X. Xxxxxxx & Sons, Inc.
First Union Securities, Inc.
Xxxxxxx Xxxxx & Associates, Inc.
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The undersigned, Inergy, L.P., a Delaware limited partnership (the
"PARTNERSHIP"), Inergy Propane, LLC, a Delaware limited liability company (the
"OPERATING COMPANY"), New Inergy Propane, LLC, a Delaware limited liability
company ("NEW PROPANE"), Inergy Partners, LLC, a Delaware limited liability
company (the "NON-MANAGING GENERAL PARTNER"), Inergy GP, LLC, a Delaware limited
liability company (the "MANAGING GENERAL PARTNER") (the Managing General Partner
and the Non-Managing General Partner are sometimes collectively referred to
herein as the "GENERAL PARTNERS"), Inergy Holdings, LLC, a Delaware limited
liability company ("HOLDINGS"), Inergy Sales & Service, Inc., a Delaware
corporation ("SERVICE SUB"), L&L Transportation, LLC, a Delaware limited
liability company ("L&L TRANSPORTATION"), and Inergy Transportation, LLC, a
Delaware limited liability company ("INERGY TRANSPORTATION") hereby address you
as the "Underwriters" and hereby confirm their agreement with the several
Underwriters as set forth below. The Partnership, the Operating Company,
Service Sub, L&L Transportation, and Inergy Transportation are referred to as
the "PARTNERSHIP GROUP." L&L Transportation and Inergy Transportation are
sometimes collectively referred to herein as the "OPERATING SUBS." The
Partnership, the Operating Company, New Propane, the General Partners, Holdings,
Service Sub and the Operating Subs are referred to as the "INERGY PARTIES." The
Inergy Parties, Xxxxxx Oil Company of Xxxxxxxx County, Inc., a North Carolina
corporation ("XXXXXX"), and Rolesville Gas and Oil Company, Inc., a North
Carolina corporation ("ROLESVILLE"), are collectively referred to herein as the
"INERGY ENTITIES."
It is understood and agreed by all parties that the Partnership was formed
to acquire, own and operate the business and assets of Holdings. The partnership
agreement of the Partnership was adopted by the Managing General Partner, the
Non-Managing General Partner, and Inergy Partners, LLC, in its capacity as the
organizational limited partner of the Partnership (the "ORGANIZATIONAL LIMITED
PARTNER"), on _____________, 2001 (as the same may be amended or restated at or
prior to the Closing Date, the "PARTNERSHIP
AGREEMENT"). The Partnership will operate its business through the Operating
Company. The Operating Company will operate its business through itself, the
Operating Subs and Service Sub. The Managing General Partner serves as the
managing general partner of the Partnership. The Non-Managing General Partner
serves as the non-managing general partner of the Partnership.
Prior to the date hereof, the Operating Company entered into a bank credit
agreement (the "BANK CREDIT AGREEMENT") providing for a $75 million acquisition
credit facility.
On the Closing Date, certain members of the Non-Managing General Partner,
as disclosed on Schedule III hereto, will exchange their preferred interests in
the Non-Managing General Partner for common interests therein pursuant to letter
agreements entered into with each of them dated March 26, 2001 (the "NON-
MANAGING GENERAL PARTNER EXCHANGE OFFER").
On the Closing Date, the Partnership, the General Partners, the Operating
Company, Holdings, New Propane, Service Sub, L&L Transportation, Xxxxxx, and
Rolesville will enter into a Contribution and Conveyance Agreement (the
"CONTRIBUTION AGREEMENT") pursuant to which the following transactions will
occur:
(a) The Non-Managing General Partner will contribute to the Operating
Company the wholesale assets owned by it and all other assets related to the
propane business other than (i) $1.5 million in cash or cash equivalents and
(ii) the stock of Xxxxxx.
(b) The Non-Managing General Partner will contribute its interest in the
Operating Company (other than a 1.0101% interest) to the Partnership in
exchange for (i) a continuation of its 1% general partner interest, (ii)
3,135,831 senior subordinated units ("SENIOR SUBORDINATED UNITS") representing
senior subordinated limited partner interests in the Partnership, (iii)
480,659 junior subordinated units ("JUNIOR SUBORDINATED UNITS") representing
junior subordinated limited partner interests in the Partnership and (iv) the
assumption by the Partnership of all liability for funded debt of the Non-
Managing General Partner (the "DEBT").
(c) The Non-Managing General Partner will contribute 928,730 of its Senior
Subordinated Units and all of its 480,659 Junior Subordinated Units to New
Propane in exchange for 100% of the common interests in New Propane.
(d) Xxxxxx will contribute its preferred interest in the Operating Company
to New Propane in exchange for a similar preferred interest in New Propane
[expand].
(e) Rolesville will contribute its preferred interest in the Operating
Company to New Propane in exchange for a similar preferred interest in New
Propane [expand].
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(f) New Propane will contribute the preferred interests in the Operating
Company that it received from Xxxxxx and Rolesville to the Partnership in
exchange for 177,536 Senior Subordinated Units and 91,883 Junior Subordinated
Units.
(g) The public offering of the common units representing limited partner
interests in the Partnership (the "COMMON UNITS") contemplated hereby will be
consummated.
(h) The Partnership will contribute the proceeds received from the sale of
the Common Units offered hereby to the Operating Company as a capital
contribution to continue its ownership of a 100% interest in the Operating
Company.
(i) The Managing General Partner will be admitted as a managing member of
the Operating Company without any contribution and with no economic interest
in the Operating Company.
(j) The Operating Company will use the cash received by it to pay
transaction costs (estimated to be $___ million) and will use the balance of
$___ million to retire a portion of the Debt.
(k) The Non-Managing General Partner will distribute the incentive
distribution rights, as defined in the Partnership Agreement (the "INCENTIVE
DISTRIBUTION RIGHTS"), to Holdings in redemption of a ___% interest in the
Non-Managing General Partner.
(l) The Non-Managing General Partner will distribute 2,207,101 Senior
Subordinated Units to the persons and entities listed on Schedule II in
redemption of their interest in the Non-Managing General Partner.
(m) The Operating Company [and L&L Transportation] will contribute
nonqualifying assets to Service Sub in exchange for stock of Service Sub and
the assumption by Service Sub of any liabilities related to those businesses.
The Non-Managing General Partner Exchange Offer and the transactions
described above in clauses (a) through (m) are referred to herein collectively
as the "TRANSACTIONS." The exchanges described in (d) and (e) above are
referred to herein as the "XXXXXX AND ROLESVILLE EXCHANGE." In connection with
the Transactions, the parties to the Transactions have entered or will enter
into various bills of sale, assignments, conveyances, contribution agreements
and related documents (the "CONVEYANCES"). The Conveyances and the Contribution
Agreement are collectively referred to herein as the "CONTRIBUTION DOCUMENTS."
1. DESCRIPTION OF COMMON UNITS. The Partnership proposes to issue
and sell to the Underwriters 1,500,000 Common Units (the "FIRM UNITS"). Solely
for the purpose of covering over-allotments in the sale of the Firm Units, the
Partnership further proposes to grant to the Underwriters the right to purchase
up to an additional 225,000 Common Units (the "OPTION
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UNITS"), as provided in Section 3 of this Agreement. The Firm Units and the
Option Units are herein sometimes referred to as the "UNITS" and are more fully
described in the Prospectus hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM UNITS. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Partnership agrees to sell to the
Underwriters, and each such Underwriter agrees, severally and not jointly, (a)
to purchase from the Partnership, pro rata, at a purchase price of $___ per
share, the number of Firm Units set forth opposite the name of such Underwriter
in Schedule I hereto and (b) to purchase from the Partnership any additional
number of Option Units which such Underwriter may become obligated to purchase
pursuant to Section 3 hereof.
Delivery of the Firm Units will be in book-entry form through the
facilities of The Depository Trust Company, New York, New York ("DTC").
Delivery of the documents required by Section 6 hereof with respect to the Units
shall be made prior to 11:00 a.m. on ______________, 2001 at Xxxxxx & Xxxxxx
LLP, 2300 First City Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000-0000 or at such
other place as may be agreed upon between you and the Partnership (the "PLACE OF
CLOSING"), or at such other time and date not later than five full business days
thereafter as you and the Partnership may agree, such time and date of payment
and delivery being herein called the "CLOSING DATE."
The Partnership will cause its transfer agent to deposit as original
issue the Firm Units pursuant to the Full Fast Delivery Program of the DTC.
It is understood that an Underwriter, individually, may (but shall not
be obligated to) make payment on behalf of the other Underwriters whose funds
shall not have been received prior to the Closing Date for Units to be purchased
by such Underwriter. Any such payment by an Underwriter shall not relieve the
other Underwriters of any of their obligations hereunder.
It is understood that the Underwriters propose to offer the Units to
the public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION UNITS. The Partnership
hereby grants an option to the Underwriters to purchase from the Partnership up
to 225,000 Option Units, on the same terms and conditions as the Firm Units;
provided, however, that such option may be exercised only for the purpose of
covering any over-allotments that may be made by them in the sale of the Firm
Units. No Option Units shall be sold or delivered unless the Firm Units
previously have been, or simultaneously are, sold and delivered.
The option is exercisable by you at any time, and from time to time,
before the expiration of 30 days from the date of the Prospectus (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next day thereunder
when The Nasdaq National Market is open for trading), for
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the purchase of all or part of the Option Units covered thereby, by notice given
by you to the Partnership in the manner provided in Section 13 hereof, setting
forth the number of Option Units as to which the Underwriters are exercising the
option, and the date of delivery of said Option Units, which date shall not be
more than five business days after such notice unless otherwise agreed to by the
parties. You may terminate the option at any time, as to any unexercised portion
thereof, by giving written notice to the Partnership to such effect.
You shall make such allocation of the Option Units among the
Underwriters as may be required to eliminate purchases of fractional Units.
Delivery of the Option Units will be in book-entry form through the
facilities of DTC. Delivery of the documents required by Section 6 hereof with
respect to the Units shall be made prior to 11:00 a.m. on ______________, 2001
at the Place of Closing, or at such other time and date as you and the
Partnership may agree (which may be the same as the Closing Date), such time and
date of payment and delivery being herein called the "OPTION CLOSING DATE." On
the Option Closing Date, the Partnership shall provide the Underwriters such
representations, warranties, agreements, opinions, letters, certificates and
covenants with respect to the Option Units as are required to be delivered on
the Closing Date with respect to the Firm Units.
The Partnership will cause its transfer agent to deposit as original
issue the Option Units pursuant to the Full Fast Delivery Program of the DTC.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INERGY PARTIES.
The Inergy Parties jointly and severally represent and warrant to and agree with
each Underwriter that:
(a) Definitions. A registration statement (Registration No. 333-
56976) on Form S-1 with respect to the Units, including a preliminary
prospectus, and such amendments to such registration statement as may have
been required to the date of this Agreement, has been carefully prepared by
the Partnership pursuant to and in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 ACT"), and the rules and
regulations thereunder (the "1933 ACT RULES AND REGULATIONS") of the
Securities and Exchange Commission (the "SEC") and has been filed and
declared effective by the SEC under the 1933 Act. Copies of such
registration statement, including any amendments thereto, each related
preliminary prospectus (meeting the requirements of Rule 430 or 430A of the
1933 Act Rules and Regulations) contained therein, and the exhibits,
financial statements and schedules thereto have heretofore been delivered
by the Partnership to you. A final prospectus containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the
1933 Act Rules and Regulations will be filed promptly by the Partnership
with the SEC in accordance with Rule 424(b) of the 1933 Act Rules and
Regulations. The term "REGISTRATION STATEMENT" as used herein means the
registration statement as amended at the time it becomes
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effective under the 1933 Act (the "EFFECTIVE DATE"), including financial
statements and all exhibits and, if applicable, the information deemed to
be included by Rule 430A of the 1933 Act Rules and Regulations. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to such registration statement will be filed and must be declared
effective before the offering of Units may commence, the term "REGISTRATION
STATEMENT" as used herein means the registration statement as amended by
said post-effective amendment. If an abbreviated registration statement is
prepared and filed with the SEC in accordance with Rule 462(b) or Rule
462(d) under the 1933 Act (an "ABBREVIATED REGISTRATION STATEMENT"), the
term "REGISTRATION STATEMENT" as used in this Agreement includes the
Abbreviated Registration Statement. The term "PROSPECTUS" as used herein
means the prospectus as first filed with the SEC pursuant to Rule 424(b) of
the 1933 Act Rules and Regulations. The term "PRELIMINARY PROSPECTUS" as
used herein shall mean a preliminary prospectus as contemplated by Rule 430
or 430A of the 1933 Act Rules and Regulations included at any time in the
Registration Statement. For purposes of this Agreement, the words "amend,"
"amendment," "amended," "supplement" or "supplemented" with respect to the
Registration Statement or the Prospectus shall mean amendments or
supplements to the Registration Statement or the Prospectus, as the case
may be.
(b) No Material Misstatements or Omissions. Neither the SEC nor any
state or other jurisdiction or other regulatory body has issued, and
neither is, to the knowledge of the Inergy Parties, threatening to issue,
any stop order under the 1933 Act or other order suspending the
effectiveness of the Registration Statement (as amended or supplemented) or
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending the qualification or registration of the Units for
offering or sale in any jurisdiction nor instituted or, to the knowledge of
the Inergy Parties, threatened to institute proceedings for any such
purpose. Each Preliminary Prospectus at its date of issue, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contain or will contain, as the case may be, all statements which
are required to be stated therein by, and in all material respects conform
or will conform, as the case may be, to the requirements of, the 1933 Act
and the 1933 Act Rules and Regulations. Neither the Registration Statement
nor any amendment thereto, as of the applicable effective date, contains or
will contain, as the case may be, any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make the
statements therein, not misleading, and neither any Preliminary Prospectus,
the Prospectus nor any supplement thereto contains or will contain, as the
case may be, any untrue statement of a material fact or omits or will omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Partnership makes no representation or warranty
as to information contained in or omitted from the Registration Statement
or the Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the Partnership
relating to the Underwriters by or on behalf of
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the Underwriters expressly for use in the preparation thereof (as provided
in Section 14 hereof). Each of the statements made by the Partnership in
such documents within the coverage of Rule 175(b) of the 1933 Act Rules and
Regulations, including (but not limited to) any statements with respect to
future available cash or future cash distributions of the Partnership or
the anticipated ratio of taxable income to distributions was made or will
be made with a reasonable basis and in good faith. There is no contract or
document required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required.
(c) Formation and Due Qualification of the Partnership. The
Partnership has been duly formed and is validly existing in good standing
as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act ("DELAWARE LP ACT") with full power and authority to own or
lease its properties to be owned or leased at the Closing Date, to assume
the liabilities being assumed by it pursuant to the Contribution Documents
and to conduct its business to be conducted at the Closing Date in all
material respects as described in the Registration Statement and the
Prospectus. The Partnership is, or at the Closing Date will be, duly
registered or qualified as a foreign limited partnership for the
transaction of business under the laws of each jurisdiction in which the
character of the business conducted by it or the nature or location of the
properties owned or leased by it makes such registration or qualification
necessary, except where the failure so to register or qualify would not (i)
have a material adverse effect on the business, financial condition or
results of operation of the Partnership Group, taken as a whole ("MATERIAL
ADVERSE EFFECT"), or (ii) subject the limited partners of the Partnership
to any material liability or disability.
(d) Formation and Due Qualification of Holdings, New Propane, the
Operating Company and the Operating Subs. Each of Holdings, New Propane,
the Operating Company and the Operating Subs has been duly formed and is
validly existing in good standing as a limited liability company under the
Delaware Limited Liability Company Act (the "DELAWARE LLC ACT") with full
power and authority to own or lease its properties to be owned or leased at
the Closing Date, to assume the liabilities being assumed by it pursuant to
the Contribution Documents and to conduct its business to be conducted at
the Closing Date, in each case in all material respects as described in the
Registration Statement and the Prospectus. Each of Holdings, New Propane,
the Operating Company and the Operating Subs is duly registered or
qualified as a foreign limited liability company for the transaction of
business under the laws of each jurisdiction in which the character of the
business conducted by it or the nature or location of the properties owned
or leased by it makes such registration or qualification necessary, except
where the failure so to register or qualify would not (i) have a Material
Adverse Effect or (ii) subject the limited partners of the Partnership to
any material liability or disability.
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(e) Formation and Due Qualification of the General Partners. Each of
the General Partners has been duly formed and is validly existing in good
standing as a limited liability company under the Delaware LLC Act with
full power and authority to own or lease its properties to be owned or
leased at the Closing Date, to conduct its business to be conducted at the
Closing Date and to act as a general partner of the Partnership and to own
membership interests or have management rights, as the case may be, of the
Operating Company, in each case in all material respects as described in
the Registration Statement and the Prospectus. Each of the General
Partners is duly registered or qualified as a foreign limited liability
company for the transaction of business under the laws of each jurisdiction
in which the character of the business conducted by it or the nature or
location of the properties owned or leased by it makes such registration or
qualification necessary, except where the failure so to register or qualify
would not (i) have a Material Adverse Effect or (ii) subject the limited
partners of the Partnership to any material liability or disability.
(f) Formation and Due Qualification of Service Sub. Service Sub has
been duly incorporated and is validly existing in good standing under the
Delaware General Corporation Law ("DGCL") with full power and authority to
own or lease its properties to be owned or leased at the Closing Date and
to conduct its business to be conducted at the Closing Date, in all
material respects as described in the Registration Statement and the
Prospectus. Service Sub is duly registered or qualified as a foreign
corporation for the transaction of business under the laws of each
jurisdiction in which the character of the business conducted by it or the
nature or location of the properties owned or leased by it makes such
registration or qualification necessary, except where the failure so to
register or qualify would not (i) have a Material Adverse Effect or (ii)
subject the limited partners of the Partnership to any material liability
or disability.
(g) Ownership of the General Partner Interests in the Partnership. At
the Closing Date and the Option Closing Date, after giving effect to the
Transactions, the Managing General Partner and the Non-Managing General
Partner will be the sole general partners of the Partnership. The Non-
Managing General Partner will own a 2% general partner interest and the
Managing General Partner will own a non-economic, managing general partner
interest; such general partner interests will be duly authorized and
validly issued in accordance with the Partnership Agreement; and each
General Partner will own its general partner interest free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(h) Ownership of the Sponsor Units and the Incentive Distribution
Rights. At the Closing Date and the Option Closing Date, after giving
effect to the Transactions, (i) New Propane will own 1,106,266 Senior
Subordinated Units and 572,542 Junior Subordinated Units, (ii) the persons
and entities listed on Schedule II will collectively own 2,207,101 Senior
Subordinated Units in the amounts shown on such Schedule II and
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(iii) Holdings will own all of the Incentive Distribution Rights; all of
such Senior Subordinated Units, Junior Subordinated Units (the Senior
Subordinated Units and the Junior Subordinated Units are sometimes
collectively referred to herein as the "SPONSOR UNITS") and Incentive
Distribution Rights and the limited partner interests represented thereby
will be duly authorized and validly issued in accordance with the
Partnership Agreement, and will be fully paid (to the extent required under
the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the Prospectus
under the caption "The Partnership Agreement--Limited Liability"); and New
Propane will own its Sponsor Units and Holdings will own its Incentive
Distribution Rights free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus), security
interests, charges or claims.
(i) Valid Issuance of the Firm Units. At the Closing Date, there will
be issued to the Underwriters the Firm Units (assuming no purchase by the
Underwriters of Additional Units); at the Closing Date or the Option
Closing Date, as the case may be, the Firm Units or the Additional Units,
as the case may be, and the limited partner interests represented thereby,
will be duly authorized by the Partnership Agreement and, when issued and
delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid (to the extent
required under the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the Prospectus
under the caption "The Partnership Agreement--Limited Liability"); and
other than the Sponsor Units and the Incentive Distribution Rights, the
Units will be the only limited partner interests of the Partnership issued
and outstanding at the Closing Date or the Option Closing Date.
(j) Ownership of the Membership Interests in the Operating Company. At
the Closing Date and the Option Closing Date, after giving effect to the
Transactions, the Partnership will own a 100% membership interest in the
Operating Company; such membership interest will be duly authorized and
validly issued in accordance with the limited liability company agreement
of the Operating Company (the "OPERATING COMPANY LLC AGREEMENT") and will
be fully paid (to the extent required under the Operating Company LLC
Agreement) and nonassessable (except as such nonassessability may be
affected by Section 18-607 of the Delaware LLC Act); and the Partnership
will own its membership interest free and clear of all liens, encumbrances,
security interests, equities, charges or claims.
(k) Ownership of Service Sub. At the Closing Date and the Option
Closing Date, after giving effect to the Transactions, (i) the Operating
Company will own ___%
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of the issued and outstanding capital stock of Service Sub and (ii) L&L
Transportation will own ___% of the issued and outstanding capital stock of
Service Sub; such capital stock will be duly authorized and validly issued
and will be fully paid and nonassessable; and the Operating Company and L&L
Transportation will own such capital stock free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(l) Ownership of the Operating Subs. At the Closing Date and the
Option Closing Date, after giving effect to the Transactions, the Operating
Company will own a 100% membership interest in each of the Operating Subs;
such membership interests will be duly authorized and validly issued in
accordance with the limited liability company agreements of the Operating
Subs (as the same may be amended or restated at or prior to the Closing
Date, the "OPERATING SUBS LLC AGREEMENTS") and will be fully paid (to the
extent required under the Operating Subs LLC Agreements) and nonassessable
(except as such nonassessability may be affected by Section 18-607 of the
Delaware LLC Act); and the Operating Company will own such membership
interests free and clear of all liens, encumbrances, security interest,
equities, charges or claims.
(m) Ownership of New Propane. At the Closing Date and the Option
Closing Date, after giving effect to the Transactions, the Non-Managing
General Partner will own a 100% common membership interest in New Propane,
Xxxxxx will own ___% of the preferred membership interests in New Propane,
and Rolesville will own ___% of the preferred membership interests in New
Propane; such membership interests will be duly authorized and validly
issued in accordance with New Propane's limited liability company agreement
(as the same may be amended or restated at or prior to the Closing Date,
the "NEW PROPANE LLC AGREEMENT") and will be fully paid (to the extent
required under the New Propane LLC Agreement) and nonassessable (except as
such nonassessability may be affected by Section 18-607 of the Delaware LLC
Act); and the Non-Managing General Partner, Xxxxxx and Rolesville will own
such membership interests free and clear of all liens, encumbrances,
security interests, equities, charges or claims.
(n) Ownership of the Managing General Partner. At the Closing Date
and the Option Closing Date, after giving effect to the Transactions,
Holdings will own 100% of the issued and outstanding membership interests
of the Managing General Partner; such membership interests will be duly
authorized and validly issued and will be fully paid and nonassessable; and
Holdings will own such membership interests free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(o) Ownership of the Non-Managing General Partner. Holdings will own
____% of the issued and outstanding common membership interests in the Non-
Managing General Partner. The persons and entities listed on Schedule III
will collectively own ____% of the issued and outstanding common membership
interests and
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100% of the issued and outstanding preferred membership interests of the
Non-Managing General Partner; such membership interests will be duly
authorized and validly issued and will be fully paid and nonassessable; and
Holdings will own its membership interests free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(p) No Other Subsidiaries. Other than the Partnership's ownership of
its membership interest in the Operating Company and the Operating
Company's ownership of its membership interest in the Operating Subs and
its shares of capital stock of Service Sub, neither the Partnership nor the
Operating Company own, and at the Closing Date and the Option Closing Date,
neither will own, directly or indirectly, any equity or long-term debt
securities of any corporation, partnership, limited liability company,
joint venture, association or other entity. Other than its ownership of
its partnership interests in the Partnership and its membership interests
in the Operating Company and New Propane, the Non-Managing General Partner
does not own, and at the Closing Date and the Option Closing Date will not
own, directly or indirectly, any equity or long-term debt securities of any
corporation, partnership, limited liability company, joint venture,
association or other entity. Other than its ownership of its partnership
interests in the Partnership and its membership interests in the Operating
Company, the Managing General Partner does not own, and at the Closing Date
and the Option Closing Date will not own, directly or indirectly, any
equity or long-term debt securities of any corporation, partnership,
limited liability company, joint venture, association or other entity.
(q) No Preemptive Rights, Registration Rights or Options. Except as
described in the Prospectus, there are no preemptive rights or other rights
to subscribe for or to purchase, nor any restriction upon the voting or
transfer of, (i) any limited partner interests of the Partnership, (ii) any
membership interests of the General Partners, the Operating Company, New
Propane or the Operating Subs or (iii) any shares of Service Sub, in each
case pursuant to the partnership agreement or limited liability company
agreement of such entity (collectively, the "ORGANIZATIONAL AGREEMENTS") or
the certificates of incorporation, bylaws and other organizational
documents (together with the Organization Agreements, the "ORGANIZATIONAL
DOCUMENTS") or any other agreement or instrument to which any of such
entities is a party or by which any one of them may be bound. Neither the
filing of the Registration Statement nor the offering or sale of the Units
as contemplated by this Agreement gives rise to any rights for or relating
to the registration of any Units or other securities of the Partnership or
any of its subsidiaries, other than as have been waived. Except as
described in the Prospectus, there are no outstanding options or warrants
to purchase (A) any Common Units, Sponsor Units or Incentive Distribution
Rights or other interests in the Partnership, (B) any membership interests
in the General Partners, the Operating Company, New Propane or the
Operating Subs or (C) any shares of Service Sub.
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(r) Authority and Authorization. The Partnership has all requisite
power and authority to issue, sell and deliver (i) the Units, in accordance
with and upon the terms and conditions set forth in this Agreement, the
Partnership Agreement and the Registration Statement and the Prospectus and
(ii) the Sponsor Units and Incentive Distribution Rights, in accordance
with and upon the terms and conditions set forth in the Partnership
Agreement and the Contribution Documents. At the Closing Date and the
Option Closing Date, all corporate, partnership and limited liability
company action, as the case may be, required to be taken by the Inergy
Parties, Xxxxxx and Rolesville or any of their stockholders, members or
partners for the authorization, issuance, sale and delivery of the Units,
the Sponsor Units and Incentive Distribution Rights, the execution and
delivery of the Operative Agreements (as defined in Section 4(t)) and the
consummation of the transactions (including the Transactions) contemplated
by this Agreement and the Operative Agreements (as defined in Section
4(t)), shall have been validly taken.
(s) Enforceability of the Underwriting Agreement. This Agreement has
been duly executed and delivered by each of the Inergy Parties, and
constitutes the valid and legally binding agreement of each of the Inergy
Parties, enforceable against each of the Inergy Parties in accordance with
its terms, provided that the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); provided, further, that
the indemnity and contribution provisions hereunder may be limited by
federal or state securities laws.
(t) Enforceability of Other Agreements. At or before the Closing
Date:
i. The Partnership Agreement will have been duly authorized,
executed and delivered by the General Partners and the Organizational
Limited Partner and will be a valid and legally binding agreement of the
General Partners and the Organizational Limited Partner, enforceable
against the General Partners and the Organizational Limited Partner in
accordance with its terms;
ii. The Non-Managing General Partner's LLC Agreement will have been
duly authorized, executed and delivered by Holdings and the persons and
entities listed on Schedule III and will be a valid and legally binding
agreement of Holdings and
12
the persons and entities listed on Schedule III, enforceable against each
of them in accordance with its terms;
iii. Each of the Contribution Documents will have been duly
authorized, executed and delivered by the parties thereto and will be valid
and legally binding agreements of the parties thereto enforceable against
such parties in accordance with their respective terms;
iv. The Bank Credit Agreement will have been duly authorized, executed
and delivered by the Operating Company and will be a valid and legally
binding agreement of the Operating Company enforceable against the
Operating Company in accordance with its terms;
provided that, with respect to each agreement described in this Section
4(t), the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating
to or affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and provided, further, that the indemnity,
contribution and exoneration provisions contained in any of such agreements
may be limited by applicable laws and public policy. The Partnership
Agreement, the Non-Managing General Partner LLC Agreement, the Contribution
Documents and the Bank Credit Agreement are herein collectively referred to
as the "OPERATIVE AGREEMENTS."
(u) No Conflicts. None of the offering, issuance and sale by the
Partnership of the Units, the execution, delivery and performance of this
Agreement or the Operative Agreements by the Inergy Entities which are
parties thereto, or the consummation of the transactions contemplated
hereby and thereby (including the Transactions) (i) conflicted, conflicts
or will conflict with or constituted, constitutes or will constitute a
violation of the Organizational Documents, (ii) conflicted, conflicts or
will conflict with or constituted, constitutes or will constitute a breach
or violation of, or a default (or an event which, with notice or lapse of
time or both, would constitute such a default) under any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which any of the Inergy Entities is a party or by which any
of them or any of their respective properties may be bound, (iii) violated,
violates or will violate any statute, law or regulation or any order,
judgment, decree or injunction of any court or governmental agency or body
directed to any of the Inergy Entities or any of their properties in a
proceeding to which any of them or their property is a party or (iv)
resulted, results or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of any of the Inergy
Entities, which conflicts, breaches, violations or defaults, in the case of
clauses (ii), (iii) or (iv), would, individually or in the aggregate, have
a Material Adverse Effect.
13
(v) No Consents. No permit, consent, approval, authorization, order,
registration, filing or qualification ("consent") of or with any court,
governmental agency or body is required for the offering, issuance and sale
by the Partnership of the Units, the execution, delivery and performance of
this Agreement and the Operative Agreements by the Inergy Entities party
thereto, or the consummation by the Inergy Entities of the transactions
contemplated by this Agreement or the Operative Agreements (including the
Transactions), except (i) for such consents required under the Securities
Act, the Exchange Act and state securities or "Blue Sky" laws, (ii) for
such consents which have been, or prior to the Closing Date will be,
obtained, and (iii) for such consents which, if not obtained, would not,
individually or in the aggregate, have a Material Adverse Effect.
(w) No Default. None of the Inergy Entities is in (i) violation of
its Organizational Documents, or of any law, statute, ordinance,
administrative or governmental rule or regulation applicable to it or of
any decree of any court or governmental agency or body having jurisdiction
over it or (ii) breach, default (or an event which, with notice or lapse of
time or both, would constitute such a default) or violation in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which it is a party or
by which it or any of its properties may be bound, which breach, default or
violation, in the case of clause (ii), would, if continued, have a Material
Adverse Effect or could materially impair the ability of any of the Inergy
Entities to perform their obligations under this Agreement or the Operative
Agreements. To the knowledge of the Inergy Parties, no third party to any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which any of the Inergy Entities is a party or by which any
of them is bound or to which any of their properties is subject, is in
default under any such agreement, which breach, default or violation would,
if continued, have a Material Adverse Effect.
(x) Conformity of Securities to Descriptions in the Prospectus. The
Units, when issued and delivered against payment therefor as provided
herein, and the Sponsor Units and the Incentive Distribution Rights, when
issued and delivered in accordance with the terms of the Partnership
Agreement, will conform in all material respects to the descriptions
thereof contained in the Prospectus.
(y) Independent Public Accountants. The accountants, Ernst & Young
LLP, who have certified or shall certify the audited financial statements
included in the Registration Statement and the Prospectus (or any amendment
or supplement thereto), are independent public accountants with respect to
the Partnership and the General Partners as required by the Act and the
applicable published rules and regulations thereunder.
14
(y) Financial Statements. At March 31, 2001, the Partnership would
have had, on the consolidated pro forma basis indicated in the Prospectus
(and any amendment or supplement thereto), a capitalization as set forth
therein. The historical financial statements (including the related notes
and supporting schedules) included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) present fairly in all
material respects the financial position, results of operations and cash
flows of the entities purported to be shown thereby on the basis stated
therein at the respective dates or for the respective periods to which they
apply and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except to the extent disclosed therein. The selected historical and pro
forma information set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) under the captions
"Selected Historical and Pro Forma Financial and Operating Data" and
"Selected Historical Financial and Operating Data" is accurately presented
in all material respects and prepared on a basis consistent with the
audited and unaudited historical consolidated financial statements and pro
forma financial statements from which it has been derived. The pro forma
financial statements of the Partnership included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto) have
been prepared in all material respects in accordance with the applicable
accounting requirements of Article 11 of Regulation S-X of the Commission;
the assumptions used in the preparation of such pro forma financial
statements are, in the opinion of the management of the Managing General
Partner, reasonable; and the pro forma adjustments reflected in such pro
forma financial statements have been properly applied to the historical
amounts in compilation of such pro forma financial statements.
(z) No Material Adverse Change. None of the Inergy Parties has
sustained since the date of the latest audited financial statements
included in the Registration Statement and the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, investigation, order or decree, otherwise
than as set forth or contemplated in the Registration Statement and the
Prospectus. Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), (i)
none of the Inergy Parties has incurred any liability or obligation,
indirect, direct or contingent, or entered into any transactions, not in
the ordinary course of business, that, singly or in the aggregate, is
material to the Partnership Group, (ii) there has not been any material
change in the capitalization, or material increase in the short-term debt
or long-term debt, of the Inergy Parties and (iii) there has not been any
material adverse change, or any development involving or which may
reasonably be expected to involve, singly or in the aggregate, a
prospective material adverse change in or affecting the general affairs,
business, prospects, properties, management, condition (financial or
15
other), partners' capital, stockholders' equity, net worth or results of
operations of the Partnership Group.
(aa) Legal Proceedings or Contracts to be Described or Filed. There
are no legal or governmental proceedings pending or, to the knowledge of
the Inergy Parties, threatened, against any of the Inergy Parties, or to
which any of the Inergy Parties is a party, or to which any of their
respective properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as required,
and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required by the Act.
(bb) Title to Properties. Upon consummation of the Transactions on
the Closing Date, the Operating Company, Service Sub and the Operating Subs
will have good and indefeasible title to all real property and good title
to all personal property described in the Prospectus to be owned by the
Operating Company, Service Sub and the Operating Subs, free and clear of
all liens, claims, security interests or other encumbrances except (i) as
described in the Prospectus and (ii) such as do not materially interfere
with the use of such properties taken as a whole as they have been used in
the past and are proposed to be used in the future as described in the
Registration Statement and the Prospectus. Upon consummation of the
Transactions on the Closing Date, all real property and buildings held
under lease or license by the Operating Company, Service Sub and the
Operating Subs will be held by the Operating Company, Service Sub and the
Operating Subs under valid and subsisting and enforceable leases or
licenses with such exceptions as do not materially interfere with the use
of such properties taken as a whole as they have been used in the past and
are proposed to be used in the future as described in the Registration
Statement and the Prospectus.
(cc) Sufficiency of Contribution Documents. The Contribution
Documents were, or as of the Closing Date will be, legally sufficient to
transfer or convey to the Operating Company, Service Sub and the Operating
Subs all properties not already held by them that are, individually or in
the aggregate, required to enable the Operating Company, Service Sub and
the Operating Subs to conduct their operations (in all material respects as
contemplated by the Registration Statement and the Prospectus), subject to
the conditions, reservations and limitations contained in the Contribution
Documents and those set forth in the Registration Statement and the
Prospectus. The Operating Company, Service Sub and the Operating Subs,
upon execution and delivery of the Contribution Documents, succeeded or
will succeed in all material respects to the business, assets, properties,
liabilities and operations reflected by the pro forma financial statements
of the Partnership, except as disclosed in the Prospectus and the
Contribution Documents.
16
(dd) Permits. Each of the Operating Company, Service Sub and the
Operating Subs has, or at the Closing Date will have, such permits,
consents, licenses, franchises, certificates and authorizations of
governmental or regulatory authorities ("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
Registration Statement and the Prospectus and except for such permits
which, if not obtained, would not, individually or in the aggregate, have a
Material Adverse Effect; each of the Operating Company, Service Sub and the
Operating Subs has, or at the Closing Date will have, fulfilled and
performed all its material obligations with respect to such permits which
are due to have been fulfilled and performed by such date and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any impairment of the
rights of the holder of any such permit, except for such revocations,
terminations and impairments that would not, individually or in the
aggregate, have a Material Adverse Effect, subject in each case to such
qualification as may be set forth in the Registration Statement and the
Prospectus; and, except as described in the Registration Statement and the
Prospectus, none of such permits contains any restriction that is
materially burdensome to the Partnership Group taken as a whole.
(ee) Books and Records. The Partnership (i) makes and keeps books,
records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets and (ii) maintains
systems of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ff) Tax Returns. Each of the Inergy Parties has filed (or has
obtained extensions with respect to) all material federal, state and
foreign income and franchise tax returns required to be filed through the
date hereof, which returns are complete and correct in all material
respects, and has timely paid all taxes shown to be due pursuant to such
returns, other than those which are being contested in good faith and for
which adequate reserves have been established in accordance with generally
accepted accounting principles. There are no tax returns of any of the
Inergy Parties that are currently being audited by federal, state or local
taxing authorities or with respect to which the Inergy Parties have
received notice from such authorities that such an audit is being
contemplated, which, if adversely determined, would reasonably be likely to
result
17
in a Material Adverse Effect or would subject the Partnership or the
limited partners of the Partnership to any material liability or
disability.
(gg) ERISA. With respect to each employee benefit plan, program and
arrangement, including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), maintained or contributed to by the Inergy
Parties, or with respect to which the Partnership could incur any liability
under ERISA (collectively, the "Benefit Plans"), no event has occurred, in
connection with which the Partnership could be subject to any liability
under the terms of such Benefit Plan, applicable law (including, without
limitation, ERISA and the Internal Revenue Code of 1986, as amended) or any
applicable agreement that would reasonably be likely to result in a
Material Adverse Effect or would subject the Partnership or the limited
partners of the Partnership to any material liability or disability.
(hh) Investment Company/Public Utility Holding Company. None of the
Inergy Entities is now, and after sale of the Units to be sold by the
Partnership hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds," none of
the Inergy Entities will be, (i) an "investment company" or a company
"controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, (ii) a "public utility
company," "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" thereof, under the Public Utility Holding
Company Act of 1935, as amended.
(ii) No Environmental Problems. The Inergy Entities (i) are in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety
and the environment or imposing liability or standards of conduct
concerning any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), (ii) have received all permits required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, except where
such noncompliance with Environmental Laws, failure to receive required
permits, or failure to comply with the terms and conditions of such permits
would not, individually or in the aggregate, have a Material Adverse
Effect. The term "Hazardous Material" means (A) any "hazardous substance"
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (B) any "hazardous waste" as defined in
the Resource Conservation and Recovery Act, as amended, (C) any petroleum
or petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other Environmental Law.
18
(jj) Environmental Costs. In the ordinary course of business, the
Inergy Entities conduct a periodic review of the effect of Environmental
Laws on the business, operations and properties of the Inergy Entities, in
the course of which they identify and evaluate associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). Except as set forth in the Registration Statement and the
Prospectus, there are no costs and liabilities associated with or arising
in connection with Environmental Laws as currently in effect (including,
without limitation, costs of compliance therewith) which would,
individually or in the aggregate, reasonably be likely to result in a
Material Adverse Effect.
(kk) No Labor Dispute. The Inergy Entities are in compliance with all
federal, state and local employment and labor laws, including, but not
limited to, laws relating to non-discrimination in hiring, promotion and
pay of employees; no labor dispute with the employees of the Inergy
Entities exists or, to the knowledge of the Inergy Parties, is imminent or
threatened; and none of the Inergy Parties is aware of any existing,
imminent or threatened labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors which would, individually
or in the aggregate, reasonably likely to result in a Material Adverse
Effect.
(ll) Insurance. The Inergy Entities maintain insurance covering their
properties, operations, personnel and businesses against such losses and
risks as are reasonably adequate to protect them and their businesses in a
manner consistent with other businesses similarly situated. None of the
Inergy Entities has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance, and all such insurance
is outstanding and duly in force on the date hereof and will be outstanding
and duly in force on the Closing Date.
(mm) Litigation. Except as described in the Prospectus, there is (i)
no action, suit or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending or,
to the knowledge of the Inergy Parties, threatened, to which any of the
Inergy Entities is or may be a party or to which the business or property
of any of the Inergy Entities is or may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency or proposed by any governmental agency and (iii) no
injunction, restraining order or order of any nature issued by a federal or
state court or foreign court of competent jurisdiction to which any of the
Inergy Entities is or may be subject, that, in the case of clauses (i),
(ii) and (iii) above, is reasonably likely to (A) individually or in the
aggregate have a Material Adverse Effect, (B) prevent or result in the
suspension of the offering and issuance of the
19
Units, or (C) in any manner draw into question the validity of this
Agreement or any Operative Agreement.
(nn) Private Placement. The sale and issuance of the Sponsor Units to
New Propane and the persons and entities listed on Schedule II and the
Incentive Distribution Rights to Holdings pursuant to the Partnership
Agreement are exempt from the registration requirements of the Act and the
securities laws of any state having jurisdiction with respect thereto, and
none of the Inergy Entities has taken or will take any action that would
cause the loss of such exemption. The Non-Managing General Partner
Exchange Offer is exempt from the registration requirements of the 1933 Act
and the securities laws of any state having jurisdiction with respect
thereto, and none of the Inergy Entities has taken or will take any action
that would cause the loss of such exemption. The Xxxxxx and Rolesville
Exchange is exempt from the registration requirements of the Act and the
securities laws of any state having jurisdiction with respect thereto, and
none of the Inergy Entities has taken or will take any action that would
cause the loss of such exemption.
(oo) No Distribution of Other Offering Materials. The Inergy Entities
have not distributed and, prior to the later to occur of (i) the Closing
Date and (ii) completion of the distribution of the Units, will not
distribute, any prospectus (as defined under the Act) in connection with
the offering and sale of the Units other than the Registration Statement,
any Prepricing Prospectus, the Prospectus or other materials, if any,
permitted by the Act, including Rule 134 of the general rules and
regulations thereunder.
(pp) Listing. The Units have been approved for quotation on the
Nasdaq National Market, subject only to official notice of issuance.
Any certificate signed by any officer of any Inergy Party and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by such Inergy Party to each Underwriter as to
the matters covered thereby.
5. ADDITIONAL COVENANTS. The Inergy Parties covenant and agree with
the several Underwriters that:
(a) The Partnership will timely transmit copies of the Prospectus, and
any amendments or supplements thereto, to the SEC for filing pursuant to Rule
424(b) of the 1933 Act Rules and Regulations.
(b) The Partnership will deliver to each of the Underwriters, and to
counsel for the Underwriters (i) a signed copy of the Registration Statement as
originally filed, including copies of exhibits thereto, of any amendments and
supplements to the Registration Statement and (ii) a signed copy of each consent
and certificate included in, or filed as an exhibit to, the Registration
20
Statement as so amended or supplemented; the Partnership will deliver to the
Underwriters as soon as practicable after the date of this Agreement as many
copies of the Prospectus as the Underwriters may reasonably request for the
purposes contemplated by the 1933 Act; if the Registration Statement is not
effective under the 1933 Act, the Partnership will use its best efforts to cause
the Registration Statement to become effective as promptly as possible, and it
will notify you, promptly after it shall receive notice thereof, of the time
when the Registration Statement has become effective; the Partnership will
promptly advise the Underwriters of any request of the SEC for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, and of the issuance by the SEC or any state or other jurisdiction
or other regulatory body of any stop order under the 1933 Act or other order
suspending the effectiveness of the Registration Statement (as amended or
supplemented) or preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending the qualification or registration of the Units
for offering or sale in any jurisdiction, and of the institution or threat of
any proceedings therefor, of which the Partnership shall have received notice or
otherwise have knowledge prior to the completion of the distribution of the
Units; and the Partnership will use its best efforts to prevent the issuance of
any such stop order or other order and, if issued, to secure the prompt removal
thereof.
(c) The Partnership will not file any amendment or supplement to the
Registration Statement, the Prospectus (or any other prospectus relating to the
Units filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations that
differs from the Prospectus as filed pursuant to such Rule 424(b)), of which the
Underwriters shall not previously have been advised and furnished with a copy or
to which the Underwriters shall have reasonably objected or which is not in
compliance with the 1933 Act Rules and Regulations; and the Partnership will
promptly notify you after it shall have received notice thereof of the time when
any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.
(d) During the period when a prospectus relating to any of the Units
is required to be delivered under the 1933 Act by any Underwriter or dealer, the
Partnership will comply, at its own expense, with all requirements imposed by
the 1933 Act and the 1933 Act Rules and Regulations, as now and hereafter
amended, and by the rules and regulations of the SEC thereunder, as from time to
time in force, so far as necessary to permit the continuance of sales of or
dealing in the Units during such period in accordance with the provisions hereof
and as contemplated by the Prospectus.
(e) If, during the period when a prospectus relating to any of the
Units is required to be delivered under the 1933 Act by any Underwriter or
dealer, (i) any event relating to or affecting the Partnership or of which the
Partnership shall be advised in writing by the Underwriters shall occur as a
result of which, in the opinion of the Partnership or the Underwriters, the
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
21
statements therein, in the light of the circumstances under which they were
made, not misleading or (ii) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the 1933 Act, the 1933
Act Rules and Regulations, the 1934 Act or the 1934 Act Rules and Regulations,
the Partnership will forthwith at its expense prepare and file with the SEC, and
furnish to the Underwriters a reasonable number of copies of, such amendment or
supplement or other filing that will correct such statement or omission or
effect such compliance.
(f) During the period when a prospectus relating to any of the Units
is required to be delivered under the 1933 Act by any Underwriter or dealer, the
Partnership will furnish such proper information as may be lawfully required and
otherwise cooperate in qualifying the Units for offer and sale under the
securities or blue sky laws of such jurisdictions as the Underwriters may
reasonably designate and will file and make in each year such statements or
reports as are or may be reasonably required by the laws of such jurisdictions;
provided, however, that the Partnership shall not be required to qualify as a
foreign corporation or to qualify as a dealer in securities or to file a general
consent to service of process under the laws of any jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and Rule 158 of
the 1933 Act Rules and Regulations, the Partnership will make generally
available to its security holders and to holders of the Units, as soon as
practicable, an earning statement (which need not be audited) in reasonable
detail covering the 12 months beginning not later than the first day of the
month next succeeding the month in which occurred the effective date (within the
meaning of Rule 158) of the Registration Statement.
(h) The Partnership will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants and quarterly reports containing financial statements and financial
information which may be unaudited. The Partnership will, for a period of five
years from the Closing Date, deliver to the Underwriters at their principal
executive offices a reasonable number of copies of annual reports, quarterly
reports, current reports and copies of all other documents, reports and
information furnished by the Partnership to holders of Units or filed with any
securities exchange or market pursuant to the requirements of such exchange or
market or with the SEC pursuant to the 1933 Act or the 1934 Act. The
Partnership will deliver to the Underwriters similar reports with respect to any
significant subsidiaries, as that term is defined in the 1933 Act Rules and
Regulations, which are not consolidated in the Partnership's financial
statements. Any report, document or other information required to be furnished
under this paragraph (h) shall be furnished as soon as practicable after such
report, document or information becomes available.
(i) The Partnership, New Propane and the General Partners will not,
during the 180 days after the date of this prospectus, without the prior written
consent of X.X. Xxxxxxx & Sons, Inc., directly or indirectly, offer for sale,
contract to sell, sell, distribute, grant any option, right or warrant to
purchase, pledge, hypothecate or otherwise dispose of any Common Units, any
securities convertible into, or exercisable or exchangeable for, Common Units or
any other rights
22
to acquire such Common Units, other than pursuant to employee benefit plans as
in existence as of the date of this prospectus.
(j) The Partnership will apply the proceeds from the sale of the Units
as set forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all respects with the requirements of Item 504 of
Regulation S-K and will file such reports with the SEC with respect to the sale
of the Units and the application of the proceeds therefrom as may be required by
the 1933 Act or the 1934 Act or by the applicable rules and regulations
thereunder.
(k) The Partnership will promptly provide you with copies of all
correspondence to and from, and all documents issued to and by, the SEC in
connection with the registration of the Units under the 1933 Act.
(l) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Partnership will furnish to you, as soon as they have been prepared,
copies of any unaudited interim consolidated financial statements of the
Partnership Group for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the Prospectus.
(m) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Partnership will not issue any press releases or other communications
directly or indirectly and will hold no press conferences with respect to the
Partnership or any of its subsidiaries, the financial condition, results of
operations, business, properties, assets or liabilities of the Partnership or
any of its subsidiaries, or the offering of the Units, without your prior
written consent.
(n) The Partnership will use its best efforts to obtain approval for,
and maintain the quotation of the Units on, The Nasdaq National Market.
(o) The Partnership will cause its directors and officers and the
persons and entities listed on Schedule II to furnish to you, on or prior to the
date of this Agreement, a letter or letters, in form and substance satisfactory
to counsel for the Underwriters, pursuant to which each such person shall agree
not to directly or indirectly, offer for sale, contract to sell, sell,
distribute, grant any option, right or warrant to purchase, pledge, hypothecate
or otherwise dispose of any Common Units, Senior Subordinated Units, Junior
Subordinated Units, or any securities convertible into, or exercisable or
exchangeable for, Common Units or any other rights to acquire such Common Units,
during the 180 days after the date of this prospectus, without the prior written
consent of X.X. Xxxxxxx & Sons, Inc.
(p) If the Partnership elects to rely on Rule 462(b) under the 1933
Act, the Partnership shall both file an Abbreviated Registration Statement with
the SEC in compliance with Rule 462(b) and pay the applicable fees in accordance
with Rule 111 of the 1933 Act by the earlier of
23
(i) 10:00 p.m., New York time, on the date of this Agreement, and (ii) the time
that confirmations are given or sent, as specified by Rule 462(b)(2).
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase and pay for the Units, as provided herein, shall
be subject to the accuracy, as of the date hereof and as of the Closing Date
(and, if applicable, the Option Closing Date), of the representations and
warranties of the Inergy Parties contained herein, to the performance by the
Inergy Parties of their covenants and obligations hereunder, and to the
following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 1:00 p.m., New York time, on
the date hereof, or, with your consent, at a later date and time, not later than
_____ p.m., New York time, on the first business day following the date hereof,
or at such later date and time as may be approved by the Underwriters; if the
Partnership has elected to rely on Rule 462(b) under the 1933 Act, the
Abbreviated Registration Statement shall have become effective not later than
the earlier of (x) 10:00 p.m. New York time, on the date hereof, or (y) at such
later date and time as may be approved by the Underwriters. All filings
required by Rule 424 and Rule 430A of the 1933 Act Rules and Regulations shall
have been made. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Partnership or any Underwriter, threatened or contemplated by the SEC, and
any request of the SEC for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of the Underwriters.
(b) No Underwriter shall have advised the Partnership on or prior to
the Closing Date (and, if applicable, the Option Closing Date), that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of fact which, in the opinion of counsel to the
Underwriters, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) On the Closing Date (and, if applicable, the Option Closing Date),
you shall have received the opinion of Xxxxxx & Xxxxxx L.L.P. counsel for the
Partnership, addressed to you and dated the Closing Date (and, if applicable,
the Option Closing Date), to the effect that:
(i) The Partnership has been duly formed and is validly existing in
good standing as a limited partnership under the Delaware LP Act with all
necessary power and authority to own or lease its properties, to assume the
liabilities being assumed by it pursuant to the Contribution Documents and
to conduct its business, in all material respects as described in the
Registration Statement and the Prospectus. The Partnership is
24
duly registered or qualified as a foreign limited partnership for the
transaction of business under the laws of the jurisdictions set forth on
Exhibit A to this Agreement.
(ii) Each of Holdings, New Propane, the Operating Company and the
Operating Subs has been duly formed and is validly existing in good
standing as a limited liability company under the Delaware LLC Act with all
necessary power and authority to own or lease its properties, to assume the
liabilities being assumed by it pursuant to the Contribution Documents and
to conduct its business, in each case in all material respects as described
in the Registration Statement and the Prospectus. Each of Holdings, New
Propane, the Operating Company and the Operating Subs is duly registered or
qualified as a foreign limited liability company for the transaction of
business under the laws of the jurisdictions set forth on Exhibit A to this
Agreement.
(iii) Each of the General Partners has been duly formed and is
validly existing in good standing as a limited liability company under the
Delaware LLC Act with all necessary limited liability company power and
authority to own or lease its properties, to conduct its business and to
act as general partner of the Partnership and the Operating Company and to
own membership interests in the Partnership and the Operating Company, in
each case in all material respects as described in the Registration
Statement and the Prospectus. Each of the General Partners is duly
registered or qualified as a limited liability company for the transaction
of business under the laws of the jurisdictions set forth on Exhibit A to
the Underwriting Agreement.
(iv) Service Sub has been duly incorporated and is validly existing in
good standing as a corporation under the DGCL with all necessary corporate
power and authority to own or lease its properties and to conduct its
business, in each case in all material respects as described in the
Registration Statement and the Prospectus. Service Sub is duly registered
or qualified as a foreign corporation for the transaction of business under
the laws of the jurisdictions set forth on Exhibit A to the Underwriting
Agreement.
(v) The Managing General Partner and the Non-Managing General Partner
are the sole general partners of the Partnership. The Non-Managing General
Partner owns a 2% general partner interest and the Managing General Partner
owns a non-economic, managing general partner interest; such general
partner interests have been duly authorized and validly issued in
accordance with the Partnership Agreement; and each General Partner owns
its general partner interest free and clear of all liens, encumbrances,
security interests, charges or claims (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of Delaware naming
either of such General Partners as debtors is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LP Act.
25
(vi) The Sponsor Units, the Incentive Distribution Rights and the
limited partner interests represented thereby have been duly authorized and
validly issued in accordance with the Partnership Agreement, and are fully
paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by matters
described in the Prospectus under the caption "The Partnership Agreement--
Limited Liability"); and New Propane owns its Sponsor Units and Holdings
owns the Incentive Distribution Rights, in each case, free and clear of all
liens, encumbrances, security interests, charges or claims (i) in respect
of which a financing statement under the Uniform Commercial Code of the
State of Delaware naming New Propane or Holdings as debtor is on file in
the office of the Secretary of State of the State of Delaware or (ii)
otherwise known to such counsel, without independent investigation, other
than those created by or arising under the Delaware LP Act.
(vii) The Units to be issued and sold to the Underwriters by the
Partnership pursuant to this Agreement and the limited partner interests
represented thereby have been duly authorized by the Partnership Agreement
and, when issued and delivered to the Underwriters against payment therefor
in accordance with the terms hereof, will be validly issued, fully paid (to
the extent required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters described in
the Prospectus under the caption "The Partnership Agreement--Limited
Liability"); and other than the Sponsor Units and the Incentive
Distribution Rights, the Units will be the only limited partner interests
of the Partnership issued and outstanding at the Closing Date.
(viii) The Partnership owns a 100% membership interest in the
Operating Company; such membership interest has been duly authorized and
validly issued in accordance with the Operating Company LLC Agreement; and
the Partnership will own its membership interest free and clear of all
liens, encumbrances, security interests, charges or claims (i) in respect
of which a financing statement under the Uniform Commercial Code of the
State of Delaware naming the Partnership as debtor is on file in the office
of the Secretary of State of the State of Delaware or (ii) otherwise known
to such counsel, without independent investigation, other than those
created by or arising under the Delaware LP Act.
(ix) The Operating Company owns ___% of the issued and outstanding
capital stock of Service Sub and L&L Transportation owns ___% of the issued
and outstanding capital stock of Service Sub; such capital stock has been
duly authorized and validly
26
issued and is fully paid and nonassessable; and the Operating Company and
L&L Transportation own such capital stock free and clear of all liens,
encumbrances, security interests, charges or claims (i) in respect of which
a financing statement under the Uniform Commercial Code of the State of
Delaware naming the Operating Company or L&L Transportation as debtor is on
file in the office of the Secretary of State of the State of Delaware or
(ii) otherwise known to such counsel, without independent investigation,
other than those created by or arising under the DGCL.
(x) The Operating Company owns a 100% membership interest in each of
the Operating Subs; such membership interests have been duly authorized and
validly issued in accordance with the Operating Subs LLC Agreements and are
fully paid (to the extent required under the Operating Subs LLC Agreements)
and nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware LLC Act); and the Operating Company owns
such membership interests free and clear of all liens, encumbrances,
security interests, charges or claims (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of Delaware naming
the Operating Company as debtor is on file in the office of the Secretary
of State of the State of Delaware or (ii) otherwise known to such counsel,
without independent investigation, other than those created by or arising
under the Delaware LLC Act.
(xi) The Non-Managing General Partner owns a 100% common membership
interest in New Propane, Xxxxxx owns ___% of the preferred membership
interests in New Propane, and Rolesville owns ___% of the preferred
membership interests in New Propane; such member interests have been duly
authorized and validly issued in accordance with the New Propane LLC
Agreement and are fully paid (to the extent required under the New Propane
LLC Agreement) and nonassessable (except as such nonassessability may be
affected by Section 18-607 of the Delaware LLC Act); and the Non-Managing
General Partner, Xxxxxx and Rolesville own such membership interests free
and clear of all liens, encumbrances, security interests, charges or claims
(i) in respect of which a financing statement under the Uniform Commercial
Code of the State of Delaware naming the Non-Managing General Partner,
Xxxxxx or Rolesville as debtor is on file in the office of the Secretary of
State of the State of Delaware or (ii) otherwise known to such counsel,
without independent investigation, other than those created by or arising
under the Delaware LLC Act.
(xii) Holdings owns 100% of the issued and outstanding membership
interests of the Managing General Partner. Such membership interests have
been duly authorized and validly issued and fully paid (to the extent
required under Holdings limited liability company Agreement) and
nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and Holdings owns such membership
interests free and clear of all liens, encumbrances, security interests,
charges or claims (i) in respect of which a financing statement under the
Uniform Commercial Code of the
27
State of Delaware naming Holdings as debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LLC Act.
(xiii) Holdings owns ___% of the issued and outstanding common
membership interests in the Non-Managing General Partner; such membership
interests have been duly authorized and validly issued and fully paid (to
the extent required under Holdings limited liability company Agreement) and
nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and Holdings owns such membership
interests free and clear of all liens, encumbrances, security interests,
charges or claims (i) in respect of which a financing statement under the
Uniform Commercial Code of the State of Delaware naming Holdings as debtor
is on file in the office of the Secretary of State of the State of Delaware
or (ii) otherwise known to such counsel, without independent investigation,
other than those created by or arising under the Delaware LLC Act.
(xiv) Except as described in the Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, (i) any limited partner interests of the
Partnership, (ii) any membership interests of the General Partners, the
Operating Company, New Propane or the Operating Subs or (iii) any shares of
Service Sub, in each case pursuant to the Organizational Documents or, to
the knowledge of such counsel after due inquiry, any other agreement or
instrument to which such entities are a party or by which any of them may
be bound. To the knowledge of such counsel, neither the filing of the
Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to any rights for or relating to
the registration of any Units or other securities of the Partnership or any
of its subsidiaries, other than as have been waived. To such counsel's
knowledge after due inquiry, except as described in the Prospectus, there
are no outstanding options or warrants to purchase (A) any Common Units,
Sponsor Units or Incentive Distribution Rights or other partnership
interests in the Partnership, (B) membership interests of the General
Partners, the Operating Company, New Propane or the Operating Subs or (B)
any shares of Service Sub.
(xv) The Partnership has all requisite power and authority to issue,
sell and deliver (i) the Units, in accordance with and upon the terms and
conditions set forth in this Agreement, the Partnership Agreement and the
Registration Statement and the Prospectus and (ii) the Sponsor Units and
Incentive Distribution Rights, in accordance with and upon the terms and
conditions set forth in the Partnership Agreement and the Contribution
Documents.
28
(xvi) The Underwriting Agreement has been duly executed and delivered
by each of the Inergy Parties.
(xvii) Each of the Operative Agreements to which any of the Inergy
Entities is a party has been duly authorized and validly executed and
delivered by each of the Inergy Entities party thereto. Each of the
Operative Agreements constitutes a valid and legally binding agreement of
the Inergy Entities party thereto, enforceable against each such Inergy
Entity in accordance with its respective terms, subject to (i) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (ii) public policy,
applicable law relating to fiduciary duties and indemnification and an
implied covenant of good faith and fair dealing.
(xviii) None of the offering, issuance and sale by the Partnership of
the Units, the execution, delivery and performance of the Underwriting
Agreement, the Contribution Documents or the Operative Agreements by the
Inergy Entities which are parties thereto, or the consummation of the
transactions contemplated hereby and thereby (including the Transactions,
with the exception of the Non-Managing General Partner Exchange Offer) (i)
constituted, constitutes or will constitute a violation of the
Organizational Documents, (ii) constituted, constitutes or will constitute
a breach or violation of, or a default (or an event which, with notice or
lapse of time or both, would constitute such a default) under any Operative
Agreement or any other agreement filed as an exhibit to the Registration
Statement, (iii) violated, violates or will violate the Delaware LP Act,
the Delaware LLC Act, the DGCL or federal law or (iv) resulted, results or
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of any of the Inergy Entities,
which breaches, violations, defaults or liens, in the case of clauses (ii),
(iii) or (iv), would, individually or in the aggregate, have a material
adverse effect on the condition (financial or other), business or results
of operations of the Partnership Group.
(xix) No permit, consent, approval, authorization, order,
registration, filing or qualification ("consent") of or with any federal or
Delaware court, governmental agency or body is required for the offering,
issuance and sale by the Partnership of the Units, the execution, delivery
and performance of the Underwriting Agreement and the Operative Agreements
by the Inergy Entities party thereto or the consummation by the Inergy
Entities of the transactions contemplated by the Underwriting Agreement or
the Operative Agreements (including the Transactions, with the exception of
the Non-Managing General Partner Exchange Offer), except (i) for such
consents required under the Act, the Exchange Act and state securities or
"Blue Sky" laws, as to which such counsel need not express any opinion,
(ii) for such consents which have been obtained or made, (iii) for such
consents which (A) are of a routine or administrative nature, (B) are not
customarily obtained or made prior to the consummation of transactions such
as those contemplated
29
by the Underwriting Agreement and the Operative Agreements and (C) are
expected in the reasonable judgment of the Managing General Partner to be
obtained or made in the ordinary course of business subsequent to the
consummation of the Transactions, (iv) for such consents which, if not
obtained or made, would not, individually or in the aggregate, have a
Material Adverse Effect or (v) as disclosed in the Prospectus.
(xx) The statements in the Registration Statement and Prospectus under
the captions "The Transactions," "Cash Distribution Policy," "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
The Partnership--Capital Resources, Liquidity and Financial Condition,"
"Business--Regulation," "Certain Relationships and Related Transactions,"
"Conflicts of Interest and Fiduciary Responsibilities," "Description of the
Common Units," "Description of the Subordinated Units," "The Partnership
Agreement" and "Investment in the Partnership by Employee Benefit Plans,"
insofar as they constitute descriptions of agreements or refer to
statements of law or legal conclusions, are accurate and complete in all
material respects, and the Common Units, the Sponsor Units and the
Incentive Distribution Rights conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus under the captions "Prospectus Summary--The Offering," "Cash
Distribution Policy," "Description of the Common Units," "Description of
the Subordinated Units" and "The Partnership Agreement."
(xxi) The opinion of Xxxxxx & Xxxxxx L.L.P. that is filed as Exhibit
8.1 to the Registration Statement is confirmed and the Underwriters may
rely upon such opinion as if it were addressed to them.
(xxii) The Registration Statement was declared effective under the
1933 Act on __________; to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required by
such Rule.
(xxiii) The Registration Statement and the Prospectus (except for the
financial statements and the notes and the schedules thereto, and the other
financial, statistical and accounting data included in the Registration
Statement or the Prospectus, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements
of the Act and the rules and regulations promulgated thereunder.
(xxiv) To the knowledge of such counsel, (i) there are no legal or
governmental proceedings pending or threatened against any of the Inergy
Entities or to which any of the Inergy Entities is a party or to which any
of their respective properties is subject that are required to be described
in the Prospectus but are not so described as required and (ii)
30
there are no agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required by the Act.
(xxv) None of the Inergy Parties is an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended, or (ii)
a "public utility company" or "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xxvi) Assuming that the Underwriters do not have notice of any
adverse claim (as defined in Sections 8-102 and 8-105 of the New York
Uniform Commercial Code) to the Units, upon the delivery to the
Underwriters of certificates evidencing the Units registered in the name of
the Underwriters (or their nominee) and payment by the Underwriters of the
purchase price for the Units, the Underwriters (or such nominee) will be
"protected purchasers" (as such term is used in Section 8-303 of the New
York Uniform Commercial Code).
(xxvii) The offer, sale and issuance of the Sponsor Units to the Non-
Managing General Partner and the persons and entities listed on Schedule II
and the Incentive Distribution Rights to Holdings pursuant to the
Partnership Agreement are exempt from the registration requirements of the
Act and the securities laws of any state having jurisdiction with respect
thereto.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Inergy Parties
and the independent public accountants of the Partnership and the
Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is
not passing on, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus (except to the extent specified in the
foregoing opinion), based on the foregoing, no information has come to such
counsel's attention that causes such counsel to believe that the
Registration Statement (other than (i) the financial statements included
therein, including the notes and schedules thereto and the auditors'
reports thereon, and (ii) the other financial data included therein, as to
which such counsel need not comment), as of its effective date contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (other than (i) the financial
statements included therein, including the notes and schedules thereto and
the auditors' reports thereon, and (ii) the other financial data included
therein, as to which such counsel need not comment), as of its issue date
and the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact necessary to make
31
the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may (A) rely in respect of
matters of fact upon certificates of officers and employees of the Inergy
Parties and upon information obtained from public officials, (B) assume
that all documents submitted to them as originals are authentic, that all
copies submitted to them conform to the originals thereof, and that the
signatures on all documents examined by them are genuine, (C) state that
their opinion is limited to federal laws, the Delaware LP Act, the Delaware
LLC Act, the DGCL and the laws of the State of New York, (D) with respect
to the opinions expressed in paragraphs (a), (b), (c) and (d) above as to
the due qualification or registration as a foreign limited partnership,
corporation or limited liability company, as the case may be, of the
Partnership, the Operating Company, the Operating Subs, New Propane and the
General Partners, state that such opinions are based upon the opinions of
local counsel provided pursuant to (e) below and upon certificates of
foreign qualification or registration provided by the Secretary of State of
the States of the States listed on Exhibit A to such opinion (each of which
shall be dated as of a date not more than fourteen days prior to the
Closing Date and shall be provided to you), (E) state that they express no
opinion with respect to the title of any of the Inergy Entities to any of
their respective real or personal property purported to be transferred by
the Contribution Documents nor with respect to the accuracy or descriptions
of real or personal property, and (F) state that they express no opinion
with respect to state or local taxes or tax statutes to which any of the
limited partners of the Inergy Entities may be subject.
(d) On the Closing Date (and, if applicable, the Option Closing Date),
you shall have received the opinion of Xxxxxxx, Mag & Fizzel, counsel for the
Partnership, addressed to you and dated the Closing Date (and, if applicable,
the Option Closing Date), to the effect that:
(i) None of the offering, issuance and sale by the Partnership of the
Units, the execution, delivery and performance of the Underwriting
Agreement or the Operative Agreements by the Inergy Entities which are
parties thereto, or the consummation of the transactions contemplated
hereby and thereby (including the Transactions and specifically including
the Non-Managing General Partner Exchange Offer) (i) constituted,
constitutes or will constitute a breach or violation of, or a default under
(or an event which, with notice or lapse of time or both, would constitute
such a default), any agreement, lease or other instrument known to such
counsel (excluding any Operative Agreement or any agreement filed as an
exhibit to the Registration Statement) to which any of the Inergy Entities
or any of their properties may be bound, which breach, violation or default
would reasonably be expected to have a Material Adverse Effect (ii)
violated, violates or will violate any order, judgment, decree or
injunction of any federal, Texas or Delaware court or government agency or
body known to such counsel directed to any of the Inergy
32
Entities or any of their properties in a proceeding to which any of them or
their property is a party.
(ii) To the knowledge of such counsel after due inquiry, none of the
Inergy Entities is in (i) violation of its Organizational Documents, or of
any law, statute, ordinance, administrative or governmental rule or
regulation applicable to it or of any decree of any court or governmental
agency or body having jurisdiction over it or (ii) breach, default (or an
event which, with notice or lapse of time or both, would constitute such a
default) or violation in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument to
which it is a party or by which it or any of its properties may be bound,
which breach, default or violation would, if continued, have a Material
Adverse Effect or could materially impair the ability of any of the Inergy
Entities to perform their obligations under the Underwriting Agreement, the
Contribution Documents or the Operative Agreements.
(iii) To the knowledge of such counsel after due inquiry, each of the
Inergy Entities has such permits, consents, licenses, franchises,
certificates and authorizations of governmental or regulatory authorities
("permits") as are necessary to own its properties and to conduct its
business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus and except for such
permits which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the ability of the
Partnership Group, to conduct their businesses in all material respects as
currently conducted or as contemplated by the Prospectus to be conducted;
and, to the knowledge of such counsel after due inquiry, none of the Inergy
Entities has received any notice of proceedings relating to the revocation
or modification of any such permits which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to have a Material Adverse Effect.
(iv) No permit, consent, approval, authorization, order, registration,
filing or qualification ("consent") of or with any federal or Delaware
court, governmental agency or body is required for the offering, issuance
and sale by the Partnership of the Units, the execution, delivery and
performance of the Underwriting Agreement and the Operative Agreements by
the Inergy Entities party thereto or the consummation by the Inergy
Entities of the transactions contemplated by the Underwriting Agreement or
the Operative Agreements (including the Transactions and specifically
including the Non-Managing General Partner Exchange Offer), except (i) for
such consents required under the Act, the Exchange Act and state securities
or "Blue Sky" laws, as to which such counsel need not express any opinion,
(ii) for such consents which have been obtained or made, (iii) for such
consents which (A) are of a routine or administrative nature, (B) are not
customarily obtained or made prior to the consummation of transactions such
as those contemplated by the Underwriting Agreement and the Operative
Agreements and (C) are expected in
33
the reasonable judgment of the Managing General Partner to be obtained or
made in the ordinary course of business subsequent to the consummation of
the Transactions, (iv) for such consents which, if not obtained or made,
would not, individually or in the aggregate, have a Material Adverse Effect
or (v) as disclosed in the Prospectus.
(v) The persons and entities listed on Schedule II own the Senior
Subordinated Units in the Partnership set forth opposite their respective
names.
(vi) The persons and entities listed on Schedule III own ___% of the
issued and outstanding common membership interests and 100% of the
preferred membership interests in the Non-Managing General Partner. such
membership interests have been duly authorized and validly issued and fully
paid (to the extent required under Holdings limited liability company
Agreement) and nonassessable (except as such nonassessability may be
affected by Section 18-607 of the Delaware LLC Act). With respect to the
persons and entities listed on Schedule III, Mr. Xxxx Xxxxxxx owns ___
common membership interests and he owns such interests free and clear of
all liens, encumbrances, security interests, charges or claims (i) in
respect of which a financing statement under the Uniform Commercial Code of
the State of Delaware naming Xx. Xxxxxxx or such persons or entities listed
on Schedule III as debtor is on file in the office of the Secretary of
State of the State of Delaware or (ii) otherwise known to such counsel,
without independent investigation, other than those created by or arising
under the Delaware LLC Act.
(vii) The Non-Managing General Partner Exchange Offer and the Xxxxxx
and Rolesville Exchange Offer are exempt from the registration requirements
of the 1933 Act and the securities laws of any state having jurisdiction
with respect thereto.
(viii) Except as described in the Prospectus, to the knowledge of
such counsel after due inquiry, there is no litigation, proceeding or
governmental investigation pending or threatened against any of the Inergy
Entities or to which any of the Inergy Entities is a party or to which any
of their respective properties is subject, which, if adversely determined
to such Inergy Entities, is reasonably likely to have a material adverse
effect on the condition (financial or other), business or results of
operations of the Partnership Group.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Inergy Parties
and the independent public accountants of the Partnership and the
Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is
not passing on, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus (except to the extent specified in the
foregoing opinion),
34
based on the foregoing, no information has come to such counsel's attention
that causes such counsel to believe that the Registration Statement (other
than (i) the financial statements included therein, including the notes and
schedules thereto and the auditors' reports thereon, and (ii) the other
financial data included therein, as to which such counsel need not
comment), as of its effective date contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus (other than (i) the financial statements included therein,
including the notes and schedules thereto and the auditors' reports
thereon, and (ii) the other financial data included therein, as to which
such counsel need not comment), as of its issue date and the Closing Date
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (A) rely in respect of
matters of fact upon certificates of officers and employees of the Inergy
Parties and upon information obtained from public officials, (B) assume
that all documents submitted to them as originals are authentic, that all
copies submitted to them conform to the originals thereof, and that the
signatures on all documents examined by them are genuine, (C) state that
their opinion is limited to federal laws, the Delaware LP Act, the Delaware
LLC Act, the DGCL and the laws of the State of Missouri, (D) state that
they express no opinion with respect to the title of any of the Inergy
Entities to any of their respective real or personal property purported to
be transferred by the Contribution Documents nor with respect to the
accuracy or descriptions of real or personal property, and (E) state that
they express no opinion with respect to state or local taxes or tax
statutes to which any of the limited partners of the Inergy Entities may be
subject.
(e) On the Closing Date, you shall have received the opinions of (i)
Xxxxxxx, Mag & Fizzel with respect to the States of Missouri and Illinois, (ii)
Womble, Carlyle, Xxxxxxxxx & Xxxx with respect to the State of North Carolina,
(iii) Xxxxx, Tarrant & Xxxxx, LLP with respect to the States of Tennessee and
Indiana, (iv) Xxxxxx & Xxxxx, Ltd. with respect to the State of Ohio and (v)
Varnum, Riddering, Xxxxxxx & Xxxxxx, LLP with respect to the State of Michigan,
each of which is acting as special local counsel for the Partnership, addressed
to you and dated the Closing Date, to the effect that:
(i) The Partnership has been duly qualified or registered as a foreign
limited partnership for the transaction of business under the laws of
[insert applicable state]. Each of the Managing General Partner, the Non-
Managing General Partner, the Operating Company and the Operating Subs has
been duly qualified or registered as a foreign limited liability company,
for the transaction of business under the laws of [insert applicable
state]. Service Sub has been duly qualified or registered as a foreign
corporation for the transaction of business under the laws of [insert
applicable state].
35
(ii) Each member of the Partnership Group, as applicable, has all
requisite limited liability company, limited partnership or corporate power
and authority under the laws of the State of [insert applicable state] to
own or lease its properties and to conduct its business in the State of
[insert applicable state], in each case in all material respects as
described or otherwise disclosed in the Registration Statement and the
Prospectus; and upon the consummation of the Transactions (assuming that
the Partnership will not be liable under the laws of the State of Delaware
for the liabilities of the Operating Company, Service Sub and the Operating
Subs and assuming that the holders of Units will not be liable under the
laws of the State of [insert applicable state] for the liabilities of the
Partnership Group), the Partnership will not be liable under the laws of
the State of [insert applicable state] for the liabilities of the Operating
Company, Service Sub and the Operating Subs and the holders of Units will
not be liable under the laws of the State of [insert applicable state] for
the liabilities of the Partnership Group except in each case to the same
extent as under the laws of the State of Delaware.
(iii) No permit, consent, approval, authorization, order,
registration, filing or qualification ("consent") of or with any court,
governmental agency or body of the State of [insert applicable state]
having jurisdiction over the Partnership Group or any of their respective
properties is required for the issuance and sale of the Units by the
Partnership, or for the conveyance of the properties located in the State
of [insert applicable state] purported to be conveyed to the Operating
Company, Service Sub or the Operating Subs pursuant to the Conveyances,
except (A) for such consents required under the Act, the Exchange Act and
state securities or "Blue Sky" laws, as to which such counsel need not
express any opinion, (B) for such consents which have been obtained or
made, (C) for such consents which (I) are of a routine or administrative
nature, (II) are not customarily obtained or made prior to the consummation
of transactions such as those contemplated by this Agreement and the
Operative Agreements and (III) are expected in the reasonable judgment of
the Managing General Partner to be obtained or made in the ordinary course
of business subsequent to the consummation of the Transactions, (D) for
such consents which, if not obtained or made, would not, individually or in
the aggregate, have a material adverse effect upon the operations conducted
in the State of [insert applicable state] by the Partnership Group or (v)
as disclosed in the Prospectus.
(iv) The execution, delivery and performance of the Conveyances
relating to the transfer of property in the State of [insert applicable
state] did not or will not violate any statute of the State of [insert
applicable state] or any rule, regulation or, to the knowledge of such
counsel, any order of any agency of the State of [insert applicable state]
having jurisdiction over any of the Inergy Entities or any of their
respective properties, except for any such violations which, individually
or in the aggregate, would not have a material adverse effect on the
holders of Units or the operations conducted in the State of [insert
applicable state] by the Partnership Group, taken as a whole.
36
(v) Each of the Conveyances is in a form legally sufficient as between
the parties thereto to convey to the transferee thereunder all of the
right, title and interest of the transferor stated therein in and to the
properties located in the State of [insert applicable state], as described
in the Conveyances, subject to the conditions, reservations and limitations
contained in the Conveyances, except motor vehicles or other property
requiring conveyance of certificated title as to which the Conveyances are
legally sufficient to compel delivery of such certificated title.
(vi) Each of the deeds and real property assignments (including,
without limitation, the form of the exhibits and schedules thereto) is in a
form legally sufficient for recordation in the appropriate public offices
of the State of [insert applicable state], to the extent such recordation
is required, and, upon proper recordation of any of such deeds and real
property assignments in the State of [insert applicable state], will
constitute notice to all third parties under the recordation statutes of
the State of [insert applicable state] concerning record title to the
assets transferred thereby; recordation in the office of the County Clerk
for each county in which the Partnership or any of its subsidiaries owns
property is the appropriate public office in the State of [insert
applicable state] for the recordation of deeds and assignments of interests
in real property located in such county.
In rendering such opinion, such counsel may (A) rely in respect of
matters of fact upon certificates of officers and employees of the Inergy
Parties and upon information obtained from public officials, (B) assume that all
documents submitted to them as originals are authentic, and all copies submitted
to them conform to the originals thereof, and that the signatures on all
documents examined by them are genuine, (C) state that such opinions are limited
to the laws of the State of [insert applicable state], excepting therefrom
municipal and local ordinances and regulations, (D) state that they express no
opinion with respect to state or local taxes or tax statutes to which any of the
limited partners of the Partnership or any of the Inergy Entities may be
subject, and (E) with respect to the opinion in paragraph (i) rely upon
certificates of foreign qualification provided by the Secretary of State of
[insert applicable state] (each of which shall be dated as of the date not more
than fourteen days prior to the Closing Date and provided to you.)
In rendering such opinion, such counsel shall state that (A) Xxxxxx &
Xxxxxx L.L.P. and Xxxxxxx Mag & Fizzel are hereby authorized to rely upon such
opinion letter in connection with the Transactions as if such opinion letter
were addressed and delivered to them on the date hereof and (B) subject to the
foregoing, such opinion letter may be relied upon only by the Underwriters and
its counsel in connection with the Transactions and no other use or distribution
of this opinion letter may be made without such counsel's prior written consent.
(f) You shall have received on the Closing Date (and, if applicable,
the Option Closing Date), from Xxxxx Xxxxx L.L.P., counsel to the Underwriters,
such opinion or opinions,
37
dated the Closing Date (and, if applicable, the Option Closing Date) with
respect to such matters as you may reasonably require; and the Partnership shall
have furnished to such counsel such documents as they reasonably request for the
purposes of enabling them to review or pass on the matters referred to in this
Section 6 and in order to evidence the accuracy, completeness and satisfaction
of the representations, warranties and conditions herein contained.
(g) You shall have received at or prior to the Closing Date from Xxxxx
Xxxxx L.L.P. a memorandum or memoranda, in form and substance satisfactory to
you, with respect to the qualification for offering and sale by the Underwriters
of the Units under state securities or Blue Sky laws of such jurisdictions as
the Underwriters may have designated to the Partnership.
(h) On the business day immediately preceding the date of this
Agreement and on the Closing Date (and, if applicable, the Option Closing Date),
you shall have received from Ernst & Young LLP, a letter or letters, dated the
date of this Agreement and the Closing Date (and, if applicable, the Option
Closing Date), respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to the
Partnership and the General Partners within the meaning of the 1933 Act and 1933
Act Rules and Regulations, and stating to the effect set forth in Schedule IV
hereto.
(i) Except as set forth in the Registration Statement and the
Prospectus, (i) none of the members of the Partnership Group shall have
sustained since the date of the latest audited financial statements included or
in the Registration Statement and in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree; and (ii) subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), none of the Inergy Entities shall have
incurred any liability or obligation, direct or contingent, or entered into any
transactions, and there shall not have been any change in the capital stock or
short-term or long-term debt of the Partnership Group or any change, or any
development involving or which might reasonably be expected to involve a
prospective change in the condition (financial or other), net worth, business,
affairs, management, prospects, results of operations or cash flow of the
Partnership or its subsidiaries, the effect of which, in any such case described
in clause (i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Units being delivered on such Closing Date (and, if applicable, the
Option Closing Date) on the terms and in the manner contemplated in the
Prospectus.
(j) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the
Nasdaq National Market or the establishing on such exchanges or market by the
SEC or by such exchanges or markets of minimum or maximum prices which are not
in force and effect on the date hereof; (ii) a suspension or material limitation
in trading in the Partnership's securities on The Nasdaq National Market or the
38
establishing on such market by the SEC or by such market of minimum or maximum
prices which are not in force and effect on the date hereof; (iii) a general
moratorium on commercial banking activities declared by either federal or any
state authorities; (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, which in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Units in the manner contemplated
in the Prospectus; or (v) any calamity or crisis, change in national,
international or world affairs, act of God, change in the international or
domestic markets, or change in the existing financial, political or economic
conditions in the United States or elsewhere, which in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Units in the manner contemplated in the Prospectus.
(k) You shall have received certificates, dated the Closing Date (and,
if applicable, the Option Closing Date) and signed by the President and the
Chief Financial Officer of the Managing General Partner, in their capacities as
such, stating that:
(i) the condition set forth in Section 6(a) has been fully satisfied;
(ii) they have carefully examined the Registration Statement and the
Prospectus as amended or supplemented and nothing has come to their
attention that would lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto as of
their respective effective, issue or filing dates, contained, and the
Prospectus as amended or supplemented and at such Closing Date, contains
any untrue statement of a material fact, or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(iii) since the Effective Date, there has occurred no event required
to be set forth in an amendment or supplement to the Registration Statement
or the Prospectus which has not been so set forth;
(iv) all representations and warranties made herein by the Inergy
Parties are true and correct at such Closing Date, with the same effect as
if made on and as of such Closing Date, and all agreements herein to be
performed or complied with by the Inergy Parties on or prior to such
Closing Date have been duly performed and complied with by the Inergy
Parties;
(v) none of the members of the Partnership Group has sustained since
the date of the latest audited financial statements included in the
Registration Statement and the Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
39
(vi) except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, none of the Partnership Group has incurred
any liabilities or obligations, direct or contingent, other than in the
ordinary course of business, or entered into any transactions not in the
ordinary course of business, which in either case are material to the
Partnership Group; and there has not been any change in the capital stock
or material increase in the short-term debt or long-term debt of the
Partnership Group or any material adverse change or any development
involving or which may reasonably be expected to involve a prospective
material adverse change, in the condition (financial or other), net worth,
business, affairs, management, prospects, results of operations or cash
flow of the Partnership Group; and there has been no dividend or
distribution of any kind, paid or made by the Partnership Group on any
class of its capital stock;
(vii) there has not been any change or decrease specified in
paragraph iii(E) or (iii)(F) of the letter or letters delivered to the
Underwriters referred to in Section 6(g) above, except those changes and
decreases that are disclosed therein; and
(viii) covering such other matters as you may reasonably request.
(m) The Inergy Parties shall not have failed, refused, or been unable,
at or prior to the Closing Date (and, if applicable, the Option Closing Date) to
have performed any agreement on their part to be performed or any of the
conditions herein contained and required to be performed or satisfied by them at
or prior to such Closing Date.
(n) The Partnership shall have furnished to you at the Closing Date
(and, if applicable, the Option Closing Date) such further information,
opinions, certificates, letters and documents as you may have reasonably
requested.
(o) The Units shall have been approved for trading upon official
notice of issuance on The Nasdaq National Market.
(p) You shall have received duly and validly executed letter
agreements referred to in Section 5(m) hereof.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and to Xxxxx Xxxxx L.L.P., counsel for the several
Underwriters. The Partnership will furnish you with such signed and conformed
copies of such opinions, certificates, letters and documents as you may request.
40
If any of the conditions specified above in this Section 6 shall not
have been satisfied at or prior to the Closing Date (and, if applicable, the
Option Closing Date) or waived by you in writing, this Agreement may be
terminated by you on notice to the Partnership.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Inergy Parties will
indemnify and hold harmless each Underwriter from and against any losses,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the 1933 Act or otherwise, insofar as such losses, damages or
liabilities (or actions or claims in respect thereof) arise out of or are based
upon (i) an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any other prospectus relating to the Units, or any amendment or
supplement thereto, or in any blue sky application or other document executed by
the Partnership or based on any information furnished in writing by the
Partnership, filed in any state or other jurisdiction in order to qualify any or
all of the Units under the securities laws thereof (the "BLUE SKY APPLICATION"),
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
incurred by such Underwriter in connection with investigating, preparing,
pursuing or defending against or appearing as a third party witness in
connection with any such loss, damage, liability or action or claim, including,
without limitation, any investigation or proceeding by any governmental agency
or body, commenced or threatened, including the reasonable fees and expenses of
counsel to the indemnified party, as such expenses are incurred (including such
losses, damages, liabilities or expenses to the extent of the aggregate amount
paid in settlement of any such action or claim, provided that (subject to
Section 7( c) hereof) any such settlement is effected with the written consent
of the Partnership); provided, however, that the Inergy Parties shall not be
liable in any such case to the extent, but only to the extent, that any such
loss, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or any other prospectus
relating to the Units, or any such amendment or supplement, in reliance upon and
in conformity with written information relating to the Underwriters furnished to
the Partnership by you or by any Underwriter through you, expressly for use in
the preparation thereof (as provided in Section 14 hereof).
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Inergy Parties from and against any losses, damages or
liabilities to which the Inergy Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, damages or liabilities (or
actions or claims in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained
in any Preliminary Prospectus, the Registration Statement, the Prospectus
or any other prospectus relating to the Units, or any amendment or
supplement thereto, or any Blue Sky Application, or arise out of are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission
41
was made in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any other prospectus relating to the Units, or any such
amendment or supplement, or any Blue Sky Application, in reliance upon and
in conformity with written information relating to the Underwriters
furnished to the Partnership by you or by any Underwriter through you,
expressly for use in the preparation thereof (as provided in Section 14
hereof), and will reimburse the Inergy Parties for any legal or other
expenses incurred by the Inergy Parties in connection with investigating or
defending any such action or claim as such expenses are incurred (including
such losses, damages, liabilities or expenses to the extent of the
aggregate amount paid in settlement of any such action or claim, provided
that (subject to Section 7(c) hereof) any such settlement is effected with
the written consent of the Underwriters).
(c) Promptly after receipt by an indemnified party under Section 7(a)
or 7(b) hereof of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under Section 7(a) or 7(b) hereof, notify each such indemnifying party in
writing of the commencement thereof, but the failure so to notify such
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have to any such indemnified party
otherwise than under Section 7(a) or 7(b) hereof. In case any such action shall
be brought against any such indemnified party and it shall notify each
indemnifying party of the commencement thereof, each such indemnifying party
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party under Section 7(a) or 7(b) hereof
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of such
indemnified party, be counsel to such indemnifying party), and, after notice
from such indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party under Section 7(a) or 7(b) hereof for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
its own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party at the expense of the indemnifying party has
been authorized by the indemnifying party, (ii) the indemnified party shall have
been advised by such counsel that there may be a conflict of interest between
the indemnifying party and the indemnified party in the conduct of the defense,
or certain aspects of the defense, of such action (in which case the
indemnifying party shall not have the right to direct the defense of such action
with respect to those matters or aspects of the defense on which a conflict
exists or may exist on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have employed counsel reasonably
satisfactory to such indemnified party to assume the defense of such action, in
any of which events such fees and expenses to the extent applicable shall be
borne, and shall be paid as incurred, by the indemnifying party. If at any time
such indemnified party shall have requested such indemnifying party under
Section 7(a) or 7(b) hereof to reimburse such indemnified party for fees and
expenses of counsel, such indemnifying
42
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a) or 7(b) hereof effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of such request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request for reimbursement prior to the date of such settlement. No such
indemnifying party shall, without the written consent of such indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not such
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of such indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any such indemnified party.
In no event shall such indemnifying parties be liable for the fees and expenses
of more than one counsel, including any local counsel, for all such indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to indemnify or hold harmless an indemnified
party under Section 7(a) or 7(b) hereof in respect of any losses, damages or
liabilities (or actions or claims in respect thereof) referred to therein, then
each indemnifying party under Section 7(a) or 7(b) hereof shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
damages or liabilities (or actions or claims in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Inergy Parties, on the one hand, and the Underwriters, on the other hand, from
the offering of the Units. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 7(c) hereof
and such indemnifying party was prejudiced in a material respect by such
failure, then each such indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault, as
applicable, of the Inergy Parties, on the one hand, and the Underwriters, on the
other hand, in connection with the statements or omissions that resulted in such
losses, damages or liabilities (or actions or claims in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by, as applicable, the Inergy Parties, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from such offering (before deducting expenses) received
by the Partnership bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault, as applicable, of the Inergy
Parties, 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
43
the Inergy Parties, on the one hand, or 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 Inergy Parties and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to above in this Section 7(d). The amount paid or payable by such an
indemnified party as a result of the losses, damages or liabilities (or actions
or claims in respect thereof) referred to above in this Section 7(d) shall be
deemed to include any legal or other expenses incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this Section 7(d) to
contribute are several in proportion to their respective underwriting
obligations with respect to the Units and not joint.
(e) The obligations of the Inergy Parties under this Section 7 shall
be in addition to any liability that the Inergy Parties may otherwise have and
shall extend, upon the same terms and conditions, to each officer, director,
employee, agent or other representative and to each person, if any, who controls
any Underwriter within the meaning of the 1933 Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Partnership who signed the
Registration Statement and to each person, if any, who controls the Partnership
within the meaning of the 1933 Act.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including, without limitation, the
provisions of this Section 7, and are fully informed regarding such provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Partnership
and its business in order to assure that adequate disclosure is made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
supplement or amendment thereof, as required by the 1933 Act.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The
respective representations, warranties, agreements and statements of the Inergy
Parties and the Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain operative
and in full force and effect regardless of any
44
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, the Partnership
or any of its officers, directors or any controlling persons and shall survive
delivery of and payment for the Units hereunder.
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter shall default
in its obligation to purchase the Units which it has agreed to purchase
hereunder, you may in your discretion arrange for you or another party or other
parties to purchase such Units on the terms contained herein. If within thirty-
six hours after such default by any Underwriter you do not arrange for the
purchase of such Units, then the Partnership shall be entitled to a further
period of thirty-six hours within which to procure another party or parties
reasonably satisfactory to you to purchase such Units on such terms. In the
event that, within the respective prescribed periods, you notify the Partnership
that you have so arranged for the purchase of such Units, or the Partnership
notifies you that it has so arranged for the purchase of such Units, you or the
Partnership shall have the right to postpone the Closing Date for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Partnership agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "UNDERWRITER" as used in this Agreement
shall include any persons substituted under this Section 9 with like effect as
if such person had originally been a party to this Agreement with respect to
such Units.
(b) If, after giving effect to any arrangements for the purchase of
the Units of a defaulting Underwriter or Underwriters made by you and the
Partnership as provided in subsection (a) above, the aggregate number of Units
which remains unpurchased does not exceed one-eleventh of the total Units to be
sold on the Closing Date, then the Partnership shall have the right to require
each non-defaulting Underwriter to purchase the Units which such Underwriter
agreed to purchase hereunder and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Units which
such Underwriter agreed to purchase hereunder) of the Units of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Units of a defaulting Underwriter or Underwriters made by you and the
Partnership as provided in subsection (a) above, the number of Units which
remains unpurchased exceeds one-eleventh of the total Units to be sold on the
Closing Date, or if the Partnership shall not exercise the right described in
subsection (b) above to require the non-defaulting Underwriters to purchase
Units of the defaulting Underwriter or Underwriters, then this Agreement (or,
with respect to the Option Closing Date, the obligations of the Underwriters to
purchase and of the Partnership to sell the Option Units) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Partnership except for the expenses to be borne by the Partnership and the
Underwriters as provided in Section 11 hereof and the indemnity and contribution
agreements in
45
Section 7 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. EFFECTIVE DATE AND TERMINATION. (a) This Agreement shall become
effective at 1:00 p.m., New York time, on the first business day following the
effective date of the Registration Statement, or at such earlier time after the
effective date of the Registration Statement as you in your discretion shall
first release the Units for offering to the public; provided, however, that the
provisions of Section 7 and 11 shall at all times be effective. For the
purposes of this Section 10(a), the Units shall be deemed to have been released
to the public upon release by you of the publication of a newspaper
advertisement relating to the Units or upon release of telegrams, facsimile
transmissions or letters offering the Units for sale to securities dealers,
whichever shall first occur.
(b) This Agreement may be terminated by you at any time before it
becomes effective in accordance with Section 10(a) by notice to the Partnership;
provided, however, that the provisions of this Section 10 and of Section 7 and
Section 11 hereof shall at all times be effective. In the event of any
termination of this Agreement pursuant to Section 9 or this Section 10(b)
hereof, the Partnership shall not then be under any liability to any Underwriter
except as provided in Section 7 or Section 11 hereof.
(c) This Agreement may be terminated by you at any time at or prior to
the Closing Date by notice to the Partnership if any condition specified in
Section 6 hereof shall not have been satisfied on or prior to the Closing Date.
Any such termination shall be without liability of any party to any other party
except as provided in Sections 7 and 11 hereof.
(d) This Agreement also may be terminated by you, by notice to the
Partnership, as to any obligation of the Underwriters to purchase the Option
Units, if any condition specified in Section 6 hereof shall not have been
satisfied at or prior to the Option Closing Date or as provided in Section 9 of
this Agreement.
If you terminate this Agreement as provided in Sections 10(b), 10(c)
or 10(d), you shall notify the Partnership by telephone or telegram, confirmed
by letter.
11. COSTS AND EXPENSES. The Partnership, whether or not the
transactions contemplated hereby are consummated or this Agreement is prevented
from becoming effective under Section 10 hereof or is terminated, will bear and
pay the costs and expenses incident to the registration of the Units and public
offering thereof, including, without limitation, (a) all expenses (including
stock transfer taxes) incurred in connection with the delivery to the several
Underwriters of the Units, the filing fees of the SEC, the fees and expenses of
the Partnership's counsel and accountants and the fees and expenses of counsel
for the Partnership, (b) the preparation, printing, filing, delivery and
shipping of the Registration Statement, each Preliminary Prospectus, the
Prospectus and any amendments or supplements thereto (except as
46
otherwise expressly provided in Section 5(d) hereof) and the printing, delivery
and shipping of this Agreement and other underwriting documents, including the
Agreement Among Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaires and Powers of Attorney and Blue Sky Memoranda, and any
instruments or documents related to any of the foregoing, (c) the furnishing of
copies of such documents (except as otherwise expressly provided in Section 5(d)
hereof) to the Underwriters, (d) the registration or qualification of the Units
for offering and sale under the securities laws of the various states and other
jurisdictions, including the fees and disbursements of counsel to the
Underwriters relating to such registration or qualification and in connection
with preparing any Blue Sky Memoranda or related analysis, (e) the filing fees
of the NASD (if any) and fees and disbursements of counsel to the Underwriters
relating to any review of the offering by the NASD, (f) all printing and
engraving costs related to preparation of the certificates for the Units,
including transfer agent and registrar fees, (g) all fees and expenses relating
to the authorization of the Units for trading on The Nasdaq National Market (h)
all travel expenses, including air fare and accommodation expenses, of
representatives of the Partnership in connection with the offering of the Units,
and (i) all of the other costs and expenses incident to the performance by the
Partnership of the registration and offering of the Units; provided, that the
Underwriters will bear and pay the fees and expenses of the Underwriters'
counsel (except as provided in this Section 11), the Underwriters' out-of-pocket
expenses, and any advertising costs and expenses incurred by the Underwriters
incident to the public offering of the Units.
If this Agreement is terminated by you in accordance with the
provisions of Section 10(c), the Partnership shall reimburse the Underwriters
for all of their out-of-pocket expenses, including the fees and disbursements of
counsel to the Underwriters.
13. NOTICES. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o X.X. Xxxxxxx & Sons, Inc. at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Director, Corporate Finance,
facsimile number [(314) ___-____], with a copy to ___________________,
Attention: General Counsel, facsimile number [(314) ___-____], or if sent to
the Partnership shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed to the Partnership at Inergy, L.P., 0000 Xxxxxx, Xxxxx
0000, Xxxxxx Xxxx, Xxxxxxxx 00000, facsimile number (000) 000-0000. Notice to
any Underwriter pursuant to Section 7 shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to such Underwriter's
address as it appears in the Underwriters' Questionnaire furnished in connection
with the offering of the Units or as otherwise furnished to the Partnership.
14. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth
in the table on the cover page of the Prospectus and the statements in the table
in the first paragraph, the third, tenth, eleventh, twelfth, thirteenth and
fifteenth paragraphs and the third sentence of the seventh paragraph under the
caption "Underwriting" in the Prospectus constitute the only
47
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Section 4(a)(ii) and Section 7 hereof.
15. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Inergy Parties and, to the extent provided in
Sections 7 and 8, the officers and directors of the Managing General Partner and
each person who controls the Partnership or any Underwriter and their respective
heirs, executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, corporation or other entity any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained;
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and said controlling persons and said officers
and directors, and for the benefit of no other person, corporation or other
entity. No purchaser of any of the Units from any Underwriter shall be
construed a successor or assign by reason merely of such purchase.
In all dealings hereunder, you shall act on behalf of each of the
several Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of the Underwriters,
made or given by you jointly or by X.X. Xxxxxxx & Sons, Inc. on behalf of you as
the Underwriters, as if the same shall have been made or given in writing by the
Underwriters.
16. COUNTERPARTS. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
17. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
18. TIME OF ESSENCE. Time shall be of the essence of this Agreement.
19. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri, without giving
effect to the choice of law or conflict of laws principles thereof.
48
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Inergy Parties and the
Underwriters.
INERGY HOLDINGS, LLC
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY PARTNERS, LLC
By:_______________________________________
Name:_____________________________________
Title:____________________________________
NEW INERGY PROPANE, LLC
BY: INERGY PARTNERS, LLC, ITS SOLE MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY GP, LLC
BY: INERGY HOLDINGS, LLC, ITS SOLE MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY, L.P.
BY: INERGY GP, LLC, ITS GENERAL PARTNER
BY: INERGY HOLDINGS, LLC, ITS SOLE MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY PROPANE, LLC
BY: INERGY GP, LLC, ITS MANAGING MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
L&L TRANSPORTATION, LLC
BY: INERGY PROPANE, LLC, ITS SOLE MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY TRANSPORTATION, LLC
BY: INERGY PROPANE, LLC, ITS SOLE MEMBER
By:_______________________________________
Name:_____________________________________
Title:____________________________________
INERGY SALES & SERVICE, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters
named in Schedule I hereto.
X.X. Xxxxxxx & Sons, Inc.
First Union Securities, Inc.
Xxxxxxx Xxxxx & Associates, Inc.
By: X.X. Xxxxxxx & Sons, Inc.
By: _______________________
Title: ______________________
SCHEDULE I
Name Number of Units
---- ---------------
X.X. Xxxxxxx & Sons, Inc.
---------
First Union Securities, Inc.
---------
Xxxxxxx Xxxxx & Associates, Inc
---------
Total 1,500,000
=========
SCHEDULE II
Persons and Entities who own Senior Subordinated Units of the Partnership
KCEP Ventures II, LP
Country Partners
Domex, Inc.
Investors 300, Inc.
L&L Leasing, Inc.
Moramerica Capital Corporation
NDSBIC, L.P.
Kansas Venture Capital, Inc.
Midstates Capital, L.P.
Diamond State Ventures, L.P.
Rocky Mountain Mezzanine
Firstar Capital Corporation
Eagle Fund II, L.P.
RNG Investments L.P.
KCEP Ventures III, XX
Xxxxxxx-Xxxxxxxx, LLC
SCHEDULE III
Persons and Entities who own Class A Preferred Interests of the Non-Managing
General Partner
Xxxxx Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
H. Xxxx Xxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx, Xx.
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx, Xx.
Zero Butane Gas, Inc.
Xxxxxx Xxx Xxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx
Inergy Holdings, LLC
SCHEDULE IV
Pursuant to Section 6(g) of the Underwriting Agreement, Ernst & Young
L.L.P. shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the General Partners and the Partnership within the meaning of the 1933 Act and
the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information audited by them and included in the Prospectus or the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the applicable Rules and
Regulations with respect to registration statements on Form S-1; and, if
applicable, they have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial data, pro forma
financial information, prospective financial statements and/or condensed
financial statements derived from audited financial statements of the
Partnership for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the Underwriters.
(iii) On the basis of limited procedures, not constituting an audit
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial Information,
on the latest available interim financial statements of the Partnership Group,
inspection of the minute books of the Partnership Group since the date of the
latest audited financial statements included in the Prospectus, inquiries of
officials of the Partnership Group responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated cash
flows included in the Prospectus for them to be in conformity with
generally accepted accounting principles, or the unaudited statements
of consolidated income, statements of consolidated financial position
and statements of consolidated cash flows included in the Prospectus
do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the related published
Rules and Regulations thereunder.
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus.
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus.
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements.
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock or any increase in the consolidated long-
term debt of the Partnership Group, or any decreases in consolidated
working capital, net current assets or net assets, or any changes in
any other items specified by the Underwriters, in each case as
compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter.
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or any changes in any other items specified by the
Underwriters, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Underwriters, except in each case for changes,
decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter.
(iv) In addition to the audit referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph (iii) above, they have
carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Underwriters,
which are derived from the general accounting records of the Partnership Group
for the periods covered by their reports and any interim or other periods since
the latest period covered by their reports, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Partnership Group and have found them to be in agreement.
