Exhibit 1.1
DRAFT: MAY 20, 2004
▇▇▇▇▇ ENERGY PARTNERS, L.P.
[6,000,000] COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
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UNDERWRITING AGREEMENT
_______, 2004
▇▇▇▇▇▇▇, Sachs & Co.
▇. ▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
UBS Investment Bank LLC
c/o Goldman, Sachs & Co.,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership (the
"PARTNERSHIP" or the "MLP"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the Underwriters named in Schedule I hereto
(the "UNDERWRITERS") an aggregate of [6,000,000] common units representing
limited partner interests in the Partnership ("COMMON UNITS") and, at the
election of the Underwriters, up to [900,000] additional Common Units. The
aggregate of [6,000,000] Common Units is herein called the "FIRM UNITS" and the
aggregate of [900,000] additional Common Units is herein called the "OPTIONAL
UNITS." The Firm Units and the Optional Units that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"UNITS." As part of the public offering of the Units contemplated hereby (the
"OFFERING"), the Underwriters have agreed to reserve out of the Firm Units up to
[300,000] Common Units for sale to certain officers, employees and directors of
▇▇▇▇▇ (as defined below) or to persons who are otherwise associated or
affiliated with the Partnership (collectively, the "PARTICIPANTS"), as set forth
in the Prospectus (as defined in Section 1) under the caption "Underwriting"
(the DIRECTED UNIT PROGRAM").
It is represented by the ▇▇▇▇▇ Parties (as defined below) that the
Partnership was formed to acquire, own and operate certain refined product
pipelines and distribution terminals primarily in West Texas, New Mexico, Utah
and Arizona held by various subsidiaries of ▇▇▇▇▇ Corporation, a Delaware
corporation ("▇▇▇▇▇"), as described more particularly in the Prospectus. At each
Time of Delivery (as defined in Section 4), the Partnership will operate its
business through HEP Operating Company, L.P., a Delaware limited partnership
(the "OPERATING PARTNERSHIP" or the "OLP"). HEP Logistics Holdings, L.P., a
Delaware limited partnership (the "GENERAL PARTNER"), is the general partner of
the Partnership. HEP Logistics GP, L.L.C., a Delaware limited liability company
(the "OLP GP"), is the general partner of the Operating Partnership. ▇▇▇▇▇
Logistic Services, L.L.C., a Delaware limited liability company and an indirect
wholly-owned subsidiary of ▇▇▇▇▇ ("GP LLC") is the general partner of the
General Partner. Navajo Pipeline Co., L.P., a Delaware limited partnership and
an indirect wholly owned subsidiary of ▇▇▇▇▇ ("NAVAJO PIPELINE"), is the sole
limited partner of the General Partner. ▇▇▇▇▇, Navajo Pipeline, Navajo Refining
Company, L.P., a Delaware limited partnership ("NAVAJO REFINING"), ▇▇▇▇▇ Cross
Refining Company, L.L.C., a Delaware limited liability company ("▇▇▇▇▇ CROSS
REFINING"), GP LLC, the General Partner, the Partnership, the Operating
Partnership and the OLP GP are hereinafter referred to collectively as the
"▇▇▇▇▇ PARTIES." The ▇▇▇▇▇ Parties and the Operating Subsidiaries (as defined
below) are hereinafter referred to collectively as the "▇▇▇▇▇ Entities." GP LLC,
the General Partner, the Partnership, the Operating Partnership, the OLP GP, and
the Operating Subsidiaries are hereinafter referred to collectively as the
"PARTNERSHIP ENTITIES."
It is represented by the ▇▇▇▇▇ Parties that as of the date hereof:
(a) HEP Pipeline GP, LLC, a Delaware limited liability company
("PIPELINE GP LLC"), is a wholly owned subsidiary of Navajo Pipeline;
(b) HEP Pipeline LLC, a Delaware limited liability company ("PIPELINE
LLC"), is a wholly owned subsidiary of Navajo Pipeline;
(c) HEP Pipeline Assets Limited Partnership is a Delaware limited
partnership ("PIPELINE ASSETS LP") in which Pipeline GP LLC is the general
partner and Navajo Pipeline is the limited partner;
(d) Navajo Southern, Inc., a Delaware corporation ("NAVAJO SOUTHERN"),
is a wholly owned subsidiary of Navajo Pipeline;
(e) HEP Refining LLC, a Delaware limited liability company ("REFINING
LLC") is a wholly owned subsidiary of Navajo Refining;
(f) HEP Refining GP LLC, a Delaware limited liability company
("REFINING GP") is a wholly owned subsidiary of Navajo Refining;
(g) HEP Refining Assets, L.P. is a Delaware limited partnership
("REFINING ASSETS LP") in which Refining GP is the general partner and Refining
LLC is the limited partner.
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(h) Rio Grande Pipeline Company is a Texas general partnership ("RIO
GRANDE") in which Navajo Southern owns a 70% interest;
(i) GP LLC is a wholly owned direct subsidiary of Navajo Pipeline;
(j) The General Partner is the sole general partner of the Partnership
and ▇▇▇▇▇ is the sole limited partner of the Partnership. The General Partner
owns a 2% general partner interest in the Partnership and ▇▇▇▇▇ owns a 98%
limited partner interest in the partnership;
(k) OLP GP is a wholly owned direct subsidiary of the Partnership;
(l) OLP GP is the sole general partner of the OLP. The Partnership is
the sole limited partner of the OLP. OLP GP owns a .001% general partner
interest in the OLP and the Partnership owns a 99.999% limited partner interest
in the OLP;
(m) HEP Mountain Home LLC, a Delaware limited liability company
("MOUNTAIN LLC") is a wholly owned subsidiary of ▇▇▇▇▇;
(n) ▇▇▇▇▇ Cross Refining is a wholly owned subsidiary of Navajo
Refining;
(o) HEP ▇▇▇▇▇ Cross LLC, a Delaware limited liability company ("▇▇▇▇▇
CROSS LLC"), is a wholly owned subsidiary of ▇▇▇▇▇ Cross Refining;
(p) The Operating Partnership and the Operating Subsidiaries have
executed and delivered a $125 million revolving credit facility (the "Bank
Credit Agreement") for general partnership purposes.
On or prior to the First Time of Delivery (as defined herein), the
parties thereto will enter into a Contribution, Conveyance and Assumption
Agreement (the "CONTRIBUTION AGREEMENT") pursuant to which the following
transactions will occur:
(a) Navajo Pipeline will contribute .001% of the stock of Navajo
Southern to Pipeline GP LLC as a capital contribution.
(b) Navajo Southern will file articles of conversion with the State of
Delaware and convert to a limited partnership named HEP Navajo Southern LP
("NAVAJO SOUTHERN LP") (the "CONVERSION") designating Pipeline GP LLC as the
general partner and Navajo Pipeline as the limited partner. [THIS STEP SHOULD
OCCUR PRIOR TO THE CLOSING DATE TO AVOID HOLDING UP CLOSING.]
(c) Navajo Pipeline will convey all of its Texas assets, other than
working capital, to Pipeline Assets LP as a capital contribution (99.999% for
itself and .001% on behalf of Pipeline GP LLC) and in exchange for an assumption
by Pipeline Assets LP of certain liabilities of Navajo Pipeline.
(d) Navajo Pipeline will convey all of its non-Texas assets, other than
working capital, certain crude oil pipelines, and the interests in Pipeline GP
LLC, GP LLC, the General Partner,
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Pipeline LLC, Navajo Southern LP and Pipeline Assets LP, to Pipeline LLC as a
capital contribution and in exchange for an assumption by Pipeline LLC of
certain liabilities of Navajo Pipeline.
(e) ▇▇▇▇▇ will convey the Mountain Home terminal (and related assets
other than working capital) to Mountain LLC as a capital contribution and in
exchange for an assumption by Mountain LLC of certain liabilities of ▇▇▇▇▇.
(f) ▇▇▇▇▇ Cross Refining will convey the ▇▇▇▇▇ Cross refinery truck
rack and related assets to ▇▇▇▇▇ Cross LLC as a capital contribution and in
exchange for an assumption of certain liabilities of ▇▇▇▇▇ Cross Refining.
(g) Navajo Refining will convey certain Texas assets, other than
working capital, to Refining Assets LP as a capital contribution (99.999% for
itself and .001% on behalf of Refining GP) and in exchange for an assumption by
Refining Assets LP of certain liabilities of Navajo Refining.
(h) Navajo Refining will convey certain non-Texas assets, other than
working capital and its interests in Refining Assets LP, Refining LLC, Refining
GP and ▇▇▇▇▇ Cross LLC, to Refining LLC as a capital contribution and in
exchange for an assumption by Refining LLC of certain liabilities.
(i) Navajo Pipeline will convey its interests in Pipeline Assets LP,
Pipeline GP LLC, Navajo Southern LP and Pipeline LLC to the General Partner as a
capital contribution (99.999% for itself and .001% on behalf of GP LLC) and in
exchange for an assumption by the General Partner of certain liabilities of
Navajo Pipeline.
(j) The General Partner will contribute its interests in Pipeline
Assets LP, Pipeline GP LLC, Navajo Southern LP and Pipeline LLC to the
Partnership in exchange for (i) a continuation of its 2% general partner
interest, (ii) the Incentive Distribution Rights (as defined in the Partnership
Agreement (as defined herein)) (the "INCENTIVE DISTRIBUTION RIGHTS"), (iii)
__________ subordinated units representing limited partner interests in the
Partnership ("SUBORDINATED UNITS"), (iv) the right to receive $______, of which
$_____ is intended to reimburse it for certain capital expenditures, (v) the
right to receive the proceeds of the Bank Debt (as defined below) and (vi) the
assumption by the Partnership of certain liabilities of the General Partner.
(k) ▇▇▇▇▇ will contribute its interest in Mountain LLC to the
Partnership in exchange for (i) __________ Subordinated Units, (ii) the right to
receive $__________, of which $__________ is intended to reimburse it for
capital expenditures and (iii) the assumption by the Partnership of certain
liabilities of Mountain LLC.
(l) Navajo Refining will contribute its interest in Refining Assets LP,
Refining GP, Refining LLC to the Partnership in exchange for (i) __________
Subordinated Units, (ii) the right to receive $__________, of which $__________
is intended to reimburse it for capital expenditures, and (iii) __________
Common Units and (iv) the assumption by the Partnership of certain liabilities
of Refining Assets LP, Refining GP and Refining LLC.
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(m) ▇▇▇▇▇ Cross Refining will contribute all of its interest in ▇▇▇▇▇
Cross LLC to the Partnership in exchange for (i) _______________ Subordinated
Units, (ii) the right to receive $_______________ of which $____________ is
intended to reimburse it for capital expenditures and (iii) the assumption by
the Partnership of certain liabilities of ▇▇▇▇▇ Cross Refining.
(n) The "Offering" of the Firm Units contemplated hereby will be
consummated pursuant to which the public, through the Underwriters, will
contribute $___,___.___ (net of the Underwriters' discount as provided for
herein) to the Partnership in exchange for [6,000,000] Common Units;
(o) The Partnership will distribute $_______ million of the net
proceeds of the Offering to ▇▇▇▇▇ and its affiliates, in part to reimburse them
for certain capital expenditures, and will contribute $_____ million in net
proceeds of the Offering proceeds and its interests in Navajo Southern LP,
Pipeline Assets LP, Pipeline GP LLC, Pipeline LLC, Mountain LLC, Refining Assets
LP, Refining GP, Refining LLC and ▇▇▇▇▇ Cross LLC to the OLP as an additional
capital contribution (99.999% for itself and .001% on behalf of OLP GP), in
exchange for the assumption by the OLP of certain liabilities of the
Partnership.
(p) The OLP will contribute such net proceeds to the Operating LPs (as
defined below) (99.999% for itself and .001% on behalf of its respective general
partner) and to Pipeline LLC, Mountain LLC, Refining LLC and ▇▇▇▇▇ Cross LLC.
(q) The Operating Subsidiaries will use the cash contributed to them by
the OLP to replenish working capital and to retire indebtedness.
(r) The Operating Partnership will borrow $___ million pursuant to the
Bank Credit Agreement (the "BANK DEBT") and will distribute the funds to the
Partnership, which will distribute the funds to the General Partner.
The conversion and transactions described above in clauses (a)-(r) are
referred to as the "TRANSACTIONS." In connection with the Transactions, the
parties to the Transactions entered or will enter into various bills of sale,
assignments, conveyances, articles of conversion, contribution agreements and
related documents. (collectively with the Contribution Agreement, the
"CONTRIBUTION DOCUMENTS"). Pipeline Assets LP, Refining Assets LP and Navajo
Southern LP are hereinafter referred to collectively as the "OPERATING LPS."
Pipeline LLC, Pipeline GP LLC, Mountain LLC, Refining GP, Refining LLC and ▇▇▇▇▇
Cross LLC are hereinafter referred to collectively as the "OPERATING LLCS." The
Operating LPs, the Operating LLCs, and Rio Grande are hereinafter referred to
collectively as the "OPERATING SUBSIDIARIES."
1. Representations, Warranties and Agreements of the ▇▇▇▇▇ Parties. The
▇▇▇▇▇ Parties, jointly and severally, represent and warrant to, and agree with,
each of the Underwriters that:
(a) Registration. A registration statement on Form S-1 (File No.
333-113588) (the "INITIAL REGISTRATION STATEMENT") in respect of the Units has
been filed with the Securities and Exchange Commission (the "COMMISSION" or the
"SEC"); the Initial Registration Statement and any
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post-effective amendment thereto, each in the form heretofore delivered to you,
and, excluding exhibits thereto, to you for each of the other Underwriters, have
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "RULE
462(b) REGISTRATION STATEMENT"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "ACT"), which became effective upon
filing, no other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a "PRELIMINARY
PROSPECTUS"; the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective, each as
amended at the time such part of the Initial Registration Statement became
effective or such part of the Rule 462(b) Registration Statement, if any, became
or hereafter becomes effective, are hereinafter collectively called the
"REGISTRATION STATEMENT"; and such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the "PROSPECTUS").
(b) No Stop Order; No Material Misstatements or Omissions in
Preliminary Prospectus(es). No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with written information furnished in writing to the Partnership by
an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein.
(c) No Material Misstatements or Omissions in Registration Statement or
Prospectus. The Registration Statement conforms, and any further amendments or
supplements to the Registration Statement will, when they become effective,
conform in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 424(b) will conform
in all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and do not or will not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the statements within the
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coverage of Rule 175(b) of the rules and regulations of the Commission made by
the Partnership in such documents, including (but not limited to) any
projections of results of operations or 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. Notwithstanding the foregoing, this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with written information furnished to the
Partnership by an Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use
therein.
(d) Formation and Qualification of the Partnership, the Operating
Partnership, the General Partner, Navajo Pipeline, Navajo Refining and the
Operating LPs. Each of the Partnership, the Operating Partnership, the General
Partner, Navajo Pipeline, Navajo Refining, and the Operating LPs has been, or at
the First Time of Delivery will be duly formed and is validly existing in good
standing as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act (the "DELAWARE LP ACT") with full partnership power and
authority to own or lease its properties to be owned or leased at the First Time
of Delivery, to assume the liabilities assumed by it pursuant to the
Contribution Documents and to conduct its business to be conducted at the First
Time of Delivery, and, in the case of the General Partner, to act as the general
partner of the Partnership, in each case in all material respects as described
in the Registration Statement and the Prospectus. Each of the Partnership, the
Operating Partnership, the General Partner and the Operating LPs is, or at the
First Time of Delivery 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 condition
(financial or otherwise), business, prospects, assets or results of operations
of the Partnership Entities taken as a whole (a "MATERIAL ADVERSE EFFECT"), or
(ii) subject the limited partners of the Partnership to any material liability
or disability.
(e) Formation and Qualification of the OLP GP, GP LLC and the Operating
LLCs. Each of the OLP GP, GP LLC and the Operating LLC has been, or at the First
Time of Delivery will be duly formed and is validly existing in good standing as
a limited liability company under the Delaware Limited Liability Company Act
(the "DELAWARE LLC ACT") with full limited liability company power and authority
to own or lease its properties to be owned or leased at the First Time of
Delivery, to assume the liabilities assumed by it pursuant to the Contribution
Documents and to conduct its business to be conducted at the First Time of
Delivery, and in the case of the OLP GP and GP LLC, to act as the general
partner of the Operating Partnership and the General Partner, respectively, in
each case in all material respects as described in the Registration Statement
and the Prospectus. Each of the OLP GP, GP LLC and the Operating LLCs is, or at
the First Time of Delivery will be, 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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(f) Formation and Good Standing of ▇▇▇▇▇ and Navajo Southern. Each of
▇▇▇▇▇ and Navajo Southern has been duly incorporated and is validly existing in
good standing under the Delaware General Corporation Law (the "DGCL") with full
corporate power and authority to own or lease its properties to be owned or
leased at the First Time of Delivery, to assume the liabilities assumed by it
pursuant to the Contribution Documents, and to conduct its business to be
conducted at the First Time of Delivery, and, in the case of Navajo Southern, to
effect the Conversion, in each case in all material respects as described in the
Registration Statement and the Prospectus.
(g) Formation and Good Standing of Rio Grande Pipeline Company. Rio
Grande has been duly formed and is validly existing in good standing as a
general partnership under the laws of the State of Texas, with full partnership
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.
(h) Ownership of the General Partner Interest in the Partnership. At
each Time of Delivery, after giving effect to the Transactions, the General
Partner will be the sole general partner of the Partnership with a 2.0% general
partner interest in the Partnership; such general partner interest will be duly
authorized and validly issued in accordance with the partnership agreement of
the Partnership as the same may be amended or restated at or prior to any Time
of Delivery, the "Partnership Agreement"); and the General Partner will own such
general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus), security
interests, equities, charges or claims.
(i) Ownership of Sponsor Units. At the First Time of Delivery, after
giving effect to the Transactions, (i) the General Partner will own
________________ Subordinated Units, (ii) ▇▇▇▇▇ will own __________ Subordinated
Units; (iii) ▇▇▇▇▇ Cross will own __________ Subordinated Units and Navajo
Refining will own ____________Common Units and __________ Subordinated Units
(collectively, the "SPONSOR UNITS") and (iv) the General Partner will own all
the Incentive Distribution Rights; and all of such 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 Section 17-607 of the Delaware LP Act); and each of the
General Partner, ▇▇▇▇▇, ▇▇▇▇▇ Cross and Navajo Refining will own such Sponsor
Units and the General Partner will own the Incentive Distribution Rights free
and clear of all liens, encumbrances, security interests, equities, charges or
claims.
(j) Valid Issuance of the Units. At the First Time of Delivery, there
will be issued to the Underwriters the Firm Units (assuming no purchase by the
Underwriters of Optional Units); at the First Time of Delivery or the Second
Time of Delivery, as the case may be, the Firm Units or the Optional 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 therefore 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
8
by matters described in Section 17-607 of the Delaware LP Act); 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
either Time of Delivery.
(k) Ownership of the General Partner Interest in Operating Partnership.
At each Time of Delivery, after giving effect to the Transactions, the OLP GP
will be the sole general partner of the Operating Partnership with a 0.001%
general partner interest in the Operating Partnership; such general partner
interest will be duly authorized and validly issued in accordance with the
partnership agreement of the Operating Partnership (as the same may be amended
or restated at or prior to each Time of Delivery, the "OPERATING PARTNERSHIP
AGREEMENT"); and the OLP GP will own such general partner interest free and
clear of all liens, encumbrances (except restrictions on transferability as
described in the Prospectus), security interests, equities, charges or claims.
(l) Ownership of the Limited Partner Interest in the Operating
Partnership. At each Time of Delivery, after giving effect to the Transactions,
the Partnership will be the sole limited partner of the Operating Partnership
with a 99.999% limited partner interest in the Operating Partnership; such
limited partner interest will have been duly authorized and validly issued in
accordance with the Operating Partnership Agreement and will be fully paid (to
the extent required under the Operating Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by Section 17-607 of the
Delaware LP Act); and the Partnership will own such limited partner interest
free and clear of all liens, encumbrances, security interests, equities, charges
or claims.
(m) Ownership of the General Partner Interest in the General Partner.
At each Time of Delivery, after giving effect to the Transactions, GP LLC will
be the sole general partner of the General Partner with a 0.001% general partner
interest in the General Partner; such general partner interest will be duly
authorized and validly issued in accordance with the Partnership Agreement of
the General Partner (as the same may be amended or restated at or prior to each
Time of Delivery, the "GENERAL PARTNER PARTNERSHIP AGREEMENT"); and GP LLC will
own such general partner interest free and clear of all liens, encumbrances
(except restrictions on transferability described in the Prospectus), security
interests, equities, charges or claims.
(n) Ownership of the Limited Partner Interest in the General Partner.
At each Time of Delivery, after giving effect to the Transactions, Navajo
Pipeline will be the sole limited partner of the General Partner with a 99.999%
limited partner interest in the General Partner; such limited partner interest
will have been duly authorized and validly issued in accordance with the General
Partner Partnership Agreement and will be fully paid (to the extent required
under the General Partner Partnership Agreement) and nonassessable (except as
such nonassessability may be affected by Section 17-607 of the Delaware LP Act);
and Navajo Pipeline will own such limited partner interest free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(o) Ownership of GP LLC. At each Time of Delivery, after giving effect
to the Transactions, Navajo Pipeline will own a 100% membership interest in GP
LLC; such membership interest will be duly authorized and validly issued in
accordance with the limited liability company
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agreement of GP LLC (as the same may be amended or restated at or prior to each
Time of Delivery, the "GP LLC AGREEMENT"), and will be fully paid (to the extent
required under the GP LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC Act); and
Navajo Pipeline will own such membership interests free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(p) Ownership of the Operating LLCs. At each Time of Delivery, after
giving effect to the Transactions, the Operating Partnership will own a 100%
membership interest in each of the Operating LLCs; such membership interests
will be duly authorized and validly issued in accordance with the limited
liability company agreements of the Operating LLCs (as the same may be amended
or restated at or prior to each Time of Delivery, the "OPERATING SUBSIDIARIES
LLC AGREEMENTS") and will be fully paid (to the extent required under the
Operating Subsidiaries LLC Agreements) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC Act); and
the Operating Partnership will own such membership interests free and clear of
all liens, encumbrances, security interests, equities, charges or claims other
than those arising under the Bank Credit Agreement.
(q) Ownership of Rio Grande. At each Time of Delivery, Navajo Southern
LP will own a 70% general partner interest in Rio Grande; such partnership
interest will be duly authorized and validly issued in accordance with the
partnership agreement of Rio Grande; and Navajo Southern LP will own such
partnership interest free and clear of all liens, encumbrances, security
interests, equities, charges or claims other than those arising under the Bank
Credit Agreement.
(r) Ownership of Operating LPs. At each Time of Delivery, after giving
effect to the Transactions:
(i) Pipeline LP. Pipeline GP LLC will be the sole general
partner of Pipeline LP with a .001% general partner interest in Pipeline LP,
such general partner interest will be duly authorized and validly issued in
accordance with the partnership agreement of Pipeline LP; and Pipeline GP LLC
will own such general partner interest free and clear of all liens, encumbrances
(except restrictions on transferability as described in the Prospectus),
security interests, equities, charges or claims; the Operating Partnership will
be the sole limited partner of Pipeline LP with a 99.999% limited partner
interest in Pipeline LP; such limited partner interest will have been duly
authorized and validly issued in accordance with the partnership agreement of
Pipeline LP, and will be fully paid (to the extent required under such
partnership agreement) and nonassessable (except as such nonassessability may be
affected by Section 17-607 of the Delaware LP Act); and the Operating
Partnership will own such limited partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(ii) Navajo Southern LP. Pipeline GP LLC will be the sole
general partner of Navajo Southern LP with a .001% general partner interest in
Navajo Southern LP, such general partner interest will be duly authorized and
validly issued in accordance with the partnership agreement of Navajo Southern
LP; and Pipeline GP LLC will own such general partner interest free and clear of
all liens, encumbrances (except restrictions on transferability as described in
the Prospectus), security
10
interests, equities, charges or claims; the Operating Partnership will be the
sole limited partner of Navajo Southern LP with a 99.999% limited partner
interest in Navajo Southern LP; such limited partner interest will have been
duly authorized and validly issued in accordance with the partnership agreement
of Navajo Southern LP, and will be fully paid (to the extent required under such
partnership agreement) and nonassessable (except as such nonassessability may be
affected by Section 17-607 of the Delaware LP Act); and the Operating
Partnership will own such limited partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(iii) Refining LP. Refining GP will be the sole general
partner of Refining LP with a .001% general partner interest in Refining LP,
such general partner interest will be duly authorized and validly issued in
accordance with the partnership agreement of Refining LP; and Refining GP will
own such general partner interest free and clear of all liens, encumbrances
(except restrictions on transferability as described in the Prospectus),
security interests, equities, charges or claims; the Operating Partnership will
be the sole limited partner of Refining LP with a 99.999% limited partner
interest in Refining LP; such limited partner interest will have been duly
authorized and validly issued in accordance with the partnership agreement of
Refining LP, and will be fully paid (to the extent required under such
partnership agreement) and nonassessable (except as such nonassessability may be
affected by Section 17-607 of the Delaware LP Act); and the Operating
Partnership will own such limited partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(s) No Other Subsidiaries. Other than the Partnership's ownership of
its limited partner interest in the Operating Partnership and a 100% membership
interest in the OLP GP, the Operating Partnership's ownership of membership and
partnership interests in the Operating Subsidiaries, none of the Partnership,
the Operating Partnership or the Operating Subsidiaries owns, and at each Time
of Delivery, none 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. The General Partner, the OLP GP and GP LLC
do not own, and at each Time of Delivery 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 their
respective partnership interests in the Partnership, the Operating Partnership,
and the General Partner.
(t) No Preemptive Rights, Registration Rights or Options. Except as
described in the Prospectus, there are no options, warrants, preemptive rights
or other rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any partnership or membership interests in any
Partnership Entity, in each case pursuant to the Partnership Agreement, the
Operating Partnership Agreement, the General Partner Partnership Agreement, the
GP LLC Agreement, the OLP GP LLC Agreement, the Operating Subsidiary LLC
Agreements and the Operating Subsidiaries Partnership Agreements (collectively,
the "ORGANIZATIONAL AGREEMENTS") or the certificates of limited partnership or
formation and other organizational documents of the Partnership Entities
(collectively with the Organizational 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
11
gives rise to any rights for or relating to the registration of any Units or
other securities of the Partnership, other than as have been waived.
(u) Effective Date of Conversion. The Conversion shall have become
effective under the DGCL and the Delaware LP Act on or prior to the First Time
of Delivery.
(v) 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 and the
Partnership Agreement and (ii) the Sponsor Units and Incentive Distribution
Rights, in accordance with and upon the terms and conditions set forth in the
Contribution Agreement and the Partnership Agreement. At each Time of Delivery,
all corporate, partnership and limited liability company action, as the case may
be, required to be taken by the ▇▇▇▇▇ Entities 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 by the ▇▇▇▇▇ Entities of the Operative Agreements (as defined in
[SECTION 1(x)]) and the consummation of the transactions (including the
Transactions) contemplated by this Agreement and the Operative Agreements, shall
have been validly taken.
(w) Enforceability of Underwriting Agreement. This Agreement has been
duly executed and delivered by each of the ▇▇▇▇▇ Parties, and constitutes the
valid and legally binding agreement of each of the ▇▇▇▇▇ Parties, enforceable
against each of the ▇▇▇▇▇ Parties in accordance with its terms, provided that
the enforceability hereof 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 contained
herein may be limited by applicable laws or public policy.
(x) Enforceability of Other Agreements. At or before the First Time of
Delivery:
(i) The Partnership Agreement will have been duly authorized,
executed and delivered by the General Partner and ▇▇▇▇▇ as the "Organizational
Limited Partner" and will be a valid and legally binding agreement of the
General Partner and ▇▇▇▇▇ as the Organizational Limited Partner, enforceable
against the General Partner and ▇▇▇▇▇ as the Organizational Limited Partner in
accordance with its terms;
(ii) The Operating Partnership Agreement will have been duly
authorized, executed and delivered by the OLP GP and the Partnership and will be
a valid and legally binding agreement of the OLP GP and the Partnership,
enforceable against the OLP GP and the Partnership in accordance with its terms;
(iii) The General Partner Partnership Agreement will have been
duly authorized, executed and delivered by each of GP LLC and Navajo Pipeline
will be a valid and legally binding agreement of GP LLC and Navajo Pipeline,
enforceable against each of them in accordance with its terms;
12
(iv) The GP LLC Agreement will have been duly authorized,
executed and delivered by Navajo Pipeline and will be a valid and legally
binding agreement of Navajo Pipeline, enforceable against Navajo Pipeline in
accordance with its terms;
(v) Each of the Operating Subsidiaries LLC Agreements will be
duly authorized, executed and delivered by the Operating Partnership and will be
a valid and legally binding agreement of the Operating Partnership, enforceable
against the Operating Partnership in accordance with its terms;
(vi) Each of the Operating Subsidiaries Partnership Agreements
will be duly authorized, executed and delivered by the parties thereto and will
be valid and legally binding agreements of the parties thereto, enforceable
against the parties thereto in accordance with its terms;
(vii) The Bank Credit Agreement will have been duly
authorized, executed and delivered by the Operating Partnership and the
Operating Subsidiaries and will be a valid and legally binding agreement of the
Operating Partnership and the Operating Subsidiaries enforceable against the
Operating Partnership and the Operating Subsidiaries in accordance with its
terms;
(viii) 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 its terms;
(ix) An omnibus agreement (the "OMNIBUS AGREEMENT") will have
been duly authorized, executed and delivered by each of ▇▇▇▇▇, Navajo, the
General Partner, GP LLC, the Partnership, the OLP GP, and the Operating
Partnership and will be a valid and legally binding agreement of each of them
enforceable against each of them in accordance with its terms;
(x) A pipeline and terminals agreement (the "THROUGHPUT
AGREEMENT") will have been duly authorized, executed and delivered by each of
▇▇▇▇▇, Refining, ▇▇▇▇▇ Refining and Marketing Company, a Delaware corporation,
the General Partner, GP LLC, the Partnership, the OLP GP, and the Operating
Partnership and will be a valid and legally binding agreement of each of them
enforceable against each of them in accordance with its terms;
provided that, with respect to each agreement described in [THIS SECTION 1(x)],
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 contained
therein may be limited by applicable laws or public policy. The Organizational
Agreements, the Bank Credit Agreement, the Contribution Documents, the Omnibus
Agreement, and the Throughput Agreement are herein collectively referred to as
the "OPERATIVE AGREEMENTS."
(y) No Conflicts. None of the offering, issuance and sale by the
Partnership of the Units, the execution, delivery and performance of this
Agreement or the Operative Agreements by the ▇▇▇▇▇
13
Entities which are parties thereto, or the consummation of the transactions
contemplated hereby and thereby (including the Transactions) (i) conflicts or
will conflict with or constituted or will constitute a violation of the
certificate of limited partnership, agreement of limited partnership,
certificate of formation, limited liability company agreement, certificate or
articles of incorporation or bylaws or other organizational documents of any of
the ▇▇▇▇▇ Entities, including the Organizational Documents, (ii) conflicts or
will conflict with or 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 indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of the ▇▇▇▇▇
Entities is a party or by which any of them or any of their respective
properties may be bound, (iii) 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 ▇▇▇▇▇ Entities or any of
their properties in a proceeding to which any of them or their property is a
party or (iv) results or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of any of the ▇▇▇▇▇ 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 or would materially impair the ability of any of the ▇▇▇▇▇ Entities to
perform their obligations under this Agreement or the Operative Documents.
(z) No Consents. No 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 ▇▇▇▇▇ Entities party thereto, or
the consummation by the ▇▇▇▇▇ Entities of the transactions contemplated hereby
and thereby (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 First Time of
Delivery will be, obtained, and (iii) for such consents which, if not obtained,
would not, individually or in the aggregate, have a Material Adverse Effect.
(aa) No Default. None of the ▇▇▇▇▇ Entities is in (i) violation of its
certificate or agreement of limited partnership, limited liability company
agreement, certificate or articles of incorporation or bylaws or other
organizational documents, (ii) violation in any material respect of any law,
statute, ordinance, administrative or governmental rule or regulation applicable
to it or of any decree of any court or governmental agency or body having
jurisdiction over it or (iii) 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 clauses (ii) or (iii), would, if continued, have a Material Adverse
Effect, or could materially impair the ability of any of the ▇▇▇▇▇ Entities to
perform their obligations under this Agreement or the Operative Agreements. To
the knowledge of the ▇▇▇▇▇ Parties, no third party to any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which any of
the ▇▇▇▇▇ Entities is a party or by which any of them is bound or to which any
of their properties is subject, is in
14
default under any such agreement, which breach, default or violation would, if
continued, have a Material Adverse Effect.
(bb) Conformity of Securities to Description in Prospectus. The Units
to be issued by the Partnership, when issued and delivered in accordance with
the terms of the Partnership Agreement and against payment therefore 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.
(cc) Investment Company/Public Utility Holding Company. None of the
Partnership Entities are, nor, after giving effect to the offering and sale of
the Units and the application of the proceeds thereof, will be (i) an
"investment company" or a company "controlled by" an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "public utility company," "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" thereof,
under the Public Utility Holding Company Act of 1935, as amended.
(dd) No Business with Cuba. None of the Partnership Entities does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes.
(ee) Independent Public Accountants. Ernst & Young LLP, who have
certified the audited financial statements of the Partnership, the General
Partner, Navajo Pipeline Co., L.P. (Predecessor) and Rio Grande included in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) are independent public accountants with respect to such entities as
required by the Act and the rules and regulations of the Commission thereunder.
(ff) Financial Statements. At March 31, 2004, 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, the Preliminary Prospectus
dated ___________, 2004 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
financial information set forth in the Registration Statement, the Preliminary
Prospectus dated ___________, 2004 and the Prospectus (and any amendment or
supplement thereto) under the caption "Selected Historical and Operating Data of
Navajo Pipeline Co., L.P. (Predecessor), and Pro Forma Financial Data of ▇▇▇▇▇
Energy Partners, L.P. (Successor)" 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
15
Statement, the Preliminary Prospectus dated ______, 2004 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
▇▇▇▇▇ Parties, 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.
(gg) Litigation. Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which any of the ▇▇▇▇▇ Entities
is a party or of which any property of any of the ▇▇▇▇▇ Entities is the subject
which, if determined adversely to the ▇▇▇▇▇ Entities, could reasonably be
expected to, individually or in the aggregate have a Material Adverse Effect
and, to the best of the ▇▇▇▇▇ Parties' knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(hh) Sufficiency of Transferred Assets Under the Contribution
Documents. The Contribution Documents will be legally sufficient to transfer or
convey to the Operating Partnership and the Operating Subsidiaries all
properties not already held by them that are, individually or in the aggregate,
required to enable the Operating Partnership and the Operating Subsidiaries to
conduct their operations in all material respects as contemplated by the
Prospectus, subject to the conditions, reservations, encumbrances and
limitations contained in the Contribution Documents and those set forth in the
Prospectus. The Operating Partnership and the Operating Subsidiaries, as the
case may be, upon execution and delivery of the Contribution Documents, 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.
(ii) No Material Changes. None of the ▇▇▇▇▇ Entities has sustained
since the date of the latest audited financial statements included in 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 Prospectus; and,
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capitalization or long-term debt of any of the Partnership Entities or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, partners' capital, members' equity, or results of operations of any of
the Partnership Entities, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(jj) Title to Real Property. At each Time of Delivery, the Operating
Partnership and the Operating Subsidiaries, as the case may be, 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 Partnership
and the Operating Subsidiaries, as the case may be, free and clear of all (i)
liens and security interests except liens or security interests securing
indebtedness incurred, assumed or agreed to by the Operating Partnership or any
of the Operating Subsidiaries specifically listed in any of the Contribution
16
Documents or (ii) other claims and other encumbrances (other than liens or
security interests) except (1) as described, and subject to the limitations
contained, in the Prospectus or (2) 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 Prospectus, provided
that, with respect to any real property and buildings held under lease by the
Operating Partnership and the Operating Subsidiaries, such real property and
buildings are held under valid and subsisting and enforceable leases with such
exceptions as do not materially interfere with the use of the properties of the
Partnership Entities taken as a whole as they have been used in the past as
described in the Prospectus and are proposed to be used in the future as
described in the Prospectus.
(kk) Rights-of-Way. At each Time of Delivery, each of the Partnership
Entities will have, such consents, easements, rights-of-way, permits or licenses
from each person (collectively, "rights-of-way") as are necessary to conduct its
business in the manner described, and subject to the limitations contained, in
the Prospectus, except for (i) qualifications, reservations and encumbrances as
may be set forth in the Prospectus which are not reasonably expected to have a
material adverse effect upon the ability of the Partnership Entities, taken as a
whole, to conduct their businesses in all material respects as currently
conducted and as contemplated by the Prospectus to be conducted and (ii) such
rights-of-way that, if not obtained, would not have, individually or in the
aggregate, a material adverse effect upon the ability of the Partnership
Entities, taken as a whole, to conduct their businesses in all material respects
as currently conducted and as contemplated by the Prospectus to be conducted;
other than as set forth, and subject to the limitations contained, in the
Prospectus, each of the Partnership Entities has, or at each Time of Delivery
will have, fulfilled and performed all its material obligations with respect to
such rights-of-way and no event has occurred that allows, or after notice or
lapse of time would allow, revocation or termination thereof or would result in
any impairment of the rights of the holder of any such rights-of-way, except for
such revocations, terminations and impairments that would not have a Material
Adverse Effect upon the ability of the Partnership Entities, taken as a whole,
to conduct their businesses in all material respects as currently conducted and
as contemplated by the Prospectus to be conducted; and, except as described in
the Prospectus, none of such rights-of-way contains any restriction that is
materially burdensome to the Partnership Entities, taken as a whole.
(ll) Permits. At each Time of Delivery, each of the Partnership
Entities 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 Prospectus and except for such permits which, if not obtained, would not,
individually or in the aggregate, have a Material Adverse Effect; at each Time
of Delivery, each of the Partnership Entities 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 Prospectus; and,
except as described in the Prospectus, none of
17
such permits will, at each Time of Delivery contain any restriction that is
materially burdensome to the Partnership Entities taken as a whole.
(mm) 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.
(nn) Tax Returns. Each of the ▇▇▇▇▇ Entities has filed (or has obtained
extensions with respect to) all material federal, state and foreign income and
franchise tax returns required to be filed through the date hereof, which
returns are complete and correct in all material respects, and has timely paid
all taxes shown to be due pursuant to such returns, other than those (i) which,
if not paid, would not have a Material Adverse Effect, or (ii) which are being
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles.
(oo) No Environmental Problems. Except as described in the Registration
Statement and the Prospectus, the ▇▇▇▇▇ 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, (iii) are in compliance with all terms and conditions of any such
permit, and (iv) to the knowledge of the ▇▇▇▇▇ Parties, do not have any
liability in connection with the release into the environment of any Hazardous
Materials, except where such noncompliance with Environmental Laws, failure to
receive required permits, failure to comply with the terms and conditions of
such permits or liability in connection with such releases, would not,
individually or in the aggregate, have a Material Adverse Effect. The term
"Hazardous Material" means (A) any "hazardous substance" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (B) any "hazardous waste" as defined in the Resource Conservation and
Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(pp) No Labor Dispute. No material labor dispute with the employees of
the Partnership Entities exists, or, to the knowledge of the ▇▇▇▇▇ Parties, is
imminent.
(qq) Insurance. The Partnership Entities maintain, or are entitled to
the benefits of, insurance covering their properties, operations, personnel and
businesses against such losses and risks
18
as are reasonably adequate to protect them and their businesses in a manner
consistent with other businesses similarly situated. None of the Partnership
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 each
Time of Delivery.
(rr) Legal Proceedings or Contracts to be Described or Filed. There are
no legal or governmental proceedings pending or, to the knowledge of the ▇▇▇▇▇
Parties, threatened, against any of the ▇▇▇▇▇ Entities, or to which any of the
▇▇▇▇▇ Entities 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.
(ss) Private Placement. The sale and issuance of the Sponsor Units to
the General Partner, ▇▇▇▇▇, ▇▇▇▇▇ Cross, and Navajo Refining and the Incentive
Distribution Rights to the General Partner pursuant to the Partnership Agreement
and the Contribution 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 Partnership Entities has taken or will take any action
that would cause the loss of such exemption.
(tt) No Distribution of Other Offering Materials. The Partnership
Entities have not distributed and, prior to the later to occur of (i) the First
Time of Delivery 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
Preliminary Prospectus, the Prospectus or other materials, if any, permitted by
the Act, including Rule 134 of the general rules and regulations thereunder.
(uu) NYSE Listing. The Units have been approved for listing on the New
York Stock Exchange (the "Exchange"), subject only to official notice of
issuance.
(vv) Directed Unit Sales. None of the Units distributed in connection
with the Directed Unit Program will be offered or sold outside of the United
States. None of the ▇▇▇▇▇ Entities has offered, or caused the Underwriters to
offer, Units to any person pursuant to the Directed Unit Program with the
specific intent to unlawfully influence (i) a customer or supplier of the ▇▇▇▇▇
Entities to alter the customer's or supplier's level or type of business with
the ▇▇▇▇▇ Entities, or (ii) a trade journalist or publication to write or
publish favorable information about the ▇▇▇▇▇ Entities or their products or
services.
(ww) Market Stabilization. The Partnership has not taken, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Partnership to facilitate the sale or resale of the Units.
19
(xx) Related Party Transactions. No relationship, direct or indirect,
exists between or among any ▇▇▇▇▇ Entity on the one hand, and the directors,
officers, partners, customers or suppliers of any ▇▇▇▇▇ Entity on the other
hand, which is required to be described in the Prospectus which is not so
described.
(yy) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Partnership is in compliance in all
material respects with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002.
2. Subject to the terms and conditions herein set forth, (a) the
Partnership agrees to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Partnership, at a purchase price per unit of $_____, the number of Firm Units
set forth opposite the name of such Underwriter in Schedule I hereto and (b) in
the event and to the extent that the Underwriters shall exercise the election to
purchase Optional Units as provided below, the Partnership agrees to issue and
sell to each of the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Partnership, at the purchase price per
unit set forth in clause (a) of this Section 2, that portion of the number of
Optional Units as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional units) determined by multiplying
such number of Optional Units by a fraction, the numerator of which is the
maximum number of Optional Units which such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Units that all of the
Underwriters are entitled to purchase hereunder.
The Partnership hereby grants to the Underwriters the right to purchase
at their election up to [900,000] Optional Units, at the purchase price per unit
set forth in the paragraph above, for the sole purpose of covering sales of
units in excess of the number of Firm Units. Any such election to purchase
Optional Units may be exercised only by written notice from you to the
Partnership, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Units to be purchased
and the date on which such Optional Units are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Partnership otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
3. Offering of Units by the Underwriters. Upon the authorization by you
of the release of the Firm Units, the several Underwriters propose to offer the
Firm Units for sale upon the terms and conditions set forth in the Prospectus.
4. Delivery and Payment for the Units. (a) The Units to be purchased by
each Underwriter hereunder, in book entry form, and in such authorized
denominations and registered in such names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request
upon at least forty-eight hours' prior notice to the Partnership, shall be
delivered by or on behalf of the Partnership to ▇▇▇▇▇▇▇, Sachs & Co., through
the facilities of The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefore by wire transfer of Federal (same-day) funds to the account
specified by the Partnership to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. at least forty-
20
eight hours in advance. The Partnership will cause the certificates representing
the Units to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of DTC or its designated custodian (the "DESIGNATED OFFICE"). The
time and date of such delivery and payment shall be, with respect to the Firm
Units, 9:30 a.m., New York City time, on _________, 2004 or such other time and
date as ▇▇▇▇▇▇▇, Sachs & Co. and the Partnership may agree upon in writing, and,
with respect to the Optional Units, 9:30 a.m., New York time, on the date
specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given by ▇▇▇▇▇▇▇, Sachs
& Co. of the Underwriters' election to purchase such Optional Units, or such
other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Partnership may agree upon
in writing. Such time and date for delivery of the Firm Units is herein called
the "FIRST TIME OF DELIVERY", such time and date for delivery of the Optional
Units, if not the First Time of Delivery, is herein called the "SECOND TIME OF
DELIVERY", and each such time and date for delivery is herein called a "TIME OF
DELIVERY".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Units and any additional documents requested by the Underwriters
pursuant to Section [7(l)] hereof, will be delivered at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P., 3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇-▇▇▇▇ (the "CLOSING LOCATION"), and the Units will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., Dallas time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "NEW YORK
BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. Further Agreements of the ▇▇▇▇▇ Parties. Each of the ▇▇▇▇▇ Parties
agrees with each of the Underwriters:
(a) Preparation of Prospectus and Registration Statement. To prepare
the Prospectus in a form approved by you and to file such Prospectus pursuant to
Rule 424(b) under the Act not later than the Commission's close of business on
the second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to advise you,
promptly after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus, of the suspension of the qualification of
the Units for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or
21
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Qualification of Securities. Promptly from time to time to take
such action as you may reasonably request to qualify the Units for offering and
sale under the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Units, provided that in connection therewith the Partnership
shall not be required to qualify as a foreign limited partnership or to file a
general consent to service of process in any jurisdiction;
(c) Copies of Documents to Underwriters. Prior to 10:00 A.M., New York
City time, on the New York Business Day next succeeding the date of this
Agreement and from time to time, to furnish the Underwriters with written and
electronic copies of the Prospectus in New York City in such quantities as you
may reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Units and if at such
time any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order to
comply with the Act, to notify you and upon your request to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Units at any time nine months
or more after the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act;
(d) Lock-Up Period. During the period beginning from the date hereof
and continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, hedge, contract to sell or otherwise dispose of,
except as provided hereunder, any Common Units or any securities of the
Partnership that are substantially similar to the Common Units, including but
not limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Common Units or any such substantially
similar securities (other than pursuant to employee stock option plans existing
on, or upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without your prior written
consent;
(e) Reports to Unitholders. To make generally available to its
unitholders as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Partnership and its
subsidiaries (which need not be audited) complying with Section 11(a) of the Act
and the rules and regulations thereunder (including, at the option of the
Partnership, Rule 158);
22
(f) Copies of Public Documents. During a period of five years from the
effective date of the Registration Statement, to furnish to its unitholders as
soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, partnership equity and cash
flows of the Partnership and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), to make
available to its unitholders a consolidated summary financial information of the
Partnership and its subsidiaries for such quarter in reasonable detail;
(g) Copies of Reports. During a period of five years from the effective
date of the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to Unitholders, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Partnership is
listed; and (ii) such additional information concerning the business and
financial condition of the Partnership as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Partnership and its subsidiaries are consolidated in reports
furnished to its Unitholders generally or to the Commission);
(h) Use of Proceeds. To use the net proceeds received by it from the
sale of the Units pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) Listing. To use its best efforts to list, subject to notice of
issuance, the Units on the Exchange;
(j) Rule 463. To file with the Commission such information on Form 10-Q
or Form 10-K as may be required by Rule 463 under the Act; and
(k) Rule 462(b) Registration Statement. If the Partnership elects to
rely upon Rule 462(b), the Partnership shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Partnership shall
at the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
(l) License. Upon request of any Underwriter, to furnish, or cause to
be furnished, to such Underwriter an electronic version of the Partnership's
trademarks, servicemarks and logo for use on the website, if any, operated by
such Underwriter for the purpose of facilitating the on-line offering of the
Units (the "LICENSE"); provided, however, that the License shall be used solely
for the purpose described above, is granted without any fee and may not be
assigned or transferred.
6. Expenses. Each of the ▇▇▇▇▇ Parties covenants and agrees with one
another and with the several Underwriters that the Partnership will pay or cause
to be paid the following: (i) the fees,
23
disbursements and expenses of the Partnership's counsel and accountants in
connection with the registration of the Units under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Units; (iii)
all expenses in connection with the qualification of the Units for offering and
sale under state securities laws as provided in Section 5(b) [Qualification of
Securities] hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the Units
on the New York Stock Exchange; (v) the filing fees incident to, and the fees
and disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Units; (vi) the cost of preparing certificates for
the Units; (vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, the Partnership shall bear the cost of
any other matters not directly relating to the sale and purchase of the Units
pursuant to this Agreement, and that, except as provided in this Section, and
Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Units by them, and any advertising expenses connected with any offers
they may make.
7. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder, as to the Units to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the ▇▇▇▇▇ Parties herein
are, at and as of such Time of Delivery, true and correct, the condition that
the ▇▇▇▇▇ Parties shall have performed all of their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Partnership has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction.
(b) ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
with respect to the issuance and sale of the Units, the Registration Statement
and the Prospectus and other related matters as you may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
24
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Partnership, shall have
furnished to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) Formation and Qualification of the Partnership, the
Operating Partnership, the General Partner, and the Operating LPs. Each of the
Partnership, the Operating Partnership, the General Partner, and the Operating
LPs has been duly formed and is validly existing in good standing as a limited
partnership under the Delaware LP Act with all necessary limited partnership
power and authority to own or lease its properties, to assume the liabilities
assumed by it pursuant to the Contribution Documents and to conduct its
business, and, in the case of the General Partner, to serve as the general
partner of the Partnership, in each case in all material respects as described
in the Registration Statement and the Prospectus. Each of the Partnership, the
Operating Partnership, the General Partner and the Operating LPs is duly
registered or qualified as a foreign limited partnership for the transaction of
business under the laws of the jurisdictions set forth under its name on Annex I
to this Agreement.
(ii) Formation and Good Standing of the OLP GP, GP LLC and the
Operating LLCs. Each of the OLP GP, GP LLC, and the Operating LLCs 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 assume the liabilities assumed
by it pursuant to the Contribution Documents and to conduct its business, and,
in the case of the OLP GP and GP LLC, to serve as the general partner of the OLP
and the General Partner, respectively, in each case in all material respects as
described in the Registration Statement and the Prospectus. Each of the OLP GP,
GP LLC and the Operating LLCs is duly registered or qualified as a foreign
limited liability company for the transaction of business under the laws of the
jurisdictions set forth under its name on Annex I to this Agreement.
(iii) Formation and Good Standing of ▇▇▇▇▇. ▇▇▇▇▇ 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 to assume the liabilities assumed by it pursuant to the
Contribution Documents, to conduct its business, in all material respects as
described in the Registration Statement and the Prospectus.
(iv) Ownership of the General Partner Interest in the
Partnership and the Incentive Distribution Rights. The General Partner is the
sole general partner of the Partnership with a 2.0% general partner interest in
the Partnership; such general partner interest has been duly authorized and
validly issued in accordance with the Partnership Agreement; and the General
Partner owns its general partner interest free and clear of all liens,
encumbrances except restrictions on transferability as described in the
Prospectus, security interests, equities charges or claims (i) in respect of
which a financing statement under the Uniform Commercial Code of the State of
Delaware naming the General Partner as debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LP Act.
25
(v) Ownership of the Sponsor Units. 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 Section 17-607 of the Delaware LP Act). ▇▇▇▇▇ owns _____
Subordinated Units, ▇▇▇▇▇ Cross owns ____ Subordinated Units, Navajo Refining
owns _____ Common Units and _____ Subordinated Units and the General Partner
owns _____ subordinated Units and the Incentive Distribution Rights, in each
case free and clear of all liens, encumbrances, security interests, equities
charges or claims (i) in respect of which a financing statement under the
Uniform Commercial Code of the State of Delaware naming ▇▇▇▇▇, ▇▇▇▇▇ Cross or
Navajo Refining or the General Partner as debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LP Act, the Delaware LLC Act or the DGCL.
(vi) Valid Issuance of the Units. 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 Section 17-607
of the Delaware LP Act) 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 First Time of Delivery.
(vii) Ownership of the General Partner Interest in the
Operating Partnership. OLP GP is the sole general partner of the Operating
Partnership with a 0.001% general partner interest in the Operating Partnership;
such general partner interest has been duly authorized and validly issued in
accordance with the Operating Partnership Agreement; and the OLP GP owns such
general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus), security
interests, charges or claims (i) in respect of which a financing statement under
the Uniform Commercial Code of the State of Delaware naming the OLP GP 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.
(viii) Ownership of the Limited Partner Interest in the
Operating Partnership. The Partnership is the sole limited partner of the
Operating Partnership with a 99.999% limited partner interest in the Operating
Partnership; such limited partner interest has been duly authorized and validly
issued in accordance with the Operating Partnership Agreement and is fully paid
(to the extent required under the Operating Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by Section 17-607
of the Delaware LP Act); and the Partnership owns such limited 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 the Partnership as debtor is on file in the
office of the Secretary of State of the State of Delaware or (ii)
26
otherwise known to such counsel, without independent investigation, other than
those created by or arising under the Delaware LP Act.
(ix) Ownership of the General Partner Interest in the General
Partner. GP LLC is the sole general partner of the General Partner with a 0.001%
general partner interest in the General Partner; such general partner interest
has been duly authorized and validly issued in accordance with the General
Partner Partnership Agreement, and GP LLC owns such general partner interest
free and clear of all liens, encumbrances (except restrictions on
transferability described in the Prospectus), security interests, charges or
claims (i) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming GP LLC 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.
(x) Ownership of the Limited Partner Interest in the General
Partner. Navajo Pipeline is the sole limited partner of the General Partner with
a 99.999% limited partner interest in the General Partner; such limited partner
interest has been duly authorized and validly issued in accordance with the
General Partner Partnership Agreement and is fully paid (to the extent required
under the General Partner Partnership Agreement) and nonassessable (except as
such nonassessability may be affected by Section 17-607 of the Delaware Act);
and Navajo Pipeline owns such limited 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 the General Partner as debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LP Act.
(xi) Ownership of GP LLC. Navajo Pipeline owns a 100%
membership interest in GP LLC; such membership interests have been duly
authorized and validly issued in accordance with the GP LLC Agreement, and will
be fully paid (to the extent required under the GP LLC Agreement) and
nonassessable (except as such nonassessability may be affected by Section 18-607
of the Delaware LLC Act); and Navajo Pipeline 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 Navajo Pipeline 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) Ownership of the Operating LLCs. The Operating
Partnership owns a 100% membership interest in each of the Operating LLCs; such
membership interests have been duly authorized and validly issued in accordance
with the Operating Subsidiaries LLC Agreements and are fully paid (to the extent
required under the Operating Subsidiaries LLC Agreements) and nonassessable
(except as such nonassessability may be affected by Section 18-607 of the
Delaware LLC Act); and the Operating Partnership 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 Partnership as debtor is on file
in the
27
office of the Secretary of State of the State of Delaware or (ii) otherwise
known to such counsel, without independent investigation, other than those
created by or arising under the Delaware LLC Act and those arising in connection
with the Bank Credit Agreement.
(xiii) Ownership of Operating LPs. Pipeline GP LLC is the sole
general partner of each of Pipeline LP and Navajo Southern LP with a .001%
general partner interest in Pipeline LP and Navajo Southern LP, respectively.
Refining GP is the sole general partner of Refining LP with a .001% general
partner interest in Refining LP. Such general partner interests have been duly
authorized and validly issued in accordance with the partnership agreements of
Pipeline LP, Navajo Southern LP, or Refining LP, as the case may be; and
Pipeline GP LLC or Refining LP, as the case may be, owns such general partner
interests free and clear of all liens, encumbrances (except restrictions on
transferability as described in the Prospectus), security interests, charges or
claims (i) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming Pipeline GP LLC or Refining GP,
as the case may be, 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.
The Operating Partnership is the sole limited partner of each of
Pipeline LP, Navajo Southern LP and Refining LP with a 99.999% limited partner
interest in each of Pipeline LP, Navajo Southern LP and Refining LP; such
limited partner interests have been duly authorized and validly issued in
accordance with the partnership agreements of Pipeline LP, Navajo Southern LP
and Refining LP, respectively, and will be fully paid (to the extent required
under each such partnership agreement) and nonassessable (except as such
nonassessability may be affected by Section 17-607 of the Delaware LP Act); and
the Operating Partnership owns each such limited 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 the Operating 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.
(xiv) Ownership of Rio Grande. Navajo Southern LP owns a 70%
general partner interest in Rio Grande; such partnership interest has been duly
authorized and validly issued in accordance with the partnership agreement of
Rio Grande; and Navajo Southern LP owns such partnership 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
Delaware naming the Navajo Southern LP as debtor is on file in the office of the
Secretary of Sate of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware LLC Act and those arising in connection with the Bank
Credit Agreement.
(xv) No Preemptive Rights, Registration Rights or Options.
Except as described in the Prospectus, there are no options, warrants,
preemptive rights or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any partnership or membership
interests in
28
any Partnership Equity, in each case pursuant to the Organizational Documents
or, to the knowledge of such counsel, 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 after due inquiry, neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated by this
Agreement gives rise to any rights for or relating to the registration of any
Units or other securities of the Partnership other than as have been waived.
(xvi) Conversion. The Conversion became effective under the
DGCL and the Delaware LP Act on [date].
(xvii) Authority and Authorization. The Partnership has all
requisite partnership power and authority to issue, sell and deliver (i) the
Units, in accordance with and upon the terms and conditions set forth in this
Agreement and the Partnership Agreement and (ii) the Sponsor Units and Incentive
Distribution Rights, in accordance with and upon the terms and conditions set
forth in the Contribution Agreement and the Partnership Agreement.
(xviii) Due Authorization, Execution and Delivery of
Agreement. This Agreement has been duly authorized, executed and delivered by
each of the ▇▇▇▇▇ Parties.
(xix) Enforceability of Other Agreements. Each of the
Operative Agreements to which any of the ▇▇▇▇▇ Entities is a party has been duly
authorized and validly executed and delivered by each of the ▇▇▇▇▇ Entities
party thereto. Each of the Operative Agreements constitutes a valid and legally
binding agreement of the ▇▇▇▇▇ Entities party thereto, enforceable against each
such ▇▇▇▇▇ Entity in accordance with its respective terms, subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and (ii) public policy,
applicable law relating to fiduciary duties and indemnification and an implied
covenant of good faith and fair dealing.
(xx) No Conflicts. None of the offering, issuance and sale by
the Partnership of the Units being delivered at such Time of Delivery, the
execution, delivery and performance of this Agreement or the Operative
Agreements by the ▇▇▇▇▇ Entities which are parties thereto, or the consummation
of the transactions contemplated hereby and thereby (including the Transactions)
(i) constitutes or will constitute a violation of the certificate of limited
partnership, agreement of limited partnership, certificate of formation, limited
liability company agreement, certificate or articles of incorporation or bylaws
or other organizational documents of any of the ▇▇▇▇▇ Entities, including the
Organizational Documents, (ii) 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 Operative Agreement or any
other agreement filed as an exhibit to the Registration Statement or any
agreement filed by ▇▇▇▇▇ as an exhibit to any periodic report filed by ▇▇▇▇▇ or
incorporated by reference into a filing made by ▇▇▇▇▇ with the Commission since
▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) results or will result in any violation of the Delaware LP
Act, the Delaware LLC Act, the DGCL, the laws of the State of Texas, or federal
law, or (iv) results or will result in the creation or imposition of any lien,
charge or
29
encumbrance upon any property or assets of any of the ▇▇▇▇▇ Entities, which, in
the case of clauses (ii), (iii) or (iv), would reasonably be expected to have a
material adverse effect on the financial condition, business or results of
operations of the Partnership Entities taken as a whole or would materially
impair the ability of any of the ▇▇▇▇▇ Entities to perform their obligations
under this Agreement or the Operative Agreements.
(xxi) No Consents. No consent, approval, authorization, order,
registration, filing or qualification ("consent") of or with any federal,
Delaware or Texas 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
▇▇▇▇▇ Entities party thereto or the consummation by the ▇▇▇▇▇ Entities of the
transactions contemplated by this Agreement or the Operative Agreements
(including the Transactions) or for the conveyance of the properties located in
the State of Texas purported to be conveyed to the Operating Partnership or the
Operating Subsidiaries pursuant to the Conveyance Agreements, 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
this Agreement and (C) are expected in the reasonable judgment of the 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, would not, individually or in the aggregate, have a Material Adverse
Effect, or (v) as disclosed in the Prospectus.
(xxii) Accuracy of Statements. The statements set forth in the
Registration Statement and Prospectus under the captions "Cash Distribution
Policy," "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources--Credit Agreement,"
"Business--Rate Regulation," "Business--Environmental Regulation," "Certain
Relationships and Related Transactions," "Conflicts of Interest and Fiduciary
Duties," "Description of the Common Units," "The Partnership Agreement,"
"Investment in ▇▇▇▇▇ Energy Partners by Employee Benefit Plans," and
"Underwriting," 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 Units, the Subordinated 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," and "The Partnership Agreement."
(xxiii) Tax Opinion. The opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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.
(xxiv) Effectiveness of Registration Statement. The
Registration Statement was declared effective under the Act on _______, 2004; to
the knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
30
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.
(xxv) Compliance as to Form. The Registration Statement and
the Prospectus and any further amendments and supplements thereto made by the
Partnership prior to such Time of Delivery (other than the financial statements,
notes or schedules included in the Registration Statement or Prospectus or other
financial 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.
(xxvi) Investment Company Act/Public Utility Holding Company
Act. None of the ▇▇▇▇▇ Parties is an "investment company" as such term is
defined in the Investment Company Act, or (ii) a "public utility company" or
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(xxvii) Legal Proceedings or Contracts to be Described or
Filed. To the knowledge of such counsel, (i) there are no legal or governmental
proceedings pending or threatened against any of the ▇▇▇▇▇ Entities or to which
any of the ▇▇▇▇▇ 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) 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.
(xxviii) Private Placement. The offer, sale and issuance of
the Sponsor Units to the General Partner, ▇▇▇▇▇, ▇▇▇▇▇ Cross and Navajo Refining
and the Incentive Distribution Rights to the General Partner pursuant to the
Partnership Agreement and the Contribution Agreement are exempt from the
registration requirements of the Act and the securities laws of any state having
jurisdiction with respect thereto.
(xxix) No Additional Liability. Upon the consummation of the
Transactions, the Partnership will not be liable under the laws of the State of
Texas for the liabilities of the Operating Partnership or the Operating
Subsidiaries and the Unitholders will not be liable under the laws of the State
of Texas for the liabilities of the Partnership, the Operating Partnership or
the Operating Subsidiaries, except in each case to the same extent as under the
laws of the State of Delaware.
(xxx) No Violation of Law. The execution, delivery and
performance of the Contribution Documents relating to the transfer of property
in the State of Texas has not violated and will not violate any statute of the
State of Texas or any rule, regulation or, to our knowledge, without independent
investigation, any order of any agency of the State of Texas having jurisdiction
over any of the ▇▇▇▇▇ Entities or the Partnership 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 Texas by the Partnership Entities,
taken as a whole.
31
(xxxi) Sufficiency of all Contribution Documents. Each of the
Contribution Documents 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 Texas as described in the Contribution Documents, subject to the
conditions, reservations and limitations contained in the Contribution
Documents; 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.
(xxxii) Recording of Deeds and Assignments. Each of the
contributions documents transmitting real property (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
Texas, to the extent such recordation is required to evidence title to the
properties covered thereby in the transferee thereunder and, upon proper
recordation of any of such contribution documents transmitting real property in
the State of Texas, will constitute notice to all third parties under the
recordation statutes of the State of Texas concerning record title to the assets
transferred thereby. Recordation in the office of the County Clerk for each
county in which the Operating Partnership and the Operating Subsidiaries own
property is the appropriate public office in the State of Texas for the
recordation of deeds and assignments of interests in real property located in
such county.
(xxxiii) Rights of Way. The Operating Partnership is entitled
to exercise the power of eminent domain in the State of Texas to secure
rights-of-way necessary to operate and maintain each of its common carrier
pipelines.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Partnership Entities and the independent public accountants of the Partnership
and your representatives, at which the contents of the Registration Statement
and the Prospectus and related matters were discussed, and although such counsel
has not independently verified, is not passing on, and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in, the Registration Statement and the Prospectus (except to the
extent specified in the foregoing opinion), no facts have come to such counsel's
attention that lead such counsel to believe that the Registration Statement
(other than (i) the financial statements and related schedules, including the
notes thereto and auditor's report thereon, and (ii) the other information of a
financial nature included in the Registration Statement 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 and related schedules,
including the notes thereto and auditor's report thereon, and (ii) the other
information of a financial nature included in the Prospectus as to which such
counsel need not comment), as of its issue date and as of such Time of Delivery
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
▇▇▇▇▇ Entities and upon information obtained from public
32
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 States of Texas and New York, (D) with
respect to the opinions expressed in paragraphs (i), (ii) and (iii) 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 Partnership, the General Partner, GP LLC, OLP GP and
the Operating Subsidiaries, state that such opinions are based upon the opinions
of counsel provided pursuant to (e) below and upon certificates of foreign
qualification or registration provided by the Secretary of State of the States
listed on Annex I to such opinion (each of which shall be dated as of a date not
more than fourteen days prior to such Time of Delivery and shall be provided to
you), (E) state that they express no opinion with respect to the title of any of
the Partnership 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 Partnership Entities may be subject.
You shall also have received on the First Time of Delivery, a copy of the
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. delivered pursuant to the Bank Credit
Agreement, substantially in the form provided for therein, accompanied by a
letter dated the Time of First Delivery and addressed to you from such counsel
stating that you are entitled to rely on such opinion as if it were addressed to
you.
(d) W. ▇▇▇▇ ▇▇▇▇▇▇, counsel for the Partnership, shall have furnished
to you his written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) No Default. 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 ▇▇▇▇▇ Entities which are parties
thereto, or the consummation of the transactions contemplated hereby and thereby
(including the Transactions) (i) 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, any
agreement filed as an exhibit to the Registration Statement and any agreement
filed by ▇▇▇▇▇ as an exhibit to any periodic report filed by ▇▇▇▇▇ or
incorporated by reference into a filing made by ▇▇▇▇▇ with the Commission since
March 10, 2004) to which any of the ▇▇▇▇▇ Entities or any of their properties
may be bound, or (ii) to the knowledge of such counsel, any order, judgment,
decree or injunction of any federal, Texas or Delaware court or government
agency or body directed to any of the ▇▇▇▇▇ Entities or any of their properties
in a proceeding to which any of them or their property is a party which breach,
violation or default would reasonably be expected to have a material adverse
effect on the financial condition, business or results of operations of the
Partnership Entities, taken as a whole or would materially impair the ability of
any of the ▇▇▇▇▇ Entities to perform their obligations under this Agreement or
the Operative Agreements.
(ii) No Conflicts. To the knowledge of such counsel after due
inquiry, none of the ▇▇▇▇▇ Entities is in (i) violation of its certificate or
agreement of limited partnership, certificate of
33
formation, limited liability company agreement, certificate or articles of
incorporation or bylaws or other organizational documents, or (ii) violation of
any law, statute, ordinance, administrative or governmental rule or regulation
applicable to it or of any decree of any court or governmental agency or body
having jurisdiction over it, or in breach, default (or an event which, with
notice or lapse of time or both, would constitute such a default) or violation
in the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any agreement,
indenture, lease or other instrument to which it is a party or by which it or
any of its properties may be bound, which violation or breach, default or
violation would, if continued, have a material adverse effect on the financial
condition, business or results of operations of the Partnership Entity, taken as
a whole, or could materially impair the ability of any of the Partnership
Entities to perform their obligations under this Agreement or the Operative
Agreements.
(iii) Permits. To the knowledge of such counsel after due
inquiry, each of the Partnership 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 Entities, taken as a
whole, 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 Partnership 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 upon the ability of the Partnership
Entities, taken as a whole, to conduct their businesses in all material respects
as currently conducted or as contemplated by the Prospectus to be conducted.
(iv) Litigation. 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 ▇▇▇▇▇
Entities or to which any of the ▇▇▇▇▇ Entities is a party or to which any of
their respective properties is subject, which, if adversely determined to such
▇▇▇▇▇ Entities, would reasonably be expected to have a material adverse effect
on the financial condition, business or results of operations of the Partnership
Entities, taken as a whole.
In addition, such counsel shall state that he has participated
in conferences with officers and other representatives of the Partnership
Entities and the independent public accountants of the Partnership and your
representatives, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel has not
independently verified, is not passing on, and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in, the Registration Statement and the Prospectus, no facts have come
to such counsel's attention that lead such counsel to believe that the
Registration Statement (other than (i) the financial statements and related
schedules, including the notes thereto and auditor's report thereon, and (ii)
the other information of a financial nature included in the Registration
Statement as to which such counsel need not comment), as of its effective date,
contained an untrue
34
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 or related
schedules, including the notes thereto and auditor's report thereon and (ii) the
other information of a financial nature included in the Prospectus, as to which
such counsel need not comment), as of its issue date and as of such Time of
Delivery 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
▇▇▇▇▇ Entities and upon information obtained from public officials, (B) assume
that all documents submitted to him as originals are authentic, that all copies
submitted to him conform to the originals thereof, and that the signatures on
all documents examined by him are genuine, (C) state that his opinion is limited
to federal laws, the Delaware LP Act, the Delaware LLC Act, the DGCL and the
laws of the State of Texas, (D) state that he expresses no opinion with respect
to the title of any of the Partnership 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 he expresses no opinion with respect to state or local taxes
or tax statutes to which any of the limited partners of the Partnership Entities
may be subject.
(e) In the case of the First Time of Delivery only, each of [name of
local counsel] with respect to the State of New Mexico, [name of local counsel]
with respect to the State of Arizona, and [name of local counsel] with respect
to the State of Idaho, and [name of local counsel] with respect to the State of
Utah, shall have furnished to you their written opinion, dated the First Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) Each of the General Partner, the Operating Partnership and
the Operating LPs has been duly qualified or registered as a foreign limited
partnership for the transaction of business under the laws of [insert applicable
state].
(ii) Each of GP LLC, the OLP GP and the Operating LLCs has
been duly qualified or registered as a foreign limited liability company for the
transaction of business under the laws of [insert applicable state].
(iii) Each of the Partnership, the Operating Partnership and
the Operating Subsidiaries has all requisite limited partnership 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 in the
Prospectus; and upon the consummation of the Transactions the Partnership will
not be liable under the laws of the State of [insert applicable state] for the
liabilities of the Operating Partnership or the Operating Subsidiaries, and the
Unitholders will not be liable under the laws of the State of [insert applicable
state] for the liabilities of the Partnership, the Operating Partnership or the
Operating Subsidiaries except in each case to the same extent as under the laws
of the State of Delaware.
35
(iv) [New Mexico Opinion] Assuming that the Conversion was
legally sufficient under applicable Delaware law to vest in Navajo Southern LP
the assets of Navajo Southern, then the Conversion was legally sufficient under
the law of the State of New Mexico to vest in Navajo Southern LP the assets of
Navajo Southern located in the State of New Mexico.
(v) 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 ▇▇▇▇▇ Entities 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 Partnership pursuant to the
Contribution Documents, 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 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 or to be conducted as described in
the Prospectus in the State of [insert applicable state] by the Partnership
Entities or (E) as disclosed in the Prospectus.
(vi) The execution, delivery and performance of the
Contribution Documents relating to the transfer of property in the State of
[insert applicable state] has not violated and will not violate any statute of
the State of [insert applicable state] or any rule, regulation or, to our
knowledge, without independent investigation, any order of any agency of the
State of [insert applicable state] having jurisdiction over any of the ▇▇▇▇▇
Entities or the Partnership 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 Entities,
taken as a whole.
(vii) Each of the Contribution Documents 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 Contribution Documents, subject to the conditions, reservations and
limitations contained in the Contribution Documents; 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.
(viii) 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 to evidence title to the properties covered thereby in
the transferee thereunder, and, upon
36
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 the
Operating Partnership or the applicable Operating Subsidiary 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.
(ix) [New Mexico Opinion] The Operating Partnership is
entitled to exercise the power of eminent domain in the State of New Mexico to
secure rights-of-way necessary to operate and maintain each of its common
carrier pipelines.
In rendering such opinion, such counsel may (A) rely in respect of
matters of fact upon certificates of officers and employees of the Partnership
Entities 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 Partnership
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 such Time of Delivery and provided to you.)
In rendering such opinion, such counsel shall state that (A) ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P. and W. ▇▇▇▇ ▇▇▇▇▇▇ 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) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Ernst & Young LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex II hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex II(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex II(b) hereto).
(g) (i) None of the ▇▇▇▇▇ Entities shall have sustained since the date
of the latest audited financial statements included 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, otherwise than as set forth or
contemplated in the
37
Prospectus, and (ii) since the respective dates as of which information is given
in the Prospectus there shall not have been any change in the capitalization or
long-term debt of any of the Partnership Entities or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, partners' equity, members' equity or results of
operations of any of the Partnership Entities otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in clause (i) or (ii), is in the judgment of the Underwriters so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Units being delivered at such Time of Delivery
on the terms and in the manner contemplated in the Prospectus.
(h) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the debt securities of any ▇▇▇▇▇ Entity by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities of any ▇▇▇▇▇ Entity.
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Partnership's securities or the securities of ▇▇▇▇▇
on the NYSE; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York or Texas State authorities or a material
disruption in commercial banking or securities settlement or clearance services
in the United States; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war; or (v) the occurrence of any other calamity or crisis
or any change in financial, political or economic conditions in the United
States or elsewhere, if the effect of any such event specified in clause (iv) or
(v) in the judgment of the Underwriters makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Units being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus.
(j) The Units to be sold at such Time of Delivery shall have been duly
listed, subject to notice of issuance, on the New York Stock Exchange.
(k) The Partnership has obtained and delivered to the Underwriters
executed copies of an agreement from each officer and director of the GP LLC,
substantially to the effect set forth in Subsection 5(d) [Lock-Up Period] hereof
in form and substance satisfactory to you.
(l) The Partnership shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement.
(m) The Partnership shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the ▇▇▇▇▇ Parties
satisfactory to you as to the accuracy of the representations and warranties of
the ▇▇▇▇▇ Parties herein at and as of such Time of Delivery, as to the
performance by the ▇▇▇▇▇ Parties all of their obligations hereunder to be
performed at or prior to such
38
Time of Delivery, as to the matters set forth in subsections (a) and (h) of this
Section and as to such other matters as you may reasonably request.
8. Indemnification.
(a) The ▇▇▇▇▇ Parties, jointly and severally, will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions 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 or the Prospectus, or any amendment or supplement
thereto, or arise out of or 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, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that each of the ▇▇▇▇▇ Parties shall
not be liable in any such case to the extent that any such loss, claim, 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 or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Partnership by any Underwriter through ▇▇▇▇▇▇▇, Sachs & Co.
expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the ▇▇▇▇▇ Parties
against any losses, claims, damages or liabilities to which any of the ▇▇▇▇▇
Parties may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions 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 or the
Prospectus, or any amendment or supplement thereto, or arise out of or 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 was made in any
Preliminary Prospectus, 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 by such Underwriter through ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. expressly for use therein; and will reimburse the ▇▇▇▇▇ Parties for
any legal or other expenses reasonably incurred by the ▇▇▇▇▇ Parties in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
39
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection 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. No indemnifying party shall, without the written consent
of the 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 the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the ▇▇▇▇▇ Parties on the one hand and the
Underwriters on the other 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 subsection (c) above, then each 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 of the ▇▇▇▇▇ Parties on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
▇▇▇▇▇ Parties on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Partnership bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the ▇▇▇▇▇ Parties on the one
hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Each of the ▇▇▇▇▇ Parties and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(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
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be
40
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (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 which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the ▇▇▇▇▇ Parties under this Section 8 shall be
in addition to any liability which they may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of GP LLC (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of GP LLC) and to each person, if any, who controls
the ▇▇▇▇▇ Parties within the meaning of the Act.
9. Underwriters.
(a) If any Underwriter shall default in its obligation to purchase the
Units which it has agreed to purchase hereunder at a Time of Delivery, 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 other parties 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 such Time of Delivery 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 person substituted under this Section 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 by you and the Partnership as
provided in subsection (a) above, the aggregate number of such Units which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Units to be purchased at such Time of Delivery, then the Partnership shall
have the right to require each non-defaulting Underwriter to purchase the number
of Units which such
41
Underwriter agreed to purchase hereunder at such Time of Delivery 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 by you and the Partnership as
provided in subsection (a) above, the aggregate number of such Units which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Units to be purchased at such Time of Delivery, or if the Partnership shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Units of a defaulting Underwriter or Underwriters, then
this Agreement (or, with respect to the Second Time of Delivery, the obligations
of the Underwriters to purchase and of the Partnership to sell the Optional
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 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Partnership and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Partnership, or any officer or director or controlling person of GP LLC, and
shall survive delivery of and payment for the Units.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Partnership shall not then be under any liability to any Underwriter except
as provided in Sections 6 and 8 hereof; but, if for any other reason, any Units
are not delivered by or on behalf of the Partnership as provided herein, the
Partnership will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Units not so delivered, but the Partnership
shall then be under no further liability to any Underwriter except as provided
in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
representatives of the several Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives of the several Underwriters
in care of ▇▇▇▇▇▇▇, Sachs & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Registration Department; and if to the Partnership shall be
42
delivered or sent by mail to the address of the Partnership set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Partnership by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Partnership Entities and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of GP LLC and
each person who controls or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Units from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. 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.
The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.
43
If the foregoing is in accordance with your understanding, please sign
and return to us twelve counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
each of the ▇▇▇▇▇ Parties. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Partnership for examination upon request, but without warranty on your part
as to the authority of the signers thereof.
Very truly yours,
▇▇▇▇▇ ENERGY PARTNERS, L.P.
By: HEP Logistics Holdings, L.P. its
general partner
By: ▇▇▇▇▇ Logistic Services, L.L.C.,
its general partner
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
HEP OPERATING COMPANY, L.P.
By: HEP Logistics GP, L.L.C., its
general partner
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
44
HEP LOGISTICS HOLDINGS, L.P.
By: ▇▇▇▇▇ Logistic Services, L.L.C., its
general partner
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
▇▇▇▇▇ LOGISTIC SERVICES, L.L.C.
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
HEP LOGISTICS GP, L.L.C.
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
NAVAJO PIPELINE CO., L.P.
By:
----------------------------------------
-------------------------------
-------------------------------
NAVAJO REFINING COMPANY, L.P.
By:
----------------------------------------
-------------------------------
-------------------------------
45
▇▇▇▇▇ CORPORATION
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
▇▇▇▇▇ CROSS REFINING
By:
----------------------------------------
President
46
Accepted as of the date hereof:
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
UBS Investment Bank LLC
----------------------------------------------
(▇▇▇▇▇▇▇, Sachs & Co.)
On behalf of each of the Underwriters
47
SCHEDULE I
NUMBER OF OPTIONAL
UNITS TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM UNITS MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------------------------------------------------------------------------- --------------- ------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co..........................................................
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.....................................................
▇▇▇▇▇▇ Brothers Inc..........................................................
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc..............................................
--------------- ---------------
UBS Investment Bank LLC......................................................
--------------- ---------------
Total................................................ [6,000,000] [900,000]
=============== ===============
ANNEX I
FOREIGN QUALIFICATIONS
▇▇▇▇▇ Energy Partners, L.P.
Texas
New Mexico
HEP Operating Company, L.P.
Arizona
Idaho
Texas
Utah
HEP Logistics Holdings, L.P.
Arizona
Idaho
New Mexico
Texas
Utah
HEP Logistic Services, L.L.C.
Arizona
Idaho
New Mexico
Texas
Utah
Each of Operating Subsidiaries
New Mexico
Texas
ANNEX II(a)
[COMFORT LETTER OF ERNST & YOUNG LLP]
ANNEX II(b)
Pursuant to Section 7(d) of the
Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined 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 Act and the related published rules and
regulations thereunder; 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, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the Underwriters];
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to the Representatives and on
the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations, nothing came to their attention that cause them to believe
that the unaudited condensed consolidated financial statements do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries 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) (i) the unaudited consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material
respects with the applicable accounting requirements
of the Act and the related published rules and
regulations, or (ii) any material modifications
should be made to the unaudited condensed
consolidated statements of income, consolidated
balance sheets and consolidated statements of cash
flows included in the Prospectus for them to be in
conformity with generally accepted accounting
principles;
(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 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 (other than issuances of
capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible
securities, in each case which were outstanding on
the date of the latest financial statements included
in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items
specified by the Representatives, or any increases in
any items specified by the Representatives, 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; and
(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 other
items specified by the Representatives, or any
increases in any items specified by the
Representatives, in each case as compared with the
comparable period of the preceding year and with any
other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have
occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination 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 paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.