EXHIBIT 1.1
HERITAGE PROPANE PARTNERS, L.P.
1,400,000 Common Units*
Representing Limited Partner Interests
Underwriting Agreement
May 13, 2003
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇▇▇ BROTHERS INC.
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Heritage Propane Partners, L.P., a Delaware limited partnership (the
"Partnership"), proposes to sell to you (the "Underwriters"), 1,400,000 common
units representing limited partner interests in the Partnership ("Common Units")
(said units to be issued and sold by the Partnership being hereinafter called
the "Underwritten Securities"). The Partnership also proposes to grant to the
Underwriters an option to purchase up to 210,000 additional Common Units to
cover over-allotments (the "Option Securities"; the Option Securities, together
with the Underwritten Securities, being hereinafter called the "Securities").
Any reference herein to the Registration Statement or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue date of
such Prospectus; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the Effective Date of the Registration Statement, or the issue date of
the Prospectus, as the case may be, deemed to be incorporated therein by
reference. Certain terms used herein are defined in Section 16 hereof.
U.S. Propane, L.P., a Delaware limited partnership (the "General
Partner"), is the sole general partner of the Partnership and the sole general
partner of Heritage Operating, L.P. (the "Operating Partnership"). U.S. Propane,
L.L.C., a Delaware limited liability company ("U.S. Propane, L.L.C."), is the
sole general partner of the General Partner. The Partnership, the Operating
Partnership and the General Partner are collectively referred to herein as the
"Heritage Parties."
1. Representations and Warranties. Each of the Heritage Parties,
jointly and severally, represents and warrants to, and agrees with, the
Underwriters as set forth below in this Section 1.
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* Plus an option to purchase from Heritage Propane Partners, L.P., up to 210,000
additional common units to cover over-allotments.
(a) The Partnership meets the requirements for use of Form S-3
under the Act and has prepared and filed with the Commission a
registration statement (file number 333-86057) on Form S-3 for
registration under the Act of the offering and sale of the Securities.
The Registration Statement has been declared effective by the
Commission, and no stop order suspending the effectiveness of such
registration statement has been issued by the Commission. The
Partnership may have filed one or more amendments thereto which have
been furnished to you. The Partnership will next file with the
Commission a final prospectus in accordance with Rule 424(b). The
Partnership has included in such registration statement, as amended at
the Effective Date, all information required by the Act and the rules
thereunder to be included in such registration statement. As filed,
such amendment and such final prospectus, shall contain all such
required information, and shall be in all substantive respects in the
form furnished to you prior to the Execution Time.
(b) On the Effective Date, the Registration Statement did, and
when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date
on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date the Registration Statement did not,
and at the Execution Time the Registration Statement, as supplemented
or amended, will not, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
on the date of any filing pursuant to Rule 424(b) and on the Closing
Date and any settlement date, the Prospectus (together with any
supplement thereto) 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 the light of the circumstances under which they
were made, not misleading; provided, however, that the Heritage Parties
make no representations or warranties as to the information contained
in or omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to any Heritage Party by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement
or the Prospectus (or any supplement thereto).
(c) The documents which are incorporated by reference in the
Prospectus (or any supplement thereto) or from which information is so
incorporated by reference, when they became effective or were filed
with the Commission as the case may be, complied in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the respective rules thereunder; and any documents so
filed and incorporated by reference subsequent to the Effective Date
shall, when they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange Act, as
applicable, and the respective rules thereunder.
(d) Each of the Partnership and the Operating Partnership has
been 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, as the case may be, and to operate its
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properties and conduct its business, in each case in all material
respects as described in the Prospectus, and is duly qualified to do
business as a foreign limited partnership and is in good standing under
the laws of each jurisdiction which requires such qualification, except
where the failure to so qualify would not (i) have a material adverse
effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Partnership and
its subsidiaries, taken as a whole, or (ii) subject the limited
partners of the Partnership to any material liability or disability.
(e) The General Partner has been duly formed and is validly
existing in good standing as a limited partnership under the Delaware
LP Act with full partnership power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
and to act as general partner of the Partnership and the Operating
Partnership, in each case in all material respects as described in the
Prospectus. The General Partner is duly qualified to do business as a
foreign limited partnership and is in good standing under the laws of
each jurisdiction which requires such qualification, except where the
failure to so qualify would not (i) have a material adverse effect on
the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Partnership and its
subsidiaries, taken as a whole, or (ii) subject the limited partners of
the Partnership to any material liability or disability.
(f) U.S. Propane, L.L.C. has been duly formed and is validly
existing in good standing as a limited liability company under the laws
of the State of Delaware with full power and authority to own or lease,
as the case may be, and to operate its properties and conduct its
business and to act as general partner of the General Partner as
described in the Prospectus. U.S. Propane, L.L.C. is duly qualified to
do business as a foreign limited liability company and is in good
standing under the laws of each jurisdiction which requires such
qualification.
(g) Each of the subsidiaries of the Partnership, direct or
indirect, has been duly formed or incorporated and is validly existing
in good standing as a limited liability company, partnership or
corporation, as the case may be, under the laws of the state or
province of its formation or incorporation, as the case may be, with
full power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business, in each case in all
material respects as described in the Prospectus. Each of the
subsidiaries of the Partnership, direct or indirect, is duly qualified
to do business as a foreign limited liability company, partnership or
corporation, as the case may be, and is in good standing under the laws
of each jurisdiction which requires such qualification, except where
the failure to so qualify would not (i) have a material adverse effect
on the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Partnership and its
subsidiaries, taken as a whole, or (ii) subject the limited partners of
the Partnership to any material liability or disability.
(h) U.S. Propane, L.L.C. owns a .01% general partner interest
in the General Partner; such general partner interest has been duly
authorized and validly issued in accordance with the Amended and
Restated Agreement of Limited Partnership of the General Partner, as
amended to date (as the same may be amended and restated at the Closing
Date, the "GP Partnership Agreement"). U.S. Propane, L.L.C. owns such
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general partner interest free and clear of any perfected security
interest or any other security interests, claims, liens or
encumbrances.
(i) The General Partner is the sole general partner of the
Partnership with a 1% general partner interest in the Partnership; such
general partner interest has been duly authorized and validly issued in
accordance with the Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended to date (as the same may be
amended and restated at the Closing Date, the "Partnership Agreement");
and the General Partner owns such general partner interest free and
clear of any perfected security interest or any other security
interests, claims, liens or encumbrances.
(j) The General Partner owns 212,720 Common Units and all of
the Incentive Distribution Rights (as defined in the Partnership
Agreement), other than the 1,000,000 Class C Units owned by certain
former stockholders of Heritage Holdings, Inc. and the General Partner,
owns such Common Units and Incentive Distribution Rights free and clear
of any perfected security interest or any other security interests,
claims, liens or encumbrances.
(k) On the date hereof, the issued and outstanding limited
partner interests of the Partnership consist of 16,369,803 Common Units
and the Incentive Distribution Rights (including 1,000,000 Class C
Units). The Common Units, Incentive Distribution Rights (including
Class C Units) and all other limited partner interests of the
Partnership conform in all material respects to the description thereof
contained in the Prospectus; all outstanding Common Units and Incentive
Distribution Rights (including the Class C Units) and the limited
partner interests represented thereby have been duly authorized and
validly issued in accordance with the Partnership Agreement, and are
fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by
matters described under the caption "The Partnership Agreement--Limited
Liability" in the prospectus contained in the Partnership's
Registration Statement on Form S-1 (No. 333-4018) filed as Exhibit No.
1 to the Partnership's Registration Statement on Form 8-A (File No.
1-11727) incorporated by reference in the Prospectus (the "IPO
Prospectus")).
(l) The Securities issued to the Underwriters that may be
issued at the Closing Date and any settlement date and the limited
partner interests represented thereby will be duly authorized in
accordance with the Partnership Agreement and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid (to the
extent required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters described
under the caption "The Partnership Agreement--Limited Liability" in the
IPO Prospectus); the Securities are, or by the Closing Date will be,
duly listed, and admitted and authorized for trading, subject to
official notice of issuance, on the New York Stock Exchange; the
certificates for the Securities are in valid and sufficient form;
except as described in the Prospectus or arising under certain
agreements providing for the issuance of Common Units to the General
Partner in connection with stock acquisitions for the benefit of the
Partnership and the issuance of 20,000 Common Units issuable to an
employee upon vesting thereof (collectively, the "Stock Issuance
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Agreements"), there are no preemptive rights or other rights to
purchase or to subscribe for, nor any restriction upon the voting or
transfer of, any interests in the Partnership or the Operating
Partnership; and, except (i) as set forth in the Prospectus, (ii) for
restricted units granted under the General Partner's restricted unit
plan and (iii) for Common Units issuable under the Stock Issuance
Agreements, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, Common Units, or other
partnership interests in the Partnership or Operating Partnership are
outstanding.
(m) The Partnership has all requisite power and authority to
issue, sell and deliver the Securities, in accordance with and upon the
terms and conditions set forth in this Agreement, the Partnership
Agreement and the Prospectus. At the Closing Date and any settlement
date, all corporate and partnership action, as the case may be,
required to be taken by the Heritage Parties or any of their partners
for the authorization, issuance, sale and delivery of the Securities
shall have been validly taken.
(n) The General Partner is the sole general partner of the
Operating Partnership with a 1.0101% general partner interest in the
Operating Partnership; such general partner interest has been duly
authorized and validly issued in accordance with the Amended and
Restated Agreement of Limited Partnership of the Operating Partnership,
as amended to date (as the same may be amended and restated at the
Closing Date, the "Operating Partnership Agreement" and, together with
the Partnership Agreement, the "Partnership Agreements"); and the
General Partner owns such general partner interest free and clear of
any perfected security interest or any other security interests,
claims, liens or encumbrances.
(o) The Partnership is the sole limited partner of the
Operating Partnership with a 98.9899% 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 matters described under the caption
"The Partnership Agreement--Limited Liability" in the IPO Prospectus)
and the Partnership owns such limited partner interests free and clear
of any perfected security interest or any other security interests,
claims, liens or encumbrances.
(p) All the outstanding shares of capital stock, limited
liability company interests and partner interests of each of the
subsidiaries of the Partnership, direct and indirect, have been duly
authorized and validly issued and are fully paid and nonassessable
(except as such nonassessability may be affected by Section 18-607 of
the Delaware Limited Liability Company Act or by Section 17-607 of the
Delaware LP Act); and, except as provided in the Security Agreement
dated June 28, 1996 among Heritage Holdings, Inc., the Operating
Partnership and Wilmington Trust Company (the "Security Agreement) and
except for M-P Energy Partnership (in which M-P Oils, Ltd. owns a
general partnership interest of 60%) and Bi-State Propane (in which
Heritage-Bi State, L.L.C. owns a 50% general partner interest), the
Partnership, owns all of such shares and interests, directly or
indirectly, free and clear of any perfected security interest or any
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other security interests, claims, liens or encumbrances. Heritage-Bi
State, L.L.C. owns a 50% general partner interest in Bi-State Propane;
such general partner interest has been duly authorized and validly
issued in accordance with the partnership agreement of Bi-State Propane
(as the same may be amended and restated at the Closing Date, the
"Bi-State Propane Partnership Agreement"); and, except as encumbered by
the provisions of the Security Agreement, Heritage-Bi State, L.L.C.
owns such general partner interest free and clear of any perfected
security interest or any other security interests, claims, liens or
encumbrances.
(q) There is no agreement, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the headings "Tax Considerations" and "Description of Common
Units" insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or proceedings.
(r) This Agreement has been duly authorized, executed and
delivered by each of the Heritage Parties and constitutes a valid and
binding obligation of the Heritage Parties enforceable against each of
the Heritage 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) and except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws.
(s) The Partnership Agreement has been duly authorized,
executed and delivered by the General Partner and is a valid and
legally binding agreement of the General Partner, enforceable against
the General Partner in accordance with its terms; the Operating
Partnership Agreement has been duly authorized, executed and delivered
by the General Partner and the Partnership, and is a valid and legally
binding agreement of the General Partner and the Partnership,
enforceable against each of them in accordance with its terms; provided
that, with respect to each of the Partnership Agreements, 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).
(t) None of the Heritage Parties or any of their subsidiaries
is now, nor after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in
the Prospectus, will be, an (i) "investment company" as defined in the
Investment Company Act of 1940, as amended, or (ii) a "public utility
company" or "holding company" or subject to regulation as a "subsidiary
company" of a "registered holding company" or an "affiliate" thereof,
under the Public Utility Holding Company Act of 1935, as amended.
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(u) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the Exchange
Act or the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters in the
manner contemplated herein and in the Prospectus.
(v) Neither the offering, issuance and sale of the Securities,
nor the execution, delivery and performance of this Agreement by the
Heritage Parties, nor the consummation of any other of the transactions
herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach, default or violation (and no event
has occurred that, with notice or lapse of time or otherwise, would
constitute such an event) or imposition of any lien, charge or
encumbrance upon any property or assets of the Heritage Parties or any
of their subsidiaries pursuant to, (i) the certificate or agreement of
limited partnership of the Heritage Parties or any of their
subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which any
of the Heritage Parties or any of their subsidiaries is a party or
bound or to which any of their respective property is subject, or (iii)
any statute, law, rule, regulation, judgment, order or decree
applicable to any of the Heritage Parties or any of their subsidiaries
of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over any of the
Heritage Parties or any of their subsidiaries or any of their
respective properties, which conflicts, breaches, violations or
defaults, in the case of clauses (ii) or (iii), would have a material
adverse effect on the condition (financial or other), business,
prospects, properties, net worth or results of operations of the
Heritage Parties, taken as a whole whether or not arising from
transactions in the ordinary course of business ("Material Adverse
Effect"), or could materially impair the ability of any of the Heritage
Parties to perform its obligations under this Agreement.
(w) To the knowledge of the Heritage Parties, no third party
to any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which any of the Heritage Parties or any of
their subsidiaries is a party or bound or to which their respective
properties are subject, is in breach, default or violation under any
such agreement (and no event has occurred that, with notice or lapse of
time or otherwise, would constitute such an event), which breach,
default or violation would have a Material Adverse Effect.
(x) No holders of securities of the Partnership have rights to
the registration of such securities under the Registration Statement,
except for any such rights as have been effectively waived with respect
to the offering of the Securities.
(y) The financial statements and schedules of the Heritage
Parties and the related notes included in the Prospectus and the
Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows as of the
dates and for the periods indicated, comply as to form in all material
respects with the applicable accounting requirements of the Act and
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
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periods involved (except as otherwise noted therein). The selected
financial data set forth under the caption "Selected Historical
Financial and Operating Data" in the Partnership's Annual Report on
Form 10-K for the fiscal year ended August 31, 2002, (the "Form 10-K"),
the Prospectus and Registration Statement fairly present, on the basis
stated in the Form 10-K, the Prospectus and the Registration Statement,
the information included therein.
(z) Except as disclosed in the Prospectus, subsequent to the
date as of which such information is given in the Prospectus, (i) none
of the Heritage Parties or any of their respective subsidiaries has
incurred any liability or obligation, indirect, direct or contingent,
or entered into any transactions, not in the ordinary course of
business, that, singly or in the aggregate, is material to the Heritage
Parties and their subsidiaries, taken as a whole, (ii) there has not
been any material change in the capitalization, or material increase in
the short-term debt or long-term debt, of the Heritage Parties or any
of their respective subsidiaries and (iii) there has not been any
material adverse change, or any development involving or which may
reasonably be expected to involve, singly or in the aggregate, a
prospective material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of
operations of the Heritage Parties or any of their respective
subsidiaries whether or not arising from transactions in the ordinary
course of business.
(aa) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving any
of the Heritage Parties or any of their subsidiaries or any of their
respective property is pending or, to the knowledge of any of the
Heritage Parties, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or
the consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to have a Material Adverse Effect, except
as set forth in or contemplated in the Prospectus.
(bb) There are no legal or governmental proceedings pending
or, to the knowledge of the Heritage Parties, threatened, against any
of the Heritage Parties or any of their subsidiaries, or to which any
of the Heritage Parties or any of their subsidiaries 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.
(cc) The Heritage Parties and their subsidiaries have good and
marketable title to all real property and good title to all personal
property described in the Prospectus as being owned by them, free and
clear of any perfected security interest or any other security
interests, claims, liens or encumbrances except (i) as described in the
Prospectus, (ii) pursuant to the Security Agreement and (iii) such as
do not materially interfere with the use of such properties taken as a
whole as described in the Prospectus, including security interests,
claims, liens and encumbrances pursuant to mortgage and/or security
agreements given as security for certain non-compete agreements with
the prior owners of certain businesses previously acquired by the
Heritage Parties and their subsidiaries; and all real property and
buildings held under lease by any of the Heritage Parties or any of
their subsidiaries are held under valid and subsisting and enforceable
leases with such
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exceptions as do not materially interfere with the use of such
properties taken as a whole as described in the Prospectus.
(dd) Neither the Heritage Parties nor any of their
subsidiaries is in violation or default (and no event has occurred
that, with notice or lapse or time or otherwise, would constitute such
an event) of (i) any provision of its certificate or agreement of
limited partnership, the certificate or articles of incorporation or
bylaws or other organizational documents, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order
or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Heritage Parties or such subsidiary or any of their respective
properties, as applicable, which violation or default would, in the
cases of clauses (ii) and (iii), have a Material Adverse Effect, or
could materially impair the ability of any of the Heritage Parties to
perform its obligations under this Agreement.
(ee) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have audited certain consolidated
financial statements of the General Partner and the Partnership,
including the Operating Partnership and their subsidiaries for 2001 and
2002 and delivered their report with respect to the audited
consolidated financial statements incorporated by reference in the
Prospectus, are independent public accountants with respect to the
Heritage Parties within the meaning of the Act and the applicable
published rules and regulations thereunder.
(ff) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have audited certain
consolidated financial statements of the Heritage Parties and their
subsidiaries prior to 2001 and delivered their report with respect to
the audited consolidated financial statements incorporated by reference
in the Prospectus, are independent public accountants with respect to
the Heritage Parties within the meaning of the Act and the applicable
published rules and regulations thereunder.
(gg) The Heritage Parties maintain insurance covering their
properties, operations, personnel and businesses against such losses
and risks as are reasonably adequate to protect them and their
businesses in a manner consistent with other businesses similarly
situated. None of the Heritage Parties has received notice from any
insurer or agent of such insurer that substantial capital improvements
or other expenditures will have to be made in order to continue such
insurance, and all such insurance is outstanding and duly in force on
the date hereof and will be outstanding and duly in force on the
Closing Date.
(hh) The Heritage Parties and their subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the
appropriate foreign, federal, state or local regulatory authorities
necessary to conduct their respective businesses in the manner
described in the Prospectus, subject to such qualifications as may be
set forth in the Prospectus and except for such licenses, certificates,
permits and other authorizations, the failure of which to have obtained
would not have, individually or in the aggregate, a material adverse
effect upon the ability of the Heritage Parties to conduct their
businesses
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as currently conducted and as contemplated by the Prospectus to be
conducted. None of the Heritage Parties or any of their subsidiaries
have received any notice of proceedings relating to the revocation or
modification of any such license, certificate, permit or other
authorization which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(ii) The Heritage Parties and each of their subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(jj) The Heritage Parties have 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
Securities.
(kk) The Heritage Parties and their subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual
or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus. Except as set forth in the Prospectus
and except with respect to the ▇▇▇▇▇ Superfund site in New England to
which the Operating Partnership has been named as a de minimis
potentially responsible party, neither the Heritage Parties nor any of
its subsidiaries has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
Any certificate signed by any officer of any of the Heritage Parties
and delivered to the Underwriters or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Heritage Parties, as to matters covered thereby, to the
Underwriters.
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2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Partnership
agrees to sell to the Underwriters, and the Underwriters agree to
purchase from the Partnership, 1,400,000 common units at a purchase
price of $27.80 per unit.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Partnership
hereby grants an option to the Underwriters to purchase up to 210,000
Option Securities at the same purchase price per unit as the
Underwriters shall pay for the Underwritten Securities. Said option may
be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on
or before the 30th day after the date of the Prospectus upon written or
telegraphic notice by the Underwriters to the Partnership setting forth
the number of Option Securities as to which the Underwriters are
exercising the option and the settlement date.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 9:00 a.m., Houston time, on May 19, 2003 at
▇▇▇▇▇ ▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, which date
and time may be postponed by agreement between the Underwriters and the
Partnership (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Underwriters against payment by the Underwriters of the purchase price
thereof to or upon the order of the Partnership by wire transfer payable in
same-day funds to an account specified by the Partnership. Delivery of the
Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Underwriters shall
otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Partnership will deliver
the Option Securities (at the expense of the Partnership) to the Underwriters,
at c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, on the date specified by the Underwriters (which shall be within three
Business Days after exercise of said option) for the account of the
Underwriters, against payment by the Underwriters of the purchase price thereof
to or upon the order of the Partnership by wire transfer payable in same-day
funds to an account specified by the Partnership. If settlement for the Option
Securities occurs after the Closing Date, the Partnership will deliver to the
Underwriters on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Securities for sale to the public as set forth in the
Prospectus.
11
5. Agreements. Each of the Partnership and the General Partner agrees
with the several Underwriters that:
(a) The Partnership will use its best efforts to cause any
amendment to the Registration Statement to become effective. Prior to
the termination of the offering of the Securities, the Partnership will
not file any amendment of the Registration Statement or supplement to
the Prospectus or any Rule 462(b) Registration Statement unless the
Partnership has furnished you a copy for your review prior to filing
and will not file any such proposed amendment or supplement to which
you reasonably object. Subject to the foregoing sentence, if filing of
the Prospectus is required under Rule 424(b), the Partnership will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. The Partnership
will promptly advise the Underwriters (1) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (2) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (3)
of any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or
for any supplement to the Prospectus or for any additional information,
(4) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (5) of the receipt
by the Partnership of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or
the institution or threatening of any proceeding for such purpose. The
Partnership will use its best efforts to prevent the issuance of any
such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, the Partnership promptly will (1) notify the
Underwriters of such event, (2) prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission
or effect such compliance and (3) supply any supplemented Prospectus to
you in such quantities as you may reasonably request.
(c) The Partnership will furnish to the Underwriters and
counsel for the Underwriters, without charge, a copy of the
Registration Statement (including exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of the Prospectus and any supplement thereto as
the Underwriters may reasonably request. The Partnership will pay the
expenses of printing or other production of all documents relating to
the offering.
12
(d) The Partnership will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriters may designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities and will pay any fee of the National Association of
Securities Dealers, Inc. in connection with its review of the offering;
provided that in no event shall the Partnership be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or
to take any action that would subject it to service of process in
suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(e) The Heritage Parties will not, during the 90 days after
the date of this Underwriting Agreement, without the prior written
consent of the Underwriters, directly or indirectly, offer for sale,
contract to sell, distribute, grant any option, right or warrant to
purchase, pledge, hypothecate or otherwise dispose of any Common Units
or any securities convertible into, or exercisable, or exchangeable
for, Common Units; or publicly announce an intention to effect any such
transaction, provided, however, that the Heritage Parties may
contribute Common Units to the Partnership and may issue and sell
Common Units (i) to the Underwriters pursuant to this Underwriting
Agreement, (ii) pursuant to the Second Amended and Restated Restricted
Unit Plan dated as of February 4, 2002, (iii) to the General Partner or
its affiliates in connection with any acquisition by the Heritage
Parties of assets or similar prior acquisitions, (iv) in a transaction
not involving a public offering to purchasers who enter into an
agreement with the Underwriters in the form set forth in Exhibit A, (v)
in one or more transactions from and after 30 days from the date of
this Underwriting Agreement, utilizing the Partnership's Form S-4
Registration Statement for the contribution of assets to the
Partnership or its affiliates in exchange for Common Units, but not to
exceed an aggregate of 50,000 Common Units under this exception (v),
and (vi) as a capital contribution required on account of the issuance
and sale of Common Units to the Underwriters pursuant to this
Underwriting Agreement.
(f) The Heritage Parties will not take, 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
Securities.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Heritage Parties contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the Heritage
Parties made in any certificates pursuant to the provisions hereof, to the
performance by the Heritage Parties of their obligations hereunder and to the
following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the
13
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
(b) The Partnership shall have requested and caused ▇▇▇▇▇
▇▇▇▇▇ L.L.P., counsel for the Partnership, to have furnished to the
Underwriters their opinion, dated the Closing Date and addressed to the
Underwriters, to the effect that:
(i) Each of the Partnership and the Operating
Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the Delaware LP
Act, with all necessary partnership power and authority to own
or lease, as the case may be, and to operate its properties
and conduct its business as described in the Prospectus.
(ii) The General Partner is the sole general partner
of the Partnership with a 1% general partner interest in the
Partnership; such general partner interest has been duly
authorized and validly issued in accordance with the
Partnership Agreement; the General Partner owns 212,720 Common
Units and the Incentive Distribution Rights, other than the
1,000,000 Class C Units owned by certain former stockholders
of Heritage Holdings, Inc.; and the General Partner owns such
general partner interest, Common Units and Incentive
Distribution Rights (other than the Class C units) free and
clear of all liens, encumbrances, security interests, charges
or claims (A) 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 (B) otherwise
known to such counsel, without independent investigation,
other than those created by or arising under the Delaware LP
Act.
(iii) All outstanding Common Units issued to the
underwriters in the Partnership's initial public offering
(including pursuant to the underwriters' overallotment option)
and the Partnership's public offerings in October 1999 and
July 2001 and the Incentive Distribution Rights (including the
Class C Units) and the limited partner interests represented
thereby have been duly authorized and validly issued and are
fully paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such nonassessability
may be affected by matters described under the caption "The
Partnership Agreement-Limited Liability" in the IPO
Prospectus).
(iv) The Securities and the limited partner interests
represented thereby have been duly and validly authorized,
and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be fully paid
(to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected
by matters described under the caption "The Partnership
Agreement-Limited Liability" in the IPO Prospectus); except as
described in the Prospectus, there are no preemptive rights or
other rights to purchase or subscribe for, nor any restriction
upon the voting or transfer of any interests in the
Partnership or Operating Partnership pursuant to either of the
Partnership Agreements.
14
(v) The General Partner is the sole general partner
of the Operating Partnership with a 1.0101% 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
General Partner owns such general partner interest free and
clear of all liens, encumbrances, security interests, charges
or claims (A) 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 (B) otherwise
known to such counsel, without independent investigation,
other than those created by or arising under the Delaware LP
Act.
(vi) The Partnership is the sole limited partner of
the Operating Partnership with a 98.9899% 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 matters described under
the caption "The Partnership Agreement-Limited Liability" in
the IPO Prospectus); and the Partnership owns such limited
partner interests free and clear of all liens, encumbrances,
security interests, charges or claims (A) 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 (B) otherwise known to such counsel, without
independent investigation, other than those created by or
arising under the Delaware LP Act.
(vii) Neither the filing of the Registration
Statement nor the offering, issuance or sale of the Securities
as contemplated by this Agreement gives rise to any rights
under the Partnership Agreements, other than those which have
been waived for purposes of the offering of the Securities,
for or relating to the registration of any Securities or other
securities of the Partnership; the Partnership has all
requisite power and authority to offer, issue, sell and
deliver the Securities, in accordance with and upon the terms
and conditions set forth in this Agreement, the Partnership
Agreement and the Prospectus; at the Closing Date and any
settlement date, all partnership action required to be taken
by the Heritage Parties or any of their partners for the
authorization, issuance, sale and delivery of the Securities
shall have been validly taken.
(viii) The Partnership Agreement has been duly
authorized, executed and delivered by the General Partner and
is a valid and legally binding agreement of the General
Partner, enforceable against the General Partner in accordance
with its terms; the Operating Partnership Agreement has been
duly authorized, executed and delivered by the General Partner
and the Partnership and is a valid and legally binding
agreement of the General Partner and the Partnership,
enforceable against each of them in accordance with its terms;
provided that, with respect to each Partnership Agreement, the
enforceability thereof may be limited by (A) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
15
similar laws from time to time in effect affecting creditors'
rights and remedies generally and by general principles of
equity (regardless of whether such principles are considered
in a proceeding in equity or at law) and (B) public policy,
applicable law relating to fiduciary duties and
indemnification and an implied covenant of good faith and fair
dealing.
(ix) To the knowledge of such counsel, there is no
(A) pending or threatened action, suit or proceeding by or
before any court or governmental agency, authority or body or
any arbitrator to which any of the Heritage Parties is a party
or to which any of their subsidiaries or their respective
properties is subject of a character required to be disclosed
in the Registration Statement or Prospectus which is not
adequately disclosed in the Prospectus, and (B) agreement,
contract or other document to which any of the Heritage
Parties or any of their subsidiaries is a party that is
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; and the
statements included or incorporated by reference in the
Prospectus under the heading "Description of Common Units,"
insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are
materially accurate and fair summaries of such legal matters,
agreements, documents or proceedings; the discussion set forth
under the captions "Tax Considerations" included in the
Prospectus, subject to the qualifications stated therein,
constitutes our opinion as to the material federal United
States income tax consequences for purchasers of the
Securities; and the Securities, the Common Units, the Class C
Units and the Incentive Distribution Rights conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(x) The Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and other financial and
statistical information contained therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Exchange Act and the respective rules thereunder.
(xi) This Agreement has been duly authorized,
executed and delivered by each of the Heritage Parties.
(xii) None of the Heritage Parties or any of their
subsidiaries is now, nor after giving effect to the offering
and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus will be, a "public
utility company" or a "holding company" or subject to
regulation as a "subsidiary company" of a "registered holding
company" or an "affiliate" thereof, under the Public Utility
Holding Company Act of 1935, as amended.
16
(xiii) None of the Heritage Parties are, or after
giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the
Prospectus will be, an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(xiv) No consent, approval, authorization, filing
with or order of any federal, Delaware or Texas court,
governmental agency or body having jurisdiction over the
Heritage Parties is required in connection with the
transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the
state securities or "Blue Sky" laws of any jurisdiction in
connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated in
this Agreement and in the Prospectus and such other approvals
(specified in such opinion) as have been obtained.
(xv) Neither the offering, issue and sale of the
Securities nor the execution, delivery and performance of this
Agreement by the Heritage Parties, nor the consummation of any
other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in
a breach, default or violation (and no event has occurred
that, with notice or lapse of time or otherwise, would
constitute such an event) or imposition of any lien, charge or
encumbrance upon any property or assets of the Heritage
Parties or any of their subsidiaries pursuant to, (i) the
certificate or agreement of limited partnership of any of the
Heritage Parties, (ii) any agreement filed or incorporated by
reference as an exhibit to the Registration Statement, or
(iii) the Delaware LP Act, the Delaware General Corporation
Law, the laws of the State of Texas or federal law which in
the cases of clauses (ii) and (iii) would reasonably be
expected to have a material adverse effect on the financial
condition, business or results of operations of the
Partnership and its subsidiaries, taken as a whole whether or
not arising from transactions in the ordinary course of
business.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Heritage
Parties and the independent public accountants of the Partnership and
the Underwriters, at which the contents of the Registration Statement
and the Prospectus and related matters were discussed and, although
such counsel has not independently verified, is not passing upon, and
is not assuming responsibility for the accuracy, completeness or
fairness of the statements contained in, the Registration Statement and
the Prospectus (except to the extent specified in the foregoing
opinion), based on the foregoing, no information has come to such
counsel's attention that causes such counsel to believe that the
Registration Statement or any further amendment thereto made by the
Partnership prior to such Closing Date (other than (i) the financial
statements included or incorporated by reference therein, including the
notes and schedules thereto and the auditors' reports thereon, (ii) the
other financial and statistical data included or incorporated by
reference therein and (iii) the exhibits thereto, 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
17
misleading or that the Prospectus or any further amendment or
supplement thereto made by the Partnership prior to such Closing Date
(other than (i) the financial statements included or incorporated by
reference therein, including the notes and schedules thereto and the
auditors' reports thereon and (ii) the other financial and statistical
data included or incorporated by reference therein, as to which such
counsel need not comment) as of its issue date and the Closing Date
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect of
matters of fact upon certificates of officers and employees of the
General Partner or its general partner and upon information obtained
from public officials, (ii) 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 such counsel are genuine, (iii) state that they express no
opinion with respect to state or local taxes or tax statutes or
municipal ordinances to which any of the limited partners of the
Partnership or any of the Heritage Parties may be subject and (iv)
state that their opinion is limited to federal laws, the Delaware LP
Act, the Delaware General Corporation Law and the laws of the State of
Texas.
(c) The Partnership shall have requested and caused Doerner,
Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P., counsel to the Partnership, to
have furnished to the Underwriters their opinion, dated the Closing
Date and addressed to the Underwriters to the effect that:
(i) The General Partner has been duly formed and is
validly existing in good standing as a limited partnership
under the laws of the State of Delaware, with all necessary
power and authority to own or lease, as the case may be, and
to operate its properties, conduct its business and act as
general partner of the Partnership and the Operating
Partnership, in each case in all material respects as
described in the Prospectus.
(ii) U.S. Propane, L.L.C. has been duly formed and is
validly existing in good standing as a limited liability
company under the laws of the State of Delaware, with all
necessary power and authority to own or lease, as the case may
be, and to operate its properties, conduct its business and
act as general partner of the General Partner in all material
respects as described in the Prospectus.
(iii) Heritage-Bi State, L.L.C. has been duly formed
and is validly existing as a limited liability company in good
standing under the Delaware Limited Liability Company Act,
with all necessary power and authority to own or lease, as the
case may be, and to operate its properties and conduct its
business as described in the Prospectus. Heritage-Bi State,
L.L.C. is duly registered or qualified as a foreign limited
liability company for the transaction of business and is in
good standing under the laws of the states set forth on
Exhibit B attached hereto. All of the issued and outstanding
limited liability company interests of
18
Heritage-Bi State, L.L.C. have been duly authorized and
validly issued and are fully paid and non-assessable (except
as such non-assessability may be affected by Section 18-607 of
the Delaware Limited Liability Company Act); and except as
provided in the Security Agreement, the Partnership and the
Operating Partnership own all of such interests free and clear
of all liens, encumbrances, security interests, charges or
claims (A) in respect of which a financing statement under the
Uniform Commercial Code of the State of Delaware naming the
Partnership or the Operating Partnership as debtor is on file
in the office of the Secretary of State of the State of
Delaware or is (B) otherwise known to such counsel without
independent investigation, other than those created by the
Delaware Limited Liability Company Act. Heritage-Bi State,
L.L.C. owns a 50% general partner interest in Bi-State
Propane; such general partner interest has been duly
authorized and validly issued in accordance with the Bi-State
Propane Partnership Agreement; and, except as encumbered by
the provisions of the Security Agreement, Heritage-Bi State,
L.L.C. owns such general partner interest free and clear of
any perfected security interest or any other security
interests, claims, liens or encumbrances (A) in respect of
which a financing statement under the Uniform Commercial Code
of the State of Delaware naming Bi-State L.L.C. as debtor is
on file in the office of the Secretary of State of the State
of Delaware or is (B) otherwise known to such counsel without
independent investigation, other than those created under the
partnership laws of the State of California.
(iv) Each of the Partnership and the Operating
Partnership is duly registered or qualified as a foreign
limited partnership for the transaction of business and is in
good standing under the laws of the states set forth on
Exhibit B attached hereto.
(v) The General Partner is duly registered or
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of the states
set forth on Exhibit B attached hereto.
(vi) All outstanding Common Units (other than those
which were issued to the underwriters in the Partnership's
initial public offering (including pursuant to the
underwriters' overallotment option) and the Partnership's
public offering in October 1999 and July 2001) and the limited
partner interests represented thereby have been duly
authorized and validly issued in accordance with the
Partnership Agreement, and are fully paid (to the extent
required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters
described under the caption "The Partnership
Agreement--Limited Liability" in the IPO Prospectus).
(vii) All of the issued and outstanding general
partner interests of the General Partner have been duly
authorized and validly issued in accordance with the GP
Partnership Agreement; all of the issued and outstanding
limited partner interests of the General Partner have been
duly authorized and validly issued and are fully paid (to the
extent required under the GP Partnership Agreement) and
nonassessable (except as such nonassessability may be affected
19
by Section 17-607 of the Delaware LP Act); such general
partner interest is owned by U.S. Propane, L.L.C. and all such
limited partner interests are owned by AGL Propane Services,
Inc., United Cities Propane Gas, Inc., TECO Propane Ventures,
L.L.C. and Piedmont Propane Company; and in all cases free and
clear of all liens, encumbrances, security interests, charges
or claims (A) in respect of which a financing statement under
the Uniform Commercial Code of the State of Delaware naming
U.S. Propane, L.L.C., AGL Propane Services, Inc., United
Cities Propane Gas, Inc., TECO Propane Ventures, L.L.C. and
Piedmont Propane Company, as the case may be, as debtor is on
file in the office of the Secretary of State of the State of
Delaware or (B) otherwise known to such counsel, without
independent investigation, other than those created by the
Delaware General Corporation Law.
(viii) To such counsel's knowledge, except as
described in the Prospectus or arising under the Stock
Issuance Agreements, there are no preemptive rights or other
rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any limited partner interests
in the Partnership or the Operating Partnership pursuant to
any agreement or instrument to which the Partnership or the
Operating Partnership is a party or by which either of them
may be bound, other than the Partnership Agreements. To such
counsel's knowledge, except as described in the Prospectus,
neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this
Agreement gives rise to any rights (other than those arising
under the Partnership Agreements), other than those which have
been waived, for or relating to the registration of any Units
or other securities of the Partnership. To such counsel's
knowledge, except (A) as described in the Prospectus, (B) for
restricted units granted under the Partnership's restricted
unit plan and (C) for Common Units issuable under the Stock
Issuance Agreements, there are no outstanding options or
warrants to purchase any Common Units, Class C Units or other
partnership interests in the Partnership or the Operating
Partnership.
(ix) The statements in the Form 10-K under the
caption "Business--Government Regulation," insofar as they
refer to statements of law or legal conclusions, are accurate
and complete in all material respects.
(x) None of the offering, issuance and sale by the
Partnership of the Securities, the execution, delivery and
performance by the Heritage Parties of this Agreement or the
consummation of the transactions contemplated hereby (A)
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 an event) any bond, debenture,
note or any other evidence of indebtedness, indenture or any
other material instrument known to such counsel to which a
Heritage Party or one of its subsidiaries is a party or by
which any one of them may be bound (other than any other
agreement filed or incorporated by reference as an exhibit to
the Registration Statement), (B) violates or will violate any
order, judgment, decree or injunction of any court or
governmental agency or body known to such counsel directed to
any of them or any of their properties in a proceeding to
which any of
20
them or their property is a party, or (C) violates or will
violate any Oklahoma statute, law or regulation applicable to
any of the Heritage Parties or any of their subsidiaries or
any of their respective properties, which in the case of
clauses (A), (B) or (C) would reasonably be expected to have a
material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of
operations of the Partnership and its subsidiaries, taken as a
whole whether or not arising from transactions in the ordinary
course of business.
(xi) No permit, consent, approval, authorization,
order, registration, filing or qualification of or with any
Oklahoma court, governmental agency or body having
jurisdiction over the Heritage Parties or any of their
respective properties is required for the offering, issuance
and sale by the Partnership of the Securities, the execution,
delivery and performance of this Agreement or the consummation
of the transactions contemplated by this Agreement, except as
may be required under state securities or "Blue Sky" laws, as
to which counsel need not express any opinion.
(xii) To the knowledge of such counsel, none of the
Heritage Parties is in (A) breach or violation of its
partnership agreement, certificate of limited partnership or
other organizational documents or (B) default (and no event
has occurred which, with notice or lapse of time or both,
would constitute such a default) or violation in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence
of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its
properties may be bound which breach, default or violation
would, if continued, have a Material Adverse Effect, or could
materially impair the ability of any of the Heritage Parties
to perform their obligations under this Agreement.
(xiii) Except as described in the Prospectus, to the
knowledge of such counsel, there is no litigation, proceeding
or governmental investigation pending or threatened against
any of the Heritage Parties or any of their subsidiaries
which, if adversely determined to such Heritage Parties, is
reasonably likely to have a Material Adverse Effect.
(xiv) To the knowledge of such counsel, without
independent investigation, each of the Heritage Parties and
their subsidiaries has such permits, consents, licenses,
franchises and authorizations ("permits") issued by the
appropriate federal, state or local governmental or regulatory
authorities as are necessary to own or lease 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 reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
and, to the knowledge of such counsel, without independent
investigation, none of the Heritage Parties or their
subsidiaries 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
21
decision, ruling or finding, would reasonably be expected to
have a Material Adverse Effect.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Heritage
Parties and the independent public accountants of the Partnership and
the Underwriters, at which the contents of the Registration Statement
and the Prospectus and related matters were discussed and, although
such counsel has not independently verified, is not passing upon, and
is not assuming responsibility for the accuracy, completeness or
fairness of the statements contained in, the Registration Statement and
the Prospectus (except to the extent specified in the foregoing
opinion), based on the foregoing, no information has come to such
counsel's attention that causes such counsel to believe that the
Registration Statement or any further amendment thereto made by the
Partnership prior to such Closing Date (other than (i) the financial
statements included or incorporated by reference therein, including the
notes and schedules thereto and the auditors' reports thereon, (ii) the
other financial and statistical data included or incorporated by
reference therein and (iii) the exhibits thereto, 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 or any further amendment
or supplement thereto made by the Partnership prior to such Closing
Date (other than (i) the financial statements included or incorporated
by reference therein, including the notes and schedules thereto and the
auditors' reports thereon and (ii) the other financial and statistical
data included or incorporated by reference therein, as to which such
counsel need not comment) as of its issue date and the Closing Date
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect of
matters of fact upon certificates of officers and employees of the
General Partner or its general partner and upon information obtained
from public officials, (ii) 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 such counsel are genuine, (iii) state that they express no
opinion with respect to state or local taxes or tax statutes or
municipal ordinances to which any of the limited partners of the
Partnership or any of the Heritage Parties may be subject, (iv) state
that their opinion is limited to federal laws and the laws of the State
of Oklahoma and (v) with respect to the opinions expressed in
paragraphs (i), (iv), (v) and (iv) above as to the due qualification of
and registrations as a foreign limited partnership or foreign
corporation, of each of the Heritage Parties or their subsidiaries,
state that such opinions are based solely upon certificates of foreign
qualification and registration provided by the Secretaries of State of
the States listed on Exhibit A to such opinion, each of which shall be
dated as of a date not more than 14 days prior to the Closing date and
shall be provided to you.
(d) The Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Underwriters, with respect to the
issuance and sale of the Securities, the
22
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Underwriters may reasonably
require, and the Heritage Parties shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(e) The General Partner shall have furnished to the
Underwriters a certificate of the general partner of the General
Partner, signed by the Chairman of the Board or the President and the
principal financial or accounting officer thereof, dated the Closing
Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplements to
the Prospectus and this Agreement and that:
(i) the representations and warranties of the
Heritage Parties in this Agreement are true and correct on and
as of the Closing Date with the same effect as if made on the
Closing Date and the Heritage Parties have complied with all
the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the General
Partner's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included or incorporated by reference in the
Prospectus (exclusive of any supplement thereto), there has
been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Partnership and its subsidiaries, taken as a whole whether or
not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(f) The Partnership shall have requested and caused ▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP to have furnished to the Underwriters, at the Execution
Time and at the Closing Date, letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Underwriters, confirming that they are independent
public accountants within the meaning of the Act and the respective
applicable rules and regulations adopted by the Commission thereunder
and that they have performed a review of the unaudited interim
financial information of the Partnership for the six-month period ended
February 28, 2003, and as at February 28, 2003 in accordance with
Statement on Auditing Standards No. 71, and stating in effect that:
(i) in their opinion the audited consolidated or
combined financial statements, as applicable, incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Act and the
Exchange Act and the related rules and regulations adopted by
the Commission;
23
(ii) on the basis of a reading of the latest
unaudited consolidated financial statements made available by
the Partnership and its subsidiaries; their limited review, in
accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial
information for the six-month period ended February 28, 2003,
and as at February 28, 2003, incorporated by reference in the
Registration Statement and the Prospectus; carrying out
certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the directors, Audit Committee
or other governing committee of the Partnership, the General
Partner or U.S. Propane, L.L.C.; and inquiries of certain
officials of the Partnership who have responsibility for
financial and accounting matters of the Partnership as to
transactions and events subsequent to August 31, 2002, nothing
came to their attention which caused them to believe that:
(1) any unaudited consolidated financial
statements incorporated by reference in the
Registration Statement and the Prospectus do not
comply as to form in all material respects with
applicable accounting requirements of the Act and
with the related rules and regulations adopted by the
Commission with respect to financial statements
incorporated by reference in quarterly reports on
Form 10-Q under the Exchange Act; and said unaudited
consolidated financial statements are not in
conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus;
(2) with respect to the period subsequent to
February 28, 2003, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the Common Units, increase in
long-term debt or any decreases in consolidated net
current assets or partners' capital as compared with
the amounts shown on the February 28, 2003, unaudited
condensed consolidated balance sheet incorporated by
reference in the Registration Statement and the
Prospectus, or for the period from March 1, 2003 to
such specified date there were any decreases, as
compared with the corresponding period in the
preceding year, in consolidated total revenues or in
the total or per-unit amounts of net income, except
in all instances for changes, increases or decreases
set forth in such letter, in which case the letter
shall be accompanied by an explanation by the
Partnership as to the significance thereof unless
said explanation is not deemed necessary by the
Underwriters; or
(3) the information incorporated by
reference in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301
(Selected Historical Financial and Operating Data) is
not in
24
conformity with the applicable disclosure
requirements of Regulation S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Partnership and its subsidiaries) set forth in the
Registration Statement and the Prospectus, including the
information included or incorporated by reference in Items 1,
2, 6, 7 and 11 of the Partnership's Annual Report on Form
10-K, incorporated by reference in the Registration Statement
and the Prospectus, the information included in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated by reference in the
Partnership's Quarterly Reports on Form 10-Q, incorporated by
reference in the Registration Statement and the Prospectus,
and the unaudited pro forma combined financial statements
included in the Partnership's Current Report on Form 8-K/A
dated January 2, 2003, as amended on March 18, 2003,
incorporated by reference is the Registration Statement and
the Prospectus, agrees with the accounting records of the
Partnership and its subsidiaries, excluding any questions of
legal interpretation.
(iv) on the basis of a reading of the unaudited pro
forma combined balance sheet as of November 30, 2002, and the
unaudited pro forma combined statements of operations for the
year ended August 31, 2002 and the three months ended November
30, 2002, included in the Partnership's Form 8-K/A dated
January 2, 2003, as amended on March 18, 2003, incorporated by
reference in the Registration Statement and the Prospectus; an
inquiry of certain officials of the Partnership who have
responsibility for financial accounting matters about the
basis for their determination of the pro forma adjustments,
and whether the unaudited pro forma combined financial
statements comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X; and proving the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the
unaudited pro forma combined financial statements, nothing
came to their attention that caused them to believe that the
unaudited pro forma combined financial statements incorporated
by reference in the Registration Statement and Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X and that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements.
References to the Prospectus in this paragraph (f)
include any supplement thereto at the date of the
letter.
(g) The Partnership shall have requested and caused ▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP to have furnished to the Underwriters, at the Execution
Time, a letter dated as of the Execution Time, in form and substance
satisfactory to the Underwriters, confirming that they have performed
agreed-upon procedures in accordance with the attestation standards
25
established by the American Institute of Certified Public Accountants,
and stating in effect that:
(i) they have compared the indicated quantity, amount
or percentage of items identified by the Partnership and the
Underwriters in the Partnership's 10-K for the year ended
August 31, 2002, to the corresponding quantity, amount or
percentage in the audited consolidated financial statements or
notes thereto included in the Partnership's reports on Form
10-K for 1997 through 2000 (such audits performed by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, the Partnership's former independent public
accountants), and found such quantities, amounts or
percentages to be in agreement, after considering rounding;
and
(ii) they have recomputed the indicated quantity,
amount or percentage of items identified by the Partnership
and the Underwriters in the Partnership's 10-K for the year
ended August 31, 2002, using amounts included in or derived
from the audited consolidated financial statements or notes
thereto included in the Partnership's annual reports on Form
10-K for 1997 through 2000, and found such quantities, amounts
or percentages to be in agreement, after considering rounding.
(h) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraphs
(f) or (g) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the
Partnership and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Underwriters,
so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated
by the Registration Statement (exclusive of any amendment thereof) and
the Prospectus (exclusive of any supplement thereto).
(i) Prior to the Closing Date, the Heritage Parties shall have
furnished to the Underwriters such further information, certificates
and documents as the Underwriters may reasonably request.
(j) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange, and satisfactory
evidence of such actions shall have been provided to the Underwriters.
(k) At the Execution Time, the General Partner shall have
furnished to the Underwriters a letter substantially in the form of
Exhibit A hereto from each executive officer and director of the
General Partner and U.S. Propane, L.L.C. addressed to the Underwriters.
26
(l) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading securities generally on
the New York Stock Exchange or the establishing on such market by the
Commission or by such market of minimum or maximum prices which are not
in force and effect on the date hereof; (ii) a suspension or material
limitation in trading in the Partnership's securities on the New York
Stock Exchange; (iii) a general moratorium on commercial banking
activities declared by either federal or Missouri authorities; (iv) the
outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war,
which in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities in the
manner contemplated in the Prospectus; or (v) any calamity or crisis,
change in national, international or world affairs, act of God, change
in the international or domestic markets, or change in the existing
financial, political or economic conditions in the United States or
elsewhere, the effect of which on the financial markets of the United
States is such as to make it in your judgment impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities in the manner contemplated in the Prospectus.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Partnership in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel for the Partnership, at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, on the Closing Date.
7. Reimbursement of the Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because of any termination
pursuant to Section 9 hereof (other than a termination thereunder as a result of
the occurrence of an event described in 6(l)(i), (iii), (iv) or (v)), or because
of any refusal, inability or failure on the part of the Heritage Parties to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by the Underwriters, the Partnership will reimburse the
Underwriters on demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
27
8. Indemnification and Contribution.
(a) The Heritage Parties, jointly and severally, will
indemnify and hold harmless the Underwriters, the directors, officers,
employees and agents of the Underwriters and each person who controls
the Underwriters, within the meaning of either the Act or the Exchange
Act, from and against any losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or claims in respect thereof) arise
out of or are based upon (i) an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement 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, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances in which
they were made, not misleading, and will reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Heritage Parties will 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 any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Heritage
Parties by or on behalf of the Underwriters specifically for inclusion
therein. This indemnity agreement will be in addition to any liability
which the Heritage Parties may otherwise have.
(b) The Underwriters will indemnify and hold harmless the
Heritage Parties, each person who signed the Registration Statement and
each person who controls a Heritage Party, including officers and
directors thereof, within the meaning of either the Act or the Exchange
Act, from and against any losses, claims, damages or liabilities, joint
or several, to which the Heritage Parties may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or claims in respect thereof) arise
out of or are based upon (i) an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement 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, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances in which
they were made, not misleading, and will reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; in each
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with
28
written information furnished to the Heritage Parties by or on behalf
of the Underwriters specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Underwriters
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
in writing of the commencement thereof; but the failure so to notify
the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's
choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case
the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party
or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding
the indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would, based on
advice of counsel to the indemnified party, present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded, based on advice from its counsel, that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of
such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Heritage Parties
jointly and severally and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) (collectively
29
"Losses") to which the Heritage Parties and the Underwriters may be
subject in such proportion as is appropriate to reflect the relative
benefits received by the Heritage Parties on the one hand and by the
Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall the Underwriters (except as
may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of
the underwriting discount or commission applicable to the Securities
purchased hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Heritage Parties
jointly and severally and the Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Heritage Parties on the one hand and
of the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Heritage Parties
shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by it, and benefits received by
the Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page
of the Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information provided by Heritage Parties on
the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Heritage Parties and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), 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. For purposes of this
Section 8, each person who controls the Underwriters within the meaning
of either the Act or the Exchange Act and each director, officer,
employee and agent of the Underwriters shall have the same rights to
contribution as the Underwriters, and each person who controls a
Heritage Party within the meaning of either the Act or the Exchange
Act, each person who shall have signed the Registration Statement and
each director of the General Partner shall have the same rights to
contribution as the General Partner, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination.
(a) This Agreement may be terminated by you at any time at or
prior to the Closing Date in accordance with the second to last
paragraph of Section 6. Any such termination shall be without liability
of any party to any other party except as provided in Sections 8 and 10
hereof.
(b) This Agreement also may be terminated by you, by notice to
the Partnership, as to any obligation of the Underwriters to purchase
the Option Units, if any condition specified in the second to last
paragraph of Section 6 hereof shall not have been satisfied at or prior
to the Option Closing Date.
30
If you terminate this Agreement as provided in Sections 9(a) or 9(b),
you shall notify the Partnership by telephone or telegram, confirmed by letter.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Heritage Parties or their officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Underwriters or the Heritage
Parties or any of the officers, directors, employees, agents or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Underwriters, will be mailed,
delivered or telefaxed to the c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. General Counsel (fax
no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the General Counsel, ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel; or, if sent to the Partnership, will be mailed, delivered or telefaxed
to (▇▇▇) ▇▇▇-▇▇▇▇ and confirmed to it at (▇▇▇) ▇▇▇-▇▇▇▇, attention of the
President.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Missouri, without giving effect to the
choice of law or conflict of laws principles thereof.
14. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
15. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
16. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
31
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date.
"Registration Statement" shall mean the registration statement referred
to in paragraph 1(a) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, shall also mean such registration
statement as so amended or such Rule 462(b) Registration Statement, as the case
may be.
"Rule 424"and "Rule 462" refer to such rules under the Act.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the registration statement referred to in Section 1(a)
hereof.
32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Heritage Parties and the several Underwriters.
Very truly yours,
Heritage Propane Partners, L.P.
By: U.S. Propane, L.P.
its general partner
By: U.S. Propane, L.L.C.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President and Chief
Financial Officer
---------------------------------
Heritage Operating, L.P.
By: U.S. Propane, L.P.
its general partner
By: U.S. Propane, L.L.C.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President and Chief
Financial Officer
---------------------------------
U.S. Propane, L.P.
By: U.S. Propane, L.L.C.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President and Chief
Financial Officer
---------------------------------
33
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Title: Managing Director
------------------------------------------
▇▇▇▇▇▇ Brothers Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Title: Senior Vice President
------------------------------------------
34
[FORM OF LOCK-UP AGREEMENT] EXHIBIT A
Heritage Propane Partners, L.P.
Public Offering of Common Stock
May 7, 2003
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇▇▇ BROTHERS INC.
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Heritage Propane
Partners, L.P., a Delaware limited partnership (the "Partnership"), Heritage
Operating, L.P., A Delaware limited partnership, U.S. Propane, L.P., a Delaware
limited partnership, and you as Underwriters, relating to an underwritten public
offering of Common Units (the "Common Units"), of the Partnership.
In order to induce you to enter into the Underwriting Agreement, the
undersigned will not, during the 90 days after the date of the Underwriting
Agreement, without the prior written consent of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. and
▇▇▇▇▇▇ Brothers Inc., directly or indirectly, offer for sale, contract to sell,
distribute, grant any option, right or warrant to purchase, pledge, hypothecate
or otherwise dispose of any Common Units or any securities convertible into, or
exercisable, or exchangeable for, Common Units; or publicly announce an
intention to effect any such transaction, provided, however, that the Heritage
Parties (as defined in the Underwriting Agreement) or, as applicable, the
undersigned, may contribute Common Units to the Partnership and may issue and
sell Common Units (i) to the Underwriters pursuant to the Underwriting
Agreement, (ii) pursuant to the Second Amended and Restated Restricted Unit Plan
dated as of February 4, 2002, (iii) to the General Partner or its affiliates in
connection with any acquisition by the Heritage Parties of assets or similar
prior acquisitions, (iv) in a transaction not involving a public offering to
purchasers who enter into an agreement with the Underwriters in the form of this
letter agreement, (v) in one or more transactions from and after 30 days from
the date of the Underwriting Agreement, utilizing the Partnership's Form S-4
Registration Statement for the contribution of assets to the Partnership or its
affiliates in exchange for Common Units, but not to exceed an aggregate of
50,000 Common Units under this exception (v), and (vi) as a capital contribution
required on account of the issuance and sale of Common Units to the Underwriters
pursuant to the Underwriting Agreement.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR
MAJOR STOCKHOLDER]
[NAME AND ADDRESS OF OFFICER,
DIRECTOR OR MAJOR STOCKHOLDER]
A-1
EXHIBIT B
Entity Jurisdiction in which registered or qualified
------ ---------------------------------------------
Partnership Delaware, Oklahoma
Operating Partnership Arizona, Alabama, California, Colorado,
Delaware, Florida, Georgia, Idaho, Kentucky,
Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Montana, Nevada, New
Hampshire, New Jersey, New Mexico, New York,
North Carolina, Oklahoma, Oregon,
Pennsylvania, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Virginia,
Washington, Wyoming
General Partner Arizona, Alabama, California, Colorado,
Delaware, Florida, Georgia, Idaho, Kentucky,
Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Montana, Nevada, New
Hampshire, New Jersey, New Mexico, New York,
North Carolina, Oklahoma, Oregon,
Pennsylvania, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Virginia,
Washington, Wyoming
Heritage-Bi State L.L.C.. Delaware, California, Nevada, Oklahoma
B-1