DUNCAN ENERGY PARTNERS
L.P.
Representing Limited Partner
Interests
Lehman Brothers
Inc.
UBS Securities LLC
As Representatives of the several Underwriters named in
Schedule I hereto
c/o Lehman
Brothers Inc.
745 Seventh Avenue
New York, New York 10019
c/o UBS
Securities LLC
299 Park Avenue
New York, New York 10173
Duncan Energy
Partners L.P., a Delaware limited partnership (the “
Partnership ”), proposes to sell to the underwriters
named in Schedule I hereto (the “ Underwriters
”) 13,000,000 common units (the “ Firm Units
”), representing limited partner interests in the Partnership
(the “ Common Units ”). In addition, the
Partnership proposes to grant to the Underwriters an option to
purchase up to 1,950,000 additional Common Units on the terms and
for the purposes set forth in Section 2 (the “ Option
Units ”). The Firm Units and the Option Units, if
purchased, are referred to collectively herein as the “
Units .”
This is to confirm
the agreement among the Partnership, DEP Holdings, LLC, a Delaware
limited liability company and the general partner of the
Partnership (the “ General Partner ”), DEP
Operating Partnership, L.P., a Delaware limited partnership (the
“ Operating Partnership ”), DEP OLPGP, LLC, a
Delaware limited liability company and the general partner of the
Operating Partnership (“ OLPGP ”) and Enterprise
Products Operating L.P., a Delaware limited partnership (“
EPOLP ” and, together with the Partnership, the
General Partner, the Operating Partnership and OLPGP, the “
DEP Parties ”) and the Underwriters concerning the
purchase of the Units from the Partnership by the
Underwriters.
It is understood
and agreed to by all parties hereto that the Partnership was
initially formed to acquire certain natural gas gathering,
transportation, marketing and storage assets and certain natural
gas liquid transportation and storage assets from EPOLP, each as
more particularly described in the Preliminary Prospectus and the
Prospectus (as such terms are hereinafter defined).
It is further
understood and agreed to by all parties hereto that as of the date
hereof:
(i) the
Partnership owns 100% of the limited liability company interests in
OLPGP and a 99.999% limited partner interest in the Operating
Partnership;
(ii) the General
Partner owns a 2% general partner interest in the
Partnership;
(iii) OLPGP owns a
0.001% general partner interest in the Operating
Partnership;
(iv) EPOLP and its
general partner, Enterprise Products OLPGP, Inc., a Delaware
corporation (“ EPOLPGP ”), collectively or
individually own 100% of the limited liability company interests in
the General Partner and 100% of the limited liability company
interests or partnership interests, as the case may be, in each of
Mont Belvieu Caverns, LLC (“ MBC LLC ”), South
Texas NGL Pipelines, LLC (“ South Texas NGL ”),
Acadian Gas, LLC (“ Acadian Gas ”), Enterprise
Lou-Tex Propylene Pipeline L.P. (“ Lou-Tex LP
”), and Sabine Propylene Pipeline L.P. (“ Sabine
LP ”, and collectively with MBC LLC, South Texas NGL,
Acadian Gas, Lou-Tex LP and Sabine LP, the “ Initial
Operating Subsidiaries ”); and
(v) the
Partnership has entered into a $300 million revolving credit
facility (the “ Credit Facility ”).
The General
Partner, the Partnership, OLPGP, the Operating Partnership, the
Initial Operating Subsidiaries and the subsidiaries of the Initial
Operating Subsidiaries named in Schedule III hereto (together
with the Initial Operating Subsidiaries, the “
Subsidiaries ”) are referred to collectively herein as
the “ Partnership Entities .” The General
Partner, the Partnership, the OLPGP, the Operating Partnership, the
Initial Operating Subsidiaries, Evangeline Gas Pipeline Company,
L.P. and Evangeline Gas Corp. are collectively herein referred to
as the “ Significant DEP Entities ”).
It is further
understood and agreed to by the parties hereto that the following
transactions have occurred prior to the date hereof or will occur
on the date hereof:
(i) the
Partnership and the Initial Operating Subsidiaries will enter into
various new and amended transportation, storage and operating
agreements with EPOLP and its affiliates, including the
following:
a) South Texas NGL
and EPOLP entered into an NGL Transportation Agreement dated as of
January 1, 2007 regarding transportation of dedicated
production from EPD’s Shoup and Armstrong facilities to Mont
Belvieu, Texas; and
b) MBC LLC entered
into (1) the Storage Lease (Enterprise Products NGL
Marketing), between Enterprise Products Operating L.P. and Mont
Belvieu Caverns, LLC, (2) the Storage Lease (North Propane
—
2
Propylene
Splitters), between Enterprise Products Operating L.P. and Mont
Belvieu Caverns, LLC, (3) the Storage Lease (Belvieu
Environmental Fuels), between Enterprise Products Operating L.P.
and Mont Belvieu Caverns, LLC, (4) the Storage Lease (Butane
Isomer), between Enterprise Products Operating L.P. and Mont
Belvieu Caverns, LLC, (5) the Storage Lease (Enterprise
Fractionation Plant), between Enterprise Products Operating L.P.,
Duke Energy NGL Services L.P., Burlington Resources Inc. and Mont
Belvieu Caverns, LLC, and (6) the Amended and Restated RGP
Storage Lease, between Enterprise Products Operating L.P. and Mont
Belvieu Caverns, LLC, each dated as of January 23, 2007 with
lease terms commencing on February 1, 2007; and MBC LLC became
party to the Ground Lease Agreement, dated as of January 17,
2002, by and between Enterprise Products Operating L.P.
(successor-in-interest to Diamond-Koch, L.P.) and Mont Belvieu
Caverns, LLC (successor-in-interest to Enterprise Products Texas
Operating L.P.), with a lease term commencing on February 1,
2007.
(ii) EPOLP,
EPOLPGP, EPD, the Partnership, the General Partner, OLPGP and the
Operating Partnership will enter into a Contribution, Conveyance
and Assumption Agreement (the “ Contribution Agreement
”) pursuant to which EPOLP, for itself and on behalf of the
General Partner, will contribute to the Partnership an aggregate of
66% of the limited liability company or limited partnership
interests, as the case may be, in each of the Initial Operating
Subsidiaries in exchange for the issuance by the Partnership to
EPOLP of 7,301,571 Common Units (the “ Sponsor Units
”) and a continuation of the General Partner’s 2%
general partner interest in the Partnership;
(iii) MBC LLC has
entered into a Contribution, Conveyance and Assumption Agreement
dated January 23, 2007 but effective as of February 1,
2007 with EPOLP and certain of its affiliates relating to assets
located at Mont Belvieu, Texas (the “ MB Contribution
Agreement ”), and South Texas NGL has entered into a
Contribution, Conveyance and Assumption Agreement dated
January 23, 2007 but effective as of January 1, 2007 with
EPOLP and certain of its affiliates relating to assets that form
part of the South Texas NGL Pipeline System (the “ South
Texas Contribution Agreement ”); and
(iv) EPOLP has
assigned to the appropriate Initial Operating Subsidiary
(a) the Sabine Pipeline Propylene Exchange Agreement, by and
between Shell Chemical LP and Enterprise Products Operating L.P.,
dated as of July 12, 2006, (b) Propylene Product Exchange
Agreement, by and between Enterprise Products Operating L.P. and
Shell Chemical Company, dated as of March 1, 2000 as amended
April 1, 2005, and (c) the Chemical Grade Propylene
Product Exchange Agreement between Enterprise Products Operating
L.P. and Exxon Mobil Company, dated as of June 1,
2000.
The agreements
described in (i) and (iv) above, as assigned, are
referred to herein collectively as the “ Commercial
Agreements .”
It is further
understood and agreed to by the parties hereto that the following
additional transactions will occur on or prior to the Initial
Delivery Date:
3
(i) the
Partnership will amend and restate its agreement of limited
partnership (as so amended and restated, the “ Partnership
Agreement ”);
(ii) the General
Partner will amend and restate its limited liability company
agreement (as so amended and restated, the “ GP LLC
Agreement ”);
(iii) the OLPGP
will amend and restate its limited liability company agreement (as
so amended and restated, the “ OLPGP LLC Agreement
”);
(iv) each of the
Initial Operating Subsidiaries will amend and restate their limited
liability company agreement or limited partnership agreement, as
the case may be (as so amended and restated, the “
Operating Subsidiaries Formation Agreements
”);
(v) EPOLP, the
General Partner, the Partnership, OLPGP, the Operating Partnership
and the Initial Operating Subsidiaries will enter into an Omnibus
Agreement (the “ Omnibus Agreement ”) pursuant
to which (A) EPOLP has agreed to indemnify the Partnership for
certain liabilities, (B) EPOLP has agreed to reimburse the
Partnership for its 66% share of excess expenditures, if any,
relating to construction of the South Texas NGL Pipeline System and
additional brine production capacity and above-ground storage
reservoirs at Mont Belvieu, (C) EPOLP will have a right of
first refusal on the equity interests of the current and future
Subsidiaries and their assets, and (D) EPOLP will have
preemptive rights with respect to certain issuances of equity by
the Subsidiaries;
(vi) EPCO, Inc.,
Enterprise Products Partners L.P., a Delaware limited partnership
(“ EPD ”), and its general partner, Enterprise
GP Holdings L.P. and its general partner, EPOLP and its general
partner, TEPPCO Partners, L.P. and its general partner, TE Products
Pipeline Company, Limited Partnership, TEPPCO Midstream Companies,
L.P., TCTM, L.P., the Partnership and the General Partner will
enter into the Fourth Amended and Restated Administrative Services
Agreement (the “ Administrative Services Agreement
”) pursuant to which (A) EPCO, Inc. will provide all
necessary administrative, management, engineering and operating
services to the Partnership, (B) business opportunities will
be allocated amongst the parties, and (C) certain parameters
will be established regarding the parties’ governance
structures;
(vii) the public
offering of the Firm Units contemplated hereby will be
consummated;
(viii) the
Partnership will borrow approximately $200 million under the
Credit Facility;
(ix) the
Partnership will distribute to EPOLP $198.9 million of
borrowings under the Credit Facility and approximately
$224.5 million of the net proceeds of the public offering;
provided , the actual final amount of net proceeds so
distributed shall be calculated as set forth under “Use of
Proceeds” in the Prospectus and in accordance with the
Contribution Agreement; and
4
(x) the
Partnership will contribute to the Operating Partnership (including
0.001% for the benefit of OLPGP) its ownership interests in the
Initial Operating Subsidiaries.
The transactions
contemplated in the paragraphs above are referred to herein
collectively as the “ Transactions .”
In connection with
the Transactions, the parties to the Transactions have entered or
will enter into various bills of sale, assignments, conveyances,
contribution agreements and related documents (collectively with
the Contribution Agreement, the South Texas Contribution Agreement
and the MB Contribution Agreement, the “ Contribution
Documents ”). The “ Transaction Documents
” shall mean the Contribution Documents, the Omnibus
Agreement, the Administrative Services Agreement and the Credit
Facility. The “ Organizational Documents ” shall
mean the Partnership Agreement, the GP LLC Agreement, the OLPGP LLC
Agreement, the Operating Partnership Agreement (as defined below)
and the Initial Operating Subsidiaries Formation Agreements. The
“ Operative Agreements ” shall mean the
Transaction Documents, the Commercial Agreements and the
Organizational Documents collectively. The “ Operating
Partnership Agreement ” shall mean the Agreement of
Limited Partnership of the Operating Partnership.
The DEP Parties
wish to confirm as follows their agreement with you in connection
with the purchase of the Units from the Partnership by the
Underwriters.
1.
Representations, Warranties and Agreements of the DEP
Parties . The DEP Parties jointly and severally represent,
warrant and agree that:
(a)
Registration; Definitions; No Stop Order . A registration
statement (Registration No. 333-138371) on Form S-1 relating
to the Units has (i) been prepared by the Partnership in
conformity with the requirements of the Securities Act of 1933, as
amended (the “ Securities Act ”), and the rules
and regulations (the “ Rules and Regulations ”)
of the Securities and Exchange Commission (the “
Commission ”) thereunder; (ii) been filed with
the Commission under the Securities Act; and (iii) become
effective under the Securities Act. Copies of such registration
statement and any amendment thereto have been delivered by the
Partnership to you as the Representatives of the Underwriters (the
“ Representatives ”). As used in this
Agreement:
(i)
“ Applicable Time ” means 5:30 p.m. (New York
City time) on the date of this Agreement, which the Underwriters
have informed the Partnership and its counsel is a time prior to
the time of the first sale of the Units;
(ii)
“ Effective Date ” means the date and time as of
which the Registration Statement, or any post-effective amendment
or amendments thereto, was declared effective by the
Commission;
(iii)
“ Issuer Free Writing Prospectus ” means each
“free writing prospectus” (as defined in Rule 405
of the Rules and Regulations) prepared by or on behalf of the
Partnership or used or referred to by the Partnership in connection
with the offering of the Units;
5
(iv)
“ Preliminary Prospectus ” means any preliminary
prospectus relating to the Units included in the Registration
Statement or filed with the Commission pursuant to Rule 424 of
the Rules and Regulations;
(v)
“ Pricing Disclosure Package ” means, as of the
Applicable Time, the most recent Preliminary Prospectus, together
with the information set forth on Schedule IV hereto
and each Issuer Free Writing Prospectus filed with the Commission
or used by the Partnership on or before the Applicable Time, other
than a road show that is an Issuer Free Writing Prospectus but is
not required to be filed under Rule 433 of the Rules and
Regulations;
(vi)
“ Prospectus ” means the final prospectus
relating to the Units, as filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations; and
(vii)
“ Registration Statement ” means the
registration statement on Form S-1 (File No. 333-138371) relating
to the Units, as amended as of the Effective Date, including any
Preliminary Prospectus, the Prospectus and all exhibits to such
registration statement. Any reference herein to the term
“Registration Statement” shall be deemed to include the
abbreviated registration statement to register additional Common
Units under Rule 462(b) of the Rules and Regulations (the “
Rule 462(b) Registration Statement ”).
Any reference
to the “most recent Preliminary Prospectus” shall be
deemed to refer to the latest Preliminary Prospectus included in
the Registration Statement or filed pursuant to Rule 424(b) of the
Rules and Regulations on or prior to the date hereof.
The Commission has
not issued any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the
effectiveness of the Registration Statement, and no proceeding or
examination for such purpose has been instituted or, to the
knowledge of any of the DEP Parties, threatened by the
Commission.
(b) Partnership
Not an “Ineligible Issuer .” The Partnership was
not at the time of initial filing of the Registration Statement and
at the earliest time thereafter that the Partnership or another
offering participant made a bona fide offer (within the meaning of
Rule 164(h)(2) of the Rules and Regulations) of the Units, is
not on the date hereof and will not be on the applicable Delivery
Date (as defined in Section 4), an “ineligible
issuer” (as defined in Rule 405 of the Rules and
Regulations).
(c)
Registration Statement and Prospectus Conform to the
Requirements of the Securities Act . The Registration Statement
conformed when filed and will conform in all material respects on
each of the Effective Date and the applicable Delivery Date, and
any amendment to the Registration Statement filed after the date
hereof will conform in all material respects when filed, to the
requirements of the Securities Act and the Rules and Regulations.
The most recent Preliminary Prospectus conformed, and the
Prospectus will conform, in all material respects when filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations
and on the applicable Delivery Date, to the requirements of the
Securities Act and the Rules and Regulations.
6
(d) No Material
Misstatements or Omissions in Registration Statement . The
Registration Statement did not, as of the Effective Date, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Registration Statement in reliance upon and in
conformity with written information furnished to the Partnership
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified
in Section 8(e).
(e) No Material
Misstatements or Omissions in Prospectus . The Prospectus will
not, as of its date and on the applicable Delivery Date, contain an
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 that no representation or warranty is
made as to information contained in or omitted from the Prospectus
in reliance upon and in conformity with written information
furnished to the Partnership through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 8(e).
(f) No Material
Misstatements or Omissions in Pricing Disclosure Package . The
Pricing Disclosure Package did not, as of the Applicable Time,
contain an 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 that no representation or warranty is
made as to information contained in or omitted from the Pricing
Disclosure Package in reliance upon and in conformity with written
information furnished to the Partnership through the
Representatives by or on behalf of any Underwriter specifically for
inclusion therein, which information is specified in Section
8(e).
(g) No Material
Misstatements or Omissions in Issuer Free Writing Prospectuses
. Each Issuer Free Writing Prospectus (including, without
limitation, any road show that is a free writing prospectus under
Rule 433 of the Rules and Regulations), when considered
together with the Pricing Disclosure Package as of the Applicable
Time, did not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from any
Issuer Free Writing Prospectus in reliance upon and in conformity
with written information furnished to the Partnership through the
Representatives by or on behalf of any Underwriters specifically
for inclusion therein, which information is specified in
Section 8(e).
(h) Issuer Free
Writing Prospectuses Conform to the Requirements of the Securities
Act . Each Issuer Free Writing Prospectus conformed or will
conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations on the date of first
use, and the Partnership has complied with all prospectus delivery
requirements, any filing requirements and any record keeping
requirements applicable to such Issuer Free Writing Prospectus
pursuant to the Rules and Regulations. The
7
Partnership has
not made any offer relating to the Units that would constitute an
Issuer Free Writing Prospectus without the prior written consent of
the Representatives. The Partnership has retained in accordance
with the Rules and Regulations all Issuer Free Writing Prospectuses
that were not required to be filed pursuant to the Rules and
Regulations. The Partnership has taken all actions necessary so
that any “road show” (as defined in Rule 433 of
the Rules and Regulations) in connection with the offering of the
Units will not be required to be filed pursuant to the Rules and
Regulations. Each Issuer Free Writing Prospectus does not include
any information that conflicts with the information contained in
the Registration Statement as of the Applicable Time.
(i) Formation,
Qualification and Authority . Each of the Significant DEP
Entities and EPOLP has been duly formed or incorporated, as the
case may be, is validly existing and is in good standing under the
laws of its respective jurisdiction of formation or incorporation,
as applicable, with all corporate, limited liability company or
partnership, as the case may be, power and authority necessary to
own or hold its properties and conduct the businesses in which it
is engaged and, in the case of the General Partner and the OLPGP,
to act as general partner of the Partnership and the Operating
Partnership, respectively, in each case in all material respects as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. Each of the Significant DEP Entities is
duly registered or qualified to do business in and is in good
standing as a foreign limited partnership, limited liability
company or corporation, as applicable, in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification or registration, except where
the failure to be so qualified or registered could not,
individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), securityholders’
equity, results of operations, properties, business or prospects of
the Partnership Entities taken as a whole (a “ Material
Adverse Effect ”), or subject the limited partners of the
Partnership to any material liability or disability.
(j) Ownership
of General Partner . At each Delivery Date, EPOLP will own 100%
of the issued and outstanding membership interests in the General
Partner; such membership interests will be duly authorized and
validly issued in accordance with the GP LLC Agreement and fully
paid (to the extent required under the GP LLC Agreement) and
non-assessable (except as such nonassessability may be affected by
Sections 18-607 and 18-804 of the Delaware Limited Liability
Company Act (the “ Delaware LLC Act ”)); and
EPOLP will own such membership interests free and clear of all
liens, encumbrances, security interests, charges or claims (“
Liens ”).
(k) Ownership
of the General Partner Interest in the Partnership . At each
Delivery Date, the General Partner will be the sole general partner
of the Partnership with a 2.0% general partner interest in the
Partnership; such general partner interest will be duly authorized
and validly issued in accordance with the Partnership Agreement;
and the General Partner will own such general partner interest free
and clear of all Liens (except for restrictions on transferability
described in the Pricing Disclosure Package).
(l) Ownership
of Sponsor Units by EPOLP . Assuming no purchase by the
Underwriters of Option Units on the Initial Delivery Date, at the
Initial Delivery Date,
8
after giving
effect to the Transactions, EPOLP will own the Sponsor Units; the
Sponsor Units and the limited partner interests represented thereby
will have been duly authorized and validly issued in accordance
with the Partnership Agreement and will be fully paid (to the
extent required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by
Sections 17-607 and 17-804 of the Delaware Revised Uniform
Limited Partnership Act (the “ Delaware LP Act
”); and EPOLP will own the Sponsor Units free and clear of
all Liens.
(m) Valid
Issuance of the Units . At the Initial Delivery Date or the
Option Unit Delivery Date (as defined in Section 4 hereof), as
the case may be, the Firm Units or the Option Units, as the case
may be, 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 this Agreement, will be duly and
validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 17-607 or 17-804 of
the Delaware LP Act). Other than the Sponsor Units, the Units will
be the only limited partner interests of the Partnership issued and
outstanding at each Delivery Date.
(n) Ownership
of OLPGP . At each Delivery Date, the Partnership will own 100%
of the issued and outstanding membership interests in OLPGP; such
membership interests will have been duly authorized and validly
issued in accordance with the OLPGP LLC Agreement and will be fully
paid (to the extent required under the OLPGP LLC Agreement) and
non-assessable (except as such nonassessability may be affected by
Sections 18-607 and 18-804 of the Delaware LLC Act); and the
Partnership will own such membership interests free and clear of
all Liens (except for restrictions on transferability described in
the Pricing Disclosure Package, including under the Credit
Facility).
(o) Ownership
of the Operating Partnership . At each Delivery Date,
(i) OLPGP will be the sole general partner of the Operating
Partnership with a 0.001% general partner interest in the Operating
Partnership; such general partner interest will have been duly
authorized and validly issued in accordance with the Operating
Partnership Agreement; and OLPGP will own such general partner
interest free and clear of all Liens; and (ii) the Partnership
will be the sole limited partner of the Operating Partnership with
a 99.999% limited partner interest in the Operating Partnership;
such limited partner interest will have been duly authorized and
validly issued in accordance with the Operating Partnership
Agreement and will be fully paid (to the extent required under the
Operating Partnership Agreement) and non-assessable (except as such
non-assessability may be affected by Sections 17-607 and
17-804 of the Delaware LP Act); and the Partnership will own such
limited partner interest free and clear of all Liens (except for
restrictions on transferability described in the Pricing Disclosure
Package, including under the Credit Facility).
(p) Ownership
of the Initial Operating Subsidiaries . At each Delivery Date,
the Operating Partnership will own 66% of the limited liability
company interests or partnership interests, as the case may be, in
each of the Initial Operating Subsidiaries free
9
and clear of
all Liens, except for Liens described in the Pricing Disclosure
Package, including under the Omnibus Agreement. Such limited
liability company interests or partnership interests, as the case
may be, will be duly authorized and validly issued in accordance
with the Initial Operating Subsidiaries Formation Agreements and
will be fully paid (to the extent required under the applicable
Operating Subsidiaries Formation Agreement) and non-assessable
(except as such nonassessability may be affected by Sections 18-607
and 18-804 of the Delaware LLC Act, in the case of a Delaware
limited liability company, or Sections 17-607 and 17-804 of
the Delaware LP Act, in the case of a Delaware limited
partnership).
(q) No Other
Subsidiaries . Other than its ownership of its 2.0% general
partner interest in the Partnership, the General Partner does not
own, and at each Delivery Date will not own, directly or
indirectly, any equity or long-term debt securities of any
corporation, partnership, limited liability company, joint venture,
association or other entity. Other than (i) the
Partnership’s ownership of a 99.999% limited partnership
interest in the Operating Partnership and a 100% membership
interest in OLPGP, and (ii) the Operating Partnership’s
66% ownership of the outstanding membership interests or
partnership interests, as the case may be, in each of the Initial
Operating Subsidiaries, neither the Partnership nor the Operating
Partnership owns, and at each Delivery Date will directly own, any
equity or long-term debt securities of any corporation,
partnership, limited liability company, joint venture, association
or other entity. None of the Subsidiaries has, or will have at each
Delivery Date, any subsidiaries which, individually or considered
as a whole, would be deemed to be a significant subsidiary of the
Partnership (as such term is defined in Section 1-02(w) of
Regulation S-X of the Securities Act).
(r) No
Preemptive Rights, Registration Rights or Options . Except as
identified in the most recent Preliminary Prospectus (including the
rights of EPOLP under the Omnibus Agreement), there are no
(i) preemptive rights or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any
equity interests in of any of the Significant DEP Entities or
(ii) outstanding options or warrants to purchase any
securities of any of the Significant DEP Entities. Except for such
rights that have been waived or complied with, none of the filing
of the Registration Statement, the consummation of the transactions
contemplated by this Agreement or the Operative Agreements
(including the Transactions), nor the offering or sale of the Units
as contemplated by this Agreement gives rise to any rights for or
relating to the registration of any Common Units or other
securities of any of the Significant DEP Entities.
(s) Authority
and Authorization . The Partnership has all requisite
partnership power and authority to issue, sell and deliver the
(i) the Units, in accordance with and upon the terms and
conditions set forth in this Agreement, the Partnership Agreement,
the most recent Preliminary Prospectus and the Prospectus and
(ii) the Sponsor Units, in accordance with and upon the terms
and conditions set forth in the Partnership Agreement and the
Contribution Agreement. Each of the DEP Parties has all requisite
right, power and authority to execute and deliver the Underwriting
Agreement and to perform its respective obligations thereunder. At
each Delivery Date, all corporate, partnership and limited
liability company action, as the case may be, required to be
taken
10
by any of the
Partnership Entities or any of their respective unitholders,
stockholders, members or partners for the authorization, issuance,
sale and delivery of the Units, the execution and delivery of the
Operative Agreements and the consummation of the transactions
(including the Transactions) contemplated by this Agreement and the
Operative Agreements, shall have been validly taken.
(t)
Authorization, Execution and Delivery of this Agreement .
This Agreement has been duly authorized and validly executed and
delivered by each of the DEP Parties.
(u)
Authorization, Execution, Delivery and Enforceability of Certain
Agreements . At each Delivery Date:
(i)
The Transaction Documents will have been duly authorized, executed
and delivered by the parties thereto and each will be a valid and
legally binding agreement of the parties thereto, enforceable
against such parties in accordance with its terms;
(ii)
The Commercial Agreements will have been duly authorized, executed
and delivered by the parties thereto and each will be a valid and
legally binding agreement of the parties thereto, enforceable
against such parties in accordance with its terms;
(iii)
the Partnership Agreement will have been duly authorized, executed
and delivered by the General Partner and EPOLP and will be a valid
and legally binding agreement of the General Partner and EPOLP,
enforceable against each of them in accordance with its
terms;
(iv)
the GP LLC Agreement will have been duly authorized, executed and
delivered by EPOLP and will be a valid and legally binding
agreement, enforceable against EPOLP in accordance with its
terms;
(v)
the OLPGP LLC Agreement will have been duly authorized, executed
and delivered by the Partnership and will be a valid and legally
binding agreement, enforceable against the Partnership in
accordance with its terms;
(vi)
the Operating Partnership Agreement will have been duly authorized,
executed and delivered by the Partnership and the OLPGP and will be
a valid and legally binding agreement of the Partnership and the
OLPGP, enforceable against each of them in accordance with its
terms;
(vii)
the Initial Operating Subsidiaries Formation Agreements will have
been duly authorized, executed and delivered by the parties thereto
and each will be a valid and legally binding agreement of the
parties thereto, enforceable against such parties in accordance
with its terms;
provided,
however, that , with
respect to each agreement described in this Section 1(u), the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer or conveyance, reorganization,
moratorium and similar laws relating to or affecting
creditors’
11
rights
generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law); and provided further that the indemnity,
contribution and exoneration provisions contained in any such
agreements may be limited by applicable laws relating to fiduciary
duties, public policy and an implied covenant of good faith and
fair dealing.
(v) Sufficiency
of the Contribution Documents . The Contribution Documents will
be legally sufficient (i) to transfer or convey to the
Partnership all equity interests in the Initial Operating
Subsidiaries as contemplated by the Pricing Disclosure Package and
the Prospectus and (ii) to transfer or convey to the
applicable Subsidiaries all properties not already held by them
that are, individually or in the aggregate, required to enable the
Initial Operating Subsidiaries to conduct their operations in all
material respects as contemplated by the Pricing Disclosure Package
and the Prospectus, in each case subject to the conditions,
reservations and limitations contained in the Contribution
Documents and those set forth in the Pricing Disclosure Package and
the Prospectus. The Operating Partnership and the Subsidiaries, as
the case may be, upon execution and delivery of the Contribution
Documents, will succeed in all material respects to the business,
assets, properties, liabilities and operations reflected by the pro
forma financial statements of the Partnership, except as disclosed
in the Prospectus and the Contribution Documents.
(w) No
Conflicts . None of (i) the offering, issuance and sale by
the Partnership of the Units and the application of the proceeds
from the sale of the Units as described under “Use of
Proceeds” in the most recent Preliminary Prospectus,
(ii) the execution, delivery and performance of this Agreement
or the Operative Agreements by the DEP Parties party hereto or
thereto or (iii) the consummation of the transactions
contemplated hereby and thereby (including the Transactions)
(A) conflicts or will conflict with or constitutes or will
constitute a violation of the partnership agreement, limited
liability company agreement, certificate of formation or
conversion, certificate or articles of incorporation, bylaws or
other constituent document of any of the Partnership Entities,
(B) conflicts or will conflict with or constitutes or will
constitute a breach or violation of, or a default (or an event
that, with notice or lapse of time or both, would constitute such a
default) under any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of
the Partnership Entities is a party or by which any of them or any
of their respective properties may be bound, (C) violates or
will violate any statute, law or regulation or any order, judgment,
decree or injunction of any court or governmental agency or body
directed to any of the Partnership Entities or any of their
properties in a proceeding to which any of them or their property
is a party or (D) results or will result in the creation or
imposition of any Lien upon any property or assets of any of the
Partnership Entities (other than Liens created pursuant to the
Credit Facility), which conflicts, breaches, violations, defaults
or Liens, in the case of clauses (B), (C) or (D), would,
individually or in the aggregate, have a Material Adverse Effect or
materially impair the ability of any of the DEP Parties to
consummate the transactions (including the Transactions) provided
for in this Agreement or the Operative Agreements.
(x) No
Consents . No permit, consent, approval, authorization, order,
registration, filing or qualification of or with any court,
governmental agency or body having jurisdiction over any of the
Partnership Entities is required in connection with (i)
12
the offering,
issuance or sale by the Partnership of the Units, (ii) the
application of the proceeds therefrom as described under “Use
of Proceeds” in the most recent Preliminary Prospectus,
(iii) the execution and delivery of this Agreement or the
Operative Agreements by the DEP Parties party hereto or thereto and
consummation by such DEP Parties of the transactions contemplated
hereby and thereby (including the Transactions), except for (i)
consents, approvals and similar authorizations as may be required
under the Securities Act, the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), and state
securities or “Blue Sky” laws in connection with the
purchase and distribution of the Units by the Underwriters,
(ii) such consents that have been, or prior to any such
Delivery Date will be, obtained , (iii) such consents
that, if not obtained, would not have a Material Adverse Effect and
(iv) with respect to the transactions contemplated by the
South Texas Contribution Agreement and the MB Contribution
Agreement only, which (A) are of a routine or administrative
nature, (B) are not customarily obtained or made prior to the
consummation of transactions such as those contemplated by this
Agreement and (C) are expected in the reasonable judgment of
the General Partner to be obtained within a reasonable period
following the Initial Delivery Date.
(y) No
Defaults . None of the Significant DEP Entities (i) is in
violation of its certificate of limited partnership, agreement of
limited partnership, limited liability company agreement,
certificate of incorporation or bylaws or other organizational
documents, (ii) is in violation of any law, statute,
ordinance, administrative or governmental rule or regulation
applicable to it or of any decree of any court or governmental
agency or body having jurisdiction over it, or (iii) is in
breach, default (or an event which, with notice or lapse of time or
both, would constitute such an event) or violation in the
performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which it
is a party or by which it or any of its properties may be bound,
which breach, default or violation, in the case of clause
(ii) or (iii), would, if continued, reasonably be expected to
have a Material Adverse Effect or could materially impair the
ability of any of the DEP Parties to perform their obligations
under this Agreement or the Operative Agreements.
(z) Conformity
of Units to Description in the most recent Preliminary Prospectus
and Prospectus . The Units, when issued and delivered in
accordance with the terms of the Partnership Agreement and this
Agreement against payment therefor as provided therein and herein,
will conform in all material respects to the description thereof
contained in the Registration Statement, the most recent
Preliminary Prospectus and the Prospectus.
(aa) No
Material Adverse Change . None of the Partnership Entities has
sustained, since the date of the latest audited financial
statements included in the most recent Preliminary Prospectus, any
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree ,
and since such date, there has not been any change in the
capitalization or increase in the long-term debt of any of the
Partnership Entities or any adverse change in or affecting the
condition (financial or otherwise), results of operations,
securityholders’ equity, properties, management or
13
business of the
Partnership Entities taken as a whole, in each case except as could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(bb) Conduct of
Business . Except as disclosed in the Registration Statement
and the most recent Preliminary Prospectus, since the date as of
which information is given in the most recent Preliminary
Prospectus, none of the Partnership Entities has (i) incurred
any liability or obligation, direct or contingent, that,
individually or in the aggregate, is material to the Partnership
Entities taken as a whole, other than liabilities and obligations
that were incurred in the ordinary course of business,
(ii) entered into any transaction not in the ordinary course
of business that, individually or in the aggregate, is material to
the Partnership Entities taken as a whole, or (iii) declared,
paid or made any dividend or distribution on any class of security
other than distributions of cash by the Initial Operating
Subsidiaries prior to the effective time of contribution to the
Partnership pursuant to the Contribution Agreement.
(cc) Financial
Statements . The historical financial statements (including the
related notes and supporting schedules) included in the
Registration Statement and most recent Preliminary Prospectus
(i) comply in all material respects with the requirements
under the Securities Act and the Exchange Act, (ii) present
fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown
thereby on the basis shown therein at the dates or for the periods
indicated, and (iii) have been prepared in accordance with
accounting principles generally accepted in the United States
consistently applied throughout the periods involved. The summary
historical and pro forma financial and operating data included in
the most recent Preliminary Prospectus under the caption
“Summary—Summary Historical and Pro Forma Financial and
Operating Data” in the most recent Preliminary Prospectus and
the selected historical and pro forma financial and operating data
set forth under the caption “Selected Historical and Pro
Forma Financial and Operating Data” included in the most
recent Preliminary Prospectus are fairly presented in all material
respects and prepared on a basis consistent with the audited and
unaudited historical financial statements and pro forma financial
statements, as applicable, from which they have been derived. The
other financial information of the General Partner and the
Partnership and its subsidiaries, including non-GAAP financial
measures, if any, contained in the Registration Statement and the
most recent Preliminary Prospectus (and any amendment or supplement
thereto) has been derived from the accounting records of the
General Partner, the Partnership and its subsidiaries, and fairly
presents the information purported to be shown thereby.
(dd) Pro Forma
Financial Statements . The pro forma financial statements
included in the most recent Preliminary Prospectus include
assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to
the historical financial statement amounts in the pro forma
financial statements included in the most recent Preliminary
Prospectus. The pro forma financial statements included in the most
recent Preliminary Prospectus comply as
14
to form in all
material respects with the applicable requirements of
Regulation S-X under the Securities Act.
(ee)
Statistical and Market-Related Data . The statistical and
market-related data included under the captions “Prospectus
Summary,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and
“Business” in the most recent Preliminary Prospectus
are based on or derived from sources that the DEP Parties believe
to be reliable and accurate in all material respects.
(ff)
Independent Registered Public Accounting Firm . Deloitte
& Touche LLP, who has audited the audited financial statements
contained in the Registration Statement and the most recent
Preliminary Prospectus, whose reports appear in the most recent
Preliminary Prospectus and the Prospectus and who has delivered the
initial letter referred to in Section 7(g) hereof, is, and were
during the periods covered by the financial statements covered by
such reports, an independent registered public accounting firm
within the meaning of the Securities Act and the applicable rules
and regulations thereunder adopted by the Commission and the Public
Company Accounting Oversight Board (United States) (the “
PCAOB ”).
(gg) Title to
Properties . At each Delivery Date, each Partnership Entity
will have good and indefeasible title to all its interests in real
property, subject to recordation of individual conveyances and
assignments, and good title to all its personal property (excluding
easements or rights-of-way), in each case free and clear of all
Liens except (i) as described, and subject to the limitations
contained, in the Prospectus, (ii) as do not materially affect
the value of such property taken as a whole and do not materially
interfere with the use of such properties taken as a whole as they
have been used in the past and are proposed to be used in the
future as described in the Prospectus, (iii) could not be
reasonably expected to have a Material Adverse Effect or
(iv) are described, and subject to the limitations contained
in, the most recent Preliminary Prospectus; provided that,
with respect to any real property and buildings held under lease by
the Partnership Entities, such real property and buildings are held
under valid and subsisting and enforceable leases with such
exceptions as do not materially interfere with the use of the
properties of the Partnership Entities taken as a whole as they
have been used in the past as described in the Prospectus and are
proposed to be used in the future as described in the
Prospectus.
(hh)
Rights-of-Way . At each Delivery Date, each of the
Partnership Entities will have such consents, easements,
rights-of-way or licenses from any person (collectively, “
rights-of-way ”) as are necessary to conduct its
business in the manner described in the most recent Preliminary
Prospectus, subject to such qualifications as may be set forth in
the most recent Preliminary Prospectus and except for such
rights-of-way the failure of which to have obtained, would not
have, individually or in the aggregate, a material adverse effect
upon the ability of the Partnership Entities, taken as a whole, to
conduct their businesses in all material respects as currently
conducted; at each Delivery Date, each Partnership Entity will have
fulfilled and performed all its material obligations with respect
to such rights-of-way and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or
termination thereof or would result in
15
any impairment
of the rights of the holder of any such rights-of-way, except for
such revocations, terminations and impairments that will not have a
material adverse effect upon the ability of the Partnership
Entities, taken as a whole, to conduct their businesses in all
material respects as currently conducted, subject in each case to
such qualification as may be set forth in the most recent
Preliminary Prospectus; and, except as described in the most recent
Preliminary Prospectus, none of such rights-of-way will contain any
restriction that is materially burdensome to the Partnership
Entities, taken as a whole.
(ii)
Permits . Each of the Partnership Entities has such permits,
consents, licenses, franchises, certificates and authorizations of
governmental or regulatory authorities (“ permits
”) as are necessary to own or lease its properties and to
conduct its business in the manner described in the most recent
Preliminary Prospectus, subject to such qualifications as may be
set forth in the most recent Preliminary Prospectus and except for
such consents (i) which if not obtained, would not have,
individually or in the aggregate, a Material Adverse Effect or
(ii) with respect to the transactions contemplated by the
South Texas Contribution Agreement and the MB Contribution
Agreement only, which (A) are of a routine or administrative
nature, (B) are not customarily obtained or made prior to the
consummation of transactions such as those contemplated by this
Agreement and (C) are expected in the reasonable judgment of
the General Partner to be obtained within a reasonable period
following the Initial Delivery Date; each of the Partnership
Entities has fulfilled and performed all its material obligations
with respect to such permits in the manner described, and subject
to the limitations contained in the most recent Preliminary
Prospectus, and no event has occurred that would prevent the
permits from being renewed or reissued or that allows, or after
notice or lapse of time would allow, revocation or termination
thereof or results or would result in any impairment of the rights
of the holder of any such permit, except for such non-renewals,
non-issues, revocations, terminations and impairments that would
not, individually or in the aggregate, have a Material Adverse
Effect. None of the Partnership Entities has received notification
of any revocation or modification of any such permit or has any
reason to believe that any such permit will not be renewed in the
ordinary course.
(jj)
Environmental Compliance . Except as described in the most
recent Preliminary Prospectus, each of DEP Parties, with respect to
the assets to be owned or leased by the Partnership Entities at the
Initial Delivery Date, (i) is, and at all times prior hereto
was, in compliance with any and all applicable federal, state and
local laws and regulations relating to the protection of human
health and safety and the environment or imposing liability or
standards of conduct concerning any Hazardous Materials (as defined
below) (“ Environmental Laws ”), (ii) has
received all permits required of them under applicable
Environmental Laws to conduct their respective businesses,
(iii) is in compliance with all terms and conditions of any
such permits and (iv) has not received notice of any actual or
alleged violation of Environmental Law and does not have any
potential liability in connection with the release into the
environment of any Hazardous Material, except where such
noncompliance with Environmental Laws, failure to receive required
permits, failure to comply with the terms and conditions of such
permits or liability in connection with such releases could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The term “ Hazardous Material
” means (A) any “hazardous substance” as
defined in the Comprehensive
16
Environmental
Response, Compensation and Liability Act of 1980, as amended,
(B) any “hazardous waste” as defined in the
Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated
under or within the meaning of any other Environmental
Law.
(kk)
Insurance . The DEP Parties, with respect to the assets to
be owned or leased by the Partnership Entities at the Initial
Delivery Date, 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 Partnership Entities has received notice from any insurer or
agent of such insurer that material capital improvements or other
material expenditures will have to be made in order to continue
such insurance, and all such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force
on each Delivery Date.
(ll)
Intellectual Property . Each of DEP Parties, with respect to
the assets to be owned or leased by the Partnership Entities at the
Initial Delivery Date, owns or possesses adequate rights to use all
material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of
their respective businesses; and the conduct of their respective
businesses will not conflict in any material respect with, and no
DEP Party has received any notice of any claim of conflict with,
any such rights of others.
(mm)
Litigation . Except as described in the most recent
Preliminary Prospectus, there is (i) no action, suit or
proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to
the knowledge of any of the DEP Parties, threatened, to which any
of the Partnership Entities is or may be a party or to which the
business or property of any of the Partnership Entities is or may
be subject, (ii) no statute, rule, regulation or order that
has been enacted, adopted or issued by any governmental agency and
(iii) no injunction, restraining order or order of any nature
issued by a federal or state court or foreign court of competent
jurisdiction to which any of the Partnership Entities is or may be
subject, that, in the case of clauses (i), (ii) and
(iii) above, is reasonably expected to (A) individually
or in the aggregate reasonably be expected to have a Material
Adverse Effect, (B) prevent or result in the suspension of the
offering and issuance of the Units, or (C) in any manner draw
into question the validity of this Agreement.
(nn) Related
Party Transactions . No relationship, direct or indirect,
exists between or among the Partnership Entities on the one hand,
and the directors, officers, partners, customers or suppliers of
the General Partner and its affiliates (other than the Partnership
Entities) on the other hand, which is required to be described in
the most recent Preliminary Prospectus or the Prospectus and which
is not so described.
17
(oo) No Labor
Disputes . No labor dispute with the employees that are engaged
in the business of the Partnership or its subsidiaries exists or,
to the knowledge of the DEP Parties, is imminent or threatened that
is reasonably likely to result in a Material Adverse
Effect.
(pp) Tax
Returns . Each of the Partnership Entities has filed (or has
obtained extensions with respect to) all material federal, state,
local and foreign income and franchise tax returns required to be
filed through the date hereof, which returns are complete and
correct in all material respects, and has timely paid all taxes due
thereon, other than those (i) which are being contested in
good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles or (ii)
which, if not paid, would not have a Material Adverse
Effect.
(qq) No Omitted
Descriptions; Legal Proceedings . There are no legal or
governmental proceedings pending or, to the knowledge of the DEP
Parties, threatened or contemplated, against any of the Partnership
Entities, or to which any of the Partnership Entities is a party,
or to which any of their respective properties or assets is
subject, that are required to be described in the Registration
Statement or the most recent Preliminary Prospectus but are not
described as required, and there are no agreements, contracts,
indentures, leases or other instruments that are required to be
described in the Registration Statement or the most recent
Preliminary Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required
by the Securities Act or the Rules and Regulations or the Exchange
Act or the rules and regulations thereunder. The statements
included in the Registration Statement and the most recent
Preliminary Prospectus under the headings “Description of Our
Common Units,” “Cash Distribution Policy and
Restrictions on Distributions,” “Description of
Material Provisions of Our Partnership Agreement,”
“Material Tax Consequences,” “Business,”
“Management’s Discussion and Analysis of Financial
Condition,” and “Certain Relationships and Related
Party Transactions,” 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.
(rr) Books and
Records. The Partnership Entities and Duncan Energy Partners
Predecessor (as defined in the most recent Preliminary Prospectus)
(i) make and keep books, records and accounts that, in
reasonable detail, accurately and fairly reflect the transactions
and dispositions of assets, and (ii) maintain systems of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management’s general or specific authorization;
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America and
to maintain accountability for assets; (C) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
18
(ss) Disclosure
Controls and Procedures . (i) The Partnership Entities
have established and maintain disclosure controls and procedures
(as such term is defined in Rule 13a-15 under the Exchange
Act), (ii) such disclosure controls and procedures are
designed to ensure that the information required to be disclosed by
the Partnership in the reports it files or will file or submit
under the Exchange Act, as applicable, is accumulated and
communicated to management of the Partnership Entities, including
their respective principal executive officers and principal
financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made and (iii) such
disclosure controls and procedures are effective in all material
respects to perform the functions for which they were
established.
(tt) No Changes
in Internal Controls . Since the date of the most recent
balance sheet of Duncan Energy Partners Predecessor audited by
Deloitte & Touche LLP, (i) neither EPD nor any of the
Partnership Entities has been advised of (A) any significant
deficiencies in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect
the ability of the Partnership Entities to record, process,
summarize and report financial data, or any material weaknesses in
internal controls over financial reporting affecting any of the
Partnership Entities, or (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the internal controls over financial reporting
of EPD or any of the Partnership Entities, and (ii) since that
date, there have been no significant changes in the internal
controls of EPD or any of the Partnership Entities that materially
affected or are reasonably likely to materially affect any internal
controls over financial reporting relating to any of the
Partnership Entities.
(uu)
Sarbanes-Oxley Act of 2002 . There is and has been no
failure on the part of the Partnership and any of the General
Partner’s directors or officers, in their capacities as such,
to comply with the provisions of the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated in connection
therewith.
(vv) Directed
Unit Sales . None of the Directed Units distributed in
connection with the Directed Unit Program (each as defined in
Section 3) will be offered or sold outside of the United
States. The Partnership has not offered, or caused Lehman Brothers
Inc. to offer, Units to any person pursuant to the Directed Unit
Program with the specific intent to unlawfully influence (i) a
customer or supplier of any of the Partnership Entities to alter
the customer’s or supplier’s level or type of business
with any such entity or (ii) a trade journalist or publication
to write or publish favorable information about any of the
Partnership Entities, or their respective businesses or
products.
(ww) No
Distribution of Other Offering Materials . None of the
Partnership Entities has distributed and, prior to the later to
occur of any Delivery Date and completion of the distribution of
the Units, will distribute any offering material in connection with
the offering and sale of the Units other than any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus to
which the Representatives have consented in accordance with Section
1(h) or 5(a)(v), any other materials, if any, permitted by the
Securities Act, including Rule 134, and, in connection with
the Directed
19
Unit Program
described in Section 3, the enrollment materials prepared by
Lehman Brothers Inc.
(xx) Market
Stabilization . None of the General Partner, the Partnership or
any of their affiliates has taken, directly or indirectly, any
action designed to or which has constituted or which would
reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
securities of the Partnership or to facilitate the sale or resale
of the Units.
(yy) Listing on
the New York Stock Exchange . The Units have been approved for
listing on the New York Stock Exchange, subject to official notice
of issuance.
(zz) Investment
Company . None of the Partnership Entities is now, or after
sale of the Units to be sold by the Partnership hereunder and
application of the net proceeds from such sale as described in the
most recent Preliminary Prospectus under the caption “Use of
Proceeds” will be, an “ investment company
” or a company “ controlled by ” an
“ investment company ” within the meaning of the
Investment Company Act of 1940, as amended (the “
Investment Company Act ”), and the rules and
regulations of the Commission thereunder.
(aaa) Private
Placement . The sale and issuance of the Sponsor Units to EPOLP
are exempt from the registration requirements of the Securities
Act, the Rules and Regulations and the securities laws of any state
having jurisdiction with respect thereto, and none of the
Partnership Entities has taken or will take any action that would
cause the loss of such exemption. The Partnership has not sold or
issued any securities that would be integrated with the offering of
the Units contemplated by this Agreement pursuant to the Securities
Act, the Rules and Regulations or the interpretations thereof by
the Commission.
(bbb) Critical
Accounting Policies . The section entitled
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Critical Accounting
Policies and Estimates” in the most recent Preliminary
Prospectus accurately and fully describes (A) the accounting
policies that the Partnership believes are the most important in
the portrayal of the financial condition and results of operations
of the Partnership and Duncan Energy Partners Predecessor and that
require management’s most difficult, subjective or complex
judgments; (B) the judgments and uncertainties affecting the
application of critical accounting policies; and (C) the
likelihood that materially different amounts would be reported
under different conditions or using different assumptions and an
explanation thereof.
(ccc) No
Foreign Operations . None of the Partnership Entities conducts
business operations outside the United States.
Any certificate
signed by any officer of the DEP Parties and delivered to the
Representatives or counsel for the Underwriters in connection with
the offering of the Units shall be deemed a representation and
warranty by such entity, as to matters covered thereby, to each
Underwriter.
20
2.
Purchase of the Units by the Underwriters . On the basis of
the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Partnership agrees to
sell the Firm Units to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase the
number of Firm Units set forth opposite that Underwriter’s
name in Schedule I hereto. The respective purchase obligations
of the Underwriters with respect to the Firm Units shall be rounded
among the Underwriters to avoid fractional Units, as the
Representatives may determine.
In addition, the
Partnership grants to the Underwriters an option to purchase up to
1,950,000 Option Units. Such option (the “ Option
”) is exercisable in the event that the Underwriters sell
more Common Units than the number of Firm Units in the offering and
as set forth in Section 4 hereof. Each Underwriter agrees,
severally and not jointly, to purchase the number of Option Units
(subject to such adjustments to eliminate fractional Units as the
Representatives may determine) that bears the same proportion to
the total number of Option Units to be sold on such Delivery Date
as the number of Firm Units set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of
Firm Units.
The price of the
Firm Units and any Option Units purchased by the Underwriters shall
be $19.74 per Common Unit.
The Partnership
shall not be obligated to deliver any of the Firm Units or Option
Units to be delivered on the applicable Delivery Date, except upon
payment for all such Units to be purchased on such Delivery Date as
provided herein.
3.
Offering of Units by the Underwriters . Upon authorization
by the Representatives of the release of the Firm Units, the
several Underwriters propose to offer the Firm Units for sale upon
the terms and conditions to be set forth in the
Prospectus.
It is understood
that 650,000 Firm Units (the “ Directed Units ”)
initially will be reserved by the several Underwriters for offer
and sale upon the terms and conditions to be set forth in the most
recent Preliminary Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
(the “ NASD ”) to directors, officers and
employees of the General Partner and its affiliates (“
Directed Unit Participants ”) who have heretofore
delivered to Lehman Brothers Inc. offers to purchase Firm Units in
form satisfactory to Lehman Brothers Inc. (such program, the
“ Directed Unit Program ”) and that any
allocation of such Firm Units among such persons will be made in
accordance with timely directions received by Lehman Brothers Inc.
from the Partnership; provided that under no circumstances
will Lehman Brothers Inc. or any Underwriter be liable to the
Partnership or to any such person for any action taken or omitted
in good faith in connection with such Directed Unit Program. It is
further understood tha
|
