EXHIBIT 1.1
Execution Copy
Quicksilver Gas
Services LP
5,000,000 Common Units
Representing Limited Partner Interests
Underwriting
Agreement
Underwriting
Agreement
August 6, 2007
UBS
Securities LLC
Goldman, Sachs & Co.
as Representatives
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
c/o
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004-2456
Ladies
and Gentlemen:
Quicksilver
Gas Services LP, a Delaware limited partnership (the “
Partnership ”), proposes to issue and sell to the
underwriters named in Schedule A annexed hereto (the
“ Underwriters ”), for whom UBS Securities LLC
(“ UBS ”) and Goldman, Sachs & Co. (“
Goldman ”) are acting as representatives (the “
Representatives ”), an aggregate of 5,000,000 common
units (the “ Firm Units ”) representing limited
partner interests in the Partnership. Units representing limited
partner interests in the Partnership, including, without
limitation, any common units or subordinated units, together with
any units representing general partner interests in the
Partnership, are collectively referred to herein as the “
Partnership Units .” In addition, solely for the
purpose of covering over-allotments, the Partnership proposes to
grant to the Underwriters the option to purchase from the
Partnership up to an additional 750,000 common units (the “
Additional Units ”). The Firm Units and the Additional
Units are hereinafter collectively sometimes referred to as the
“ Units .” The Units are described in the
Prospectus which is referred to below. This agreement (the “
Agreement ”) is to confirm the agreement among the
Partnership, Quicksilver Gas Services GP LLC, a Delaware limited
liability company (the “ General Partner ”),
Quicksilver Gas Services Holdings LLC, a Delaware limited liability
company (“ Holdings ”) and Quicksilver Resources
Inc. (“ Quicksilver ,” and together with the
Partnership, the General Partner and Holdings, the “
Quicksilver Parties ”) on the one hand, and the
Underwriters, on the other hand, concerning the purchase of the
Units from the Partnership by the Underwriters. The Quicksilver
Parties, other than Quicksilver and Holdings, and the subsidiaries
listed on Schedule B hereto (the “
Subsidiaries ”) are hereinafter collectively sometimes
referred to as the “ Partnership Entities
.”
The
Partnership hereby acknowledges that, in connection with the
proposed offering (the “ Offering ”) of the
Units, it has requested UBS Financial Services, Inc. (the “
DUP Manager ”) to administer a directed unit program
(the “ Directed Unit Program ”) under which up
to 187,500 Firm Units (the “ Reserved Units ”)
shall be reserved for sale by the DUP Manager at the initial public
offering price to the General Partner’s officers, directors
and employees and its sole member and other persons having a
relationship with the Partnership as designated by the Partnership
(the “ Directed Unit Participants ”) as part of
the distribution of Units by the Underwriters, subject to the terms
of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers,
Inc. (the “ NASD ”) and all other applicable
laws, rules and regulations. The number of Units available for sale
to the general public will be reduced to the extent that that
Directed Unit Participants purchase Reserved Units. The
Underwriters may offer any Reserved Units not purchased by Directed
Unit Participants to the general public on the same basis as the
other Units being issued and sold hereunder. The Partnership has
supplied the DUP Manager with the names, addresses and telephone
numbers of the individuals or other entities which the Partnership
has designated to be participants in the Directed Unit Program. It
is understood that any number of those so designated to participate
in the Directed Unit Program may decline to do so.
The
Partnership has prepared and filed, in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules
and regulations thereunder (collectively, the “ Securities
Act ”), with the Securities and Exchange Commission (the
“ SEC ”) a registration statement on Form S-1
(File No. 333-140599) under the Securities Act, including a
prospectus, relating to the Units. Amendments to such registration
statement have been similarly prepared and filed with the SEC in
accordance with the Securities Act. Such registration statement, as
so amended, has become effective under the Securities Act.
Except
where the context otherwise requires, “ Registration
Statement ,” as used herein, means the registration
statement, as amended at the time of such registration
statement’s effectiveness for purposes of Section 11 of
the Securities Act (the “ Effective Time ”),
including (i) all documents filed as a part thereof,
(ii) any information contained in a prospectus subsequently
filed with the SEC pursuant to Rule 424(b) under the Securities Act
and deemed, pursuant to Rule 430A or Rule 430C under the
Securities Act, to be part of the registration statement at the
Effective Time, and (iii) any registration statement filed to
register the offer and sale of Units pursuant to Rule 462(b) under
the Securities Act.
The
Partnership has furnished to you, for use by the Underwriters and
by dealers in connection with the Offering, copies of one or more
preliminary prospectuses relating to the Units. Except where the
context otherwise requires, “ Preliminary Prospectus
,” as used herein, means each such preliminary prospectus, in
the form so furnished.
Except
where the context otherwise requires, “ Prospectus
,” as used herein, means the prospectus relating to the
Units, filed by the Partnership with the SEC pursuant to Rule
424(b) under the Securities Act on or before the second business
day after the date hereof (or such earlier time as may be required
under the Securities Act), or, if no such filing is required, the
final prospectus included in the Registration Statement at the time
it became effective under the Securities Act, in each case in the
form furnished by the Partnership to you for use by the
Underwriters and by dealers in connection with the Offering.
“
Permitted Free Writing Prospectuses ,” as used herein,
means the documents listed on Schedule D attached hereto, each
“road show” (as defined in Rule 433(h)(4) under
the Securities Act), if any, related to the Offering contemplated
hereby that is a “written communication” (as defined in
Rule 405 under the Securities Act) (each such road show, a
“ Road Show ”) and any other “free writing
prospectus” (as defined in Rule 405 under the Securities
Act) to which the Representatives provide their prior
consent.
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“
Disclosure Package ,” as used herein, means any
Preliminary Prospectus together with any combination of one or more
of the Permitted Free Writing Prospectuses, if any.
As used
in this Agreement, “ business day ” shall mean a
day on which the New York Stock Exchange (“ NYSE
”) is open for trading. The terms “herein,”
“hereof,” “hereto,”
“hereinafter” and similar terms, as used in this
Agreement, shall in each case refer to this Agreement as a whole
and not to any particular section, paragraph, sentence or other
subdivision of this Agreement. The term “or,” as used
herein, is not exclusive.
The
Partnership has prepared and filed, in accordance with
Section 12 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the “ Exchange
Act ”), a registration statement (as amended, the “
Exchange Act Registration Statement ”) on Form 8-A
(File No. 001-33631) under the Exchange Act to register, under
Section 12(b) of the Exchange Act, the class of securities
consisting of the Partnership Units.
It is
understood and agreed to by all parties that the Partnership was
recently formed by Holdings and the General Partner to gather and
process natural gas produced in the Fort Worth Basin. The
Partnership will initially own a pipeline system in the southern
portion of the Fort Worth Basin (the “ Cowtown
Pipeline ”) and a natural gas processing plant in Hood
County, Texas (the “ Cowtown Plant ”).
Currently, Quicksilver indirectly owns the Cowtown Pipeline through
its indirect ownership of Cowtown Pipeline L.P. (“
Pipeline LP ”) and indirectly owns the Cowtown Plant
through its indirect ownership of Cowtown Processing L.P. (“
Processing LP ”).
Prior
to the date hereof, the following transactions occurred:
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1. |
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Pipeline LP and Processing LP formed Holdings to act as the
holding company for Quicksilver’s interest in the
Partnership; |
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2. |
|
Holdings formed Quicksilver Gas Services Operating GP LLC, a
Delaware limited liability company (“ Quicksilver OPGP
”) to act as the general partner of each of Cowtown Pipeline
Partners L.P. (“ Pipeline Partners ”) and
Cowtown Gas Processing Partners L.P. (“ Processing
Partners ”); |
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3. |
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Holdings formed the General Partner to act as the general
partner of the Partnership; |
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4. |
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The General Partner and Holdings formed the Partnership;
and |
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5. |
|
The Partnership formed Quicksilver Gas Services Operating LLC,
a Delaware limited liability company (“ Quicksilver
Operating LLC ”) to become a subsidiary of the
Partnership and to indirectly own all of the interests in the
Partnership’s assets. |
The
transactions described in clauses (1)-(5) above are referred to
herein collectively as the “ Prior Transactions
.”
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It is
further understood and agreed to by all parties that, on or prior
to the Closing Date, the following transactions will occur:
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1. |
|
Pipeline LP will make a capital contribution to Holdings of its
1.0% general partner interest and 92.0% limited partner interest in
Pipeline Partners in exchange for a continuation of its member
interest in Holdings; |
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2. |
|
Processing LP will make a capital contribution to Holdings of
its 1.0% general partner interest and 94.0% limited partner
interest in Processing Partners in exchange for a continuation of
its member interest in Holdings; |
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3. |
|
Holdings will make a capital contribution to Quicksilver OPGP
of the 1.0% general partner interests in each of Pipeline Partners
and Processing Partners in exchange for a continuation of its
member interest in Quicksilver OPGP; |
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4. |
|
The Partnership will enter into a $150 million revolving
credit facility with Bank of America, N.A., as administrative
agent, and the other lenders named therein (collectively with the
other financing documents entered into in connection therewith, the
“ Credit Facility ”); |
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5. |
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Holdings will convey to the General Partner, as a capital
contribution, a part of its limited partner interests in each of
Pipeline Partners and Processing Partners with an aggregate value
equal to 2.0% of the equity value of the Partnership; |
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6. |
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The General Partner will convey to the Partnership, as a
capital contribution, its limited partner interests in each of
Pipeline Partners and Processing Partners in exchange for
(a) 415,614 general partner units representing a continuation
of its 2.0% general partner interest in the Partnership and
(b) all of the Incentive Distribution Rights (as defined in
the Partnership Agreement); |
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7. |
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Holdings will convey to the Partnership, as a capital
contribution, all of its interest in Quicksilver OPGP and the rest
of its limited partner interests in each of Pipeline Partners and
Processing Partners in exchange for (a) 11,513,625
subordinated units representing limited partner interests and
5,696,752 Common Units representing limited partner interests, with
an aggregate 73.2% limited partner interest in the Partnership, and
(b) the right to receive approximately $162.1 million in cash
in part to reimburse it for certain capital expenditures incurred
by it or its affiliate; |
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8. |
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The Private Investors will convey, as a capital contribution,
their limited partner interests in each of Pipeline Partners and
Processing Partners in exchange for (a) an aggregate 816,873
common units representing an aggregate 3.5% limited partner
interest in the Partnership, and (b) the right to receive
approximately $7.7 million in cash in part for reimbursement
for certain capital expenditures incurred by the Private
Investors; |
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9. |
|
The public, through the underwriters, will contribute $97.635
million in cash, $105.0 million of gross proceeds, net of the
Underwriters’ discounts and commissions and a structuring fee
(the “ Offering Proceeds ”), to the Partnership
in exchange for 5,000,000 million Common Units representing an
21.3% limited partner interest in the Partnership (the “
Offering ”); |
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10. |
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The Partnership will enter into a $50 million subordinated
intercompany note with Quicksilver (the “ Quicksilver
Note ”) to finance a portion of the expenses associated
with the Offering; |
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11. |
|
The Partnership will use the Offering Proceeds and the cash
contribution from the General Partner and the Quicksilver Note to
(i) pay the underwriters’ structuring fee, (ii) pay
approximately $3.0 million in offering expenses (net of the
Underwriters’ discounts and commissions and structuring fees)
incurred by Holdings on behalf of the Partnership, and
(iii) distribute approximately $162.1 million, consisting
of $112.1 million in cash and the $50 million Quicksilver
Note, to Quicksilver and $7.7 million in cash to the Private
Investors as reimbursement for capital expenditures comprising most
of the initial investment by Quicksilver and the Private Investors
in the Partnership; |
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12. |
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The Partnership will convey to Quicksilver Operating LLC, as a
capital contribution, its limited partner interests in each of
Pipeline Partners and Processing Partners and its interest in
Quicksilver OPGP; |
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13. |
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The agreements of limited partnership and the limited liability
company agreements of the aforementioned entities will be amended
and restated to the extent necessary to reflect the foregoing
transactions and any other transactions contemplated by the
Contribution Documents (as defined below); |
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14. |
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If the Underwriters exercise their option to purchase any
Option Units within 30 days after the date of this Agreement
as provided in Section 4, the Partnership will use the net
proceeds of the sale of those Option Units for general partnership
purposes; and |
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15. |
|
The Partnership will redeem the limited partner interest in the
Partnership acquired by Holdings in exchange for the amount of the
initial cash capital contribution by Holdings. |
The
transactions described above in clauses (1)-(15) or otherwise
provided for in the Contribution Documents (as defined below)
together with the Prior Transactions, are referred to 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, the
“ Contribution Documents ”). The Omnibus
Agreement to be dated the Closing Date among the Partnership, the
General Partner and
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Quicksilver
is referred to herein as the “ Omnibus Agreement
.” The Services and Secondment Agreement to be dated the
Closing Date among the General Partner and Quicksilver is referred
to herein as the “ Services Agreement .” The
Fifth Amended and Restated Cowtown Gas Facilities Gas Gathering and
Processing Agreement, among Quicksilver, Pipeline Partners and
Processing Partners is referred to herein as the “
Processing Agreement .” The Contribution Documents,
the Credit Facility, the Omnibus Agreement, the Services Agreement
and the Processing Agreement are referred to herein collectively as
the “ Transaction Documents .”
The
“ Organizational Documents ” shall mean each of
the Partnership Agreement, the General Partner LLC Agreement, the
Quicksilver OPGP LLC Agreement and Quicksilver Operating LLC
Agreement (each as defined below) and the certificates of limited
partnership or formation and other organizational documents of the
Partnership Entities. The “ Operative Documents
” shall mean the Transaction Documents and the Organizational
Documents, collectively.
The
Quicksilver Parties and the Underwriters agree as follows:
1. Sale and Purchase .
Upon the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Partnership agrees
to issue and sell to the respective Underwriters, each of the
General Partner and Holdings agree to cause the Partnership to
issue and sell to the respective Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from
the Partnership, the number of Firm Units set forth opposite the
name of such Underwriter in Schedule A attached hereto,
subject to adjustment in accordance with Section 9
hereof, in each case at a purchase price of $19.635 per Unit. The
Partnership is advised by you that the Underwriters intend
(i) to make a public offering of their respective portions of
the Firm Units as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially
to offer the Firm Units upon the terms set forth in the Prospectus.
You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may
determine.
In
addition, the Partnership hereby grants to the several Underwriters
the option (the “ Over-Allotment Option ”) to
purchase, and upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not
jointly, from the Partnership, ratably in accordance with the
number of Firm Units to be purchased by each of them, all or a
portion of the Additional Units in the event the Underwriters sell
more than the number of Firm Units, at the same purchase price per
Unit to be paid by the Underwriters to the Partnership for the Firm
Units. The Over-Allotment Option may be exercised by the
Representatives on behalf of the several Underwriters at any time
and from time to time on or before the thirtieth day following the
date of the Prospectus, by written notice to the Partnership. Such
notice shall set forth the aggregate number of Additional Units as
to which the Over-Allotment Option is being exercised and the date
and time when the Additional Units are to be delivered (any such
date and time being herein referred to as an “ additional
time of purchase ”); provided , however ,
that no additional time of purchase shall be earlier than the
“time of purchase” (as defined below) nor earlier than
the second business day after the date on which the Over-Allotment
Option shall have been exercised nor later than the tenth business
day after the date on which the Over-Allotment Option shall have
been exercised. The number of Additional Units to be sold to each
Underwriter shall
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be the
number which bears the same proportion to the aggregate number of
Additional Units being purchased as the number of Firm Units set
forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm
Units (subject, in each case, to such adjustment as the
Representatives may determine to eliminate fractional Units),
subject to adjustment in accordance with Section 9
hereof.
2. Payment and Delivery
. Payment of the purchase price for the Firm Units shall be made to
the Partnership by Federal Funds wire transfer against electronic
delivery of the certificates for the Firm Units to you through the
facilities of The Depository Trust Company (“ DTC
”) for the respective accounts of the Underwriters. Such
payment and delivery shall be made at 10:00 A.M., New York
City time, on August 10, 2007 (unless another time shall be
agreed to by you and the Partnership or unless postponed in
accordance with the provisions of Section 9 hereof). The
time at which such payment and delivery are to be made is
hereinafter sometimes called the “ time of purchase
.” Electronic transfer of the Firm Units shall be made to you
at the time of purchase in such names and in such denominations as
you shall specify.
Payment
of the purchase price for the Additional Units shall be made at the
additional time of purchase in the same manner and at the same
office as the payment for the Firm Units. Electronic transfer of
the Additional Units shall be made to you at the additional time of
purchase in such names and in such denominations as you shall
specify.
Deliveries
of the documents described in Section 7 hereof with
respect to the purchase of the Units shall be made at the offices
of Andrews Kurth LLP, at 9:00 A.M., Houston, Texas time, on the
date of the closing of the purchase of the Firm Units or the
Additional Units, as the case may be.
3. Representations and
Warranties of the Partnership . Each of the Quicksilver Parties
jointly and severally, represents and warrants to and agrees with
each of the Underwriters that:
(a) Registration; No Material
Misstatements or Omissions . The Registration Statement has
heretofore become effective under the Securities Act or, with
respect to any registration statement to be filed to register the
offer and sale of Units pursuant to Rule 462(b) under the
Securities Act, will be filed with the SEC and become effective
under the Securities Act no later than 10:00 P.M., New York
City time, on the date of determination of the public offering
price for the Units; no stop order of the SEC preventing or
suspending the use of any Preliminary Prospectus, the Prospectus or
any Permitted Free Writing Prospectus or the effectiveness of the
Registration Statement, has been issued, and no proceedings for
such purpose have been instituted or, to the Partnership’s
knowledge after due inquiry, are contemplated by the SEC; the
Exchange Act Registration Statement has become effective as
provided in Section 12 of the Exchange Act; the Registration
Statement complied when it became effective, complies as of the
date hereof and, as amended or supplemented, at the time of
purchase, each additional time of purchase, if any, and at all
times during which a prospectus is required by the Securities Act
to be delivered (whether physically or through compliance with
Rule 172 under the Securities Act or any similar rule) in
connection with any sale of Units, will comply, in all material
respects, with the requirements of the Securities Act;
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the
Registration Statement did not, as of the Effective Time, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; each Preliminary Prospectus
complied, at the time it was filed with the SEC, and complies as of
the date hereof, in all material respects with the requirements of
the Securities Act; at no time during the period that begins on the
earlier of the date of such Preliminary Prospectus and the date
such Preliminary Prospectus was filed with the SEC and ends at the
time of purchase did or will any Preliminary Prospectus, as then
amended or supplemented, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading, and at no time during such period
did or will any Preliminary Prospectus, as then amended or
supplemented, together with any combination of one or more of the
then-issued Permitted Free Writing Prospectuses, if any, include 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; the Prospectus will comply, as of its date and the date
it is filed with the SEC, the time of purchase, each additional
time of purchase, if any, and at all times during which a
prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 under
the Securities Act or any similar rule) in connection with any sale
of Units, will comply, in all material respects, with the
requirements of the Securities Act (including, without limitation,
Section 10(a) of the Securities Act); at no time during the period
that begins on the earlier of the date of such Prospectus and the
date the Prospectus is filed with the SEC and ends at the later of
the time of purchase, the latest additional time of purchase, if
any, and the end of the period during which a prospectus is
required by the Securities Act to be delivered (whether physically
or through compliance with Rule 172 under the Securities Act
or any similar rule) in connection with any sale of Units did or
will the Prospectus, as then amended or supplemented, include 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; at no time during the period that begins on the date of
such Permitted Free Writing Prospectus and ends at the time of
purchase did or will any Permitted Free Writing Prospectus include
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, or conflict with the information contained in the
Registration Statement, the Preliminary Prospectus or the
Prospectus; provided, however , that the Quicksilver
Parties make no representation or warranty in this
Section 3(a) with respect to any statement contained in
the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Permitted Free Writing Prospectus in reliance
upon and in conformity with the information specified in
Section 11 hereof furnished in writing by or on behalf
of such Underwriter through you to the Partnership expressly for
use in the Registration Statement, such Preliminary Prospectus, the
Prospectus or such Permitted Free Writing Prospectus. All Permitted
Free Writing Prospectuses were preceded by, or accompanied with, a
statutory prospectus meeting the requirements of Section 10(a) of
the Securities Act as required by Rule 164 under the
Securities Act.
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(b) Prospectuses Used in
Offering . Prior to the execution of this Agreement, the
Partnership has not, directly or indirectly, offered or sold any
Units by means of any “ prospectus ” (within the
meaning of the Securities Act) or used any “prospectus”
(within the meaning of the Securities Act) in connection with the
offer or sale of the Units, in each case other than the Preliminary
Prospectuses and the Permitted Free Writing Prospectuses, if any;
the Partnership has not, directly or indirectly, prepared, used or
referred to any Permitted Free Writing Prospectus except in
compliance with Rules 164 and 433 under the Securities Act;
assuming that such Permitted Free Writing Prospectus is so sent or
given after the Registration Statement was filed with the SEC (and
after such Permitted Free Writing Prospectus was, if required
pursuant to Rule 433(d) under the Securities Act, filed with the
SEC), the sending or giving, by any Underwriter, of any Permitted
Free Writing Prospectus will satisfy the provisions of
Rule 164 and Rule 433 (without reliance on subsections
(b), (c) and (d) of Rule 164); each of the
Preliminary Prospectuses is a prospectus that, other than by reason
of Rule 433 or Rule 431 under the Securities Act,
satisfies the requirements of Section 10 of the Securities
Act, including a price range where required by rule; neither the
Partnership nor the Underwriters are disqualified, by reason of
subsection (f) or (g) of Rule 164 under the
Securities Act, from using, in connection with the offer and sale
of the Units, “free writing prospectuses” (as defined
in Rule 405 under the Securities Act) pursuant to
Rules 164 and 433 under the Securities Act; the Partnership is
not an “ineligible issuer” (as defined in Rule 405
under the Securities Act) as of the eligibility determination date
for purposes of Rules 164 and 433 under the Securities Act
with respect to the Offering contemplated by the Registration
Statement; the parties hereto agree and understand that the content
of any and all “road shows” (as defined in Rule 433(h)
under the Securities Act) related to the Offering is solely the
property of the Partnership; the Partnership has caused there to be
made available at least one version of a “ bona fide
electronic road show” (as defined in Rule 433(h)(5) under the
Securities Act) in a manner that, pursuant to
Rule 433(d)(8)(ii) under the Securities Act, causes the
Partnership not to be required, pursuant to Rule 433(d) under the
Securities Act, to file with the SEC any Road Show.
(c) Formation and Qualification of
Partnership Entities . Each of the Partnership Entities has
been duly formed and is validly existing in good standing as a
limited partnership or limited liability company, as the case may
be, under the laws of its respective jurisdiction of formation,
with all partnership or limited liability company power and
authority necessary to own, lease and operate its properties and
conduct its business as described in the Registration Statement,
the Preliminary Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any; and (i) in the case of the
General Partner, to act as the general partner of the Partnership
and (ii) in the case of each party to an Operative Document
that is a Partnership Entity, to execute and deliver the Operative
Documents to which such Partnership Entity is a party and to
consummate the transactions contemplated thereby, and (iii) in
the case of the Quicksilver Parties, to execute and deliver this
Agreement to consummate the transactions contemplated hereby.
(d) Foreign Qualification and
Registration . Each of the Partnership Entities is duly
qualified to do business as a foreign limited liability company or
limited partnership, as the case may be, and is in good standing in
each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such
9
qualification,
except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, (i) have a
material adverse effect on the business, properties, financial
condition, results of operations or prospects of the Partnership
Entities taken as a whole (a “ Material Adverse Effect
”); or (ii) subject the limited partners of the
Partnership to any material liability or disability; insofar as the
foregoing representation relates to the registration or
qualification of each Partnership Entity, the applicable
jurisdictions are set forth on Schedule C hereto.
(e) Ownership of the General
Partner . At the time of purchase, after giving effect to the
Transactions, Holdings will own all 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 limited liability company agreement of the General
Partner, as in effect at the time of purchase (“ General
Partner LLC Agreement ”), and Holdings will own such
membership interests free and clear of all Liens.
(f) Ownership of the General
Partner Interest in the Partnership . At the time of purchase,
after giving effect to the Transactions, the General Partner will
be the sole general partner of the Partnership with a 2% general
partner interest in the Partnership (the “ GP Interest
”); such GP Interest will be duly authorized and validly
issued in accordance with the Partnership Agreement of the
Partnership, as in effect at the time of purchase, and the General
Partner will own such general partner interest free and clear of
all Liens.
(g) Ownership of the Sponsor
Units . Immediately prior to the purchase by the Underwriters
of any Units pursuant to this Agreement, after giving effect to the
Transactions, there will be 5,365,275 common units and 11,513,625
subordinated units outstanding, of which Holdings will own
5,696,752 common units and 11,513,625 subordinated units and the
Private Investors will own 816,873 common units (such common units
and subordinated units being collectively referred to herein as the
“ Sponsor Units ”) and the General Partner will
own all of the Incentive Distribution Rights (as defined in the
Partnership Agreement). All of the Sponsor Units and the limited
partner interests represented thereby and the Incentive
Distribution Rights will be duly authorized and validly issued in
accordance with the Partnership Agreement, and will be fully paid
(to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by
Sections 17-303 and 17-607 of the Delaware Revised Uniform
Limited Partnership Act (the “ Delaware LP Act
”) and as otherwise described in the Prospectus under the
caption “The Partnership Agreement—Limited
Liability”). All of the Sponsor Units owned by Holdings and
the Private Investors and the Incentive Distribution Rights owned
by the General Partner will be owned free and clear of all Liens
(except with respect to the restrictions on transferability
contained in Section 4.7 and 4.8 of the Partnership Agreement
and as otherwise described in the Prospectus).
(h) Ownership of Quicksilver
Operating LLC . At the time of purchase, after giving effect to
the Transactions, the Partnership will own all of the issued and
outstanding member interests in Quicksilver Operating LLC, such
ownership interest will
10
be duly
authorized and validly issued in accordance with the limited
liability company agreement of Quicksilver Operating LLC, as in
effect at the time of purchase (“ Quicksilver Operating
LLC Agreement ”), and the Partnership will own such
ownership interest free and clear of all Liens.
(i) Ownership of Quicksilver
OPGP . At the time of purchase, after giving effect to the
Transactions, Quicksilver Operating LLC will own all of the issued
and outstanding membership interests in Quicksilver OPGP; such
ownership interests will be duly authorized and validly issued in
accordance with the Quicksilver OPGP limited liability company
agreement (the “ Quicksilver OPGP LLC Agreement
”), and Quicksilver Operating LLC will own such ownership
interests free and clear of all Liens.
(j) Subsidiaries . The
Partnership has no other direct or indirect subsidiaries (as
defined under the Securities Act) other than the Subsidiaries.
Other than the Subsidiaries, the Partnership does not own, directly
or indirectly, any shares of stock or any other equity interests or
long-term debt securities of any corporation, firm, partnership,
joint venture, association or other entity; complete and correct
copies of the formation and governing documents of each of the
Partnership Entities and all amendments thereto have been delivered
to you, and, except as set forth in the exhibits to the
Registration Statement, no changes thereto will be made on or after
the date hereof, through and including the time of purchase, or, if
later, any additional time of purchase; each of the Partnership
Entities is in compliance with the laws, orders, rules, regulations
and directives issued or administered by such jurisdictions, except
where the failure to be in compliance would not, individually or in
the aggregate, have a Material Adverse Effect; each Subsidiary is
duly registered or qualified to do business and is in good standing
as a foreign corporation, limited liability company, limited
partnership or general partnership, as the case may be, in each
jurisdiction in which its ownership or lease of property or the
conduct of its businesses requires such registration or
qualification; and all of the outstanding limited liability company
interests, partnership interests or shares of capital stock of each
of the Subsidiaries, as applicable, have been duly authorized and
validly issued, are fully paid and non-assessable.
(k) Valid Issuance of Units .
As of the time of purchase or any additional time of purchase, the
Firm Units and the Additional Units, if any, 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
(i) matters described in the Registration Statement, the
Preliminary Prospectus and the Prospectus under the caption
“Risk Factors—Risks Inherent in an Investment in
Us—Your liability may not be limited if a court finds that
unitholder action constitutes control of our business” and
“—Risks Inherent in an Investment in
Us—Unitholders may have liability to repay distributions that
were wrongfully distributed to them” (and any similar
information, if any, contained in any Permitted Free Writing
Prospectus) and (ii) Sections 17-303 and 17-607 of the
Delaware LP Act); and other than the Sponsor Units, the Units will
be the only limited partner interests of the Partnership issued and
outstanding as of the time of purchase and any
11
additional time
of purchase, as applicable; the Units, when issued and delivered
against payment therefor as provided herein, will be free of any
restriction upon the voting or transfer thereof pursuant to the
Partnership’s formation and governing documents or any
agreement or other instrument to which the Partnership or any of
the Partnership Entities or their affiliates is a party or by which
any of them or any of their respective properties may be bound or
affected.
(l) Conformity to Description of
Partnership Units . The Units, when issued and delivered in
accordance with the terms of the Partnership Agreement and against
payment therefore as provided herein, and the Sponsor Units, the GP
Interest and the Incentive Distribution Rights, when issued and
delivered in accordance with the terms of the Partnership
Agreement, will conform in all material respects to the description
thereof contained in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any.
(m) Authorization, Execution and
Delivery of this Agreement . This Agreement has been duly
authorized, executed and delivered by each of the Quicksilver
Parties.
(n) Authorization, Execution,
Delivery and Enforceability of Certain Agreements . At or
before the time of purchase:
(i) the Partnership Agreement will be
duly authorized and executed and validly delivered by the General
Partner and will be a valid and legally binding agreement of the
General Partner, enforceable against the General Partner in
accordance with its terms;
(ii) the General Partner LLC
Agreement will be duly authorized and executed and validly
delivered by Holdings and will be a valid and legally binding
agreement of Holdings, enforceable against Holdings in accordance
with its terms;
(iii) the Quicksilver Operating LLC
Agreement will be duly authorized and executed and validly
delivered by the Partnership and will be a valid and legally
binding agreement of the Partnership, enforceable against the
Partnership in accordance with its terms;
(iv) the Quicksilver OPGP LLC
Agreement will be duly authorized and executed and validly
delivered by Quicksilver Operating LLC and will be a valid and
legally binding agreement of each of them and enforceable against
Quicksilver Operating LLC in accordance with its terms;
(v) the first amendment to the
limited partnership agreements of each of Pipeline Partners and
Processing Partners will be duly authorized and executed and
validly delivered by each of Quicksilver OPGP and Quicksilver
Operating LLC and will be a valid and legally binding agreement of
each of them and enforceable against each of Quicksilver OPGP and
Quicksilver Operating LLC in accordance with its terms;
12
(vi) the Contribution Agreement will
be duly authorized and executed and validly delivered by the
Partnership and each of the Partnership Entities party thereto and
will be a valid and legally binding agreement of each of them,
enforceable against each of them in accordance with its
terms;
(vii) the Omnibus Agreement will be
duly authorized and executed and validly delivered by Quicksilver
and each of the Partnership Entities party thereto and will be a
valid and legally binding agreement of each of them, enforceable
against each of them in accordance with its terms;
(viii) the Credit Facility will be
duly authorized and executed and validly delivered by each of the
Partnership Entities party thereto and will be a valid and legally
binding agreement of each of them, enforceable against each of them
in accordance with its terms;
(ix) the Services Agreement will be
duly authorized and executed and validly delivered by each of the
General Partner and Quicksilver and will be a valid and legally
binding agreement of each of them, enforceable against each of them
in accordance with its terms;
(x) the Processing Agreement will be
duly authorized and executed and validly delivered by each of
Quicksilver, Pipeline Partners and Processing Partners and will be
a valid and legally binding agreement of each of them, enforceable
against each of them in accordance with its terms;
except;
with respect to each agreement described in this Section 3(o),
as the enforceability thereof may be limited (A) by
(bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other 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 (B) with respect to the
indemnity, contribution and exoneration provisions therein, by
public policy and applicable laws relating to fiduciary duties and
indemnification.
(o) No Conflicts or Violations; No
Default . None of the Partnership Entities is (A) in
violation of its respective Organizational Documents, or
(B) in breach of, in default under or violation of (nor has
any event occurred which with notice, lapse of time or both would
result in any breach of, default under or violation of or give the
holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a part of such indebtedness
under) any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound or affected, or
(C) in violation of any federal, state, local or foreign law,
regulation or rule, or (D) in violation of any rule or
regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of NYSE Arca), or (E) in
violation of any decree, judgment or order applicable to any of the
Partnership Entities or any of their properties, which breach,
default or violation in the
13
case of
Clauses (B) , (C) , (D) and (E) above,
would, if continued, have, individually or in the aggregate, a
Material Adverse Effect, affect the validity of the Units or
prevent or materially interfere with consummation of the
transactions contemplated by this Agreement, including the
Offering, the other transactions contemplated by the Registration
Statement, the Preliminary Prospectus, the Prospectus and the
Permitted Free Writing Prospectus, if any, the Transactions and the
Operative Documents; and none of (i) the execution, delivery
and performance of this Agreement and the Operative Documents by
the parties thereto, (ii) the offering, issuance and sale of
the Units or (iii) the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the
Transactions) will conflict with, result in any breach or violation
of or constitute a default under, or constitute any event which,
with notice, lapse of time or both, would result in any breach or
violation of, constitute a default under or give the holder of any
indebtedness (or a person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or
a part of such indebtedness under, or result in the creation or
imposition of a Lien, charge or encumbrance on any property or
assets of the Partnership Entities pursuant to (I) any
Organizational Document, or (II) any indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract 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 or affected, or (III) any federal, state, local or
foreign law, regulation or rule, or (IV) any rule or
regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of NYSE Arca), or
(V) any decree, judgment or order applicable to any of the
Partnership Entities or any of their respective properties, which
conflicts, breaches, violation or defaults, in the case of
clauses (II) , (III) , (IV) or (V)
above, would, individually or in the aggregate, have a Material
Adverse Effect, affect the validity of the Units or prevent or
materially interfere with consummation of the transactions
contemplated by this Agreement, including the Offering, the other
transactions contemplated by the Registration Statement, the
Preliminary Prospectus, the Prospectus and the Permitted Free
Writing Prospectus, if any, the Transactions and the Operative
Documents.
(p) No Consents Regarding the
Offering . No approval, authorization, consent or order of or
filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or of or
with any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, NYSE Arca)
(each, a “ Consent ”) or any approval of the
security holders of the Partnership Entities, is required in
connection with the Offering and the execution, delivery and
performance of the Operative Documents by the Quicksilver Parties,
or the consummation by the Partnership of the transactions
contemplated hereby or thereby (including, without limitation, the
Transactions) other than (i) registration of the Units under
the Securities Act, which has been effected (or, with respect to
any registration statement to be filed hereunder pursuant to Rule
462(b) under the Securities Act, will be effected in accordance
herewith), (ii) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which
the Units are being offered by the Underwriters, (iii) under
the Conduct Rules of the NASD and (iv) such Consents that have
been, or prior to the Closing Date will be, obtained, or, if not
obtained, would not,
14
individually or
in the aggregate, result in a Material Adverse Effect, affect the
validity of the Units or prevent or materially interfere with
consummation of the transactions contemplated by this Agreement,
including the Offering, the other transactions contemplated by the
Registration Statement, the Preliminary Prospectus, the Prospectus
and the Permitted Free Writing Prospectus, if any, the Transactions
and the Operative Documents.
(q) No Preemptive Rights,
Registration Rights, Options or Other Rights . Except as
described in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus and the Prospectus,
(i) no person has the right, contractual or otherwise, to
cause the Partnership to issue or sell to it Partnership Units or
other equity interests of the Partnership, (ii) no person has
any preemptive rights, resale rights, rights of first refusal or
other rights to purchase any Partnership Units or other equity
interests in the Partnership, (iii) no person has any resale
rights in respect of the Partnership Units that would be required
to be disclosed in the Registration Statement and are not so
disclosed and (iv) no person has the right to act as an
underwriter or as a financial advisor to the Partnership in
connection with the Offering; no person has the right, contractual
or otherwise, to cause the Partnership to register under the
Securities Act any Partnership Units or other equity interests in
the Partnership, or to include any such Partnership Units or other
interests in the Registration Statement or the Offering
contemplated thereby.
(r) Permits . Each of the
Partnership Entities has all necessary licenses, authorizations,
consents and approvals (each, a “Permit”) and has made
all necessary filings required under any applicable law, regulation
or rule, and has obtained all necessary licenses, authorizations,
consents and approvals from other persons, in order to conduct
their respective businesses except for such Permits that, if not
obtained, would not have a Material Adverse Effect; none of the
Partnership Entities is in violation of, or in default under, or
has received notice of any proceedings relating to the revocation
or modification of, any such Permit or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment
applicable to any of the Partnership Entities, except where such
violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse
Effect.
(s) Descriptions; Exhibits .
All legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements,
properties, leases or documents of a character required to be
described in the Registration Statement, each Preliminary
Prospectus or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
and the statements included in the Registration Statement, the
Preliminary Prospectuses and the Prospectus under the headings
“Our Cash Distribution Policy and Restrictions on
Distributions,” “Provisions of our Partnership
Agreement Relating to Cash Distributions,”
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources” and “—Capital Requirements,”
“Management,” “Certain Relationships and Related
Party Transactions,” “Conflicts of Interest and
Fiduciary Duties,” “Description of the Common
Units,” “The Partnership Agreement,”
“Material Tax Consequences” and
“Underwriting” (and any similar information, if any,
contained in any Permitted Free Writing Prospectus) insofar as
such
15
statements
summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal
matters, agreements, documents or proceedings.
(t) Litigation . Except as
described in the Registration Statement, the Preliminary
Prospectus, the Prospectus and the Permitted Free Writing
Prospectuses, if any, there are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of the
Partnership Entities, threatened or contemplated to which any of
the Partnership Entities or any of their respective directors or
officers is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, NYSE Arca), except any
such action, suit, claim, investigation or proceeding that would
not result in a judgment, decree or order having, individually or
in the aggregate, a Material Adverse Effect.
(u) Independent Registered Public
Accounting Firms . Deloitte & Touche LLP, whose report on
the financial statements of the Partnership and the General Partner
are included in the Registration Statement, the Preliminary
Prospectuses and the Prospectus or any Permitted Free Writing
Prospectuses containing an audit report, are independent registered
public accountants as required by the Securities Act and by the
rules of the Public Company Accounting Oversight Board.
(v) Financial Statements . The
financial statements included in the Registration Statement, the
Preliminary Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any, together with the related notes and
schedules, present fairly in all material respects the consolidated
financial position of the Partnership and the General Partner as of
the dates indicated and the consolidated statements of operations,
cash flows and changes in partners’ equity of the Partnership
and the General Partner for the periods specified and have been
prepared in compliance with the requirements of the Securities Act
and Exchange Act and in conformity with U.S. generally accepted
accounting principles applied on a consistent basis during the
periods involved; all pro forma financial statements or data
included in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, (excluding the pro forma information set
forth under the caption “Our Cash Distribution Policy and
Restrictions on Distributions—Unaudited Pro Forma Available
Cash” and the related notes) comply with the requirements of
the Securities Act (including, without limitation,
Regulation S-X under the Securities Act) (including, without
limitation, Regulation G under the Securities Act and the
Exchange Act), Item 10 under Regulation S-K and Financial
Interpretation No. 46, and the assumptions used in the
preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate
to give effect to the transactions or circumstances described
therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements and
data; and the other financial and statistical data contained set
forth in the Registration Statement, the Preliminary Prospectuses,
the Prospectus and any Permitted Free Writing Prospectuses are
accurately
16
and fairly
presented and prepared on a basis consistent with the financial
statements and books and records of the Partnership Entities. The
assumptions and forecasts underlying the pro forma information set
forth under the caption “Our Cash Distribution Policy and
Restrictions on Distributions—Unaudited Pro Forma Available
Cash” and the related notes in the Registration Statement,
the Preliminary Prospectuses and the Prospectus (and any similar
information, if any, contained in any Permitted Free Writing
Prospectus) are, in the informed judgment of management of the
Partnership Entities, reasonable. There are no financial statements
(historical or pro forma) that are required to be included in the
Registration Statement, any Preliminary Prospectus or the
Prospectus that are not included as required. The Partnership
Entities do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus and the Prospectus.
(w) No Material Adverse Change
. Subsequent to the respective dates as of which information is
given in the Registration Statement, the Preliminary Prospectuses,
the Prospectus and the Permitted Free Writing Prospectuses, if any,
in each case excluding any amendments or supplements to the
foregoing made after the execution of this Agreement, there has not
been (i) any material adverse change, or any development
involving, individually or in the aggregate, a material adverse
change, in the business, properties, management, financial
condition, prospects or results of operations of the Partnership
Entities (considered as a single enterprise), (ii) any
transaction which is material to the Partnership Entities
(considered as a single enterprise), (iii) any obligation or
liability, direct or contingent (including any off-balance sheet
obligations), incurred by any of the Partnership Entities, which is
material to the Partnership Entities (considered as a single
enterprise), (iv) any material change in the capitalization,
ownership or outstanding indebtedness of any of the Partnership
Entities or (v) any dividend or distribution of any kind
declared, paid or made on the security interests of any of the
Partnership Entities, in each case whether or not arising from
transactions in the ordinary course of business.
(x) Lock-Up Agreement . The
Partnership Entities have obtained for the benefit of the
Underwriters the agreement (a “ Lock-Up Agreement
”), in substantially the form set forth as
Exhibit A hereto, of each of the directors and
“officers” of the General Partner (within the meaning
of Rule 16a-1(f) under the Exchange Act), the Private
Investors, as such term is defined in the Prospectus under the
caption “Summary—Formation Transactions and Partnership
Structure,” each Directed Unit Participant who purchases
Reserved Units, each holder of Sponsor Units and each holder of
Partnership Units named in Exhibit A-1 hereto.
(y) Investment Company . None
of the Partnership Entities is and at no time during which a
prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 under
the Securities Act or any similar rule) in connection with any sale
of Units will any of them be, and, after giving effect to the
Offering and sale of the Units and the application of the proceeds
thereof, none of them will be, an “investment company”
or an entity “controlled” by an “investment
17
company,”
as such terms are defined in the Investment Company Act of 1940, as
amended (the “ Investment Company Act ”).
(z) Title to Properties . Each
of the Partnership Entities has good and marketable title to all
real property and good title to all personal property described in
the Registration Statement, the Preliminary Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any, as
being owned by any of them, free and clear of all Liens except
Liens, individually or in the aggregate, that would not have a
Material Adverse Effect, Liens that would not materially interfere
with the use of any such property for the conduct of its businesses
and/or Liens described in the Registration Statement, the
Preliminary Prospectuses and the Prospectus. All of the property
described in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, as being held under lease by any of the
Partnership Entities is held thereby under valid, subsisting and
enforceable leases.
(aa) Information Underlying
Reserve Report of Quicksilver . The factual information
underlying the estimates of reserves of Quicksilver, including,
without limitation, production volumes, costs of operation and
development, current prices for production, agreements relating to
current and future operations and sales of production, which was
supplied by Quicksilver to Schlumberger Data and Consulting
Services (“ Schlumberger ”) for purposes of
preparing (i) the reserve reports, (ii) the estimates of
proved reserves of Quicksilver in the Fort Worth Basin, and
(iii) the summary reserve letter to the Company of
Schlumberger (the “ Reserve Report Letter ”),
was true and correct in all material respects on the dates such
estimates were made and such information was supplied and was
prepared in accordance with customary industry practices; other
than normal production of the reserves and intervening market
commodity price fluctuations, Quicksilver is not aware of any facts
or circumstances that would result in a material adverse change in
the reserves as described in the Prospectus and as reflected in the
Reserve Report Letter; estimates of such reserves as described in
the Prospectus and reflected in the Reserve Report Letter comply in
all material respects with the applicable requirements of
Regulation S-X and Industry Guide 2 under the Securities
Act.
(bb) Independent Petroleum
Engineers . Schlumberger, whose report dated February 7,
2007 is referenced in the Registration Statement, Prospectus and
Preliminary Prospectus and who has delivered the letter referred to
in Section 7(c) hereof, was, as of the date of such report, and is,
as of the date hereof, an independent reserve engineer with respect
to Quicksilver.
(cc) Rights-of-Way . Each of
the Partnership Entities has such consents, easements,
rights-of-way or licenses from any person (“
rights-of-way ”) as are necessary to enable it to
conduct its business in the manner described in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any
Permitted Free Writing Prospectus, subject to such qualifications
as may be set forth in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing
Prospectus, except for (i) qualifications, reservations and
encumbrances that would not have, individually or in the aggregate,
a Material Adverse Effect and (ii) such rights-of-way that, if
not
18
obtained, would
not have, individually or in the aggregate, a Material Adverse
Effect; and, except as described in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus or as would not interfere with the operations of
the Partnership Entities as conducted on the date hereof to such a
material extent that the Representatives could reasonably conclude
that proceeding with the Offering would be inadvisable, none of
such rights-of-way contains any restriction that is materially
burdensome to the Partnership Entities, taken as a whole.
(dd) Intellectual Property .
Each of the Partnership Entities owns or possesses all inventions,
patent applications, patents, trademarks (both registered and
unregistered), tradenames, service names, copyrights, trade secrets
and other proprietary information described in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, as being owned or
licensed by it or which is necessary for the conduct of, or
material to, its respective businesses, except where the failure to
own, license or have such rights would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, the
“ Intellectual Property ”) and the Partnership
Entities are unaware of any claim to the contrary or any challenge
by any other person to the rights of any of the Partnership
Entities with respect to the Intellectual Property. None of the
Partnership Entities has infringed or is infringing the
intellectual property of a third party, and none of the Partnership
Entities has received notice of a claim by a third party to the
contrary.
(ee) Labor and Employment .
None of the Partnership Entities is engaged in any unfair labor
practice; no labor disputes with the employees that are engaged in
the businesses of the Partnership Entities exist or, to the
knowledge of the Quicksilver Parties after due inquiry, are
imminent or threatened that would, individually or in the
aggregate, have a Material Adverse Effect. To the knowledge of the
Quicksilver Parties: (i) there is (A) no unfair labor
practice complaint pending or threatened against any of the
Partnership Entities before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending or threatened,
(B) no strike, labor dispute, slowdown or stoppage pending or
threatened against any of the Partnership Entities and (C) no
union representation dispute currently existing concerning the
employees of any of the Partnership Entities, (ii) no union
organizing activities are currently taking place concerning the
employees of any of the Partnership Entities and (iii) there
has been no violation of any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of
employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974, as amended
(“ ERISA ”), or the rules and regulations
promulgated thereunder concerning the employees of the Partnership
Entities.
(ff) Environmental Compliance
. Except as described in the Registration Statement, any
Preliminary Prospectus, the Prospectus and any Permitted Free
Writing Prospectus, each of the Partnership Entities and their
subsidiaries (i) is in compliance with any and all applicable
federal, state, local or foreign laws, statutes, ordinances, rules,
regulations, orders, decrees, judgments, injunctions, permits,
licenses, authorizations or other binding requirements, or common
laws, relating to health, safety or the protection, cleanup or
restoration of the environment or natural resources, including
those relating to
19
the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials (as defined below) (“ Environmental
Laws ”), (ii) has received and are in compliance
with all permits, licenses, or other approvals required of it under
applicable Environmental Laws to conduct its respective businesses
as it is currently being conducted, (iii) has not received
written notice of any, and to the knowledge of the Quicksilver
Parties after due inquiry there are no, pending events or
circumstances that could reasonably be expected to form the basis
for 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, and (iv) is
not subject to any pending or, to the knowledge of the Quicksilver
Parties after due inquiry, threatened actions, suits, demands,
orders or proceedings relating to any Environmental Laws against
the Partnership Entities (collectively, “ Proceedings
”), except in the cases of clauses (i) through
(iv) where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals,
actual or potential liability or Proceedings could not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. Except as described in the Registration
Statement, any Preliminary Prospectus, the Prospectus and any
Permitted Free Writing Prospectus, none of the Partnership Entities
nor their subsidiaries has entered into any agreement relating to
any alleged violation of any Environmental Law or any actual or
alleged release or threatened release or cleanup at any location of
any Hazardous Materials (as defined below). Except as set forth in
the Registration Statement, any Preliminary Prospectus, or the
Prospectus, none of the Partnership Entities or their subsidiaries
is currently named as a “potentially responsible party”
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (“ CERCLA ”).
As used herein, “ Hazardous Materials ” means
any material (including, without limitation, pollutants,
contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental
Law.
(gg) Environmental Compliance
Review . In the ordinary course of their respective businesses,
the Partnership Entities (i) monitor changes Environmental
Laws applicable to their respective businesses, operations and
properties, and take actions as necessary to obtain and maintain
compliance with any new or amended Environmental Laws;
(ii) retain environmental consultants to apply for and obtain
certain permits, licenses and approvals required for their
operations under Environmental Laws, and to advise the Partnership
Entities as to measures that may be required to obtain and maintain
compliance with Environmental Laws; and (iii) consult with
appropriate operations personnel to ensure that adequate capital
and operating budgets are established to provide funding for
expenditures required to conduct their operations in compliance
with Environmental Laws.
(hh) Tax Returns . All tax
returns required to be filed by the Partnership Entities have been
timely filed, and all taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due
or claimed to be due from such entities have been timely paid,
other than those (i) that are being contested in good faith
and for which adequate reserves have been provided or
(ii) that, if not paid, would not, individually or in the
aggregate, have a Material Adverse Effect.
20
(ii) Insurance . Quicksilver
maintains insurance covering the Partnership Entities’
properties, operations, personnel and businesses as Quicksilver
reasonably deems adequate; such insurance insures against such
losses and risks to an extent which is adequate in accordance with
customary industry practice to protect the Partnership Entities and
their respective businesses; all such insurance is fully in force
on the date hereof and will be fully in force at the time of
purchase and each additional time of purchase, if any; Quicksilver
does not have reason to believe that it will not be able to renew
any such insurance as and when such insurance expires.
(jj) No Business Interruptions
. None of the Partnership Entities has sustained since the date of
the last audited financial statements included in the Registration
Statement, any Preliminary Prospectuses, the Prospectus or any
Permitted Free Writing Prospectuses any material loss or
interference with its respective 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.
(kk) Non-Renewal of Agreements; No
Third Party Defaults . Except as described in the Registration
Statement, any Preliminary Prospectus or the Prospectus, none of
the Partnership Entities has sent or received any communication
regarding termination of, or intent not to renew, any of the
contracts or agreements referred to or described in any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing
Prospectus, or referred to or described in, or filed as an exhibit
to, the Registration Statement, and no such termination or
non-renewal has been threatened by any of the Partnership Entities
or, to the knowledge of the Partnership Entities, any other party
to any such contract or agreement. To the knowledge of the
Quicksilver Parties after due inquiry, 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 Partnership
Entities 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 both, would
constitute such an event), which breach, default or violation would
have a Material Adverse Effect.
(ll) Internal Controls . The
Partnership Entities 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 authorization; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(mm) Disclosure Controls . The
Partnership has established and will maintain and evaluate
“disclosure controls and procedures” (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act) and
“internal control over financial reporting” (as such
term is defined in Rule 13a-15 and 15d-15 under the Exchange
Act); such disclosure
21
controls and
procedures are designed to ensure that material information
relating to the Partnership, including its consolidated
subsidiaries, is made known to General Partner’s Chief
Executive Officer and Chief Financial Officer, and such disclosure
controls and procedures are effective to perform the functions for
which they were established; the Partnership’s independent
auditors and the Audit Committee of the Board of Directors of the
General Partner have been advised of: (i) all known
significant deficiencies, if any, in the design or operation of
internal control over financial reporting which could adversely
affect the Partnership’s ability to record, process,
summarize and report financial data; and (ii) any known fraud,
if any, whether or not material, that involves management or other
employees who have a significant role in the Partnership’s
internal control over financial reporting; all material weaknesses,
if any, in internal control over financial reporting have been
identified to the Partnership’s independent auditors; and the
Partnership Entities have taken all necessary actions to ensure
that, upon and at all time after effectiveness of the Registration
Statement, the Partnership Entities and the officers and directors
of the General Partner, will be in compliance in all material
respects with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations of the SEC and
NYSE Arca promulgated thereunder.
(nn) Related Party
Transactions . None of the Partnership Entities has, directly
or indirectly, including through any Subsidiary: (A) extended
credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or
executive officer of the General Partner or its affiliates, or to
or for any family member or affiliate of any director or executive
officer of the General Partner or its affiliates; or (B) made
any material modification, including any renewal thereof, to the
term of any personal loan to any director or executive officer of
the General Partner or its affiliates, or any family member or
affiliate of any director or executive officer of the General
Partner or its affiliates.
(oo) Forward-Looking
Statements . Each “forward-looking statement”
(within the meaning of Section 27A of the Securities Act or
Section 21E of the Exchange Act) contained or incorporated by
reference in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, has been made or reaffirmed with a reasonable
basis and in good faith.
(pp) Statistical and
Market-Related Data . All statistical or market-related data
included in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, are based on or derived from sources that the
Partnership reasonably believes to be reliable and accurate, and
the Partnership has obtained the written consent to the use of such
data from such sources to the extent required.
(qq) No Prohibition on
Distributions . None of the Partnership Entities is currently
prohibited, directly or indirectly, from making distributions with
respect of its equity securities or from repaying to the
Partnership any loans or advances or from transferring any property
or assets to the Partnership or any other Subsidiary, except as
described in (i) the Registration Statement (excluding the
exhibits thereto), each
22
Preliminary
Prospectus and the Prospectus or (ii) the Organizational
Documents of the Partnership and the General Partner.
(rr) Foreign Corrupt Practices
Act. None of the Partnership Entities nor, to the knowledge of
the Quicksilver Parties, any employee or agent of the Company or
any Subsidiary has made any payment of funds of the Partnership
Entities or received or retained any funds in violation of any law,
rule or regulation (including, without limitation, the Foreign
Corrupt Practices Act of 1977), which payment, receipt or retention
of funds is of a character required to be disclosed in the
Registration Statement, any Preliminary Prospectus or the
Prospectus;
(ss) Money Laundering Laws.
The operations of the Partnership Entities are and have been
conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental
agency (collectively, the “ Money Laundering Laws
”); and no action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator or
non-governmental authority involving the Partnership Entities with
respect to the Money Laundering Laws is pending or, to the
knowledge of the Quicksilver Parties, threatened;
(tt) No Other Securities .
Immediately after the issuance and sale of the Units as
contemplated hereby, except as described in the Registration
Statement, the Preliminary Prospectus, the Prospectus and the
Permitted Free Writing Prospectuses, if any, no other securities of
the Partnership shall be issued or outstanding; and the issuance
and sale of the Units as contemplated hereby will not cause any
holder of Partnership Units, securities convertible into or
exchangeable or exercisable for Partnership Units, or options,
warrants or other rights to purchase Partnership Units or any other
securities of the Partnership to have any right to acquire any
other securities of the Partnership.
(uu) NYSE Arca Listing . The
Units have been approved for trading on NYSE Arca, subject only to
official notice of issuance.
(vv) No Brokers’ Fees .
Except pursuant to this Agreement, none of the Partnership Entities
has incurred any liability for any finder’s or broker’s
fee or agent’s commission in connection with the execution
and delivery of this Agreement or the consummation of the
transactions (including, without limitation, the Transactions)
contemplated hereby or by the Registration Statement, any
Preliminary Prospectus or the Prospectus.
(ww) No Stabilizing
Transactions . None of the Partnership Entities nor any of
their Affiliates (as such term is defined in Rule 405
promulgated under the Securities Act) has taken, directly or
indirectly, any action designed, or which has constituted or might
reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Partnership to
facilitate the sale or resale of the Units.
23
(xx) NASD Affiliations . To
the knowledge of the Quicksilver Parties after due inquiry, there
are no affiliations or associations between (i) any member of
the NASD and (ii) the Partnership, the General Partner, any of
the General Partner’s officers and directors or 5% or greater
security holders of the Partnership, or any beneficial owner of the
Partnership’s unregistered equity securities that were
acquired at any time on or after the 180th day immediately
preceding the date the Registration Statement was initially filed
with the SEC, other than the Private Investors (as defined in the
Registration Statement), except as disclosed in the Registration
Statement (excluding the exhibits thereto), the Preliminary
Prospectuses and the Prospectus.
(yy) Directed Unit Program .
The Registration Statement, each Preliminary Prospectus, the
Prospectus and each Permitted Free Writing Prospectus comply, any
further amendments or supplements thereto will comply, with any
applicable laws or regulations of any foreign jurisdiction in which
any Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus is distributed in connection with the Directed
Unit Program; and no approval, authorization, consent or order of
or filing with any governmental or regulatory commission, board,
body, authority or agency, other than those heretofore obtained, is
required in connection with the offering of the Reserved Units in
any jurisdiction where the Reserved Units are being offered.
(zz) Reserved Unit Sales . The
Partnership has not offered, or caused the Underwriters to offer,
Units to any person pursuant to the Directed Unit Program with the
intent to influence unlawfully (A) a customer or supplier of
the Partnership Entities to alter the customer’s or
supplier’s level or type of business with the Partnership
Entities, or (B) a trade journalist or publication to write or
publish favorable information about the Partnership Entities or any
of their products or services.
(aaa) No Distribution of Other
Offering Materials . None of the Partnership Entities has
distributed nor will they distribute, prior to the later to occur
of (i) the time of purchase and additional time of purchase
and (ii) the completion of the distribution of the Units, any
prospectus (as defined under the Securities Act) in connection with
the offering and sale of the Units other than the Registration
Statement, any Preliminary Prospectus, the Prospectus, any
Permitted Free Writing Prospectuses or other materials, if any,
permitted by the Securities Act, including Rule 134
promulgated thereunder.
In
addition, any certificate signed by any officer of the Partnership
Entities or any of the Subsidiaries and delivered to the
Underwriters or counsel for the Underwriters in connection with the
Offering shall be deemed to be a representation and warranty by the
Partnership Entity or Subsidiary, as the case may be, as to matters
covered thereby, to each Underwriter.
4. Certain Covenants of the
Partnership . The Quicksilver Parties, jointly and severally,
hereby agree:
(a) Blue Sky Qualification .
To furnish such information as may be required and otherwise to
cooperate in qualifying the Units for offering and sale under the
securities or blue sky laws of such states or other jurisdictions
as you may designate and
24
to maintain
such qualifications in effect so long as you may request for the
distribution of the Units; provided , however , that
the Partnership shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws
of any such jurisdiction (except service of process with respect to
the offering and sale of the Units); and to promptly advise you of
the receipt by the Partnership of any notification with respect to
the suspension of the qualification of the Units for offer or sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(b) Copies of Prospectus . To
make available to the Underwriters in New York City, as soon as
practicable after this Agreement becomes effective, and thereafter
from time to time to furnish to the Underwriters, as many copies of
the Prospectus (or of the Prospectus as amended or supplemented if
the Partnership shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) as
the Underwriters may request for the purposes contemplated by the
Securities Act; in case any Underwriter is required to deliver
(whether physically or through compliance with Rule 172 under
the Securities Act or any similar rule) a prospectus after the
nine-month period referred to in Section 10(a)(3) of the
Securities Act in connection with the sale of the Units, the
Partnership will prepare, at its expense, promptly upon request
such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act.
(c) Effectiveness of Registration
Statement . If, at the time this Agreement is executed and
delivered, it is necessary or appropriate for a post-effective
amendment to the Registration Statement, or a Registration
Statement under Rule 462(b) under the Securities Act, to be filed
with the SEC and become effective before the Units may be sold, to
use its best efforts to cause such post-effective amendment or such
Registration Statement to be filed and become effective, and will
pay any applicable fees in accordance with the Securities Act, as
soon as possible; and the Partnership will advise you promptly and,
if requested by you, will confirm such advice in writing,
(i) when such post-effective amendment or such Registration
Statement has become effective, and (ii) if Rule 430A
under the Securities Act is used, when the Prospectus is filed with
the SEC pursuant to Rule 424(b) under the Securities Act (which the
Partnership agrees to file in a timely manner in accordance with
such Rules).
(d) Delivery of Prospectus .
If, at any time during the period when a prospectus is required by
the Securities Act to be delivered (whether physically or through
compliance with Rule 172 under the Securities Act or any
similar rule) in connection with any sale of Units, the
Registration Statement shall cease to comply with the requirements
of the Securities Act with respect to eligibility for the use of
the form on which the Registration Statement was filed with the
SEC, to (i) promptly notify the Underwriters,
(ii) promptly file with the SEC a new registration statement
under the Securities Act, relating to the Units, or a
post-effective amendment to the Registration Statement, which new
registration statement or post-effective amendment shall comply
with the requirements of the Securities Act and shall be in a form
satisfactory to the Underwriters, (iii) use its best efforts
to cause such new registration statement or post-effective
amendment to become effective under the Securities Act as soon as
practicable,
25
(iv) promptly
notify the Underwriters of such effectiveness and (v) take all
other action necessary or appropriate to permit the public offering
and sale of the Units to continue as contemplated in the
Prospectus; all references herein to the Registration Statement
shall be deemed to include each such new registration statement or
post-effective amendment, if any.
(e) Filing of Amendments or
Supplements . To advise the Underwriters promptly, confirming
such advice in writing, of any request by the SEC for amendments or
supplements to the Registration Statement or the Exchange Act
Registration Statement, any Preliminary Prospectus, the Prospectus
or any Permitted Free Writing Prospectus or for additional
information with respect thereto, or of notice of institution of
proceedings for, or the entry of a stop order, suspending the
effectiveness of the Registration Statement and, if the SEC should
enter a stop order suspending the effectiveness of the Registration
Statement, to use its best efforts to obtain the lifting or removal
of such order as soon as possible; to advise the Underwriters
promptly of any proposal to amend or supplement the Registration
Statement or the Exchange Act Registration Statement, any
Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus, and to provide the Underwriters and
Underwriters’ counsel copies of any such documents for review
and comment a reasonable amount of time prior to any proposed
filing and to file no such amendment or supplement to which the
Underwriters shall object in writing.
(f) Exchange Act Reports .
Subject to Section 4(e) hereof, to file promptly all
reports and documents and any preliminary or definitive proxy or
information statement required to be filed by the Partnership with
the SEC in order to comply with the Exchange Act for so long as a
prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 under
the Securities Act or any similar rule) in connection with any sale
of Units.
(g) Rule 462(b)
Registration Statement . If necessary or appropriate, to
file a registration statement pursuant to, and in accordance with,
Rule 462(b) under the Securities Act and pay the applicable fees in
accordance with the Securities Act.
(h) Misstatements and
Omissions . To advise the Underwriters promptly of the
happening of any event within the period during which a prospectus
is required by the Securities Act to be delivered (whether
physically or through compliance with Rule 172 under the
Securities Act or any similar rule) in connection with any sale of
Units, which event could require the making of any change in the
Prospectus then being used so that the Prospectus would not include
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 are made, not
misleading, and to advise the Underwriters promptly if, during such
period, it shall become necessary to amend or supplement the
Prospectus to cause the Prospectus to comply with the requirements
of the Securities Act, and, in each case, during such time, subject
to Section 4(e) hereof, to prepare and furnish, at the
Partnership’s expense, to the Underwriters promptly such
amendments or supplements to such Prospectus as may be necessary to
reflect any such change or to effect such compliance.
26
(i) Earnings Information . To
make generally available to its security holders, and to deliver to
the Underwriters, an earnings statement of the Partnership (which
will satisfy the provisions of Section 11(a) of the Securities Act)
covering a period of twelve months beginning after the effective
date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act) as soon as is reasonably practicable after the
termination of such twelve-month period but in any case not later
than 18 months after the effective date of this Registration
Statement.
(j) Annual Report . Unless
otherwise available through the electronic data gathering, analysis
and retrieval system (“ EDGAR ”), to furnish to
the Partnership’s security holders as soon as practicable
after the end of each fiscal year an annual report (including a
consolidated balance sheet of the General Partner, as required, and
the consolidated balance sheet and statements of income,
partners’ equity and cash flow of the Partnership and the
Subsidiaries for such fiscal year, accompanied by a copy of the
certificate of report thereon of nationally recognized independent
registered public accountants duly registered with the
PCAOB).
(k) Copies of the Registration
Statement . To furnish or make available via EDGAR to the
Underwriters as many copies of the Registration Statement as may be
reasonably requested, as such Registration Statement was initially
filed with the SEC, and of all amendments thereto (including all
exhibits thereto) and sufficient copies of the foregoing (other
than exhibits) for distribution of a copy to each
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