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EXHIBIT 10.17
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CONTRIBUTION AGREEMENT
BY AND AMONG
U.S. PROPANE, L.P.
AND
HERITAGE OPERATING, L.P. AND HERITAGE PROPANE PARTNERS, L.P.
JUNE 15, 2000
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CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS....................................................................................1
1.1 Certain Defined Terms......................................................................1
1.2 Certain Additional Defined Terms...........................................................1
1.3 Construction...............................................................................2
ARTICLE 2 CLOSING........................................................................................3
2.1 Actions Prior to the Closing...............................................................3
2.2 Contribution of Contributed Interests......................................................3
2.3 Issuance of Certificate for Common Units...................................................4
2.4 Instruments of Conveyance..................................................................4
2.5 Closing Price..............................................................................5
2.6 Net Working Capital True-Up................................................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE HERITAGE PARTIES.........................................6
3.1 SEC Reports................................................................................6
3.2 Financial Statements.......................................................................7
3.3 No Material Adverse Change.................................................................8
3.4 Formation of Heritage MLP and Heritage OLP.................................................9
3.5 Organization of Heritage Entities.........................................................10
3.6 Capitalization of Heritage MLP and Ownership of Interests.................................11
3.7 Authority and Binding Agreement...........................................................13
3.8 Agreements of Limited Partnership.........................................................13
3.9 No Breach or Violation....................................................................13
3.10 No Consents...............................................................................14
3.11 No Violation..............................................................................14
3.12 No Proceedings............................................................................14
3.13 Listing...................................................................................15
3.14 Finder's Fees.............................................................................15
3.15 Business Permits..........................................................................15
3.16 Books and Records.........................................................................15
3.17 Taxes.....................................................................................16
3.18 Intellectual Property.....................................................................17
3.19 Regulation................................................................................17
3.20 Environmental Matters.....................................................................17
3.21 Employee Matters..........................................................................18
3.22 Insurance.................................................................................19
3.23 Opinion of Financial Advisor..............................................................19
3.24 Approval of Special Committee.............................................................19
3.25 Employee Benefit Plans....................................................................19
3.26 Disclosure................................................................................21
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3.27 Sufficiency of Heritage Assets............................................................21
3.28 Title to Heritage Assets..................................................................21
3.29 Compliance with Laws......................................................................21
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE LP......................................................21
4.1 Organization and Existence................................................................22
4.2 Organization and Capitalization of the Contributed Subs...................................22
4.3 Authority Relative to this Agreement......................................................22
4.4 Noncontravention..........................................................................23
4.5 Governmental Approvals....................................................................23
4.6 Exclusive Operation of the Business.......................................................23
4.7 Title to Contributed Interests and Transferred Assets.....................................23
4.8 Financial Statements; Absence of Liabilities..............................................24
4.9 Absence of Certain Changes................................................................24
4.10 Tax Matters...............................................................................24
4.11 Compliance With Laws......................................................................25
4.12 Legal Proceedings.........................................................................25
4.13 Sufficiency of Transferred Assets.........................................................26
4.14 Real Property.............................................................................26
4.15 Tangible Personal Property................................................................26
4.16 Intellectual Property; Technology; Software...............................................26
4.17 Permits...................................................................................27
4.18 Agreements................................................................................28
4.19 Environmental Matters.....................................................................29
4.20 Insurance.................................................................................30
4.21 Financial Requirements....................................................................30
4.22 Books and Records.........................................................................30
4.23 Investment Intent.........................................................................31
4.24 Employee Matters..........................................................................31
4.25 Consents..................................................................................32
4.26 Contributed Subs..........................................................................32
4.27 Disclosure................................................................................32
4.28 Employee Benefit Plans....................................................................32
4.29 Finder's Fees.............................................................................34
4.30 Regulation................................................................................34
ARTICLE 5 AGREEMENTS....................................................................................34
5.1 Conduct and Preservation of the Business of the LP........................................34
5.2 Restrictions on Certain Actions of the LP, the LLC and the Contributed Subs...............35
5.3 Services of Employees.....................................................................36
5.4 Conduct and Preservation of the Business..................................................37
5.5 Restrictions on Certain Actions of the Heritage Parties and Heritage GP...................37
5.6 Heritage GP Shares........................................................................49
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ARTICLE 6 ADDITIONAL AGREEMENTS.........................................................................39
6.1 Access to Information, Confidentiality....................................................39
6.2 Third Party Consents......................................................................39
6.3 Release of Liens..........................................................................40
6.4 Public Announcements......................................................................40
6.5 Access to Records after Closing...........................................................40
6.6 Fees and Expenses.........................................................................40
6.7 Taxes; Other Charges......................................................................40
6.8 Insurance.................................................................................41
6.9 Employment Matters........................................................................41
6.10 Amendment of Disclosure Letters and Schedules.............................................41
6.11 Trademarks, Logos, Etc....................................................................42
6.12 Employee Benefits.........................................................................42
6.13 Financial Statements......................................................................42
6.14 Financing.................................................................................42
6.15 Inquiry...................................................................................42
6.16 Actions by Parties........................................................................42
6.17 Vote of Common Units......................................................................43
6.18 Listing...................................................................................43
ARTICLE 7 CONDITIONS TO OBLIGATIONS OF THE PARTIES......................................................43
7.1 Conditions to Closing of the LP...........................................................43
7.2 Conditions to Closing of the Heritage Parties.............................................45
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER.............................................................47
8.1 Termination...............................................................................47
8.2 Effect of Termination.....................................................................48
8.3 Amendment.................................................................................48
8.4 Waiver....................................................................................48
ARTICLE 9 INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS..................................................48
9.1 Indemnification Obligations of the LP.....................................................48
9.2 Indemnification Obligations of the Heritage Parties.......................................49
9.3 Indemnification Procedures................................................................50
9.4 Survival..................................................................................51
9.5 No Special or Consequential Damages.......................................................52
ARTICLE 10 MISCELLANEOUS................................................................................52
10.1 Notices...................................................................................52
10.2 Entire Agreement..........................................................................55
10.3 Binding Effect; Assignment; No Third Party Benefit........................................55
10.4 Severability..............................................................................55
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10.5 Governing Law.............................................................................55
10.6 Jurisdiction..............................................................................55
10.7 Further Assurances........................................................................56
10.8 Descriptive Headings......................................................................56
10.9 Counterparts..............................................................................56
10.10 Dispute Resolution........................................................................56
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CLOSING SCHEDULES
Schedule 1.1 - Contributed Sub Disclosure Letters
Section 1.1(a) - List of Assets
Section 1.1(b) - List of Excluded Assets
Section 4.8(a) - Balance Sheet
Section 4.10(a) - List of exceptions to tax representations
Section 4.10(b) - Tax basis
Section 4.12 - List of litigation and claims
Section 4.14(a) - List of owned real estate
Section 4.14(b) - List of leased real estate
Section 4.15 - List of tangible personal property
Section 4.16 - List of intellectual property and software related to the Business
Section 4.17(a) - List of Permits related to the Business
Section 4.18(a) - List of Contracts
Section 4.19 - Environmental Matters
Section 4.24 - Employee Matters
Section 4.25 - Consents required for the transactions
Section 4.26 - Debt
Section 4.28 - Employee Benefit Plans
Section 4.30 - Regulation
Section 5.1 - List of restricted actions prior to closing
Schedule 3.2(a) - Financial Statements
Schedule 3.2(e) - Outstanding Phantom Units
Schedule 3.3(a) - Certain Changes
Schedule 3.3(b) - Certain liabilities and obligations
Schedule 3.5(i) - Organization of the Heritage Entities
Schedule 3.17(a) - Taxes (Exceptions)
Schedule 3.17(b) - Tax returns
Schedule 3.17(e) - Taxes in stock acquisitions
Schedule 3.18 - Intellectual property
Schedule 3.19 - Regulation
Schedule 3.20 - Environmental matters
Schedule 3.21(a) - Employee matters
Schedule 3.21(b) - Employment agreements
Schedule 3.25 - Employee benefit plans
Schedule 4.24 - Employee matters
Schedule 4.24(a) - Benefits
Schedule 4.26 - Debt
Schedule 4.28 - Employee benefit plans
Schedule 5.5 - Permitted actions
Schedule 6.11 - Trademarks, logos, etc.
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EXHIBITS
Exhibit 1.1 - Definitions
Exhibit 2.4 - Form of Conveyance of Contributed Sub Interest
Exhibit 2.6 - Net Working Capital
Exhibit 6.14 - Debt Financing Term Sheet
Exhibit 7.1(c) - Form of Officer's Certificate
Exhibit 7.1(e) - List of Mandatory Consents
Exhibit 7.2(c) - Form of Officer's Certificate
Exhibit 7.2(e) - List of Mandatory Consents
Exhibit 7.2(l) - Form of Provision for Lease
Exhibit 7.2(m) - Noncompetition Agreement
Exhibit 7.2(n) - Assignment of Contract
Exhibit 7.2(o) - Application for Issuance
Exhibit 10.10 - Dispute Resolution Procedures
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CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement"), dated as of June 15,
2000, is entered into by and among the following:
1. U.S. Propane, L.P., a Delaware limited partnership ("LP"); and
2. Heritage Operating, L.P., a Delaware limited partnership
("Heritage OLP"), and Heritage Propane Partners, L.P., a
Delaware limited partnership ("Heritage MLP").
AGREEMENT
The Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, each capitalized
term used herein but not defined has the meaning given to it in Exhibit 1.1.
1.2 CERTAIN ADDITIONAL DEFINED TERMS. In addition to such terms as are
defined in Section 1.1, the following terms are used in this Agreement as
defined in the Articles or Sections set forth opposite such terms:
DEFINED TERM ARTICLE OR SECTION REFERENCE
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Agreement Preamble
Amendment No. 1 3.8
Ancillary Agreements 7.1(h)
Applicable Environmental Laws 3.20(a)
Cash Purchase Price 2.2(b)(i)
CERCLA 3.20(a)
Closing Article 2
Closing Date Article 2
Closing Price 2.5
commercially reasonable best efforts 6.2
Common Units 2.2(f)
Consents 4.25
Contingent Payments 4.18(a)(xx)
Debt Financing 2.2(a)
Delaware LP Act 3.4
Documents 4.3
Employment Agreements 7.1(h)
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DEFINED TERM ARTICLE OR SECTION REFERENCE
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Exchange Act 3.1(a)
Exchange Act Regulations 3.1(a)
Final Statement 2.6(b)
Final Cash Payment 2.2(b)(i)
Financial Statement Date 4.8(a)
Financial Statements 3.2(a)
Hazardous Substance 3.20(c)
Heritage Assets 3.20(a)
Heritage MLP Preamble
Heritage MLP Partnership Agreement 3.6(a)
Heritage Material Adverse Effect 3.3(a)
Heritage OLP Preamble
Heritage OLP Interests 2.2(b)(ii)
Heritage OLP Partnership Agreement 3.6(g)
Heritage Plans 3.25(a)
indemnified Party 9.3(a)
indemnifying Party 9.3(a)
Independent Accounting Firm 2.6(b)(iii)
Instruments of Conveyance 2.4
Listed Software 4.16(a)
LP Preamble
Net Working Capital 2.6(a)
RCRA 3.20(a)
Registration Rights Agreement 3.6(g)
Resolution Period 2.6(b)(iii)
SEC 3.1(a)
SEC Reports 3.1(a)
Securities Act 3.1(a)
Solid Waste 3.20(c)
Third Party Action 9.3(a)
Trademarks 6.11
U.S. Propane Indemnified Parties 9.2
U.S. Propane Material Adverse Effect 4.9
U.S. Propane Plans 4.28(a)
1.3 CONSTRUCTION. Unless the context requires otherwise: (a) the gender
(or lack of gender) of all words used in this Agreement includes the masculine,
feminine, and neuter; (b) the term "include" or "includes" means "includes,
without limitation," and "including" means "including, without limitation"; (c)
references to Articles and Sections refer to Articles and Sections of this
Agreement; (d) references to Exhibits and Schedules refer to the Exhibits and
Schedules attached to this Agreement, which are made a part hereof for all
purposes; (e) references to Laws refer to such Laws as they may be
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amended from time to time, and references to particular provisions of a Law
include any corresponding provisions of any succeeding Law; and (f) references
to money refer to legal currency of the United States of America.
ARTICLE 2
CLOSING
The Closing of the transactions contemplated by this Article 2 (the
"Closing") will take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., Houston,
Texas and will be effective as of 12:01 a.m., Houston, Texas Time, on the date
that is three business days following the later of (a) the satisfaction of the
conditions to Closing in Sections 7.1 and 7.2 and (b) the determination of the
Average Price, or at such other time or place or on such other date as the
Parties agree in writing (the "Closing Date"). Except for purposes of Sections
2.1 and 2.2, all Closing transactions will be deemed to have occurred
simultaneously.
2.1 ACTIONS PRIOR TO THE CLOSING.
(a) Prior to or at the Closing, the LP agrees to effect the actions
required under the Formation Agreement so that the LP will be the sole owner of
the Contributed Interests.
(b) Prior to the Closing, Heritage MLP will issue the Class C Units (as
defined in Section 2.1 of the Stock Purchase Agreement) to Heritage GP, which
will distribute the Class C Units to the stockholders of Heritage GP or, at
their direction, to FHS.
2.2 CONTRIBUTION OF CONTRIBUTED INTERESTS. At the Closing, and on the
terms and subject to the conditions set forth in this Agreement, the appropriate
Parties will effect the following actions to be taken by such Party:
(a) Heritage OLP shall borrow not less than $171.395 million from
certain lenders and financial institutions (the "Debt Financing");
(b) The LP shall contribute, assign, transfer, deliver and convey (for
purposes of this Section 2.2, "transfer") all the Contributed Interests to
Heritage OLP in exchange for (i) the payment by Heritage OLP to the LP of the
sum of $140.745 million in cash (the "Cash Purchase Price"), subject to
adjustment as specified in Section 2.6 (as so adjusted, the "Final Cash
Payment"), and (ii) the issuance by Heritage OLP to the LP of approximately
$10.0 million in limited partner interests in Heritage OLP ("Heritage OLP
Interests");
(c) The Debt Financing shall be made recourse to the LP;
(d) The LP shall redeem LP Interests with an aggregate redemption price
of $14.547 million and in payment therefor shall distribute $8.864 million of
cash to AGL
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or its designee, $0.660 million of cash to Peoples or its designee and $5.023
million of cash to Piedmont;
(e) Using the remaining proceeds under the Debt Financing, Heritage OLP
shall contribute cash to repay debt of the Contributed Subs, such debt
consisting of total principal and interest of $30.650 million;
(f) The LP shall transfer its Heritage OLP Interests (other than a
1.0101% interest in Heritage OLP) to Heritage MLP in exchange for common units
issued by Heritage MLP ("Common Units") determined in accordance with Section
2.3;
(g) After the LP's purchase of the capital stock of Heritage GP, the LP
shall contribute an amount to Heritage GP as an additional capital contribution
to maintain Heritage GP's general partner interests; Heritage GP, in turn, shall
contribute a portion of this to Heritage OLP and a portion of this to Heritage
MLP to maintain its general partner interests in those limited partnerships;
Heritage MLP, in turn, shall contribute the same to Heritage OLP; and
(h) The Transferred Assets shall be valued, in the aggregate, at
$181.395 million for all purposes, and such value shall be allocated among such
assets in accordance with the appraisal by Valuation Research Corporation. No
Party to this Agreement, nor any affiliate thereof, shall take any action, or
fail to take any action, inconsistent with such allocations of value.
Payments to be made under Section 2.2(d) are based on assumed transaction costs
of $5.0 million and will be adjusted pro rata to reflect the actual amount of
transaction costs determined as of the Closing. Other dollar amounts will be
adjusted, if necessary, in a manner consistent with the calculations in this
Section 2.2, to reflect the final determination of Average Price and any changes
(to the extent otherwise permitted under this Agreement) in the number of Common
Units outstanding.
2.3 ISSUANCE OF CERTIFICATE FOR COMMON UNITS. In exchange for the
contribution of the Heritage OLP Interests by the LP pursuant to Section 2.2(f),
Heritage MLP shall issue to the LP a certificate representing Common Units, with
the number of Common Units to be equal to the quotient (rounded to the nearest
whole number) of $10,000,000 divided by the Average Price.
2.4 INSTRUMENTS OF CONVEYANCE. In order to effect the transfers of the
Contributed Interests contemplated by Section 2.2 at the Closing, the LP, or one
of the Affiliates of the LP, will execute and deliver to Heritage OLP one or
more instruments of conveyance, dated the Closing Date, substantially in the
form attached hereto as Exhibit 2.4 (the "Instruments of Conveyance"), that are
sufficient to vest good title to the respective Contributed Interests, free and
clear of all Encumbrances other than Permitted Encumbrances.
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2.5 CLOSING PRICE. At the Closing, in exchange for the contribution of
the Contributed Interests, Heritage OLP will pay the Cash Purchase Price (the
"Closing Price") to the LP, by wire transfer of immediately available funds to
an account furnished by the LP to Heritage OLP not later than three business
days before Closing.
2.6 NET WORKING CAPITAL TRUE-UP.
(a) Within 60 days after the Closing Date, Heritage MLP shall determine
the amount of the Net Working Capital included in the Contributed Subs and
contributed to Heritage OLP by the LP as of the Closing Date, such determination
to be made using the valuation methodology specified in Exhibit 2.6 ("Net
Working Capital").
(b) Within 60 days after the Closing Date, Heritage MLP shall prepare
an unaudited statement (the "Final Statement") of the Net Working Capital
included with the Contributed Subs as of the close of business on the Closing
Date, such Final Statement to be prepared in the following manner:
(i) Heritage MLP shall deliver to the LP the Final Statement,
fairly presenting the Net Working Capital of each Contributed Sub,
individually, and of the Contributed Subs, in aggregate, as of the
Closing Date. The Final Statement shall be accompanied by a report
setting forth (A) the Net Working Capital, in reasonable detail, that
was included with each Contributed Sub, as reflected in the Final
Statement, and (B) the amount of any adjustment to the Closing Price to
be paid and by whom pursuant to Section 2.6(c) and the basis therefor.
The principles of presentation in the Final Statement shall be the same
as those of the Financial Statements.
(ii) Following the Closing, Heritage MLP, on the one hand, and
the LP, on the other hand, shall deliver to each other and each other's
authorized representatives, if any, full access at all reasonable times
to the properties, books, records and personnel of the Contributed Subs
relating to periods prior to the Closing Date for purposes of
preparing, reviewing and resolving any disputes concerning the Final
Statement. The LP shall have 60 days following delivery of the Final
Statement during which to notify Heritage MLP of any dispute of any
item contained in the Final Statement, which notice shall set forth in
reasonable detail the basis for such dispute. If the LP fails to notify
Heritage MLP of any such dispute within such 60-day period, the Final
Statement shall be deemed to be accepted. If the LP shall so notify
Heritage GP of any dispute, the LP and Heritage MLP shall cooperate in
good faith to resolve such dispute as promptly as possible.
(iii) If Heritage MLP and the LP are unable to resolve any
such dispute within 30 days of the LP's delivery of such notice (the
"Resolution Period"), then all amounts remaining in dispute shall be
submitted to such nationally recognized accounting firm as shall be
reasonably acceptable to Heritage MLP and the LP (the "Independent
Accounting Firm") within 10 days after the expiration of the
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Resolution Period. Each party agrees to execute, if requested by the
Independent Accounting Firm, a reasonable engagement letter. All fees
and expenses relating to the work, if any, to be performed by the
Independent Accounting Firm shall be borne equally by Heritage MLP and
the LP. The Independent Accounting Firm shall act as an arbitrator to
determine, based solely on presentations by Heritage MLP and the LP,
and not by independent review, only those issues still in dispute and
shall be limited to those adjustments, if any, that need be made for
the Final Statement to comply with the standards set forth in this
Section 2.6(b). The Independent Accounting Firm's determination shall
be requested to be made within 30 days of their selection, shall be set
forth in a written statement delivered to Heritage MLP and the LP and
shall be final, binding and conclusive. The Final Statement, as
modified by resolution of any disputes by Heritage MLP and the LP or by
the Independent Accounting Firm, shall be the "Final Statement."
(c) To the extent that the value of the Net Working Capital shown on
the Final Statement contributed to Heritage OLP by the LP is not equal to zero,
the Closing Price shall be increased or decreased, as the case may be. Heritage
OLP shall pay, or cause to be paid, to the LP, the amount by which the amount of
Net Working Capital as set forth in the Final Statement exceeds zero, and the LP
shall pay, or cause to be paid, to Heritage OLP the amount by which the Net
Working Capital as set forth in the Final Statement is less than zero.
(d) The amounts, if any, referred to in Section 2.6(c), shall be paid
by the paying party under Section 2.6(c) by wire transfer in immediately
available funds to an account to be designated by the recipient.
(e) The rights to indemnification pursuant to Article 9 (and any
limitations on such rights) shall not be deemed to limit, supersede or otherwise
affect the rights of the Parties to a full Cash Purchase Price adjustment
pursuant to this Section 2.6, provided that no claim for indemnification may be
made with respect to any matters or items to the extent reflected in the Final
Statement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE HERITAGE PARTIES
For the purposes of this Agreement, each of the Heritage Parties,
jointly and severally, represents and warrants as set forth in this Article 3.
The Heritage Parties do not make any representations and warranties in this
Article 3 with respect to the Contributed Subs, the Contributed Interests or the
Transferred Assets.
3.1 SEC REPORTS.
(a) Heritage MLP's annual report on Form 10-K for the year ended August
31, 1999, and the quarterly and current reports on Form 10-Q and 8-K, if any,
filed by Heritage MLP with the Securities and Exchange Commission ("SEC") since
August 31, 1999 (collectively, the "SEC Reports") were timely filed with the
SEC. Such
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documents, at the time they were filed with the SEC, complied and will comply in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of the SEC
thereunder (the "Exchange Act Regulations") and did not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In addition, each of
the statements made in such documents within the coverage of Rule 175(b) of the
rules and regulations under the Securities Act of 1933, as amended (the
"Securities Act"), was made by Heritage MLP, or Heritage GP, as the case may be,
with a reasonable basis and in good faith. Other than the SEC Reports, none of
the Heritage Entities nor any of their respective subsidiaries or affiliates is
required to file any form, report or other document with the SEC that has not
been filed.
(b) There are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the SEC Reports or to be filed
as exhibits to the SEC Reports that are not described or filed as required by
the Exchange Act.
(c) Since August 31, 1999, no transaction has occurred between or among
Heritage GP, Heritage MLP, Heritage MLP's Subsidiaries and any of their
respective officers, directors, stockholders or affiliates or, to the best
knowledge of the Heritage Parties, any affiliate of any such officer, director
or stockholder, that is required to be described in the SEC Reports that is not
so described.
3.2 FINANCIAL STATEMENTS.
(a) Attached as Schedule 3.2(a) or filed with the SEC Reports are
copies of (i) unaudited consolidated balance sheets as of February 29, 2000 and
the related consolidated statements of income, cash flows and owners' equity for
the interim quarterly periods then ended and for the six months ended February
29, 2000, and (ii) unaudited consolidated balance sheets as of April 30, 2000,
and the related unaudited consolidated statements of income, cash flows and
owners' equity for the fiscal year to date then ended (including in all cases
the notes, if any, thereto) of the Heritage Entities (the "Financial
Statements"). The Financial Statements have been prepared in accordance with
GAAP except, in the case of unaudited interim financial statements, for normal
year-end adjustments and the absence of footnotes, and fairly present the
respective consolidated financial position of Heritage MLP and its Subsidiaries
as of the respective dates set forth therein and the respective results of
operations and cash flows for Heritage MLP and its Subsidiaries for the
respective fiscal periods set forth therein.
(b) The books of account and other financial records of Heritage MLP
and its Subsidiaries from which the Financial Statements were prepared: (i)
reflect all items of income and expense and all assets and liabilities required
to be reflected therein in accordance with GAAP applied on a basis consistent
with past practices, (ii) are complete and correct, and do not contain or
reflect any inaccuracies or discrepancies that are inconsistent with financial
reporting requirements in accordance with GAAP and (iii) have been maintained in
accordance with good business and accounting practices.
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(c) Except for liabilities and obligations reflected on the February
29, 2000 consolidated balance sheets of Heritage MLP and its Subsidiaries
(including the notes thereto), liabilities and obligations disclosed in the SEC
Reports filed prior to the date of this Agreement and other liabilities and
obligations contemplated by this Agreement, the Stock Purchase Agreement or the
Subscription Agreement, or incurred in the ordinary course of business
consistent with past practice since February 29, 2000, neither Heritage MLP nor
any of its Subsidiaries has any liabilities or obligations of any nature that
are required to be disclosed in the SEC Reports (whether accrued, absolute,
contingent or otherwise), other than the vesting of phantom units under the
Restricted Unit Plan as set forth on Schedule 3.2(e).
(d) Heritage MLP has heretofore furnished to the LP complete and
correct copies of (i) all agreements, documents and other instruments not yet
filed by Heritage MLP with the SEC but that are currently in effect and that
Heritage MLP expects to file with the SEC after the date of this Agreement (with
the exception of documents contemplated by this Agreement to be filed with the
Form 8-K expected to be filed with the SEC after the signing of this Agreement
to disclose the transactions contemplated by this Agreement) and (ii) all
amendments and modifications that have not been filed by Heritage MLP with the
SEC to all agreements, documents and other instruments that previously have been
filed by Heritage MLP with the SEC and are currently in effect.
(e) Schedule 3.2(e) sets forth a list of all outstanding phantom units
that have been granted under the Restricted Unit Plan and the number of Common
Units issuable upon vesting thereof. No other Common Units are or will be
issuable as a result of the Closing and the consummation of the transactions
contemplated by this Agreement.
3.3 NO MATERIAL ADVERSE CHANGE.
(a) Since August 31, 1999 and except as disclosed in the SEC Reports or
as set forth on Schedule 3.3(a), there has not occurred (i) any change by
Heritage GP or any of the Heritage Entities in any of their accounting methods,
principles or practices or any of their tax methods, practices or elections,
(ii) any declaration, setting aside or payment of any distribution by Heritage
MLP in respect of its partnership interests or any redemption, purchase or other
acquisition of any of its partnership interests, except for quarterly
distributions of up to $0.5625 on each MLP Common Unit and Subordinated Unit and
the corresponding distribution on the general partner interests, (iii) any
revaluation by any of the Heritage Entities of any asset (including, without
limitation, any writing down of the value of inventory or writing off of notes
or accounts receivable), other than in the ordinary course of business
consistent with past practice, (iv) any entry by any of the Heritage Entities
into any commitment or transaction material to the Heritage Entities, taken as a
whole, except in the ordinary course of business consistent with past practice,
(v) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to
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any officers or key employees of Heritage GP, Heritage MLP or any of the
Heritage Entities, except in the ordinary course of business consistent with
past practice, (vi) any acquisition or disposition by Heritage GP or any of the
Heritage Entities of any material asset, except in the ordinary course of
business consistent with past practice, (vii) any incurrence, assumption or
guarantee by any of the Heritage Entities of any indebtedness or obligation
relating to any lending or borrowing except current liabilities and commitments
incurred in the ordinary course of business consistent with past practice,
(viii) any amendment, modification or termination by Heritage GP or any of the
Heritage Entities of any existing, or entering into any new, contract, plan,
lease, license, permit or franchise, except in the ordinary course of business
consistent with past practice, or (ix) any event that (A) would have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Heritage Entities, taken
as a whole, or (B) would subject Heritage GP to any material liability or
disability, or (C) would impede in any material respect the ability of Heritage
GP or any of the Heritage Parties to consummate the transactions contemplated by
this Agreement, the Stock Purchase Agreement or the Subscription Agreement
(clause (A), (B) and (C), or any of such clauses, a "Heritage Material Adverse
Effect"). Since the date of the most recent filing with the SEC of a quarterly
report on Form 10-Q by Heritage MLP, there has not occurred any event that
(singly or together with any other such events) could reasonably be expected to
have a Heritage Material Adverse Effect.
(b) Except as disclosed in the SEC Reports and as set forth on Schedule
3.3(b), subsequent to the respective dates as of which information is given in
the SEC Reports, (i) none of the Heritage Entities has incurred any liabilities
or obligations (indirect, direct or contingent) or entered into any other
transactions not in the ordinary course of business that, singly or in the
aggregate, could reasonably be expected to be material to the Heritage Entities
considered as a whole, or that could reasonably be expected to result in a
material reduction in the earnings of the Heritage Entities considered as a
whole; (ii) none of the Heritage Entities has sustained any loss or interference
with its business or properties from strike, fire, flood, windstorm, accident or
other calamity (whether or not covered by insurance) that, singly or in the
aggregate, could reasonably be expected to be material to the Heritage Entities
considered as a whole; (iii) there has been no material change in the
indebtedness of any of the Heritage Entities, no material change in the
capitalization of any Heritage Entity and no distribution of any kind declared,
paid or made by any of the Heritage Entities; and (iv) there has not been any
material adverse change, nor any development that could, singly or in the
aggregate, result in a material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of operations of
Heritage GP or of the Heritage Entities considered as a whole.
3.4 FORMATION OF HERITAGE MLP AND HERITAGE OLP. Each of Heritage MLP
and Heritage OLP has been duly formed and is validly existing in good standing
as a limited partnership under the Delaware Revised Uniform Limited Partnership
Act (the "Delaware LP Act") with full partnership power and authority to own or
lease its properties and to conduct its business, in each case in all material
respects as described in the SEC Reports. Heritage GP has been duly incorporated
and is validly existing in good
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standing as a corporation under the Delaware General Corporation Law with full
corporate power and authority to own and lease its properties, to conduct its
business and to act as general partner of Heritage MLP and Heritage OLP, in each
case in all material respects as described in the SEC Reports. Each of Heritage
GP, Heritage MLP and Heritage OLP is duly registered or qualified as a foreign
limited partnership or corporation for the transaction of business under the
laws of each jurisdiction in which the character of the business conducted by it
or the nature or location of the properties owned or leased by it makes such
registration or qualification necessary, except where the failure so to register
or qualify would not have a Heritage Material Adverse Effect.
3.5 ORGANIZATION OF HERITAGE ENTITIES.
(a) Heritage Service Corp. has been duly incorporated and is validly
existing in good standing as a corporation under the laws of the State of
Delaware with full corporate power and authority to own or lease its properties
and to conduct its business, in each case in all material respects as described
in the SEC Reports. Heritage Service Corp. is duly registered or qualified as a
foreign corporation for the transaction of business under the laws of each
jurisdiction in which the character of the business conducted by it or the
nature or location of the properties owned or leased by it makes such
registration or qualification necessary, except where the failure so to register
or qualify would not have a Heritage Material Adverse Effect.
(b) Guilford Gas Service, Inc. has been duly formed and is validly
existing in good standing as a corporation under the laws of the State of North
Carolina, with full corporate power and authority to own or lease its properties
and to conduct its business, in each case in all material respects as described
in the SEC Reports.
(c) Heritage Bi-State LLC has been duly formed and is validly existing
in good standing as a limited liability company under the laws of the State of
Delaware, with full limited liability company power and authority to own or
lease its properties and to conduct its business, in each case in all material
respects as described in the SEC Reports.
(d) Heritage Energy Resources, L.L.C. has been duly formed and is
validly existing in good standing as a limited liability company under the laws
of the State of Oklahoma, with full limited liability company power and
authority to own or lease its properties and to conduct its business.
(e) M-P Oils, Ltd. has been duly incorporated and is validly existing
in good standing as a corporation under the laws of the Province of Alberta,
Canada with full corporate power and authority to own or lease its properties
and to conduct its business, in each case in all material respects as described
in the SEC Reports. M-P Oils, Ltd. is duly registered or qualified as a foreign
corporation for the transaction of business under the laws of each jurisdiction
in which the character of the business conducted by it or the nature or location
of the properties owned or leased by it makes such registration or
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qualification necessary, except where the failure so to register or qualify
would not have a Heritage Material Adverse Effect.
(f) M-P Energy Partnership has been duly formed and is validly existing
in good standing as a general partnership under the laws of the Province of
Alberta, Canada, with full partnership power and authority to own or lease its
properties and to conduct its business, in each case in all material respects as
described in the SEC Reports.
(g) Bi-State Propane has been duly formed and is validly existing in
good standing as a general partnership under the laws of the State of
California, with full partnership power and authority to own or lease its
properties and to conduct its business, in each case in all material respects as
described in the SEC Reports.
(h) Heritage GP is the sole general partner of Heritage MLP and
Heritage OLP with a 1% general partner interest in Heritage MLP and a 1.0101%
general partner interest in Heritage OLP.
(i) Other than as set forth on Schedule 3.5(i), neither of the Heritage
Parties has any Subsidiary or owns any equity interest in any Person other than
the Heritage Entities.
3.6 CAPITALIZATION OF HERITAGE MLP AND OWNERSHIP OF INTERESTS.
(a) All of the outstanding Common Units, Subordinated Units and
Incentive Distribution Rights have been duly authorized and validly issued in
accordance with the Amended and Restated Agreement of Limited Partnership of
Heritage MLP (the "Heritage MLP Partnership Agreement"); are fully paid (to the
extent required under the Heritage MLP Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters described in Section
17-303 of the Delaware LP Act); and are issued and held as described in the SEC
Reports and the Financial Statements.
(b) The Class C Units to be issued to the stockholders of Heritage GP
prior to the Closing, the Class C limited partner interests represented thereby,
and the Common Units to be issued to the LP at the Closing and the common
limited partner interests represented thereby, will be duly authorized in
accordance with the Partnership Agreement and, when issued and delivered to the
Purchasers against payment therefor in accordance with the terms hereof, will be
validly issued, fully paid (to the extent required under the Heritage MLP
Partnership Agreement) and nonassessable (except as such nonassessability may be
affected by matters described in Section 17-303 of the Delaware LP Act) and will
be issued free and clear of any lien, claim or encumbrance.
(c) Heritage MLP is the sole limited partner of Heritage OLP with a
98.9899% limited partner interest in Heritage OLP.
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(d) All of the outstanding shares of capital stock of Heritage Service
Corp. have been duly authorized and validly issued and are fully paid and
nonassessable; and Heritage OLP owns all of such shares.
(e) All of the outstanding shares of capital stock of M-P Oils, Ltd.
have been duly authorized and validly issued and are fully paid and
nonassessable; and Heritage Service Corp. owns all of such shares.
(f) M-P Oils, Ltd. owns a general partner interest of 60% in M-P Energy
Partnership; such general partner interest has been duly authorized and validly
issued in accordance with the partnership agreement of M-P Energy Partnership;
and M-P Oils, Ltd. owns such general partner interest.
(g) Except (i) as described in the SEC Reports, (ii) for the Common
Units and the Class B Subordinated Units to be issued pursuant to this
Agreement, the Subscription Agreement and Amendment No. 1, (iii) for the Class C
Units to be issued pursuant to the Stock Purchase Agreement and Amendment No. 1,
and (iv) arising under certain agreements providing for the issuance of Common
Units to (A) Heritage GP in connection with Heritage GP's assumption of certain
tax liabilities in connection with prior stock acquisitions for the benefit of
Heritage MLP of retail propane operations, and (B) Heritage GP Stockholders
under the Restricted Unit Plan in the numbers of Common Units set forth in
Schedule 3.2(e), there are no preemptive rights or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any
interests in Heritage MLP or Heritage OLP pursuant to the Heritage MLP
Partnership Agreement or the agreement of limited partnership of Heritage OLP
(the "Heritage OLP Partnership Agreement") or any other agreement or instrument
to which Heritage MLP or Heritage OLP is a party or by which either of them may
be bound. Neither the offering nor the sale of the Common Units as contemplated
by this Agreement gives rise to any rights for or relating to the registration
of any Common Units or other securities of Heritage MLP, except pursuant to this
Agreement, to the Registration Rights Agreement, of even date herewith, among
Heritage MLP and each of the Heritage GP Stockholders (the "Registration Rights
Agreement"), to the Registration Rights Agreement among Heritage GP and the
stockholders of Heritage GP, dated as of June 28, 1996, or such rights as have
been waived or satisfied.
(h) The Common Units, when issued and delivered against payment
therefor as provided herein, will conform in all material respects to the
description thereof contained in the Heritage MLP Partnership Agreement, as
amended by Amendment No. 1 thereto, which has been duly approved and adopted as
of the date hereof. Heritage MLP has all requisite power and authority to issue,
sell and deliver the Common Units, in accordance with and upon the terms and
conditions set forth in this Agreement and the Heritage MLP Partnership
Agreement, as such Heritage MLP Partnership Agreement will be amended by
Amendment No. 1 thereto prior to the Closing. As of the Closing Date, all
corporate and partnership action, as the case may be, required to be taken by
the Heritage Parties or any of their respective stockholders or partners for the
authorization,
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issuance, sale and delivery of the Common Units shall have been validly taken,
and no other authorization is required therefor.
3.7 AUTHORITY AND BINDING AGREEMENT. Each of the Heritage Parties has
all requisite power and authority to enter into and to perform their respective
obligations under this Agreement. As of the Closing Date, all corporate and
partnership action, as the case may be, required to be taken by Heritage GP or
any of the Heritage Parties or any of their respective stockholders or partners
for the authorization of the transactions contemplated by this Agreement shall
have been validly taken.
(b) The execution and delivery of, and the performance by Heritage GP
(as to Section 5.5) and each of the Heritage Parties of their respective
obligations under, this Agreement have been duly and validly authorized by
Heritage GP (as to Section 5.5) and each of the Heritage Parties. This Agreement
has been duly executed and delivered by Heritage GP (as to Section 5.5) and each
of the Heritage Parties, and constitutes the valid and legally binding agreement
of Heritage GP (as to Section 5.5) and each of the Heritage Parties, enforceable
against Heritage GP (as to Section 5.5) and each of the Heritage Parties in
accordance with its terms; provided that the enforceability hereof may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws.
3.8 AGREEMENTS OF LIMITED PARTNERSHIP. The Heritage MLP Partnership
Agreement has been, and prior to the Closing the Heritage MLP Partnership
Agreement, as amended by Amendment No. 1 to the Heritage MLP Partnership
Agreement ("Amendment No. 1"), thereto will be, duly authorized, executed and
delivered by Heritage GP and is, and will be, a valid and legally binding
agreement of Heritage GP, enforceable against Heritage GP in accordance with its
terms; the Heritage OLP Partnership Agreement has been duly authorized, executed
and delivered by Heritage GP and Heritage MLP, and is a valid and legally
binding agreement of Heritage GP and Heritage MLP, enforceable against each of
them in accordance with its terms; provided that, with respect to each of the
agreements of limited partnership, the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.9 NO BREACH OR VIOLATION. None of the offering, issuance and sale by
Heritage MLP of the Common Units, or the execution, delivery and performance of
this Agreement by the Heritage Parties (i) conflicts or will conflict with or
constitutes or will constitute a violation of the certificate or agreement of
limited partnership (in the case of the Heritage MLP Partnership Agreement, as
amended by Amendment No. 1), the certificate or articles of incorporation or
bylaws or other organizational documents of Heritage GP or any of the Heritage
Entities, (ii) constitutes or will constitute a breach or
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violation of, or a default under (or an event which, with notice or lapse of
time or both, would constitute such an event), any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which Heritage
GP or any of the Heritage Entities is a party or by which any of them or any of
their respective properties may be bound, (iii) violates or will violate any
statute, law or regulation or any order, judgment, decree or injunction of any
arbitrator or Governmental Authority directed to Heritage GP or any of the
Heritage GP Entities or any of their properties in a proceeding to which any of
them or their property is a party except as may be obtained prior to Closing
under state securities or "Blue Sky" laws or under the HSR Act or (iv) will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Heritage GP or any of the Heritage Entities, which
conflicts, breaches, violations or defaults, in the case of clauses (ii), (iii)
or (iv), would have a Heritage Material Adverse Effect.
3.10 NO CONSENTS. Except as may be obtained under state securities or
"Blue Sky" laws and under the HSR Act, no permit, consent, approval,
authorization, order, registration, filing or qualification of or with
Governmental Authority is required in connection with the execution and delivery
by the Heritage Parties of, or the consummation by the Heritage Parties of the
transactions contemplated by, this Agreement.
3.11 NO VIOLATION. None of Heritage GP or the Heritage Entities is in
(i) violation of its partnership agreement, certificate or articles of
incorporation or bylaws or other organizational documents, or of any law,
statute, ordinance, administrative or governmental rule or regulation applicable
to it or of any decree of any Governmental Authority having jurisdiction over it
or (ii) breach, default (or an event which, with notice or lapse of time or
both, would constitute such a default) or violation in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its properties may be
bound, which breach, default or violation would, if continued, have a Heritage
Material Adverse Effect. To the knowledge of the Heritage Entities, no third
party to any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Heritage GP or any of the Heritage Entities is
a party or by which any of them is bound or to which any of their properties are
subject, is in default under any such agreement, which breach, default or
violation would, if continued, have a Heritage Material Adverse Effect.
3.12 NO PROCEEDINGS. Except as described in the SEC Reports, there is
(i) no Proceeding before or by any Governmental Authority or arbitrator or
official, domestic or foreign, now pending or, to the knowledge of the Heritage
Parties, threatened, to which any of the Heritage Entities or any of their
respective subsidiaries is or may be a party or to which the business or
property of any of the Heritage Entities or any of their respective subsidiaries
is or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any Governmental Authority or that has been
proposed by any Governmental Authority and (iii) no injunction, restraining
order or order of any nature issued by a federal or state court or foreign court
of competent jurisdiction to which any of the Heritage Entities or any of their
respective subsidiaries is or may be
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subject, that, in the case of clauses (i), (ii) and (iii) above, is reasonably
expected to (A) individually or in the aggregate have a Heritage Material
Adverse Effect, (B) prevent or result in the suspension of the issuance and sale
of the Common Units or (C) affect adversely the ability of the Heritage Parties
to consummate the Closing as contemplated herein.
3.13 LISTING. The outstanding Common Units are listed for trading on
the New York Stock Exchange.
3.14 FINDER'S FEES. Except in accordance with the letter agreement
dated May 5, 2000 between the Special Committee of the Board of Directors of
Heritage MLP, Heritage MLP, Heritage GP and ▇▇▇▇▇▇ Brothers Inc., none of the
Heritage Entities is obligated (directly or indirectly) under any agreement with
any Person that would obligate any of the Heritage Entities or the LP or any of
their respective Affiliates to pay any commission, brokerage or "finder's fee"
in connection with the transactions contemplated herein.
3.15 BUSINESS PERMITS. Each of the Heritage Entities has, or at the
Closing Date will have, such Permits as are necessary to own its properties and
to conduct its business in the manner described in the SEC Reports, subject to
such qualifications as may be set forth in the SEC Reports and except for such
Permits which, if not obtained, would not have, individually or in the
aggregate, a Heritage Material Adverse Effect; each of the Heritage Entities
has, or at the Closing Date will have, fulfilled and performed all its material
obligations with respect to such Permits, and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any impairment of the rights of the holder of any such
Permit, except for such revocations, terminations and impairments that would not
have a Heritage Material Adverse Effect; and, except as described in the SEC
Reports, none of such Permits contains any restriction that is materially
burdensome to the Heritage Entities considered as a whole.
3.16 BOOKS AND RECORDS.
(a) To the actual knowledge of the Specified Heritage Persons, each of
the Heritage Entities (i) makes and keeps books, records and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets and (ii) maintains systems of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's general
or specific authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
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(b) To the actual knowledge of the Specified Heritage Persons, none of
the Heritage Entities nor any employee or agent of any of the Heritage Entities
has made any payment of funds of any of the Heritage Entities or received or
retained any funds in either case in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the SEC Reports.
3.17 TAXES.
(a) Except as set forth on Schedule 3.17(a), each of the Heritage
Entities has filed all material federal, state, local and foreign Tax Returns
required to be filed with the IRS or other applicable taxing authority through
the date hereof, which returns are complete and correct in all material
respects, and has timely paid or has provided an accrual for all Taxes shown to
be due pursuant to such returns, other than those (i) which, if not paid, would
not have a Heritage Material Adverse Effect or (ii) which are being contested in
good faith. Except as set forth on Schedule 3.17(a), none of the Heritage
Entities currently is the beneficiary of any extension of time within which to
file any Tax Returns.
(b) Schedule 3.17(b) lists all federal, state, local and foreign income
Tax Returns filed with respect to each of the Heritage Entities and any
affiliated, consolidated, combined, unitary or similar group of which Heritage
OLP or Heritage MLP is or was a member for the three taxable years prior to the
date hereof and indicates those Tax Returns that are as of the date hereof the
subject of audit. None of Heritage GP or the Heritage Entities has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(c) None of Heritage GP or the Heritage Entities has made any material
payments, is obligated to make any material payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Code Section 280G.
(d) None of Heritage GP or the Heritage Entities has been a United
States real property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(e) Since September 1, 1996, none of Heritage GP or the Heritage
Entities (i) has been a member of an affiliated group filing a consolidated
federal income Tax Return or (ii) has any liability for Taxes of any Person
(other than Heritage GP or a Heritage Entity) under Treas. Reg. 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract, or otherwise, excluding liability for Taxes to the extent set forth
on Schedule 3.17(e) for stock acquisitions for which Heritage GP obtained
commercially reasonable indemnification and which liability was assumed by
Heritage OLP upon transfer of the assets of the acquired entity to Heritage OLP.
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(f) Since their formation, Heritage MLP and Heritage OLP have each been
treated as a partnership for federal income tax purposes. Moreover, for each
taxable year of existence and as reasonably estimated for Heritage MLP's and
Heritage OLP's taxable year ended December 31, 2000, more than 90% of the gross
income of Heritage MLP and Heritage OLP has constituted "qualifying income"
within the meaning of Section 7704(d) of the Code.
3.18 INTELLECTUAL PROPERTY. Except as set forth on Schedule 3.18, each
of the Heritage Entities owns or possesses or has the right to use, or at the
Closing Date will own or possess or have the right to use in the localities
where they are currently used by the Heritage Entities, all patents, trademarks,
trademark registrations, service marks, service ▇▇▇▇ registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights described in the SEC
Reports as being owned by it or any of the Heritage Entities or necessary for
the conduct of its respective business, other than those which if not so owned
or possessed would not have a Heritage Material Adverse Effect, and none of the
Heritage Entities is aware of any claim to the contrary or any challenge by any
other Person to the rights of the Heritage Entities with respect to the
foregoing.
3.19 REGULATION. Except as set forth on Schedule 3.19, none of the
Heritage Entities is now, or after the consummation of the transactions
contemplated by the Contribution Agreement and application of the net proceeds
thereof will be, (i) an "investment company" or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" thereof, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
3.20 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Specified Heritage Persons, except as set
forth in Schedule 3.20, none of the Heritage Entities is in violation of, or
subject to, any pending or threatened Proceeding under, or subject to any
remedial obligations under, any Applicable Laws pertaining to health, safety,
the environment, Hazardous Substances or Solid Wastes (such Applicable Laws as
they now exist are herein collectively called "Applicable Environmental Laws")
relating to the ownership or operation of the assets of the Heritage Entities
(the "Heritage Assets") or the operation of the Business, including (i) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), and (ii) the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"). To the Knowledge of the Specified Heritage Persons,
except as set forth on Schedule 3.20, the Heritage Entities have obtained all
Permits to construct, occupy, lease, operate or use any real property or
equipment or other tangible property forming a part of the Heritage Assets by
reason of any Applicable Environmental Laws.
(b) To the Knowledge of the Specified Heritage Persons, except as set
forth on Schedule 3.20, there are no past or present events, conditions,
circumstances or plans (i) that interfere with or prevent compliance or
continued compliance, with respect to the
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Heritage Assets or business conducted by the Heritage Entities, with Applicable
Environmental Laws or (ii) that are reasonably expected to give rise to any
common law or other legal liability or obligation with respect to the Heritage
Assets or Business, including liability or obligation under CERCLA or RCRA,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling or the emission, discharge,
release or threatened release into the environment, of any pollutant,
contaminant, chemical, industrial toxin, Hazardous Substance or Solid Waste.
(c) As used in this Agreement, the term "Hazardous Substance" shall
have the meaning currently specified in CERCLA and the term "Solid Waste" shall
have the meaning currently specified in RCRA; provided, that to the extent the
Applicable Laws of the jurisdiction in which the particular asset is located
have currently established a meaning for such term that is broader than that
specified in CERCLA or RCRA, such broader meaning shall apply.
(d) To the Knowledge of the Specified Heritage Persons, except as set
forth on Schedule 3.20, there are no (i) underground storage tanks, known
contamination of soil or groundwater, or known or suspected asbestos or
asbestos-containing materials on any property owned or leased by the Heritage
Entities, (ii) pending or threatened complaints, suits, actions or demand
letters by any third party or Governmental Authority relating to any alleged
violation of Applicable Environmental Law by the Heritage Entities, (iii)
Permits required of the Heritage Entities under Applicable Environmental Laws to
own, lease or operate their properties and conduct their business as described
in the SEC Reports that the Heritage Entities do not possess or Permits the
terms and conditions of which the Heritage Entities have violated or are
violating (except, in each case as would not have a Heritage Material Adverse
Effect), or (iv) real estate sites owned or operated by any of the Heritage
Entities that have been used as a manufactured gas plant site.
3.21 EMPLOYEE MATTERS.
(a) To the actual knowledge of the Specified Heritage Persons, except
as set forth on Schedule 3.21(a), none of the Heritage Entities has violated any
federal, state or local law relating to discrimination in the hiring, promotion
or pay of employees nor any applicable wage or hour laws, nor any provisions of
ERISA or the rules and regulations promulgated thereunder, nor has any of the
Heritage Entities engaged in any unfair labor practice, which in each case would
have a Heritage Material Adverse Effect; there is (i) no unfair labor practice
complaint pending against any of the Heritage Entities or, to the best knowledge
of the Heritage Parties, threatened against any of them, before the National
Labor Relations Board or any state or local labor relations board, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement pending against any of the Heritage Entities or, to the
best knowledge of the Heritage Parties, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage pending against any of
the Heritage Entities or, to the best knowledge of the Heritage Parties,
threatened against any of the Heritage Entities and
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(iii) to the best knowledge of the Heritage Parties, no union representation
question existing with respect to the employees of the Heritage Entities and no
union organizing activities taking place, except in the cases of clauses (i),
(ii) and (iii) such complaints, grievances, arbitration proceedings, strikes,
labor disputes, slowdowns, stoppages or questions, which if determined adversely
to the Heritage Entities, would not individually or in the aggregate result in a
Heritage Material Adverse Effect.
(b) Schedule 3.21(b) lists all express employment agreements and
related noncompete agreements in excess of $75,000 per annum in salary to which
Heritage GP or any of the Heritage Entities is a party or by which any of such
Persons is bound.
3.22 INSURANCE. The Heritage Parties maintain insurance covering the
properties, operations, personnel and businesses of the Heritage Entities. In
the reasonable judgment of the Heritage Parties, such insurance insures against
such losses and risks as are reasonably adequate to protect the Heritage
Entities and their businesses. None of the Heritage Entities has received notice
from any insurer or agent of such insurer that substantial capital improvements
or other expenditures will have to be made in order to continue such insurance;
all such insurance is outstanding and duly in force on the date hereof and will
be outstanding and duly in force on the Closing Date.
3.23 OPINION OF FINANCIAL ADVISOR. The Special Committee has received
the opinion of ▇▇▇▇▇▇ Brothers Inc. to the effect that, as of the date of such
opinion, the transactions contemplated hereby are fair, from a financial point
of view, to Heritage MLP.
3.24 APPROVAL OF SPECIAL COMMITTEE. The Special Committee has
recommended that the Board of Directors of Heritage GP approve the transactions
contemplated hereby.
3.25 EMPLOYEE BENEFIT PLANS.
(a) To the Knowledge of the Specified Heritage Persons, Schedule 3.25
contains a true and complete list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA), and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance or other contracts
or agreements to which Heritage GP or any of the Heritage Entities is a party,
with respect to which Heritage GP or any of the Heritage Entities has any
liability or which are maintained, contributed to or sponsored by Heritage GP or
any of the Heritage Entities for the benefit of any current or former employee,
officer or director of Heritage GP or any of the Heritage Entities
(collectively, referred to herein as the "Heritage Plans"). Heritage GP and each
of the Heritage Entities, as applicable, have, and within 15 business days prior
to Closing, will have furnished to the LP true and complete copies of each
Heritage Plan and true and complete copies of each material document prepared in
connection with each Heritage Plan that is currently in effect, including,
without limitation, (i) a copy of each trust or
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other funding arrangement, (ii) each summary plan description and summary of
material modifications, (iii) the most recently filed Internal Revenue Service
Form 5500, (iv) the most recently received IRS determination letter for each
such Heritage Plan, and (v) the most recently prepared actuarial report and
financial statement in connection with each such Heritage Plan. To the Knowledge
of the Specified Heritage Persons, except as set forth on Schedule 3.25, neither
Heritage GP nor the Heritage Entities has any express or implied commitment (i)
to create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any Heritage Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) To the Knowledge of the Specified Heritage Persons, none of the
Heritage Plans is a multiemployer plan, within the meaning of Section 3(37) or
4001(a)(3) of ERISA, or is a single employer pension plan, within the meaning of
Section 4001(a)(15) of ERISA, for which Heritage GP or any of the Heritage
Entities could incur liability under Section 4063 or 4064 of ERISA. Except to
the extent set forth in the Heritage Plans listed in Schedule 3.25, none of the
Heritage Plans (i) provides for the payment of separation, severance,
termination or similar-type benefits to any person, (ii) obligates Heritage GP
or any Heritage Entity to pay separation, severance, termination or other
benefits as a result of the transaction or (iii) obligates Heritage GP or any
Heritage Entity to make any payment or provide any benefit that could be subject
to a tax under Section 4999 of the Code. Except as disclosed in Schedule 3.25,
none of the Heritage Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of Heritage GP or any Heritage Entity.
(c) To the Knowledge of the Specified Heritage Persons, each Heritage
Plan which is intended to be qualified under Section 401(a) or 401(k) of the
Code is and has always been so qualified.
(d) To the knowledge of the Specified Heritage Persons, except to the
extent set forth on Schedule 3.25, each Heritage Plan is now and always has been
operated in all respects in accordance with the requirements of Applicable Law,
including, without limitation, ERISA and the Code, and each Heritage Entity has
performed all obligations required to be performed by it under such Heritage
Plan, is not in any respect in default under or in violation of, and has no
knowledge of any default or violation by any party to, any Heritage Plan. Except
as set forth on Schedule 3.25, no Heritage Plan is subject to Title IV of ERISA
or Section 412 of the Code.
(e) To the Knowledge of the Specified Heritage Persons, with respect to
each Heritage Plan, there are no prohibited transactions or breaches of
fiduciary duties that could result in liability (directly or indirectly) for
Heritage GP or any Heritage Entity.
(f) To the Knowledge of the Specified Heritage Persons, except as set
forth on Schedule 3.25, each Heritage Plan may be unilaterally terminated any
time by a
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Heritage Entity without material liability, other than for benefits accrued
prior to such termination.
(g) To the Knowledge of the Specified Heritage Persons, all
contributions to, and payments from, each Heritage Plan that are required to be
made in accordance with the terms of the Heritage Plan and Applicable Law have
been timely made.
(h) For the purposes of this Section 3.25, the Specified Heritage
Persons have made appropriate inquiry of employees of the Heritage Entities at
the level of regional manager or above.
3.26 DISCLOSURE. Neither this Agreement nor any Schedule or Exhibit or
any other certificate or instrument delivered to the LP by or on behalf of
Heritage GP or any of the Heritage Parties in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein not misleading.
3.27 SUFFICIENCY OF HERITAGE ASSETS. The Heritage Assets constitute all
the assets and properties used or held for use in connection with the operation
of the business as described in the SEC Reports. The Heritage Assets constitute
all the assets and properties the use or benefit of which are reasonably
necessary for the operation of the business of the Heritage Entities as
currently conducted. The Heritage Assets and their uses conform in all material
respects to all Applicable Laws. As of the Closing, all tangible assets and
properties included in the Heritage Assets will be in the possession, or under
the control, of the Heritage Entities. All Heritage Assets are in good
condition, normal wear and tear excepted, and are useable in the continued
operation of the business of the Heritage Entities consistent with past
practice.
3.28 TITLE TO HERITAGE ASSETS. As of the Closing, the Heritage Entities
will have good and marketable title to, or valid leasehold interests in, all of
the Heritage Assets, free and clear of all Encumbrances (other than Permitted
Encumbrances).
3.29 COMPLIANCE WITH LAWS. Subject to the specific representations and
warranties in this Agreement, which representations and warranties shall govern
the subject matter thereof, the Heritage Entities have complied in all material
respects with all Applicable Laws relating to the ownership or operation of the
Heritage Assets and the conduct of the business of the Heritage Entities. None
of the Heritage Entities is charged or, to the knowledge of the Heritage
Parties, threatened with, or under investigation with respect to, any violation
of any Applicable Law relating to any aspect of the ownership or operation of
the Heritage Assets or such business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE LP
For purposes of this Agreement, the LP, as of the Closing Date, hereby
represents and warrants to each of the Heritage Parties, except as set forth in
the Disclosure Letters
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with respect to the Contributed Subs (with specific references to the
appropriate section of this Agreement), as follows:
4.1 ORGANIZATION AND EXISTENCE. As of or prior to the Closing, the LP
will be duly formed and will be validly existing in good standing as a limited
partnership under the Delaware LP Act with full partnership power and authority
to own or lease its properties and to conduct its business as currently
conducted. As of or prior to the Closing, the LLC will be duly formed and will
be validly existing in good standing as a limited liability company under the
Delaware Limited Liability Company Act with full limited liability company power
and authority to act as the general partner of the LP.
4.2 ORGANIZATION AND CAPITALIZATION OF THE CONTRIBUTED SUBS.
(a) Each of the Contributed Subs that is a limited liability company
will be, as of the Closing, duly organized under the laws of the jurisdiction of
its formation, qualified to do business in each jurisdiction where the character
of its business requires it to be so qualified and will be wholly owned by the
LP. None of the Contributed Subs will have any Subsidiaries or any equity
interest in any other Person.
(b) AGL Propane, Inc. is validly existing as a corporation in good
standing under the laws of the State of Georgia with full corporate power and
authority to own or lease its properties and to conduct its Business as
currently conducted.
(c) United Cities Propane Gas, Inc. is validly existing as a
corporation in good standing under the laws of the State of Tennessee, with full
corporate power and authority to own or lease its properties and to conduct its
Business as currently conducted.
(d) Peoples Gas Company is validly existing as a corporation in good
standing under the laws of the State of Florida, with full corporate power and
authority to own or lease its properties and to conduct its Business as
currently conducted.
(e) Piedmont Propane Company is validly existing as a corporation in
good standing under the laws of the State of North Carolina, with full corporate
power and authority to own or lease its properties and to conduct its Business
as currently conducted.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the LP and the LLC
has full power and authority to execute, deliver and perform this Agreement and
the Instruments of Conveyance (collectively, the "Documents") to which it is a
party, and to consummate the transactions contemplated thereby. The execution,
delivery and performance by the LP of such Documents, and the consummation by it
of the transactions contemplated thereby, have been duly authorized by all
necessary action. This Agreement has been duly executed and delivered by the LP
and constitutes, and each of Documents and each other agreement, instrument or
document executed or to be executed by the LP in connection with the
transactions contemplated by this Agreement has been, or when executed will be,
duly executed and delivered by such Party and
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constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of the applicable member of such Party enforceable against it
in accordance with its terms, except that such enforceability may be limited by
(a) applicable bankruptcy, insolvency, reorganization, moratorium and similar
Laws affecting creditors' rights generally and (b) equitable principles.
4.4 NONCONTRAVENTION. The execution, delivery and performance by the LP
of the Documents to which it is a party, and the consummation by it of the
transactions contemplated thereby do not and will not (a) conflict with or
result in a violation of any provision of the respective charter or bylaws or
other governing instruments of the LLC or any of the U.S. Propane Entities, (b)
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation or acceleration under, any bond,
debenture, note, mortgage, indenture, lease, contract, agreement or other
instrument or obligation to which the LP or the LLC, the Contributed Interests,
the Transferred Assets or Business may be bound, (c) result in the creation or
imposition of any Encumbrance upon any Contributed Interests or Transferred
Assets, (d) assuming compliance with the matters referred to in Section 4.5,
violate any Applicable Law binding upon it or the Contributed Interests,
Transferred Assets or Business or (e) conflict with or result in a violation of
any Permit identified in Section 4.17(a) of the Disclosure Letters.
4.5 GOVERNMENTAL APPROVALS. Except as set forth in Section 4.5 of the
Disclosure Letters and except as may be obtained under state securities or "Blue
Sky" laws and under the HSR Act, no consent, approval, order or authorization
of, or declaration, filing or registration with, any Governmental Authority is
required to be obtained or made by the LP in connection with the execution,
delivery or performance by such member of the Documents or the consummation by
it of the transactions contemplated thereby, other than filings with and
approvals by Governmental Authorities with respect to the transfer of the
Transferred Assets or Contributed Interests (as the case may be) that are to
occur in the ordinary course following the consummation of the transactions
contemplated hereby.
4.6 EXCLUSIVE OPERATION OF THE BUSINESS. Except as set forth in Section
4.6 of the Disclosure Letters and except for the Contributed Subs, the LP and
the LLC do not have any direct or indirect equity or ownership interest in any
corporation, partnership, joint venture or other entity that is involved,
directly or indirectly, in the conduct of the Business.
4.7 TITLE TO CONTRIBUTED INTERESTS AND TRANSFERRED ASSETS. As of the
Closing, (i) the LP will be the owner of, and will have good and marketable
title to, all of the Contributed Interests free and clear of any Encumbrance
other than Permitted Encumbrances and (ii) the Contributed Subs will have good
and marketable title to, or valid leasehold interests in, all of the Transferred
Assets, free and clear of all Encumbrances (other than Permitted Encumbrances)
and (iii) there are no outstanding interests, subscriptions, options, warrants,
convertible interests, calls or rights of any kind
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(issued or granted by or binding upon the Contributed Sub to purchase or
otherwise acquire any security of or equity interest in any of the Contributed
Subs) other than pursuant to this Agreement.
4.8 FINANCIAL STATEMENTS; ABSENCE OF LIABILITIES.
(a) The balance sheet dated as of February 29, 2000 (as the case may
be) (the "Financial Statement Date") for each Contributed Sub's Business, and
the income statement for the twelve months ended August 31, 1999, each as set
forth in Section 4.8(a) of the Disclosure Letters, has been prepared from, and
is in accordance with, the books and records of such Contributed Sub and
presents fairly in all material respects the financial position of such
Contributed Sub's Business as of the Financial Statement Date and the results of
operations for the 12 months ended August 31, 1999, as applicable, in accordance
with GAAP consistently applied.
(b) None of the U.S. Propane Entities has any material liabilities or
obligations (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known, and whether due or to become due), other than as set forth
in the Disclosure Letters, that will create or result in any Encumbrances on the
Assets or the Contributed Interests, except for Permitted Encumbrances.
4.9 ABSENCE OF CERTAIN CHANGES. Since the Financial Statement Date, (a)
there has been no event that (A) would have a material adverse effect on the
financial condition, business, prospects, properties, net worth or results of
operations of the U.S. Propane Entities, taken as a whole, or (B) would
adversely affect the ability of the LP to consummate the transactions
contemplated by this Agreement, the Stock Purchase Agreement or the Subscription
Agreement (clauses (A) and (B), or either of such clauses, a "U.S. Propane
Material Adverse Effect") with respect to the Transferred Assets or Business;
(b) the Business has been conducted only in the ordinary course consistent with
past practice; (c) except for, or as contemplated by, this Agreement, none of
the U.S. Propane Entities has, in respect of the Transferred Assets, Contributed
Subs or Business, incurred any material liability, engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business consistent with past practice that individually or in the aggregate
would result in a U.S. Propane Material Adverse Effect; (d) none of the U.S.
Propane Entities has suffered any material loss, damage, destruction or other
casualty to any of the Transferred Assets (whether or not covered by insurance)
that individually or in the aggregate would result in a U.S. Propane Material
Adverse Effect; and (e) none of the U.S. Propane Entities has, in respect of the
Transferred Assets or the Business, taken any of the actions set forth in
Section 5.2 except as permitted thereunder.
4.10 TAX MATTERS.
(a) Each of the LLC and the U.S. Propane Entities has (either directly
or indirectly or as part of a consolidated or combined group) (i) duly filed all
material federal, state, local and foreign Tax Returns required to be filed by
or with respect to it
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with the IRS or other applicable Taxing authority, (ii) paid, or adequately
established a funded reserve against all Taxes due, or claimed by any Taxing
authority to be due, from or with respect to it, and (iii) made all material
deposits required with respect to Taxes, in each such case to the extent that
the failure to do so would result in the imposition of any Encumbrance (other
than a Permitted Encumbrance) on the Transferred Assets or Contributed
Interests. There has been no material issue raised or material adjustment
proposed (and none is pending) by the IRS or any other Taxing authority in
connection with any Tax Returns relating to the Transferred Assets or
Contributed Interests or the Business. Except as set forth in Section 4.10(a) of
the Disclosure Letters, no waiver or extension of any statute of limitations as
to any federal, state, local or foreign Tax matter relating to the Transferred
Assets or Contributed Interests or the Business has been given by or requested
from any of the U.S. Propane Entities with respect to any Tax year. None of the
U.S. Propane Entities has filed a consent under Section 341(f) of the Code.
There are no outstanding Tax liens and no Proceedings pending or, to the
knowledge of the LP, threatened, that could create a Tax lien, affecting any of
the Transferred Assets or Contributed Interests or the Business.
(b) Section 4.10(b) of the Disclosure Letters sets forth the tax basis,
as of December 31, 1999, of the depreciable and amortizable Transferred Assets
contributed to Heritage OLP by the Contributed Subs, and any material change in
such tax basis since December 31, 1999.
4.11 COMPLIANCE WITH LAWS. Subject to the specific representations and
warranties in this Agreement, which representations and warranties shall govern
the subject matter thereof, the U.S. Propane Entities have complied in all
material respects with all Applicable Laws relating to the ownership or
operation of the Transferred Assets and Business. None of the U.S. Propane
Entities is charged or, to the knowledge of the LP, threatened with, or under
investigation with respect to, any violation of any Applicable Law relating to
any aspect of the ownership or operation of the Transferred Assets or Business.
All the real property within the Transferred Assets is allowed to be used in its
current use, and such use is allowable after giving effect to its transfer to
Heritage OLP.
4.12 LEGAL PROCEEDINGS. Set forth in Section 4.12 of the Disclosure
Letters is a list of all Proceedings pending or, to the knowledge of the LP and
the LLC, threatened against or involving the Transferred Assets, Contributed
Interests or Business. Each of the matters set forth in Section 4.12 sets forth
the insurance carrier, the limits of coverage, if any, and the fact that the
carrier has assumed defense and that the loss is covered. Other than as set
forth in Section 4.12 of the Disclosure Letters, none of Proceedings set forth
in Section 4.12 of the Disclosure Letters, individually or in the aggregate, are
reasonably expected to have a U.S. Propane Material Adverse Effect or to
materially adversely affect the Transferred Contracts. None of the U.S. Propane
Parties is subject to any judgment, order, writ, injunction or decree of any
Governmental Authority that is, individually or in the aggregate, reasonably
likely to have a U.S. Propane Material Adverse Effect or materially adversely
affect the Transferred Contracts, other than as set forth in Section 4.12 of the
Disclosure Letters. There are no Proceedings
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pending or, to the knowledge of the LP, threatened, seeking to restrain,
prohibit or obtain damages or other relief in connection with this Agreement or
the transactions contemplated hereby.
4.13 SUFFICIENCY OF TRANSFERRED ASSETS. The Transferred Assets
constitute all the assets and properties the use or benefit of which are
reasonably necessary for the operation of the Business as currently conducted.
The Transferred Assets and their uses conform in all material respects to all
Applicable Laws. As of the Closing, all tangible assets and properties included
in the Transferred Assets will be in the possession, or under the control, of
the LP. All Transferred Assets are in good condition, normal wear and tear
excepted, and are useable in the continued operation of the Business consistent
with past practice.
4.14 REAL PROPERTY.
(a) Set forth in Section 4.14(a) of the Disclosure Letters is the
street address, a brief description and a legal description of all real property
owned by any of the U.S. Propane Parties and used or held for use in connection
with the operation of the Transferred Assets or Business.
(b) Set forth in Section 4.14(b) of the Disclosure Letters is the
street address and a brief description of the real property, including
facilities and structures, leased by any of the U.S. Propane Parties and used or
held for use in connection with the operation of the Transferred Assets or
Business.
4.15 TANGIBLE PERSONAL PROPERTY. Set forth in Section 4.15 of the
Disclosure Letters is a list of all furniture, fixtures, leasehold improvements,
equipment, machinery, computer hardware, prototypes, spare parts, supplies,
materials, motor vehicles, apparatus, tools, implements, appliances and other
tangible personal property (other than inventories) owned or leased by any of
U.S. Propane Parties and used or held for use in connection with the operation
of the Transferred Assets or Business, except for items having a value
individually of less than $5,000 and having, in the aggregate of like items, a
value of less than $100,000.
4.16 INTELLECTUAL PROPERTY; TECHNOLOGY; SOFTWARE.
(a) Set forth in Section 4.16 of the Disclosure Letters is a list of
all Intellectual Property and Software (other than documentation and object and
source codes therefore (the "Listed Software")) relating to or used in
connection with the operation of the Transferred Assets or Business. Section
4.16 of the Disclosure Letters specifies, as applicable: (i) the nature of such
Intellectual Property and Listed Software; (ii) the owner of such Intellectual
Property and Listed Software; and (iii) all licenses, sublicenses and other
agreements to which one of the U.S. Propane Entities is a party and pursuant to
which any Person is authorized to use the Intellectual Property, Technology and
Software, including the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty (if any) and the terms
thereof.
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(b) The Intellectual Property and Software listed in Section 4.16 of
the Disclosure Letters and the Technology transferred as part of the Transferred
Assets constitute all Intellectual Property, Technology and Software necessary
for the conduct of the Business by the Contributed Subs on a basis consistent
with past practice. As of the Closing, one of the Contributed Subs will have
good title to or is validly licensed to use all such Intellectual Property,
Technology and Software. Each item of such Intellectual Property is in full
force and effect, the owner or licensee thereof is in compliance in all material
respects with all of its obligations with respect to any such Intellectual
Property, Software or Technology and, to the knowledge of the LP, no event has
occurred which permits, or upon the giving of notice or the passage of time or
otherwise would permit, the revocation or termination of any thereof. There are
no Proceedings pending or, to the knowledge of the LP, threatened, against any
of the Contributed Subs asserting that the use by any of the Contributed Subs of
any of such Intellectual Property, Technology or Software infringes the rights
of any other Person or seeking revocation, termination or concurrent use of any
of such Intellectual Property, Technology or Software, and, to the knowledge of
the LP, there is no basis for any such Proceeding. To the knowledge of the LP,
none of such Intellectual Property, Technology or Software that is owned by one
of the Contributed Subs or their Affiliates is being infringed upon by any other
Person. None of such Intellectual Property, Technology or Software that is owned
by one of the Contributed Subs or their Affiliates is subject to any outstanding
judgment, order, writ, injunction or decree of any Governmental Authority, or
any agreement, arrangement or understanding restricting the scope or use
thereof. To the knowledge of the LP, the conduct of the Business at any time
prior to the Closing did not, and, to the knowledge of the LP, the conduct of
the Business on a basis consistent with past practice as of the Closing will
not, infringe upon or otherwise misappropriate any Intellectual Property,
Technology or Software of any other Person.
4.17 PERMITS.
(a) Set forth in Section 4.17(a) of the Disclosure Letters is a list of
all Permits held by one of the Contributed Subs that relate to the Transferred
Assets or Business. Each of such Permits is in full force and effect, the holder
is in compliance in all material respects with all of its obligations with
respect thereto and no event has occurred which permits, or with or without the
giving of notice or the passage of time or both would permit, the revocation or
termination of any such Permit. No notice has been issued by any Governmental
Authority and no Proceeding is pending or, to the knowledge of the LP,
threatened, with respect to any alleged failure by the holder to have any
material Permit.
(b) The Permits listed in Section 4.17(a) of the Disclosure Letters
constitute all the Permits necessary or required for the ownership and operation
of the Transferred Assets or Business as of the Closing.
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4.18 AGREEMENTS.
(a) Set forth in Section 4.18(a) of the Disclosure Letters is a list of
all the following Contracts to which any of the Contributed Subs is a party or
by which the Contributed Interests, Transferred Assets or Business are bound
that are not terminable at the option of one of the Contributed Subs (or one of
their Affiliates) within 30 days for convenience and without penalty:
(i) collective bargaining agreements and similar agreements
with Employees as a group;
(ii) agreements, trusts, plans, funds or other employee
benefit arrangements of any nature;
(iii) agreements with any director, officer, Employee,
consultant or advisor of one of the U.S. Propane Entities or any of
their Affiliates;
(iv) agreements between or among one of the U.S. Propane
Parties and any of their Affiliates;
(v) indentures, mortgages, security agreements, notes, loan or
credit agreements or other agreements relating to the borrowing of
money by one of the U.S. Propane Entities or to the direct or indirect
guarantee or assumption by any one of the U.S. Propane Entities of any
obligation of one of their Affiliates;
(vi) agreements relating to the acquisition or disposition of
any assets, involving obligations or revenues of $50,000 or more;
(vii) agreements with respect to the lease of any real or
personal property, involving annual obligations or revenues of $50,000
or more;
(viii) agreements concerning the management or operation of
any real property, involving annual obligations or revenues of $50,000
or more;
(ix) supplier, broker, distributor, dealer, manufacturer's
representative, sales, agency, sales promotion, advertising, marketing,
consulting, research and development, maintenance, service and repair
agreements, involving annual obligations or revenues of $20,000 or
more;
(x) license, royalty or other agreements relating to
Intellectual Property, Technology or Software;
(xi) partnership, joint venture and profit sharing agreements;
(xii) agreements with any Governmental Authority;
(xiii) agreements in the nature of a settlement or a
conciliation agreement arising out of any claim asserted by any other
Person;
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(xiv) agreements containing any covenant limiting the freedom
of any of the U.S. Propane Entities to engage in any line of business
or compete with any other Person in any geographic area or during any
period of time;
(xv) powers of attorney granted by Entities in favor of any
Person;
(xvi) agreements not made in the ordinary course of the
Business;
(xvii) agreements for the purchase, sale, exchange, marketing,
storage or other use of propane, natural gas, electric energy, or other
commodities, and all exchange, swap, hedging, and other financial or
future contracts and agreements;
(xviii) other agreements, whether or not made in the ordinary
course of business, that are material to the Business or the ownership
or operation of the Transferred Assets;
(xix) agreements or commitments to enter into any of the
foregoing; and
(xx) a separate listing of all agreements that have potential
payments in excess of $50,000 in the aggregate (A) to third parties for
such costs to install LPG appliances or (B) to third parties, if
natural gas is not made available within a specified period of time
(collectively, the "Contingent Payments").
(b) Each of such Contracts is a valid and binding agreement of the LP,
the LLC or one of the Contributed Subs, as applicable. None of the U.S. Propane
Entities is in breach of or in default in any material respect under, nor has
any event occurred which (with or without the giving of notice or the passage of
time or both) would constitute a material default by it under, any material
provision of any of such agreements, and has not received any written notice
from any other party indicating that it is in breach of or in default under any
such material provision. No other party to any of such agreements is, to the
knowledge of the LP, in breach of or in default under such agreements in any
material respect, nor has any assertion been made by any of the U.S. Propane
Entities of any such breach or default. Each of such Contracts is freely and
fully assignable to Heritage OLP without penalty or other adverse consequence.
4.19 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth in Section 4.19 of the Disclosure Letters, none of the Contributed
Subs is in violation of, or subject to, any pending or threatened Proceeding
under, or subject to any remedial obligations under, any Applicable
Environmental Laws relating to the ownership or operation of the Transferred
Assets or the operation of the Business, including (i) CERCLA, and (ii) the
RCRA. To the Knowledge of the Specified U.S. Propane Persons, except as set
forth in Section 4.19 of the Disclosure Letters, the Contributed Subs have
obtained all Permits to construct, occupy, lease, operate or use any real
property or any equipment or other tangible property forming a part of the
Transferred Assets by reason of any Applicable Environmental Laws.
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(b) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth in Section 4.19 of the Disclosure Letters, there are no past or
present events, conditions, circumstances or plans (i) that interfere with or
prevent compliance or continued compliance, with respect to the Transferred
Assets or Business, with Applicable Environmental Laws or (ii) that are
reasonably expected to give rise to any common law or other legal liability or
obligation with respect to the Transferred Assets or Business, including
liability or obligation under CERCLA or RCRA, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, industrial toxin,
Hazardous Substance or Solid Waste.
(c) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth in Section 4.19 of the Disclosure Letters, there are no (i)
underground storage tanks, known contamination of soil or groundwater, or known
or suspected asbestos or asbestos-containing materials on any property owned or
leased by the Contributed Subs, (ii) pending or threatened complaints, suits,
actions or demand letters by any third party or Governmental Authority relating
to any alleged violation of Applicable Environmental Law by any Contributed Sub,
(iii) Permits required of the Contributed Subs under Applicable Environmental
Laws to own, lease or operate their properties and conduct their Business the
terms and conditions of which the Contributed Subs have violated or are
violating (except, in each case as would not have a U.S. Propane Material
Adverse Effect), or (iv) real estate sites transferred under this Agreement
(other than by lease of the properties identified in an appendix to Exhibit
7.2(l)) that has been used as a manufactured gas plant site.
4.20 INSURANCE. Except as would not have a U.S. Propane Material
Adverse Effect, the Contributed Subs and their respective Affiliates have fire,
liability, casualty, product liability and other insurance coverage with respect
to the Transferred Assets and Business sufficient to satisfy all material
requirements of Applicable Laws and any agreements, arrangements or
understandings to which any of the U.S. Propane Entities, and that is customary
for businesses of similar size engaged in similar lines of business.
4.21 FINANCIAL REQUIREMENTS. There are no currently effective bonds,
deposits, financial assurance requirements or insurance coverages required to be
submitted to Governmental Authorities or any third parties for the continued
ownership and operation (or assignment to Heritage OLP) of the Transferred
Assets or Business.
4.22 BOOKS AND RECORDS. To the actual knowledge of the Specified U.S.
Propane Persons, all the books and records of the U.S. Propane Entities relating
to the Business, including all personnel files, employee data and other
materials relating to the Employees, are substantially complete and correct in
all material respects and have been in all material respects maintained in
accordance with good business practice and all Applicable Laws. To the actual
knowledge of the Specified U.S. Propane Persons, such books and records
accurately and fairly reflect, in reasonable detail, all material transactions,
assets and liabilities of the Contributed Subs and the Business.
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4.23 INVESTMENT INTENT. The LP is acquiring the Heritage OLP Interests
and Common Units to be acquired by it at the Closing for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any public distribution of all or any part thereof. The LP has
reviewed the SEC Reports described in Section 3.1 and the Heritage MLP
Partnership Agreement and has had such opportunity as deemed necessary by the LP
and its advisors and affiliates to ask questions of the Heritage Entities and
their affiliates, officers and employees to enable the LP to make an investment
decision concerning the receipt of the Heritage OLP Interests and the Common
Units, the operation of Heritage MLP, and the investment risks associated with
the LP's investment in Heritage MLP. The LP, by entering into this Agreement,
(a) requests admission as a limited partner of Heritage MLP and agrees to comply
with, and be bound by, and hereby executes, the Heritage MLP Partnership
Agreement, (b) represents and warrants that the LP has all right, power and
authority and the capacity necessary to enter into the Heritage MLP Partnership
Agreement, (c) appoints the Heritage GP of Heritage MLP and, if a Liquidator
shall be appointed, the Liquidator of Heritage MLP as the LP's attorney-in-fact
to execute, swear to, acknowledge and file any document, including, without
limitation, the Heritage MLP Partnership Agreement and any amendment thereto,
necessary or appropriate for the LP's admission as an Additional Limited Partner
and as a party to the Heritage MLP Partnership Agreement, (d) gives the power of
attorney provided for in the Heritage MLP Partnership Agreement and (e) makes
the waivers and gives the consents and approvals contained in the Heritage MLP
Partnership Agreement. Capitalized terms not defined in this paragraph have the
meanings assigned to such terms in the Heritage MLP Partnership Agreement.
4.24 EMPLOYEE MATTERS.
(a) To the actual knowledge of the Specified U.S. Propane Persons,
except as set forth on Section 4.24 of the Disclosure Letters, none of the
Contributed Subs has violated any federal, state or local law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
wage or hour laws, nor any provisions of ERISA or the rules and regulations
promulgated thereunder, nor has any of the Contributed Subs engaged in any
unfair labor practice, which in each case would have a U.S. Propane Material
Adverse Effect; there is (i) no unfair labor practice complaint pending against
any of the Contributed Subs or, to the best knowledge of the LP, threatened
against any of them, before the National Labor Relations Board or any state or
local labor relations board, and no grievance or arbitration proceeding arising
out of or under any collective bargaining agreement pending against any of the
Contributed Subs or, to the best knowledge of the LP, threatened against any of
them, (ii) no significant strike, labor dispute, slowdown or stoppage pending
against any of the Contributed Subs and (iii) except as described in Section
4.24 of the Disclosure Letters, none of the Contributed Subs has any obligation
or liability under union pension plans or collective bargaining agreements
related to its Employees or Business that will be an obligation or liability of
or binding on any of the Contributed Subs after the Closing, except in the cases
of clauses (i), (ii) and (iii) such complaints, grievances, arbitration
proceedings, strikes, labor disputes, slowdowns, stoppages, questions, or
liabilities which if determined adversely to
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the U.S. Propane Entities, would not individually or in the aggregate result in
a U.S. Propane Material Adverse Effect.
(b) As of Closing, there will be no employment agreements in excess of
$75,000 per annum in salary and noncompete agreements to which any of the
Contributed Subs is a party or by which any of such Persons is bound.
(c) The Employees constitute all employees who are reasonably necessary
to be employed for the operation of the Transferred Assets or Business of the
Contributed Subs as currently conducted.
4.25 CONSENTS. Section 4.25 of the Disclosure Letters sets forth each
of the consents, approvals, orders, authorizations and waivers of, and
declarations, filings and registrations with, all third parties (including
Governmental Authorities) that are necessary or required to permit the transfer
of the Transferred Assets and Contributed Interests to the LP as contemplated by
this Agreement and otherwise to consummate the transactions contemplated hereby
(the "Consents"). Exhibit 7.1(e) includes all of the Consents that, if not
obtained and in full force and effect at the time of the Closing, could result
in a Material Adverse Effect on the Business.
4.26 CONTRIBUTED SUBS.
(a) With respect to a Contributed Sub that is a limited liability
company, no election has been made to treat such Contributed Sub as a
corporation for federal, state or local income tax purposes.
(b) With respect to each Contributed Sub, the aggregate amount of debt
and other liabilities to which it is subject for the items specified on Section
4.26 of the Disclosure Letters shall not exceed, in the aggregate, the amount of
debt set forth for such Contributed Sub on Section 4.26 of the Disclosure
Letters.
4.27 DISCLOSURE. Neither this Agreement nor any Schedule or Exhibit
hereto nor any other certificate or instrument delivered to the Heritage
Entities by or on behalf of the LP in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein not misleading.
4.28 EMPLOYEE BENEFIT PLANS.
(a) To the Knowledge of the Specified U.S. Propane Persons, Schedule
4.28 contains a true and complete list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA), and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance or other contracts
or agreements to which any of the U.S. Propane Entities is a party, with respect
to which any of the U.S. Propane Entities has any liability or which are
maintained, contributed to or sponsored by any of the U.S.
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Propane Entities for the benefit of any current or former employee, officer or
director of any of the U.S. Propane Entities (collectively, referred to herein
as the "U.S. Propane Plans"). To the Knowledge of the Specified U.S. Propane
Persons, except as set forth in Section 4.28 of the Disclosure Letters, none of
the U.S. Propane Entities has any express or implied commitment (i) to create,
incur liability with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) to enter into any contract or agreement to
provide compensation or benefits to any individual or (iii) to modify, change or
terminate any U.S. Propane Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth in Section 4.28 of the Disclosure Letters, none of the Plans is a
multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA,
or is a single employer pension plan, within the meaning of Section 4001(a)(15)
of ERISA, for which any of the U.S. Propane Entities could incur liability under
Section 4063 or 4064 of ERISA. Except to the extent set forth in the U.S.
Propane Plans listed in Schedule 4.28, none of the U.S. Propane Plans (i)
provides for the payment of separation, severance, termination or similar-type
benefits to any person, (ii) obligates any U.S. Propane Entity to pay
separation, severance, termination or other benefits as a result of the
transaction or (iii) obligates any U.S. Propane Entity to make any payment or
provide any benefit that could be subject to a tax under Section 4999 of the
Code. To the Knowledge of the Specified U.S. Propane Persons, except as set
forth in Section 4.28 of the Disclosure Letters, none of the U.S. Propane Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of any U.S. Propane
Entity.
(c) To the Knowledge of the Specified U.S. Propane Persons, each U.S.
Propane Plan which is intended to be qualified under Section 401(a) or 401(k) of
the Code is and has always been so qualified.
(d) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth on Section 4.28 of the Disclosure Letters, each U.S. Propane Plan is
now and always has been operated in all respects in accordance with the
requirements of Applicable Law, including, without limitation, ERISA and the
Code, and each Contributed Sub has performed all obligations required to be
performed by it under such U.S. Propane Plan, is not in any respect in default
under or in violation of, and has no knowledge of any default or violation by
any party to, any U.S. Propane Plan. To the Knowledge of the Specified U.S.
Propane Persons, except as set forth on Section 4.28 of the Disclosure Letters,
no U.S. Propane Plan is subject to Title IV of ERISA or Section 412 of the Code.
(e) To the Knowledge of the Specified U.S. Propane Persons, with
respect to each U.S. Propane Plan, there are no prohibited transactions or
breaches of fiduciary duties that could result in liability (directly or
indirectly) for any U.S. Propane Entity.
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(f) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth on Section 4.28 of the Disclosure Letters, each U.S. Propane Plan may
be unilaterally terminated at any time by a U.S. Propane Entity without material
liability, other than for benefits accrued prior to such termination.
(g) To the Knowledge of the Specified U.S. Propane Persons, except as
set forth in Section 4.28 of the Disclosure Letters, all contributions to, and
payments from, each U.S. Propane Plan that are required to be made in accordance
with the terms of the U.S. Propane Plan and Applicable Law have been timely
made.
(h) For the purposes of this Section 4.28, the Specified U.S. Propane
Persons have made appropriate inquiry of employees of the Contributed Subs at
the level of regional manager or above.
4.29 FINDER'S FEES. None of the Contributed Subs, the LP, the LLC, or
any of their respective Affiliates, are obligated (directly or indirectly) under
any agreement with any Person that would obligate Heritage GP, any of the
Heritage GP Stockholders or any of the Heritage Entities to pay any commission,
brokerage or "finder's fee" in connection with the transactions contemplated
herein.
4.30 REGULATION. Except as set forth in Section 4.30 of the Disclosure
Letters, neither the LP nor any of the Contributed Subs is now, or after the
consummation of the transactions contemplated by this Agreement and application
of the net proceeds thereof will be, (i) an "investment company" or a company
"controlled by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" thereof, within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
ARTICLE 5
AGREEMENTS
The LP hereby covenants and agrees with each of the Heritage Parties to
the effect set forth in Sections 5.1 to 5.3 and Section 5.6. The Heritage
Parties hereby covenant and agree, jointly and severally, with the LP to the
effect set forth in Sections 5.4 and 5.5.
5.1 CONDUCT AND PRESERVATION OF THE BUSINESS OF THE LP. Except as
expressly provided in this Agreement, or except as listed in Section 5.1 of the
Disclosure Letters, and except for any distribution or transfer of an Excluded
Asset during the period from the date hereof to the Closing Date, the LP shall
(a) conduct the Business substantially as it is being conducted on the date
hereof; (b) use its commercially reasonable best efforts to preserve, maintain
and protect the Transferred Assets and Business consistent with available
resources; (c) use its commercially reasonable best efforts to preserve intact
the business organization of the Contributed Subs and the Business, consistent
with its available resources, to keep available the services of the
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Employees and to maintain existing relationships with suppliers, contractors,
distributors, customers and others having business relationships with the
Contributed Subs or the Business; and (d) permit the Heritage Entities to
conduct safety training with employees of the Contributed Subs.
5.2 RESTRICTIONS ON CERTAIN ACTIONS OF THE LP, THE LLC AND THE
CONTRIBUTED SUBS. Without limiting the generality of Section 5.1, except as
listed in Section 5.1 of the Disclosure Letters and except as otherwise
expressly contemplated by this Agreement (including Sections 2.1, 2.2 and 2.3),
the Stock Purchase Agreement, the Subscription Agreement and the Formation
Agreement, from and after the date hereof and until the Closing Date, none of
the LLC, the LP or any Contributed Sub, without the approval of Heritage OLP,
shall, with respect to the Contributed Subs, the Transferred Assets or the
Business of the U.S. Propane Parties, or shall cause or permit any of the
Contributed Subs to:
(a) make any expenditures outside the ordinary course of business
consistent with past practice which, individually or in the aggregate, exceed
$100,000;
(b) make any material change in the ongoing operations of the
Transferred Assets or Business;
(c) create, incur, guarantee or assume any indebtedness for borrowed
money outside the ordinary course business;
(d) mortgage or pledge any of the Transferred Assets or Contributed
Interests or create or suffer to exist any Encumbrance thereupon, other than
Permitted Encumbrances;
(e) sell, lease, transfer or otherwise dispose of, directly or
indirectly, any of the Transferred Assets, except in the ordinary course of
business consistent with past practice, or sell, lease, transfer, or otherwise
dispose of any fixed assets, whether or not in the ordinary course of business,
which have a value, individually or in the aggregate, in excess of $100,000;
(f) enter into any lease, contract, agreement, commitment, arrangement
or transaction relating to the Transferred Assets other than in the ordinary
course of business;
(g) amend, modify or change any existing lease or Contract relating to
the Transferred Assets, other than in the ordinary course of the business
consistent with past practice;
(h) waive, release, grant or transfer any rights of value relating to
the Transferred Assets, Contributed Interests or Business, other than in the
ordinary course of the business consistent with past practice;
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(i) except in the ordinary course of business, hire any new employees
or recall any laid-off employees;
(j) delay payment of any account payable or other liability relating to
the Transferred Assets or Business beyond the later of its due date or the date
when such liability would have been paid in the ordinary course of business
consistent with past practice, unless such delay is due to a good faith dispute
as to liability or amount;
(k) permit any current insurance or reinsurance or continuation
coverage to lapse if such policy insures risks, contingencies or liabilities
(including product liability) related to the Transferred Assets or Business;
(l) except as set forth in this Section 5.2, take any action which
would make any of the representations or warranties of the LP untrue as of any
time from the date of this Agreement to the date of the Closing, or would result
in any of the conditions set forth in this Agreement not being satisfied;
(m) authorize or propose, or agree in writing or otherwise take, any of
the actions described in this Section 5.2;
(n) merge into or with or consolidate with any other corporation or
acquire all or substantially all of the business or assets of any corporation or
other Person;
(o) purchase any securities of any corporation or other Person;
(p) take any action or enter into any commitment with respect to or in
contemplation of any liquidation, dissolution, recapitalization, reorganization,
or other winding up of the Business;
(q) create any employee benefit plans (within the meaning of Section
3(3) of ERISA) or any other employee benefit plan or program not subject to
ERISA, except as required by law;
(r) enter into or take any action in connection with ▇▇▇▇▇▇, trades or
swaps of any commodity, except to the extent consistent with the provisions of
the Hedging Policy; or
(s) take any actions prohibited on the part of a Contributed Sub by
Section 5.2 of the Formation Agreement (and the LP will not waive any such
restrictions without the approval of Heritage OLP).
5.3 SERVICES OF EMPLOYEES. Between the date hereof and the Closing, the
LP (or its Affiliates) shall use its reasonable best efforts to keep available
the services of the Employees, and shall not, except in accordance with past
practice and existing business policy, terminate any such Employees.
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5.4 CONDUCT AND PRESERVATION OF THE BUSINESS. Except as expressly
provided in this Agreement, the Stock Purchase Agreement and the Subscription
Agreement, the Heritage Parties shall (a) cause the Heritage Entities to conduct
the Business substantially as it is being conducted on the date hereof; (b) use
their commercially reasonable best efforts to cause the Heritage Entities to
preserve, maintain and protect the assets of the Heritage Entities and Business
consistent with available resources; and (c) use their commercially reasonable
best efforts to cause the Heritage Entities to preserve intact the business
organization of the Heritage Entities and the Business, consistent with its
available resources, to keep available the services of the employees of the
Heritage Entities and to maintain existing relationships with suppliers,
contractors, distributors, customers and others having business relationships
with the Heritage Entities.
5.5 RESTRICTIONS ON CERTAIN ACTIONS OF THE HERITAGE PARTIES AND
HERITAGE GP. Without limiting the generality of Section 5.4, except as otherwise
expressly contemplated by this Agreement, the Stock Purchase Agreement, the
Subscription Agreement and the Debt Financing, from and after the date hereof
and until the Closing Date, without the approval of the LP, with respect to the
Business of the Heritage Entities:
(a) Neither of the Heritage Parties nor Heritage GP shall agree to
sell, transfer or otherwise dispose, or grant or agree to grant an option to
purchase, sell, transfer, or otherwise dispose of any securities of any of the
Heritage Entities.
(b) Except as set forth on Schedule 5.5, neither of the Heritage
Parties nor Heritage GP shall, or shall cause or permit any of the Heritage
Entities to:
(i) make any expenditures outside the ordinary course of
business consistent with past practice which, individually or in the
aggregate, exceed $100,000;
(ii) make any material change in the ongoing operations of the
Business;
(iii) create, incur, guarantee or assume any indebtedness for
borrowed money outside the ordinary course business, except for
Permitted Loans;
(iv) mortgage or pledge any of the securities of any of the
Heritage Entities or create or suffer to exist any Encumbrance
thereupon, other than Permitted Encumbrances;
(v) sell, lease, transfer or otherwise dispose of, directly or
indirectly, any assets, except in the ordinary course of business
consistent with past practice, or sell, lease, transfer, or otherwise
dispose of any fixed assets, whether or not in the ordinary course of
business, which have a value, individually or in the aggregate, in
excess of $100,000;
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(vi) enter into any lease, contract, agreement, commitment,
arrangement or transaction relating to the assets other than in the
ordinary course of business;
(vii) amend, modify or change any existing lease or contract,
other than in the ordinary course of the business consistent with past
practice;
(viii) waive, release, grant or transfer any rights of value
relating to the Business, other than in the ordinary course of business
consistent with past practice;
(ix) hire or promote from within any executive employees or,
except in the ordinary course of business, hire any new employees or
recall any laid-off employees;
(x) delay payment of any account payable or other liability
relating to the Business beyond the later of its due date or the date
when such liability would have been paid in the ordinary course of
business consistent with past practice, unless such delay is due to a
good faith dispute as to liability or amount;
(xi) permit any current insurance or reinsurance or
continuation coverage to lapse if such policy insures risks,
contingencies or liabilities (including product liability) related to
the Business;
(xii) except as set forth in this Section 5.5, take any action
which would make any of the representations or warranties of any of the
Heritage Parties untrue as of any time from the date of this Agreement
to the date of the Closing, or would result in any of the conditions
set forth in this Agreement not being satisfied;
(xiii) authorize or propose, or agree in writing or otherwise
take, any of the actions described in this Section 5.5;
(xiv) merge into or with or consolidate with any other
corporation or acquire all or substantially all of the business or
assets of any corporation or other Person;
(xv) purchase any securities of any corporation or other
Person;
(xvi) take any action or enter into any commitment with
respect to or in contemplation of any liquidation, dissolution,
recapitalization, reorganization, or other winding up of the Business;
(xvii) create any employee benefit plans (within the meaning
of Section 3(3) of ERISA) or any other employee benefit plan or program
not subject to ERISA, except as required by law;
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(xviii) declare any distribution or dividend or issue any
securities, other than regular quarterly cash distributions by Heritage
MLP of Available Cash at a rate of $0.5625 per Common Unit and
Subordinated Unit (with a proportionate distribution to Heritage GP in
respect of its general partner interests in Heritage MLP and Heritage
OLP);
(xix) enter into or take any action in connection with ▇▇▇▇▇▇,
trades or swaps of any commodity, except in accordance with the Hedging
Policy; or
(xx) take any of the actions described in Section 3.3.
5.6 HERITAGE GP SHARES. The LP agrees that, without the consent of FHS
Investments, L.L.C., a Nevada limited liability company, which consent will not
unreasonably be withheld, the LP will not sell or transfer the Heritage GP
Shares prior to the first anniversary of the Closing Date, except in connection
with the admission of the LP as a general partner of Heritage OLP or Heritage
MLP or any restructuring, recapitalization or business combination in which the
LP continues as a surviving entity.
ARTICLE 6
ADDITIONAL AGREEMENTS
The LP hereby covenants and agrees with the Heritage Parties as
follows:
6.1 ACCESS TO INFORMATION, CONFIDENTIALITY.
(a) Between the date hereof and the Closing, the LP (i) shall give each
of the Heritage Parties and their respective authorized representatives
reasonable access to all Employees and all facilities and all books and records
relating to the Contributed Subs, Transferred Assets and Business, (ii) shall
permit each of the Heritage Parties and their respective authorized
representatives to make such inspections of the Transferred Assets as they may
reasonably require to verify the accuracy of any representation or warranty
contained in Article 4 and (iii) shall furnish each of the Heritage Parties and
their respective authorized representatives with such financial and operating
data and other information with respect to the Transferred Assets and Business
as any such Party may from time to time reasonably request; provided, however,
that the LP shall have the right to have a representative present at all times
of any such inspections or examinations conducted at the offices or other
facilities of the LP or its Affiliates.
(b) The Confidentiality Agreement dated February 25, 2000, by and among
the LP, the LLC and the Heritage Parties shall remain in full force and effect
as set out therein until the Closing.
6.2 THIRD PARTY CONSENTS. Between the date hereof and the Closing, the
LP shall use its commercially reasonable best efforts to obtain all of the
Consents. "Commercially reasonable best efforts" or any phrase of similar tenor
as used in this Agreement or any Ancillary Agreement shall mean such good faith
efforts as are
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commercially reasonable, comparing the cost and expense of the efforts to the
benefit to be gained (without regard to the identity of the beneficiary).
6.3 RELEASE OF LIENS. Between the date hereof and the Closing, the LP
shall obtain full releases of any Encumbrances on the Contributed Interests and
Transferred Assets other than Permitted Encumbrances.
6.4 PUBLIC ANNOUNCEMENTS. Between the date hereof and the Closing,
except as may be required by Applicable Law or stock exchange rule, none of the
Parties or any of their respective Affiliates or representatives shall issue any
press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of each of the other Parties.
6.5 ACCESS TO RECORDS AFTER CLOSING. For a period of six years from and
after the Closing Date, the LP and its Affiliates and representatives shall have
reasonable access to inspect and copy all books and records relating to the
Contributed Interests and Transferred Assets to the extent that such access may
reasonably be required in connection with matters relating to or affected by the
operation of the Business prior to the Closing Date. The Heritage Parties shall
afford such access upon receipt of reasonable advance notice and during normal
business hours. If the Heritage Parties desire to dispose of any of such books
and records prior to the expiration of such period, the Heritage Parties shall,
prior to such disposition, give the LP a reasonable opportunity, at their
expense, to segregate and remove such books and records as they may select. The
LP shall be solely responsible for any costs or expenses incurred by it pursuant
to this Section 6.5.
6.6 FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party shall pay its own fees and expenses (including (a) its own
internal company expenses, including all salaries and expenses of its employees
performing legal or accounting duties and (b) the fees and expenses of counsel,
financial advisors, accountants and others engaged by such Party), incurred in
connection with the negotiation, execution and delivery of this Agreement and
the transactions contemplated hereby, whether or not the Closing shall have
occurred.
6.7 TAXES; OTHER CHARGES.
(a) All sales, use, registration, stamp, property transfer, transfer
and similar Taxes (including any real estate transfer Taxes) incurred in
connection with the consummation of the transactions contemplated by this
Agreement shall be borne by Heritage OLP. Each Party agrees to cooperate in the
filing of all necessary documentation and returns with respect to all such
Taxes.
(b) If the Closing occurs, the Heritage Parties shall pay all real and
personal property Taxes attributable to the Transferred Assets that are due
after the Closing Date, whether accruing prior to or after the Closing Date;
provided, however, that the LP shall pay to the Heritage Parties with respect to
the Transferred Assets, all such Taxes
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attributable to any period or periods prior to the Closing Date. The Heritage
Parties shall credit the LP for the amounts of such Taxes pursuant to the Net
Working Capital true-up mechanism set forth in Section 2.6, if any, paid by the
LP or its Affiliates and attributable to periods after the Closing Date. For the
taxable period within which the Closing Date occurs, the real and personal
property Taxes attributable to the portion of the period prior to the Closing
Date shall be considered to be the amount of such Taxes for the entire taxable
period in which the Closing Date occurs, multiplied by a fraction, the numerator
of which is the number of days in the portion of such period ending on the
Closing Date and the denominator of which is the number of days in the entire
period.
(c) The Heritage Parties and the U.S. Propane Parties will provide each
other Party with such assistance as may reasonably be requested in connection
with preparation of any Tax Return, audit or other examination by any taxing
authority or judicial or administrative proceeding relating to liability for any
Taxes, will each retain and provide to the other Party all records and other
information that may be relevant to any such Tax Return, audit or examination,
proceeding or determination and will each provide each other Party with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax Return of
such other Party for any period. Without limiting the generality of the
foregoing, the LP and the LLC will retain, until the expiration of the
applicable statutes of limitation (including any extensions thereof), copies of
all Tax Returns, supporting work schedules and other records relating to Tax
periods or portions thereof ending on or prior to the Closing Date.
6.8 INSURANCE. The Heritage Parties shall use commercially reasonable
best efforts to obtain fire, liability, casualty, product liability and other
insurance coverage with respect to the Business sufficient to satisfy all
material requirements of Applicable Laws and any agreements, arrangements or
understandings to which any of the U.S. Propane Entities is a party, and which
is customary for businesses of similar size engaged in similar lines of
business, effective on and after the Closing Date on arm's-length terms
acceptable to Heritage OLP and maintain such coverage at the request and expense
of Heritage OLP and Heritage MLP.
6.9 EMPLOYMENT MATTERS. Prior to the Closing, the Parties will take
such actions with respect to Employees, benefit plans and other employment
matters as they mutually determine to be appropriate.
6.10 AMENDMENT OF DISCLOSURE LETTERS AND SCHEDULES. The LP (with
respect to the Disclosure Letters) and the Heritage Parties (with respect to the
Schedules in Article 3) shall have the continuing obligation until the Closing
to amend or supplement promptly the Disclosure Letters or such Schedules with
respect to any matter hereafter arising or discovered that, if existing or known
at the date of this Agreement, would have been required to be set forth or
described in the Disclosure Letters or such Schedules. For all purposes of this
Agreement, including for purposes of determining whether the conditions set
forth in Section 7.1(a) and Section 7.2(a) have been fulfilled, the Disclosure
Letters and such Schedules shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
all
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information contained in any supplement or amendment thereto. If the Closing
shall occur, then all matters disclosed pursuant to any such supplement or
amendment at or prior to the Closing shall be waived, and the Disclosure Letters
and the Schedules as so supplemented or amended at the time of the Closing shall
thereafter constitute the Disclosure Letters and Schedules for purposes of this
Agreement.
6.11 TRADEMARKS, LOGOS, ETC. The Heritage Parties will have the right
to use all trademarks, service marks, trade names, service names and logos of
the Business of the Contributed Subs, as set forth on Schedule 6.11 (the
"Trademarks"), for a period of 180 days after the Closing. After such 180-day
period, the Heritage Parties will have the continuing right to use the
Trademarks, except that any of the members of the LLC may elect to terminate
such right after 90 days' written notice to Heritage OLP.
6.12 EMPLOYEE BENEFITS. The LP will be responsible for and hold
harmless the Heritage Entities from and against any claims in respect of payment
to employees of all salary, wages, commissions, overtime, or bonuses, plus any
applicable payroll taxes and any and all other employee benefits accruing to the
Selected Employees under applicable wage and hour laws and employee benefit
plans of any of the Contributed Subs including, but not limited to, ▇▇▇▇▇▇▇'▇
compensation, medical, retirement, and profit sharing, all to (but not
including) the Closing Date. LP will pay the Selected Employees for their
services to (but not including) the Closing Date, including but not limited to,
wages, commissions and bonuses.
6.13 FINANCIAL STATEMENTS. Within 60 days after the Closing Date, the
LP will provide to Heritage OLP the financial statements of the Contributed Subs
required to be filed in accordance with the Exchange Act, the Exchange Act
Regulations and the Securities Act.
6.14 FINANCING. Heritage OLP will use its best efforts promptly to
obtain Debt Financing of not less than $171.395 million on terms that are
consistent in all material respects with the term sheet attached as Exhibit
6.14.
6.15 INQUIRY.
(a) Within 15 days after the date of this Agreement, the Specified
Heritage Persons shall make appropriate inquiry of each employee of the Heritage
Entities at the level of regional manager or above as to the matters set forth
in Section 3.20 and shall amend Schedule 3.20 if required in accordance with
Section 6.10.
(b) Within 15 days after the date of this Agreement, the Specified U.S.
Propane Persons shall make appropriate inquiry of each employee of the
Contributed Subs at the level of regional manager or above as to the matters set
forth in Section 4.19 and shall amend Section 4.19 of the Disclosure Letters if
required in accordance with Section 6.10.
6.16 ACTIONS BY PARTIES. Each Party agrees to use commercially
reasonable best efforts to satisfy the conditions to Closing set forth in
Article 7 and to use its
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commercially reasonable best efforts to refrain from taking any action within
its control that would cause a breach of a representation, warranty, covenant or
agreement set forth in this Agreement.
6.17 VOTE OF COMMON UNITS. Heritage GP and the LP and their respective
successors and assigns hereby covenant and agree to vote all of their Common
Units, at each meeting or other vote of holders of the Common Units of Heritage
MLP, with respect thereto, for approval of the conversion of Class B
Subordinated Units to Common Units, for the admission of the LP or its designee
as general partner of Heritage MLP, and for any amendment to the Heritage MLP
Partnership Agreement related thereto.
6.18 LISTING. Heritage MLP shall use its best efforts to list the
Common Units on the New York Stock Exchange, prior to the Closing Date, subject
to official notice of issuance.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS TO CLOSING OF THE LP. The obligations of the LP to
consummate the transactions contemplated by this Agreement at the Closing shall
be subject to the fulfillment by each of the Heritage Parties on or prior to the
Closing Date of each of the following conditions:
(a) Representations and Warranties True. All the representations and
warranties of the Heritage Parties contained in this Agreement, and in any
agreement, instrument or document delivered by any of the Heritage Parties
pursuant to this Agreement on or prior to the Closing Date shall be true and
correct, individually and in the aggregate, in all material respects (other than
any representation or warranty that is qualified by materiality or a Heritage
Material Adverse Effect, which shall be true and correct in all respects) as of
the date of this Agreement and as of the Closing Date.
(b) Covenants and Agreements Performed. Each of the Heritage Parties
shall have performed and complied with, in all material respects, all covenants
and agreements required by this Agreement to be performed or complied with by
it.
(c) Certificates. The LP shall have received a certificate from each of
the Heritage Parties, in substantially the form set forth in Exhibit 7.1(c),
dated the Closing Date, representing and certifying that the conditions set
forth in Sections 7.1(a) and 7.1(b) have been fulfilled and a certificate as to
the incumbency of the officers executing this Agreement on behalf of the
Heritage Parties.
(d) Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Authority, and no statute,
rule, regulation or executive order promulgated or enacted by a Governmental
Authority, shall be in effect that restrains, enjoins, prohibits or otherwise
makes illegal the consummation of the transactions contemplated hereby. No
Proceeding before a Governmental
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Authority shall be pending (A) seeking to restrain or prohibit the consummation
of the transactions contemplated hereby or (B) that could reasonably be
expected, if adversely determined, to impose any material limitation on the
ability of the LP to convey the Contributed Interests or to receive full payment
therefor.
(e) Consents. All Consents set forth on Exhibit 7.1(e) shall have been
obtained or made and shall be in full force and effect as to the Heritage
Parties at the time of the Closing.
(f) No Material Adverse Effect. Since the date of this Agreement, there
shall not have been any event or condition having a Heritage Material Adverse
Effect.
(g) Deliveries. Heritage OLP shall have delivered the Instruments of
Conveyance.
(h) Certain Ancillary Agreements. Each of the Ancillary Agreements
listed below shall have been executed and delivered by (if a party thereto)
Heritage OLP and the Heritage GP Stockholders:
(i) the Employment Agreements and Consulting Agreement (the
"Employment Agreements"), substantially in the form agreed as of the
date of this Agreement; and
(ii) the Registration Rights Agreement, substantially in the
form of Exhibit 6.1(d) to the Subscription Agreement.
The foregoing are the "Ancillary Agreements."
(i) Debt Financing. At Closing, Heritage OLP will have available to it
Debt Financing on terms that are consistent in all material respects with
Exhibit 6.14 in an amount sufficient to permit Heritage OLP to pay the Cash
Purchase Price.
(j) Amendment to Heritage MLP Partnership Agreement. Amendment No. 1
shall have been duly executed and adopted and shall be in full force and effect.
(k) HSR Waiting Period. If applicable, the waiting period under the HSR
Act applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated without any adverse condition attached thereto.
(l) Legal Opinions. The LP shall have received an opinion of counsel to
the Heritage Parties in a reasonable and customary form to be agreed by the
Parties.
(m) Stock Purchase Agreement and Subscription Agreement. The Stock
Purchase Agreement shall have been executed and delivered by the Heritage
Stockholders and all conditions to closing therein (other than the closing of
the transactions pursuant to this Agreement) shall have been satisfied or
waived. The Subscription Agreement shall have been executed and delivered by the
Heritage GP
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Stockholders and all conditions to closing therein (other than the closing of
the transactions pursuant to this Agreement and the Stock Purchase Agreement)
shall have been satisfied or waived.
(n) Listing. The Common Units issuable to the LP pursuant to this
Agreement shall have been approved for listing on the New York Stock Exchange
subject to official notice of issuance.
7.2 CONDITIONS TO CLOSING OF THE HERITAGE PARTIES. The obligations of
each of the Heritage Parties to consummate the transactions contemplated by this
Agreement at the Closing shall be subject to the fulfillment by the LP on or
prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties True. All the representations and
warranties of the LP contained in this Agreement, and in any agreement,
instrument or document delivered by the LP pursuant to this Agreement on or
prior to the Closing Date shall be true and correct, individually and in the
aggregate, in all material respects (other than any representation or warranty
that is qualified by materiality or an LP Material Adverse Effect, which shall
be true and correct in all respects) as of the date of this Agreement and as of
the Closing Date.
(b) Covenants and Agreements Performed. The LP shall have performed and
complied with, in all material respects, all covenants and agreements required
by this Agreement to be performed or complied with by it.
(c) Certificates. The Heritage Parties shall have received a
certificate from the LP, in substantially the form set forth in Exhibit 7.2(c),
executed by the LP, dated the Closing Date, representing and certifying that the
conditions set forth in Sections 7.2(a) and 7.2(b) have been fulfilled and a
certificate as to the incumbency of the officers executing this Agreement on
behalf of the LP.
(d) Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Authority, and no statute,
rule, regulation or executive order promulgated or enacted by a Governmental
Authority, shall be in effect (i) that restrains, enjoins, prohibits or
otherwise makes illegal the consummation of the transactions contemplated hereby
or (ii) that would impose any material limitation on the ability of Heritage OLP
effectively to exercise full rights of ownership of the Contributed Interests,
Businesses and Assets to be acquired by Heritage OLP under this Agreement. No
Proceeding before a Governmental Authority shall be pending (A) seeking to
restrain or prohibit the consummation of the transactions contemplated hereby or
(B) that could reasonably be expected, if adversely determined, to impose any
material limitation on the ability of Heritage OLP effectively to exercise full
rights of ownership of the Contributed Interests, Businesses and Assets to be
acquired by Heritage OLP under this Agreement.
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(e) Consents. All Consents set forth on Exhibit 7.2(e) shall have been
obtained or made and shall be in full force and effect as to the LP at the time
of the Closing.
(f) No Material Adverse Effect. Since the date of this Agreement, there
shall not have been any event or condition having a material adverse effect on
the condition (financial or otherwise), business, prospects, properties, net
worth or results of operations of the LP Entities, taken as a whole.
(g) Deliveries. The LP and its Affiliates shall have delivered the
Instruments of Conveyance.
(h) Stock Purchase Agreement. The Stock Purchase Agreement shall have
been executed and delivered by the LP and all conditions to closing therein
(other than the closing of the transactions pursuant to this Agreement) shall
have been satisfied or waived.
(i) Release of Encumbrances. All Encumbrances on the Transferred Assets
and Contributed Interests, other than Permitted Encumbrances, shall have been
fully released.
(j) HSR Waiting Period. If applicable, the waiting period under the HSR
Act applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated without any adverse condition attached thereto.
(k) Legal Opinions. The Heritage Parties shall have received an opinion
of counsel to the LP in a reasonable and customary form to be agreed by the
Parties.
(l) Leases. Leases shall have been executed and delivered by the
applicable Affiliate of the members of the LLC, with respect to the properties
identified in an Appendix to Exhibit 7.2(l), on commercially reasonable terms
with representations, warranties and covenants consistent with this Agreement
and an indemnity provision substantially in the form attached as Exhibit 7.2(l).
(m) Noncompetition Agreement. At or prior to Closing, the
Noncompetition Agreement, substantially in the form attached as Exhibit 7.2(m),
shall have been duly executed and delivered by the parties thereto.
(n) Assignment Agreement. At or prior to Closing, the Assignment of
Contract, substantially in the form attached as Exhibit 7.2(n), shall have been
duly executed and delivered by the LP.
(o) Application for Issuance. At the Closing, the LP will deliver the
Application for Issuance of Common Units, substantially in the form attached as
Exhibit 7.2(o).
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(p) Debt Financing. At Closing, Heritage OLP will have available to it
Debt Financing on terms that are consistent in all material respects with
Exhibit 6.14 in an amount sufficient to permit Heritage OLP to pay the Cash
Purchase Price.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby abandoned by written notice at any time prior to the Closing
in any of the following manners:
(a) concurrently with any permitted termination of the Stock Purchase
Agreement or the Subscription Agreement;
(b) by written consent of each of the Parties;
(c) by any Party if the Closing has not occurred on or before August
31, 2000, unless such failure to close resulted from a breach of this Agreement
by the Party or its Affiliate seeking to terminate this Agreement pursuant to
this Section 8.1(c);
(d) by any Parties if (i) there is any statute, rule or regulation that
makes consummation of the transactions contemplated hereby or the operation of
the Business illegal or otherwise prohibited or (ii) a Governmental Authority
(A) has issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable or (B) has made any order, decree, ruling or
other action consenting to or approving consummation of the transactions
contemplated hereby contingent or conditional in any manner that has a Heritage
Material Adverse Effect or a U. S. Propane Material Adverse Effect;
(e) by any Party, if there has been any violation or breach by any
other Party (other than an Affiliate or related party of the first party) of any
representation, warranty, covenant or agreement contained in this Agreement that
has rendered impossible the satisfaction of any condition to the obligations of
such other Party set forth in Section 7.1 or Section 7.2 and such violation or
breach has neither been cured within 30 days after notice by such first Party to
the other Party nor waived by the first Party;
(f) by any Party, if any other event shall occur that shall render the
satisfaction of any such condition to the obligations of any other Party (other
than an Affiliate or related party of the first party) impossible and such
condition has not been waived by the other Parties;
(g) by the LP, (i) if the weighted average interest rate of the Debt
Financing exceeds 9 percent over the life of the Debt Financing, (ii) if the
weighted average term of the notes comprising the Debt Financing is less than
seven years or (iii) if a firm commitment for such Debt Financing (as to
weighted average interest rate, weighted
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average term and principal amount) has not been obtained as of July 21, 2000 on
terms that are consistent in all material respects with Exhibit 6.14;
(h) by the LP, if any amendment is made to Schedule 3.20 in accordance
with Section 6.15(a);
(i) by the Heritage Parties, if any amendment is made to Section 4.19
of the Disclosure Letters in accordance with Section 6.15(b); and
(j) by the Heritage Parties if, after compliance with Section 6.14,
Heritage OLP has not obtained the Debt Financing on or before August 15, 2000,
on terms consistent in all material respects with Exhibit 6.14.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 8.1 by any Party, written notice thereof shall
forthwith be given to the other Parties specifying the provision hereof pursuant
to which such termination is made. In the event of termination of this Agreement
for any reason, this Agreement, the Stock Purchase Agreement and the
Subscription Agreement shall become void and have no effect, except that the
agreements contained in this Section 8.2 and in Sections 6.1(b), 6.6 and Article
10 shall survive the termination hereof. Nothing contained in this Section 8.2
shall relieve any Party from liability for any willful breach of this Agreement.
8.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by each of the Parties.
8.4 WAIVER. Any Party may, on behalf of itself only and not on behalf
of any other Party, (a) waive any inaccuracies in the representations and
warranties of any other Party (other than an Affiliate or related party of the
first party) contained herein or in any document, certificate or writing
delivered pursuant hereto, (b) waive compliance by any other Party (other than
an Affiliate or related party of the first party) with any of its agreements
contained herein and (c) waive fulfillment of any conditions to its obligations
contained herein. Any agreement on the part of a Party to any such waiver shall
be valid only if set forth in an instrument in writing signed by or on behalf of
such Party. No failure or delay by a Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
ARTICLE 9
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
9.1 INDEMNIFICATION OBLIGATIONS OF THE LP. From and after the Closing
Date, the LP shall indemnify each of the Heritage Parties and their Affiliates,
as the case may be, and hold such Parties harmless against and in respect of any
and all Losses arising out of, based upon or resulting from:
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(a) the breach of any representation or warranty of the LP contained in
or made pursuant to this Agreement; and
(b) the breach by the LP or failure of the LP to observe or perform in
any material respect, any of its covenants or agreements contained in this
Agreement.
Notwithstanding the foregoing, the LP will not have any obligation to indemnify
any of the Heritage Parties or their Affiliates for Losses under Section 9.1(a)
unless and until the aggregate amount of all such Losses under Section 9.1(a)
exceeds $200,000 (regardless of whether, in the case of third party actions,
suits or proceedings with respect to any of the foregoing, the LP may have a
meritorious defense), at and after which time the LP shall be liable for all
Losses in excess of $200,000. The rights and remedies of the Heritage Parties
based upon, arising out of or otherwise in respect of any clause of this Section
9.1 or any representation, warranty or covenant in this Agreement shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any such claim is based may also be the subject matter of any
representation, warranty or covenant in this Agreement that would not give rise
to any rights or remedies of the Heritage Parties.
9.2 INDEMNIFICATION OBLIGATIONS OF THE HERITAGE PARTIES. From and after
the Closing Date, the Heritage Parties, jointly and severally, shall indemnify
the LP, the LLC, their members and partners and their respective Affiliates and
controlling Persons (the "U.S. Propane Indemnified Parties"), as the case may
be, and hold such Persons harmless against and in respect of any and all Losses
arising out of, based upon or resulting from:
(a) the breach of any representation or warranty of the Heritage
Parties contained in or made pursuant to this Agreement; and
(b) the breach by any of the Heritage Parties or failure of any of the
Heritage Parties or any of their Affiliates to observe or perform in any
material respect, any of their covenants or agreements contained in this
Agreement.
Notwithstanding the foregoing, none of the Heritage Parties will have any
obligation to indemnify the U.S. Propane Indemnified Parties for Losses under
Section 9.2(a) unless and until the aggregate amount of all such Losses under
Section 9.2(a) exceeds $200,000 (regardless of whether, in the case of third
party actions, suits or proceedings with respect to any of the foregoing, any of
the Heritage Parties may have a meritorious defense), at and after which time
the Heritage Parties shall be liable, jointly and severally, for all Losses in
excess of $200,000. The rights and remedies of the U.S. Propane Indemnified
Parties based upon, arising out of or otherwise in respect of any clause of this
Section 9.2 or any representation, warranty or covenant in this Agreement shall
in no way be limited by the fact that the act, omission, occurrence or other
state of facts upon which any such claim is based may also be the subject matter
of any representation, warranty or covenant in this Agreement that would not
give rise to any rights or remedies of the U.S. Propane Indemnified Parties.
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9.3 INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by any Person entitled to indemnification
under Section 9.1 or Section 9.2 (an "indemnified Party") of notice of the
commencement of any Proceeding by a Person not a Party to this Agreement in
respect of which the indemnified Party will seek indemnification hereunder (a
"Third Party Action"), the indemnified Party shall notify the Person that is
obligated to provide such indemnification (an "indemnifying Party") thereof in
writing, but any failure to so notify the indemnifying Party shall not relieve
it from any liability that it may have to the indemnified Party under Section
9.1 or Section 9.2, except to the extent that the indemnifying Party is actually
and materially prejudiced by the failure to give such notice. The indemnifying
Party shall be entitled to participate in the defense of such Third Party Action
and to assume control of such defense with counsel reasonably satisfactory to
such indemnified Party; provided, however, that:
(i) the indemnified Party shall be entitled to participate in
the defense of such Third Party Action and to employ counsel at its own
expense to assist in the handling of such Third Party Action;
(ii) the indemnifying Party shall obtain the prior written
approval of the indemnified Party, which approval shall not be
unreasonably withheld or delayed, before entering into any settlement
of such Third Party Action or ceasing to defend against such Third
Party Action, if pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be imposed
against the indemnified Party or the indemnified Party would be
adversely affected thereby;
(iii) no indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to
each indemnified Party of a release from all liability in respect of
such Third Party Action; and
(iv) the indemnifying Party shall not be entitled to control
the defense of any Third Party Action unless within 15 days after
receipt of such written notice from the indemnified Party the
indemnifying Party confirms in writing its responsibility to indemnify
the indemnified Party with respect to such Third Party Action and
reasonably demonstrates that it will be able to pay the full amount of
the reasonably expected Losses in connection with any such Third Party
Action.
Except as set forth in the following sentence, after written notice by
the indemnifying Party to the indemnified Party of its election to assume
control of the defense of any such Third Party Action in accordance with the
foregoing and compliance by the indemnifying Party with Section 9.3(a)(iv), (A)
the indemnifying Party shall not be liable to such indemnified Party hereunder
for any Legal Expenses subsequently incurred by such indemnified Party
attributable to defending against such Third Party
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Action, and (B) as long as the indemnifying Party is reasonably contesting such
Third Party Action in good faith, the indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge the claim
underlying, such Third Party Action without the indemnifying Party's prior
written consent. If the indemnifying Party does not assume control of the
defense of such Third Party Action in accordance with this Section 9.3, the
indemnified Party shall have the right to defend and/or settle such Third Party
Action in such manner as it may deem appropriate at the cost and expense of the
indemnifying Party, and the indemnifying Party will promptly reimburse the
indemnified Party therefor in accordance with this Article 9. The reimbursement
of fees, costs and expenses required by this Article 9 shall be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred.
(b) If the indemnifying Party shall be obligated to indemnify the
indemnified Party pursuant to this Article 9, the indemnifying Party shall be
subrogated to all rights of the indemnified Party with respect to the claims to
which such indemnification relates. If an indemnified Party becomes entitled to
any indemnification from an indemnifying Party, such indemnification shall be
made in cash upon demand.
(c) The right of indemnification pursuant to this Article 9 shall
constitute the sole and exclusive remedy of each of the Parties to this
Agreement, other than with respect to fraud or willful breach by a Party. So
long as a claim for indemnification pursuant to this Article 9 is being
contested in good faith by the indemnifying Party or such claim shall otherwise
remain unliquidated, such claim shall not affect any of the rights of the
indemnifying Party under the LP Agreement, including any right to current
distributions by the LP.
9.4 SURVIVAL. All representations, warranties, covenants and agreements
contained in this Agreement shall survive (and not be affected in any respect
by) the Closing, any investigation conducted by any Party and any information
which any Party may receive (other than information identified in the Disclosure
Letters).
(a) The right to indemnification:
(i) with respect to any breach or violation of any of the
representations and warranties contained in this Agreement (other than
those in Sections 3.4, 3.5, 3.6(b), 3.7, 3.9, 3.10, 3.17, 3.20, 3.25,
4.1, 4.2, 4.3, 4.4, 4.7, 4.10, 4.19 and 4.28), shall survive for one
year after the date of the audit of Heritage MLP for the first full
fiscal year following the Closing;
(ii) with respect to any breach or violation of any of the
representations and warranties contained in Sections 3.20 and 3.25,
shall survive for three years from the Closing Date;
(iii) with respect to any breach or violation of any of the
representations and warranties contained in Sections 3.4, 3.5, 3.6(b),
3.7, 3.9,
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3.10, 3.17, 4.1, 4.2, 4.3, 4.4, 4.7, 4.10, 4.19 and 4.28, shall survive
without any time limit; and
(iv) with respect to all covenants and agreements contained in
this Agreement, shall survive for the applicable statute of
limitations.
(b) The expiration of any survival period under this Agreement will not
affect the liability of any Party under this Article 9 for any Loss as to which
a bona fide claim has been asserted prior to the termination of such survival
period.
9.5 NO SPECIAL OR CONSEQUENTIAL DAMAGES. No Party shall be entitled to
recover special, consequential, exemplary or punitive damages from the other
Parties, and each Party hereby waives any claim or right to special,
consequential, exemplary or punitive damages hereunder, even if caused by the
active, passive, sole, joint, concurrent or comparative negligence, strict
liability, or other fault of any Party, other than fraud or intentional
misconduct.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICES. All notices, requests, demands and other communications
required or permitted to be given or made hereunder by any Party shall be in
writing, and shall be delivered either personally, or by registered or certified
mail (postage prepaid and return receipt requested) or by express courier or
delivery service, or by telegram, telefax, telex or similar facsimile means, to
the Parties, at the addresses (or at such other addresses as shall be specified
by the Parties by like notice) set forth below:
(a) If to the LP:
(1) AGL Resources, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. Short
Long, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
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(2) Atmos Energy Corporation
5430 LBJ Freeway
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (214)
698-3100 (▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
(3) TECO Energy, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
(4) Piedmont Natural Gas Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telefax)
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with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
PMB 317
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(5) ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: G. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(b) If to Heritage OLP or Heritage MLP:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (telecopier)
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (telecopier)
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (telecopier)
Notices and other communications shall be deemed given or made (i) when
received, if sent by telegram, telefax, telex or similar facsimile means
(written confirmation of such receipt by confirmed facsimile transmission being
deemed receipt of communications sent by telefax, telex or similar facsimile
means) and (ii) when delivered and receipted for (or upon the date of attempted
delivery where delivery is refused), if hand-delivered, sent by registered or
certified mail or sent by express courier or delivery service, except
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62
in the case of facsimile transmissions received after the normal close of
business at the receiving location, which shall be deemed given on the next
business day.
10.2 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, together with the Schedules and Exhibits hereto (where applicable, as
executed and delivered), constitute the entire agreement between the Parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, between the Parties with respect to the
subject matter hereof.
10.3 BINDING EFFECT; ASSIGNMENT; NO THIRD PARTY BENEFIT. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned (whether by
operation of law or otherwise) by any Party without the prior written consent of
each of the Parties, and any purported assignment without such consent shall be
void. Except as provided in Article 9, nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person other than the Parties,
and their respective successors and permitted assigns, any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
10.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
10.5 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas.
10.6 JURISDICTION. Subject to Section 10.10, any legal action, suit or
proceeding in law or equity arising out of or relating to this Agreement or the
transactions contemplated by this Agreement may only be instituted in any state
or federal court located in the State of Texas, and each Party agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or execution,
that the action, suit or proceeding is brought in an inconvenient forum, that
the venue of the action, suit or proceeding is improper or that this Agreement,
or the subject matter hereof or thereof may not be enforced in or by such court.
Each Party further irrevocably submits to the jurisdiction of any such court in
any such action, suit or proceeding. Any and all service of process and any
other notice in any such action, suit or proceeding shall be effective against
any Party if given by registered or certified mail (return receipt requested) or
by any other means which requires a signed receipt in accordance with, and at
the address listed in, Section 10.1. Nothing herein contained shall be deemed to
affect the right of any Party to serve process in any manner permitted by law.
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10.7 FURTHER ASSURANCES. From time to time following the Closing, at
the request of any Party and without further consideration, the other Parties
shall execute and deliver to such requesting Party such instruments and
documents and take such other action as such requesting Party may reasonably
request or as may be otherwise necessary to (a) more fully and effectively
transfer to, and vest in, Heritage OLP or Heritage Service Sub the Transferred
Assets or the Contributed Interests, (b) enable Heritage OLP or Heritage Service
Sub to assume and fully and timely perform in accordance with their terms any or
all of the Transferred Contracts, (c) enable Heritage OLP or Heritage Service
Sub to continue the Business, and (d) otherwise consummate more fully and
effectively the transactions contemplated by this Agreement and the Ancillary
Agreements.
10.8 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only, do not constitute a part of this Agreement
and shall not affect in any manner the meaning or interpretation of this
Agreement.
10.9 COUNTERPARTS. This Agreement may be executed by the Parties in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement.
10.10 DISPUTE RESOLUTION. From and after the Closing, the Parties shall
use the Dispute Resolution Procedures, attached as Exhibit 10.10, to resolve in
good faith any dispute, controversy or claim related to this Agreement or any
Ancillary Agreement, including any dispute involving the payment of
indemnification pursuant to Article 9, except to the extent otherwise set forth
herein. Nothing herein is intended to limit the Parties from resolving
informally between them any dispute, controversy or claim that may arise, thus
avoiding the necessity of using the Dispute Resolution Procedures.
[SIGNATURE PAGES FOLLOW]
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64
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
LP U.S. PROPANE, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: U.S. PROPANE, L.L.C.,
ITS GENERAL PARTNER
By:
-------------------------------------
Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
LLC U.S. PROPANE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
FOR THE PURPOSES OF SECTION 5.2 AND
SECTION 6.17
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
65
HERITAGE OPERATING, L.P.,
Heritage OLP A DELAWARE LIMITED PARTNERSHIP
BY: HERITAGE HOLDINGS, INC.
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Heritage MLP HERITAGE PROPANE PARTNERS, L.P.
A DELAWARE LIMITED PARTNERSHIP
BY: HERITAGE HOLDINGS, INC.
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Heritage GP HERITAGE HOLDINGS, INC.,
A DELAWARE CORPORATION,
FOR THE PURPOSES OF SECTION 5.5
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
66
EXHIBIT 1.1
DEFINITIONS
"Affiliate" means, with respect to a Person, (a) any other Person more
than 50 percent of whose outstanding voting securities are directly or
indirectly owned, controlled or held with the power to vote by such Person or
(b) any other Person directly or indirectly controlling, controlled by or under
common control with such Person. The term "controls" (and the variants thereof)
as used in this definition means the possession of the power, acting alone, to
direct or cause the direction of the management and policies of a Person by
virtue of ownership of voting securities or otherwise.
"Applicable Law" means any Law to which a specified Person or property
is subject.
"Assets" means all assets and properties of the Contributed Subs of
every kind, character and description, whether tangible, intangible, real,
personal or mixed, and wherever located, that are owned, used or held for use on
the Closing Date in connection with the Business, including the following assets
and properties:
(a) all propane inventory and other inventory and supplies of any kind;
(b) all real property, together with all buildings, tanks, containers,
storage facilities, structures, improvements, appurtenances, and fixtures of
every kind or nature located thereon, including those identified in Section
4.14(a) of the Disclosure Letters;
(c) all rights in real property or personal property arising under
leases, easements or other contracts or arrangements;
(d) all storage tanks and containers, propane cylinders, furniture,
fixtures, leasehold improvements, equipment, machinery, computer hardware,
supplies, materials, motor vehicles, trailers, tanks, railcars, apparatus,
tools, implements, appliances and other tangible personal property, including
those identified in Section 4.15 of the Disclosure Letters;
(e) all right, title and interest in, to and under (i) all Intellectual
Property and Software identified in Section 4.16 of the Disclosure Letters and
(ii) all Technology relating to, or used in connection with, the operation of
the Business;
(f) all right, title and interest in, to and under all Permits relating
to, or used in connection with, the operation of the Business, including the
Permits described in Section 4.17(a) of the Disclosure Letters;
(g) all right, title and interest in, to and under the Transferred
Contracts;
(h) all books and records relating to the Business, including (i)
financial and accounting records, (ii) all books and records relating to
Employees to the extent
Exhibit 1.1 - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
67
permitted by Applicable Law to be transferred hereunder, other than those
related to employee benefit plans and associated funding arrangements, (iii) all
books and records relating to the purchase of materials, supplies and services,
and (iv) all books and records relating to dealings with customers, vendors and
suppliers of the Business, and including computerized books and records and
other computerized storage media (or, in each case, copies thereof in accessible
form or access thereto reasonably satisfactory to the Heritage Parties);
(i) all customer and potential customer lists and customer and
potential customer data, vendor lists and vendor data, supplier lists and
supplier data and sales and promotional material and other sales-related
material relating to, or used in connection with, the operation of the Business;
(j) all rights, claims and causes of action under or pursuant to all
warranties, representations, indemnifications, hold harmless provisions and
guarantees made by suppliers, licensors, manufacturers or contractors in respect
of the Business;
(k) all goodwill associated with the Business; and
(l) all assets included in the definition of Working Capital associated
with the Business.
The material Assets of each Contributed Sub are identified in Section
1.1(a) of the Disclosure Letters.
"Average Price" means the average of the closing sales prices of the
Common Units as reported in The Wall Street Journal - Composite Transactions for
the 20 consecutive trading days commencing on the tenth trading day prior to the
later to occur of (i) the day that the transaction contemplated by this
Agreement is publicly announced and (ii) the day prior to closing that any
public announcement is made by Heritage MLP concerning an increase or potential
increase in Heritage MLP's quarterly distribution to unitholders; provided, that
if such 20-trading-day period would otherwise end after the third trading day
prior to the Closing Date, the Closing Date shall be changed to be no earlier
than the third trading day after the end of such 20-day trading period.
"Business" means
(a) with respect to the Contributed Subs, all business activities of
the Contributed Subs involving the purchase, sale, exchange, marketing, trading,
storage or transportation of propane conducted in the United States, its
territories and the District of Columbia;
(b) with respect to the LP, the collective Businesses of each of the
Contributed Subs as currently conducted; and
(c) with respect to the Heritage Entities, the business of the Heritage
Entities as currently conducted and as described in the SEC Reports.
Exhibit 1.1 - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
68
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to a corresponding provision
of any successor law.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Contributed Interest" means, with respect to a Contributed Sub that is
a limited liability company, all of the member interests in such Contributed
Sub, and, collectively, all of the member interests of each of such Contributed
Subs.
"Contributed Sub" means AGL Propane, Inc., a Georgia corporation;
United Cities Propane Gas, Inc., a Tennessee corporation ("United Cities");
Peoples Gas Company, a Florida corporation; and Piedmont Propane Company, a
North Carolina corporation ("Piedmont Propane"). Such term also refers to the
limited liability company into which each of the foregoing is converted or
merged, or, in the case of United Cities, into which the Transferred Assets of
United Cities are transferred, and, in the case of Piedmont Propane, into which
the Transferred Assets of Piedmont Propane are transferred, in each case, from
and after the date of such conversion, merger or transfer.
"Control" means the possession, directly or indirectly, through one or
more intermediaries, of any of the following:
(a) (i) in the case of a corporation, more than 50 percent of the
outstanding voting securities thereof; (ii) in the case of a limited liability
company, partnership, limited partnership or joint venture, equity securities of
such entity that entitle the owner/holder thereof to the right to receive more
than 50 percent of the distributions from such entity; (iii) in the case of a
trust or estate, including a business trust, more than 50 percent of the
beneficial interests therein; and (iv) in the case of any other entity, equity
securities or ownership interests in such entity that entitle the owner/holder
thereof to more than 50 percent of the economic or beneficial interests therein;
or
(b) in the case of any entity, the possession of the power, acting
alone or as a member of a group (as defined in Rule 13d-5 under the Exchange
Act), to direct or cause the direction of the management and policies of the
entity by virtue of ownership of voting securities or otherwise.
"Disclosure Letter" means, when used with respect to a Contributed Sub,
the disclosure letter relating to such Contributed Sub and set forth as Schedule
1.1.
"Dispute Resolution Procedures" means the procedures described in
Exhibit 10.10.
"Employee" means an employee of the Contributed Subs or their
respective Affiliates who is employed in the Business.
Exhibit 1.1 - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
69
"Encumbrance" means any lien, charge, pledge, option, mortgage, deed of
trust, security interest, claim, restriction, easement and other encumbrance of
every type and description, whether imposed by Law, agreement, understanding or
otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means those Assets identified in Section 1.1(b) of
the Disclosure Letters.
"Formation Agreement" means the Formation Agreement, dated February 15,
2000, among the Contributed Subs existing as of such date and the other parties
thereto.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America on the applicable date.
"Governmental Authority" (or "Governmental") means a federal, state,
local or foreign governmental authority; a state, province, commonwealth,
territory or district thereof; a county or parish; a city, town, township,
village or other municipality; a district, ▇▇▇▇ or other subdivision of any of
the foregoing; any executive, legislative or other governing body of any of the
foregoing; any agency, authority, board, department, system, service, office,
commission, committee, council or other administrative body of any of the
foregoing; any court or other judicial body; and any officer, official or other
representative of any of the foregoing.
"Hedging Policy" means the written Trading and Hedging Policy as
approved by a resolution of the board of managers of the LLC and the board of
directors of Heritage GP.
"Heritage Acquisition Program" means the acquisition of unrelated
propane companies and/or their assets between the date of the most recent SEC
Report and Closing, consistent with past practices, provided that the aggregate
acquisition programs shall not exceed $9,400,000 plus noncompetition payments
having a net present value not to exceed $3,100,000.
"Heritage Disposition Program" means, consistent with past practices,
(a) the disposition of non-EBITDA-generating assets and (b) the sale of
marketable securities, provided that such dispositions and sales are made to
unrelated third parties and the net proceeds are utilized to pay down Heritage
OLP's indebtedness.
"Heritage Entities" means the Heritage Parties and the following
entities: M-P Oils, Ltd., an Alberta, Canada, corporation; M-P Energy
Partnership, an Alberta, Canada, general partnership; and Bi-State Propane, a
California general partnership, Guilford Gas, Inc., a North Carolina
corporation, Heritage Bi-State LLC, a Delaware limited liability company, and
Heritage Energy Resources, LLC, an Oklahoma limited liability company.
"Heritage GP" means Heritage Holdings, Inc., a Delaware corporation.
Exhibit 1.1 - 4
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
70
"Heritage GP Stockholders" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇, as Tenants by the Entireties; H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇. ▇. ▇▇▇▇▇; G.
A. ▇▇▇▇; The ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Trust; The ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Trust; The ▇▇▇▇ ▇. ▇▇▇▇▇ Trust; J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇; ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; ▇▇▇
▇. ▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇. Pass; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇; ▇. ▇.
▇▇▇▇▇▇▇▇▇▇, III; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇; and
▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Heritage MLP" means Heritage Propane Partners, L.P., a Delaware
limited partnership.
"Heritage OLP" means Heritage Operating, L.P., a Delaware limited
partnership.
"Heritage Parties" means Heritage MLP and Heritage OLP.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means patents, trademarks, service marks, trade
names, service names, logos, marks, designs, copyrights and similar rights, and
all registrations, applications, licenses and rights with respect to any of the
foregoing.
"Investments" is defined in the Stock Purchase Agreement.
"IRS" means the Internal Revenue Service.
"Knowledge of the Specified U.S. Propane Persons" means the actual
knowledge of the Specified U.S. Propane Persons after making appropriate inquiry
in accordance with Section 4.28(h) and Section 6.15(b).
"Knowledge of the Specified Heritage Persons" means the actual
knowledge of the Specified Heritage Persons after making appropriate inquiry in
accordance with Section 3.25(h) and Section 6.15(a).
"Law" means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration, or interpretative or
advisory opinion or letter of a Governmental Authority having valid
jurisdiction.
"Legal Expenses" means the reasonable out-of-pocket fees, costs and
expenses of any kind incurred by any Person entitled to indemnification pursuant
to Article 9 in investigating, preparing for, defending against or providing
evidence, producing documents or taking other action with respect to any claim
as to which such person is entitled to indemnification pursuant to Article 9.
"LLC" means U.S. Propane, L.L.C., a Delaware limited liability company.
Exhibit 1.1 - 5
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
71
"Losses" means losses, damages, liabilities, claims, costs and expenses
(including, without limitation, related Legal Expenses), but excluding losses,
damages, liabilities, claims, costs and expenses incurred in connection with or
relating to lost profits or special, consequential, exemplary or punitive
damages.
"LP" means U.S. Propane, L.P., a Delaware limited partnership.
"LP Agreement" means the Amended and Restated Agreement of Limited
Partnership of the LP.
"Other Parties" means, with respect to a Party, each Party other than
such Party and its Affiliates.
"Parties" means, collectively, each of the parties named in the
Preamble.
"Permits" means licenses, permits, franchises, consents, approvals,
variances, exemptions and other authorizations of or from Governmental
Authorities.
"Permitted Encumbrances" with respect to a Party, means (a) the
Encumbrances set forth in the Disclosure Letters or the Schedules, as the case
may be, and specifically identified as such, (b) liens for Taxes not yet due and
payable or the validity of which is being contested in good faith by appropriate
legal proceedings and for which adequate reserves have been set aside, (c)
statutory liens (including materialmen's, mechanic's, repairmen's, landlord's
and other similar liens) arising in connection with the ordinary course of
business securing payments not yet due and payable or, if due and payable, the
validity of which is being contested in good faith by appropriate legal
proceedings and for which adequate reserves have been set aside, and (d) such
imperfections or irregularities of title, if any, as (i) are not substantial in
character, amount or extent and do not materially detract from the value of the
property subject thereto, (ii) do not materially interfere with either the
present or intended use of such property and (iii) do not, individually or in
the aggregate, materially interfere with the conduct of the business of such
Party.
"Person" means any individual, corporation, firm, partnership, limited
partnership, limited liability company, joint venture, association, joint-stock
company, trust, enterprise, other entity, unincorporated association or
Governmental Authority.
"Pledge Agreement" means any of the Pledge Agreements dated as of
December 10, 1998, between Heritage GP and certain of the Heritage GP
Stockholders.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Authority.
"Restricted Unit Plan" means the Restricted Unit Plan of Heritage GP
dated as of June 28, 1996.
Exhibit 1.1 - 6
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
72
"Selected Employee" means an Employee who accepts an employment offer
and becomes an employee of Heritage GP or Service Corp., as the case may be.
"Software" means computer software, including systems software,
documentation and object and source codes.
"Specified Heritage Persons" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ and G.A. ▇▇▇▇.
"Specified U.S. Propane Persons" means the principal executive officer
of each of the Contributed Subs existing on the date of this Agreement.
"Subordinated Unit" means a Subordinated Unit, as defined in the
Heritage MLP Partnership Agreement.
"Subsidiary" means as to any Person, (a) any corporation more than 50
percent of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(excluding stock of any class or classes of such corporation that might have
voting power by reason of the happening of any contingency) is at the time owned
by such Person and/or one or more Subsidiaries of such Person and (b) any
partnership, limited partnership, limited liability company, joint venture,
association, joint-stock company, trust, enterprise, other entity or
unincorporated association in which such Person and/or one or more Subsidiaries
of such Person has more than a 50 percent equity interest at the time.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"Taxes" means any income taxes or similar assessments or any sales,
gross receipts, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax imposed
by any United States federal, state or local (or any foreign or provincial)
taxing authority, including any interest, penalties or additions attributable
thereto.
"Technology" means trade secrets, confidential information (whether or
not of a technological or commercial nature), proprietary information,
inventions, technical data, spreadsheets, technical plans and drawings,
blueprints, general specifications, tooling specifications, purchase
specifications, know-how, formulae, processes, procedures, research records,
records of inventions, test information, market surveys and marketing know-how.
"Transferred Assets" means the Assets of the Contributed Subs, other
than the Excluded Assets described in Section 1.1(b) of the Disclosure Letters.
When used with respect to the LP, "Transferred Assets" means the Transferred
Assets of all of the Contributed Subs.
Exhibit 1.1 - 7
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
73
"Transferred Contracts" means all of the Contracts identified in
Section 4.18(a) of the Disclosure Letters and each Contract relating to or used
in connection with the Business that was entered into in the ordinary course of
business and that is not required to be identified in Section 4.18(a) of the
Disclosure Letters.
"U.S. Propane Entities" means the LP and each of the Contributed Subs.
Exhibit 1.1 - 8
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
74
EXHIBIT 2.4
CONVEYANCE AND ASSIGNMENT AGREEMENT
This Conveyance and Assignment Agreement (this "Agreement"), dated as
of ________, 2000, is entered into by and between U.S. Propane, L.P., a Delaware
limited partnership ("U.S. Propane") and Heritage Propane Partners, L.P., a
Delaware limited partnership ("Heritage").
ARTICLE 1
PURPOSE
This Agreement is expressly made subject to the terms and conditions of
that certain Contribution Agreement dated as of __________, 2000, among U.S.
Propane, Heritage and the other parties thereto (the "Contribution Agreement").
All capitalized terms used herein shall have the meanings given to such terms in
the Contribution Agreement, unless otherwise defined herein. This Agreement is
intended only to effect the transfer of the Contributed Interest (defined below)
to Heritage as provided for in the Contribution Agreement and shall be governed
in accordance with the terms and conditions of the Contribution Agreement. In
the event of a conflict between the terms of this Agreement and the terms of the
Contribution Agreement, the terms of the Contribution Agreement shall prevail.
For purposes of this Agreement "Contributed Interest" shall mean all of U.S.
Propane's member interest in ______________________, a Delaware limited
liability company.
ARTICLE 2
CONVEYANCE TO HERITAGE
2.1 CONVEYANCE. U.S. Propane hereby grants, transfers, assigns and
conveys to Heritage, its successors and assigns, for its and their own use
forever, all right, title and interest in and to the Contributed Interest in
exchange for (i) a limited partner interest in Heritage and (ii) other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and Heritage hereby accepts the Contributed Interest, as a
contribution to the capital of Heritage.
TO HAVE AND TO HOLD the Contributed Interest unto Heritage, its
successors and assigns, together with all and singular the rights and
appurtenances thereto in any wise belonging, subject, however, to the terms and
conditions stated in this Agreement, forever.
2.2 DISCLAIMER OF WARRANTIES. (a) U.S. PROPANE IS CONVEYING THE
CONTRIBUTED INTEREST WITHOUT REPRESENTATION OR WARRANTY, WHETHER EXPRESS,
IMPLIED OR STATUTORY (ALL OF WHICH U.S. PROPANE HEREBY DISCLAIMS), AS TO TITLE
OR ANY OTHER MATTER WHATSOEVER, EXCEPT AS PROVIDED IN THE CONTRIBUTION
AGREEMENT.
Exhibit 2.4 - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
75
(b) U.S. Propane and Heritage agree that the disclaimers contained in
this Section 2.2 are "conspicuous" disclaimers. Any covenants implied by statute
or law by the use of the words "grant," "convey," "bargain," "sell," "assign,"
"transfer," "deliver" or "set over" or any of them or any other words used in
this Agreement are hereby expressly disclaimed, waived and negated.
2.3 RIGHTS AND OBLIGATIONS. Nothing in this Agreement is intended to or
shall expand or limit the rights or obligations of U.S. Propane under the
Contribution Agreement.
ARTICLE 3
MISCELLANEOUS
3.1 POWER OF ATTORNEY. U.S. Propane hereby constitutes and appoints
Heritage, its successors and assigns, its true and lawful attorney-in-fact with
full power of substitution for it and in its name, place and stead or otherwise
on behalf of U.S. Propane, its successors and assigns, and for the benefit of
Heritage, its successors and assigns, to demand and receive from time to time
the Contributed Interest and to execute in the name of U.S. Propane and its
successors and assigns instruments of conveyance, instruments of further
assurance and to give receipts and releases in respect of the same, and from
time to time to institute and prosecute in the name of Heritage or U.S. Propane
for the benefit of Heritage, as may be appropriate, any and all proceedings at
law, in equity or otherwise which Heritage, its successors and assigns may deem
proper in order to collect, assert or enforce any claims, rights or titles of
any kind in and to the Contributed Interest, and to defend and compromise any
and all actions, suits or proceedings in respect of any of the Contributed
Interest and to do any and all such acts and things in furtherance of this
Agreement as Heritage, its successors or assigns shall deem advisable. U.S.
Propane hereby declares that the appointment hereby made and the powers hereby
granted are coupled with an interest and are and shall be irrevocable and
perpetual and shall not be terminated by any act of U.S. Propane, its successors
or assigns or by operation of law.
3.2 FURTHER ASSURANCES. From time to time after the date hereof, and
without any further consideration, U.S. Propane shall execute, acknowledge and
deliver all such additional deeds, assignments, bills of sale, conveyances,
instruments, notices, releases, acquittances and other documents, and will do
all such other acts and things, all in accordance with applicable law, as may be
necessary or appropriate (i) more fully to assure Heritage, its successors and
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges by this Agreement granted to Heritage or intended so to be
and (ii) to more fully and effectively carry out the purposes and intent of this
Agreement.
3.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
Exhibit 2.4 - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
76
3.4 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
3.5 DEED; ▇▇▇▇ OF SALE; ASSIGNMENT. To the extent required by
applicable law, this Agreement shall also constitute a "deed," "▇▇▇▇ of sale" or
"assignment" of the Contributed Interest.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
HERITAGE PROPANE PARTNERS, L.P.
A DELAWARE LIMITED PARTNERSHIP
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
U.S. PROPANE, L.P.,
A DELAWARE LIMITED PARTNERSHIP,
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Exhibit 2.4 - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
77
EXHIBIT 2.6
NET WORKING CAPITAL
PART 1
Definition of Net Working Capital
As used herein, the term "Net Working Capital" shall be determined for
the LP on a consolidated basis including all of the assets contributed as of the
Closing Date directly to Heritage OLP by the LP and all assets held by each
Contributed Sub as of the Closing Date and shall mean the current assets minus
the assumed liabilities of the LP as of the Closing Date, as such items are
determined in accordance with GAAP but subject to the adjustments specified
below under "Adjustments to Current Assets and Assumed Liabilities."
Adjustments to Current Assets and Assumed Liabilities
Current assets include:
o Cash and cash equivalents
o Accounts receivable
o Notes receivable
o Liquids inventory
o Appliances
o Non-consumable operating materials and supplies (based on a
physical inventory conducted within 60 days of the Closing
Date and adjustment to the Closing Date if necessary),
including parts, fittings and regulators
o Prepaid expenses
o Prepaid utilities, service charges and rentals
Assumed Liabilities include:
o Accounts payable
o Accrued liabilities (such as vacation and payroll)
o Deferred credits (such as customer deposits, escheat and
Permits)
o Non-income taxes payable (such as sales taxes, motor fuel
taxes and property taxes)
o Present value of vehicle leases, discounted at 10% (discount
rate subject to auditor approval)
o The present value of payment obligations under noncompetition
agreements, to the extent included in the balance sheet and
not expensed, discounted at 10% (discount rate subject to
auditor approval)
o Credit balances on accounts receivable (prebuys, overpayments,
budget plans)
Exhibit 2.6 - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
78
Assumed Liabilities do not include debt of the Contributed Subs repaid in
accordance with Section 2.2(e) of the Contribution Agreement.
PART 2
Valuation of Net Working Capital
The Net Working Capital shall be valued as of the Closing Date using
the following valuation conventions:
Except to the extent the LP provides sufficient documentation to
reasonably support a different valuation percentage, each account
receivable shall be valued based on a percentage of its face amount
based on the age of such account or note receivable as of the Closing
Date as follows:
Age of Receivable in Days Percentage
0-30 100%
31-90 90%
91-120 75%
>120 50%
Liquids inventory:
1. Working inventories are those gallons which are held at
branch/satellite facilities and are used in the normal course
of business for daily usage/deliveries. Those inventories
should be valued at the laid-in market prices, which is based
on applicable pipeline posted prices at closing.
2. Supply position inventories are those inventories which have
been purchased for future delivery or placed into storage for
use as demand requires. These volumes could represent gallons
that have been pre-sold or bought to protect against
anticipated possible cost changes. These inventories should be
valued at cost, including freight, storage and hedging cost.
Each appliance shall be valued based on a percentage of original cost
based on the age of such appliance as of the Closing Date as follows:
Age of Appliance in Months Percentage
0-12 100%
13-18 75%
>18 0%
Exhibit 2.6 - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
79
Non-consumable operating materials and supplies shall be valued at the
lower of cost or fair market value as of the Closing Date.
Prepaid expenses shall be valued as of the Closing Date in accordance
with GAAP.
All other items comprising Net Working Capital and not otherwise
addressed herein shall be valued as of the Closing Date in accordance with GAAP.
Exhibit 2.6 - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
80
EXHIBIT 6.14
HERITAGE OPERATING, L.P.
PRIVATE MEDIUM TERM NOTE FINANCING PROGRAM
ISSUANCE OF $120 MILLION SENIOR SECURED NOTES
SUMMARY OF CERTAIN TERMS AND CONDITIONS
Presented below is a Summary of Certain Terms and Conditions associated with
Heritage Operating, L.P.' s proposed issuance of Senior Secured Notes.
Please refer to the attached Master Note Agreement for a complete
description of the terms and conditions associated with this proposed
issuance of Senior Secured Notes.
ISSUER Heritage Operating, L.P. (the "Company").
SECURITIES Senior Secured Notes of the Company (the
"Notes").
RANKING The Notes will be senior secured
obligations of the Company and shall rank
PARI PASSU with other senior secured
Indebtedness of the Company, including
additional series of Notes (each such
additional series of Notes shall hereafter
be referred to as "Future Notes") issued
under the Program (Series B, Series C,
etc.) Collectively, the Series A Notes and
each series of Future Notes are hereafter
referred to as the "Notes".
PROGRAM Private Medium Term Note Financing Program
(the "Program") of up to $225 million.
INITIAL ISSUANCE $120.0 million (the "Series A Notes").
ISSUANCE OF FUTURE NOTES For a 12-month period following the
Closing Date, the Company shall have the
right, but not the obligation, to offer
one or more series of Future Notes for
sale pursuant to the Program, provided
that the principal amount of the Notes
outstanding under the Program shall not,
at any time, exceed $225 million. Each
series of Future Notes shall be offered in
the minimum denomination of $5 million.
In the event that the Company elects to
offer Future Notes for sale under the
Program, the Company may elect to sell the
Future Notes to one or more Designated
Institutional Investors, including the
Note Purchasers; Designated Institutional
Investors purchasing Future Notes are
hereafter referred to as "Future Note
Purchasers". All Notes issued by the
Company pursuant to the Program shall be
governed by the terms of the Master Note
Agreement (as defined herein).
Notwithstanding the above, the Company
shall not sell or offer to sell Future
Notes, if a Default or an Event of Default
has occurred and is continuing.
Designated Institutional Investors shall
mean the Note Purchasers and a limited
number of additional institutional
investors (not to exceed seven (7) in
number) which shall have the opportunity
to submit bids for each series of Future
Notes. See Future Note Bidding for a
description of the bidding process for
Future Notes.
Exhibit 6.14 - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
81
FINAL MATURITY AND AVERAGE LIFE SERIES A NOTES: 15 year final maturity,
with a 10 year average life.
FUTURE NOTES: To be determined.
CLOSING DATE SERIES A NOTES: As soon as practical, but
no later than July 31, 2000.
FUTURE NOTES: As negotiated between the
Company and the Future Note Purchaser(s),
but in any event no later than fifteen
(15) business days following the date of
agreement, between the Company and the
respective Future Note Purchaser(s), as to
the Final Maturity and Average Life and
Interest Coupon on the series of Future
Notes to be issued by the Company.
INTEREST COUPON The Interest Coupon on the Series A Notes
and on each series of Future Notes will be
equal to the sum of: (i) a credit spread
appropriate for the Average Life of the
Notes being issued; and (ii) the yield to
maturity of the U.S. Treasury note having
a final maturity closest to the Average
Life of the Notes being issued by the
Company. Interest will be payable not more
frequently than quarterly in arrears and
calculated on a basis of 30/360 days.
NOTE PURCHASERS One or more accredited institutional
investors as determined by the Securities
Act of 1933 who agree to purchase the
Series A Notes on terms acceptable to the
Company. Any Series A Note Purchaser may
also purchase any series of Future Notes
issued by the Company; however, the
purchase of any series of Notes issued
under the Program by a Designated
Institutional Investor does not obligate
that Investor to purchase, or bid to
purchase, any subsequent series of Future
Notes.
USE OF PROCEEDS The proceeds of the issuance of the Series
A Notes will be utilized: (i) to acquire
the assets of U.S. Propane (the
"Acquisition Transaction"), (ii) to pay
for costs relating to the Acquisition
Transaction and the Initial Issuance and
(iii) for general corporate purposes.
PRINCIPAL REPAYMENT SERIES A NOTES: Ten (10) equal annual
installments of principal, beginning at
the end of year six.
FUTURE NOTES: To be determined based on
the Final Maturity and Average Life for
each series of Future Notes.
OPTIONAL PREPAYMENT The Company may, at any time, prepay all
or a portion of any series of Notes
outstanding for a price determined by
discounting the remaining mandatory
principal and interest payments due on the
Notes at a discount rate equal to the
lesser of: (i) the Interest Coupon on the
series of Notes to be prepaid; or (ii) the
sum of 0.50% plus the yield on the U.S.
Treasury note having a remaining term to
maturity which most closely approximates
the then-remaining average life of the
series of Notes to be prepaid.
Provided that there is no Default or Event
of Default that has occurred and is
continuing, the Company shall have the
right to prepay any series of Notes issued
under this Program without requiring
pro-rata prepayment on all series of the
Notes.
Exhibit 6.14 - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
82
CONTROL EVENT PREPAYMENT Upon the occurrence of a Control Event,
each Note Purchaser shall have the right,
but not the obligation, to request a
prepayment of that Note Purchaser's Notes.
In the event of such election, then the
prepayment amount shall be equal to the
sum of: (i) the principal amount of the
Notes being prepaid; (ii) accrued but
unpaid interest to the date set for such
prepayment; and (iii) a premium of one
percent (1.00%) of the principal amount of
the Notes being prepaid.
DOCUMENTATION Sale of the Series A Notes and each series
of Future Notes shall be made pursuant to
a Master Note Agreement (the "Agreement"),
which will contain standard
representations and warranties typically
found in agreements evidencing
Indebtedness similar to the Notes.
Each series of Future Notes shall also
require that the Company (i) re-affirm its
compliance with all covenants,
representations and terms of the Agreement
and (ii) provide opinions of counsel and
other appropriate documentation reflecting
authorization to issue the Future Notes.
FINANCIAL COVENANTS Financial covenants shall be applied to
the Company and its Subsidiaries on a
consolidated basis in accordance with U.S.
generally accepted accounting principles
("GAAP").
References to specific clauses of
Financial Covenants presented below are
strictly for purposes of this Summary of
Certain Terms and Conditions and should
not be construed to be references to
specific clauses of the Negative Covenants
or Affirmative Covenants incorporated into
the Agreement, unless otherwise noted.
Financial Ratios
(i) Ratio of Consolidated Funded
Indebtedness to Consolidated EBITDA
shall not exceed 5.25 to 1.00;
(ii) Ratio of Consolidated EBITDA to
Consolidated Interest Expense shall
not be less than 2.25 to 1.00; and
(iii) Ratio of Adjusted Consolidated
Funded Indebtedness to Adjusted
Consolidated EBITDA shall not exceed
6.25 to 1.00.
Limitation on Indebtedness. The Company
will not, and will not permit any of its
Subsidiaries to, create, incur, assume or
otherwise become directly or indirectly
liable with respect to, any Indebtedness,
except:
(i) Existing Indebtedness;
(ii) Indebtedness incurred to replace,
extend, renew, refund or refinance
any existing Indebtedness provided
that such new Indebtedness may not
have an average life to maturity
shorter than the remaining average
life to maturity of Indebtedness
being extended, renewed, refunded or
refinanced;
(iii) Indebtedness incurred under the
Revolving Working Capital Facility
for purposes permitted by such
facility, provided that the
aggregate principal amount of
Indebtedness permitted under this
clause (iii) shall not at any time
exceed an amount equal to (x)
$50,000,000 less (y) the amount of
Indebtedness, if any, outstanding
under the Revolving Working Capital
Facility permitted by Limitation on
Indebtedness clause (vi) below;
Exhibit 6.14 - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
83
(iv) Indebtedness incurred under the
Acquisition Facility for purposes
permitted by such facility and up
to $3,000,000 of Indebtedness owing
from time to time to the seller(s)
in asset acquisitions (in addition
to non-compete obligations),
provided that the aggregate
principal amount of Indebtedness
permitted under this clause shall
not exceed $50,000,000;
(v) Indebtedness for which any
Subsidiary of the Company may
become liable and which is owed to
the Company or to a Wholly-Owned
Subsidiary of the Company;
(vi) Heritage Service Corp. may incur
Indebtedness pursuant to the
Revolving Working Capital Facility
provided that the aggregate
principal amount of Indebtedness
permitted under this clause (vi)
shall not at any time exceed
$3,000,000;
(vii) Acquired Indebtedness to the extent
that such Indebtedness existed at
the time such business, property or
assets were so acquired or
contributed, and if such
Indebtedness is secured by such
property or assets, such security
interest does not extend to or
cover any other property of the
Company or any of its Subsidiaries;
provided that (a) immediately after
giving effect to such acquisition
or contribution, the Company could
incur at least $1.00 of additional
Indebtedness pursuant to Limitation
on Indebtedness clause (ix) and
such Indebtedness was not incurred
in anticipation of such acquisition
or contribution;
(viii) M-P Oils Partnership may become and
remain liable with respect to
Indebtedness in an aggregate
principal amount not to exceed
$3,000,000, and the Company may
become and remain liable with
respect to Guarantees of such
Indebtedness of M-P Oils
Partnership and of Indebtedness of
Bi-State Propane, provided that the
aggregate amount of all Guarantees
permitted by this clause (viii)
shall not exceed $10,000,000;
(ix) Indebtedness of any Person that,
after the Closing Date, becomes a
Subsidiary of the Company, to the
extent that such Indebtedness
existed at the time such Person
became a Subsidiary, provided that
(a) immediately after giving effect
to such Person becoming a
Subsidiary of the Company, the
Company could incur at least $1.00
of additional Indebtedness in
compliance with Limitation on
Indebtedness clause (xii) contained
herein and (b) such Indebtedness
was not incurred in anticipation of
such Person becoming a Subsidiary
of the Company;
(x) Indebtedness incurred in respect of
capital leases and non-compete
obligations, provided that any Lien
in respect thereof is permitted by
pursuant to the Limitation on Liens
provisions of the Agreement;
(xi) Indebtedness incurred in the
ordinary course of business,
including but not limited to
performance bonds and bid bonds,
and Indebtedness created by checks,
drafts and such similar
instruments; and
Exhibit 6.14 - 4
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
84
(xii) Indebtedness not otherwise provided
for in (i) - (xi) above, if on the
date the Company or any of its
Subsidiaries becomes liable with
respect to any such additional
Indebtedness and immediately after
giving effect thereto, and to the
substantially concurrent repayment
of any other Indebtedness, (a) the
ratio of Consolidated EBITDA to
Consolidated Debt Service is equal
to or greater than 2.50 to 1.00,
and (b) no Default or Event of
Default shall exist.
Limitation on Liens. The Company will not,
and will not permit any Subsidiary to,
create, assume, incur or suffer to exist
any Lien to respect to any of its
properties or assets, except:
(i) Existing Liens at the Closing Date;
(ii) Liens existing on any property of a
Person at the time such Person
becomes a Subsidiary of the Company
or existing at the time of
acquisition upon any property
acquired by the Company or any of
its Subsidiaries at the time such
property is so acquired;
(iii) Liens created to secure all or any
part of the purchase price, or to
secure Indebtedness (other than
Parity Debt), incurred to pay all
or any part of the purchase price
or cost or to secure obligations
incurred in consideration of
non-compete agreements entered into
in connection with any such
acquisition, provided that any such
Lien shall be created
contemporaneously with, or within
180 days after, the acquisition or
construction of such property and
such Lien does not exceed an amount
equal to 85% of the fair market
value (100% in the case of
capitalized lease obligations and
35% in the case of non-compete
obligations) of such property;
(iv) Liens on property or assets of any
Subsidiary of the Company securing
Indebtedness of such Subsidiary
owing to the Company or a
Wholly-Owned Subsidiary;
(v) Liens (other than Liens securing
Indebtedness) on the property or
assets of any Subsidiary of the
Company in favor of the Company or
any other Wholly-Owned Subsidiary
of the Company;
(vi) Liens on the property or assets of
Heritage Service Corp. securing
Indebtedness permitted by clause
(vi) of Limitation of Indebtedness,
provided that (i) such Liens shall
at all times be confined to
property or assets having an
aggregate fair market value not
exceeding $6,000,000 and (ii) as a
result of any such Lien, no Default
or Event of Default shall exist;
(vii) Leases or subleases of equipment to
customers which do not materially
interfere with the conduct of the
business of the Company and its
Subsidiaries taken as a whole;
(viii) Liens incurred in the ordinary
course of business including, but
not limited to, Liens for taxes,
assessments, lessors, landlords,
easements, carriers, vendors,
workmen's compensation, and retiree
benefits; and
Exhibit 6.14 - 5
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
85
(ix) Liens renewing, extending or
refunding any Lien permitted
herein, provided that (a) the
principal amount of the
Indebtedness secured by any such
Lien shall not exceed the principal
amount of such Indebtedness
outstanding immediately prior to
the renewal, extension or refunding
of such Lien, and (b) no assets are
encumbered by any such Lien other
than the assets encumbered
immediately prior to such renewal,
extension or refunding shall be
encumbered thereby.
Priority Debt. The Company will not permit
Priority Debt, at any time, to exceed the
sum of (i) $13,000,000 plus (ii) 10% of
the then Consolidated Tangible Net Worth
(to the extent that such Consolidated
Tangible Net Worth is positive).
Restricted Payments. The Company will not
directly or indirectly declare, order,
pay, make or set apart any sum of any
Restricted Payment, except that the
Company may declare or order, and make,
pay or set apart, during each fiscal
quarter a Restricted Payment if (i) such
Restricted Payment, together with all
other Restricted Payments during such
fiscal quarter, do not in the aggregate
exceed the amount of Available Cash with
respect to the immediately preceding
quarter, and (ii) no Default or Event of
Default exists before or immediately after
any such proposed action.
Consolidation and Mergers. The Company
will not, and will not permit any
Subsidiary to, consolidate with or merge
into any other Person or permit any other
Person to consolidate with or merge into
it, except that:
(i) Any Subsidiary or the Company may
consolidate with or merge into the
Company or a Wholly-Owned
Subsidiary of the Company, as the
case may be, provided that the
Company or a Wholly-Owned
Subsidiary of the Company, as
applicable, shall be the surviving
Person;
(ii) Any entity may consolidate with or
merge into the Company or a
Subsidiary of the Company if the
Company or a Subsidiary shall be
the surviving Person and if,
immediately after giving effect to
such transaction, (1) the Company
and its Subsidiaries (x) shall have
Consolidated Net Worth, of not less
than the Consolidated Net Worth of
the Company immediately prior to
the effectiveness of such
transaction and (y) could incur at
least at $1.00 of additional
Indebtedness in compliance with the
Financial Covenants and clause (xi)
of the Limitation on Indebtedness
provision contained herein; (2)
substantially all of the assets of
the Company and its Subsidiaries
shall be located, and substantially
all of their business shall be
conducted, within the continental
U.S. or Canada; and (3) no Default
or Event of Default shall exist and
be continuing; and
(iii) The Company may consolidate with or
merge with or into any other entity
if (1) the surviving entity is a
corporation or limited partnership
organized and existing under the
laws of the U.S. or any state
thereof; (2) such corporation or
limited partnership expressly and
unconditionally assumes the
obligations pursuant to the Notes;
(3) immediately after giving effect
to such transaction, such
corporation or limited partnership
(x) shall have Consolidated Net
Exhibit 6.14 - 6
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
86
Worth, of not less than the
Consolidated Net Worth of the
Company immediately prior to the
effectiveness of such transaction
and (y) could incur at least at
$1.00 of additional Indebtedness in
compliance with Financial Covenants
and clause (xi) of the Limitation
on Indebtedness provisions
contained herein; and (4) no
Default or Event of Default shall
exist and be continuing.
Limitation on Sale of Assets. The Company
will not, and will not permit any other
Person to, sell, lease, abandon or
otherwise dispose of all or substantially
all its assets, except that:
(i) Any Subsidiary of the Company may
sell, lease or otherwise dispose of
all or substantially all its assets
to the Company or a Wholly-Owned
Subsidiary of the Company;
(ii) The Company may sell, lease or
otherwise dispose of all or
substantially all its assets to any
corporation or limited partnership
into which the Company could be
consolidated or merged in
compliance with Mergers and
Consolidations herein;
(iii) The Company and any Subsidiary may
sell, lease, abandon or otherwise
dispose any of its assets or issue
or sell Capital Stock of any
Subsidiary of the Company, whether
in a single transaction (an Asset
Sale) or a series of related
transactions if:
(a) Immediately after giving effect
to such proposed disposition no
Default or Event of Default
shall exist and be continuing
(and, in the case of any Asset
Sale involving assets that
generate EBITDA of $500,000 and
such Asset Sale involves
consideration of $2,500,000 or
more, an officer's certificate
shall be provided to the Note
Purchasers);
(b) Such sale or other disposition
is for cash consideration or
for consideration consisting of
not less than 75% cash and not
more than 25% interest-bearing
promissory notes; provided,
that the 75% limitation
referred to in this clause (b)
shall not apply to any Asset
Sale consisting solely of a
sale or other disposition of
land and buildings for an
interest bearing promissory
note as long as the amount of
such promissory note does not
exceed $250,000;
(c) One of the following two
conditions must be satisfied:
(I) (x) the aggregate Net
Proceeds of all assets
so disposed of over the
immediately preceding
12-month period does not
exceed $3,000,000 and
(y) the aggregate Net
Proceeds of all assets
so disposed of from the
Closing Date through the
date of such disposition
does not exceed
$10,000,000; or
(II) In the event that such
Net Proceeds (less the
amount thereof
previously applied in
accordance with clause
(x) of this clause
"(c)(II)") exceeds the
limitations determined
pursuant to subsections
(x) and (y) of clause
"(c)(I)" ("Excess Sale
Proceeds"), the Company
shall
Exhibit 6.14 - 7
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
87
within 12 calendar
months of the date on
which such Net Proceeds
exceeded any such
limitation, cause an
amount equal to such
Excess Sale Proceeds to
be applied (x) to the
acquisition of assets in
replacement of the
assets so disposed of or
of assets which may be
productively used in the
U.S. or Canada in the
conduct of the Business,
or (y) to the extent not
applied pursuant to the
immediately preceding
clause (x), to offer to
make prepayments on the
Notes and allocated, on
the basis specified for
such prepayments in the
definition of Allocable
Proceeds, to offer to
repay other Parity Debt
(other than Indebtedness
under clause (iii) of
the Limitations on
Indebtedness contained
herein); and
(d) The Company shall have
delivered to the Noteholders a
certificate of the chief
financial officer or an
authorized financial officer
certifying that such sale or
other disposition is for fair
value and is in the best
interests of the Company.
Notwithstanding the foregoing, Asset Sales
shall not be deemed to include: (1) any
transfer of assets or issuance or sale of
Capital Stock by the Company or any of its
Subsidiaries to the Company or a
Wholly-Owned Subsidiary of the Company,
(2) any transfer of assets or issuance or
sale of Capital Stock by the Company or
any of its Subsidiaries to any Person in
exchange for, or the Net Proceeds of which
are applied within 12 months to the
purchase of, other assets used in a line
of business permitted herein, and having a
fair market value not less than that of
the assets so transferred or Capital Stock
so issued or sold and (3) any transfer of
assets pursuant to an Investment permitted
herein.
OTHER COVENANTS Customary non-financial covenants
including, but not limited to, the
following:
(i) Maintenance of business lines;
(ii) Maintenance of property in good
working condition;
(iii) Maintenance of appropriate programs
of insurance;
(iv) Payment of all taxes unless contest
in good faith;
(v) Maintenance of partnership or
corporate existence, rights and
franchises;
(vi) Compliance with applicable laws,
ERISA and environmental
regulations;
(vii) Maintenance of financial statements
in accordance with GAAP; and
(viii) Transactions with Affiliates
conducted on an arms-length basis.
FINANCIAL STATEMENTS AND The Company shall provide:
CERTIFICATION
Exhibit 6.14 - 8
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
88
(i) Quarterly unaudited consolidated
financial statements within 50 days
after the end of such quarterly
period, certified by an authorized
financial officer;
(ii) Annual audited consolidated
financial statements within 95 days
after the end of each fiscal year;
and
(iii) Quarterly compliance certificates
certified by an authorized
financial officer.
SEC filings for the Master Partnership of
Forms 10K and 10Q shall satisfy the
preceding financial statement reporting
requirement as long as the Consolidated
Net Income of the Company accounts for at
least 95% of the net income of the Master
Partnership for the appropriate reporting
period and all statements required to be
delivered pursuant to this clause with
respect to the Company are included in
such Form 10K and 10Q.
REPRESENTATIONS AND WARRANTIES Refer to the Agreement.
EVENTS OF DEFAULT To include but not limited to:
(i) The Company defaults in the payment
of principal of, or premium, if
any, on any Note;
(ii) The Company defaults in the payment
of any interest on any Notes for
more than 5 days;
(iii) The Company or any Subsidiary of
the Company defaults in any payment
of principal or interest on any
Parity Debt or any other
Indebtedness other than the Notes,
provided that the aggregate amount
of all Indebtedness as to which
such a default (payment or other)
shall occur and be continuing
exceeds $5,000,000;
(iv) Bankruptcy, insolvency, dissolution
or liquidation of the General
Partner, the Company or any
Significant Subsidiary Group;
(v) The Specified Entities shall own,
directly or indirectly through
Wholly-Owned Subsidiaries, in the
aggregate less than 51% of the
Capital Stock of the General
Partner; or
(vi) Either Designated Current Manager
shall, at any time during the
Lock-up Period applicable to such
Designated Current Manager, own,
directly or indirectly, less than
50% of the Common Units of the
Master Partnership owned, directly
or indirectly, by such Designated
Current Manager immediately after
giving effect to the Proposed
Reorganization.
REMEDIES Upon the occurrence of an Event of
Default, the Note Purchasers and Future
Note Purchasers, as applicable shall
possess all of the rights and remedies
customarily available to investors in
senior Indebtedness including: (i)
automatic acceleration of the Notes in the
event of bankruptcy; (ii) acceleration by
any Note Purchaser in the event of a
monetary Event of Default; and (iii) under
non-monetary Events of
Exhibit 6.14 - 9
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
89
Default, acceleration of the Notes after
consent from Note Purchasers and Future
Note Purchasers accounting for at least
51% of the aggregate outstanding principal
amount of the Notes.
AMENDMENTS Amendments to the Agreement and the
associated documentation shall require the
approval of Note Purchasers and Future
Note Purchasers accounting for at least
51% of the aggregate principal amount of
the outstanding Notes. Notwithstanding the
foregoing, any amendment which alters the
payment terms of the Notes or the voting
rights under the Agreement shall require
the consent of 100% of the Note Purchasers
and Future Note Purchasers.
CERTAIN DEFINITIONS Following below are certain definitions
associated with this Summary of Certain
Terms and Conditions. Capitalized terms
not defined in this Summary of Certain
Terms and Conditions are incorporated by
reference from the Agreement.
Adjusted Consolidated EBITDA shall mean,
as of any date of determination for any
applicable period, Consolidated EBITDA
calculated:
(x) with respect to the
consolidated group comprised of the
General Partner, the Master Partnership
and the Company and its Subsidiaries
(rather than with respect to the
consolidated group comprised of the
Company and its Subsidiaries), and
(y) as if the terms 'Consolidated
Non-Cash Charges', 'Consolidated Net
Income', 'Consolidated Interest Expense',
`Consolidated Income Tax Expense', 'Asset
Sale', and 'Asset Acquisition', were
calculated with respect to the
consolidated group comprised of the
General Partner, the Master Partnership
and the Company and its Subsidiaries
(rather than with respect to the
consolidated group comprised of the
Company and its Subsidiaries).
Adjusted Consolidated Funded Indebtedness
shall mean Consolidated Funded
Indebtedness calculated with respect to
the consolidated group comprised of the
General Partner, the Master Partnership
and the Company and its Subsidiaries
(rather than with respect to the
consolidated group comprised of the
Company and its Subsidiaries).
Designated Current Managers shall mean ▇.
▇. ▇▇▇▇▇ and H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, current
executive officers of the General Partner,
together with, in the case of either such
executive officer, the heirs of, and
trusts for the benefit of family members
controlled by, such executive officer.
Lock-Up Period shall mean, with respect to
any Designated Current Manager, the period
from the date of the closing of the
Proposed Reorganization to the earlier to
occur of (x) the third anniversary of such
closing, and (y) the first date on which
such Designated Current Manager shall
cease to be employed by the General
Partner, the Master Partnership or any of
their respective Affiliates.
Proposed Reorganization shall have the
meaning set forth in the introductory
portion of the Third Amendment Agreement,
dated as of May 31, 2000, with respect to
this Agreement.
Exhibit 6.14 - 10
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
90
Specified Entities shall mean and one or
more of the following entities: (i) Atmos
Energy Corporation, a Texas and Virginia
corporation, (ii) Piedmont Natural Gas
Company, Inc., a North Carolina
corporation, (iii) AGL Resources, Inc., a
Georgia corporation, and (iv) TECO Energy,
Inc., a Florida corporation, or a
Successor to any entity referred to in
clause (i), (ii), (iii) or (v) of this
definition.
Successor shall mean, with respect to a
Specified Entity, any entity in which the
holders of the capital stock of such
Specified Entity outstanding immediately
prior to a consolidation, acquisition or
merger involving such Specified Entity
hold, directly or indirectly through a
Wholly-Owned Subsidiary, at least a
majority of the Capital Stock immediately
after such consolidation, acquisition or
merger.
ISSUING EXPENSES The Company shall be responsible for all
fees and expenses associated with the
issuance of the Notes, including the fees
of the designated special counsel of the
Note Purchasers and Future Note
Purchaser(s).
PLACEMENT AGENT Glaucon Capital Partners, L.L.C. ("GCP").
FUTURE NOTE BIDDING GCP shall have the right to request that
each Designated Institutional Investor
update its indicative pricing for Future
Note series not more frequently than twice
a month. The Company shall then have the
right, but not the obligation, to select
one or more Designated Institutional
Investors to purchase the next series of
Future Notes. Until this Summary of
Certain Terms and Conditions has been
agreed to and all other requirements have
been satisfied, indicative prices obtained
from any Designated Institutional Investor
shall be subject to change at the
discretion of the Designated Institutional
Investor in question.
INVESTOR COUNSEL To be determined.
Exhibit 6.14 - 11
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
91
EXHIBIT 7.1(c)
[FORM OF OFFICER'S CERTIFICATE OF THE HERITAGE PARTIES]
OFFICER'S CERTIFICATE OF THE HERITAGE PARTIES
The undersigned, the [officer's title] of Heritage MLP, a Delaware
limited partnership ("Heritage MLP") and the [officer's title] of Heritage
Operating, L.P., a Delaware limited partnership ("Heritage OLP") hereby certify
to U.S. Propane, L.P., a Delaware limited partnership (the "LP"), on behalf of
Heritage MLP and Heritage OLP, respectively, that (a) all the representations
and warranties of the Heritage Parties contained in the Contribution Agreement
dated as of June 15, 2000, among the LP and the Heritage Parties (the
"Contribution Agreement"), and in any agreement, instrument or document
delivered by any of the Heritage Parties pursuant to the Contribution Agreement
on or prior to the Closing Date were true and correct, individually and in the
aggregate, in all material respects (other than those representations and
warranties of the Heritage Parties that are qualified by materiality or a
Heritage Material Adverse Effect, which shall be true and correct in all
respects) as of the date of the Contribution Agreement and are true and correct
as of today's date, and (b) each of the Heritage Parties has performed and
complied with, in all material respects, all covenants and agreements required
by the Contribution Agreement to be performed or complied with by it on or prior
to the Closing Date.
Capitalized terms used in this Certificate, but not defined herein,
have the meanings given to them in the Contribution Agreement.
This Certificate is the certificate required to be delivered by the
Heritage Parties under Section 7.1(c) of the Contribution Agreement.
This Certificate may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same Certificate.
Exhibit 7.1(c) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
92
Executed as of [the Closing Date].
HERITAGE PROPANE PARTNERS, L.P.
BY: HERITAGE HOLDINGS, INC.
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HERITAGE OPERATING, INC.,
BY: HERITAGE HOLDINGS, INC.,
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit 7.1(c) - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
93
EXHIBIT 7.1(e)
LIST OF MANDATORY CONSENTS
PUHCA, if required.
Exhibit 7.1(e) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
94
EXHIBIT 7.2(c)
[FORM OF OFFICER'S CERTIFICATE OF THE LP]
OFFICER'S CERTIFICATE OF THE LP
The undersigned, the [officer's title] of U.S. Propane, L.P., a
Delaware limited partnership (the "LP") hereby certifies to Heritage MLP, a
Delaware limited partnership ("Heritage MLP") and Heritage Operating, L.P., a
Delaware limited partnership ("Heritage OLP"), on behalf of the LP, that (a) all
the representations and warranties of the LP contained in the Contribution
Agreement dated as of June 15, 2000, among the LP and the Heritage Parties (the
"Contribution Agreement"), and in any agreement, instrument or document
delivered by the LP pursuant to the Contribution Agreement on or prior to the
Closing Date, were true and correct, individually and in the aggregate, in all
material respects (other than those representations and warranties of the LP
that are qualified by materiality or a U.S. Propane Material Adverse Effect,
which shall be true and correct in all respects) as of the date of the
Contribution Agreement and are true and correct as of today's date, and (b) the
LP has performed and complied with, in all material respects, all covenants and
agreements required by the Contribution Agreement to be performed or complied
with by it on or prior to the Closing Date.
Capitalized terms used in this Certificate, but not defined herein,
have the meanings given to them in the Contribution Agreement.
This Certificate is the certificate required to be delivered by the LP
under Section 7.2(c) of the Contribution Agreement.
Executed as of [the Closing Date].
LP
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit 7.2(c) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
95
EXHIBIT 7.2(e)
LIST OF MANDATORY CONSENTS
PUHCA, if required.
Exhibit 7.2(e) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
96
EXHIBIT 7.2(l)
FORM OF PROVISION FOR LEASE
LANDLORD HEREBY AGREES AND COVENANTS TO INDEMNIFY AND HOLD TENANT AND
ITS [PARENT,] AFFILIATES AND SUBSIDIARIES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, AGENTS, REPRESENTATIVES, EMPLOYEES, INVITEES,
SUCCESSORS AND ASSIGNS AND OTHER PARTIES CLAIMING BY, THROUGH OR UNDER TENANT
(COLLECTIVELY, "TENANT INDEMNITEE") HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES, DAMAGES, DEMANDS, CAUSES OF ACTION, EXPENSES (INCLUDING, WITHOUT
LIMITATION, EXPENSES OF LITIGATION, EXPENSES OF INVESTIGATING OR DEFENDING
CLAIMS, EXPENSES OF REMEDIATION AND COMPLIANCE OBLIGATIONS UNDER ENVIRONMENTAL
LAWS AND REASONABLE ATTORNEY'S FEES) OR LIABILITIES OF ANY KIND (INCLUDING
CLAIMS INVOLVING STRICT OR ABSOLUTE LIABILITY IN TORT AND FOR DAMAGE TO ANY
PROPERTY, OR FOR INJURIES TO OR SICKNESS OR DEATH OF ANY PERSON, INCLUDING, BUT
NOT LIMITED TO, LANDLORD, TENANT, ANY CONTRACTOR, ANY SUBCONTRACTOR OF ANY TIER
OR OF ANY EMPLOYEE OR INVITEE OF ANY OF SAID PARTIES), CAUSED BY, ARISING OUT OF
OR RELATED, DIRECTLY OR INDIRECTLY, TO ALL LIABILITIES OF LANDLORD OR ANY TENANT
INDEMNITEE WHETHER DIRECT OR INDIRECT, FIXED OR CONTINGENT, KNOWN OR UNKNOWN,
ACCRUED OR ABSOLUTE, MATURED OR UNMATURED OR DETERMINED OR DETERMINABLE,
RESULTING FROM OR ARISING OUT OF ANY VIOLATION
Exhibit 7.2(l) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
97
OR NON-COMPLIANCE WITH ANY ENVIRONMENTAL LAW, NOW [OR PREVIOUSLY] OR HEREINAFTER
IN EFFECT, BY LANDLORD, OR ANY PREDECESSOR-IN-INTEREST OF LANDLORD OR OTHER
OWNER OR OPERATOR OF ANY OF THE LEASED PREMISES, OR ANY OF THEIR RESPECTIVE
AFFILIATES (HEREIN COLLECTIVELY, "PREDECESSORS IN INTEREST"), PRIOR TO [OR
AFTER] THE COMMENCEMENT DATE OF THE LEASE WITH RESPECT TO THE FACILITIES OR ANY
PORTION OF THE LEASED PREMISES; OR ANY CLAIMS, LIABILITIES, OBLIGATIONS,
DAMAGES, COSTS AND EXPENSES, KNOWN OR UNKNOWN, FIXED OR CONTINGENT, ACCRUED OR
ABSOLUTE, MATURED OR UNMATURED OR DETERMINED OR DETERMINABLE, CLAIMED OR
DEMANDED BY THIRD PARTIES OR GOVERNMENTAL AUTHORITY AGAINST TENANT ARISING OUT
OF OR RESULTING FROM OWNERSHIP OR OPERATION OF THE LEASED PREMISES OR THE
FACILITIES BY LANDLORD OR ANY PREDECESSORS IN INTEREST PRIOR TO THE COMMENCEMENT
DATE EITHER IN VIOLATION OF OR NON-COMPLIANCE WITH ANY ENVIRONMENTAL LAW OR
INVOLVING HAZARDOUS MATERIALS. THIS INDEMNITY SHALL APPLY REGARDLESS OF WHETHER
OR NOT ANY SUCH DAMAGE, INJURY, SICKNESS OR DEATH IS CONTRIBUTED TO BY THE
NEGLIGENCE OR FAULT OF TENANT INDEMNITEE OR BY THE VIOLATION OF ANY LAW, STATUTE
OR REGULATION BY TENANT INDEMNITEE. THIS INDEMNITY WILL SURVIVE THE TERMINATION
OR EXPIRATION OF THE LEASE.
Exhibit 7.2(l) - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
98
APPENDIX TO EXHIBIT 7.2(l)
LIST OF PROPERTIES
1. Piedmont MGP site in Hickory, North Carolina.
2. Peoples MGP site at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇.
3. Peoples MGP site at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇.
Exhibit 7.2(l) - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
99
EXHIBIT 7.2(m)
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement"), dated as of
__________, 2000, is among AGL Resources, Inc., a Georgia corporation ("AGL
Parent"), AGL Investments, Inc., a Georgia corporation, AGL Propane Services,
Inc., a Delaware investment holding company, AGL Energy Corp., a Delaware
investment holding company, Atmos Energy Corporation, a Texas and Virginia
corporation ("Atmos Parent"), TECO Energy, Inc., a Florida corporation ("Peoples
Parent"), TECO Propane Ventures, LLC, a Delaware limited liability company,
Piedmont Natural Gas Company, Inc., a North Carolina corporation ("Piedmont
Parent"), PNG Energy Company, a North Carolina corporation, Piedmont Propane
Company, a North Carolina corporation, U.S. Propane, L.P., a Delaware limited
partnership (the "Partnership"), and U.S. Propane, L.L.C., a Delaware limited
liability company (the "General Partner") (collectively with any other Persons
that execute this Agreement, the "Parties").
RECITALS
1. The Venturers and others have entered into the Formation Agreement
pursuant to which the Partnership and the General Partner will be formed.
2. In partial consideration and as a material inducement to each Party
to enter into the Formation Agreement and the related transactions referenced
therein, the Parties have agreed to enter into this Agreement.
AGREEMENT
The Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the respective meanings set forth below or set forth in the Sections
referred to below (and grammatical variations of such terms have correlative
meanings):
"Acquired Venturer" is defined in Section 2.3(a).
"Acquiring Party" means any Restricted Party that acquires an interest
in a Minority Competitive Business.
"Acquiror" is defined in Section 2.3(a).
"Acquiror Competitive Business" is defined in Section 2.3(a).
"Acquisition Notice" is defined in Section 2.2(b).
Exhibit 7.2(m) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
100
"Business Day" means any day other than a Saturday, a Sunday or a
holiday on which national banking associations are closed in the State of New
York.
"Competitive Business" means, in the Competitive Business Area, all
business activities involving the purchase, sale, exchange, marketing, trading,
storage or transportation of propane, other than Permitted Activities.
"Competitive Business Area" means any state of the United States, the
territories of the United States and the District of Columbia.
"Enterprise Value" means the value of an Acquiring Party's interest in
a Competitive Business (a) agreed to by the Partnership and the Acquiring Party,
or (b) if no agreement is reached within 30 days after the date of the
Negotiation Notice, a value determined using the valuation procedures set forth
in Exhibit A.
"Formation Agreement" means the Formation Agreement, dated as of
February 15, 2000, among the Venturers, the General Partner, the Partnership and
the other parties thereto, as amended from time to time.
"Majority Competitive Business" means a Person that has earnings before
interest, taxes, depreciation and amortization of 50 percent or more that were
attributable to a Competitive Business in such Person's previous fiscal year.
"Minority Competitive Business" means a Person that (i) owns or holds
an interest in a Competitive Business and (ii) is not a Majority Competitive
Business.
"Negotiation Notice" is defined in Section 2.2(c).
"Notice Period" is defined in Section 2.2(c).
"Parent" means, with respect to a Person, (a) the Affiliate of such
Person that (i) Controls such Person and (ii) is not Controlled by any other
Person and (b) initially, AGL Parent, Atmos Parent, Peoples Parent and Piedmont
Parent, as applicable.
"Permitted Activities" is defined in Section 2.4.
"Purchase Notice" is defined in Section 2.2(e).
"Restricted Activities" is defined in Section 2.1(a).
"Restricted Party" means each Party other than the Partnership and the
General Partner.
"Term" is defined in Section 4.1.
1.2 OTHER DEFINED TERMS. Capitalized terms used in this Agreement and
not defined in this Agreement shall have the meanings given in the Formation
Agreement.
Exhibit 7.2(m) - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
101
1.3 CONSTRUCTION. Unless the context requires otherwise: (a) the gender
(or lack of gender) of all words used in this Agreement includes the masculine,
feminine, and neuter; (b) the term "include" or "includes" means "includes,
without limitation," and "including" means "including, without limitation"; (c)
references to Articles and Sections refer to Articles and Sections of this
Agreement; (d) references to Exhibits refer to the Exhibits attached to this
Agreement, which are made a part hereof for all purposes; (e) references to Laws
refer to such Laws as they may be amended from time to time, and references to
particular provisions of a Law include any corresponding provisions of any
succeeding Law; and (f) references to money refer to legal currency of the
United States of America.
ARTICLE 2
NONCOMPETITION AGREEMENT
2.1 NONCOMPETITION COVENANT.
(a) Except for Permitted Activities and except as provided in Sections
2.2 and 2.3, each Restricted Party hereby agrees not to engage, invest or
participate, directly or indirectly, in any Competitive Business during the
Term, including the ownership, management, operation or control of (or
participation in the ownership, management, operation or control of) any Person
engaged in any Competitive Business (collectively, the "Restricted Activities").
(b) Each Parent of a Venturer agrees to cause each of its Controlled
Affiliates that is not a Party hereto to comply with all provisions of this
Agreement that are applicable to its Controlled Affiliates that are a Party
hereto as if such provisions were applicable in full to such Controlled
Affiliates.
2.2 PARTNERSHIP'S PURCHASE RIGHT.
(a) Majority Competitive Business Acquisitions. No Restricted Party may
acquire an interest in, directly or indirectly, a Majority Competitive Business.
(b) Minority Competitive Business Acquisitions. If an Acquiring Party
has acquired an interest in, directly or indirectly, a Minority Competitive
Business, the Acquiring Party must give written notice of such acquisition to
the other parties and the Partnership (the "Acquisition Notice"). The Acquiring
Party shall give the Acquisition Notice no later than five Business Days after
the Acquiring Party first acquires any interest in such Minority Competitive
Business. The Acquisition Notice shall include all details of the Competitive
Business and copies of all instruments, proposals, drawings, agreements,
summaries, evaluations, and other information in the Acquiring Party's
possession related to such Competitive Business. The Acquisition Notice also
shall include an itemized statement detailing a reasonable good faith estimate
of the fair market value of such Competitive Business (determined as of the date
the Acquiring Party first acquired an interest in such Competitive Business) and
such other information as the Partnership reasonably requests. Within five
Business Days after receipt of the
Exhibit 7.2(m) - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
102
Acquisition Notice, the Partnership and the Other Venturers will execute a
confidentiality agreement in a form reasonably satisfactory to the Acquiring
Party.
(c) For 20 Business Days (the "Notice Period") after receipt of the
Acquisition Notice, the Partnership may elect by notice to the Acquiring Party
(the "Negotiation Notice") to negotiate to purchase all, but not less than all,
of such Acquiring Party's interest in such Competitive Business at the
Enterprise Value thereof. Immediately following the receipt of the Negotiation
Notice, the Partnership and the Acquiring Party shall initiate negotiations to
determine Enterprise Value.
(d) If the Partnership does not give Negotiation Notice to the
Acquiring Party within the Notice Period or if during the Notice Period the
Partnership furnishes written notice to the Acquiring Party of its election not
to acquire an interest in the Competitive Business (which notice shall be deemed
to be irrevocable), then the Partnership will have no further rights to acquire
any interest in the Competitive Business, and operating such Competitive
Business will be a Permitted Activity under this Agreement.
(e) Within ten Business Days after the final determination of the
Enterprise Value, the Partnership must provide notice (the "Purchase Notice") to
the Acquiring Party if the Partnership elects to purchase all, but not less than
all, of the Acquiring Party's interest in the Competitive Business. Within 40
Business Days of its receipt of such Purchase Notice, the Partnership shall pay
the Acquiring Party the Enterprise Value of such Competitive Business and the
Acquiring Party shall assign to the Partnership all of its interest in such
Competitive Business.
(f) If the Partnership does not provide a Purchase Notice within ten
Business Days after the final determination of the Enterprise Value or if the
Partnership elects in the Purchase Notice not to purchase such interest, then
(i) the Partnership will have no further rights to acquire an interest in the
Competitive Business, (ii) the Partnership will pay all appraisal costs related
to the determination of the Enterprise Value of such interest and (iii)
operating such Competitive Business will be a Permitted Activity under this
Agreement.
(g) The Acquiring Party shall not negotiate or enter into any
agreements or contracts related to the acquisition of an interest in the
Competitive Business that would prohibit, restrict, or otherwise limit the
rights of the Partnership freely to acquire an interest in the Competitive
Business or otherwise to exercise its rights hereunder.
2.3 CHANGE OF CONTROL OF VENTURER. If (a) a Change of Control of any
Venturer (the "Acquired Venturer") occurs, (b) the Acquired Venturer's Class A
Units and Limited Partner Interests are not purchased by any Other Venturer or
Venturers pursuant to Section 3.1 of the Transfer Restriction Agreement and (c)
the Acquired Venturer's Class A Units are not converted to Class B Units, then
the Person acquiring the Acquired Venturer (the "Acquiror") must execute and
will be bound by all provisions of this Agreement as provided in Section 3.1(f)
of the LLC Agreement; provided, however, that if the Acquiror owns or has an
interest in a Competitive Business (the
Exhibit 7.2(m) - 4
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
103
"Acquiror Competitive Business"), operating such Acquiror Competitive Business
will be a Permitted Activity under this Agreement.
2.4 PERMITTED ACTIVITIES. The provisions of Section 2.1 shall not be
construed to prohibit or restrict any Restricted Party from engaging in the
following activities (the "Permitted Activities"):
(a) owning, individually or in the aggregate, less than ten percent of
any class of securities listed for or admitted to trading on a national or
foreign securities exchange or on The Nasdaq Stock Market;
(b) rendering services for, providing consultation to, or furnishing
materials to the Partnership or the General Partner;
(c) providing engineering services to unrelated third parties with
respect to Restricted Activities to be conducted by such third parties;
(d) owning and operating such Venturer's Excluded Assets;
(e) administering any contracts that are to be transferred to the
Partnership, which transfer requires the consent of a third party or the
approval of a Governmental Authority that has not yet been obtained;
(f) the purchase, sale, exchange, marketing, trading, storage or
transportation of propane solely for the purposes of using such propane for peak
shaving in connection with such Restricted Party's natural gas business or its
electrical power generation facilities;
(g) engaging in an Acquiror Competitive Business under Section 2.3;
(h) engaging in a Competitive Business as an Acquiring Party, if
permitted by Section 2.2(d) or Section 2.2(f); or
(i) engaging in the bulk wholesale delivery of propane to commercial
and industrial customers primarily for use as interruptible fuel through AGL
Parent's and Piedmont's ownership and operation of Southstar Energy Services,
LLC, a Delaware limited liability company, or any successor entity, and all
matters which are reasonably attendant thereto.
2.5 DURATION AND SCOPE. The Parties acknowledge their belief and
agreement that the duration and scope of the noncompetition covenants set forth
in this Article 2 and in Article 4 are fair and reasonable. If any of the
restrictions contained in this Article 2 or in Article 4 is determined by any
court of competent jurisdiction to be invalid or unenforceable, or to be
enforceable only if modified in duration or scope, each Party agrees that:
Exhibit 7.2(m) - 5
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
104
(a) this Agreement shall be automatically amended in duration and scope
for application in the jurisdictional area of such court, without any further
action by any of the Parties, so as to provide the maximum duration and scope
enforceable in accordance with Applicable Law;
(b) the reviewing court or arbitration panel is authorized and
empowered to rewrite any such unenforceable provision in a manner that will
result in such restriction being enforceable in such court or arbitration
panel's jurisdictional area, provided, that if the reviewing court or
arbitration panel will not exercise its power to rewrite any such unenforceable
provision, the Parties will amend this Agreement to rewrite any such
unenforceable provision in a manner that will result in such restriction being
enforceable in such court or arbitration panel's jurisdictional area; and
(c) the terms and provisions of this Agreement will remain in full
force and effect, as originally written, in all areas outside the jurisdictional
area of such court.
ARTICLE 3
REMEDIES
3.1 REMEDIES. The covenants and obligations contained in this Agreement
relate to special, unique and extraordinary matters. Each of the conditions and
restraints contained herein is necessary for the reasonable and proper
protection of each of the Parties and is reasonable with respect to subject
matter, length of time and geographic area. Each of the Parties further agrees
that a violation of any of the terms hereof would cause irreparable injury in an
amount that would be impossible to estimate or determine and for which any
remedy at law would be inadequate. Consequently, each Party agrees that upon any
breach or threatened breach of this Agreement by such Party, any Other Party
affected by such breach shall be entitled to preliminary and permanent
injunctive relief against such breach or threatened breach, without having to
post bond or provide any other form of security, and that each Party shall have
the remedy of specific performance, which rights and remedies shall be
cumulative and nonexclusive and shall be in addition to any other rights and
remedies otherwise available under any other contract or agreement or at law or
in equity and to which such Party might be entitled.
ARTICLE 4
TERM
4.1 TERM. The term of this Agreement (the "Term") shall commence on the
Closing Date and continue until the earlier of the second anniversary of the
date of an IPO or the fifth anniversary of the Closing Date; provided, however,
that this Agreement will terminate with respect to a Venturer on any earlier
date that is the second anniversary of the first day that such Venturer and its
Affiliates, collectively, hold no Class A Units.
Exhibit 7.2(m) - 6
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
105
ARTICLE 5
MISCELLANEOUS
5.1 NOTICES.
(a) All notices, requests, demands and other communications required or
permitted to be given or made hereunder by any Party shall be in writing, and
shall be delivered either personally, or by registered or certified mail
(postage prepaid and return receipt requested) or by express courier or delivery
service, or by telegram, telefax, telex or similar facsimile means, to the
Parties, at the addresses (or at such other addresses as shall be specified by
the Parties by like notice) for notice set forth for the Parties in Section 10.1
of the Formation Agreement.
(b) Notices and other communications shall be deemed given or made (i)
when received, if sent by telegram, telefax, telex or similar facsimile means
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by telefax, telex or similar facsimile means) and
(ii) when delivered and receipted for (or upon the date of attempted delivery
where delivery is refused), if hand-delivered, sent by registered or certified
mail or sent by express courier or delivery service, except in the case of
facsimile transmissions received after the normal close of business at the
receiving location, which shall be deemed given on the next Business Day.
5.2 ENTIRETY. This Agreement (along with the Formation Agreement and
the various agreements to be entered into pursuant to the provisions contained
in the Formation Agreement) constitutes the entire agreement between the Parties
with respect to the subject matter hereof.
5.3 BINDING EFFECT; ASSIGNMENT; NO THIRD PARTY BENEFIT. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any Party
without the prior written consent of each of the Venturers, and any purported
assignment without such consent shall be void, except that the Partnership may
assign all of its rights under this Agreement to Heritage Operating, L.P.,
without the prior written consent of the other parties upon consummation of the
transactions contemplated by the Contribution Agreement. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
other than the Parties, and their respective successors and permitted assigns,
any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
5.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable after the application of Section 2.5, this Agreement shall be
considered divisible and such provision shall be deemed inoperative to the
extent it is deemed unenforceable, and in all other respects this Agreement
shall remain in full force and effect; provided, however, that if any such
provision may be made enforceable by
Exhibit 7.2(m) - 7
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
106
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by Applicable Law.
5.5 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
5.6 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only, do not constitute a part of this Agreement
and shall not affect in any manner the meaning or interpretation of this
Agreement.
5.7 COUNTERPARTS. This Agreement may be executed by the Parties in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement.
5.8 DISPUTE RESOLUTION. Any claim, dispute or controversy of any kind
now existing or hereafter arising between any of the Parties or their Affiliates
and pertaining to the interpretation or breach of this Agreement shall be
subject to the dispute resolution procedures set forth in Section 10.9 of the
Formation Agreement.
[SIGNATURE PAGES FOLLOW]
Exhibit 7.2(m) - 8
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
107
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
AGL Parent AGL RESOURCES INC.,
A GEORGIA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGL INVESTMENTS, INC.,
A GEORGIA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGL PROPANE SERVICES, INC.,
A DELAWARE INVESTMENT HOLDING COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGL ENERGY CORP.,
A DELAWARE INVESTMENT HOLDING COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Atmos Parent ATMOS ENERGY CORPORATION,
A TEXAS AND VIRGINIA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit 7.2(m) - 9
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
108
Peoples Parent TECO ENERGY, INC.,
A FLORIDA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
TECO PROPANE VENTURES, LLC,
A FLORIDA LIMITED LIABILITY COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Piedmont Parent PIEDMONT NATURAL GAS COMPANY, INC.,
A NORTH CAROLINA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PNG ENERGY COMPANY,
A NORTH CAROLINA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PIEDMONT PROPANE COMPANY,
A NORTH CAROLINA CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit 7.2(m) - 10
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
109
Partnership U.S. PROPANE, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: U.S. PROPANE, L.L.C.,
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
General Partner U.S. PROPANE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit 7.2(m) - 11
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
110
EXHIBIT A
VALUATION PROCEDURE
The Enterprise Value of any interest in a Competitive Business (the
"Valued Interest") will equal the fair market value of such interest (as of the
date the Acquiring Party first acquired an interest in such Competitive
Business, without giving effect to such acquisition) determined using the
following appraisal procedure:
1. SELECTION OF APPRAISERS. The Partnership will select an appraisal
firm of national reputation by mutual written agreement (the "Purchaser
Appraiser"). The Acquiring Party will select an appraisal firm of national
reputation (the "Other Appraiser"). The Purchaser Appraiser and the Other
Appraiser will select a third appraisal firm of national reputation by mutual
written agreement (the "Third Appraiser" and, collectively with the Purchaser
Appraiser and the Other Appraiser, the "Appraisers"). Each Appraiser will
execute a confidentiality agreement in favor of the Partnership and the
Acquiring Party in connection with such Appraiser's appraisal.
2. APPRAISAL PROCEDURE.
(a) Within 15 days after the selection of the Third Appraiser, each
Appraiser will determine the fair market value of the Valued Interest (the
"Value") as of the date the Acquiring Party first acquired an interest in such
Competitive Business.
(b) The Values determined by each of the Appraisers will be averaged to
determine the "Average Value." The two Values numerically closest to the Average
Value will be averaged, and the average of such two Values will be the
"Enterprise Value" of the Valued Interest for purposes of this Agreement;
provided, however, that if the two Values numerically farthest from the Average
Value are equally far from the Average Value, the "Enterprise Value" of the
Valued Interest for purposes of this Agreement will be the Average Value.
(c) The determination of Enterprise Value set forth in this Exhibit A
will be final and conclusive on the Parties.
3. COSTS. The Partnership will pay all costs of the Purchaser
Appraiser, the Acquiring Party will pay all costs of the Other Appraiser (unless
otherwise provided in Section 2.2(f) of the Agreement) and the Partnership will
pay all other costs of appraisal under this Exhibit A, including all costs of
the Third Appraiser.
4. EXTENSION OF TIME. The time periods provided in this Exhibit A will
be automatically extended at the request of an Appraiser if necessary in order
to obtain additional information or to provide a reasonable period of time to
properly analyze information delivered to such Appraiser, but not more than 30
days.
5. CERTAIN INFORMATION. The Acquiring Party will provide the Appraisers
access to all information, books and records and other data and documentation
(including
Exhibit 7.2(m) - 12
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
111
matters that may be deemed trade secrets or otherwise confidential, provided an
appropriate confidentiality agreement is executed) to the extent reasonably
required by the Appraisers for purposes of determining the Enterprise Value of a
Valued Interest and will fully and promptly cooperate with reasonable requests
by the Appraisers for information regarding the Valued Interest or the
Competitive Business. If financial information is provided to the Appraisers,
the financial information will be prepared in accordance with U.S. GAAP,
consistent with prior periods, or otherwise as agreed by the Parties.
6. FAIR MARKET VALUE. As used in this Exhibit A, "fair market value"
means, when used with respect to any interest in a Competitive Business, the
most probable cash price that such interest would bring at a fair sale thereof
(taking into account, as appropriate, all liabilities relating to such interest,
but excluding any tax or other benefit or liability realized or incurred by the
Acquiring Party in connection with such sale), determined in a commercially
reasonable manner, assuming that (i) each of the buyer and the seller acts
prudently and knowledgeably, (ii) neither the buyer nor the seller is under
compulsion to sell, buy or act under other undue stimulus, (iii) each of the
buyer and the seller is typically motivated, well informed and advised and
acting in what it considers to be its best interests and (iv) the payment of the
purchase price is made in cash.
Exhibit 7.2(m) - 13
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
112
EXHIBIT 7.2(n)
ASSIGNMENT OF CONTRACT
This Assignment of Contract (this "Agreement"), dated effective as of
____________, 2000, is by U.S. Propane, L.P., a Delaware limited partnership and
U.S. Propane, L.L.C., a Delaware limited liability company (collectively,
"Assignor") to Heritage Operating, L. P., a Delaware limited partnership
("Assignee").
RECITALS
Assignor desires to convey and transfer to Assignee, and Assignee
desires to receive, all of Assignor's rights under the Noncompetition Agreement,
dated ______, 2000, among Assignor and certain other parties (the "Assigned
Contract").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE 1
ASSIGNMENT
1.1 ASSIGNMENT OF CONTRACT. Assignor hereby assigns, transfers,
bargains, and delivers unto Assignee, and its successors and assigns, all right,
title, and interest of Assignor in, to and under the Assigned Contract. TO HAVE
AND TO HOLD the Assigned Contract unto Assignee, and its successors and assigns
forever, together with all and singular the rights and appurtenances belonging
or pertaining thereto.
1.2 SUBSEQUENT ACTIONS. Assignor hereby covenants to and with Assignee,
its successors and assigns, to execute and deliver to Assignee, its successors
and assigns, all such other and further instruments of assignment and transfer,
and all such notices, releases, and other documents, that would more fully and
specifically assign and transfer to and vest in Assignee, its successors and
assigns, the rights of Assignor in and to the Assigned Contract hereby assigned
and transferred, or intended to be assigned and transferred.
ARTICLE 2
MISCELLANEOUS
2.1 GOVERNING LAW. This Agreement and the rights and obligations of
Assignor and Assignee hereunder shall be governed by and interpreted in
accordance with the laws of the State of Texas without giving effect to
principles thereof relating to conflicts of law rules that would direct
application of the laws of another jurisdiction.
2.2 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their successors and assigns.
Exhibit 7.2(n) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
113
2.3 MULTIPLE ORIGINALS. This Agreement may be executed in two
originals, each of which shall be deemed an original, but both of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement
to be effective as of the day and year first above written.
Assignor U. S. PROPANE, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: U. S. PROPANE, L.L.C.,
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Assignee HERITAGE OPERATING, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: HERITAGE HOLDINGS, INC.,
ITS GENERAL PARTNER
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit 7.2(n) - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
114
STATE OF )
------------- )
COUNTY OF )
------------
This instrument was acknowledged before me on __________, 2000 by
_______________, ________________ of U. S. Propane, L.L.C., a Delaware limited
liability company, as the general partner of U. S. Propane, L. P., a Delaware
limited partnership.
----------------------------------------
Notary Public for the State of
----------
My Commission Expires:
------------------
STATE OF )
------------- )
COUNTY OF )
------------
This instrument was acknowledged before me on __________, 2000 by
_______________, ________________ of Heritage Holdings, Inc., a Delaware
corporation, as the general partner of Heritage Operating, L.P., a Delaware
limited partnership.
----------------------------------------
Notary Public for the State of
----------
My Commission Expires:
------------------
Exhibit 7.2(n) - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
115
EXHIBIT 7.2(o)
APPLICATION FOR ISSUANCE OF COMMON UNITS
The undersigned ("U.S. Propane") hereby applies for issuance of Common
Units to the name of U.S. Propane of Common Units.
U.S. Propane (a) requests admission as a Substituted Limited Partner in
respect of Common Units and agrees to comply with and be bound by, and hereby
executes, the Amended and Restated Agreement of Limited Partnership of Heritage
MLP (the "Partnership"), as amended, supplemented or restated to the date hereof
(the "Partnership Agreement"), (b) represents and warrants that U.S. Propane has
all right, power and authority and, if an individual, the capacity necessary to
enter into the Partnership Agreement, (c) appoints the General Partner of the
Partnership and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as U.S. Propane's attorney-in-fact to execute, swear to, acknowledge
and file any document, including, without limitation, the Partnership Agreement
and any amendment thereto and the Certificate of Limited Partnership of the
Partnership and any amendment thereto, necessary or appropriate for U.S.
Propane's admission as a Substituted Limited Partner and as a party to the
Partnership Agreement, (d) gives the power of attorney provided for in the
Partnership Agreement and (e) makes the waivers and gives the consents and
approvals contained in the Partnership Agreement. Capitalized terms not defined
herein have the meanings assigned to such terms in the Partnership Agreement.
Date:
---------------------------------------------
--------------------------------------------------
Signature of Authorized Signatory of U.S. Propane
--------------------------------------------------
Identification number of U.S. Propane
--------------------------------------------------
Name and Address of U.S. Propane
--------------------------------------------------
Purchase Price including commission, if any
Exhibit 7.2(o) - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
116
Type of Entity (check one):
o Individual o Partnership o Corporation
o Trust o Other (specify)
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Nationality (check one):
o U.S. Citizen, Resident or Domestic Entity
o Foreign Corporation o Non-resident Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interestholder's interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interestholder):
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identification number (Social Security
Number) is __________________________________________________.
3. My home address is ___________________________________________
4. My taxable year ends on December 31st.
B. Partnership, Corporation or Other Interestholder
1. _____________________________________________ is not a foreign
(Name of Interestholder)
corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interestholder's U.S. employer identification number is
_____________________________________________________________.
3. The interestholder's office address and place of incorporation
(if applicable) is ___________________________________________
4. The interestholder's taxable year ends on December 31st.
Exhibit 7.2(o) - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
117
The interestholder agrees to notify the Partnership within sixty (60)
days of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
--------------------------------
Name of Interestholder
--------------------------------
Signature and Date
--------------------------------
Title (if applicable)
Note: If U.S. Propane is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If U.S. Propane is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom U.S. Propane will hold the Common Units
shall be made to the best of U.S. Propane's knowledge.
Exhibit 7.2(o) - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
118
EXHIBIT 10.10
DISPUTE RESOLUTION PROCEDURES
1. GENERAL PROCEDURE. The Parties shall use the procedures set forth in
this Exhibit 10.10 to resolve in good faith any dispute, controversy or claim
(i) arising between the LP, on the one hand, and one or both of Heritage MLP and
Heritage OLP, on the other hand (together the "Disputing Heritage Parties"), and
(ii) related to this Agreement, including any dispute over the performance,
breach, termination or interpretation of this Agreement; provided, however, that
a Party may seek equitable relief prior to using the procedures set forth in
this Exhibit 10.10 if, in the reasonable judgment of such Party, such Party will
suffer irreparable harm if such equitable relief is not granted. Nothing herein
is intended (i) to address disputes, controversies or claims arising between
Heritage MLP and Heritage OLP that do not involve the LP or (ii) to limit the
Parties from resolving informally among them any dispute, controversy or claim
that may arise.
2. MEDIATION. If any dispute, controversy or claim arises between the
LP and the Disputing Heritage Parties after the Closing Date and the LP and the
Disputing Heritage Parties cannot resolve such dispute, controversy or claim
informally, then the LP and the Disputing Heritage Parties shall attempt in good
faith to settle the matter by submitting the dispute, controversy or claim to
mediation within 30 days after the date that the dispute, controversy or claim
arises, using any mediator upon which they mutually agree. If the LP and the
Disputing Heritage Parties are unable to agree mutually upon a mediator within
15 days after submitting to mediation, the case shall be referred to the
__________________________ office of the American Arbitration Association
("AAA") for mediation. The cost of the mediator will be paid by the LP, on the
one hand, and the Disputing Heritage Parties, on the other hand, equally.
3. ARBITRATION.
3.1 ALL DISPUTES ARBITRATION. All disputes between the LP and the
Disputing Heritage Parties arising under this Agreement and not resolved through
negotiation or mediation shall be submitted to arbitration in accordance with
this Section 3.1 or, if one exists, the similar arbitration provision of the
Stock Purchase Agreement or the Subscription Agreement, and the Parties hereby
expressly waive all rights to have any such disputes heard before a court of
law, except the right to enforce an arbitration award as described in Section
3.5 below. Arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. Section 1, et seq., and not by the arbitration acts, statutes or rules of
any other jurisdiction. In the event of a conflict between the terms of this
Section 3.1 and the terms of an express arbitration provision in the Stock
Purchase Agreement or the Subscription Agreement, the arbitration provision in
such other agreement shall control as to any disputes arising under that
agreement.
3.2 PROCEDURE. In the event the LP and the Disputing Heritage Parties
are unable to resolve a dispute arising under this Agreement or the Stock
Purchase
Exhibit 10.10 - 1
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
119
Agreement or the Subscription Agreement after exercising good faith efforts to
do so pursuant to the procedures of Section 2 hereof, the LP or the Disputing
Heritage Parties, as the case may be, may require that the matter be resolved
through binding arbitration by submitting a written notice to the other Parties
(including notice to any Heritage Party that is not a Disputing Heritage Party).
The Party giving notice shall select one of three arbitrators and shall prepare
a written notice containing the name of such Party's arbitrator and a statement
of the issue(s) presented for arbitration. Within 15 days after receipt of a
notice of arbitration, the LP (if the Party giving notice is a Disputing
Heritage Party) or the Disputing Heritage Parties (if the Party giving notice
was the LP) shall select the second of three arbitrators by written notice and
may designate any additional issue(s) for arbitration. The two named arbitrators
shall select the third arbitrator within 15 days after the date on which the
second arbitrator was named. Should the two arbitrators fail to agree on the
selection of the third arbitrator, any Party shall be entitled to request the
Senior Judge of the United States District Court of the ______ District of
_________ to select the third arbitrator. If the Senior Judge refuses or is
unable to select the third arbitrator, the Parties shall ask the AAA to appoint
the third arbitrator, it being understood, however, that the AAA shall not act
as administrator of the arbitration. All arbitrators shall be qualified by
education or experience within the propane or energy industry (to the extent
relevant) to decide the issues presented for arbitration. No arbitrator shall be
a current or former director, officer or employee of any Party, or any of its
Affiliates; an attorney (or member of a law firm) who has rendered legal
services to any Party, or its Affiliates, within the preceding three years; or
an accountant (or member of an accounting firm) who has rendered accounting or
consulting services to any Party or its Affiliates, within the preceding three
years; or an owner of any debt or equity securities (including but not limited
to common or preferred stock or any derivatives thereof) of any Party or its
Affiliates.
3.3 ARBITRATION HEARINGS. The three arbitrators shall commence the
arbitration hearing within 25 days following the appointment of the third
arbitrator, or at such later date as the LP and the Disputing Heritage Parties
may agree. The proceeding shall be held at a mutually acceptable site in
____________________. If the LP and the Disputing Heritage Parties are unable to
agree on a site, the arbitrators shall select a site. The arbitrators shall have
the authority to establish rules and procedures governing the arbitration
hearing. The LP and the Disputing Heritage Parties shall have the opportunity to
present evidence at the hearing. The arbitrators may call for the submission of
pre-hearing statements of position and legal authority. The arbitration panel
shall not have the authority to award punitive or exemplary damages, nor shall
the arbitration panel have any authority to terminate this Agreement unless that
issue is made subject to arbitration under the express terms of this Agreement.
The arbitrators' decision must be rendered within 30 days following the
conclusion of the hearing or submission of evidence, but no later than 90 days
after appointment of the third arbitrator.
3.4 ARBITRATION DECISION. The decision of the arbitrators, or a
majority of them, shall be in writing and shall be final and binding upon the
Parties as to the issue submitted. The LP and the Disputing Heritage Parties
shall bear the expense and cost of its attorneys and witnesses. The expense and
cost of the arbitrators shall be paid by the
Exhibit 10.10 - 2
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000
120
LP, on the one hand, and the Disputing Heritage Parties, on the other hand,
equally, or as the arbitrators may otherwise determine is just and equitable.
3.5 ENFORCEMENT OF AWARD. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. The prevailing
Party or Parties shall be entitled to reasonable attorneys' fees in any court
proceeding necessary to enforce or collect any award or judgment rendered by the
arbitrators.
Exhibit 10.10 - 3
CONTRIBUTION AGREEMENT
EXECUTION COPY DATED JUNE 15, 2000