EXHIBIT 10.31
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CONTRIBUTION AGREEMENT
BY AND AMONG
LA GRANGE ENERGY, L.P.,
AND
HERITAGE PROPANE PARTNERS, L.P., AND
U.S. PROPANE, L.P.
NOVEMBER 6, 2003
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CONTRIBUTION AGREEMENT
EXECUTION COPY NOVEMBER 6, 2003
CONTRIBUTION AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1 - DEFINITIONS................................................................. 1
1.1 Definitions.................................................................. 1
1.2 Certain Additional Definitions............................................... 8
1.3 Rules of Construction........................................................ 9
ARTICLE 2 - CLOSING..................................................................... 9
2.1 Closing...................................................................... 9
2.2 Pre-Closing Transactions..................................................... 9
2.3 Contribution................................................................. 10
2.4 Capital Expenditures Payment................................................. 11
2.5 Bossier Pipeline Reimbursement Payment....................................... 11
2.6 Accounts Payable True-Up..................................................... 12
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE HERITAGE PARTIES...................... 13
3.1 Organization and Existence................................................... 13
3.2 Capitalization of the Heritage Entities...................................... 13
3.3 Authority and Binding Agreement.............................................. 15
3.4 Agreements of Limited Partnership............................................ 15
3.5 Non-Contravention............................................................ 16
3.6 Governmental Approvals....................................................... 16
3.7 Title to Heritage Assets..................................................... 16
3.8 SEC Reports.................................................................. 16
3.9 Financial Statements......................................................... 17
3.10 Absence of Certain Changes.................................................. 18
3.11 Tax Matters................................................................. 18
3.12 Compliance with Laws........................................................ 20
3.13 Legal Proceedings........................................................... 20
3.14 Sufficiency of Heritage Assets.............................................. 20
3.15 Real Property............................................................... 20
3.16 Intellectual Property....................................................... 21
3.17 Permits..................................................................... 21
3.18 Agreements.................................................................. 21
3.19 Environmental Matters....................................................... 22
3.20 Insurance................................................................... 23
3.21 Absence of Liabilities...................................................... 23
3.22 Books and Records........................................................... 23
3.23 Listing..................................................................... 24
3.24 Employee Matters............................................................ 24
3.25 Consents.................................................................... 24
3.26 Conduct of the Heritage Business............................................ 25
3.27 Disclosure.................................................................. 25
3.28 Employee Benefit Plans...................................................... 25
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3.29 Finder's Fees............................................................... 26
3.30 Regulation.................................................................. 26
3.31 No Violation................................................................ 26
3.32 Opinion of Financial Advisor................................................ 27
3.33 Approval of Special Committee............................................... 27
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF LA GRANGE................................. 27
4.1 Organization and Existence................................................... 27
4.2 Capitalization of the La Grange Entities..................................... 27
4.3 Authority and Binding Agreement.............................................. 28
4.4 Non-Contravention............................................................ 28
4.5 Governmental Approvals....................................................... 29
4.6 Exclusive Operation of the Business.......................................... 29
4.7 Title to La Grange Assets.................................................... 29
4.8 Financial Statements......................................................... 29
4.9 Absence of Certain Changes................................................... 30
4.10 Tax Matters................................................................. 31
4.11 Compliance with Laws........................................................ 32
4.12 Legal Proceedings........................................................... 32
4.13 Sufficiency of La Grange Assets............................................. 32
4.14 Real Property............................................................... 32
4.15 Tangible Personal Property.................................................. 33
4.16 Intellectual Property....................................................... 33
4.17 Permits..................................................................... 33
4.18 Agreements.................................................................. 33
4.19 Environmental Matters....................................................... 35
4.20 Insurance................................................................... 35
4.21 Absence of Liabilities...................................................... 36
4.22 Books and Records........................................................... 36
4.23 Investment Intent........................................................... 36
4.24 Employee Matters............................................................ 37
4.25 Consents.................................................................... 37
4.26 Conduct of the La Grange Business........................................... 38
4.27 Disclosure.................................................................. 38
4.28 Employee Benefit Plans...................................................... 38
4.29 Finder's Fees............................................................... 39
4.30 Regulation.................................................................. 39
4.31 No Violation................................................................ 39
4.32 Agreements of La Grange and the La Grange Entities.......................... 40
ARTICLE 5 - AGREEMENTS.................................................................. 40
5.1 Conduct and Preservation of the Business of the La Grange Entities........... 40
5.2 Restrictions of Certain Actions of the La Grange Entities.................... 40
5.3 Services of La Grange Employees.............................................. 42
5.4 Conduct and Preservation of the Heritage Business............................ 42
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5.5 Restrictions on Certain Actions of the Heritage Parties and Heritage GP...... 42
5.6 Consent to Section 754 Elections............................................. 44
5.7 Tax Reporting................................................................ 44
ARTICLE 6 - ADDITIONAL AGREEMENTS....................................................... 45
6.1 Access to Information, Confidentiality....................................... 45
6.2 Authorizations and Consents.................................................. 45
6.3 Public Announcements......................................................... 46
6.4 Access to Records After Closing.............................................. 46
6.5 Fees and Expenses............................................................ 46
6.6 Taxes; Other Charges......................................................... 46
6.7 Employment Matters........................................................... 47
6.8 Amendment of Schedules....................................................... 47
6.9 Actions by Parties........................................................... 48
6.10 Vote of Common Units........................................................ 48
6.11 Listing..................................................................... 48
6.12 Financial Statements........................................................ 48
6.13 Additional Cooperation...................................................... 48
6.14 Confidentiality and Tax Shelter Regulations................................. 48
6.15 Permitted Actions........................................................... 48
ARTICLE 7 - CONDITIONS TO OBLIGATIONS OF THE PARTIES.................................... 49
7.1 Conditions to Closing of La Grange........................................... 49
7.2 Conditions to Closing of the Heritage Parties................................ 51
ARTICLE 8 - TERMINATION, AMENDMENT AND WAIVER........................................... 53
8.1 Termination.................................................................. 53
8.2 Effect of Termination........................................................ 54
8.3 Amendment.................................................................... 54
8.4 Waiver....................................................................... 54
8.5 Payment Upon Certain Termination............................................. 54
ARTICLE 9 - SURVIVAL OF REPRESENTATIONS................................................. 55
9.1 Indemnification Obligations of La Grange..................................... 55
9.2 Indemnification Obligations of the Heritage Parties.......................... 55
9.3 Indemnification Procedures................................................... 56
9.4 Survival..................................................................... 58
9.5 No Special or Consequential Damages.......................................... 59
ARTICLE 10 - MISCELLANEOUS.............................................................. 59
10.1 Notices..................................................................... 59
10.2 Entire Agreement............................................................ 60
10.3 Binding Effect; Assignment; No Third Party Benefit.......................... 60
10.4 Severability................................................................ 60
10.5 Governing Law............................................................... 60
10.6 Jurisdiction................................................................ 60
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10.7 Further Assurances.......................................................... 61
10.8 Descriptive Headings........................................................ 61
10.9 Counterparts................................................................ 61
SIGNATURE PAGE.......................................................................... 62
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CONTRIBUTION AGREEMENT
SUMMARY of SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 3.1 Organization and Existence
Schedule 3.2(c) Capitalization Of The Heritage Entities
Schedule 3.6 Governmental Approvals
Schedule 3.7 Encumbrances On Heritage Assets
Schedule 3.9(a) Heritage Financial Statements
Schedule 3.9(e) Outstanding Restricted Units Awarded Under the Heritage
Plans
Schedule 3.11(a) Tax Matters
Schedule 3.11(b) Tax Matters
Schedule 3.11(c) Tax Matters
Schedule 3.11(d) Tax Matters
Schedule 3.15(a) Owned Property
Schedule 3.15(b) Leased Property
Schedule 3.16 Non-Owned Heritage Intellectual Property
Schedule 3.18(a) Heritage Contracts
Schedule 3.18(b) Default Or Violation
Schedule 3.19(a) Environmental Matters
Schedule 3.19(b) Environmental Matters
Schedule 3.19(d) Environmental Matters
Schedule 3.21 Liabilities
Schedule 3.24(a) Employee Matters
Schedule 3.24(b) Employee Matters
Schedule 3.25 The Consents, Approvals, Orders, Authorizations and
Waivers Of Third Parties
Schedule 3.26 Certain Actions Since the Effective Time
Schedule 3.28(a) Employee Benefit Plans
Schedule 3.28(b) Employee Benefit Plans
Schedule 3.28(d) Employee Benefit Plans
Schedule 3.28(f) Employee Benefit Plans
Schedule 3.28(g) Employee Benefit Plans
Schedule 3.29 Finder's Fees
Schedule 3.30 Investment Or Holding Company
Schedule 4.1 Organization and Existence
Schedule 4.2(a) Capitalization
Schedule 4.2(b) Capitalization
Schedule 4.2(c) Subscriptions, Options, Convertible Securities,
Warrants, Calls, Preemptive Rights or Other Rights
Schedule 4.5 Governmental Approvals
Schedule 4.6 Exclusive Operation of Business
Schedule 4.7 Encumbrances
Schedule 4.8(a) La Grange Financial Statements
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Schedule 4.8(b) Aquila Financial Statements
Schedule 4.8(c) Oasis Financial Statements
Schedule 4.10(a) Tax Matters
Schedule 4.10(b) Tax Matters
Schedule 4.10(d) Tax Matters
Schedule 4.12 Legal Proceedings
Schedule 4.14(a) Owned Property
Schedule 4.14(b) Leased Property
Schedule 4.15 Tangible Personal Property
Schedule 4.16 Software License Agreements
Schedule 4.17(a) Permits
Schedule 4.17(b) Burdensome Permit Conditions
Schedule 4.18(a):
4.18(a)(i) Collective Bargaining Agreements
4.18(a)(ii) Employee Benefit Arrangements
4.18(a)(iii) Agreements with Officers, Directors and Employees
4.18(a)(iv) Capital Stock Agreements
4.18(a)(v) Affiliate Agreements
4.18(a)(vi) Mortgages, Security Agreements
4.18(a)(vii) Acquisition or Disposition of Assets
4.18(a)(viii) Leases
4.18(a)(ix) Management or Operation Agreements
4.18(a)(x) Supplier, Marketing and Consulting Agreements
4.18(a)(xi) Software License Agreements
4.18(a)(xii) Partnership and Joint Venture Agreements
4.18(a)(xiii) Governmental Agreements
4.18(a)(xiv) Settlement Agreements
4.18(a)(xv) Non-Competition Agreements
4.18(a)(xvi) Agreements Not Made in the Ordinary Course of Business
4.18(a)(xvii) Other Material Agreements
4.18(a)(xviii) Agreements or Commitments
4.18(b) Defaults
Schedule 4.19(a) Remedial Obligations
Schedule 4.19(b) Environmental Conditions
Schedule 4.19(c)(i) Underground Storage Tanks
Schedule 4.19(c)(ii) Pending Governmental Actions
Schedule 4.19(c)(iii) Permit Violations
Schedule 4.19(c)(iv) Manufactured Gas Sites
Schedule 4.21 Liabilities that Result in Encumbrances
Schedule 4.24(a) Employee Matters
Schedule 4.24(b) Employee Matters
Schedule 4.24(c) Employee Matters
Schedule 4.25 Consents and Approvals
Schedule 4.26 Prohibited Actions
Schedule 4.28(a)(i) Employee Benefit Plans
Schedule 4.28(a)(ii) Employee Benefit Plans
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Schedule 4.28(b) Employee Benefit Plans
Schedule 4.28(d) Employee Benefit Plans
Schedule 4.28(f) Employee Benefit Plans
Schedule 4.28(g) Employee Benefit Plans
Schedule 4.29 Finder's Fees
Schedule 4.30 Entities with Investment Company or Holding Company
Status
Schedule 5.1 Conduct and Preservation of Business
Schedule 5.2 Restricted Actions
Schedule 5.4 Conduct And Preservation Of Business
Schedule 5.5 Restricted Actions
Schedule 7.1(e) Material Consents
Schedule 7.2(e) Material Consents
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EXHIBITS
Exhibit 1.1 Noncompete Agreement
Exhibit 2.2(a)(iii) Distribution of La Grange Partnerships and New ETC Texas
Working Capital Assets to La Grange
Exhibit 2.2(a)(iv) Form of Warranty Deed
Exhibit 3.2(e)(i) Amendment No. 5 to Heritage MLP Partnership Agreement
Exhibit 7.1(c) Certificate of the Heritage Parties
Exhibit 7.2(j) Application for Issuance of Common Units
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CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement"), dated as of November 6,
2003, is entered into by and among the following:
1. La Grange Energy, L.P., a Texas limited partnership ("La
Grange"); and
2. Heritage Propane Partners, L.P., a Delaware limited
partnership ("Heritage MLP") and U.S. Propane, L.P., a
Delaware limited partnership ("Heritage GP").
RECITALS:
A. La Grange is engaged in the business of purchasing, gathering,
treating, processing, marketing, sales, storage, transportation, fractionation
and distribution of natural gas and natural gas liquids through La Grange and
its subsidiaries.
▇. ▇▇ ▇▇▇▇▇▇ desires to contribute to Heritage MLP, and Heritage
MLP desires to accept from La Grange all of the interests of certain
subsidiaries of La Grange.
C. In consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following defined
terms shall have the meanings indicated below:
"Accounts Payable" means all liabilities, excluding Long-Term Debt,
amounts to be paid pursuant to the Capital Expenditures Payment, amounts to be
paid pursuant to the Bossier Pipeline Reimbursement Payment, and deferred income
taxes.
"Acquisition Agreement" means the Acquisition Agreement by and among
Heritage GP, U.S. Propane, L.L.C., AGL Propane Services, Inc., AGL Energy
Corporation, United Cities Propane Gas, Inc., TECO Propane Ventures, LLC,
Piedmont Propane Company, and La Grange, dated November 6, 2003.
"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 and
(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.
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"Applicable Law" means any law to which a specified Person or property
is subject.
"Average Market Value" of the Units means an amount equal to the
average of the closing sales prices of the Common Units as reported in the Wall
Street Journal - Corporate Transactions for the 45 consecutive trading days
ending on the third business day before the Closing Date.
"Bossier Pipeline Project" means the approximately 55 mile natural gas
pipeline extension from Limestone County, Texas to Katy, Texas, with XTO Energy,
Inc. as its initial customer, and for which the Bossier Pipeline Reimbursement
Payment shall be made pursuant to Section 2.5.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Texas are authorized or obligated to close.
"Capital Stock" means, with respect to: (i) any corporation, any share,
or any depositary receipt or other certificate representing any share, of an
equity ownership interest in that corporation; and (ii) any other entity, any
share, membership or other percentage interest, unit of participation or other
equivalent (however designated) of an equity interest in that entity.
"Class C Unit" means a Class C Unit, as defined in the Heritage MLP
Partnership Agreement.
"Class D Unit" means a Class D Unit, as defined in the Heritage MLP
Partnership Agreement (after giving effect to Amendment No. 5).
"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.
"Commercially Reasonable Best Efforts" or any phrase of similar tenor
as used in this Agreement shall mean such good faith efforts as are commercially
reasonable, comparing the cost and expense of the efforts to the benefit to be
gained (without regard to the identity of the beneficiary).
"Common Unit" means a Common Unit, as defined in the Heritage MLP
Partnership Agreement.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Contribution Agreement" means this Agreement.
"Delaware LP Act" means the Delaware Revised Uniform Limited
Partnership Act, as amended.
"Encumbrance" means any security interest, lien, pledge, claim, charge,
escrow, encumbrance, option, right of first offer, right of first refusal,
preemptive right, mortgage,
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indenture, security agreement or other similar agreement, arrangement, contract,
commitment, understanding or obligation, whether written or oral and whether or
not relating in any way to credit or the borrowing of money.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ET Company, Ltd." means ET Company Ltd., a Texas limited partnership.
"ETC Oasis GP, LLC" means ETC Oasis GP, LLC, a Texas limited liability
company.
"ETC OLP" means La Grange Acquisition, L.P., a Texas limited
partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder.
"Five Dawaco, LLC" means the Texas limited liability company formed in
connection with the conversion of Five Dawaco, Inc., a Texas corporation.
"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.
"Heritage Assets" means all assets and properties of every kind,
character and description, whether tangible, intangible, real, personal or
mixed, which are owned, used or held for use by the Heritage Entities as of the
date hereof.
"Heritage Business" means all business activities of the Heritage
Entities as conducted on the date hereof.
"Heritage Employee" means an employee of Heritage GP, any of the
Heritage Entities, or their respective Affiliates, who is employed in the
Heritage Business.
"Heritage Entities" means the Heritage Parties and the following
entities: M-P Oils, Ltd., an Alberta, Canada corporation; Heritage Bi-State
L.L.C., a Delaware limited liability company; Heritage Energy Resources, L.L.C.,
an Oklahoma limited liability company; Heritage Service Corp., a Delaware
corporation; ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ limited liability
company; EarthAmerica, L.L.C., a Delaware limited liability company;
EarthAmerica GP, L.L.C., a Delaware limited liability company; and EarthAmerica
of Texas, L.P., a Texas limited partnership.
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"Heritage OLP" means Heritage Operating, L.P., a Delaware limited
partnership.
"Heritage Parties" means Heritage MLP and Heritage OLP.
"Heritage Permitted Acquisition" means the acquisition by any of the
Heritage Entities of (i) one or more companies, businesses or assets that are
similar in nature, or complementary to, the Heritage Business for an aggregate
purchase price of not more than $10 million, or (ii) the acquisition of the
assets or ownership interests of any Heritage Entity that will become a Heritage
Wholly Owned Subsidiary upon such acquisition.
"Heritage Wholly Owned Subsidiary" means any corporation or other
entity all of whose outstanding Capital Stock on a fully diluted basis either of
the Heritage Parties owns and controls, directly or indirectly through another
Heritage Wholly Owned Subsidiary.
"HHI" means Heritage Holdings, Inc., a Delaware corporation.
"HHI Purchase Agreement" means that certain Stock Purchase Agreement,
dated as of November 6, 2003, among Heritage MLP and the Sellers named therein.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Incentive Distribution Right" means an Incentive Distribution Right as
defined in the Heritage MLP Partnership Agreement.
"Intellectual Property" means patents, trademarks, service marks, trade
names, service names, logos, marks, designs, copyrights, licenses, inventions,
trade secrets and similar rights, and all registrations, applications, licenses
and rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"La Grange Assets" means all assets and properties of every kind,
character and description, whether tangible, intangible, real, personal or
mixed, which are owned, used or held for use by the La Grange Entities as of the
date hereof.
"La Grange Business" means all business activities of La Grange Energy,
L.P. and the La Grange Entities as conducted on the date hereof.
"La Grange Contracts" means all of the Contracts identified in Schedule
4.18(a) and each Contract relating to or used in connection with the La Grange
Business that is not required to be identified in Schedule 4.18(a).
"La Grange Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of December 27, 2002, between La Grange Acquisition, L.P.,
as borrower, Fleet National Bank, as administrative agent, Fleet Securities,
Inc. as arranger and book manager, Fortis Capital Corp. and U.S. Bank National
Association, as documentation agents and the other lenders named therein (as
amended and supplemented as of the date hereof).
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"La Grange Employee" means an employee of La Grange, any of the La
Grange Entities, or their respective Affiliates, who is employed in the La
Grange Business.
"La Grange Entity" and "La Grange Entities" means each entity and all
of the entities, respectively, required to be identified on Schedule 4.1.,
including the La Grange GP Entities and the La Grange Partnerships.
"La Grange GP Entities" means (i) LA GP, LLC, (ii) LG PL, LLC, (iii)
LGM, LLC, (iv) ETC Oasis GP, LLC and (v) Five Dawaco, LLC.
"LA GP, LLC" means LAGP, LLC, a Texas limited liability company.
"La Grange Interests" means all of the ownership interests in the La
Grange GP Entities, ETC OLP, and the Dallas Office Building.
"La Grange Partnerships" means Texas Energy Transfer Company, Ltd.;
▇▇▇▇▇▇▇▇ Transmission Company, Ltd.; Whiskey Bay Gathering Company, Ltd.;
Whiskey Bay Gas Company, Ltd.; ETC Gas Company, Ltd.; ETC Oklahoma Pipeline,
Ltd.; ETC Oasis, LP; ETC Texas Processing, Ltd.; ETC Marketing, Ltd.; ET Company
I, Ltd.; ETC Texas Pipeline, Ltd.; La Grange Acquisition Sub; and ETC OLP.
"La Grange Permitted Acquisition" means the acquisition by any of the
La Grange Entities of one or more companies, businesses or assets that are
similar in nature, or complementary to, the La Grange Business or the La Grange
Assets for an aggregate purchase price of not more than $10 million.
"La Grange Wholly Owned Subsidiary" means any corporation or other
entity all of whose outstanding Capital Stock on a fully diluted basis La Grange
owns and controls, directly or indirectly through another La Grange Wholly Owned
Subsidiary.
"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.
"LG PL, LLC" means LG PL, LLC, a Texas limited liability company.
"LGM, LLC" means LGM, LLC, a Texas limited liability company.
"LP, Inc." means a newly formed corporation to be formed by Heritage
MLP, and which will own a .001% limited partner interest in Heritage OLP.
"Long-Term Debt" means long-term debt, the current portion of long-term
debt, and all interest, fees and expenses due on the repayment of long-term
debt, with such amount being equal to the amount of the payment made by Heritage
MLP to pay off the La Grange Credit Agreement pursuant to Section 2.3(c).
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"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.
"New OLP" means a newly formed Delaware limited partnership to be
formed by Heritage MLP and which will be wholly owned, directly or indirectly,
by Heritage MLP.
"Noncompete Agreement" means that Noncompete Agreement by and among ETC
Holdings, LP, ET GP, LLC, La Grange, LE GP, LLC, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and
Heritage MLP, in substantially the form attached as Exhibit 1.1.
"Organization State" means, as applied to (i) any corporation, its
state or other jurisdiction of incorporation, (ii) any limited liability company
or limited partnership, the state or other jurisdiction under whose laws it is
formed, organized and existing in that legal form, and (iii) any other entity,
the state or other jurisdiction whose laws govern that entity's internal
affairs.
"Other Parties" means, with respect to a Party, each Party other than
such Party and its Affiliates.
"Other Transaction Documents" means the Acquisition Agreement and the
HHI Purchase Agreement.
"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 Schedules to this Agreement, and specifically
identified as such, (b) liens for Taxes 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, (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, (d) liens of
landlords under lease agreements with respect to property located on the leased
premises, and (e) 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.
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"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, as amended and restated as the Amended and Restated
Restricted Unit Plan dated August 10, 2000, as amended and restated as the
Second Amended and Restated Restricted Unit Plan dated February 4, 2002.
"Software" means computer software, including systems software,
documentation and object and source codes.
"Special Committee" means the Special Committee of the Board of
Directors of Heritage GP consisting of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇.
"Special Units" means a Special Unit as defined in the Heritage MLP
Partnership Agreement (after giving effect to Amendment No. 5).
"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 (including an information 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.
"TETC, LLC" means the Texas limited liability company formed in
connection with the conversion of TETC, Inc., a Texas corporation.
"Units" means the Common Units, Class D Units and Special Units
issuable as the Equity Consideration.
7
1.2 CERTAIN ADDITIONAL DEFINITIONS. In addition to such terms as
are defined in Section 1.1, the following terms are used in this Agreement as
defined in the Sections set forth opposite such terms:
DEFINED TERM SECTION REFERENCE
------------ -----------------
Agreement Preamble
Amendment No. 5 3.2(e)
Applicable Environmental Laws 3.17(a)
Aquila Financial Statements 4.8(b)
Bossier Pipeline Reimbursement Payment 2.5
Cash Consideration 2.3(a)(i)
Capital Expenditures Payment 2.4
CERCLA 3.17(a)
Closing 2.1
Closing Date 2.1
Consents 4.25
Dallas Office Building 2.2(a)(v)
Debt Financing 7.1(n)
Equity Consideration 2.3(a)(ii)
Equity Financing 7.1(m)
Estimated ETC OLP Accounts Payable 2.6(a)
Estimated Long-Term Debt 2.3(a)(i)
ETC OLP Accounts Payable 2.3(a)(i)
ETC OLP Interest 2.2(c)(i)
Final Statement 2.6(b)
Financial Statement Date 4.8(a)
Hazardous Substance 3.17(c)
Heritage Consents 3.21
Heritage Documents 3.3
Heritage Financial Statements 3.9(a)
Heritage GP Preamble
Heritage Indemnified Parties 9.1(a)
Heritage MLP Preamble
Heritage MLP Partnership Agreement 3.2(a)
Heritage Material Adverse Effect 3.10
Heritage OLP Partnership Agreement 3.2(d)
Heritage Plans 3.23(a)
Indemnified Party 9.3(a)
Indemnifying Party 9.3(a)
Independent Accounting Firm 2.6(b)(iii)
La Grange Preamble
La Grange Acquisition Sub 2.7
La Grange Documents 4.3
La Grange Financial Statements 4.8(a)
La Grange Indemnified Parties 9.2(a)
La Grange Material Adverse Effect 4.9
8
La Grange Plans 4.28(a)
Oasis Financial Statements 4.8(c)
Post-Signing Event 6.8
Prepayment Waivers 7.1(o)
Pre-Signing Event 6.8
RCRA 3.17(a)
Resolution Period 2.6(b)(iii)
SEC 3.8(a)
SEC Reports 3.8(a)
Securities Act 3.8(a)
Solid Waste 3.17(c)
Stub Period Financial Statements 6.12
Third Party Action 9.3(a)
1.3 RULES OF 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 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
2.1 CLOSING. Subject to the terms and conditions hereof, the
closing (the "Closing") of the transactions described in Article 2 will take
place at such time and place as La Grange and the Heritage Parties shall
mutually agree, at 9:00 A.M., central daylight time, on the third Business Day
following the date on which the last of the conditions to Closing set forth in
Article 7 have been satisfied or waived by the Party or Parties entitled to
waive the same or such other date as to which La Grange and the Heritage Parties
shall mutually agree (the date and time of the Closing are herein referred to as
the "Closing Date"). At the Closing, there shall be delivered the opinions,
certificates and other agreements, documents and instruments to be delivered
under Article 7.
2.2 PRE-CLOSING TRANSACTIONS.(a) Prior to or at the Closing, La
Grange agrees to effect the actions required to be taken so that,
(i) TETC, Inc. and Five Dawaco, Inc. shall have taken
such action as is required to convert in each case to a limited
liability company under the laws of their respective Organization State
and shall have taken such action as may be required to be taxed as a
partnership for income tax purposes;
9
(ii) ETC Holdings, LP shall have taken such action as is
required to convey its interest in each of the La Grange GP Entities to
La Grange;
(iii) Each of the La Grange Partnerships shall have
distributed its respective cash, cash equivalents and receivables as of
the Closing Date as specified in Exhibit 2.2(a)(iii) to La Grange; and
(iv) ET Company, Ltd. shall have contributed the Dallas,
Texas office building owned by ET Company, Ltd. (the "Dallas Office
Building") to ETC OLP, free and clear of all Encumbrances other than
Permitted Encumbrances, pursuant to a Warranty Deed substantially in
the form attached hereto as Exhibit 2.2(a)(iv), and shall have
terminated any prior leases relating to the Dallas Office Building.
(b) Prior to the Closing, Heritage MLP and its subsidiaries shall
have taken the action necessary to,
(i) restructure its ownership of Heritage Operating,
L.P., including the formation of LP, Inc., a Delaware corporation; and
(ii) accommodate its ownership of La Grange.
(c) Prior to or at the Closing,
(i) La Grange will convey to Heritage GP a limited
partner interest in ETC OLP in an amount that has a value equivalent to
2% of the total equity to be contributed to Heritage MLP at Closing
(the "ETC OLP Interest"); and
(ii) Heritage GP will convey the ETC OLP Interest to
Heritage MLP in exchange for the continuation of its 2% general partner
interest in Heritage MLP.
2.3 CONTRIBUTION.
(a) On the terms and subject to the conditions of this Agreement,
at the Closing, La Grange shall contribute, transfer and deliver or cause to be
contributed, transferred and delivered to Heritage MLP all of the La Grange
Interests and Heritage MLP shall acquire from La Grange all of the La Grange
Interests, free and clear of all Encumbrances other than Permitted Encumbrances,
in exchange for the following:
(i) An amount in cash equal to $300 million, less (A) the
amount of Accounts Payable of ETC OLP and its consolidated subsidiaries
(the "ETC OLP Accounts Payable") as of the Closing Date which shall
continue to be obligations of ETC OLP immediately following the
Closing, less (B) if, at Closing, the amount by which the Long-Term
Debt is more than $151.5 million (the "Estimated Long-Term Debt"), plus
(C) if, at Closing, the amount by which the Long-Term Debt is less than
$151.5 million, less (D) the amount, if any, by which $2,000,000
exceeds the appraised value of the Dallas Office Building, by wire
transfer of immediately available funds to an account designated by La
Grange at least three (3) days prior to the Closing Date (the "Cash
Consideration");
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(ii) The number of Common Units, Class D Units and Special
Units as set forth in Section 2.3(b), having a total value of $680
million, plus an amount equal to the lesser of (x) $2,000,000 and (y)
the appraised value of the Dallas Office Building, less the amount of
the Estimated Long-Term Debt (the "Equity Consideration");
(iii) the Capital Expenditures Payment set forth in Section
2.4.; and
(iv) the Bossier Pipeline Reimbursement Payment set forth
in Section 2.5.
(b) The number of Common Units, Class D Units and Special Units
which comprise the Equity Consideration, shall be an aggregate of 15,883,234
Units, divided as follows: (i) a number of Common Units equal to the number of
Common Units outstanding immediately prior to Closing (not including any Common
Units to be issued hereunder) multiplied by 19.99%, (ii) a number of Class D
Units equal to the aggregate number of Units minus the number of Common Units
determined in (i) hereof and the number of Special Units set forth in (iii)
hereof, and (iii) 3,742,515 Special Units.
(c) Immediately following the transactions described above, (i)
Heritage MLP will contribute (A) its interest in the GP Entities (other than LA
GP, LLC) and cash in an amount sufficient to replenish the working capital of
the LaGrange Partnerships to ETC OLP as a capital contribution and (B) all of
the capital stock of LP, Inc. and its interest in each of Heritage OLP, LA GP,
LLC and ETC OLP to New OLP and (ii) the Heritage Parties shall pay in full the
Long-Term Debt and shall obtain (x) the release of all collateral held by the
lenders to secure such obligations and (y) authorization of such lenders to file
any lien release or termination documents as may be necessary to effectively
terminate any and all liens and security interests held by such lenders in the
collateral, including, but not limited to UCC-3 financing statement amendments.
2.4 CAPITAL EXPENDITURES PAYMENT. Additional cash shall be paid to
La Grange at Closing as reimbursement for capital expenditures paid to third
parties through the Closing Date with respect to the following growth projects,
in an amount as mutually agreed to by the Parties, and not to exceed five
million ($5,000,000) dollars (the "Capital Expenditures Payment"):
(a) ▇▇▇▇▇▇▇ Treater located in Elk City, Oklahoma;
(b) Katy 30" Interconnect;
(c) La Grange Inlet Compression Project; and
(d) Navasota Treater Shutdown.
2.5 BOSSIER PIPELINE REIMBURSEMENT PAYMENT.
Additional cash shall be paid to La Grange at Closing as reimbursement
for capital expenditures paid to third parties through the Closing Date with
respect to the Bossier Pipeline Project, in an amount as mutually agreed to by
Parties, and not to exceed seventy-five million ($75,000,000) dollars (the
"Bossier Pipeline Reimbursement Payment").
2.6 ACCOUNTS PAYABLE TRUE-UP.
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(a) Within five (5) days of the Closing Date, La Grange shall
estimate the amount of the Accounts Payable of ETC OLP as of the Closing Date
(the "the Estimated ETC OLP Accounts Payable"), which shall continue to be the
obligations of ETC OLP following the Closing.
(b) Within 60 days after the Closing Date, Heritage MLP shall
prepare an unaudited statement (the "Final Statement") of the ETC OLP Accounts
Payable 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 La Grange the Final
Statement, fairly presenting the ETC OLP Accounts Payable as of the
close of business on the Closing Date. The Final Statement shall be
accompanied by a report setting forth (A) the ETC OLP Accounts Payable,
in reasonable detail, as reflected in the Final Statement, and (B) the
amount of any difference between the ETC OLP Accounts Payable as
reflected on the Final Statement and the Estimated ETC OLP Accounts
Payable, to whom such difference is to be paid and the basis therefore.
The principles of presentation in the Final Statement shall be the same
as those presented in determining the Estimated ETC OLP Accounts
Payable at Closing.
(ii) Following the Closing, Heritage MLP, on the one hand,
and La Grange, 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
La Grange Entities relating to periods prior to the Closing Date for
purposes of preparing, reviewing and resolving any disputes concerning
the Final Statement. La Grange shall have 30 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 La Grange
fails to notify Heritage MLP of any such dispute within such 30-day
period, the Final Statement shall be deemed to be accepted. If La
Grange shall so notify Heritage MLP of any dispute, La Grange and
Heritage MLP shall cooperate in good faith to resolve such dispute as
promptly as possible.
(iii) If Heritage MLP and La Grange are unable to resolve
any such dispute within 30 days of La Grange'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 La Grange (the "Independent
Accounting Firm") within 10 days after the expiration of the 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 La Grange.
The Independent Accounting Firm shall act as an arbitrator to
determine, based solely on presentations by Heritage MLP and La Grange,
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)(iii). 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 La
Grange and shall be final, binding and conclusive.
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The Final Statement, as modified by resolution of any disputes by
Heritage MLP and La Grange or by the Independent Accounting Firm, shall
be the "Final Statement."
(c) Heritage MLP shall pay, or cause to be paid, to La Grange, the
amount by which the Estimated ETC OLP Accounts Payable exceeds the ETC OLP
Accounts Payable as set forth in the Final Statement, and La Grange shall pay,
or cause to be paid, to Heritage MLP the amount by which the Estimated ETC OLP
Accounts Payable is less than the ETC OLP Accounts Payable as set forth in the
Final Statement.
(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.
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 La Grange Entities.
3.1 ORGANIZATION AND EXISTENCE. Schedule 3.1 sets forth the form
of organization, legal name and the Organization State of each of the Heritage
Entities and Heritage GP. Each of the Heritage Entities and Heritage GP is
either a general partnership, limited partnership, limited liability company or
corporation, as indicated on Schedule 3.1, duly organized or formed, validly
existing and in good standing under the laws of its Organization State. Each of
the Heritage Entities and Heritage GP has full power and authority to own, lease
or otherwise hold and operate its properties and assets and to carry on its
business as presently conducted, and in the case of Heritage GP, 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 the Heritage Entities and
Heritage GP is duly qualified and in good standing to do business as a foreign
general partnership, limited partnership, limited liability company or
corporation, as applicable, in each jurisdiction in which the conduct or nature
of its business or the ownership, leasing, holding or operating of its
properties makes such qualification necessary, except such jurisdictions where
the failure to be so qualified or in good standing, individually or in the
aggregate, would not have a Heritage Material Adverse Effect.
3.2 CAPITALIZATION OF THE HERITAGE ENTITIES.
(a) All of the outstanding Common Units, Class C 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, as amended by Amendment ▇▇. ▇, ▇▇. ▇, ▇▇. ▇ and No. 4 (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 Sections 17-303 and
17-607 of the Delaware LP Act), and, as of the respective dates of the SEC
Reports and the Heritage Financial Statements, were issued and held as described
therein. Prior to the Closing and prior to the restructuring contemplated by
Section 2.2, Heritage GP was the sole general partner of Heritage
13
MLP and Heritage OLP with a 1% general partner interest in Heritage MLP and a
1.0101% general partner interest in Heritage OLP. In conjunction with the
transactions to be completed prior to or at Closing pursuant to Section 2.2,
Heritage GP is the sole general partner of Heritage MLP and Heritage OLP with a
2% general partner interest in Heritage MLP and a 0.0% general partner interest
in Heritage OLP, and Heritage MLP owns, directly and indirectly, a 100% limited
partner interest in Heritage OLP. On the date hereof, the issued and outstanding
limited partner interests of Heritage MLP consist of [18,013,229] Common Units,
1,000,000 Class C Units and the Incentive Distribution Rights. On the date
hereof, there are no Class D Units or Special Units outstanding.
(b) The Common Units, Class D Units and Special Units to be issued
to La Grange at the Closing (and the limited partner interests represented
thereby), will be duly authorized in accordance with the Heritage MLP
Partnership Agreement, and, when issued and delivered to La Grange against
payment therefore 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 Sections 17-303 and 17-607 of the Delaware LP Act) and will be
issued free and clear of any lien, claim or Encumbrance.
(c) Each Heritage Entity (other than Heritage MLP and Heritage
OLP) is a Heritage Wholly Owned Subsidiary. No Encumbrance exists upon any
outstanding share (or other percentage ownership interests) of Capital Stock of
any Heritage Entity which Heritage MLP directly or indirectly owns other than
(i) the Encumbrances, if any, set forth in Schedule 3.2(c), and (ii) Permitted
Encumbrances. Except as set forth in Schedule 3.2(c), Heritage MLP does not own,
of record or beneficially, directly or indirectly through any Person, and does
not control, directly or indirectly through any Person or otherwise, any Capital
Stock or derivative securities of any entity other than a Heritage Entity. All
of the outstanding shares of Capital Stock of the Heritage Entities that are
corporations or limited liability companies have been duly authorized and
validly issued and are fully paid and nonassessable. All of the outstanding
shares of Capital Stock of the Heritage Entities that are general or limited
partnerships have been duly authorized and validly issued in accordance with
such Heritage Entity's partnership agreement and such Capital Stock has been
fully paid for (to the extent required under such Heritage Entity's partnership
agreement and the Heritage OLP Partnership Agreement, as applicable, ) and is
nonassessable (except as such nonassessability may be affected by matters
described in Sections 17-303 and 17-607 of the Delaware LP Act or similar
partnership laws of its Organization State).
(d) Except (i) as described in the SEC Reports, (ii) arising under
any Heritage Plan, and (iii) for the Common Units, Class D Units and Special
Units to be issued pursuant to this Agreement and the Class E Units to be issued
to HHI in exchange for the Common Units currently held by HHI, 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 as amended by Amendment No. 1 and No. 2
thereto (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,
Class D Units or Special Units, as contemplated by this Agreement, or the
issuance of Class E Units to HHI, gives rise to any rights for or relating to
the registration
14
of any Common Units or other securities of Heritage MLP or Heritage OLP, except
pursuant to this Agreement, to the Registration Rights Agreement among Heritage
MLP and the other parties named therein, dated as of August 10, 2000, or such
rights as have been waived or satisfied. Except (i) as set forth in the SEC
Reports (ii) pursuant to the Heritage Plans, and (iii) for the Common Units,
Class D Units and Special Units to be issued pursuant to this Agreement and the
Class E Units to be issued to HHI in exchange for the Common Units currently
held by HHI, no options, warrants or other rights to purchase, agreements or
other obligations to issue, or rights to convert any obligations into or
exchange any securities for, Capital Stock of Heritage MLP or Heritage OLP are
outstanding.
(e) 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 the Amendment contemplated by this Agreement and attached hereto as
Exhibit 3.2(e)(i) ("Amendment No. 5") or the Heritage OLP Partnership Agreement.
Heritage MLP has all requisite power and authority to issue, sell and deliver
the Common Units, Class D Units and Special 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. 5 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, issuance, sale and delivery of the Common Units, Class D
Units and Special Units shall have been validly taken, and no other
authorization by any of such parties is required therefore.
3.3 AUTHORITY AND BINDING AGREEMENT. Each of Heritage GP and the
Heritage Parties has full power and authority to execute, deliver and perform
this Agreement and the Other Transaction Documents (collectively, the "Heritage
Documents") to which they are a party, and to consummate the transactions
contemplated thereby. The execution, delivery and performance by Heritage GP and
the Heritage Parties of the Heritage Documents, and the consummation by them of
the transactions contemplated thereby, have been duly authorized by all
necessary action. This Agreement has been duly executed and delivered by
Heritage GP and the Heritage Parties and constitutes, and each of the Heritage
Documents and each other agreement, instrument or document executed or to be
executed by Heritage GP and the Heritage Parties in connection with the
transactions contemplated by the Heritage Documents has been, or when executed
will be, duly executed and delivered by such Party and constitutes, or when
executed and delivered will constitute, a valid and legally binding obligation
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.
3.4 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. 5 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, and
prior to the Closing the Heritage OLP Partnership Agreement, as amended by
Amendment No. 3 thereto, will be duly authorized, executed and delivered by
Heritage GP and is, and will be,
15
a valid and legally binding agreement of Heritage GP, enforceable against
Heritage GP in accordance with its terms; provided, however, that 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).
3.5 NON-CONTRAVENTION. The execution, delivery and performance by
the Heritage Parties of the Heritage Documents to which they are a party, and
the consummation by them of the transactions contemplated thereby do not and
will not (a) conflict with or result in a violation of any provision of the
respective certificate or agreement of limited partnership (in the case of the
Heritage MLP Partnership Agreement as amended by Amendment No. 5 and in the case
of the Heritage OLP Partnership Agreement, as amended through the date hereof),
charter or bylaws or other governing instruments of Heritage GP or the Heritage
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 Heritage GP or
the Heritage Entities may be bound, (c) result in the creation or imposition of
any Encumbrance upon any of the Heritage Entities or Heritage Assets, (d)
assuming compliance with the matters referred to in Section 3.6, violate any
Applicable Law binding upon the Heritage Entities or (e) conflict with or result
in a violation of any Permit held by the Heritage Entities.
3.6 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 3.6
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 Heritage GP or the Heritage Entities in connection
with the execution, delivery or performance of this Agreement by the Heritage
Parties or the consummation by them of the transactions contemplated thereby.
3.7 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 and Encumbrances set forth in Schedule 3.7.
3.8 SEC REPORTS.
(a) Heritage MLP's annual report on Form 10-K for the year ended
August 31, 2002, 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, 2002 (collectively, the "SEC Reports") were timely filed with
the SEC. Such documents, at the time they were filed with the SEC, complied in
all material respects with the requirements of the Exchange Act 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 with a reasonable basis
and in
16
good faith. Other than the SEC Reports, none of the Heritage Entities nor any of
their respective subsidiaries 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, 2002, 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.
3.9 FINANCIAL STATEMENTS.
(a) Attached as Schedule 3.9(a) or filed with the SEC Reports are
copies of (i) the audited consolidated balance sheet as of August 31, 2002, the
unaudited consolidated balance sheet as of May 31, 2003, and (ii) the related
audited and unaudited, respectively, consolidated statements of income, cash
flows and owners' equity for the fiscal year and quarterly period then ended
(including in all cases the notes, if any, thereto) of the Heritage Entities
(the "Heritage Financial Statements"). The Heritage Financial Statements have
been prepared in accordance with GAAP applied on a basis consistent with past
practices except, in the case of unaudited interim financial statements, for
normal year-end adjustments, 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 Heritage 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.
(c) None of the Heritage 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 Schedules to this Agreement, that will create or result in any
Encumbrances on the Heritage Assets or the Heritage Entities, except for
Permitted Encumbrances.
(d) Heritage MLP has heretofore furnished to La Grange 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
17
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 3.9(e) sets forth a list of all outstanding
restricted units that have been granted under the Heritage Plans and the number
of Common Units issuable upon vesting thereof. Except for the Common Units,
Class D Units and Special Units issuable pursuant to this Agreement at the
Closing, and the Class E Units issuable to HHI, 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.
3.10 ABSENCE OF CERTAIN CHANGES. Since August 31, 2002, except as
disclosed in the SEC Reports and except for the execution and delivery of this
Agreement and the Other Transaction Documents, (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 Heritage
Entities, taken as a whole, except for general economic changes and changes that
may affect the industry of the Heritage Entities generally or (B) would
adversely affect the ability of the Heritage Parties to consummate the
transactions contemplated by this Agreement and the Other Transaction Documents
(clauses (A) and (B), or either of such clauses, a "Heritage Material Adverse
Effect"); (b) the Heritage Business has been conducted only in the ordinary
course consistent with past practice; (c) except for, or as contemplated by,
this Agreement, the Acquisition Agreement, and the HHI Purchase Agreement, none
of the Heritage Entities has 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 Heritage Material Adverse Effect; (d) none of the
Heritage Entities has suffered any material loss, damage, destruction or other
casualty to any of the Heritage Assets (whether or not covered by insurance)
that individually or in the aggregate would result in a Heritage Material
Adverse Effect; and (e) none of the Heritage Entities has taken any of the
actions set forth in Section 5.5 except as permitted thereunder.
3.11 TAX MATTERS.
(a) Except as set forth on Schedule 3.11(a), (i) each of the
Heritage Entities has filed when due, after giving effect to applicable
extensions, all material Tax Returns required to be filed with the IRS or other
applicable taxing authority through the date hereof; (ii) such Tax Returns are
true, complete and correct in all material respects; and (iii) each of the
Heritage Entities has timely paid or has provided an accrual for all Taxes which
are or have become due (whether or not shown on any such Tax Return), and has
withheld and paid to the appropriate taxing authority any Tax that it is
required by Applicable Law to withhold and pay to a taxing authority on or
before the date hereof other than, in either case, those (x) which, if not paid,
would not have a Heritage Material Adverse Effect or (y) which are being
contested in good faith; (iv) no claim has been made by any taxing authority in
a jurisdiction in which any of the Heritage Entities does not currently file a
Tax Return that it is or may be subject to Tax by such jurisdiction; (v) none of
the Heritage Entities has entered into any agreement or arrangement with any tax
authority that requires any of the Heritage Entities to take or refrain from
taking any action; (vi) none of the Heritage Entities is a party to any
agreement, whether written or
18
unwritten, providing for the payment of Taxes, payment of Tax losses,
entitlements to refunds or similar Tax matters; and (vii) none of the Heritage
Entities that is not a corporation has elected to be treated as a corporation.
None of the Heritage Entities has any material liability for Taxes other than
those incurred in the ordinary course of business and in respect of which
adequate reserves are being maintained in accordance with GAAP. There are no
material liens for Taxes upon any asset of any of the Heritage Entities except
for liens arising as a matter of Applicable Law relating to current Taxes not
yet due. There are no Taxes that will be imposed on any of the Heritage Entities
in connection with the execution of this Agreement or the Other Transaction
Documents or in connection with any of the transaction contemplated hereby or
thereby. Except as set forth on Schedule 3.11(a), none of the Heritage Entities
currently is the beneficiary of any extension of time within which to file any
Tax Return.
(b) Schedule 3.11(b) lists all federal or state income and
franchise Tax Returns filed by any of the Heritage Entities or any affiliated,
consolidated, combined, unitary or similar group of which any Heritage Entity is
or was a member on or after August 31, 1999, (i) that are as of the date hereof
the subject of audit, (ii) in respect of which there is any other suit, action,
investigation or claim in progress by any taxing authority or (iii) in respect
of which any issue has been raised by any taxing authority at an earlier time
that is reasonably expected to be raised at a later time. Except as set forth on
Schedule 3.11(b), none of 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 or has received any notice from any taxing
authority that it intends to conduct an audit or investigation thereof or is
subject to any ruling of any taxing authority.
(c) Except as set forth on Schedule 3.11(c), none of the Heritage
Entities has made any payment, is obligated to make any payment, or is a party
to any agreement that under certain circumstances could obligate it to make any
payment that will not be deductible under Section 280G of the Code.
(d) Since August 31, 1999, none of 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
3.11(d) for stock acquisitions for which Heritage GP or HHI obtained
commercially reasonable indemnification (which indemnification was assigned or
otherwise made available to Heritage OLP) and which liability was assumed by
Heritage OLP upon the transfer of the assets of the acquired entity to Heritage
OLP.
(e) Since their formation and up to and including the current tax
year, Heritage MLP and Heritage OLP have each been treated as a partnership for
federal income tax purposes, and will immediately before, at, and immediately
after, the Closing also each be treated as a partnership for federal income tax
purposes. Moreover, as to the transactions for which provision is made in
Section 2.2(b), neither of Heritage MLP or Heritage OLP will be an "investment
partnership", that is a partnership that would be treated as an investment
company (within the meaning of Section 351 of the Code) if it were a corporation
for federal income tax purposes. Moreover, for each taxable year since their
formation more than 90% of the gross income of
19
Heritage MLP and Heritage OLP has constituted "qualifying income" within the
meaning of Section 7704(d) of the Code.
3.12 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 Heritage Business. 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 Heritage Business.
3.13 LEGAL 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 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, Class D Units or
Special Units, or (C) affect adversely the ability of the Heritage Parties to
consummate the Closing as contemplated herein.
3.14 SUFFICIENCY OF HERITAGE ASSETS. The Heritage Assets constitute
all the assets and properties the use or benefit of which are reasonably
necessary for the operation of the Heritage Business as conducted on the date of
this Agreement. 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 necessary for the conduct of the Heritage
Business are in good condition, normal wear and tear excepted, and are useable
in the continued operation of the Heritage Business consistent with past
practice.
3.15 REAL PROPERTY.
(a) Set forth in Schedule 3.15(a) is the street address, a brief
description and a legal description of all real property owned by any of the
Heritage Entities and used or held for use in connection with the operation of
the Heritage Business, which if not so owned would have a Heritage Material
Adverse Effect.
(b) Set forth in Schedule 3.15(b) is the street address and a
brief description of the real property, including facilities and structures,
leased by any of the Heritage Entities and used or held for use in connection
with the operation of the Heritage Business, which if not so leased would have a
Heritage Material Adverse Effect.
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3.16 INTELLECTUAL PROPERTY. Except as set forth on Schedule 3.16,
each of the Heritage Entities owns or possesses or has the right to use, and 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 Intellectual
Property 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.
3.17 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.
3.18 AGREEMENTS.
(a) Set forth in Schedule 3.18(a) is a list of all the following
Contracts to which any of the Heritage GP or the Heritage Entities is a party or
by which Heritage GP or the Heritage Entities are bound that are not terminable
at the option of Heritage GP or one of the Heritage Entities (or Heritage GP or
one of their Affiliates) within 30 days for convenience and without penalty:
(i) collective bargaining agreements and similar
agreements with Heritage Employees as a group;
(ii) agreements, trusts, plans, funds or other employee
benefit arrangements of any nature;
(iii) agreements with any director or officer of Heritage
GP;
(iv) agreements relating to the acquisition of any Capital
Stock of any Heritage Entity or options thereof;
(v) indentures, mortgages, security agreements, notes,
loan or credit agreements or other agreements relating to the borrowing
of money by one of the Heritage Entities;
(vi) license, royalty or other agreements relating to
Intellectual Property, Technology or Software;
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(vii) partnership, joint venture and profit sharing
agreements;
(viii) agreements with any Governmental Authority;
(ix) agreements in the nature of a settlement or a
conciliation agreement arising out of any claim asserted by any other
Person;
(x) agreements not made in the ordinary course of the
Heritage Business;
(xi) other agreements, whether or not made in the ordinary
course of business, that are material to the Heritage Business or the
ownership or operation of the Heritage Assets; and
(xii) agreements or commitments to enter into any of the
foregoing.
(b) Each of such Contracts is a valid and binding agreement of the
applicable Heritage Entities. None of the Heritage 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 none of the Heritage Entities has received any written notice
from any other party indicating that it is in breach of or in default under any
such material provision. Except as described on Schedule 3.18(b), no other party
to any of such agreements is, to the Knowledge of the Specified Heritage
Persons, in breach of or in default under such agreements in any material
respect, nor has any assertion been made by any of the Heritage Entities of any
such breach or default.
3.19 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 3.19(a), 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
Heritage Assets or the operation of the Heritage 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"). Except as set forth on Schedule 3.19(a), 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) Except as set forth on Schedule 3.19(b), 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 Heritage Assets
or Heritage Business, with Applicable Environmental Laws or (ii) that could be
reasonably expected to give rise to any common law or other legal liability or
obligation with respect to the Heritage Assets or Heritage 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
22
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) Except as set forth on Schedule 3.19(d), there are no (i)
non-propane underground storage tanks, known contamination of soil or
groundwater, or known or suspected asbestos or asbestos-containing material that
is not in an intact and undisturbed condition 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.
3.20 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.
3.21 ABSENCE OF LIABILITIES. None of the Heritage 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 on Schedule 3.21, that will create or result in
any Encumbrances on the Heritage Assets, except for Permitted Encumbrances.
3.22 BOOKS AND RECORDS.
(a) 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
23
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.
(b) None of the Heritage Entities nor any Heritage 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.
3.23 LISTING. The outstanding Common Units are listed for trading
on the New York Stock Exchange.
3.24 EMPLOYEE MATTERS.
(a) Except as set forth on Schedule 3.24(a), neither Heritage GP
nor any 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; neither Heritage GP nor any of the Heritage
Entities has 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 Heritage GP or any of the Heritage Entities or, to the
best knowledge of Heritage GP and 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 Heritage GP or any of
the Heritage Entities or, to the best knowledge of Heritage GP and the Heritage
Parties, threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against Heritage GP or any of the Heritage
Entities and (iii) except as described in Schedule 3.24(a), neither Heritage GP
nor any of the Heritage Entities has any obligation or liability under any union
pension plans or collective bargaining agreements related to the Heritage
Employees or the Heritage Business that will be an obligation or liability of or
binding on Heritage GP or any of the Heritage Entities after the Closing, except
in the cases of clauses (i), (ii) and (iii) such complaints, grievances,
arbitration proceedings, strikes, labor disputes, slowdowns, stoppages or
liabilities which if determined adversely to Heritage GP or the Heritage
Entities, would not individually or in the aggregate result in a Heritage
Material Adverse Effect.
(b) Schedule 3.24(b) lists all express employment agreements and
related noncompete agreements in excess of $75,000 per annum in salary not
terminable upon convenience and without penalty upon less than 60 days notice to
which Heritage GP or any of the Heritage Entities is a party or by which any of
such Persons is bound.
3.25 CONSENTS. Schedule 3.25 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 transactions contemplated by this
Agreement and otherwise to consummate the transactions contemplated hereby (the
"Heritage Consents"). Schedule 7.1(e) includes all of the Heritage Consents
that, if not obtained and in full force and effect at the time of the Closing,
could reasonably be expected to result in a Material Adverse Effect on the
Heritage Business.
24
3.26 CONDUCT OF THE HERITAGE BUSINESS. Except as provided on
Schedule 3.26, since May 31, 2003, neither Heritage GP nor the Heritage Entities
have taken any actions that would be prohibited by the provisions of Section 5.5
if such actions had been taken after the date of this Agreement.
3.27 DISCLOSURE. Neither this Agreement nor any Schedule or Exhibit
hereto nor any other certificate or instrument delivered to La Grange 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.
3.28 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.28(a) 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, unit option, stock purchase, unit purchase, restricted
stock, restricted unit, incentive, deferred compensation, 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 Heritage
Employee, officer or director of Heritage GP or any of the Heritage Entities
(collectively, referred to herein as the "Heritage Plans"). Except as set forth
on Schedule 3.28(a), 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) Except as set forth in Schedule 3.28(b), 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 Schedule 3.28(b), 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 3.28(b), none of the Heritage Plans provides for or
promises retiree medical, disability or life insurance benefits to any current
or former Heritage Employee, officer or director of Heritage GP or any Heritage
Entity.
(c) 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) Except to the extent set forth on Schedule 3.28(d), each
Heritage Plan is now and always has been operated in all respects in accordance
with the requirements of Applicable Law,
25
including, without limitation, ERISA and the Code, and Heritage GP 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 3.28(d), no Heritage Plan is
subject to Title IV of ERISA or Section 412 of the Code.
(e) 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) Except as set forth on Schedule 3.28(f), each Heritage Plan
may be unilaterally terminated any time by a Heritage Entity without material
liability, other than for benefits accrued prior to such termination.
(g) Except as set forth on Schedule 3.28(g), 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.
3.29 FINDER'S FEES. Except in accordance with the letter agreement
dated September 23, 2003 between the Special Committee of the Board of Directors
of Heritage GP and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and except as set forth on Schedule 3.29, none
of the Heritage Entities, or any of their respective Affiliates, are obligated
(directly or indirectly) under any agreement with any Person that would obligate
any of the Heritage Entities or La Grange or any of their respective Affiliates
to pay any commission, brokerage or "finder's fee" in connection with the
transactions contemplated herein.
3.30 REGULATION. Except as set forth on Schedule 3.30, none of the
Heritage Entities is now, or after the consummation of the transactions
contemplated by this Agreement and the Other Transaction Documents 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.
3.31 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. 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
26
default under any such agreement, which breach, default or violation would, if
continued, have a Heritage Material Adverse Effect.
3.32 OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that, as of the date of such
opinion, the consideration to be paid by Heritage MLP in connection with the
transactions contemplated by this Agreement is fair, from a financial point of
view, to the Common Unitholders of Heritage MLP.
3.33 APPROVAL OF SPECIAL COMMITTEE. Subject to the rights of the
Special Committee under Section 6.15, the Special Committee has recommended that
the Board of Directors of Heritage GP approve the transactions contemplated
hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LA GRANGE
For the purposes of this Agreement, La Grange represents and warrants
as set forth in this Article 4. La Grange does not make any representations and
warranties in this Article 4 with respect to the Heritage Entities.
4.1 ORGANIZATION AND EXISTENCE. Schedule 4.1 sets forth the form
of organization, legal name and the Organization State of La Grange and each
Subsidiary of La Grange. Each of the La Grange Entities is either a limited
partnership, limited liability company or corporation, as indicated on Schedule
4.1, duly organized or formed, validly existing and in good standing under the
laws of its Organization State. Each of the La Grange Entities has full power
and authority to own, lease or otherwise hold and operate its properties and
assets and to carry on its business as presently conducted. Each of the La
Grange Entities is duly qualified and in good standing to do business as a
foreign limited partnership, limited liability company or corporation, as
applicable, in each jurisdiction in which the conduct or nature of its business
or the ownership, leasing, holding or operating of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not have
a La Grange Material Adverse Effect.
4.2 CAPITALIZATION OF THE LA GRANGE ENTITIES.
(a) Schedule 4.2(a) sets forth by each class and each series
within each class, (i) the La Grange Interests (ii) the name and address of
record and number and percentage ownership of those shares of each holder of
record thereof. No Encumbrance exists upon any outstanding La Grange Interests
other than the Encumbrances, if any, set forth in Schedule 4.2(a), all of which
will be released at or before the Closing.
(b) Except as set forth in Schedule 4.2(b), each La Grange Entity
is a La Grange Wholly Owned Subsidiary or will be as of Closing, by virtue of
the actions required to be taken pursuant to Section 2.2(a), a La Grange Wholly
Owned Subsidiary. In the case of any La Grange Entity that is not a La Grange
Wholly Owned Subsidiary, Schedule 4.2(b) sets forth, by each class and each
series within each class, the number of outstanding shares (or other percentage
ownership interests) of Capital Stock of the La Grange Entity, (i) La Grange's
aggregate direct and indirect ownership of those shares (or interests) and (ii)
the name and address of record and percentage ownership of those shares (or
interests) of each holder of record thereof other than La
27
Grange or a La Grange Entity. No Encumbrance exists upon any outstanding share
(or other percentage ownership interests) of Capital Stock of any La Grange
Entity which La Grange directly or indirectly owns other than the Encumbrances,
if any, set forth in Schedule 4.2(b), all of which will be released at or before
the Closing. Except as set forth in Schedule 4.2(b), La Grange does not own, of
record or beneficially, directly or indirectly through any Person, and does not
control, directly or indirectly through any Person or otherwise, any Capital
Stock or derivative securities of any entity other than a La Grange Entity. All
of the outstanding shares of Capital Stock of the La Grange Entities that are
corporations or limited liability companies have been duly authorized and
validly issued and are fully paid and non-assessable. All of the outstanding
shares of Capital Stock of the La Grange Entities that are general or limited
partnerships have been duly authorized and validly issued in accordance with
such La Grange Entity's partnership agreement and such Capital Stock has been
fully paid for (to the extent required under such La Grange Entity's partnership
agreement) and is nonassessable (except as such nonassessability may be affected
by matters described in Sections 17-303 and 17-607 of the Delaware LP Act or
similar partnership laws of its Organization State).
(c) Except as set forth in Schedule 4.2(c), there are no
subscriptions, options, convertible securities, warrants, calls, preemptive
rights or other rights of any kind to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any interests in the La Grange
Entities pursuant to any agreement or instrument to which the La Grange Entities
or La Grange is a party or by which any of them may be bound. Neither the
offering nor the sale of the La Grange Interests as contemplated by this
Agreement gives rise to any rights for or relating to the registration of any
Capital Stock of the La Grange Entities, except pursuant to this Agreement or
such rights as have been waived or satisfied.
4.3 AUTHORITY AND BINDING AGREEMENT. La Grange has full power and
authority to execute, deliver and perform this Agreement and the Other
Transaction Documents (collectively, the "La Grange Documents") to which it is a
party, and to consummate the transactions contemplated thereby. The execution,
delivery and performance by La Grange of such La Grange 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 La Grange and constitutes, and each of the La Grange Documents and
each other agreement, instrument or document executed or to be executed by La
Grange in connection with the transactions contemplated by the La Grange
Documents has been, or when executed will be, duly executed and delivered by La
Grange and constitutes, or when executed and delivered will constitute, a valid
and legally binding obligation 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 NON-CONTRAVENTION. The execution, delivery and performance by
La Grange of the La Grange 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 La Grange 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,
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cancellation or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement or other instrument or obligation to which
the La Grange Entities may be bound, (c) result in the creation or imposition of
any Encumbrance upon any of the La Grange Entities or La Grange Assets, (d)
assuming compliance with the matters referred to in Section 4.4, violate any
Applicable Law binding upon them or the La Grange Entities or (e) conflict with
or result in a violation of any Permit held by the La Grange Entities.
4.5 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 4.5
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 La Grange or the La Grange Entities in connection with
the execution, delivery or performance of this Agreement by La Grange or the
consummation by them of the transactions contemplated thereby.
4.6 EXCLUSIVE OPERATION OF THE BUSINESS. Except as set forth in
Schedules 4.1, 4.2(b) or 4.6, the La Grange Entities 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 La Grange Business.
4.7 TITLE TO LA GRANGE ASSETS. As of the Closing, the La Grange
Entities will have good and marketable title to, or valid leasehold and
right-of-way interests in, all of the La Grange Assets, free and clear of all
Encumbrances other than Permitted Encumbrances and Encumbrances set forth in
Schedule 4.7.
4.8 FINANCIAL STATEMENTS.
(a) Attached as Schedule 4.8(a) are copies of (i) the audited
combined balance sheet as of December 31, 2002 (the "Financial Statement Date")
and the related combined statement of income, cash flows and partners' equity
for the period from October 1, 2002 through December 31, 2002 (including in all
cases the notes, if any, thereto) of ETC OLP and its subsidiaries, and (ii) the
unaudited combined balance sheet of ETC OLP and its subsidiaries as of June 20,
2003 and the related combined statement of income and cash flows for the six
months ended June 20, 2003 (the "La Grange Financial Statements"). The La Grange
Financial Statements have been prepared in accordance with GAAP applied on a
basis consistent with past practices and fairly present the respective
consolidated financial position of La Grange as of the date set forth therein
and the respective results of operations and cash flows of La Grange for the
fiscal period set forth therein.
(b) Attached as Schedule 4.8(b) are copies of (i) the audited
consolidated balance sheet as of September 30, 2002 and December 31, 2001 and
the related consolidated statement of income, cash flows and stockholders'
equity for the fiscal periods ended September 30, 2002 and December 31, 2001 and
2000 (including in all cases the notes, if any, thereto) of Aquila Gas Pipeline
Corporation and its subsidiaries ("Aquila"); and (ii) the unaudited consolidated
balance sheet of Aquila and its subsidiaries as of June 20, 2002 and the related
consolidated statement of income and cash flows for the six months ended June
20, 2002 (the "Aquila Financial Statements"). To the knowledge of La Grange, the
Aquila Financial Statements have been prepared in accordance with GAAP applied
on a basis consistent with past practices and fairly
29
present the respective consolidated financial position of Aquila as of the date
set forth therein and the respective results of operations and cash flows of
Aquila for the fiscal period set forth therein.
(c) Attached as Schedule 4.8(c) are copies of the audited
consolidated balance sheet as of December 27, 2002 and December 31, 2001 and the
related consolidated statement of income, cash flows and changes in
shareholders' equity for the fiscal periods ended December 27, 2002 and December
31, 2001 and 2000 (including in all cases the notes, if any, thereto) of Oasis
Pipe Line Company ("Oasis") and its subsidiaries (the "Oasis Financial
Statements"). To the knowledge of La Grange, the Oasis Financial Statements have
been prepared in accordance with GAAP applied on a basis consistent with past
practices and fairly present the respective consolidated financial position of
Oasis as of the date set forth therein and the respective results of operations
and cash flows of Oasis for the fiscal period set forth therein.
(d) The books of account and other financial records of the La
Grange Entities from which the La Grange Financial Statements were prepared: (i)
reflect all items of income and expense related to the La Grange Business and La
Grange Assets and all assets and liabilities relating to the La Grange Business
and La Grange Assets 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.
(e) None of the La Grange 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 Schedules to this Agreement, that will create or result in any
Encumbrances on the La Grange Assets or the La Grange Entities, 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 La Grange Entities, taken as a whole, except for
general economic changes and changes that may affect the industry of the La
Grange Entities generally or (B) would adversely affect the ability of La Grange
to consummate the transactions contemplated by this Agreement and the Other
Transaction Documents (clauses (A) and (B), or either of such clauses, a "La
Grange Material Adverse Effect"); (b) the La Grange 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 La Grange Entities has 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 La Grange
Material Adverse Effect; (d) none of the La Grange Entities has suffered any
material loss, damage, destruction or other casualty to any of the La Grange
Assets (whether or not covered by insurance) that individually or in the
aggregate would result in a La Grange Material Adverse Effect; and (e) none of
the La Grange Entities has taken any of the actions set forth in Section 5.2
except as permitted thereunder.
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4.10 TAX MATTERS.
(a) Except as set forth on Schedule 4.10(a), (i) each of the La
Grange Entities has filed when due, after giving effect to applicable
extensions, all material Tax Returns required to be filed with the IRS or other
applicable taxing authority through the date hereof; (ii) all such Tax Returns
are true, complete and correct in all material respects; (iii) each of the La
Grange Entities has timely paid or has provided an accrual for all Taxes which
are or have become due (whether or not shown on any such Tax Return), and has
withheld and paid to the appropriate taxing authority any Tax that it is
required by Applicable Law to withhold and pay to a taxing authority on or
before the date hereof other than, in either case, those (x) which, if not paid,
would not have a La Grange Material Adverse Effect or (y) which are being
contested in good faith; (iv) no claim has been made by any taxing authority in
a jurisdiction in which any of the La Grange Entities does not currently file a
Tax Return that it is or may be subject to Tax by such jurisdiction; (v) none of
the La Grange Entities has entered into any agreement or arrangement with any
tax authority that requires any of the La Grange Entities to take or refrain
from taking any action; (vi) none of the La Grange Entities is a party to any
agreement, whether written or unwritten, providing for the payment of Taxes,
payment of Tax losses, entitlements to refunds or similar Tax matters; and (vii)
none of the La Grange Entities that is not a corporation has elected or will
elect to be treated as a corporation. None of the La Grange Entities has any
material liability for Taxes other than those incurred in the ordinary course of
business and in respect of which adequate reserves are being maintained in
accordance with GAAP. There are no material liens for Taxes upon any asset of
any of the La Grange Entities except for liens arising as a matter of Applicable
Law relating to current Taxes not yet due. There are no Taxes that will be
imposed on any of the La Grange Entities in connection with the execution of
this Agreement or the Other Transaction Documents or in connection with any of
the transaction contemplated hereby or thereby. Except as set forth on Schedule
4.10(a), none of the La Grange Entities currently is the beneficiary of any
extension of time within which to file any Tax Return.
(b) Schedule 4.10(b) lists all federal or state income and
franchise Tax Returns filed by any of the La Grange Entities or any affiliated,
consolidated, combined, unitary or similar group of which any La Grange Entity
is or was a member on or after August 31, 1999 and on or before the date hereof,
(i) that are as of the date hereof the subject of audit, (ii) in respect of
which there is any other suit, action, investigation or claim in progress by any
taxing authority or (iii) in respect of which any issue has been raised by any
taxing authority at an earlier time that is reasonably expected to be raised at
a later time. None of the La Grange 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 or has received any notice from any taxing
authority that it intends to conduct an audit or investigation thereof or is
subject to any ruling of any taxing authority.
(c) None of the La Grange Entities has made any payment, is
obligated to make any payment, or is a party to any agreement that under certain
circumstances could obligate it to make any payment that will not be deductible
under Section 280G of the Code.
(d) Except as set forth on Schedule 4.10(d), since August 31,
1999, none of the La Grange 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 a La Grange Entity) under
31
Treas. Reg. 1.1502-6 (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract, or otherwise.
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 La Grange Entities have complied in all
material respects with all Applicable Laws relating to the ownership or
operation of the La Grange Assets and the conduct of the La Grange Business.
None of the La Grange Entities is charged or, to the knowledge of the La Grange
Entities, 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 La Grange Assets or the La Grange Business.
4.12 LEGAL PROCEEDINGS. Except as set forth in Schedule 4.12, 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 La Grange
Entities, threatened, to which any of the La Grange Entities or any of their
respective subsidiaries is or may be a party or to which the business or
property of any of the La Grange 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 La Grange Entities
or any of their respective subsidiaries is or may be subject, that, in the case
of clauses (i), (ii) and (iii) above, is reasonably expected to (A) individually
or in the aggregate have a La Grange Material Adverse Effect or (B) affect
adversely the ability of La Grange to consummate the Closing as contemplated
herein.
4.13 SUFFICIENCY OF LA GRANGE ASSETS. The La Grange Assets
constitute all the assets and properties the use or benefit of which are
reasonably necessary for the operation of the La Grange Business as conducted on
the date of this Agreement. As of the Closing, all tangible assets and
properties included in the La Grange Assets will be in the possession, or under
the control, of the La Grange Entities. All La Grange Assets necessary for the
conduct of the La Grange Business are in good condition, normal wear and tear
excepted, and are useable in the continued operation of the La Grange Business
consistent with past practice.
4.14 REAL PROPERTY.
(a) Set forth in Schedule 4.14(a) is the street address, a brief
description and a legal description of all real property owned by any of the La
Grange Entities and used or held for use in connection with the operation of the
La Grange Business other than those which if not so owned would not have a La
Grange Material Adverse Effect.
(b) Set forth in Schedule 4.14(b) is the street address and a
brief description of the real property, including facilities and structures,
leased by any of the La Grange Entities and used or held for use in connection
with the operation of the La Grange Business other than those which if not so
leased would not have a La Grange Material Adverse Effect.
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4.15 TANGIBLE PERSONAL PROPERTY. Set forth in Schedule 4.15 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 the La Grange Entities and
used or held for use in connection with the operation of the La Grange Business,
except for items having a value individually of less than $10,000 and having, in
the aggregate of like items, a value of less than $200,000.
4.16 INTELLECTUAL PROPERTY. Except as set forth in Schedule 4.16,
each of the La Grange 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 La Grange Entities, all Intellectual
Property necessary for the conduct of the La Grange Business, other than those
which if not so owned or possessed would not have a La Grange Material Adverse
Effect, and La Grange is not aware of any claim to the contrary or any challenge
by any other Person to the rights of the La Grange Entities with respect to the
foregoing.
4.17 PERMITS. Schedule 4.17(a) lists all of the Permits held by the
La Grange Entities. The Permits described in Schedule 4.17(a) are all of the
Permits which are necessary to own its properties and to conduct its business in
the manner in which it is currently conducted and except for such Permits which,
if not obtained, would not have, individually or in the aggregate, a La Grange
Material Adverse Effect; each of the La Grange 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 La Grange
Material Adverse Effect; and, except as described in Schedule 4.17(b), none of
such Permits contains any restriction that is materially burdensome to the La
Grange Entities considered as a whole.
4.18 AGREEMENTS.
(a) Set forth in Schedule 4.18(a) is a list of all the following
Contracts to which any of the La Grange Entities is a party or by which the La
Grange Entities are bound that are not terminable at the option of one of the La
Grange Entities (or one of their Affiliates) within 30 days for convenience and
without penalty:
(i) collective bargaining agreements and similar
agreements with La Grange Employees as a group;
(ii) agreements, trusts, plans, funds or other employee
benefit arrangements of any nature;
(iii) agreements with any La Grange Employee, or any
director or officer of one of the La Grange Entities or any of their
Affiliates;
(iv) agreements relating to the acquisition of any Capital
Stock of any La Grange Entity or options thereof;
33
(v) agreements between or among one of the La Grange
Entities and any of their Affiliates;
(vi) indentures, mortgages, security agreements, notes,
loan or credit agreements or other agreements relating to the borrowing
of money by one of the La Grange Entities or to the direct or indirect
guarantee or assumption by any one of the La Grange Entities of any
obligation of one of their Affiliates;
(vii) agreements relating to the acquisition or disposition
of any assets, involving obligations or revenues of $100,000 or more;
(viii) agreements with respect to the lease of any real or
personal property, involving annual obligations or revenues of $100,000
or more;
(ix) agreements concerning the management or operation of
any real property, involving annual obligations or revenues of $100,000
or more;
(x) 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 $100,000 or
more;
(xi) license, royalty or other agreements relating to
Intellectual Property, Technology or Software;
(xii) partnership, joint venture and profit sharing
agreements;
(xiii) agreements with any Governmental Authority;
(xiv) agreements in the nature of a settlement or a
conciliation agreement arising out of any claim asserted by any other
Person;
(xv) agreements containing any covenant that would limit
the freedom of any of the La Grange Entities to engage in any line of
business or compete with any other Person in any geographic area or
during any period of time;
(xvi) agreements not made in the ordinary course of the La
Grange Business;
(xvii) other agreements, whether or not made in the ordinary
course of business, that are material to the La Grange Business or the
ownership or operation of the La Grange Assets; and
(xviii) agreements or commitments to enter into any of the
foregoing.
(b) Each of such Contracts is a valid and binding agreement of the
applicable La Grange Entities. None of the La Grange 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
34
any of such agreements, and none of the La Grange Entities has received any
written notice from any other party indicating that it is in breach of or in
default under any such material provision. Except as described on Schedule
4.18(b), no other party to any of such agreements is, to the Knowledge of the
Specified La Grange Persons, in breach of or in default under such agreements in
any material respect, nor has any assertion been made by any of the La Grange
Entities of any such breach or default.
4.19 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 4.19(a), none of the La Grange
Entities 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 La Grange
Assets or the operation of the La Grange Business, including (i) CERCLA, and
(ii) the RCRA. Except as set forth in Schedule 4.19(a), the La Grange Entities
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 La
Grange Assets by reason of any Applicable Environmental Laws.
(b) Except as set forth in Schedule 4.19(b), 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 La Grange
Assets, La Grange Business or La Grange Entities, with Applicable Environmental
Laws or (ii) that could be reasonably expected to give rise to any common law or
other legal liability or obligation with respect to the La Grange Assets, La
Grange Business or La Grange Entities, 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) Except as set forth in Schedule 4.19(c), there are no (i)
underground storage tanks, known contamination of soil or groundwater, or known
or suspected asbestos or asbestos-containing material that is not in an intact
and undisturbed condition on any property owned or leased by the La Grange
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 any La Grange Entity, (iii) Permits
required of the La Grange Entities under Applicable Environmental Laws to own,
lease or operate their properties and conduct the La Grange Business the terms
and conditions of which the La Grange Entities have violated or are violating
(except, in each case as would not have a La Grange Material Adverse Effect), or
(iv) real estate sites transferred under this Agreement that have been used as a
manufactured gas plant site.
4.20 INSURANCE. The La Grange Entities maintain insurance covering
the properties, operations, personnel and businesses of the La Grange Entities.
In the reasonable judgment of the La Grange Entities, such insurance insures
against such losses and risks as are reasonably adequate to protect the La
Grange Entities and the La Grange Business. None of the La Grange 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
35
such insurance is outstanding and duly in force on the date hereof and will be
outstanding and duly in force on the Closing Date.
4.21 ABSENCE OF LIABILITIES. None of the La Grange 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 on Schedule 4.21, that will create or result in
any Encumbrances on the La Grange Assets, except for Permitted Encumbrances.
4.22 BOOKS AND RECORDS.
(a) Each of the La Grange 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.
(b) None of the La Grange Entities nor any La Grange Employee or
agent of any of the La Grange Entities has made any payment of funds of any of
the La Grange 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 which would be required to be disclosed in any reports
which would be required to be filed by the La Grange Entities if the La Grange
Entities were subject to the reporting requirements of the Exchange Act.
4.23 INVESTMENT INTENT.
(a) La Grange is acquiring the Common Units, Class D Units and
Special 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.
(b) La Grange, by entering into this Agreement, (i) 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, (ii)
represents and warrants that it has all right, power and authority and the
capacity necessary to enter into the Heritage MLP Partnership Agreement, (iii)
appoints Heritage GP (as general partner of Heritage MLP) and, if a Liquidator
shall be appointed, the Liquidator of Heritage MLP as such La Grange'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 its admission as an Additional
Limited Partner and as a party to the Heritage MLP Partnership Agreement, (iv)
gives the power of attorney provided for in the Heritage MLP Partnership
Agreement and Heritage OLP Partnership Agreement and (v) makes the waivers and
gives the consents and approvals contained in the Heritage MLP Partnership
Agreement. Capitalized terms not defined
36
in this paragraph have the meanings assigned to such terms in the Heritage MLP
Partnership Agreement.
4.24 EMPLOYEE MATTERS.
(a) Except as set forth on Schedule 4.24(a) and as contemplated by
this Agreement, neither La Grange nor any of the La Grange 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; neither
La Grange nor any of the La Grange Entities has engaged in any unfair labor
practice, which in each case would have a La Grange Material Adverse Effect;
there is (i) no unfair labor practice complaint pending against La Grange or any
of the La Grange Entities or, to the best knowledge of La Grange or the La
Grange Entities, 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 La Grange or any of the La Grange Entities or, to the
best knowledge of La Grange or the La Grange Entities, threatened against any of
them, (ii) no significant strike, labor dispute, slowdown or stoppage pending
against La Grange or any of the La Grange Entities and (iii) except as described
in Schedule 4.24(a), neither La Grange or any of the La Grange Entities has any
obligation or liability under union pension plans or collective bargaining
agreements related to the La Grange Employees or the La Grange Business that
will be an obligation or liability of or binding on La Grange or any of the La
Grange Entities after the Closing, except in the cases of clauses (i), (ii) and
(iii) such complaints, grievances, arbitration proceedings, strikes, labor
disputes, slowdowns, stoppages or liabilities which if determined adversely to
La Grange or any of the La Grange Entities, would not individually or in the
aggregate result in a La Grange Material Adverse Effect.
(b) As of Closing, except as set forth on Schedule 4.24(b) and as
contemplated by this Agreement, there will be no employment agreements in excess
of $75,000 per annum in salary not terminable upon convenience and without
penalty upon less than 60 days notice and non-compete agreements to which any of
the La Grange Entities is a party or by which any of such Persons is bound.
Schedule 4.24(c) sets forth a correct and complete list of all of the La Grange
Employees, including name, title or position and date of hire.
(c) The La Grange Employees set forth on Schedule 4.24(c)
constitute all employees who are reasonably necessary to be employed for the
operation of the La Grange Business as currently conducted.
4.25 CONSENTS. Schedule 4.25 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 transactions contemplated by this
Agreement and otherwise to consummate the transactions contemplated hereby (the
"Consents"). Schedule 7.2(e) includes all of the Consents that, if not obtained
and in full force and effect at the time of the Closing, could reasonably be
expected to result in a La Grange Material Adverse Effect on the La Grange
Business.
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4.26 CONDUCT OF THE LA GRANGE BUSINESS. Except as provided on
Schedule 4.26, since June 30, 2003, the La Grange Entities have not taken any
actions that would be prohibited by the provisions of Section 5.2 if such
actions had been taken after the date of this Agreement.
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 La Grange 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) Schedule 4.28(a)(i) 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 La
Grange Entities is a party, with respect to which any of the La Grange Entities
has any liability or which are maintained, contributed to or sponsored by any of
the La Grange Entities for the benefit of any current or former La Grange
Employee, officer or director of any of the La Grange Entities (collectively,
referred to herein as the "La Grange Plans"). Except as set forth in Schedule
4.28(a)(ii), none of the La Grange 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 La Grange Plan, other than with respect
to a modification, change or termination required by ERISA or the Code.
(b) Except as set forth in Schedule 4.28(b), none of the La Grange
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 La Grange Entities could incur
liability under Section 4063 or 4064 of ERISA. Except to the extent set forth in
the La Grange Plans listed in Schedule 4.28(a)(i), none of the La Grange Plans
(i) provides for the payment of separation, severance, termination or
similar-type benefits to any person, (ii) obligates any La Grange Entity to pay
separation, severance, termination or other benefits as a result of the
transaction or (iii) obligates any La Grange Entity to make any payment or
provide any benefit that could be subject to a tax under Section 4999 of the
Code. Except as set forth in Schedule 4.28(b), none of the La Grange Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former La Grange Employee, officer or director of any La
Grange Entity.
(c) Each La Grange 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) Except as set forth on Schedule 4.28(d), each La Grange 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 La Grange Entity has performed all obligations required to be
performed by it under such La Grange Plan, is not in any respect in
38
default under or in violation of, and has no knowledge of any default or
violation by any party to, any La Grange Plan. Except as set forth on Schedule
4.28(d), no La Grange Plan is subject to Title IV of ERISA or Section 412 of the
Code.
(e) With respect to each La Grange Plan, there are no prohibited
transactions or breaches of fiduciary duties that could result in liability
(directly or indirectly) for any La Grange Entity.
(f) Except as set forth on Schedule 4.28(f), each La Grange Plan
may be unilaterally terminated at any time by a La Grange Entity without
material liability, other than for benefits accrued prior to such termination.
(g) Except as set forth in Schedule 4.28(g), all contributions to,
and payments from, each La Grange Plan that are required to be made in
accordance with the terms of the La Grange Plan and Applicable Law have been
timely made.
4.29 FINDER'S FEES. Except as set forth on Schedule 4.29, none of
the La Grange Entities, or any of their respective Affiliates, are obligated
(directly or indirectly) under any agreement with any Person that would obligate
the La Grange Entities, Heritage GP 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 on Schedule 4.30, none of the
La Grange Entities is now, or after the consummation of the transactions
contemplated by this Agreement and the Other Transaction Documents 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.
4.31 NO VIOLATION. None of the La Grange 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 La Grange
Material Adverse Effect. No third party to any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which any of the La
Grange 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 La Grange Material
Adverse Effect.
39
4.32 AGREEMENTS OF LA GRANGE AND THE LA GRANGE ENTITIES. Each of
the Partnership Agreements of La Grange and the La Grange Partnerships, and the
limited liability company agreements of each other La Grange Entity that is a
limited liability company have been duly authorized, executed and delivered and
is, and will be, a valid and legally binding agreement of such entity,
enforceable in accordance with its terms, provided, however, that 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 of law).
ARTICLE 5
AGREEMENTS
La Grange hereby covenants and agrees with each of the Heritage Parties
to the effect set forth in Sections 5.1 to 5.3, 5.6 and 5.7. The Heritage
Parties hereby covenant and agree with La Grange to the effect set forth in
Sections 5.4, and 5.5, 5.6 and 5.7.
5.1 CONDUCT AND PRESERVATION OF THE BUSINESS OF THE LA GRANGE
ENTITIES. Except as expressly provided in this Agreement and the Other
Transaction Documents, or except as listed in Schedule 5.1, La Grange shall
cause the La Grange Entities to (a) conduct the La Grange Business substantially
as it is being conducted on the date hereof (provided that this clause (a) shall
not be violated to the extent that the La Grange Entities take any action not
otherwise prohibited by Section 5.2); (b) use its commercially reasonable best
efforts to preserve, maintain and protect the La Grange Business consistent with
available resources; and (c) use its commercially reasonable best efforts to
preserve intact the business organization of the La Grange Entities and the La
Grange Business, consistent with its available resources, to keep available the
services of the La Grange Employees and to maintain existing relationships with
suppliers, contractors, distributors, customers and others having business
relationships with the La Grange Entities or the La Grange Business.
5.2 RESTRICTIONS ON CERTAIN ACTIONS OF THE LA GRANGE ENTITIES.
Without limiting the generality of Section 5.2, except as listed in Schedule 5.2
and except as otherwise expressly contemplated by this Agreement and the Other
Transaction Documents, from and after the date hereof and until the Closing
Date, without the approval of Heritage MLP, none of the La Grange Entities,
shall, with respect to the La Grange Entities, the La Grange Assets or the La
Grange Business, or shall cause or permit any of the La Grange Entities to:
(a) make any expenditures outside the ordinary course of business
consistent with past practice which, individually or in the aggregate, exceed
$1,000,000 other than expenditures (i) made in connection with a La Grange
Permitted Acquisition or (ii) with respect for which La Grange shall be
reimbursed under Section 2.4.
(b) make any material change in the ongoing operations of the La
Grange Business except to the extent resulting from any La Grange Permitted
Acquisition;
(c) create, incur, guarantee or assume any indebtedness for
borrowed money outside the ordinary course of business;
40
(d) mortgage or pledge any of the La Grange Assets or La Grange
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 La Grange 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, in excess of $100,000, or in the aggregate, in
excess of $1,000,000;
(f) amend, modify or change any existing lease or Contract
relating to the La Grange Assets, other than in the ordinary course of the
business consistent with past practice;
(g) waive, release, grant or transfer any rights of value relating
to the La Grange Assets, La Grange Interests or La Grange Business, other than
in the ordinary course of the business consistent with past practice;
(h) except in the ordinary course of business, hire any new
employees or recall any laid-off employees;
(i) delay payment of any account payable or other liability
relating to the La Grange 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;
(j) 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 La Grange Business;
(k) except as set forth in this Section 5.2, take any action which
would make any of the representations or warranties of La Grange 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;
(l) agree in writing or otherwise take, any of the actions
described in this Section 5.2;
(m) 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, other than with a La Grange Entity or in connection with any La
Grange Permitted Acquisition;
(n) 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;
(o) 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;
41
(p) enter into or take any action in connection with ▇▇▇▇▇▇,
trades or swaps of any commodity or financial instrument, except to the extent
consistent with the provisions of the Energy Transfer Risk Management Policy;
(q) declare, set aside or pay any dividend or make any other
distribution to their partners, owners or members whether or not upon or in
respect of any La Grange Interest except as expressly authorized by this
Agreement; or
(r) redeem or otherwise acquire any La Grange Interest or issue
any La Grange Interest or any option, warrant or right relating thereto or any
securities convertible into or exchangeable for any La Grange Interest, or
otherwise authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any La
Grange Interest or any other securities or equity equivalents or amend any of
the terms of any such securities or agreements.
5.3 SERVICES OF LA GRANGE EMPLOYEES. Between the date hereof and
the Closing, La Grange shall use its commercially reasonable best efforts to
keep available the services of the La Grange Employees, and shall not, except in
accordance with past practice and existing business policy, terminate any such
La Grange Employees.
5.4 CONDUCT AND PRESERVATION OF THE HERITAGE BUSINESS. Except as
expressly provided in this Agreement and the Other Transaction Documents or
except as listed in Schedule 5.4, the Heritage Parties shall cause the Heritage
Entities to (a) conduct the Heritage Business substantially as it is being
conducted on the date hereof (provided that this clause (a) shall not be
violated to the extent that the Heritage Entities take any action not otherwise
prohibited by Section 5.5); (b) use their commercially reasonable best efforts
to preserve, maintain and protect the assets of the Heritage Entities and
Heritage 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 Heritage
Business, consistent with its available resources, to keep available the
services of the Heritage Employees and to maintain existing relationships with
suppliers, contractors, distributors, customers and others having business
relationships with the Heritage Entities or the Heritage Business.
5.5 RESTRICTIONS ON CERTAIN ACTIONS OF THE HERITAGE PARTIES AND
HERITAGE GP. Without limiting the generality of Section 5.4, except as listed in
Schedule 5.5 and except as otherwise expressly contemplated by this Agreement
and the Other Transaction Documents, from and after the date hereof and until
the Closing Date, without the approval of La Grange:
(a) Except as set forth on Schedule 5.5, 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 other than in
connection with (i) any Heritage Plan, (ii) any employee benefit plan or other
employee arrangement adopted by any of the Heritage Entities prior to the date
of this Agreement; (iii) any Heritage Permitted Acquisition, (iv) the issuance
of Common Units as
42
contemplated by this Agreement; and (v) the issuance and/or sale of Common Units
under an effective registration statement.
(b) Except as set forth on Schedule 5.5, neither 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 $1,000,000 other than (A) expenditures contemplated
by the annual budget adopted by the Heritage Entities for the year
ending August 31, 2002 or, if applicable, August 31, 2003, and (B)
expenditures made in connection with any Heritage Permitted
Acquisition;
(ii) make any material change in the ongoing operations of
the Heritage Business except to the extent resulting from any Heritage
Permitted Acquisition;
(iii) create, incur, guarantee or assume any indebtedness
for borrowed money outside the ordinary course of business other than
indebtedness permitted under credit facilities of the Heritage Entities
and indebtedness incurred under any new credit facilities entered into
by the Heritage Entities to finance the cash portion of the Purchase
Price;
(iv) mortgage or pledge any of the securities or assets of
any of the Heritage Entities or create or suffer to exist any
Encumbrance thereupon, other than (A) Permitted Encumbrances, (B)
Encumbrances created pursuant to loan documentation permitted under the
existing credit facilities of the Heritage Entities and (C)
Encumbrances created pursuant to loan documentation relating to any new
credit facilities entered into by the Heritage Parties to finance the
cash portion of the Purchase Price;
(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 which have a value, individually,
in excess of $50,000 or, in the aggregate, in excess of $1,000,000;
provided however, that any of the Heritage Entities may sell excess
real property listed on Heritage's surplus property list or real
property that does not generate EBITDA;
(vi) amend, modify or change any existing lease or
contract, other than in the ordinary course of the business consistent
with past practice;
(vii) waive, release, grant or transfer any rights of value
relating to the Heritage Assets or the Heritage Business, other than in
the ordinary course of business consistent with past practice;
(viii) 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;
(ix) delay payment of any account payable or other
liability relating to the Heritage Business beyond the later of its due
date or the date when such liability would
43
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;
(x) 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 Heritage Business other than in connection with any advance renewal
or replacement of an existing insurance policy;
(xi) 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;
(xii) agree in writing or otherwise take any of the actions
described in this Section 5.5.
(xiii) 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 other than in connection with
any Heritage Permitted Acquisition;
(xiv) purchase any securities of any corporation or other
Person other than in connection with any Heritage Permitted
Acquisition;
(xv) 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;
(xvi) declare any distribution or dividend of cash,
property or securities, other than (A) regular quarterly cash
distributions by Heritage MLP of Available Cash at a rate that is not
in excess of $0.65 per Common Unit (with a proportionate distribution
to Heritage GP in respect of its general partner interests in Heritage
MLP and Heritage OLP) and (B) distributions in respect of the Incentive
Distribution Rights; or
(xvii) enter into or take any action in connection with
▇▇▇▇▇▇, trades or swaps of any commodity, except in accordance with the
Heritage Hedging Policy.
5.6 CONSENT TO ELECTIONS. The Parties hereto agree and acknowledge
that each of the La Grange Entities entitled to make an election under Section
754 of the Code shall make such election, and each Party shall take such steps
as are necessary or required to make such election by each of the La Grange
Entities. The Parties also agree that the Heritage MLP (and its subsidiary
entities) will elect to use the remedial method under Treasury Reg. Section
1.704-3(d) with respect to all assets contributed to the Heritage MLP by La
Grange, including any goodwill.
5.7 TAX REPORTING. The Parties hereto agree, to the extent
allowable, to report the contribution to Heritage MLP by La Grange of the La
Grange Interests as a non-taxable contribution under Section 721 of the Code.
44
ARTICLE 6
ADDITIONAL AGREEMENTS
The Parties hereby covenant and agree as follows:
6.1 ACCESS TO INFORMATION, CONFIDENTIALITY.
(a) Between the date hereof and the Closing, La Grange shall cause
the La Grange Entities to (i) give each of the Heritage Parties and their
respective authorized representatives reasonable access to all La Grange
Employees and all facilities and all books and records relating to the La Grange
Entities, (ii) permit each of the Heritage Parties and their respective
authorized representatives to make such inspections of the La Grange 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 La Grange Entities as
any such Party may from time to time reasonably request; provided, however, that
La Grange 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 La Grange Entities.
(b) Between the date hereof and the Closing, the Heritage Parties
shall (i) give La Grange and its respective authorized representatives
reasonable access to all Heritage Employees and all facilities and all books and
records relating to the Heritage Entities, (ii) permit La Grange and its
respective authorized representatives to make such inspections of the Heritage
Assets as they may reasonably require to verify the accuracy of any
representation or warranty contained in Article 3 and (iii) shall furnish La
Grange and its respective authorized representatives with such financial and
operating data and other information with respect to the Heritage Entities as La
Grange may from time to time reasonably request; provided, however, that the
Heritage Parties 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 Heritage Entities.
6.2 AUTHORIZATIONS AND CONSENTS.
(a) Each Party hereto shall take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and shall use
all commercially reasonable best efforts to obtain, as promptly as practicable,
(i) all authorizations, consents, orders and approvals of all Governmental
Authorities that may be or become necessary for such party's execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and the Other Transaction Documents, and (ii) all approvals and consents
(including those approvals, consents and authorizations specified in Schedule
3.25 (with respect to the Heritage Parties) and Schedule 4.25) (with respect to
La Grange) required under all Contracts to which the La Grange Entities or the
Heritage Entities is a party to consummate the transactions contemplated hereby.
Each Party will cooperate fully (including by providing all information the
other Party reasonably requests) with the other Parties in promptly seeking to
obtain all such authorizations, consents, orders and approvals. Each Party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
soon as reasonably practicable after the date hereof, but in no event later than
five (5) business days following the execution of this Agreement, use their
commercially reasonable efforts to cause the
45
waiting period under the HSR Act to expire as quickly as possible and to supply
promptly any additional information and documentary material that may be
requested pursuant to the HSR Act. Notwithstanding the foregoing, no Party shall
have any obligation to dispose of, hold separate or otherwise restrict its
enjoyment of any of their assets or properties.
(b) Each Party hereto shall promptly inform the other Parties of
any communication from any Governmental Authority regarding any of the
transactions contemplated by this Agreement. If any Party or Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Authority with respect to the transactions contemplated
hereby, then such Party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request.
6.3 PUBLIC ANNOUNCEMENTS. The Heritage Parties and La Grange will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statement with
respect to the transactions contemplated by this Agreement and the Other
Transaction Documents, and none of the Parties to this Agreement shall, and La
Grange shall cause the La Grange Entities not to, issue any such press release
or make any such public statement, in the case of any press release or public
statement by any of the Heritage Parties, without the advance approval of La
Grange following such consultation (such approval not to be unreasonably
withheld or delayed) and, in the case of La Grange or the La Grange Entities,
without the advance approval of Heritage MLP following such consultation (such
approval not to be unreasonably withheld or delayed), except as may be required
by Applicable Law, court process or by the requirements of any securities
exchange.
6.4 ACCESS TO RECORDS AFTER CLOSING. For a period of six years
from and after the Closing Date, La Grange and its Affiliates and
representatives shall have reasonable access to inspect and copy all books and
records relating to the La Grange Entities to the extent that such access may
reasonably be required in connection with matters relating to or affected by the
operation of the La Grange 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 La Grange and its representatives
a reasonable opportunity, at their expense, to segregate and remove such books
and records as they may select. La Grange shall be solely responsible for any
costs or expenses incurred by it pursuant to this Section 6.4.
6.5 FEES AND EXPENSES. Except as otherwise expressly provided in
this Agreement, La Grange shall pay the fees and expenses of La Grange and the
La Grange Entities, and the Heritage Parties shall pay the fees and expenses of
the Heritage Entities, 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.
6.6 TAXES; OTHER CHARGES. All sales, use, registration, stamp,
property transfer, transfer and similar Taxes incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be borne
by the person upon whom such Tax is imposed
46
by Applicable Law. Each Party agrees to cooperate in the filing of all necessary
documentation and returns with respect to all such Taxes.
6.7 EMPLOYMENT MATTERS.
(a) Heritage Plans. The Heritage Parties shall include the La
Grange Entities as "participating Employers" in the Heritage Plans described in
Schedule 3.28(a)(i), and all La Grange Employees shall be eligible to
participate in the Heritage Plans or similar plans as of the Closing Date,
pursuant to the terms of those plans, and (i) with respect to each "welfare
plan," as defined in Section 3(1) of ERISA, any waiting period for eligibility
shall be waived for each La Grange Employee provided such La Grange Employee was
covered under a similar La Grange Plan on the Closing Date; and (ii) with
respect to each "pension plan," as defined in Section 3(2)(A) of ERISA, and to
the extent allowed by law, La Grange Employees shall receive credit for prior
service with the La Grange Entities for purposes of eligibility and vesting, and
the plan shall accept eligible rollover distributions and loans pursuant to the
terms of the plan from any La Grange "pension plan."
(b) La Grange Plans. All La Grange Plans described in Schedule
4.28(a)(i) shall be terminated preceding the Closing Date, and (i) with respect
to each "group health care plan," which must comply with Section 4980B of the
code and Sections 601 through 608 of ERISA, the Heritage Plans, as applicable,
shall make COBRA continuation coverage available to qualified beneficiaries
whose qualifying event occurred before the Closing Date; and (ii) with respect
to each "employee pension benefit plan," all contributions (including the La
Grange Entities' contributions and Employee salary redirection contributions)
shall have been paid or accrued for any period ending on or before the Closing
Date, resolutions shall have been adopted before the Closing Date, terminating
each "employee pension benefit plan" with a termination date which precedes the
Closing Date, all La Grange Employees shall have been 100% vested, and the
distribution process, with regard to such La Grange Employees, shall begin
pursuant to the terms of such plan.
(c) Other Employment Matters. Except for accrued vacation time, no
other La Grange Employee-related liability or La Grange Plan liability,
including, without limitation, any liability under COBRA (except as set forth in
subsection (b) above), ERISA, or the Code is being assumed by the Heritage
Parties.
6.8 AMENDMENT OF SCHEDULES. The Heritage Parties and La Grange
will, promptly upon becoming aware of any fact, matter, circumstance or event,
which fact, matter, circumstance or event arose either (i) on or prior to the
date hereof (a "Pre-Signing Event") or (ii) after the date hereof but prior to
the Closing (a "Post-Signing Event"), in any case, requiring supplementation or
amendment of the schedules provided by the Heritage Parties or La Grange
attached hereto, supplement or amend such schedules to this Agreement to reflect
any fact, matter, circumstance or event, which, if existing, occurring or known
on the date of this Agreement, would have been required to be set forth or
described in such schedules which were or have been rendered inaccurate thereby.
All supplements and amendments to the schedules provided by Heritage Parties or
La Grange are provided for the information of the Parties only and no such
supplement or amendment to the schedules shall (i) amend or supplement the
representations and warranties (and corresponding schedules) made as of the date
hereof or (ii)
47
have any effect for the purpose of determining (A) satisfaction of the
conditions set forth in Article 6.8 hereof or (B) compliance by the Heritage
Parties and La Grange with their respective covenants and agreements set forth
herein.
6.9 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 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.
6.10 VOTE OF COMMON UNITS. Heritage GP shall use Commercially
Reasonable Best Efforts to cause its officers and directors to vote all of their
respective 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
the Class D Units.
6.11 LISTING. Heritage MLP shall use Commercially Reasonable Best
Efforts to list the Common Units to be issued to La Grange pursuant to this
Agreement on the New York Stock Exchange, prior to the Closing Date, subject to
official notice of issuance.
6.12 FINANCIAL STATEMENTS. La Grange will provide to Heritage MLP
an unaudited balance sheet dated as of September 30, 2003 of ETC OLP and its
subsidiaries within five days of the receipt of such unaudited balance sheet and
no later than the Closing. La Grange shall provide such other audited and
unaudited financial statements as may be required to be filed by Heritage MLP in
accordance with the Exchange Act and the Securities Act, and at such times as
may be required by Heritage MLP in order to make timely filings in compliance
thereunder.
6.13 ADDITIONAL COOPERATION. The Parties agree to cooperate and
assist in the filing of proxy solicitation materials relating to matters
contemplated hereby requiring a vote of the holders of the outstanding Common
Units of Heritage MLP.
6.14 CONFIDENTIALITY AND TAX SHELTER REGULATIONS. Except as
reasonably necessary to comply with applicable securities laws and
notwithstanding anything in this Agreement to the contrary (including the
confidentiality provisions set forth in Section 6.1) or in any other agreement
to which a Party hereto is bound, the Parties hereto (and each employee,
representative, or other agent of any of the Parties) are expressly authorized
to disclose to any and all persons, without limitation of any kind, the U.S.
federal income "tax treatment" and "tax structure" (as those terms are defined
in Treas. Reg. Sections 1.6011-4(c)(8) and (9), respectively) of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to such parties
relating to such "tax treatment" and "tax structure" of the transactions
contemplated by this Agreement. For these purposes, "tax structure" is limited
to facts relevant to the U.S. federal income tax treatment of the transaction
described herein.
6.15 PERMITTED ACTIONS. Notwithstanding the provisions of Section
5.5 above, the Heritage Parties and the Heritage GP (but only with respect to
the Heritage Parties) shall be entitled to take any action otherwise prohibited
by Section 5.5 in response to any third party inquiry, contact or proposal
received by them if (a) the Special Committee shall have determined, in its good
faith judgment, that any such otherwise prohibited action may lead to the
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negotiation and consummation of a sale or other transaction involving the
assets, business or securities of the Heritage Parties or any other transaction
similar to the transactions contemplated by this Agreement (collectively, a
"Possible Alternative") that in the opinion of the Special Committee may be more
beneficial than the transactions contemplated by this Agreement, taken as a
whole, to the holders of the Common Units (a "Superior Transaction") and (b) the
Special Committee shall have determined, after consultation with and based on
the advice of its legal counsel, that the failure to take such action would be
inconsistent with the Heritage GP's Board of Directors' fiduciary duties to
holders of the Common Units under applicable law; provided, that none of the
Heritage GP (but only with respect to the Heritage Parties) or the Heritage
Parties may execute a binding agreement to effect a Superior Transaction unless
this Agreement has first been terminated as provided in Section 8.1. The
Heritage GP (but only with respect to the Heritage Parties) and the Heritage
Parties agree that each of them will notify La Grange immediately if any
inquiry, contact or proposal is received by, any such information is requested
from, or any such discussions or negotiations are sought to be initiated or
continued with, any of their representatives, and thereafter shall keep La
Grange informed, on a current basis, on the status of any such inquiry, contact
or proposal and the status of any such negotiations or discussions.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS TO CLOSING OF LA GRANGE.
The obligations of La Grange 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, including, but not limited to, the consummation of the transactions
required to be completed pursuant to Section 2.2.
(c) Certificates. La Grange 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.
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(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 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 La Grange to
convey the La Grange Assets or to receive full payment therefore.
(e) Consents. All Consents set forth on Schedule 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, and with respect to any such Consent related
to any amendment of any credit agreement or similar document, such Consent shall
have been given (and any such amendment shall have been made) on terms that are
reasonably acceptable to La Grange, which acceptance shall not be unreasonably
withheld, conditioned or delayed.
(f) No Heritage 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. The Heritage Parties shall have delivered the
Equity Consideration and shall have delivered to an account designated by La
Grange the Cash Consideration and the Capital Expenditures Payment.
(h) Acquisition Agreement; HHI Purchase Agreement. The Acquisition
Agreement and the HHI Purchase Agreement shall have been executed and delivered
by the parties thereto and all conditions to closing therein (other than the
closing of the transactions pursuant to this Agreement) shall have been
satisfied or waived.
(i) 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.
(j) Amendment to Heritage MLP Partnership Agreement. Amendment No.
5 to the MLP Partnership Agreement and Amendment No. 3 to the OLP Partnership
Agreement shall have been duly executed and adopted and shall be in full force
and effect.
(k) Listing. The Common Units issuable to La Grange pursuant to
this Agreement shall have been approved for listing on the New York Stock
Exchange subject to official notice of issuance.
(l) Legal Opinion. La Grange shall have received the written
opinion from Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. in a reasonable and
customary form to be agreed to by the Parties.
(m) Equity Financing. Heritage MLP shall have completed, or shall
complete contemporaneously with the Closing, a public offering of Common Units
with minimum net proceeds to Heritage MLP of $250 million, on terms and
conditions mutually agreeable to Heritage MLP and La Grange (the "Equity
Financing").
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(n) Debt Financing. Heritage MLP shall have completed, or shall
complete contemporaneously with the Closing, a public debt offering or private
debt placement with minimum net proceeds to Heritage OLP of $300 million, on
terms and conditions mutually agreeable to the Heritage Parties and La Grange
(the "Debt Financing").
(o) Waiver of Prepayment Premiums. The Heritage Parties shall have
obtained waivers or amendments under their existing debt facilities which would
serve to avoid the triggering of any debt prepayment premiums for which the
Heritage Parties may be obligated to pay as a result of the transactions
contemplated by this Agreement or the Acquisition Agreement, on terms and
conditions mutually agreeable to the Heritage Parties and La Grange (the
"Prepayment Waivers").
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 La Grange on or prior to the Closing Date of each of the
following conditions:
(a) Representations and Warranties True. All the representations
and warranties of La Grange contained in this Agreement, and in any agreement,
instrument or document delivered by La Grange 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 La Grange 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. La Grange 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 them,
including, but not limited to, the consummation of the transactions required to
be completed pursuant to Section 2.2(b). In addition, La Grange shall have
performed and complied with all the covenants set forth in Sections 6.12 and
6.13.
(c) Certificates. The Heritage Parties shall have received a
certificate from La Grange, in substantially the form set forth in Exhibit
7.2(c), executed by La Grange, 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 any officer executing this
Agreement on behalf of La Grange.
(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 MLP effectively to exercise full rights of ownership of the
La Grange Interests and La Grange Assets to be acquired by Heritage MLP 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
51
determined, to impose any material limitation on the ability of Heritage MLP
effectively to exercise full rights of ownership of the La Grange Interests and
La Grange Assets to be acquired by Heritage MLP under this Agreement.
(e) Consents. All Consents set forth on Schedule 7.2(e) shall have
been obtained or made and shall be in full force and effect as to La Grange or
the La Grange Entities at the time of the Closing.
(f) No La Grange Material Adverse Effect. Since the date of this
Agreement, there shall not have been any event or condition having a La Grange
Material Adverse Effect.
(g) Deliveries. La Grange shall have delivered the certificates
representing all of the outstanding La Grange Shares, duly endorsed in blank or
accompanied by transfer powers[, or if any of such La Grange Interests are
uncertificated, such other assigment and conveyance documents as are reasonably
acceptable to the Parties].
(h) Acquisition Agreement; HHI Purchase Agreement. The Acquisition
Agreement and the HHI Purchase Agreement shall have been executed and delivered
by the parties thereto and all conditions to closing therein (other than the
closing of the transactions pursuant to this Agreement) shall have been
satisfied or waived.
(i) 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.
(j) Application for Issuance - Common Units. At the Closing, La
Grange will deliver the Application for Issuance of Common Units, substantially
in the form attached as Exhibit 7.2(j).
(k) Legal Opinion. The Heritage Entities shall have received the
written opinion from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. and such other written opinions
of counsel as may be required, each such opinion to be in a reasonable and
customary form to be agreed to by the Parties.
(l) Administrative Management Contract. The General and
Administrative Services, Reimbursement and Indemnification Agreement among La
Grange and ET GP, LLC shall have been terminated or amended to provide that any
fees payable under said agreement are not payable or reimbursable by Heritage
MLP.
(m) Voting and Transfer Rights Agreement. The Voting and Transfer
Rights Agreement dated as of October 1, 2002, among La Grange and the
Co-Investors named therein shall have been terminated or amended to provide that
Section 7 thereof shall not be applicable to the subsidiaries of La Grange that
become subsidiaries of Heritage MLP in connection with the transactions
contemplated by this Agreement.
(n) Non-Compete Agreement. The Non-Compete Agreement, in
substantially the form attached as Exhibit 1.1, shall have been executed by the
Restricted Parties, as defined therein.
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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) by any Party concurrently with any permitted termination of
the Acquisition Agreement;
(b) by written consent of each of the Parties;
(c) by any Party if the Closing has not occurred on or before
February 15, 2004, 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 Party if (i) there is any statute, rule or regulation
that makes consummation of the transactions contemplated hereby or the operation
of the La Grange Business or Heritage 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 La Grange
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 La Grange, if any material amendment is made by the
Heritage Parties in accordance with Section 6.8;
(h) by the Heritage Parties, if any material amendment is made by
La Grange in accordance with Section 6.8;
(i) by La Grange, if the Average Market Value is less than $29.50,
or by Heritage MLP, if the Average Market Value is greater than $38.50;
53
(j) by La Grange, if the general partner of La Grange reasonably
determines at any time after January 10, 2004 that it is not possible for the
Heritage Parties to fulfill any of the conditions described in Sections 7.1(m),
7.1(n) or 7.1(o) on or before the Closing Date on terms and conditions
reasonably acceptable to La Grange; and
(k) by the Heritage Parties acting through the Special Committee,
if the Special Committee determines that a possible alternative would constitute
a Superior Transaction.
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. Except as provided in Section 8.5 of this
Agreement, in the event of termination of this Agreement for any reason, this
Agreement and the Acquisition Agreement shall become void and have no effect,
except that the agreements contained in this Section 8.2 and Section 8.5 and in
Section 6.5 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. In the event of termination, each of the
Parties shall be responsible for its own expenses and costs.
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.
8.5 PAYMENT UPON CERTAIN TERMINATION. If this Agreement is
terminated by the Heritage Parties pursuant to Section 8.1(k), Heritage MLP
shall pay to La Grange a termination fee of $30 million in cash (the
"Termination Fee"), within one (1) business day after such termination. If
Heritage MLP fails to promptly pay to La Grange the Termination Fee, Heritage
MLP shall pay the costs and expenses (including reasonably documented legal fees
and expenses) in connection with any action, including the filing of any lawsuit
or other legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of Bank of
Oklahoma, National Association from the date such fee was required to be paid.
Any payment required to be made pursuant to this Section 8.5 shall be made by
wire transfer of immediately available funds to an account designated by La
Grange in writing to Heritage MLP.
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ARTICLE 9
SURVIVAL OF REPRESENTATIONS
9.1 INDEMNIFICATION OBLIGATIONS OF LA GRANGE.
(a) La Grange shall indemnify each of the Heritage Parties and any
of their owners, partners, officers, agents and their respective Affiliates and
controlling Persons (the "Heritage 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:
(i) the breach of any representation or warranty of La
Grange contained in or made pursuant to this Agreement (other than
breaches and warranties set forth in Section 4.2, Section 4.3, Section
4.7, Section 4.19, and Section 4.23);
(ii) the breach of any representation or warranty of La
Grange contained in or made pursuant to Section 4.19 [Environmental
Matters], and Section 4.23 [Investment Intent];
(iii) the breach of any representation or warranty of La
Grange contained in or made pursuant to Section 4.2 [Capitalization of
the La Grange Entities], Section 4.3 [Authority and Binding Agreement],
and Section 4.7 [Title to La Grange Assets],; and
(iv) the breach by La Grange or the failure by La Grange
to observe or perform in any material respect, any of their covenants
or agreements contained in Section 5.6, Section 5.7, Section 6.4,
Section 6.5, Section 6.6, Section 6,10, Section 6.12, Section 6.13,
Section 6.14 or Article 10 of this Agreement.
(b) Notwithstanding the foregoing, La Grange will not have any
obligation to indemnify any of the Heritage Parties or their Affiliates for
Losses under Section 9.1(a)(i) or Section 9.1(a)(ii) unless and until the
aggregate amount of all such Losses under Section 9.1(a)(i) or Section
9.1(a)(ii) exceeds $500,000 (regardless of whether, in the case of third party
actions, suits or proceedings with respect to any of the foregoing, La Grange
may have a meritorious defense), at and after which time La Grange shall be
liable for all Losses in excess of $500,000 and which do not in the aggregate
exceed $10,000,000; provided however, that any liabilities for which accruals
have been made by La Grange on the La Grange Financial Statement shall be
excluded in determining whether losses exceed $500,000. 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.
(a) The Heritage Parties shall, jointly and severally, indemnify
La Grange and any of its owners, partners, officers, agents and their respective
Affiliates and controlling Persons (the "La Grange 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:
55
(i) the breach of any representation or warranty of the
Heritage Parties contained in or made pursuant to this Agreement (other
than breaches and warranties set forth in Section 3.2, Section 3.3,
Section 3.7, and Section 3.19);
(ii) the breach of any representation or warranty of the
Heritage Parties contained in or made pursuant to Section 3.19
[Environmental Matters];
(iii) the breach of any representations or warranty of the
Heritage Parties contained in or made pursuant to Section 3.2
[Capitalization of the Heritage Entities], Section 3.3 [Authority and
Binding Agreement], Section 3.7 [Title to Heritage Assets], and
(iv) the breach by the Heritage Parties or the failure by
the Heritage Parties to observe or perform in any material respect, any
of its covenants or agreements contained in Section 5.6, Section 5.7,
Section 6.4, Section 6.5, Section 6.6, Section 6,10, Section 6.12,
Section 6.13, Section 6.14 or Article 10 of this Agreement.
(b) Notwithstanding the foregoing, the Heritage Parties will not
have any obligation to indemnify La Grange or its Affiliates for Losses under
Section 9.2(a)(i) or Section 9.2(a)(ii) unless and until the aggregate amount of
all such Losses under Section 9.2(a)(i) or Section 9.2(a)(ii) exceeds $500,000
(regardless of whether, in the case of third party actions, suits or proceedings
with respect to any of the foregoing, the Heritage Parties may have a
meritorious defense), at and after which time the Heritage Parties shall be
liable for all Losses in excess of $500,000 and which do not in the aggregate
exceed $10,000,000; provided however, that any liabilities for which accruals
have been made by the Heritage Parties on the Heritage Financial Statements
shall be excluded in determining whether losses exceed $500,000. The rights and
remedies of La Grange 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 La Grange.
9.3 INDEMNIFICATION PROCEDURES.
(a) Promptly upon receipt by a Party indemnified under this
Article 9 (an "Indemnified Party") of notice of the commencement of any action
against such Indemnified Party (a "Third Party Action") in respect of which
indemnity or reimbursement may be sought against a party required to make
indemnification hereunder (an "Indemnifying Party"), such Indemnified Party
shall notify the Indemnifying Party in writing of the commencement of such Third
Party Action, but the failure so to notify the Indemnifying Party shall not
relieve it of any liability which it may have to any Heritage Indemnified Party
under Section 9.1 or any La Grange Indemnified Party under Section 9.2, as
applicable, unless such failure actually and materially adversely affects the
defense of such Third Party Action. In case notice of commencement of any such
Third Party Action shall be given to the Indemnifying Party as above provided,
the Indemnifying Party shall be entitled to participate in and to assume the
defense of such action at its own expense, with counsel chosen by it that is
reasonably satisfactory to the Indemnified Party; provided, however, that:
56
(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 (provided that the Indemnified Party shall be entitled to
reimbursement for such expenses in accordance with subclauses (A) and
(B) below in Section 9.3(b));
(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.
(b) 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(d), (i)
the Indemnifying Party shall not be liable to the Indemnified Party hereunder
for any fees and expenses of counsel subsequently incurred by the Indemnified
Party attributable to defending against such Third Party Action, and (ii) 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 prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or delayed). If (A) the Indemnifying
Party does not assume control of the defense of such Third Party Action in
accordance with this Section 9.3, or (B) the Indemnified Party has been advised
in writing by counsel that representation of such Indemnified Party and the
Indemnifying Party by the same counsel would be inappropriate under applicable
standards of professional conduct (in which case the Indemnifying Party shall
not have the right to assume the defense of such Third Party Action on behalf of
the Indemnified Party), in each case 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 shall promptly reimburse the Indemnified Party therefore in
accordance with this Article 9. The reimbursement of fees and expenses of
counsel 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.
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(c) 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.
(d) The right of indemnification pursuant to this Article 9 shall
constitute the sole and exclusive remedy of each of the Parties to this
Agreement and their respective Affiliates, managers, directors, officers,
members, employees and other agents and representatives, 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 this Agreement.
9.4 SURVIVAL.
(a) All representations, warranties, covenants and agreements
contained in this Agreement other than those set forth in Article 9 hereof,
shall expire with and be terminated and extinguished by the Closing, and
thereafter no Party nor any of such Party's owners, partners, officers, agents,
and Affiliates shall have any liability with respect to such representations,
warranties, covenants and agreements conducted by any Party and any information
which any Party may receive (other than information identified in the Schedules
to this Agreement).
(b) The right to indemnification:
(i) with respect to any breach or violation of any of the
representations and warranties contained in Section 3.19 [Environmental
Matters] and Section 4.19 [Environmental Matters] shall survive for two
years following the Closing;
(ii) with respect to any breach or violation of any of the
representations and warranties contained in Section 3.7 [Title to
Heritage Assets] and Section 4.7 [Title to La Grange Assets] shall
survive for one year following the Closing;
(iii) with respect to any breach or violation of any of the
representations and warranties contained in Section 3.2,
[Capitalization of the Heritage Entities], Section 3.3, [Authority and
Binding Agreement], Section 4.2 [Capitalization of the La Grange
Entities], Section 4.3 [Authority and Binding Agreement], and Section
4.23 [Investment Intent], shall survive indefinitely; and
(iv) and with respect to any of the covenants and
agreements contained in Section 5.6, Section 5.7, Section 6.4, Section
6.5, Section 6.6, Section 6.10, Section 6.12, Section 6.13, Section
6.14 or Article 10 of this Agreement, shall survive for the applicable
statute of limitations.
(c) 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.
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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 La Grange:
c/o ETC Holdings, LP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Knight L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Heritage MLP or Heritage OLP:
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: 918-591-5360
and
▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇.
Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: 918-591-5360
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 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,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
10.6 JURISDICTION. 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
60
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.
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, the Heritage Parties, the La Grange Interests and the
La Grange Assets, (b) enable the Heritage Parties or the La Grange Entities to
assume and fully and timely perform in accordance with their terms any or all of
the La Grange Contracts, (c) enable the Heritage Parties or the La Grange
Entities to continue the La Grange Business, and (d) otherwise consummate more
fully and effectively the transactions contemplated by this Agreement and the
Other Transaction Documents.
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.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
La Grange Energy, L.P.
By:________________________________________
General Partner
By:________________________________________
Its:_______________________________________
Heritage Propane Partners, L.P.
By: U.S. Propane, L.P., General Partner
By: U.S. Propane, L.L.C., General Partner
By:________________________________________
Its:_______________________________________
U.S. Propane, L.P.
By: U.S. Propane, L.L.C., General Partner
By:________________________________________
Its:_______________________________________
CONTRIBUTION AGREEMENT
EXECUTION COPY NOVEMBER 6, 2003