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EXHIBIT 10.1 8/7/01
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PURCHASE AGREEMENT
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BY AND AMONG
COLUMBIA ENERGY GROUP,
COLUMBIA PROPANE CORPORATION,
COLUMBIA PROPANE, L.P.,
CP HOLDINGS, INC.,
AMERIGAS PROPANE, L.P.,
AMERIGAS PARTNERS, L.P.
AND
AMERIGAS PROPANE, INC.
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DATED JANUARY 30, 2001, AND
AMENDED AND RESTATED ON AUGUST 7, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I THE TRANSACTIONS..................................................................1
SECTION 1.1 The Transactions........................................................1
(a) Sale and Purchase of Buyer Limited Partnership Interests; Capital
Contribution of API to Buyer..........................................1
(b) Contribution of Buyer Limited Partnership Interests to Buyer Parent
in Return for Buyer Parent Units; Capital Contribution of API
to Buyer Parent.......................................................2
(c) Buyer and Buyer Parent Financing; Capital Contributions to Buyer.........2
(d) Distribution to Company and Assumption by Company of Certain CPLP
Assets and Liabilities................................................3
(e) Sale of Company Assets and Liabilities to the Buyer.....................3
(f) Execution and Delivery of Capital Contribution Agreement.................3
(g) Amendment of the Intercompany Loan Agreement.............................3
(h) Purchase of the Company's CPLP Limited Partnership Interest and the
Intercompany Note.....................................................4
(i) Contribution of Buyer Blend Assets and Liabilities to CPLP...............4
(j) Distribution to Seller and Assumption by Seller of Certain Company
Assets and Liabilities................................................4
(k) Purchase and Sale of the Company Shares..................................4
SECTION 1.2 Closing.................................................................4
SECTION 1.3 Closing Deliveries......................................................5
(a) Seller's Deliveries.....................................................5
(b) Buyer's Deliveries.......................................................7
(c) Registration Rights Agreement............................................9
(d) Definition of Transaction Documents......................................9
SECTION 1.4 Purchase Price Adjustment...............................................9
(a) Adjusted Net Working Capital; Absence of Certain Long-Term
Liabilities...........................................................9
(b) Purchase Price Adjustment................................................9
(c) Closing Date Financial Statements.......................................10
(d) Delivery of Closing Date Financial Statements; Access to Records........10
(e) Objection to the Closing Date Financial Statements.....................11
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(f) Resolution of Disputes..................................................11
(g) Payment of Balance......................................................11
SECTION 1.5 Allocation of Purchase Price..........................................11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER........................................12
SECTION 2.1 Organization of Seller; Authority of Seller; Binding Effect on
Seller......................................................................12
SECTION 2.2 Organization and Existence of the Company Parties; Authority of
the Subsidiaries; Binding Effect on the Subsidiaries........................12
(a) Organization and Existence of the Company and its Subsidiaries;
Qualification of the Company and its Subsidiaries....................12
(b) Authority of the Company Parties; Binding Effect on Company
Parties; Enforceability..............................................13
SECTION 2.3 Capital Structure......................................................13
(a) Company Capital Stock...................................................13
(b) Subsidiaries' Capital Stock or Partnership Interests....................13
SECTION 2.4 Subsidiaries...........................................................14
SECTION 2.5 No Material Adverse Change.............................................14
SECTION 2.6 No Conflict............................................................14
SECTION 2.7 No Default.............................................................15
SECTION 2.8 Brokerage Arrangements.................................................15
SECTION 2.9 Company Party Financial Statements; Undisclosed Liabilities............15
SECTION 2.10 No Litigation.........................................................16
SECTION 2.11 Environmental Matters.................................................16
SECTION 2.12 Labor Matters.........................................................17
SECTION 2.13 Compliance with Laws..................................................18
SECTION 2.14 Intellectual Property.................................................18
SECTION 2.15 Employee Benefit Plans; ERISA.........................................18
SECTION 2.16 Taxes.................................................................20
SECTION 2.17 Corporate and Partnership Records.....................................22
SECTION 2.18 Material Contracts....................................................22
SECTION 2.19 Real and Personal Property............................................24
SECTION 2.20 Bank Accounts.........................................................25
SECTION 2.21 Insurance Policies....................................................25
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SECTION 2.22 Inventory.............................................................25
SECTION 2.23 Accounts Receivable...................................................25
SECTION 2.24 Propane Sales.........................................................25
SECTION 2.25 Letters of Credit and Guaranties......................................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER.......................26
SECTION 3.1 Organization and Existence.............................................26
SECTION 3.2 Authority; Binding Effect..............................................26
SECTION 3.3 No Material Adverse Change.............................................26
SECTION 3.4 SEC Filings............................................................27
SECTION 3.5 Ownership..............................................................27
SECTION 3.6 No Conflict............................................................28
SECTION 3.7 No Default.............................................................28
SECTION 3.8 Brokerage Arrangements.................................................28
SECTION 3.9 Purchase Not for Distribution..........................................28
SECTION 3.10 Governing Documents...................................................29
SECTION 3.11 Compliance with Laws..................................................29
SECTION 3.12 Taxes.................................................................29
ARTICLE IV INVESTMENT......................................................................30
SECTION 4.1 Restricted Securities..................................................30
SECTION 4.2 Purchase for Own Account; Investment...................................30
SECTION 4.3 Information............................................................30
SECTION 4.4 Legends................................................................31
ARTICLE V CERTAIN COVENANTS................................................................31
SECTION 5.1 Access to Information..................................................31
SECTION 5.2 Seller Conduct of Business.............................................32
(a) Ordinary Course.........................................................32
(b) Restrictions on the Company and the Subsidiaries........................32
(c) Tax Filings.............................................................34
(d) Employees of the Company and the Subsidiaries...........................34
SECTION 5.3 Expenses...............................................................35
SECTION 5.4 Approvals; Further Action; Commercially Reasonable Efforts............35
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SECTION 5.5 Notification of Certain Matters........................................35
SECTION 5.6 Certain Indebtedness...................................................36
SECTION 5.7 No Public Announcement.................................................36
SECTION 5.8 Use of Names...........................................................36
(a) Licenses................................................................36
(b) Amendments; Necessary Actions...........................................37
(c) Cessation of Use........................................................37
SECTION 5.9 Post-Closing Assistance................................................37
SECTION 5.10 Noncompetition........................................................38
(a) Covenant Not to Compete.................................................38
(b) Non-Solicitation........................................................39
(c) Hiring of Buyer's Employees.............................................39
(d) Remedies for Breach.....................................................39
(e) Other Business..........................................................39
SECTION 5.11 Registration Rights...................................................39
SECTION 5.12 Additional Insured....................................................39
SECTION 5.13 Pre-Closing Annual and Monthly Financial Statements...................40
SECTION 5.14 Pre-Closing Employment Taxes Cooperation..............................40
SECTION 5.15 Information Concerning Partnership Tax Attributes.....................40
SECTION 5.16 Periodic Information Concerning Financing Arrangements................41
SECTION 5.17 Information Provided under the National Propane Purchase Agreement....41
ARTICLE VI CONDITIONS......................................................................42
SECTION 6.1 Conditions to Each Party's Obligations.................................42
(a) Governmental Consents...................................................42
(b) Third Party Consents....................................................42
(c) HSR Act.................................................................42
(d) No Injunctions or Restraints............................................42
(e) Deliveries..............................................................42
SECTION 6.2 Conditions to Obligations of Buyer Parties.............................42
(a) Representations and Warranties..........................................42
(b) Performance of Obligations of Seller and Company Parties................42
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(c) Resignations............................................................43
(d) No Company Material Adverse Effect......................................43
(e) Seller's Counsel's Opinion..............................................43
(f) Financing...............................................................43
(g) Payment of Long-Term Liabilities........................................43
(h) Richmond Office Lease...................................................43
(i) Sinking Springs Terminal...............................................43
(j) Transition Services Agreement...........................................43
(k) Buyer's Tax Counsel's Opinion...........................................43
(l) Various Tax Matters....................................................43
SECTION 6.3 Conditions to Obligations of Seller....................................44
(a) Representations and Warranties..........................................44
(b) Performance of Obligations of Buyer.....................................44
(c) Buyer Financing.........................................................44
(d) No Buyer Material Adverse Effect........................................45
(e) Opinion of Counsel to Buyer and Buyer Parent............................45
ARTICLE VII EMPLOYEE BENEFITS..............................................................45
SECTION 7.1 Seller Pension Plans...................................................45
SECTION 7.2 401(k) Plan Benefits...................................................45
SECTION 7.3 Seller Welfare or Other Benefit Plans..................................45
SECTION 7.4 Post-Closing Employee Benefits.........................................47
SECTION 7.5 Provision of Information to Company Employees..........................48
SECTION 7.6 Indemnification........................................................48
ARTICLE VIII TERMINATION...................................................................48
SECTION 8.1 Events of Termination..................................................48
(a) Consent.................................................................49
(b) Prohibition or Restriction..............................................49
(c) Non-Occurrence..........................................................49
SECTION 8.2 Effect of Termination..................................................49
ARTICLE IX INDEMNIFICATION.................................................................49
SECTION 9.1 Obligation to Indemnify................................................49
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SECTION 9.2 Control of Remediation of Company Party Properties for Which
Seller Is Providing Indemnification.........................................53
ARTICLE X NATIONAL PROPANE PURCHASE AGREEMENT..............................................54
SECTION 10.1 Representations and Warranties of the Seller.........................54
SECTION 10.2 Representations, Warranties and Covenants of the Buyer Parties........55
SECTION 10.3 Indemnification.......................................................55
(a) Seller's Indemnification................................................55
(b) Buyer's Indemnification.................................................56
(c) Seller's and Buyer Parties' Cross Indemnification.......................56
(d) Absence of Certain Limitations on Indemnification Obligations...........56
(e) Effect of Buyer Keep Well Agreement and Seller Guaranty.................56
ARTICLE XI INDEMNIFICATION PROCEDURES; SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
EFFECT OF INSURANCE................................................................57
SECTION 11.1 Indemnification Procedures............................................57
SECTION 11.2 Survival; Termination; Insurance; Claims against Third Parties........59
SECTION 11.3 Environmental Insurance...............................................61
ARTICLE XII TAX MATTERS....................................................................61
SECTION 12.1 Tax Indemnity.........................................................61
SECTION 12.2 Returns and Payments..................................................62
SECTION 12.3 Tax Benefits..........................................................64
SECTION 12.4 Tax Refunds...........................................................64
SECTION 12.5 Contests..............................................................64
SECTION 12.6 Time of Payment.......................................................65
SECTION 12.7 Cooperation and Exchange of Information...............................66
SECTION 12.8 Conveyance Taxes......................................................66
SECTION 12.9 Miscellaneous.........................................................66
ARTICLE XIII MISCELLANEOUS.................................................................67
SECTION 13.1 Notices...............................................................67
SECTION 13.2 Governing Law; Dispute Resolution; Enforcement........................69
SECTION 13.3 Entire Agreement; Amendments and Waivers..............................69
SECTION 13.4 Binding Effect and Assignment.........................................70
SECTION 13.5 Severability..........................................................70
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SECTION 13.6 Disclosure............................................................70
SECTION 13.7 Interpretation........................................................70
SECTION 13.8 References; Construction..............................................71
SECTION 13.9 Context...............................................................71
SECTION 13.10 No Prejudice.........................................................71
SECTION 13.11 Execution............................................................72
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SCHEDULES
Schedule 1.1(d) CPLP Assets and Liabilities (to be Distributed to the Company)
Schedule 1.1(e) Company Purchased Assets and Assumed Liabilities (to be Sold to or
Assumed by Buyer)
Schedule 1.1(f) Buyer Blend Assets and Liabilities Contributed by Buyer to CPLP
Schedule 1.1(j) Company Excluded Assets and Liabilities (to be Distributed to Seller)
Schedule 1.3(a)(xv) Language to be Included in Seller's Officer's Certificate
Schedule 1.4(a)(x)-I Adjustments to Total Current Assets
Schedule 1.4(a)(x)-II Adjustments to Total Current Liabilities
Schedule 1.4(a)(y) Permitted Long-Term Liabilities
Schedule 1.5 Allocation of Purchase Price
Schedule 2.2(a)-I Company Subsidiaries
Schedule 2.2(a)-II Company Party Foreign Qualifications
Schedule 2.2(a)-III Company Party Investments
Schedule 2.2(b) Corporate and Partnership Authority
Schedule 2.3(b) Subsidiaries' Capital Stock
Schedule 2.4 Liens on Interests in Subsidiaries
Schedule 2.5 Company Party Material Adverse Changes
Schedule 2.6 Company Party Required Consents; Conflicts
Schedule 2.7 Company Party Defaults
Schedule 2.8 Company Party Brokerage Arrangements
Schedule 2.9 Company Party Financial Statements
Schedule 2.10 Company Party Litigation
Schedule 2.11 Company Party Environmental Matters
Schedule 2.12 Company Party Labor Matters
Schedule 2.13 Exceptions to Company Compliance with Laws
Schedule 2.14 Company Party Intellectual Property
Schedule 2.15(a) Employee Benefit Plans
Schedule 2.15(b) Multiemployer and Multiple Employer Plans
Schedule 2.15(c) Single Employer Plans
Schedule 2.15(g) Accrual of Benefit Plan Liabilities
Schedule 2.16 Company Party Tax Matters
Schedule 2.18(a) Company Party Material Contracts
Schedule 2.18(b) Fixed Supply and Purchase Obligations
Schedule 2.19(a)-I Company Party Real Property
Schedule 2.19(a)-II Liens Affecting Use of Company Party Real Property
Schedule 2.19(b) Breaches and Defaults under Leases; Leases Not in Full Force and
Effect
Schedule 2.19(c) Outstanding Notices
Schedule 2.19(d) Liens on Personal Property
Schedule 2.20 Company Party Bank Accounts
Schedule 2.21 Company Party Insurance Policies
Schedule 2.23 Accounts Receivable
Schedule 2.24 Propane Sales
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Schedule 2.25 Letters of Credit and Guaranties
Schedule 3.3 Buyer Party Material Adverse Changes
Schedule 3.5(e) Liens on Partnership Interests
Schedule 3.6 Buyer Party Required Consents; Conflicts
Schedule 3.8 Buyer Brokerage Arrangements
Schedule 3.12(f) Tax Sharing Agreements
Schedule 5.2(b) Company Party Permitted Transactions
Schedule 5.8(b) Seller Trademarks
Schedule 5.12 Certain Environmental Insurance Policies
Schedule 5.15 Asset Classes
Schedule 7.3(b) Company Employees for Whom Seller Is Retaining Severance and
Other Obligations
Schedule 7.4(a) Buyer's Enhanced Severance Benefits
Schedule 9.1(c)(ii) Litigation Retained by Seller
Schedule 9.1(c)(iii) Seller Indemnified Properties
Schedule 10.1 National Propane Purchase Agreement
Schedule 13.8(a) Seller Knowledge Persons
Schedule 13.8(b) Buyer Party Knowledge Persons
EXHIBITS
Exhibit A Capital Contribution Agreement
Exhibit B First Amendment to Intercompany Loan Agreement
Exhibit C Registration Rights Agreement
Exhibit D Seller Trademark License Agreement
Exhibit E-1 Seller's Counsel's Opinion
Exhibit E-2 Seller's Delaware Counsel's Opinion
Exhibit F-1 Terms and Conditions of Sinking Springs Terminal Lease
Exhibit F-2 Form of Sinking Springs Terminal Lease
Exhibit G Transition Services Agreement
Exhibit H-1 Buyer's Counsel's Opinion
Exhibit H-2 Buyer's Delaware Counsel's Opinion
Exhibit I Buyer Keep Well Agreement
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DEFINED TERMS
PAGE
Accounts Receivable.......................................................................25
Adjusted Net Working Capital...............................................................9
affiliate.................................................................................71
Agreement..................................................................................1
Alternative Structure.....................................................................67
API........................................................................................1
Assigned Asset............................................................................38
Assignee Party............................................................................38
Assigning Party...........................................................................38
Atlantic...................................................................................1
Atlantic Interest..........................................................................1
Benefit Plan..............................................................................18
Benefit Plans.............................................................................18
Book Value and Section 704(c).............................................................40
Business Day..............................................................................71
Buyer......................................................................................1
Buyer Blend Assets and Liabilities.........................................................3
Buyer Employee Benefit Plans..............................................................47
Buyer Guaranty............................................................................55
Buyer Indemnification Basket..............................................................56
Buyer Indemnification Cap.................................................................52
Buyer Indemnification Threshold...........................................................56
Buyer Indemnitees.........................................................................49
Buyer Limited Partnership Agreement........................................................2
Buyer Limited Partnership Interests........................................................1
Buyer Material Adverse Effect.............................................................26
Buyer Parent...............................................................................1
Buyer Parent Partnership Agreement.........................................................2
Buyer Parties..............................................................................1
Buyer Partnership Agreement................................................................1
Buyer Party................................................................................1
Buyer Permits.............................................................................29
Buyer Required Consents...................................................................28
Buyer's 401(k) Plan.......................................................................45
Buyer's Additional CPLP Limited Partnership Interest.......................................4
Buyer's Counsel............................................................................8
Buyer's Delaware Counsel...................................................................8
Buyer's Tax Counsel.......................................................................43
Capital Contribution Agreement.............................................................3
Closing....................................................................................4
Closing Agreement.........................................................................22
Closing Date...............................................................................5
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Closing Date Financial Statements.........................................................10
Columbia Petroleum........................................................................36
Columbia Petroleum Trademark License Agreement............................................36
Company....................................................................................1
Company Assets.............................................................................3
Company Assets and Liabilities.............................................................3
Company Financial Statements..............................................................15
Company Material Adverse Effect...........................................................14
Company Parties............................................................................1
Company Party or Atlantic Property........................................................51
Company Permits...........................................................................18
Company Required Consents.................................................................14
Company Shares.............................................................................1
Company's CPLP Limited Partnership Interest................................................1
Compensation Plans........................................................................46
Confidentiality Agreement.................................................................32
Conoco.....................................................................................1
Contest...................................................................................65
Contest Expenses..........................................................................61
Conveyance Taxes..........................................................................66
CPH........................................................................................1
CPH Shares.................................................................................1
CPLP.......................................................................................3
CPLP General Partnership Interest..........................................................5
CPLP Partnership Agreement................................................................33
Delaware Court............................................................................69
employee benefit plans....................................................................18
Energy USA................................................................................38
Environmental Claim.......................................................................17
Environmental Laws........................................................................16
ERISA.....................................................................................18
Exchange Act..............................................................................27
Financing Arrangements.....................................................................2
Financing Documents.......................................................................44
GAAP.......................................................................................9
Governmental Entity.......................................................................18
Governmental Order........................................................................16
Hazardous Materials.......................................................................16
HSR Act...................................................................................14
including.................................................................................71
Indemnified Party.........................................................................57
Indemnifying Party........................................................................57
Intellectual Property.....................................................................18
Intercompany Loan Agreement................................................................3
Intercompany Note..........................................................................3
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Interests.................................................................................15
IRS.......................................................................................20
Knowledge.................................................................................71
Liens.....................................................................................13
Litigation................................................................................16
Losses....................................................................................49
multiemployer plan........................................................................19
Multiple Employer Plan....................................................................19
National Propane Environmental Insurance Policy...........................................40
National Propane Purchase Agreement.......................................................21
Noncompete Period.........................................................................39
Notice....................................................................................67
Off-Site Location.........................................................................51
Permitted Long-Term Liabilities............................................................9
person....................................................................................71
Pre-Closing Financial Statements..........................................................40
Principal Closing Transactions.............................................................4
Properties................................................................................24
Purchase Price.............................................................................4
Purchase Price Adjustment.................................................................10
Registration Rights Agreement..............................................................9
Reporting Position........................................................................67
SEC.......................................................................................27
Secured Lending Arrangements...............................................................2
Securities Act............................................................................27
Seller.....................................................................................1
Seller Environmental Indemnification Cap..................................................51
Seller Guarantee..........................................................................57
Seller Indemnification Basket.............................................................50
Seller Indemnification Cap................................................................50
Seller Indemnification Threshold..........................................................50
Seller Indemnified Properties.............................................................52
Seller Indemnitees........................................................................52
Seller Pension Plans......................................................................45
Seller Representatives....................................................................53
Seller Trademark License Agreement........................................................36
Seller Trademarks.........................................................................37
Seller Welfare or Other Benefit Plans.....................................................46
Seller's Counsel...........................................................................6
Seller's Delaware Counsel..................................................................6
Seller's Pension Plans....................................................................20
Seller's Title IV Pension Plan............................................................20
significant risk..........................................................................44
Single Employer Plans.....................................................................19
Site Remediation Work Plans...............................................................53
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Special Limited Partner...................................................................21
Structure Controversy.....................................................................67
Subsidiary................................................................................12
take or pay...............................................................................23
Tax Allocation Statement..................................................................63
Tax Indemnity Provisions..................................................................55
Tax Referee...............................................................................63
Tax Return................................................................................22
Tax Ruling................................................................................22
Taxes.....................................................................................22
Third Party Claim.........................................................................57
Trademark License Agreements...............................................................7
Transaction Documents......................................................................9
Transactions...............................................................................4
Transition Services Agreement.............................................................43
Triarc....................................................................................21
Triarc Claim..............................................................................56
Unknown Coal Tar Sites....................................................................50
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PURCHASE AGREEMENT
This Purchase Agreement was made and entered into as of the 30th day of
January, 2001, and amended and restated on August 7, 2001 (this "Agreement"), by
and between Columbia Energy Group, a Delaware corporation ("Seller"), Columbia
Propane Corporation, a Delaware corporation (the "Company"), CP Holdings, Inc.,
a Delaware corporation ("CPH"), Columbia Propane, L.P., a Delaware limited
partnership ("CPLP" and, together with the Company and CPH, the "Company
Parties"), of which CPH is the sole general partner, AmeriGas Propane, L.P., a
Delaware limited partnership ("Buyer"), AmeriGas Partners, L.P., a Delaware
limited partnership and the parent of the Buyer ("Buyer Parent"), and AmeriGas
Propane, Inc., a Pennsylvania corporation that is the general partner of each of
the Buyer Parent and the Buyer ("API," and together with Buyer and Buyer Parent,
the "Buyer Parties," and each individually, a "Buyer Party").
W I T N E S S E T H:
WHEREAS, Seller is the owner of 100% of the outstanding shares of the
common stock, par value $25.00 per share, of the Company (the "Company Shares");
and
WHEREAS, the Company is the owner of (i) 99.26% of the outstanding
limited partnership interests of CPLP (the "Company's CPLP Limited Partnership
Interest"), (ii) all of the issued and outstanding capital stock (the "CPH
Shares") of CPH, (iii) 50% of the issued and outstanding capital stock (the
"Atlantic Interest") of Atlantic Energy, Inc., a Delaware corporation
("Atlantic"), which is a joint venture between the Company and Conoco, Inc., a
Delaware corporation ("Conoco"), and (iv) certain other tangible and intangible
assets of the Company used or useful in the propane distribution business; and
WHEREAS, the parties desire to enter into the transactions provided for
in this Agreement upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
SECTION 1.1 The Transactions.
(a) Sale and Purchase of Buyer Limited Partnership Interests;
Capital Contribution of API to Buyer. Upon the terms and subject to the
conditions of this Agreement, and on the basis of and in reliance upon the
representations, warranties, covenants and agreements set forth herein, on the
Closing Date, Buyer shall sell and issue to Seller, and Seller shall purchase
from Buyer, limited partnership interests of the Buyer valued at $50,000,000
(the "Buyer Limited Partnership Interests"), for cash in the amount of
$50,000,000. Simultaneously with the transactions described in this Section
1.1(a), API will contribute 1/98th of $50,000,000 (or $510,204) to Buyer to
maintain its ownership interest in Buyer, which amount shall constitute a
capital contribution to Buyer pursuant to the Amended and Restated Agreement of
Limited Partnership of Buyer (the "Buyer Partnership Agreement"). Buyer shall
not make any "reverse
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Section 704(c) allocations" (within the meaning of Treas. Reg. 1.704-3(a) (6))
by reason of the Transactions.
(b) Contribution of Buyer Limited Partnership Interests to Buyer
Parent in Return for Buyer Parent Units; Capital Contribution of API to Buyer
Parent. At the Closing, immediately following the completion of the transactions
described in Section 1.1(a) above, upon the terms and subject to the conditions
of this Agreement, and on the basis of and in reliance upon the representations,
warranties, covenants and agreements set forth herein, Buyer Parent shall sell
and issue to Seller, and Seller shall purchase from Buyer Parent, (i) that
number of fully paid (to the extent required under the Second Amended and
Restated Agreement of Limited Partnership of the Buyer Parent (the "Buyer Parent
Partnership Agreement")) and nonassessable (except to the extent provided in the
Delaware Revised Uniform Limited Partnership Act) common limited partnership
units of Buyer Parent ("Buyer Parent Units") equal to $52,500,000 divided by the
average closing price of the Buyer Parent Units on the New York Stock Exchange
for the 10 consecutive trading days ending on the second Business Day prior to
the Closing Date (subject to a maximum number of Buyer Parent Units of 3,027,682
and a minimum number of Buyer Parent Units of 2,460,169), less (ii) 103,216
Buyer Parent Units in return for the Buyer Limited Partnership Interests (valued
at $50,000,000) acquired by the Seller pursuant to Section 1.1(a)), which shall
be transferred and assigned to the Buyer Parent. At the Closing, Buyer Parent
shall deliver to Seller a copy of an irrevocable letter of instruction sent to
Buyer Parent's transfer agent instructing it to deliver to Seller the Buyer
Parent Units, rounded to the nearest whole unit. Buyer Parent shall not make any
"reverse Section 704(c) allocations" (within the meaning of Treas. Reg.
1.704-3(a)(6)) by reason of the Transactions. Buyer Parent shall allocate to
Seller in respect of the Buyer Parent Units items of income, gain, loss and
deduction in accordance with its existing policy for allocating such items
between a transferor and transferee of units that is described under the caption
"Tax Considerations - Disposition of Common Units - Allocations between
Transferors and Transferees" in the prospectus of Buyer Parent dated October 5,
2000 with respect to 9,000,000 Common Units. Simultaneously with the
transactions described above in this Section 1.1(b), API will contribute to
Buyer Parent, pursuant to the Buyer Parent Partnership Agreement, 1/99th of the
fair market value, as of the Closing Date, of the Buyer Parent Units issued to
Seller in order to maintain its ownership interest in Buyer Parent, which amount
shall constitute a capital contribution to Buyer Parent pursuant to the Buyer
Parent Partnership Agreement.
(c) Buyer and Buyer Parent Financing; Capital Contributions to
Buyer. (i) At the Closing, immediately following the completion of the
transactions described in Section 1.1(b), Buyer Parent shall borrow at least
$148,500,000 pursuant to a financing arrangement with one or more creditors (the
"Financing Arrangements") and shall contribute at least $148,500,000 to the
Buyer, which amount shall constitute a capital contribution to Buyer pursuant to
the Buyer Partnership Agreement, and (ii) API will contribute to Buyer 1/98th of
the amount contributed to Buyer under clause (i), above, to maintain its
ownership interest in Buyer, which amount shall constitute a capital
contribution to Buyer pursuant to the Buyer Partnership Agreement. As part of
the Financing Arrangements and as security for the Buyer's obligations under
certain outstanding secured indebtedness of the Buyer (the "Secured Lending
Arrangements"), the Buyer may agree to pledge, upon consummation of the
transactions contemplated in this Section
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1.1, to the collateral agent for its secured indebtedness, (i) all of the
Buyer's limited partnership interest in CPLP acquired by the Buyer pursuant to
Section 1.1(h) and (i) below, (ii) all of CPH's general partnership interest in
CPLP, to be indirectly acquired by the Buyer through its acquisition of the
Company Shares pursuant to Section 1.1(k), (iii) all of the Company Shares and
the CPH Shares, and (iv) all of the Buyer's rights under the Promissory Note
dated July 19, 1999 with the current outstanding balance due of $137,997,000
executed by National Propane, L.P., a Delaware limited partnership (which is
currently known as CPLP through name change), as payor, in favor of the Company,
as payee (the "Intercompany Note") and under the related Loan Agreement, dated
July 19, 1999, between National Propane L.P. (which is currently known as CPLP
through name change) and the Company (the "Intercompany Loan Agreement"), to be
acquired by the Buyer pursuant to Section 1.1(h) below. No Lien on any of the
assets of CPLP shall be created in connection with either the Financing
Arrangements or the Secured Lending Arrangements.
(d) Distribution to Company and Assumption by Company of Certain
CPLP Assets and Liabilities. At the Closing, immediately following the
completion of the transactions described in Section 1.1(c), CPLP shall
distribute or assign, as applicable, to the Company, and the Company shall
receive as a distribution or assume, as applicable, certain assets and
liabilities of CPLP as more particularly described in Schedule 1.1(d).
(e) Sale of Company Assets and Liabilities to the Buyer. At the
Closing, immediately following the completion of the transactions described in
Section 1.1(d), upon the terms and subject to the conditions of this Agreement,
and on the basis of and in reliance upon the representations, warranties,
covenants and agreements set forth herein, the Company shall sell to the Buyer,
and the Buyer shall purchase from the Company, the assets described in Schedule
1.1(e) (the "Company Assets"), and the Company shall transfer and assign to the
Buyer, and the Buyer shall assume, the liabilities of the Company described on
Schedule 1.1(e) (together with the "Company Assets," the "Company Assets and
Liabilities"), in exchange for $55,315,000.
(f) Execution and Delivery of Capital Contribution Agreement. At the
Closing, immediately following the completion of the transactions described in
Section 1.1(e), the Buyer shall, and the Seller shall cause CPLP to, enter into
a capital contribution agreement, substantially in the form of Exhibit A (the
"Capital Contribution Agreement"), providing for a capital contribution by the
Buyer to CPLP, on the Closing Date, of assets with an aggregate fair market
value, net of associated liabilities, of at least $105,315,000, consisting of
assets previously owned by the Buyer, together with the associated liabilities,
in each case as more fully described on Schedule 1.1(f) (the "Buyer Blend Assets
and Liabilities"), in exchange for a limited partnership interest in CPLP equal
in value to the amount of such contribution. The assets included in the Buyer
Blend Assets and Liabilities shall be free and clear of any Liens in favor of
any secured lender of any of the Buyer Parties or their affiliates.
(g) Amendment of the Intercompany Loan Agreement. At the Closing,
immediately following the completion of the transactions described in Section
1.1(f), the Company and CPLP shall enter into the First Amendment to the
Intercompany Loan Agreement, substantially in the form of Exhibit B.
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(h) Purchase of the Company's CPLP Limited Partnership Interest and
the Intercompany Note. At the Closing, immediately following the completion of
the transactions described in Section 1.1(g), upon the terms and subject to the
conditions of this Agreement, and on the basis of and in reliance upon the
representations, warranties, covenants and agreements set forth herein, the
Company shall sell to the Buyer, and the Buyer shall purchase from the Company,
(i) the Company's CPLP Limited Partnership Interest in exchange for $3,216,000
and (ii) the Company's rights and obligations under the Intercompany Note and
the Intercompany Loan Agreement in exchange for $138,000,000. Simultaneously
with the transactions contemplated by this Section 1.1(h), the Company shall
declare and pay to the Seller a special cash dividend in the amount of
$196,531,000.
(i) Contribution of Buyer Blend Assets and Liabilities to CPLP. At
the Closing, immediately following the completion of the transactions described
in Section 1.1(h), the Buyer shall contribute the Buyer Blend Assets and
Liabilities to CPLP in exchange for a limited partnership interest in CPLP as
specified in the Capital Contribution Agreement (the "Buyer's Additional CPLP
Limited Partnership Interest").
(j) Distribution to Seller and Assumption by Seller of Certain
Company Assets and Liabilities. At the Closing, immediately following the
completion of the transactions described in Section 1.1(i), upon the terms and
subject to the conditions of this Agreement, and on the basis of and in reliance
upon the representations, warranties, covenants and agreements set forth herein,
the Company will distribute or assign, as applicable, to the Seller, and the
Seller shall take title to or assume, as applicable, the assets and liabilities
of the Company as more particularly described on Schedule 1.1(j).
(k) Purchase and Sale of the Company Shares. At the Closing,
immediately following the completion of the transactions described in Section
1.1(j), the Seller shall sell, convey, distribute, assign and transfer the
Company Shares to the Buyer, upon the terms and subject to the conditions of
this Agreement and on the basis of and in reliance upon the representations,
warranties, covenants and agreements set forth herein, in exchange for
$5,219,000.
The transactions expressly described in Sections 1.1(a) - (k) (the "Principal
Closing Transactions"), together with any other transactions contemplated by
this Agreement and the other Transaction Documents, are collectively referred to
herein as the "Transactions." The aggregate amount of the payments from the
Buyer to the Company under Sections 1.1(e) and (h) and from the Buyer to the
Seller under Section 1.1(k), amounting, in the aggregate, to $201,750,000, are
referred to herein as the "Purchase Price."
SECTION 1.2 Closing. Unless this Agreement shall have been
terminated pursuant to Section 8.1, and subject to the satisfaction or waiver of
each of the conditions set forth in Article VI, the closing of the Transactions
(the "Closing") shall take place no later than the fifth Business Day following
the date on which the last to be fulfilled or waived of the conditions set forth
in Sections 6.1(a), (b), (c) or (d), Section 6.2(f) and Section 6.2(l) hereof
shall be fulfilled or waived in accordance with this Agreement, at the offices
of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, unless another date, time or place is
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agreed to in writing by the parties hereto. At the Closing, the Principal
Closing Transactions set forth in Section 1.1 shall be consummated in their
proper sequence in accordance with Section 1.1. The Closing shall be deemed
effective for payroll, accounting and other financial purposes as of 11:59 p.m.,
Eastern Time, on the date on which all of the Principal Closing Transactions
have been completed. The date and actual time on which the Closing occurs is
herein referred to as the "Closing Date."
SECTION 1.3 Closing Deliveries. (a) Seller's Deliveries. The Seller,
or such other applicable party, shall deliver, or cause to be delivered, to the
party entitled thereto under Section 1.1, as applicable, at the Closing the
following:
(i) the purchase price for the Buyer Limited Partnership
Interests, in the amount required by Section 1.1(a), by wire transfer of
immediately available funds to such bank account as shall have been designated
by Buyer Parent by notice given to the Seller not later than the second Business
Day prior to the Closing Date;
(ii) stock certificates or other certificates representing
the Company Shares, duly endorsed in blank or accompanied by stock powers and
with all requisite stock transfer tax stamps attached, and stock certificates or
other certificates representing the CPH Shares and Atlantic Interest;
(iii) a certificate or certificates representing the Company's
CPLP Limited Partnership Interest, duly endorsed in blank or accompanied by
limited partnership powers and with all requisite limited partnership transfer
tax stamps attached, and a certificate or certificates representing CPH's
interest as the sole general partner of CPLP (the "CPLP General Partnership
Interest");
(iv) deeds, bills of sale and instruments of assignment and
assumption in such forms as may be required to effect the transfers contemplated
by Sections 1.1(d), 1.1(e), 1.1(h), 1.1(i), and 1.1(j) and the transfer of
certain computer hardware valued at approximately $20,000 from an affiliate of
the Seller to the Buyer;
(v) all (A) minute books of each Company Party and Atlantic,
(B) other corporate or partnership books and records of each Company Party and
(C) corporate or partnership books and records of Atlantic in the possession or
control of the Company Parties;
(vi) a copy, certified as of the Closing Date, by Seller's
Secretary or Assistant Secretary, as the case may be, of the resolutions duly
adopted by the Board of Directors of Seller authorizing the Transactions;
(vii) a copy, certified as of the Closing Date by the
Secretary or Assistant Secretary or other authorized person of the applicable
Company Party, as the case may be, of the resolutions or other similar approval
duly adopted by the Board of Directors or other governing body of each Company
Party authorizing the Transactions;
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(viii) certificates of good standing for Seller, each Company
Party and Atlantic in the State of Delaware, or such other applicable state of
incorporation or formation, and certificates of good standing in each foreign
jurisdiction in which any Company Party or Atlantic is qualified to do business,
as certified as of a recent date by the Secretary of State of the State of
Delaware or any other appropriate authority of such foreign jurisdictions, as
the case may be;
(ix) the opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Seller (the "Seller's Counsel"), and of Potter, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, special
Delaware counsel to the Seller ("Seller's Delaware Counsel"), required by
Section 6.2(e);
(x) copies of the certificate of incorporation or formation,
as the case may be, for Seller, each Company Party that is a corporation or a
limited partnership, and Atlantic certified as of a recent date by the Secretary
of State of the State of Delaware;
(xi) copies of the bylaws or partnership agreement, as the
case may be, of Seller and each Company Party, as in effect on the Closing Date,
certified by the Secretary or the Assistant Secretary or other authorized person
of Seller and each Company Party, as the case may be;
(xii) copies of the bylaws, certificate of incorporation and
operating agreement of Atlantic;
(xiii) certificates of the Secretary or Assistant Secretary of
Seller, as the case may be, certifying as of the Closing Date as to the
incumbency and signatures of the officer(s) of Seller authorized to sign this
Agreement and the other documents to be delivered hereunder, together with
evidence of the incumbency of each such Secretary or Assistant Secretary;
(xiv) certificates of the Secretary or Assistant Secretary or
such other authorized person of each Company Party, as the case may be,
certifying as of the Closing Date as to the incumbency and signature of the
officer(s) or other authorized persons of each Company Party authorized to sign
this Agreement and the other documents to be delivered hereunder, together with
evidence of the incumbency of each such Secretary or Assistant Secretary or
other authorized person;
(xv) a certificate or certificates, dated the Closing Date,
of an officer of Seller as to the matters contained in Sections 6.2(a), (b),
(d), (g), (h) and (i), Section 5.6, and Schedule 1.3(a)(xv);
(xvi) the written resignations of all directors and officers
of each Company Party referred to in Section 6.2(c) and of all directors and
officers of Atlantic appointed by the Company;
(xvii) a certificate from the insurers under each of the
environmental insurance policies set forth in Schedule 5.12 that indicates that
the Buyer and each Company Party have been listed as an additional insured under
each of such policies and that such policies may not be terminated or canceled
prior to their expiration without Buyer's consent;
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(xviii) an executed copy of the Transition Services Agreement
referred to in Section 6.2(j);
(xix) an executed copy of the Capital Contribution Agreement
referred to in Section 1.1(f);
(xx) an executed copy of Amendment No. 1 to the Intercompany
Loan Agreement referred to in Section 1.1(g);
(xxi) a termination of any tax sharing agreements among the
Seller, the Company Parties, and their affiliates, effective as of the Closing
Date;
(xxii) a FIRPTA affidavit from each of the Seller, the Company,
and CPLP;
(xxiii) copies of all required state filings and amendments to
the certificates of incorporation and certificates of limited partnership of the
Company Parties, prepared for filing at the Closing Date, and executed copies of
the resolutions required, in each case to effect the name changes described in
Section 5.8(b);
(xxiv) executed copies of the Trademark License Agreements
described in Section 5.8(a);
(xxv) an executed copy of the lease for the Sinking Springs
Terminal referred to in Section 6.2(i); and
(xxvi) executed copies of the deeds transferring to an
affiliate of the Seller the real property referred to in Section 6.2(m),
together with a reasonable access agreement in favor of the Buyer permitting it
to remove any tanks or other propane related equipment from such real property.
(b) Buyer's Deliveries. Buyer and Buyer Parent shall deliver, or
cause to be delivered, to Seller at the Closing the following:
(i) an irrevocable letter of instruction to the Transfer
Agent instructing the Transfer Agent to issue the Buyer Parent Units to Seller;
(ii) the amounts required by Sections 1.1(e), (h) and (k) by
wire transfer of immediately available funds to such bank account as shall have
been designated by the Seller or the Company, as applicable, by notice given to
the Buyer not later than the second Business Day prior to the Closing Date;
(iii) deeds, bills of sale and instruments of assignment and
assumption in such forms as may be required to effect the contribution of the
Buyer Blend Assets and Liabilities to CPLP, as contemplated by Section 1.1(i);
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(iv) a copy, certified as of the Closing Date by a Secretary
or Assistant Secretary of API, as the case may be, of the resolutions duly
adopted by API, authorizing the Transactions;
(v) a copy, certified as of the Closing Date by API, as the
general partner of each of the Buyer and the Buyer Parent, of the resolutions
authorizing the Transactions;
(vi) certificates of good standing for each of API, the Buyer
and the Buyer Parent in each of their jurisdictions of formation, as certified
as of a recent date by the relevant Secretary of State or other appropriate
authority of such jurisdiction;
(vii) a copy of the certificate of formation of each of Buyer
and Buyer Parent and of the Articles of Incorporation of API, certified as of a
recent date by the relevant Secretary of State or other appropriate authority of
its jurisdiction of formation;
(viii) a copy of the partnership agreement of each of Buyer and
Buyer Parent as in effect on the Closing Date, certified as of the Closing Date
by the Secretary or Assistant Secretary of API;
(ix) a copy of the bylaws of API as of the Closing Date,
certified by the Secretary or the Assistant Secretary or other authorized person
of API;
(x) a certificate of the Secretary or Assistant Secretary of
API certifying as of the Closing Date as to the incumbency and signatures of the
officer(s) or representatives of API authorized to sign this Agreement and the
other documents to be delivered hereunder on behalf of Buyer and Buyer Parent,
together with evidence of the incumbency of each such Secretary or Assistant
Secretary;
(xi) the opinions of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, counsel to
the Buyer Parties ("Buyer's Counsel"), and of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, special
Delaware counsel to the Buyer ("Buyer's Delaware Counsel"), required by Section
6.3(e);
(xii) a certificate dated the Closing Date of an officer of
API as to the matters contained in Sections 6.3(a), (b) and (d);
(xiii) copies of the executed agreements and instruments
evidencing the Financing Arrangements and the Secured Lending Arrangements that
were previously delivered to the Seller in draft form pursuant to Section
6.3(c), certified by an officer of API as true and complete;
(xiv) evidence of the listing, upon official notice of
issuance, of the Buyer Parent Units on the New York Stock Exchange;
(xv) an executed copy of the Transition Services Agreement
referred to in Section 6.2(j);
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(xvi) an executed copy of the Capital Contribution Agreement
referred to in Section 1.1(f);
(xvii) a list of any persons included in Schedule 7.3(b) who
have received or will receive an offer of employment from the Company or any
Subsidiary or Buyer Party on or within 90 days following the Closing Date,
certified by an officer of API as true and complete; and
(xviii) an executed copy of the Buyer Keep Well Agreement
referred to in Section 10.2(c).
(c) Registration Rights Agreement. On the Closing Date, Buyer Parent
and Seller shall each execute and deliver the Registration Rights Agreement,
dated the Closing Date, and in substantially the form annexed hereto as Exhibit
C (the "Registration Rights Agreement").
(d) Definition of Transaction Documents. For purposes of this
Agreement, Transaction Documents shall mean (i) this Agreement, (ii) the
Registration Rights Agreement, (iii) the Seller Trademark License Agreement,
(iv) the Transition Services Agreement, (v) the Capital Contribution Agreement,
(vi) the First Amendment to the Intercompany Loan Agreement, (vii) the Keep Well
Agreement, and (viii) the bills of sale and assignment and assumption agreements
delivered pursuant to Section 1.3(a)(iv) of this Agreement.
SECTION 1.4 Purchase Price Adjustment.
(a) Adjusted Net Working Capital; Absence of Certain Long-Term
Liabilities. The Buyer has agreed to enter into the Transactions on the
assumption that, as of the Closing Date, (i) the "Adjusted Net Working Capital"
of the Company Parties is not less than $23,000,000 (following the distributions
of assets to and assumption of liabilities by the Seller or an affiliate of the
Company that are described in Section 1.1(d) and 1.1(j) and the schedules
thereto), and (ii) the Company Parties have no long-term liabilities, other than
the "Permitted Long-Term Liabilities." As used herein, (x) the term "Adjusted
Net Working Capital" means, with respect to the Company Parties, the excess, if
any, of the total consolidated current assets of the Company Parties adjusted as
set forth on Schedule 1.4(a)(x)-I over total consolidated current liabilities of
the Company Parties adjusted as set forth on Schedule 1.4(a)(x)-II computed as
of the Closing Date, and (y) the term "Permitted Long-Term Liabilities" means,
with respect to the Company Parties, the liabilities set forth on Schedule
1.4(a)(y). The amount of total consolidated current assets and total
consolidated current liabilities shall be determined in accordance with
generally accepted accounting principles ("GAAP"), consistently applied, subject
to adjustment as set forth above.
(b) Purchase Price Adjustment. If, on the basis of the Closing Date
Financial Statements (as defined below), it is determined that the amount of
Adjusted Net Working Capital of the Company Parties as calculated in accordance
with Section 1.4(a), is either greater than or less than $23,000,000, then the
Purchase Price shall be either (i) increased by the amount by which Adjusted Net
Working Capital of the Company Parties exceeds $23,000,000 or (ii) decreased by
the amount by which Adjusted Net Working Capital of the Company Parties is less
than $23,000,000. If and to the extent that the Company Parties have any
long-term liabilities
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other than the Permitted Long-Term Liabilities, the amount thereof shall be
deducted from the Purchase Price. The Purchase Price shall also be reduced by
$145,000, the net present value of the ground lease payments payable by the
Company under the lease for a portion of the Sinking Springs Terminal referred
to in Section 6.2(i). The Purchase Price shall be increased by any Growth
Capital Expenditures (as hereinafter defined) made by the Company Parties
pursuant to Section 5.2(a)(iii) after July 31, 2001 and before the Closing Date,
provided that the following conditions are met: (i) the Growth Capital
Expenditures relate to propane tanks and cylinders that were ordered by the
Company Parties after July 31, 2001 and before the Closing Date, (ii) the
Company Parties shall have paid for such Growth Capital Expenditures prior to
the Closing Date or established on the Closing Date Financial Statements an
accrual in the nature of a current liability equal to the aggregate amount of
such Growth Capital Expenditures (or any combination of payments and accruals
shall equal, in the aggregate, the total amount of such Growth Capital
Expenditures), and (iii) API shall have given, on behalf of the Buyer Parties,
its prior written consent to the purchase order or other documents pursuant to
which such Growth Capital Expenditure was made. Any net increase or decrease in
the Purchase Price as required by this Section 1.4(b) is herein referred to as
the "Purchase Price Adjustment."
(c) Closing Date Financial Statements. The "Closing Date Financial
Statements" shall mean the financial statements of the Company Parties as of the
Closing Date, which shall consist of a balance sheet and statements of profit
and loss, retained earnings and changes in financial position as of the Closing
Date and the results of the operations of the Company Parties for the portion of
the fiscal year then ended. The Closing Date Financing Statements shall include,
as a separate schedule, a computation of the Adjusted Net Working Capital and
the long-term liabilities of the Company Parties (other than the Permitted
Long-Term Liabilities) and the amount of the Purchase Price Adjustment. The
Closing Date Financial Statements shall be prepared in accordance with GAAP
consistently applied and with all adjustments which are necessary for the fair
presentation of the periods indicated. The Closing Date Financial Statements
shall be prepared using the general ledger accounts of the Company Parties
consistent with the past practices of the Company Parties after the distribution
to and the assumption by the Seller or an affiliate of the Seller as of the
Closing Date of the assets and liabilities of the Company referred to in Section
1.1(d) and 1.1(j) and the schedules thereto (which include former assets and
liabilities of CPLP that were distributed pursuant to Section 1.1(d)).
(d) Delivery of Closing Date Financial Statements; Access to
Records. Buyer shall provide Seller with a preliminary draft of the Closing Date
Financial Statements no later than the day which is 30 days following the
Closing Date. Buyer shall allow Seller and its agents access at all reasonable
times after the Closing Date to copies of the books, records and accounts of the
Company Parties and shall make available to Seller such information as Seller
may reasonably request to allow Seller to review the Closing Date Financial
Statements. Buyer and Seller will in good faith attempt to resolve any disputes
with respect to such calculation before the final Closing Date Financial
Statements are rendered and delivered. Buyer shall deliver to Seller the final
Closing Date Financial Statements no later than the day which is 45 days
following the Closing Date. The Closing Date Financial Statements shall be
prepared by Buyer in good faith and shall be certified by Buyer to be, as of the
date prepared, Buyer's good faith estimate of the information reflected therein.
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(e) Objection to the Closing Date Financial Statements. Seller shall
give written notice to Buyer of any objection to the Closing Date Financial
Statements within 30 days after Seller's receipt of the final Closing Date
Financial Statements. Any such notice shall specify, in reasonable detail, the
items in the Closing Date Financial Statements to which Seller objects and shall
provide a summary of Seller's reasons for such objections.
(f) Resolution of Disputes. Any dispute between Buyer and Seller
with respect to the Closing Date Financial Statements, including the calculation
of the Purchase Price Adjustment, which is not resolved within 15 days after
receipt by Buyer of the written notice from Seller specifying Seller's
objections as contemplated by Section 1.4(e) shall be referred to the
Philadelphia office of Deloitte & Touche, LLP, or if such accounting firm is
unable, or unwilling to handle the dispute or the parties otherwise agree, to
such other nationally recognized accounting firm as is mutually agreed to by the
parties. Such accounting firm shall be requested to render its decision with
respect to those matters which are disputed by Buyer and Seller within 30 days
of such referral. The decision by such accounting firm shall be final and
binding on Seller and Buyer. The cost of retaining such accounting firm
(including its fees and expenses) shall be shared equally by Buyer and Seller.
(g) Payment of Balance. If Seller does not provide a written notice
of objections to the final Closing Date Financial Statements within 30 days of
Seller's receipt thereof as contemplated by Section 1.4(e), any balance due to
Seller or refund due to Buyer as a result of the Purchase Price Adjustment shall
be paid no later than 10 days thereafter. Following delivery of Seller's written
notice of objections to the Closing Date Financial Statements, any balance due
to Seller or refund due to Buyer pursuant to the adjustments set forth in
Section 1.4(b) that is not in dispute shall be paid within 10 days of such
delivery (and any payment in respect of any amount in dispute shall be paid
within 10 days of the resolution of such dispute). Any payment made pursuant to
this paragraph shall be made together with simple interest commencing on the
Closing Date at the prime lending rate as announced from time to time in The
Wall Street Journal, in immediately available funds to an account designated by
Seller or Buyer, as the case may be, at least two days before the payment is
due.
SECTION 1.5 Allocation of Purchase Price. The Buyer Parties and the
Seller shall allocate the Purchase Price, for tax purposes, among the Company
Shares, the CPLP Limited Partnership Interest, the Company Assets, and the
Intercompany Note in the manner set forth on Schedule 1.5. Each of the Buyer
Parties and the Seller agrees to file, or to cause its affiliates to file,
Internal Revenue Service Form 8594, and all federal, state, local and foreign
Tax Returns, in accordance with Schedule 1.5 (which also contains agreed values
for the assets of CPLP). Each of the Buyer Parties and the Seller shall report
the transactions contemplated by Section 1.1 for federal Tax and all other Tax
purposes in a manner consistent with Schedule 1.5. Each of the Buyer Parties and
Seller agree to provide the other promptly with any information required to
complete Form 8594. Each of the Buyer Parties and Seller further agree that, for
federal and state income tax purposes, the Buyer Parties will cause the tax
basis that CPLP has in its assets immediately prior to the consummation of the
Transactions to remain as the tax basis in such assets immediately after the
consummation of the Transactions. The Buyer Parties and Seller shall notify and
provide the other with reasonable assistance in the event of an examination,
audit
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or other proceeding regarding any allocation of the Purchase Price. The Buyer
Parties and Seller shall not take any position in any tax return, tax proceeding
or audit that is inconsistent with the allocation set forth on Schedule 1.5.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that as of January 30,
2001 and August 7, 2001 (in each case except where such representation or
warranty is expressly made only as of another specific date):
SECTION 2.1 Organization of Seller; Authority of Seller; Binding
Effect on Seller. Seller has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware. Seller has the
requisite corporate power and authority to carry on its business as now being
conducted and has the requisite corporate power and authority to enter into each
of the Transaction Documents to which the Seller is a party and to consummate
the Transactions. The execution and delivery by Seller of the Transaction
Documents to which the Seller is a party and the consummation by Seller of the
Transactions have been duly authorized by all necessary corporate action on the
part of Seller. The Transaction Documents to which the Seller is a party have
been duly executed and delivered by Seller and, assuming such Transaction
Documents constitute the valid and binding agreement of the appropriate Buyer
Party, such Transaction Documents constitute valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought and
(iii) that the right to indemnification in the Registration Rights Agreement may
be limited by public policy or applicable securities laws.
SECTION 2.2 Organization and Existence of the Company Parties;
Authority of the Subsidiaries; Binding Effect on the Subsidiaries.
(a) Organization and Existence of the Company and its Subsidiaries;
Qualification of the Company and its Subsidiaries. The Company has been duly
incorporated and is validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted. Each person of which 50% or more of the
total combined voting power of all classes of capital stock or other voting
interests is owned directly or indirectly by the Company, including CPH,
Atlantic, and CPLP (each, a "Subsidiary," and together the "Subsidiaries"), has
been duly incorporated or formed and is validly existing and in good standing in
the jurisdiction in which it was organized and has the requisite corporate or
partnership power and authority, as applicable, to carry on its business as now
being conducted. Schedule 2.2(a)-I lists each Subsidiary of the Company. Each of
the Company and its Subsidiaries is duly licensed or qualified to do business
and in good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its
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properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified (individually or in the
aggregate) would not have a Company Material Adverse Effect (as defined below).
Schedule 2.2(a)-II contains a list of each jurisdiction in which the Company and
each of its Subsidiaries is duly licensed or qualified to do business as a
foreign corporation or foreign limited partnership. Except as set forth on
Schedule 2.2(a)-III, neither the Company nor any of its Subsidiaries has any
direct or indirect investment or interest in or control over any other
corporation, partnership, joint venture or other business entity.
(b) Authority of the Company Parties; Binding Effect on Company
Parties; Enforceability. Except as set forth on Schedule 2.2(b), (i) each
Company Party has the requisite corporate or partnership power and authority to
enter into the Transaction Documents to which such Company Party is a party, and
each Company Party has the requisite corporate or partnership power and
authority to consummate the Transactions, (ii) the execution and delivery of
each Transaction Document by the Company Party that is entering into such
Transaction Document and the consummation by it of the Transactions have been
duly authorized by all necessary corporate or partnership action on the part of
such Company Party, and (iii) the Transaction Documents have been duly executed
and delivered by each Company Party entering into such Transaction Documents
and, assuming the Transaction Documents constitute the valid and binding
agreement of the appropriate Buyer Party, each such Transaction Document
constitutes a valid and binding obligation of such Company Parties, enforceable
against such Company Parties in accordance with its terms, except that (A) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and (B)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 2.3 Capital Structure.
(a) Company Capital Stock. The authorized capital stock of the
Company consists of 3,000 shares of common stock, of which 1,377 shares are
issued and outstanding, which 1,377 shares constitute the Company Shares. Except
as set forth above, no shares of common stock of the Company are issued,
reserved for issuance or outstanding. All outstanding Company Shares are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Seller is the record and beneficial owner of the Company
Shares, free and clear of all pledges, claims, liens, charges, encumbrances,
liabilities and security interests of any kind (together, "Liens"). There are no
restrictions upon the voting or transfer of any shares of common stock of the
Company pursuant to the Company's Certificate of Incorporation or bylaws or any
agreement to which either Seller or the Company is a party. Upon delivery of and
payment for the Company Shares at the Closing as herein provided, good and valid
title to the Company Shares will pass to Buyer, free and clear of all Liens,
other than any Liens arising from acts of Buyer on or following the Closing
Date.
(b) Subsidiaries' Capital Stock or Partnership Interests. The
authorized capital stock or partnership interests of each of the Subsidiaries is
specified on Schedule 2.3(b). The number of shares of common stock or
partnership or membership interests of each of the Subsidiaries
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that are issued and outstanding is specified for each Subsidiary on Schedule
2.3(b). Except as set forth as Schedule 2.3(b), no shares of common stock or
partnership or membership interests of any Subsidiary are issued, reserved for
issuance or outstanding.
SECTION 2.4 Subsidiaries. Except as disclosed on Schedule 2.4, all
of the outstanding shares of the capital stock of each Subsidiary that is a
corporation have been duly authorized and validly issued and are fully paid and
nonassessable and are owned by the Company, by one or more Subsidiaries or by
the Company and one or more Subsidiaries, free and clear of all Liens. Except as
set forth on Schedule 2.4, all of the outstanding partnership interests in each
Subsidiary that is a partnership have been duly authorized and validly issued
and are fully paid and nonassessable and are owned, both beneficially and of
record, by the Company, by one or more Subsidiaries, or by the Company and one
or more Subsidiaries, free and clear of all Liens. Except as set forth on
Schedule 2.4 or as provided for in this Agreement, there are no securities,
options, warrants, rights, commitments or agreements of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating any of them to issue, sell or deliver shares of capital stock or
other equity or partnership interests of any of them. Except as set forth on
Schedule 2.4, there are no restrictions upon the voting or transfer of any
shares of common stock or partnership interests of the Company or any of its
Subsidiaries pursuant to the certificate of incorporation, bylaws, partnership
agreement, operating agreement, or other governing instrument or any agreement
to which the Company or such Subsidiary is a party. Assuming the Buyer has the
requisite power and authority to be the lawful owner of the partnership
interests of CPLP, upon delivery of and payment for such partnership interests
at the Closing as herein provided, good and valid title to such partnership
interests will pass to Buyer, free and clear of all Liens, other than any Liens
arising from acts of Buyer on or following the Closing Date.
SECTION 2.5 No Material Adverse Change. Since December 31, 1999,
and except as described on Schedule 2.5, there has not occurred any material
adverse change in, or effect on, or any event or circumstance that (individually
or together with any other such events or circumstances) would reasonably be
expected to have a material adverse effect on, the business, results of
operations, assets, liabilities, cash flows or financial condition of the
Company and the Subsidiaries, taken as a whole (any such change or effect, a
"Company Material Adverse Effect"); provided, however, that a Company Material
Adverse Effect shall not include any change or effect due to (i) general
business, economic or financial conditions affecting the industry or lines of
business in which the Company and the Subsidiaries participate and which do not
affect the Company and the Subsidiaries in any manner or degree materially
different from the industry as a whole and (ii) any continuation, but not a
material worsening, of an adverse trend or condition described on Schedule 2.5.
SECTION 2.6 No Conflict. Except for the required filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and except as described on Schedule 2.6 (the "Company Required
Consents"), the execution and delivery of this Agreement and the performance of
the Transactions do not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the Transactions will not, (a)
conflict with any of, or require the consent, approval or authorization of, or
any declaration or filing with or
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notice to, any person under, the terms, conditions or provisions of the charter
documents or bylaws or equivalent governing instruments of the Seller, the
Company or any Subsidiary, as applicable, (b) violate any provision of, or
require any consent, authorization or approval of, or any declaration or filing
with or notice to, any person under, any law or administrative regulation or any
judicial, administrative or arbitration order, award, judgment, writ, injunction
or decree applicable to the Seller, the Company or any Subsidiary, (c) conflict
with, result in a breach of, constitute a default under (whether with notice or
the lapse of time or both) or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, any material agreement, lease, deed, mortgage, indenture, commitment or
instrument to which Seller, the Company or any Subsidiary, as applicable, is a
party or by which the Seller, the Company or any Subsidiary is bound or to which
any assets of the Seller, the Company or any Subsidiary are subject, or (d)
result in the creation of any Lien on any of the Company Shares, CPH Shares,
Atlantic Interest, the Company's CPLP Limited Partnership Interest and CPLP
General Partnership Interest to be acquired pursuant to the Transactions
(collectively, the "Interests"), or any material assets or properties of the
Company or any Subsidiary.
SECTION 2.7 No Default. Assuming receipt of the Company Required
Consents and except as set forth on Schedule 2.7, neither the Company nor any
Subsidiary is in material default under, and no condition exists that with
notice or lapse of time or both could reasonably be expected to constitute a
material default under, (a) any material mortgage, loan agreement, indenture,
evidence of indebtedness or other instrument evidencing borrowed money or other
material agreement to which it or any of its properties is subject or bound, or
(b) any judgment, order or injunction of any Governmental Entity or arbitrator.
SECTION 2.8 Brokerage Arrangements. Except as set forth on Schedule
2.8, neither the Seller, the Company nor any Subsidiary has entered (directly or
indirectly) into any agreement with any person, firm or corporation that would
obligate Buyer, Seller, the Company or any Subsidiary to pay any commission,
brokerage, or "finder's fee" in connection with the Transactions.
SECTION 2.9 Company Party Financial Statements; Undisclosed
Liabilities.
(a) Attached as Schedule 2.9 are copies of (i) the unaudited
consolidated balance sheet of the Company Parties, including stockholders'
equity/partner capital, as at December 31, 2000, and the related unaudited
consolidated statements of income and cash flows for the fiscal year then ended
and (ii) the unaudited consolidated balance sheets of the Company Parties,
including stockholders' equity/partner capital as at March 31, 2001 and June 30,
2001, and the related unaudited consolidated statements of income for the
quarterly or six-month period then ended, as applicable, in each case including
the notes thereto, if any (collectively, the "Company Financial Statements").
The Company Financial Statements have been prepared in accordance with GAAP
consistently applied except as noted therein and fairly present in all material
respects the consolidated financial position of the Company Parties taken as a
whole as of the respective dates set forth therein and the results of operations
and cash flows for the Company Parties for the respective fiscal periods set
forth therein (subject, in each case, to the absence of footnotes and, in the
case of the interim financial statements, to normal year-end adjustments).
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(b) Except (i) as disclosed to Buyer in this Agreement or as set
forth on Schedule 2.9, or reserved against or reflected on or provided for on
the Company Financial Statements, or (ii) as incurred after December 31, 2000 in
the ordinary course of business consistent with prior practice, to the Knowledge
of Seller, no Company Party has any material liabilities or obligations that
would be required by GAAP consistently applied to be reflected or reserved
against on a balance sheet of the Company Parties or in the notes thereto. The
representations and warranties set forth in this Section 2.9(b) do not apply to
any liabilities or obligations of the Company Parties for Taxes, which are
separately addressed in Section 2.16 of this Agreement.
SECTION 2.10 No Litigation. Schedule 2.10 sets forth a list of all
suits, lawsuits, actions, proceedings and arbitrations pending against or
affecting the Company or any Subsidiary. Except as set forth on Schedule 2.10,
there is no (i) material claim, suit, lawsuit, action, proceeding, arbitration,
prosecution, inquiry or governmental investigation ("Litigation") pending or, to
the Knowledge of Seller, threatened against or affecting the Company or any
Subsidiary, (ii) material judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator ("Governmental Order") outstanding against the
Company or any Subsidiary, (iii) material dispute or disagreement pending or
threatened in writing between the Company or any Subsidiary and any of its
customers or suppliers; or (iv) event, to the Seller's Knowledge, that has
occurred or claim that has been asserted that might reasonably be expected to
result in a material claim or other material Litigation against Seller, the
Company or any Subsidiary or their respective businesses or assets. The
representations and warranties set forth in this Section 2.10 do not apply to
any (x) claims, suits, lawsuits, actions, proceedings, arbitrations,
prosecutions, inquiries or governmental investigations, or (y) any judgments,
decrees, injunctions, rules or orders of any Governmental Entity or arbitrator,
relating, in the case of either clause (x) or (y), to Taxes, which are
separately addressed in Section 2.16 of this Agreement.
SECTION 2.11 Environmental Matters. Except as set forth on Schedule
2.11, to the Knowledge of Seller:
(a) each of the Company and its Subsidiaries has obtained and is in
material compliance with all material licenses, permits and other authorizations
required under all applicable environmental laws, ordinances, rules and
regulations and any binding judicial or administrative interpretations thereof
and all orders, decrees, judgments and injunctions issued by a governmental
agency of competent jurisdiction in each case relating to pollution or the
protection, cleanup or restoration of the environment or natural resources
("Environmental Laws") required for the conduct of its businesses and operations
and is in compliance in all material respects with all applicable Environmental
Laws;
(b) there are or have been no releases of any chemical substance,
product, waste, or contaminants, including petroleum, petroleum products,
propane byproducts, lead, mercury, asbestos, polychlorinated biphenyls, and all
other materials and substances regulated pursuant to Environmental Laws
("Hazardous Materials") at any businesses or operations of the Company or any of
its Subsidiaries that are or have been in contravention of applicable
Environmental Laws and could reasonably be expected to give rise to (i)
liabilities or obligations for any cleanup, remediation, disposal or corrective
action under any applicable Environmental Laws or (ii)
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claims arising for personal injury, property damage, or damage to natural
resources, in the case of both (i) and (ii) in excess of $100,000 per location;
(c) except for matters that have been fully remediated or otherwise
resolved, neither the Company nor any Subsidiary (i) has received from any
governmental authority any written notice of noncompliance with, violation of,
or liability or potential liability under any applicable Environmental Laws,
(ii) has received from any governmental authority any written notice requesting
any information pursuant to Environmental Laws, other than routine requests
received in the ordinary course of business, (iii) has entered into any consent
decree or order related to any Environmental Laws or any environmental issue or
(iv) is subject to any final and nonappealable order of any court or
governmental authority of competent jurisdiction under any Environmental Laws;
(d) neither the Company nor any Subsidiary has assumed, either
contractually or by operation of law, from any person or entity, any liability
arising from or related to any applicable Environmental Laws other than in
connection with the purchase or acquisition of assets or entities engaged in the
distribution and sale of propane, whether through the purchase of stock or
assets, merger or otherwise;
(e) none of the Company, any Subsidiary, any predecessor of the
Company or any Subsidiary, or any entity previously owned by the Company or any
Subsidiary has transported or arranged for the treatment, storage, handling,
disposal, or transportation of any Hazardous Materials to any off-site location
which has resulted or is expected to result in an Environmental Claim for
damages in excess of $100,000 per location against the Company or any
Subsidiary.
For purposes of this Agreement, "Environmental Claim" means any and all
administrative or judicial actions, suits, orders, claims, Liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other communication (written or oral), whether criminal or
civil, pursuant to or relating to any applicable Environmental Law by any person
(including any governmental or regulatory authority, private person and
citizens' group) based upon, alleging, asserting or claiming any actual or
potential (i) violation of or liability under any Environmental Law, (ii)
violation of any environmental permit, license or other authorization required
under applicable Environmental Laws or (iii) liability for investigatory costs,
cleanup costs, removal costs, remedial costs, response costs, natural resources
damages, property damage, personal injury, fines, or penalties arising out of,
based on, resulting from, or related to the presence, release, or threatened
release into the environment, of any Hazardous Materials at any location,
including any off-site location to which Hazardous Materials or materials
containing Hazardous Materials were sent for handling, storage, treatment or
disposal.
SECTION 2.12 Labor Matters. Except as set forth on Schedule 2.12, to
the Knowledge of Seller, neither the Company nor any Subsidiary (a) is a party
to, or bound by, any collective bargaining agreement or other contract with a
labor union or labor organization or is the subject of any claims initiated by
any labor organization to represent any of its employees not currently
represented by a labor organization, (b) is the subject of any proceeding
asserting that it has
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committed an unfair labor practice or any threatened claims alleging that it has
committed an unfair labor practice or (c) is the subject of any strike, work
stoppage or material labor dispute.
SECTION 2.13 Compliance with Laws. Other than with respect to
environmental matters which are addressed in Section 2.11, and except as
specifically indicated on Schedule 2.13, the Company and its Subsidiaries each
hold all required material permits, licenses, exemptions, orders and approvals
of all federal, state or local courts or governmental agencies or authorities
(each, a "Governmental Entity") to conduct their respective businesses as
currently conducted (the "Company Permits"). The Company and its Subsidiaries
are each in compliance in all material respects with the terms of the Company
Permits. The Company and its Subsidiaries are in compliance in all material
respects with and, to the Knowledge of Seller, neither the Company nor any
Subsidiary has received any notice of any material violation of, or material
failure to comply with any material statute, law, ordinance, regulation, rule,
permit or order of any Governmental Entity applicable to the Company or its
Subsidiaries or their respective businesses, assets or operations. Except as set
forth on Schedule 2.13, to the Knowledge of Seller, there are no material
investigations or reviews pending or threatened by any Governmental Entity
relating to the operation of the Company or any Subsidiary, and except as set
forth on Schedule 2.13, there is no outstanding order, writ, judgment,
stipulation, injunction, decree, determination, award or other order of any
Governmental Entity against the Company or any Subsidiary that relates to the
business of the Company or any Subsidiary.
SECTION 2.14 Intellectual Property. Except as set forth on Schedule
2.14, each of the Company and its Subsidiaries lawfully owns, possesses and uses
all material patents, patent rights, trademarks, trademark rights, copyrights,
technology, software, trade secrets, know-how and computer programs and
proprietary information (together, "Intellectual Property") that is necessary to
permit the Company and such Subsidiary to operate its businesses in the ordinary
course consistent with past practices, without any requirement to pay any
royalty, license fee or similar type of compensation. All patents, copyrights,
trademarks, trade names, service marks owned by the Company or any Company Party
or used by the Company or any Company Party in the conduct of its business are
listed on Schedule 2.14. Except as disclosed on Schedule 2.14, to Seller's
Knowledge, the Company and each Subsidiary are in compliance in all material
respects with the terms of all material licenses or other agreements governing
the Intellectual Property of the Company or such Subsidiary that is owned by any
third party.
SECTION 2.15 Employee Benefit Plans; ERISA.
(a) Schedule 2.15(a) sets forth a list of all "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and all material bonus or other incentive
compensation, deferred compensation, salary continuation, disability, stock
award, stock option, stock purchase, severance, parachute or other material
employee benefit policies or arrangements covering any current or former
employees, officers or directors of the Company and the Subsidiaries, for which
either the Company or a Subsidiary is a participating employer (each, a "Benefit
Plan," and collectively, the "Benefit Plans"). Except as otherwise indicated on
Schedule 2.15(a), all of the Benefit Plans are sponsored and maintained by the
Seller, and neither the Company nor any Subsidiary maintains any Benefit Plan.
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(b) Except as set forth on Schedule 2.15(b), neither the Company nor
any Subsidiary contributes to a multiemployer plan as defined in Section 3(37)
of ERISA (a "Multiemployer Plan") or a plan with two or more contributing
sponsors, at least two of which are not under common control, within the meaning
of Section 3063 of ERISA (a "Multiple Employer Plan"). Except as set forth on
Schedule 2.15(b), neither the Company nor any Subsidiary has any material
liability due to a complete or partial withdrawal from a Multiemployer Plan or
Multiple Employer Plan or due to the termination or reorganization of a
Multiemployer Plan, and to the Knowledge of Seller, no events have occurred and
no circumstances exist that could reasonably be expected to result in any such
material liability to the Company or any Subsidiary. The Seller, the Company,
and each Subsidiary have provided Buyer with copies of correspondence with any
Multiemployer Plan or trustee thereof relating to withdrawal liability of the
Company or any Subsidiary in the event of a complete withdrawal by the Company
or any Subsidiary from any Multiemployer Plan.
(c) Benefit Plans maintained by Seller that are defined benefit
plans subject to Title IV of ERISA ("Single Employer Plans") are so noted on
Schedule 2.15(c), and neither the Company nor any Subsidiary has any material
liability under Section 4062 of ERISA to the Pension Benefit Guaranty
Corporation or to a trustee appointed under Section 4042 of ERISA with respect
to any such Single Employer Plan, and, to the Knowledge of Seller, no events
have occurred and no circumstances exist that could reasonably be expected to
result in any such material liability to the Company or any Subsidiary. There
have been no accumulated funding deficiencies, as defined in Section 412 of the
Code, whether or not waived, with respect to any Single Employer Plans subject
to Section 412 of the Code. All premiums payable to the Pension Benefit Guaranty
Corporation with respect to any Single Employer Plan have been paid when due.
There has not been, and will not be as a result of the Transactions, with regard
to any Single Employer Plan, any reportable event, as defined in Section 4043 of
ERISA, for which the reporting requirement has not been waived by regulation. As
of the date of the most recent actuarial report for each Single Employer Plan,
the fair market value of the assets (excluding for this purpose any accrued but
unpaid contributions) of such Single Employer Plan equaled or exceeded the
present value of all benefits accrued under such Single Employer Plan, whether
or not vested, based on the actuarial assumptions that would be used if such
Single Employer Plan were then terminated, and there has not been a material
adverse change in such funding status since such date.
(d) To the Knowledge of Seller, each Benefit Plan has been
maintained in all material respects in accordance with its terms and all
applicable provisions of ERISA, the Code and other applicable laws, other than
the occurrence of defects that are eligible for correction under the Internal
Revenue Service Employee Plans Correction Resolution System Program. Neither the
Company nor any Subsidiary has incurred any material liability for any excise,
income or other taxes or penalties with respect to any Benefit Plan covering
employees or former employees of the Company or any Subsidiary, and to the
Knowledge of Seller, no circumstance exists that could give rise to any such
liability. There are no pending or, to the Knowledge of Seller, threatened
claims by any employees of the Company or any Subsidiary, or against the sponsor
or
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a fiduciary or any Benefit Plan, other than routine benefit claims, that could
result in any material liability, direct or indirect, for the Company or any
Subsidiary.
(e) All persons classified by the Company or any Subsidiary as
independent contractors satisfy and have at all times satisfied the requirements
of applicable law to be so classified; the Company and the Subsidiaries have
fully and accurately reported their compensation on Internal Revenue Service
("IRS") Forms 1099 when required to do so; and the Company and its Subsidiaries
have no obligations to provide benefits with respect to such persons. No
individuals are currently providing, or have provided since July 19, 1999,
services to the Company or any Subsidiary pursuant to a leasing agreement or
similar type of arrangement, nor has the Company or any Subsidiary entered into
any arrangement whereby services will be provided by such individuals.
(f) There are no contracts, agreements, plans or arrangements,
including the provisions of this Agreement, covering any current or former
officer, director, employee, consultant, or independent contractor of the
Company or any Subsidiary that, individually or collectively, could give rise to
or entail any payment (or portion thereof) that would not be deductible pursuant
to Sections 280G, 404 or 162 of the Code.
(g) Except as described in Schedule 2.15(g), all liabilities, costs
and expenses of the Company Parties arising under any Benefit Plans have been
fully accrued and reflected in the Company Financial Statements, and all such
liabilities, costs and expenses attributable to any period prior to the Closing
Date will be fully accrued and reflected in the Closing Date Financial
Statements.
(h) Seller has determined, as a result of a general corporate
reorganization of Seller and its subsidiaries unrelated to the Transactions,
that a partial termination of the defined benefit pension plan subject to Title
IV of ERISA that is sponsored by the Seller (the "Seller's Title IV Pension
Plan") has occurred with respect to participants in Seller's Pension Plan whose
employment with the Seller and its affiliates terminates from and after January
1, 1999 and before December 31, 2001. Accordingly, provided that the Closing
Date occurs before December 31, 2001, employees of the Company and any
Subsidiary who are participants in Seller's Title IV Pension Plan and in the
related non-qualified defined benefit pension plan sponsored by the Seller
(together with Seller's Title IV Pension Plan, the "Seller's Pension Plans") and
whose employment with the Seller and its affiliates is terminated as of the
Closing Date will be fully vested in their accrued benefits under Seller's
Pension Plans as of the Closing Date. Under the terms of Seller's 401(k) Plan
(which is identified as such on Schedule 2.15(a)), participants in Seller's
401(k) Plan are fully vested in their account balances at all times.
SECTION 2.16 Taxes.
(a) Except as provided on Schedule 2.16:
(i) The Company and the Subsidiaries have filed or caused to
be filed, within the times and in the manner prescribed by law, all material
Federal, state, local and foreign Tax
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Returns and Tax reports that are required to be filed by the Company and the
Subsidiaries or with respect to the assets of either the Company or any
Subsidiary and such returns and reports reflect accurately all material items
required to be reported therein for the periods covered thereby and are true,
complete and correct in all material respects;
(ii) The Company and each of the Subsidiaries have, within
the time and in the manner prescribed by law, paid (and until the Closing will
pay within the time and in the manner prescribed by law) all material Taxes
imposed on or incurred by such party that are currently due and payable;
(iii) Neither the Company nor any Subsidiary has requested any
extension of time within which to file any material Tax Return, which Tax Return
has not since been filed, or has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any Tax or Tax Returns of the Company or any Subsidiary for any period prior to
the date of the Closing, and neither the Company nor any Subsidiary has been
requested to enter into any such agreement or waiver;
(iv) There is no action, suit, proceeding, investigation,
audit, or claim now pending or, to Seller's Knowledge, threatened by any
authority regarding any material Tax relating to the Company Parties, or the
assets of the Company Parties, for any period prior to the Closing, and to
Seller's Knowledge, there is no action, suit, proceeding, investigation, audit,
or claim now pending or threatened by any authority regarding any material Tax
relating to Atlantic, or the assets of Atlantic, for any period prior to the
Closing;
(v) No material deficiency for any Tax has been proposed,
asserted or assessed against the Company or any Subsidiary that has not been
resolved and paid in full;
(vi) The Company and the Subsidiaries have made available to
the Buyer Parties complete and accurate copies, covering all years ending on or
after December 31, 1996, of (A) all material Tax Returns, and any amendments
thereto, filed by the Company or any Subsidiary, (B) all material audit reports
or similar materials received from any taxing authority relating to any Tax
Return filed by the Company or any Subsidiary and (C) any material Closing
Agreements or Tax rulings (or any pending requests for such rulings) applicable
with respect to any Company or any Subsidiary;
(vii) Neither the Company nor any Subsidiary has filed a
consent under Section 341(f) of the Code. Except for the Purchase Agreement,
dated April 5, 1999, by and among Columbia Propane, L.P., a former Delaware
limited partnership, CPH, the Company, Triarc Companies, Inc., a Delaware
corporation ("Triarc"), National Propane Corporation, a Delaware corporation and
wholly-owned subsidiary of Triarc and the special limited partner of CPLP (the
"Special Limited Partner"), National Propane Partners, L.P., and National
Propane SGP, Inc., (the "National Propane Purchase Agreement"), neither the
Company nor any Subsidiary is or has been a party to a Tax sharing, Tax
indemnity or Tax allocation agreement;
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(viii) CPLP has made an election under Section 754 of the Code
to adjust the basis of CPLP's assets under Section 743 of the Code, and such
election is currently in effect; and
(ix) Seller, the Company and their affiliates have treated
CPLP as a partnership for all federal, state and local income tax purposes
during the period in which Seller controlled CPLP and have not, and will not
prior to the Closing Date, file an election with any Tax authority to cause CPLP
to be treated as a corporation for any federal, state or local income tax
purpose; and to the Seller's Knowledge, CPLP will be at the Closing Date an
entity taxable as a partnership and not as a corporation for all federal, state
and local income tax purposes.
(b) "Taxes," as used in this Agreement, shall mean any Federal,
state, county, local or foreign taxes, charges, fees, levies, or other
assessments, including all income, sales and use, ad valorem, transfer, gains,
profits, excise, franchise, real and personal property, gross receipts, business
and occupation, employment, disability, payroll, license, estimated, severance
or withholding taxes, other taxes or similar charges of any kind whatsoever
imposed by any Governmental Entity, whether imposed directly on a person or
resulting under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract or
otherwise and includes any interest and penalties (civil or criminal) on or
additions to any such taxes or in respect of a failure to comply with any
requirement relating to any Tax Return and any expenses incurred in connection
with the determination, settlement or litigation of any tax liability. "Tax
Return" as used in this Agreement, shall mean a report, return or other
information required to be supplied to a Governmental Entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities. "Tax Ruling," as used in this Agreement, shall mean a
written ruling of a taxing authority relating to Taxes. "Closing Agreement," as
used in this Agreement, shall mean a written and legally binding agreement with
a taxing authority relating to Taxes.
SECTION 2.17 Corporate and Partnership Records. The copies of the
certificate of incorporation or formation, bylaws, partnership agreement,
operating agreement or other governing instruments of Seller, the Company and
any Subsidiary that have been made available or delivered to Buyer are complete
and correct.
SECTION 2.18 Material Contracts. (a) Schedule 2.18(a) lists (i) all
material contracts, agreements and documents evidencing rights of or commitments
by any Company Party to which any Company Party is a party or its property or
assets are bound as of the Closing Date and (ii) all material contracts,
agreements and documents evidencing rights of or commitments by Atlantic to
which Atlantic is a party or its properties or assets are bound as of the
Closing Date that are in the possession and control of a Company Party. For
purposes of this Agreement, each of the following constitutes a material
contract, agreement or document:
(A) any indenture, note, letter of credit, loan or credit
agreement relating to the borrowing of at least $1 million or to the direct or
indirect guaranty or assumption of the obligation of any other person of more
than $1 million;
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(B) any (i) customer contract involving the payment or
receipt during the twelve months ended March 31, 2001 of an amount in excess of
$1 million or that is expected to involve the payment or receipt during the
twelve months ended March 31, 2002 of an amount in excess of $1 million, and
(ii) any other contract involving the payment or receipt during the twelve
months ended March 31, 2001 of an amount in excess of $500,000 or that is
expected to involve the payment or receipt during the twelve months ended March
31, 2002 of an amount in excess of $500,000;
(C) any lease of personal property having a fair market
value in excess of $500,000;
(D) any joint venture, partnership or similar organizational
contract involving a sharing of profits or losses relating to all or any portion
of the business of the Company Parties;
(E) any contract granting a third party a right of purchase
of an asset of any Company Party having a fair market value in excess of
$500,000;
(F) any contract giving a third party rights to buy from or
sell to any Company Party assets or stock with a fair market value in excess of
$500,000 upon a change of control or change in ownership of any Company Party;
(G) any agreement, license or instrument that prohibits any
Company Party from competing in the retail propane distribution business in any
geographical area in the United States;
(H) any material supply contract containing "take or pay"
provisions;
(I) any material written agreement, arrangement or
understanding with any direct or indirect affiliate of Seller, other than in the
ordinary course of business. Except as set forth on Schedule 2.18(a), since
December 31, 1999, there has not occurred any transaction between any Company
Party on the one hand and any affiliate thereof on the other, other than in the
ordinary course of business; and
(J) the Intercompany Note, the Intercompany Loan Agreement,
the Amended and Restated Agreement of Limited Partnership of CPLP (formerly
known as National Propane, L.P.), dated July 19, 1999 (the "CPLP Partnership
Agreement"), and the National Propane Purchase Agreement.
Except as set forth on Schedule 2.18(a), each such contract,
agreement and document is in full force and effect according to the terms of
each respective instrument, and each Company Party or Atlantic, as applicable,
has complied in all material respects with all requirements in connection
therewith, and there is not under any such contract, agreement or document, any
existing material breach or default (or event that, with notice, lapse of time
or both, would constitute a material breach or default) by any Company Party or
Atlantic.
(b) Attached as Schedule 2.18(b) are complete and correct lists:
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(i) breaking out the number of gallons of propane and the
price per gallon, by customer category (i.e., residential, commercial and
wholesale), that the Company and CPLP are obligated to supply after January 1,
2001 pursuant to any fixed price supply contracts or other agreements (including
hedging contracts) and reflecting, in the case of any requirements contracts, a
good faith estimate of volume based on historical information, if any, available
to the Company, and
(ii) breaking out the aggregate number of gallons of propane
and the price per gallon, on a monthly basis, that the Company and CPLP are
obligated to purchase or take title to or possession of after January 1, 2001
pursuant to any fixed price purchase or other agreement (including hedging
contracts).
SECTION 2.19 Real and Personal Property.
(a) Schedule 2.19(a)-I sets forth a list of all material real
property, leaseholds and other interests in real property that will be held by
the Company or any Subsidiary on the Closing Date (other than easements,
licenses or rights-of-way involving annual payments of less than $10,000 each)
(the "Properties"). Except as set forth on Schedule 2.19(a)-II, the Company or
such Subsidiary will hold, as of the Closing Date, an interest in the real
property described on Schedule 2.19(a)-I sufficient to permit the Company and
the Subsidiaries to operate their businesses in the ordinary course and
consistent with past practices, according to the terms of the instrument,
conveyance or document creating such interest, free and clear of all Liens, and
the Company and the Subsidiaries have good and indefeasible title to each of the
Properties (other than rights-of-way).
(b) Except as set forth on Schedule 2.19(b), each of the material
leases, subleases, easements, licenses and agreements described on Schedule
2.19(a)-I is in full force and effect according to the terms of each respective
instrument, and to Seller's Knowledge, the Company and each Subsidiary that is a
party to such material leases, subleases, easements, licenses and agreements
have complied in all material respects with all requirements in connection
therewith and there is not under any such lease, sublease, easement, license or
agreement, any existing material breach or default (or event that, with notice,
lapse of time or both, would constitute a material breach or default) by the
Company or any Subsidiary.
(c) Except as set forth on Schedule 2.19(c), there are no
outstanding notices and, to Seller's Knowledge, no facts or circumstances that
would cause it to believe that any Governmental Entity having jurisdiction over
the Properties intends to exercise the power of eminent domain or similar power
with respect to all or any part of the Properties.
(d) Except as set forth on Schedule 2.19(d), the Company and the
Subsidiaries will hold, as of the Closing Date, an interest in all material
personal property used in the business of the Company and the Subsidiaries
sufficient to permit the Company and the Subsidiaries to operate their
businesses in the ordinary course and consistent with past practices, free and
clear of Liens, and the Company and the Subsidiaries have good and marketable
title to all material
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items of equipment and other tangible personal property used in the ordinary
course of business and consistent with past practices.
SECTION 2.20 Bank Accounts. Schedule 2.20 sets forth the name of
each bank, savings and loan or other financial institution in which the Company
or any Subsidiary has any account or safe deposit box.
SECTION 2.21 Insurance Policies. Schedule 2.21 lists all currently
effective policies of insurance issued by third-party insurers, including
amounts of coverage thereof, that are maintained by the Seller for the benefit
of the Company or any Subsidiary or by the Company or any Subsidiary for which
the Company or any Subsidiary is named as an insured party. Except as set forth
on Schedule 2.21, such policies are in full force and effect and all premiums
due have been paid. There is no default by the Seller, the Company or any
Subsidiary under any such insurance policy, and there has been no failure to
give notice or to present any claim under any such policy in a due and timely
manner. There are no outstanding unpaid premiums except in the ordinary course
of business, and no notice of cancellation or non-renewal of any such insurance
policy has been received. None of the insurance policies contain provisions for
retroactive or retrospective premium adjustments.
SECTION 2.22 Inventory. All inventory used in the business of the
Company or any Subsidiary (a) was acquired and has been maintained in accordance
with the regular business practices of the Company or such Subsidiary, as
applicable, (b) consists of items of a quality and quantity useable or saleable
in the ordinary course of the business consistent with past practice, (c) is
owned by the Company or such Subsidiary, as applicable, free and clear of all
Liens, and (d) is valued at prices equal to the lower of cost determined on an
average cost basis or market value, in either case f.o.b. the storage or
warehouse of the Company or such Subsidiary, as applicable.
SECTION 2.23 Accounts Receivable. The Seller has delivered to the
Buyer a list of and the aging of (a) the accounts receivable of the Company
Parties relating to their businesses as of December 31, 2000 and (b) the
accounts receivable of Atlantic as of December 31, 2000 (the "Accounts
Receivable"). All Accounts Receivable (a) are valid and genuine, (b) arise out
of bona fide sales and deliveries of goods, performance of services or other
transactions in the ordinary course of business and consistent with past
practices, and (c) are not subject to defenses, setoffs or counterclaims in any
material amount except as described on Schedule 2.23. The allowance for doubtful
accounts with respect to the Accounts Receivable of the Company Parties has been
calculated in accordance with GAAP consistently applied in the Company Financial
Statements and, to the Knowledge of Seller, is adequate.
SECTION 2.24 Propane Sales. Information concerning the volumes
(in gallons) of propane sold by the Company Parties during the Company's 1999
fiscal year and the nine-month period ended September 30, 2000, broken down by
calendar month, the average price at which propane was sold, and the average
cost (including all transportation costs) at which propane was purchased by the
Company Parties during their 1999 fiscal year and the nine-month period ended
September 30, 2000, broken down by calendar month, is set forth in Schedule
2.24, and Schedule 2.24 is correct and complete in all material respects.
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SECTION 2.25 Letters of Credit and Guaranties. Schedule 2.25 lists
all letters of credit and guaranties to which any Company Party or, to the
Seller's Knowledge, Atlantic is a party, without regard to any minimum dollar
amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
The Buyer Parties hereby jointly and severally represent and warrant to
Seller that as of January 30, 2001 and August 7, 2001 (in each case except where
such representation or warranty is expressly made only as of another specific
date):
SECTION 3.1 Organization and Existence. Each Buyer Party has been
duly incorporated or formed and is validly existing and in good standing under
the laws of the jurisdiction in which each is incorporated or formed, and each
Buyer Party has the requisite corporate or partnership power and authority to
carry on its business as now conducted. Each Buyer Party is duly licensed or
qualified to do business as a foreign corporation or limited partnership, and
each Buyer Party is in good standing, in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in the jurisdictions where the
failure to be so qualified (individually or in the aggregate) would not have a
Buyer Material Adverse Effect (as defined below).
SECTION 3.2 Authority; Binding Effect. Each Buyer Party entering
into the Transaction Documents has the requisite corporate or partnership power
and authority to enter into the Transaction Documents to which it is a party and
to consummate the Transactions. The execution and delivery of the Transaction
Documents by each Buyer Party that is entering into the Transaction Documents
and the consummation by each Buyer Party of the Transactions have been duly
authorized by all necessary corporate or partnership action on the part of such
Buyer Party. The Transaction Documents have been duly executed and delivered by
each Buyer Party entering into the Transaction Documents and, assuming such
Transaction Documents constitute the valid and binding agreement of the Seller
and the appropriate Company Parties, such Transaction Documents constitute valid
and binding obligations of such Buyer Parties, enforceable against such Buyer
Parties in accordance with their terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought and (iii) that the right to
indemnification in the Registration Rights Agreement may be limited by public
policy or applicable securities laws.
SECTION 3.3 No Material Adverse Change. Since September 30, 2000,
and except as described on Schedule 3.3, there has not occurred any material
adverse change in, or effect on, or any event or circumstance that (individually
or together with any other such events or circumstances) would reasonably be
expected to have a material adverse effect on, the business, results of
operations, assets, liabilities, cash flows or financial condition of the Buyer
Parties, taken as a whole (any such change or effect, a "Buyer Material Adverse
Effect"); provided,
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however, that a Buyer Material Adverse Effect shall not include any change or
effect due to (i) general business, economic or financial conditions affecting
the industry or lines of business in which the Buyer Parties participate and
which do not affect the Buyer Parties in any manner or degree materially
different from the industry as a whole, and (ii) any continuation, but not a
material worsening, of an adverse trend or condition as described on Schedule
3.3.
SECTION 3.4 SEC Filings. Since September 30, 1998, (a) Buyer Parent
has timely made all filings required to be made by the Securities Act of 1933,
as amended ("Securities Act") and the Securities Exchange Act of 1934, as
amended ("Exchange Act"), (b) all filings by Buyer Parent with the United States
Securities and Exchange Commission ("SEC"), at the time filed (in the case of
documents filed pursuant to the Exchange Act) or when declared effective by the
SEC (in the case of registration statements filed under the Securities Act)
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder, (c) no such filing, at the time described above, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein in order to make the statements contained therein,
in the light of the circumstances under which they were made, not misleading,
and (d) all financial statements contained or incorporated by reference therein
complied as to form when filed in all material respects with the rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto), and fairly present in all material
respects the financial condition and results of operations of Buyer Parent at
and as of the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject in the
case of unaudited statements, to year-end audit adjustments).
SECTION 3.5 Ownership.
(a) As of March 31, 2001, there were 34,404,286 Buyer Parent Units
outstanding and 9,891,072 subordinated units of Buyer Parent outstanding, all of
which have been duly authorized by the Buyer Parent Partnership Agreement and
are validly issued and fully paid (to the extent required under the Buyer Parent
Partnership Agreement) and nonassessable (except to the extent provided in the
Delaware Revised Uniform Limited Partnership Act).
(b) API owns a 1.00% general partnership interest in Buyer Parent
pursuant to the Buyer Parent Partnership Agreement and a 1.01% general
partnership interest in Buyer pursuant to the Agreement of Limited Partnership
of Buyer. Buyer Parent owns all of the limited partnership interests in Buyer.
(c) As of May 31, 2001, API and its affiliates owned an aggregate
55% limited partnership interest in Buyer Parent.
(d) All of the outstanding limited partnership and general
partnership interests in Buyer Parent have been duly authorized and have been
validly issued in accordance with the Buyer Parent Partnership Agreement.
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(e) The general partnership interest of API in each of the Buyer and
the Buyer Parent, the limited partnership interest of API and its affiliates in
Buyer Parent, and the limited partnership interest of Buyer Parent in Buyer are
free and clear of any and all Liens, except as set forth on Schedule 3.5(e).
(f) Except as set forth in the Buyer Parent Partnership Agreement or
the Buyer Parent's SEC filings and except as issued under the AmeriGas Propane,
Inc. 2000 Long-Term Incentive Plan, there are no outstanding subscriptions,
options, convertible securities, warrants, calls or rights of any kind issued or
granted by, or binding upon, Buyer Parent to purchase or otherwise acquire any
security of or equity interest in Buyer Parent.
SECTION 3.6 No Conflict. Except for the required filings under the
HSR Act and except as described on Schedule 3.6 (the "Buyer Required Consents"),
the execution and delivery of the Transaction Documents and the performance of
the Transactions do not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the Transactions will not, (a)
conflict with any of, or require the consent, approval or authorization of, or
any declaration or filing with or notice to, any person under, the terms,
conditions or provisions of the governing instruments of any Buyer Party, (b)
violate any provision of, or require any consent, authorization or approval of,
or any declaration or filing with or notice to, any person under, any law or
administrative regulation or any judicial, administrative or arbitration order,
award, judgment, writ, injunction or decree applicable to any Buyer Party, (c)
conflict with, result in a breach of, constitute a default under (whether with
notice or the lapse of time or both), accelerate or permit the acceleration of
the performance required by, or require any consent, authorization or approval
under, any material agreement, lease, deed, mortgage, indenture, commitment or
instrument to which any Buyer Party is a party or by which any Buyer Party is
bound or to which any of the assets of any Buyer Party are subject, or (d)
result in the creation of any Lien on the Buyer Parent Units or any material
assets or properties of any Buyer Party.
SECTION 3.7 No Default. Assuming receipt of the Buyer Required
Consents, no Buyer Party is in material default under, and no condition exists
that with notice or lapse of time or both could reasonably be expected to
constitute a material default under, (a) any material mortgage, loan agreement,
indenture, evidence of indebtedness or other instrument evidencing borrowed
money or other agreement to which it or any of its properties are bound, or (b)
any material judgment, order or injunction of any court, arbitrator or
governmental agency.
SECTION 3.8 Brokerage Arrangements. Except as set forth on Schedule
3.8, no Buyer Party has entered (directly or indirectly) into any agreement with
any person, firm or corporation that would obligate Seller or any Company Party
to pay any commission, brokerage or finder's fee in connection with the
Transactions.
SECTION 3.9 Purchase Not for Distribution. The Interests will be
acquired by Buyer, or such other party acquiring the same pursuant to Section
1.1, for its own account and not with a view to distribution. Buyer will not
resell, transfer, assign or distribute the Interests, except in compliance with
the registration requirements of the Securities Act or pursuant to an available
exemption therefrom.
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SECTION 3.10 Governing Documents. The copies of the certificates of
limited partnership and all other governing instruments of the Buyer Parties
that have been made available or delivered to Seller are complete and correct.
SECTION 3.11 Compliance with Laws. Except as set forth in SEC filings
by Buyer Parent under the Securities Act or the Exchange Act, Buyer holds all
required material permits, licenses, exemptions, orders and approvals of all
Governmental Entities to conduct its respective businesses as currently
conducted (the "Buyer Permits") and is in compliance in all material respects
with the terms of the Buyer Permits. Except as set forth in SEC filings by Buyer
Parent under the Securities Act or the Exchange Act, Buyer is in compliance in
all material respects with, and to the Knowledge of Buyer, has not received any
notice of any material violation of, or failure to comply in any material
respect with, any statute, law, ordinance, regulation, rule, permit or order of
any Governmental Entity applicable to Buyer or its businesses, assets or
operations.
SECTION 3.12 Taxes. Except as set forth in SEC filings by Buyer
Parent under the Securities Act or the Exchange Act,
(a) Buyer Parent and Buyer have filed or caused to be filed, within
the times and in the manner prescribed by law, all material Federal, state,
local and foreign Tax Returns and Tax reports that are required to be filed by
Buyer or Buyer Parent with respect to the assets of Buyer or Buyer Parent,
respectively, and such returns and reports (if any) reflect accurately all
material items required to be reported therein for the periods covered thereby
and are true, complete and correct in all material respects;
(b) Buyer Parent and Buyer have, within the time and in the manner
prescribed by law, paid (and until the Closing will pay within the time and in
the manner prescribed by law) all material Taxes imposed on or incurred by each
such party that are currently due and payable (if any);
(c) Neither Buyer Parent nor Buyer has requested any extension of
time within which to file any material Tax Return, which Tax Return has not
since been filed, or has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any Tax
or Tax Returns of Buyer Parent or Buyer for any period prior to the date of the
Closing that is still outstanding, and neither Buyer Parent nor Buyer has been
requested to enter into any such agreement or waiver as to any statute of
limitations period that has not yet expired;
(d) There is no action, suit, proceeding, investigation, audit, or
claim now pending or threatened by any authority regarding any material Tax
relating to Buyer Parent or Buyer, or the assets of Buyer Parent or Buyer, for
any period prior to the Closing;
(e) No material deficiency for any Tax has been proposed, asserted
or assessed against Buyer Parent or Buyer that has not been resolved and paid in
full; and
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(f) Except as set forth in Schedule 3.12(f), neither Buyer Parent
nor Buyer is or has been a party to a Tax sharing, Tax indemnity or Tax
allocation agreement.
ARTICLE IV
INVESTMENT
SECTION 4.1 Restricted Securities. Seller acknowledges that (i)
issuance of the Buyer Limited Partnership Interests and the Buyer Parent Units
has not been and will not be registered or qualified under the Securities Act or
applicable state securities laws, and (ii) the Buyer Limited Partnership
Interests and the Buyer Parent Units are restricted securities under the
Securities Act and such state securities laws and therefore cannot be sold or
transferred unless such transfer is registered under the Securities Act and
registered or qualified under applicable state securities laws or an exemption
from such registration and qualification is available. The Seller will transfer
the Buyer Limited Partnership Interests only in compliance with Section 1.1 of
this Agreement. Seller represents that it is familiar with Rule 144 promulgated
under the Securities Act by the SEC, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act. The Seller hereby
acknowledges that, if it disposes of any Buyer Parent Units pursuant to any
exemption under the Securities Act, it will take all necessary actions to
perfect the exemption from registration provided thereby, including (a)
obtaining on behalf of the purchaser information to enable the Buyer Parent to
establish a reasonable belief that the purchaser is an accredited investor
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, (b) advising such purchaser as to which exemption under the Securities Act
is being relied upon with respect to such resale and (c) furnishing the Buyer
Parent with an opinion of counsel, satisfactory to the Buyer Parent, that such
disposition will not require registration of the Buyer Parent Units under the
Securities Act.
SECTION 4.2 Purchase for Own Account; Investment. Seller has been
advised that the Buyer Limited Partnership Interests and the Buyer Parent Units
will be issued by Buyer or Buyer Parent, as applicable, pursuant to exemptions
under the Securities Act and applicable state securities laws and that Buyer and
Buyer Parent's reliance upon such exemptions is predicated in part on Seller's
representations contained herein. Seller represents and warrants that the Buyer
Parent Units are being purchased for its own account, for investment, and
without a view to any distribution of the same within the meaning of the
Securities Act. Seller is in a financial position to hold the Buyer Parent Units
indefinitely and to bear the economic risk of its investment in the Buyer Parent
Units.
SECTION 4.3 Information. Seller has been given access to publicly
available information regarding Buyer Parent (which includes information
regarding the Buyer), including, in particular, the Annual Reports of Buyer
Parent on Form 10-K for the years ending September 30, 1999 and September 30,
2000, the Buyer Parent's Quarterly Reports on Form 10-Q for the quarters ending
December 31, 2000 and March 31, 2001, and the Buyer Parent's Registration
Statement on Form S-3 filed on September 15, 2000, and the prospectus contained
therein, as supplemented through October 11, 2000, and has utilized such
information and access to its satisfaction for the purpose of obtaining and
verifying such information. Seller has been provided an opportunity by the Buyer
and the Buyer Parent to ask such questions of senior
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management of the Buyer and the Buyer Parent as the Seller has deemed
appropriate in connection with its investment in securities of the Buyer and the
Buyer Parent.
SECTION 4.4 Legends. Seller hereby acknowledges that the
certificates evidencing the Buyer Parent Units may bear one or all of the
following legends:
(a) "These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated or otherwise transferred in the absence of a registration statement
in effect with respect to the securities under such Act or an opinion of counsel
satisfactory to the Buyer that such registration is not required or unless sold
pursuant to Rule 144 of such Act."
(b) Any legend required by the securities laws of any applicable
jurisdictions.
ARTICLE V
CERTAIN COVENANTS
SECTION 5.1 Access to Information. From January 30, 2001 to the
Closing or until this Agreement is terminated as provided in Article VIII,
Seller shall cause the Company and the Subsidiaries to, and the Company and the
Subsidiaries shall, provide to the Buyer Parties reasonable and prompt access to
all of their books, records (including making copies as reasonably requested),
assets, properties and (to the extent available) employees, and shall cause to
be furnished to the Buyer Parties such information in the possession or control
of the Seller, the Company or the Subsidiaries as Buyer may reasonably request,
upon prior notice and during normal business hours, unless such access and
disclosure would violate the terms of any agreement to which the Seller, the
Company or any Subsidiary is bound or any applicable law or regulation or the
Seller reasonably concludes, upon the advice of counsel, that such access or
disclosure might be expected to result in the loss of an available legal
privilege. Notwithstanding the provisions of the preceding sentence, any access
to the books, records, assets, properties and employees of and information
relating to, Atlantic shall be subject to the prior receipt, by the Buyer
Parties, of Conoco's consent to such access. The Seller and the Buyer Parties
shall cooperate fully in the effort to identify a means of disclosing any
information requested by the Buyer in a manner that will preserve, for the
Seller, the Company and the Subsidiaries, any legal privilege available with
respect to that information in the event that the Transactions are not
consummated. Subject to the foregoing, the Seller shall cause the Company and
the Subsidiaries to, and the Company and the Subsidiaries shall, provide to the
Buyer, its representatives and agents, access to (i) the books, records, and
employees of the Company and the Subsidiaries to allow the Buyer to make
presentations to and provide information to the employees of the Company and the
Subsidiaries regarding the Buyer's benefit plans; provided, however, that the
Buyer shall not distribute any written materials to the employees of the Company
and the Subsidiaries without the Seller's prior written approval of such
materials, which approval shall not be unreasonably withheld, conditioned or
delayed, and (ii) the management information systems employees of the Company
and the Subsidiaries, and for demonstrative purposes only, the computer
hardware, software, systems and facilities of the Company and the Subsidiaries
and all books and records of the Company Parties, and all books and records of
Atlantic in the
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possession or control of the Company Parties, related thereto. The
confidentiality of any data or information acquired pursuant to this Section 5.1
shall be maintained by Buyer and its representatives pursuant to the terms of
the letter agreement between API and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on behalf of the
Seller, dated June 22, 2000 (the "Confidentiality Agreement"), which each of the
above-named parties hereby acknowledges is binding on it; provided, however,
that in the event that this Agreement is terminated as provided in Article VIII,
the obligation of the Buyer Parties to maintain the confidentiality of any
information and data provided to them under this Section 5.1 and the obligation
of the Buyer Parties, under the Confidentiality Agreement, not to solicit for
employment any of the current employees of the Company and the Subsidiaries with
whom any of the Buyer Parties has been directly or indirectly introduced or
otherwise had contact or become aware of in connection with the Transactions
shall remain in effect until the second anniversary of the date of termination
of this Agreement.
SECTION 5.2 Seller Conduct of Business.
(a) Ordinary Course. From January 30, 2001 to the Closing, except as
contemplated or permitted by this Agreement, Seller shall cause the Company
Parties, and to the extent that such matters are within the Company's control or
power, Atlantic:
(i) within the restrictions set forth in Section 5.2(d), to
operate their respective businesses in the ordinary course as they were being
conducted prior to the execution of this Agreement and use commercially
reasonable efforts to maintain and preserve in all material respects their
business organizations intact and maintain in all material respects their
relationships with suppliers, customers, lessors and others having business
relations with them;
(ii) to make all capital expenditures previously planned or
budgeted pursuant to the operating plan of the Company Parties or Atlantic and
make any and all modifications, repairs, replacements or substitutions for lost,
damaged, unworkable or non-usable goods, equipment and other assets, in each
case in the ordinary course of business consistent with past practices; and
(iii) to make purchases of new propane tanks and cylinders
consistent with the past practices of the Company Parties (collectively, "Growth
Capital Expenditures"); provided that the Company Parties shall not be required
to make any Growth Capital Expenditures if API shall not have approved, on
behalf of the Buyer Parties, such Growth Capital Expenditures for reimbursement
in accordance with Section 1.4(b).
(b) Restrictions on the Company and the Subsidiaries. Without first
obtaining the written consent of Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed, from January 30, 2001 until the Closing,
except as otherwise contemplated or permitted by this Agreement or as set forth
on Schedule 5.2(b), Seller shall not permit the Company, any Company Party, or,
to the extent that such matters are within the Company's control or power to
prohibit, Atlantic, to:
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(i) make any material change in its financial reporting and
accounting methods, other than as required by any change in GAAP or applicable
law;
(ii) other than in the ordinary course of business consistent
with past practice, enter into any material contract or agreement or terminate
or amend in any material respect any material contract or agreement to which it
is a party, waive any material rights under any material contract or agreement
to which it is a party, or be in default in any material respect thereunder;
(iii) declare, set aside or pay any distributions to its
members, stockholders or partners or split, combine or reclassify any of its
equity securities or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any of its equity securities, or
purchase, redeem or otherwise acquire, directly or indirectly, any such
securities; provided, however, that the Company Parties shall be permitted to
pay cash dividends or make cash distributions to another Company Party or to the
Seller prior to the Closing Date provided that, if such dividend or distribution
is made, the consolidated assets of the Company Parties shall include, as of the
Closing Date, cash in the amount of at least $6,000,000;
(iv) acquire, merge into or with or consolidate with any
other corporation, partnership, person or other entity or acquire all or
substantially all of the business or assets of any corporation, partnership,
person or other entity or form, acquire any interest in or contribute any assets
to any partnership or joint venture or enter into any similar arrangement;
(v) make any material change in its charter, bylaws, limited
partnership agreement, operating agreement or other governing documents;
(vi) incur any indebtedness for borrowed money (except for
intercompany borrowings under existing working capital facilities in the
ordinary course) or guarantee any such indebtedness or issue, sell or guarantee
any debt securities or any rights or warrants to acquire any debt securities;
(vii) sell, lease, pledge, encumber or otherwise dispose of
any Property other than in the ordinary course of business consistent with past
practices;
(viii) issue, deliver or sell or authorize or propose the
issuance, delivery or sale of any of its equity securities or securities
convertible into its equity securities or any rights, warrants, or options to
acquire any such securities; provided, however, that the Special Limited Partner
or its successor shall be permitted to make contributions to CPLP in order to
maintain up to a 1% limited partnership interest in CPLP, as set forth in the
National Propane Purchase Agreement and the CPLP Partnership Agreement;
(ix) settle for an amount in excess of $1 million
(individually or in the aggregate) any claim, demand, lawsuit or state or
Federal regulatory proceeding not covered by insurance;
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(x) make any capital expenditures in excess of $250,000 in
the aggregate (not including those made in the ordinary course of business),
unless made pursuant to the operating plan of the Company or any Subsidiary,
which capital expenditures shall be required to be made pursuant to Section
5.2(a)(ii);
(xi) (A) make or rescind any material express or deemed
election relating to Taxes, (B) make a request for a Tax Ruling or enter into a
Closing Agreement, (C) settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit, or controversy
relating to Taxes or (D) change any of its methods of reporting material income
or deductions for Federal income tax purposes from those employed in the
preparation of its Federal income Tax Return for the taxable year ending
December 31, 1999, except as may be required by a change in applicable law;
(xii) cancel or compromise any indebtedness owed to it or
waive any claims or rights except in the ordinary course of business consistent
with past practice;
(xiii) close any facilities that are material to the financial
condition, results of operations or business of the Company or any Subsidiary;
(xiv) enter into any contract or other agreement, or group of
related contracts or agreements, whether oral or written, for the purchase or
sale of propane with a contract or agreement value, alone or together with such
related contracts or agreements, in excess of $1 million; or
(xv) agree to do any of the foregoing.
(c) Tax Filings. From January 30, 2001 until the Closing, Seller
shall cause each Company Party and Atlantic to (i) file or cause to be filed,
within the times and in the manner prescribed by law, all material Tax Returns
that are required to be filed by such person determined consistent with prior
practices; (ii) pay or cause to be paid, within the time and in the manner
prescribed by law, all material Taxes (including any estimated Taxes) imposed on
such party that are currently due and payable or that become due and payable;
and (iii) establish and maintain reserves adequate to pay all material Taxes not
yet due or payable as of the date of Closing and for any deferred taxes in
accordance with GAAP, which, with respect to CPLP, shall be determined assuming
CPLP is a partnership for all federal, state and local income tax purposes.
(d) Employees of the Company and the Subsidiaries. From January 30,
2001 until the Closing, Seller shall cause the Company and each Subsidiary to
not (i) adopt any new employee benefit plan, arrangement, practice or policy, or
material employment, consulting or other compensation arrangement, with or for
the benefit of new or existing employees, or, except as required by this
Agreement or by law, amend any existing employee benefit plan, arrangement,
practice or policy, or existing employment, severance, consulting or other
compensation arrangement in any material respect, without prior written consent
of Buyer, which consent shall
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not be unreasonably withheld or (ii) increase the compensation or level of
benefits applicable to its employees generally, except for normal increases
consistent with past practice.
SECTION 5.3 Expenses. Whether or not the Transactions are
consummated, except as otherwise specifically provided, each party hereto shall
pay its own fees and expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the Transactions.
SECTION 5.4 Approvals; Further Action; Commercially Reasonable
Efforts.
(a) From January 30, 2001 through the Closing, each of the parties
hereto shall use its commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
Transactions, including (i) using its commercially reasonable efforts to obtain
all Company Required Consents or Buyer Required Consents and (ii) using its
commercially reasonable efforts to make all required regulatory filings and
applications and to obtain as promptly as possible all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities or third parties as are necessary for the consummation of the
Transactions; provided, that Buyer shall be primarily responsible for obtaining
or transferring all required licenses, permits and authorizations related to the
ongoing business of the Company and the Subsidiaries, if necessary, and Seller
shall cooperate in such process as reasonably requested by Buyer. Subject to
Sections 6.1(b), 10.3 and 11.3, the Seller shall bear the cost of obtaining the
Company Required Consents and the Buyer shall bear the cost of obtaining the
Buyer Required Consents. Without limiting the foregoing, as promptly as
practicable following the execution of this Agreement, each party shall prepare
and file with the Federal Trade Commission and the Department of Justice the
appropriate filings and any supplemental information which may be requested in
connection therewith under the HSR Act, it being agreed that Buyer is the
primary "Acquiring Person" for purposes of the HSR Act and shall pay the
required filing fee. To the extent practicable in the circumstances and subject
to applicable laws, each party shall provide the other with the opportunity to
review all information relating to the other party, or any of its subsidiaries,
which appears in any filing made with, or written materials submitted to, any
Governmental Entity in connection with obtaining the necessary regulatory
approvals for the consummation of the Transactions. In case at any time after
the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, each party to this Agreement shall use its
commercially reasonable efforts to take all such necessary action.
(b) Without limiting the generality of the foregoing, the Seller
shall (i) cause the Company to enter into a lease, on or prior to the Closing
Date, for the Sinking Springs Terminal with the owner thereof, in substantially
the form attached hereto as Exhibit F-2 and consistent with the terms of Exhibit
F-1, to permit the Company to conduct its propane business from that Terminal,
and (ii) shall take or cause to be taken, prior to and after the Closing, all
actions necessary so that such lease complies with applicable subdivision laws
as of the Closing Date.
SECTION 5.5 Notification of Certain Matters. Seller shall give
prompt notice to Buyer, and Buyer shall give prompt notice to Seller, as
applicable, of (i) the occurrence or non-occurrence of any event which would
likely cause any representation or warranty made by it
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contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure by it or any affiliate to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it or such affiliate hereunder.
SECTION 5.6 Certain Indebtedness. Except as otherwise contemplated
herein (including Article I and Section 5.2), at or prior to the Closing, Seller
shall cause the Company Parties to repay in full any indebtedness owed by the
Company Parties to Seller or any of Seller's affiliates other than the Company
Parties, and all other intercompany accounts between the Company Parties, on the
one hand, and Seller and its other affiliates, on the other hand, shall be
eliminated by payment, contribution of capital, set-off or otherwise, which
shall be structured by Seller so that such repayment shall not result in any
payment obligation becoming due and payable pursuant to the Tax Indemnity
Provisions. Prior to the Closing except as contemplated herein (including
Article I and Section 5.2), Seller shall cause the Company Parties not to enter
into any new transactions, agreements, arrangements or understandings with
Seller and Seller's other affiliates, and Seller shall not charge any amounts
under any such existing agreements, arrangements and understandings with the
foregoing other than amounts charged in the ordinary course of business
consistent in nature, amount and method of determination with past practices.
All of the foregoing transactions shall be fully and accurately reflected in the
Closing Date Financial Statements.
SECTION 5.7 No Public Announcement. No party hereto shall issue any
press release or make any other public announcement concerning this Agreement or
the Transactions without the prior approval of the other parties (other than as
may be required by law or by obligations pursuant to any listing agreement with
any securities exchange, in which event the party making the public announcement
or press release shall notify the other parties, as applicable, in advance of
such public announcement or press release), which approval shall not be
unreasonably withheld or delayed.
SECTION 5.8 Use of Names.
(a) Licenses. Columbia Petroleum Corporation, a Delaware corporation
and wholly-owned subsidiary of Seller ("Columbia Petroleum"), has entered into a
royalty-free license agreement with a term of 18 months with the Company
Parties, governing the temporary use of the name "Leffler" on vehicles, bulk
storage tanks and facility signage (the "Columbia Petroleum Trademark License
Agreement"), and Richland Partners LLC, a Pennsylvania limited liability company
that purchased the retail operations of Columbia Petroleum, including the rights
to the "Leffler" name ("Richland"), and the Company have entered into an
agreement under which Richland has agreed not to use any name, trademark or
trade name employing the name "▇▇▇▇▇▇▇," "National," or "Columbia," or any
variation thereof, in connection with any retail sales of propane or a propane
business. At the Closing, Seller shall enter into a royalty-free license with a
term of 18 months with the Buyer and the Company Parties governing the temporary
use of certain Seller names on vehicles, bulk storage tanks and facility
signage, in substantially the form set forth in Exhibit D (the "Seller Trademark
License Agreement" and, together with the "Columbia Petroleum Trademark License
Agreement," the "Trademark License Agreements"). Seller covenants that, after
the Closing, it shall not use any name, trademark or trade name
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employing the names "Columbia," "Commonwealth," "National," "▇▇▇▇▇▇▇," or any
variations thereof in connection with any retail sales of propane or a propane
business.
(b) Amendments; Necessary Actions. On or prior to the Closing Date,
Seller shall cause the Company Parties to amend their respective certificates of
incorporation or equivalent governing instruments to change their corporate or
entity names to names selected by Buyer that do not include any Seller
trademarks that are set forth in Schedule 5.8(b) ("Seller Trademarks") or any
confusingly similar name.
(c) Cessation of Use. Notwithstanding any other provision of this
Section 5.8, Buyer shall use its commercially reasonable efforts to cause each
Company Party to cease using any Seller Trademark or the "▇▇▇▇▇▇▇" name on its
vehicles, bulk storage tanks and facilities, including by changing the Seller
Trademarks and the "▇▇▇▇▇▇▇" name used by the Company Parties to marks that do
not include any trademark or confusingly similar ▇▇▇▇, as soon as practicable
following the Closing. In any event, upon the expiration of the term of the
Trademark License, each licensee under the Trademark License shall cease all use
of the Seller Trademarks and the "▇▇▇▇▇▇▇" name. Any new corporate name,
trademark or service ▇▇▇▇ selected by Buyer pursuant to Section 5.8(b) shall be
subject to the approval of Seller, not to be unreasonably withheld.
Notwithstanding the foregoing, the Buyer Parties and the Company Parties shall
not be obligated to remove the Seller Trademarks or the "▇▇▇▇▇▇▇" name from any
propane tanks or cylinders of less than 2,000 gallon capacity.
SECTION 5.9 Post-Closing Assistance. (a) From and after the Closing
Date, upon the request of either Buyer or Seller, the parties hereto shall do,
execute, acknowledge and deliver all such further acts, assurances, deeds,
assignments, transfers, conveyances and other instruments and papers as may be
reasonably required or appropriate to carry out or effectuate the Transactions.
(b) For a period of two (2) years from the Closing Date or such
greater period as may be required under the applicable statute of limitations
period in order to permit a party to comply with applicable law, each of the
Seller and the Buyer Parties shall have reasonable access to all of the books
and records relating to the business of the Company Parties and, to the extent
necessary to enable the Seller to comply with its obligations under Sections
9.1(a), (b) or (c) or Article XII, Atlantic, that are in the possession of the
other party or parties. Such access shall be afforded by the party or parties in
possession of such books or records, upon receipt of reasonable advance notice
and during normal business hours. The party or parties exercising such right of
access shall be solely responsible for any costs or expenses incurred by it or
them pursuant to this Section 5.9(b). If the party or parties in possession of
such books and records shall desire to dispose of any such books and records,
such party or parties shall give the other party or parties, prior to such
disposition, a reasonable opportunity, at such other party or parties' expense,
to segregate and remove such books and records as such other party or parties
may select.
(c) For a period of two (2) years from the Closing Date or such
greater period as may be required under the applicable statute of limitation
period in order to permit a party to comply with applicable law, each of the
Seller and the Buyer Parties shall have reasonable access to the
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employees and agents of the Company Parties, the other party and, to the extent
necessary to enable the Seller to comply with its obligations under Sections
9.1(a), (b) or (c) or Article XII, Atlantic, that currently have or have had
duties in the past with respect to the business of the Company Parties or
Atlantic. Such access shall be afforded by the party or parties who employ such
employee or employees or agent or agents, upon receipt of reasonable advance
notice and during normal business hours for the purpose of providing the other
party with information required by such party in connection with the performance
of its legal obligations with respect to the business of the Company Parties or
Atlantic or under this Agreement. The party or parties exercising such right of
access shall be solely responsible for any costs or expenses incurred by it or
them pursuant to this Section 5.9(c).
(d) To the extent that the rights of any party hereto (an "Assigning
Party") that is a party to any agreement, lease, contract or other asset
transferred, assigned or contributed pursuant to Sections 1.1(d), (e), (i) or
(j) (an "Assigned Asset") to such other party or entity listed in such section
(the "Assignee Party") may not be transferred, assigned or contributed without
the consent of another Person, which consent has not been obtained, this
Agreement shall not constitute an agreement to transfer, assign or contribute
the same if an attempted transfer, assignment or contribution would constitute a
breach thereof or be unlawful, and the relevant Assigning Party, at its expense,
shall use commercially reasonable efforts to obtain any such required consent(s)
as promptly as possible. The Seller and the Buyer Parties agree that, if any
consent to an assignment of any such Assigned Asset shall not be obtained or if
any attempted assignment would be ineffective or would impair the rights and
obligations of the Assignee Party under the applicable Assigned Agreement so
that the Assignee Party would not in effect acquire the benefit of all such
rights and obligations, the Assignee Party, to the maximum extent permitted by
law, shall after the Closing appoint the Assigning Party to be such party's
representative and agent with respect to such Assigned Asset, and the Assigning
Party shall, to the maximum extent permitted by law and such Assigned Asset,
enter into such reasonable arrangements with the Assignee Party as are necessary
to provide such party with the benefits and obligations of such Assigned Asset.
The Seller and the Buyer Parties shall cooperate and shall each use commercially
reasonable efforts after the Closing to obtain an assignment of such Assigned
Asset to the relevant Assignee Party. For purposes of this Section 5.9(d),
"Assigned Asset" shall not include, and the provisions of this Section 5.9(d)
shall not apply to, the National Propane Purchase Agreement or any other
agreement to which a Company Party is a party that is not transferred by that
Company Party pursuant to Sections 1.1(d), (e), (i) or (j).
SECTION 5.10 Noncompetition.
(a) Covenant Not to Compete. During the Noncompete Period (as
defined below), except with the prior written consent of Buyer, Seller shall
not, and shall cause its affiliates other than Energy USA, Inc. (f/k/a and d/b/a
Bay State Propane) ("Energy USA") in its current territory, to not, whether
directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected with, or permit its name to be used by or in connection with, any
business or enterprise engaged in the retail distributing, marketing, leasing or
selling of propane. For purposes of the preceding
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sentence, the Noncompete Period shall be a five-year period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date (the
"Noncompete Period").
(b) Non-Solicitation. During the Noncompete Period, Seller agrees
that it will not (directly or indirectly) call on or solicit for the purpose of
selling propane to any person who is, or which as of the Closing Date was, or at
any time during the two years preceding the Closing Date has been a customer of
any Company Party or whose identity is known to any Company Party as one whom or
which any Company Party intended to solicit for the purpose of selling propane
within the succeeding year; provided, however, that the provisions of this
Section 5.10(b) shall not apply to any solicitation of customers by Energy USA
in its current territory.
(c) Hiring of Buyer's Employees. During the Noncompete Period,
Seller agrees that, after the Closing Date, it will hire or offer employment to
employees of the Company Parties employed by Buyer at the time of solicitation
only as a result of (i) general solicitation or (ii) contact initiated by such
employee. Nothing contained in this subsection (c) shall affect or be deemed to
affect in any manner any other provision of this Agreement.
(d) Remedies for Breach. Seller acknowledges that the provisions of
Sections 5.10(a), (b) and (c) are reasonable and necessary to protect the
interests of the Buyer Parties, that any violation of Sections 5.10(a), (b) and
(c) would result in irreparable injury to the Buyer Parties, and that damages at
law would not be reasonable or adequate compensation to the Buyer Parties for a
violation of such Sections. Seller further acknowledges that the Buyer Parties
shall be entitled to have the provisions of Sections 5.10(a), (b) and (c)
specifically enforced by preliminary injunctive relief without the necessity of
proving actual damages. If the provisions of this Agreement should ever be
deemed to exceed the time, geographic, product or other limitations permitted by
applicable law, then such provisions shall be deemed reformed to the maximum
time, geographic, product or other limitations permitted by law. In the event of
a breach of Section 5.10(a), (b) or (c), the Noncompete Period shall be extended
for a period equal to the period during which such breach or other violation was
occurring, and had not been fully and finally cured.
(e) Other Business. Nothing in this Section 5.10 shall prohibit
Seller or its affiliates from engaging in or soliciting customers for any energy
business other than the propane business.
SECTION 5.11 Registration Rights. Seller acknowledges that Buyer
Parent's only obligation to register the Buyer Parent Units for resale is as set
forth in the Registration Rights Agreement. Buyer Parent and Seller each
acknowledge and confirm that if an exemption from registration is available, it
may be conditioned upon various requirements including the time and manner of
sale, the holding period for the Buyer Parent Units, and on requirements
relating to Buyer Parent which are outside of Seller's control.
SECTION 5.12 Additional Insured. Prior to the Closing Date, Seller
shall, or shall cause the Company Parties to, list the Buyer and each of the
Company Parties as an additional insured on the environmental insurance policies
set forth on Schedule 5.12, and Seller shall not take any action to remove any
of the Company Parties as a named insured on Policy No. 2679090,
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underwritten by American International Specialty Lines Insurance Company (the
"National Propane Environmental Insurance Policy"). Seller shall deliver to
Buyer an insurance certificate from the insurers under each such environmental
insurance policy evidencing the same. Except as set forth in Section 11.3,
Seller agrees that it shall not modify, terminate or cancel such policies prior
to their expiration date absent Buyer's prior written consent.
SECTION 5.13 Pre-Closing Annual and Monthly Financial Statements.
(a) The Seller or the Company shall prepare and deliver to the Buyer
copies of the unaudited consolidated balance sheets of the Company Parties, and
the related statements of income and cash flows, as of the end of each month
during the period from January 30, 2001 to the Closing Date (collectively, the
"Pre-Closing Financial Statements"). Each of the Pre-Closing Financial
Statements shall be delivered to the Buyer within 20 days of the last day of the
period to which such Pre-Closing Financial Statement relates. Each of the
Pre-Closing Financial Statements shall be prepared in accordance with GAAP
consistently applied except as noted therein and shall fairly present in all
material respects the consolidated financial position of the Company Parties
taken as a whole as of the respective dates set forth therein and the results of
operation and cash flows for the Company Parties for the respective fiscal
period set forth therein (subject, in each case, to the absence of footnotes
and, in the case of interim financial statements, normal year-end adjustments).
(b) During the period from January 30, 2001 until the Closing Date,
the Seller, upon reasonable notice by the Buyer, shall cause the Company Parties
to, and the Company Parties shall, provide access to the books, records and
employees of the Company Parties to the Buyer and its representatives and agents
and cooperate with the Buyer, in each case at such reasonable times as may be
requested by the Buyer, to allow the Buyer to prepare audited financial
statements for the Company Parties of up to three years.
SECTION 5.14 Pre-Closing Employment Taxes Cooperation. From January
30, 2001 until the Closing Date, the Seller shall cause the Company and the
Subsidiaries to, and the Company and the Subsidiaries shall, compile all
information necessary for the distribution of, and shall distribute to the
intended recipients thereof and to the Company and the Subsidiaries on or prior
to the applicable due date, all required Form W-2s, 1099s and other employee and
independent contractor tax forms required by law for or relating to the calendar
year ended December 31, 2000 in the ordinary course of business consistent with
past practices.
SECTION 5.15 Information Concerning Partnership Tax Attributes.
(a) The Seller has caused Deloitte & Touche LLP to prepare, and has
delivered to the Buyer Parties, a schedule which sets forth the following, in
each case based on data included in the records of the Company Parties and used
by the Company Parties in the preparation of their Tax Returns (the "Book Value
and Section 704(c) Schedule"):
(i) The aggregate book value, within the meaning of the
Treasury Reg. Section 1.704-2(b)(2)(iv) rules for the maintenance of capital
accounts, on December 31, 2000 of the assets of CPLP in each of the classes that
are set forth on Schedule 5.15;
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(ii) The aggregate maximum amount of income and gain that
could be allocated by CPLP to the Special Limited Partner on December 31, 2000
by reason of Section 704(c) of the Code as a result of the sale of all of the
assets of CPLP in a class that is set forth on Schedule 5.15 and the method by
which such Section 704(c) allocation is being taken into account; and
(iii) The aggregate maximum amount of income and gain that
could be allocated by CPLP to the Company on December 31, 2000 by reason of
Section 704(c) of the Code by reason of the sale of all of the assets of CPLP in
a class that is set forth on Schedule 5.15 and the method by which such Section
704(c) allocation is being taken into account.
(b) From January 30, 2001 to the Closing Date, the Seller shall
cause the Company Parties and their agents, including the independent
accountants of the Company Parties, to provide the Buyer Parties with access to
any data used in preparing the Book Value and Section 704(c) Schedule, together
with an opportunity to discuss such information with the Company Parties and
their agents at such time or times as the Buyer Parties may reasonably request.
(c) Neither the Seller nor any Company Party has knowingly
misrepresented or omitted any material data provided to the independent
accountants of the Company Parties for use in preparing the Book Value and
Section 704(c) Schedule, and the delivery of the Book Value and Section 704(c)
Schedule to the Buyer, together with a certificate of the Seller identifying it
as such, shall be deemed to constitute, for purposes of this Agreement, a
representation and warranty that neither the Seller nor any Company Party has
knowingly misrepresented or omitted any material data provided to the
independent accountants of the Company for use in preparing the Book Value and
Section 704(c) Schedule. The Buyer Parties acknowledge and agree that no
representation and warranty is or shall be made by the Seller with respect to
information contained in the Book Value and Section 704(c) Schedule other than
the representation and warranty described in this Section 5.15(c).
SECTION 5.16 Periodic Information Concerning Financing Arrangements.
From January 30, 2001 through the Closing Date, the Buyer Parties shall keep the
Seller apprised of the status of the Buyer Parties' negotiations concerning the
Financing Arrangements and any actions to be taken by the Buyer at or prior to
the Closing in connection with the Secured Lending Arrangements and shall
furnish the Seller with drafts of the proposed agreements and instruments
evidencing the Financing Arrangements and the Secured Lending Arrangements on a
sufficiently regular basis to enable the Seller to complete, in a timely manner,
the review of those agreements and instruments contemplated by Section 6.3(c).
SECTION 5.17 Information Provided under the National Propane Purchase
Agreement. For so long as the Intercompany Note remains outstanding, the Buyer
Parties shall provide the Seller with copies of all certificates, notices, and
other documents provided to the Special Limited Partner under Section 5.9 of the
National Propane Purchase Agreement at the same time that such certificates,
notices or other documents are furnished to the Special Limited Partner.
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ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Transactions and the other actions to be
taken at the Closing shall be subject to the satisfaction or waiver at or prior
to the Closing of the following conditions:
(a) Governmental Consents. All filings required to be made prior to
the Closing Date with, and all consents, approvals, permits and authorizations
required to be obtained prior thereto from, any Governmental Entity in
connection with the consummation of the Transactions shall have been made or
obtained.
(b) Third Party Consents. All Buyer Required Consents shall have
been obtained.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Transactions under the HSR Act shall have been terminated or
shall have otherwise expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction and no statute, rule or regulation of any Governmental
Entity preventing the consummation of any of the Transactions shall be in
effect; provided, however, that the party invoking this condition shall have
used all reasonable efforts to have any such order or injunction vacated.
(e) Deliveries. The parties shall have delivered to the party
entitled thereto all of the certificates, opinions and other items set forth in
Section 1.3.
SECTION 6.2 Conditions to Obligations of Buyer Parties. The
obligations of Buyer Parties to effect the Transactions and the other actions to
be taken at the Closing are further subject to the satisfaction or waiver by
Buyer Parties on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller contained herein that are qualified by materiality shall be
true and correct as of January 30, 2001, the date hereof and the Closing Date
(in each case except where such representation or warranty is expressly made
only as of another specific date) and all other representations and warranties
of Seller shall be true in all material respects as of January 30, 2001, the
date hereof and the Closing Date (in each case except where such representation
or warranty is expressly made only as of another specific date or except as
otherwise contemplated by this Agreement); and Buyer shall have received at the
Closing a certificate, dated the Closing Date, signed on behalf of Seller by an
officer of Seller to such effect.
(b) Performance of Obligations of Seller and Company Parties. Seller
and the Company Parties shall have performed in all material respects all
obligations and fulfilled all covenants required to be performed by them under
this Agreement on or prior to the Closing Date, and Buyer shall have received a
certificate signed on behalf of Seller by an officer of Seller to such effect.
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(c) Resignations. Buyer shall have received the written resignations
of all of the directors and officers of the Company Parties and of the directors
and officers of Atlantic appointed by the Company, effective in each case as of
the Closing Date.
(d) No Company Material Adverse Effect. No Company Material Adverse
Effect shall have occurred and be continuing, and Buyer shall have received a
certificate of an officer of Seller to such effect.
(e) Seller's Counsel's Opinion. Buyer shall have received the
opinion of Seller's Counsel and Seller's Delaware Counsel, in the forms annexed
hereto as Exhibit E-1 and E-2.
(f) Financing. The Buyer Parties shall have received financing on
terms reasonably satisfactory to the Buyer Parties in their good faith judgment
in an amount or in amounts necessary to consummate the Transactions.
(g) Payment of Long-Term Liabilities. Seller shall have assumed or
otherwise paid and discharged the long-term liabilities of the Company Parties
as of the Closing Date, as set forth in the balance sheet included in the
Closing Date Financial Statements (other than the Permitted Long-Term
Liabilities), and Buyer shall have received a certificate of an officer of
Seller to such effect.
(h) Richmond Office Lease. Seller (i) shall have assumed the
obligations of the Company Parties under the Richmond Arboretum office lease,
and Buyer shall have received a certificate of an officer of Seller to such
effect, or (ii) shall have assigned such obligations to a third party on terms
that include the release by the landlord of all obligations of the Company
Parties under such lease, and the Buyer shall have received evidence of such
assignment and release reasonably satisfactory to the Buyer.
(i) Sinking Springs Terminal. The Company shall have entered into a
lease with the owner of the Sinking Springs Terminal, substantially in the form
of Exhibits F-1 and F-2, and containing such other terms, if any, as requested
by the owner and which are reasonably satisfactory to the Buyer; such lease
shall be in full force and effect and shall otherwise comply with the
representations and warranties in Section 2.19(b) hereof, and the Buyer shall
have received a certificate of an officer of the Seller to such effect.
(j) Transition Services Agreement. Buyer shall have received an
executed copy of a Transition Services Agreement in the form attached hereto as
Exhibit G (the "Transition Services Agreement").
(k) Buyer's Tax Counsel's Opinion. Buyer shall have received the
opinion of tax counsel to the Buyer Parties ("Buyer's Tax Counsel"), in form and
substance satisfactory to the Buyer.
(l) Various Tax Matters. The Buyer shall have received the Book
Value and Section 704(c) Schedule and, based on the Buyer's review thereof over
a period of up to five Business Days following Buyer's receipt thereof, shall be
satisfied in its sole discretion with the Book
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Value and Section 704(c) Schedule and with its review of the data and
information used in the preparation of that schedule in accordance with Section
5.15.
(m) Transfer of Title to Marshfield and Mapleton. CPLP shall have
transferred, to an affiliate of the Seller, title to the real property located
at Marshfield, Wisconsin, and Mapleton, Iowa, that is included among the Seller
Indemnified Properties set forth in Schedule 9.1(c)(iii).
SECTION 6.3 Conditions to Obligations of Seller. The obligations of
Seller to effect the Transactions and the other actions to be taken at the
Closing are further subject to the satisfaction or waiver by Seller on or prior
to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Buyer Parties contained herein that are qualified by
materiality shall be true and correct as of January 30, 2001, the date hereof
and the Closing Date (in each case except where such representation or warranty
is expressly made only as of another specific date) and all other
representations and warranties of the Buyer shall be true in all material
respects as of January 30, 2001, the date hereof and the Closing Date (in each
case except where such representation or warranty is expressly made only as of
another specific date or except as otherwise contemplated by this Agreement);
and Seller shall have received at the Closing a certificate, dated the Closing
Date, signed on behalf of Buyer by an officer of Buyer to such effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed
in all material respects all obligations and fulfilled all covenants required to
be performed by it under this Agreement on or prior to the Closing Date, and
Seller shall have received a certificate signed on behalf of Buyer by an officer
of Buyer to such effect.
(c) Buyer Financing. The Buyer has furnished the Seller with copies
of all agreements and forms of material instruments evidencing the Financing
Arrangements and any actions to be taken by the Buyer before or at the Closing
in connection with the Secured Lending Arrangements (the "Financing Documents").
In the event that the Financing Documents are materially revised or amended
after the delivery thereof to the Seller, the Buyer shall promptly furnish the
Seller with copies of such Financing Documents, as so revised or amended. Based
on Seller's review thereof over a period of up to five Business Days following
the date on which the Seller has received copies of the revised or amended
Financing Documents, the Seller shall not have determined, in its good faith
judgment based on the advice of independent counsel to the Seller, that solely
as a result of the terms and conditions of the Financing Arrangements or such
actions taken in connection with the Secured Lending Arrangements, there is a
significant risk of a material breach of the Tax Indemnity Provisions of the
National Propane Purchase Agreement. For purposes of this condition, a
"significant risk" shall mean that Seller shall have determined, based on the
advice of independent counsel, that there is at least a one-in-three risk that
the stated result will occur. If Seller shall make the adverse determination
regarding the terms and conditions of the Financing Arrangements or the Secured
Lending Arrangements as provided above, Seller shall promptly send notice
thereof to Buyer, and Buyer and Seller shall in good faith negotiate an
adjustment to the terms and conditions of the Financing Arrangements or the
actions taken in connection with the Secured Lending Arrangements to eliminate
such adverse
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determination. If the parties are unable to negotiate a mutually acceptable
adjustment, either party may terminate this Agreement in accordance with Section
8.1(c).
(d) No Buyer Material Adverse Effect. No Buyer Material Adverse
Effect shall have occurred and be continuing; and Seller shall have received a
certificate of an officer of Buyer to such effect.
(e) Opinion of Counsel to Buyer and Buyer Parent. Seller shall have
received the opinions of Buyer's Counsel and of Buyer's Delaware counsel, in the
forms annexed hereto as Exhibits H-1 and H-2.
ARTICLE VII
EMPLOYEE BENEFITS
SECTION 7.1 Seller Pension Plans. Effective as of the Closing Date,
Seller shall cause (i) the Company to terminate its participation in and to
cease to be a participating employer of, and (ii) the employees of the Company
to cease to actively participate in, all defined benefit pension plans sponsored
or maintained by Seller (the "Seller Pension Plans"). On and after the Closing
Date, Seller shall be solely liable and responsible for all benefits,
liabilities and obligations arising under or relating to the Seller Pension
Plans, the Company's termination from participation in such Plans or the
cessation of benefits accruals by the Company's employees under such Plans,
including any and all benefits and obligations relating to employees of the
Company who were participants in such Seller Pension Plans prior to the Closing
Date. For purposes of this Article VII, the term "Company" shall refer to all
Company Parties and their Subsidiaries.
SECTION 7.2 401(k) Plan Benefits. Effective as of the Closing Date,
Seller shall permit each Company employee or former employee who is a
participant in Seller's 401(k) Plan (which is identified as such on Schedule
2.15(a)) to elect a distribution, including an eligible rollover distribution as
defined in Code Section 402(c), of his account balance under Seller's 401(k)
Plan (which eligible rollover distribution may, at the election of such Company
employee or former employee, include promissory notes or other evidences of
indebtedness with respect to outstanding loans, and may, with Buyer's consent,
include other in-kind assets) from Seller's 401(k) Plan to a 401(k) plan
maintained by Buyer or an affiliate of Buyer ("Buyer's 401(k) Plan"). Buyer
shall cause Buyer's 401(k) Plan to accept such eligible rollover distributions
from Seller's 401(k) Plan, including those with promissory notes or other
evidences of indebtedness with respect to outstanding loans. To the extent
necessary, Buyer and Seller each shall amend its 401(k) Plan to permit such
distributions.
SECTION 7.3 Seller Welfare or Other Benefit Plans.
(a) Effective as of the Closing Date, Seller shall cause the Company
to cease to act as a participating employer in, and the employees of the Company
to cease to be actively covered by and participate in, the welfare plans, fringe
benefit plans and all other employee benefit plans, programs or arrangements,
sponsored or maintained by Seller (the "Seller Welfare or Other
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Benefit Plans"). The Company shall reverse, prior to the Closing, any accrual on
the Company Financial Statements for the accrued and unpaid vacation of Company
employees, and the Company shall establish, on the Closing Date Financial
Statements, an accrual for the amount of the six unscheduled personal holidays
earned for 2001, but not taken on or prior to the Closing Date, by Company
employees under the Company's holiday policy. On the pay day for the pay period
ending on the Closing Date, the Company shall pay each employee who will
continue to be employed by the Company following the Closing (or whose
employment will be terminated as of that date) for the amount of any accrued
vacation under the Company's vacation policy that has not been taken by the
employee on or prior to the Closing Date. On and after the Closing Date, Seller
shall be solely liable and responsible for all other benefits, liabilities and
obligations of the Seller Welfare or Other Benefit Plans, the Company's
termination from participation in such Plans or the cessation of coverage of the
Company's employees under such Plans, including any and all benefits or
obligations thereunder relating to employees or retired or other former
employees of the Company attributable to or payable on account of any event
occurring on, prior to, or after the Closing Date to the extent that the amount
of such benefits, liabilities and obligations have not been fully accrued and
reflected in the Company Financial Statements after giving effect to the
adjustments thereto as set forth in Section 1.4 and the schedule thereto.
(b) Anything contained herein to the contrary notwithstanding, (i)
Seller shall assume or retain all financial responsibility, including
responsibility for the provision of employee benefits, insurance and workers
compensation benefits, for any inactive employees of the Company, including
employees who are on long-term disability or other paid or unpaid leave of
absence (other than a leave of absence under the Company's Sick Leave Plan),
until such employees return to active employment with the Company, (ii) the
Company Parties shall terminate, as of the Closing Date, the employment of, and
Seller shall provide severance benefits, in accordance with its policies, to,
any Company employee listed on Schedule 7.3(b) and not identified by the Buyer
Parties on the list of continuing employees delivered to the Seller under
Section 1.3(b)(xvii), (iii) with respect to any Seller Welfare or Other Benefit
Plan that offers medical or life insurance benefits to retirees, Seller shall be
solely responsible for any and all obligations and liabilities for those
employees or former employees of the Company who are or at any time become
entitled to receive benefits under such Plans, (iv) Seller shall be solely
responsible for complying with the applicable COBRA requirements with respect to
Company employees who terminated employment with the Company on or before the
Closing Date, and (v) Seller shall be solely responsible for all benefits or
compensation due or which becomes due to any employees or former employees of
the Company under the Benefit Plans identified as "Compensation Plans" in
Schedule 2.15(a) in connection with their employment on or before the Closing
Date, except to the extent that such obligations have been fully accrued and
reflected as a liability in the Company Financial Statements after giving effect
to the adjustments thereto in Section 1.4.
(c) Any employee of the Company who is on a leave of absence, as of
the Closing Date, under the Company's Sick Leave Plan (other than those
employees listed on Schedule 7.3(b) whose employment with the Company is
terminated as of the Closing Date) shall remain an employee of the Company
following the Closing Date and shall be eligible for benefits, if any, under the
Buyer's short-term disability plan. No later than the second anniversary of the
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Closing Date, the Seller shall reimburse the Buyer for the amount of (i) any
benefits paid under the Buyer's short-term disability plan during the six-month
period following the Closing Date to any employee of the Company who was on a
leave of absence under the Company's Sick Leave Plan on the Closing Date and
remained on such leave of absence for more than 20 days following the Closing
Date, and (ii) the amount, as determined by Buyer's insurer on an actuarial
basis, of any benefits payable to such an employee under any long-term
disability plan maintained by the Buyer in the event that such employee fails to
return to active employment following such leave of absence and is transferred
to a long-term disability plan maintained by the Buyer. The Buyer shall furnish
the Seller with a reasonably detailed statement of the names and aggregate
amount due to Buyer under this Section 7.3(c) at least 30 days before such
amount is payable.
SECTION 7.4 Post-Closing Employee Benefits.
(a) From and after the Closing Date, Buyer shall provide or cause to
be provided to all continuing employees of the Company, including all employees
of the Company identified by the Buyer Parties on the list of continuing
employees delivered to the Seller under Section 1.3(b)(xvii), but excluding all
other employees listed on Schedule 7.3(b), pursuant to employee benefit and
compensation plans, policies or arrangements (including all compensation, bonus,
fringe benefits, welfare benefits, medical, dental and other health plans, short
term and long term disability pay, vacation pay, severance pay or termination
pay, deferred compensation arrangements, retirement and pension benefits)
maintained or contributed to by Buyer, the Company, or Buyer's other affiliates
(together, the "Buyer Employee Benefit Plans"), benefits and compensation not
less favorable in the aggregate than those provided by Buyer or its affiliates
to other similarly situated employees of Buyer; provided, however, that Buyer
shall also provide, to any continuing employee of the Company, including any
employee of the Company indentified by the Buyer Parties on the list of
continuing employees delivered to the Seller under Section 1.3(b)(xvii), but
excluding all other employees listed on Schedule 7.3(b), whose employment with
the Company is terminated on or before the first anniversary of the Closing
Date, the enhanced severance benefits described in Schedule 7.4(a). From and
after the Closing Date, Buyer shall provide, or cause to be provided, to
employees of the Company credit for purposes of eligibility to participate,
vesting or qualification or eligibility for any benefit or privilege (including
vacation, sick leave and disability) based on length of service, (but not for
determining accruals under a defined benefit pension plan as defined in Section
3(2) of ERISA) under Buyer Employee Benefit Plans for service with the Company
performed at any time prior to the Closing, to the extent such service was
recognized for such purposes under plans of like kind maintained by Seller
immediately prior to the Closing Date. Nothing in this Section 7.4 shall be
deemed to affect or limit the obligations of any of the Company Parties to
comply, after the Closing Date, with any of their obligations under any
collective bargaining agreements to which such Company Party is a party.
(b) The Company and Buyer shall waive all limitations as to
preexisting condition exclusions, waiting periods and physical examination
requirements (except for physical examinations required by regulation or
corporate policy with respect to drug testing or required due to the Company
employee's failure to enroll within the applicable time period when first
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eligible for coverage) with respect to participation and coverage requirements
applicable to the Company employees under any of the Buyer Employee Benefit
Plans that are welfare plans, funds or programs (within the meaning of section
3(1) of ERISA) in which such Company employees may be eligible to participate
after the Closing, other than exclusions or waiting periods that are already in
effect with respect to such Company employees and that have not been satisfied
as of the Closing Date. The Company and Buyer shall credit each Company employee
(or dependent) with the amount paid during the plan year or calendar year, as
applicable, in which the Closing Date occurs by such Company employee (or
dependent) toward applicable deductible or out-of-pocket maximum provisions of
Buyer's Employee Benefit Plans.
(c) API shall cause the Company and each Buyer Party to credit each
Company employee who continues in employment with the Company or such Buyer
Party after the Closing Date with the six unscheduled personal holidays provided
during 2001 under the Company's holiday policy to the extent such holidays have
not been taken by such Company employee between January 1, 2001 and the Closing
Date and shall either permit such Company employees to take such holidays during
2001 or shall compensate such Company employees for any such holidays which they
are not permitted to take. API also shall, or shall cause the Company to,
compensate any employee whose employment with the Company or any Buyer Party is
terminated, for any reason, in 2001 for the amount of any holidays not taken by
such employee prior to the date of termination.
SECTION 7.5 Provision of Information to Company Employees. Subject
to the provisions of Section 5.1, the Seller, the Company Parties and Buyer
Parties shall cooperate to provide, prior to the Closing Date, information to
employees of the Company Parties concerning the status of their benefits under
the Seller's benefit plans and API's benefit plans on and after the Closing
Date, including their benefits under the Seller's flexible spending account
plans.
SECTION 7.6 Indemnification. Seller shall indemnify and hold Buyer
Parties harmless from and against any and all liabilities, claims, demands,
judgments, settlements, payments, losses, costs, damages and expenses whatsoever
that Buyer Parties may sustain, suffer or incur that result from, arise out of
or pertain to any claims relating to the Seller Pension Plans, Seller 401(k)
Plan or Seller Welfare or Other Benefit Plans or the benefits provided thereby,
whether arising before, on or after the Closing Date, or to any breach of
Seller's obligations under this Article VII. Buyer Parties shall indemnify and
hold Seller harmless from and against any and all liabilities, claims, demands,
judgments, settlements, payments, losses, costs, damages and expenses whatsoever
that Seller may sustain, suffer or incur that result from, arise out of or
pertain to any claims relating to the Buyer Employee Benefit Plans or the
benefits provided thereby, whether arising on or after the Closing Date or to
any breach of Buyer's obligations under this Article VII.
ARTICLE VIII
TERMINATION
SECTION 8.1 Events of Termination. Notwithstanding any other
provision hereof, this Agreement may be terminated prior to the Closing Date as
set forth below.
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(a) Consent. By Buyer and Seller at any time upon their mutual
written agreement.
(b) Prohibition or Restriction. By Seller or Buyer in writing, if
there shall be any order, injunction or decree of any Governmental Entity which
prohibits or restrains any party from consummating the Transactions, and such
order, injunction or decree shall have become final and nonappealable.
(c) Non-Occurrence. By Seller or Buyer in writing, if the Closing
has not occurred on or prior to August 31, 2001, unless due to the failure of
the party seeking to terminate this Agreement to materially perform each of its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date.
SECTION 8.2 Effect of Termination. If this Agreement is terminated
as permitted under Section 8.1, no party hereto (or its officers or directors)
will have any liability or further obligation to any other party to this
Agreement, except for (i) willful breaches of and intentional misstatements in
or pursuant to this Agreement prior to the time of such termination, (ii)
obligations pursuant to the last sentence of Section 5.1 hereof and any
liability resulting from the breach hereof, and (iii) obligations under that
certain letter agreement, dated the date hereof, regarding the Buyer Parent's
financing special mandatory redemption (the "Special Redemption Side Letter");
provided, however, that the obligations of the parties in the last sentence of
Section 5.1 and Sections 5.3 and 5.7 shall survive such termination.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Obligation to Indemnify.
(a) Subject to the limitations set forth in Section 11.2(c), Seller
agrees to indemnify and hold harmless the Buyer Parties, the Company Parties,
and their respective directors, officers, partners, employees, agents and
affiliates, and the successors and assigns of such entities and persons
(collectively, the "Buyer Indemnitees") from and against all losses,
liabilities, claims, costs, expenses (including reasonable attorneys' fees and
expenses of outside counsel) and damages of whatsoever kind or nature
(collectively, "Losses") that the Buyer Indemnitees may incur, suffer or sustain
to the extent arising from or related to:
(i) any breach of the representations and warranties of
Seller contained in this Agreement (other than (A) the representations and
warranties of Seller contained in Sections 2.11 (captioned "Environmental
Matters"), any breach of which is governed by Section 9.1(b), (B) the
representations and warranties of Seller contained in Section 2.16(a)(i) through
(vi) (captioned "Taxes"), which expire at Closing, (C) the representations and
warranties of Seller contained in Section 2.16(a)(vii), (viii) and (ix), any
breach of which is governed by Article XII, and (D) the representations and
warranties of Seller contained in Section 10.1 (captioned "Representations and
Warranties of Seller") or Section 2.18 (solely to the extent that those
representations and warranties relate to any of the agreements listed in Section
2.18(a)(J), any breach of which is governed by Section 10.3); and
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(ii) any breach of any of the covenants and agreements of
Seller or the Company Parties contained in this Agreement (other than the
covenants set forth in Article X which are governed by Section 10.3); provided,
however, that Seller shall not have any liability under clause (i) above unless
the aggregate of all Losses for which Seller would, but for this proviso, be
liable, exceeds on a cumulative basis an amount equal to 1% of the Purchase
Price (the "Seller Indemnification Basket"), and then only to the extent of any
such excess; provided further, that Seller shall not have any liability under
clause (i) above for any individual breach where the Loss relating thereto is
less than $50,000 and the Losses with respect to such breaches shall not be
aggregated for purposes of the first proviso to this Section 9.1(a) (the "Seller
Indemnification Threshold"); provided further, that neither the Seller
Indemnification Basket nor the Seller Indemnification Threshold shall apply to
any breach of Seller's representations, warranties and covenants concerning the
Sinking Springs Terminal; provided further, that Seller shall not have any
liability under Section 9.1(a) to the extent that such liability is specifically
reserved for and properly accrued as a current liability in the Closing Date
Financial Statements after giving effect to the adjustments thereto as set forth
in Section 1.4 and the schedules to such section; provided further, that the
Seller shall be obligated to indemnify the Buyer Indemnitees pursuant to this
Section 9.1(a)(i) with respect to Properties owned or matters relating to
Atlantic only to the extent that such Losses arise out of the Company's 50%
ownership interest in Atlantic; and provided further, that the maximum amount
for which Seller shall be liable in the aggregate under Section 9.1(a)(i) shall
not exceed 25% of the Purchase Price (the "Seller Indemnification Cap").
(b) Notwithstanding the limitations set forth in Section 9.1(a) but
subject to the limitations set forth in Section 11.2(c), Seller agrees to
indemnify and hold harmless the Buyer Indemnitees from and against all Losses
that the Buyer Indemnitees may incur, suffer or sustain to the extent arising
from or related to:
(i) any breach of the representations and warranties of
Seller contained in Section 2.11 ("Environmental Matters");
(ii) any investigation, treatment, removal, containment,
monitoring or other remediation or response actions taken in response to any
third party or governmental inquiry, action, claim, lawsuit, proceeding or
governmental mandated remediation (A) to reduce to acceptable levels risks from
concentrations of Hazardous Materials present or released on, at or under, or
which are migrating from, and otherwise to bring into compliance with the
Environmental Laws, any present or former property of any Company Party or
Atlantic not identified on Schedule 9.1(c)(iii) where coal tar was present or
had been released prior to the Closing Date (the "Unknown Coal Tar Sites") or
(B) to prevent or mitigate the presence or release of Hazardous Materials at, on
or under any of the Unknown Coal Tar Sites; provided, however, that the Buyer
Indemnitees shall be entitled to indemnification under this Section 9.1(b)(ii)
only to the extent that the third-party or governmental inquiry, action, claim,
lawsuit, proceeding or governmental mandated remediation giving rise to such
Losses occurs, and notice thereof has been given to the Seller as provided in
Section 11.1(a), on or before the fourth anniversary of the Closing Date; and
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(iii) any third party or governmental inquiry, action, claim,
lawsuit, proceeding or governmental mandated remediation relating to (A)
compliance or noncompliance with any Environmental Laws, on or prior to the
Closing Date, in connection with any of the properties of the Company Parties or
Atlantic (a "Company Party or Atlantic Property"), or (B) the transportation,
treatment, storage, handling or disposal of any Hazardous Materials by or on
behalf of any Company Party or Atlantic, any predecessor to any Company Party or
Atlantic, or any entities previously owned by any Company Party or Atlantic at
or to any off-site location (an "Off-Site Location") on or prior to the Closing
Date; provided, however, that the Buyer Indemnitees shall be entitled to
indemnification under this Section 9.1(b)(iii) only to the extent that the
third-party or governmental inquiry, action, claim, lawsuit, proceeding or
governmental mandated remediation giving rise to such Losses occurs, and notice
thereof has been given to the Seller as provided in Section 11.1(a), on or
before the second anniversary of the Closing Date and only to the extent that
such Losses exceed $100,000, per property or location, for each such Company
Party or Atlantic Property or Off-Site Location;
provided further, that the Seller shall be obligated to indemnify the Buyer
Indemnitees pursuant to clauses (i), (ii) and (iii) of this Section 9.1(b) with
respect to Properties owned or matters relating to Atlantic only to the extent
that such Losses arise out of the Company's 50% ownership interest in Atlantic;
and provided further, that the maximum amount for which the Seller shall be
liable, in the aggregate, under clauses (i), (ii) and (iii) of this Section
9.1(b) shall not exceed 25% of the Purchase Price (the "Seller Environmental
Indemnification Cap").
(c) Notwithstanding the limitations in Section 9.1(a) and (b) but
subject to the limitations set forth in Section 11.2(c), Seller agrees to
indemnify and hold harmless the Buyer Indemnitees from and against all Losses
that the Buyer Indemnitees may incur, suffer or sustain, at any time, to the
extent arising from or related to:
(i) any acts or omissions of Columbia Petroleum, its direct
or indirect subsidiaries or affiliates, any predecessor entity and their
respective successors and assigns, whether occurring prior to, on or after the
Closing Date, relating to the business, assets, operations of Columbia
Petroleum, or from the sale of Columbia Petroleum to any third party;
(ii) any Litigation (whether or not material, but otherwise
as defined in Section 2.10) either (A) set forth on Schedule 9.1(c)(ii) or (B)
arising out of any act or omission of Atlantic or a Company Party (other than
acts or omissions giving rise to Environmental Claims, which are governed by
Section 9.1(b) or 9.1(c)(i) or (iii)), whether or not covered by insurance,
including any Losses arising out of employment-related or job-related claims of
former employees, contractors or agents of the Seller, any Company Party or
Atlantic, provided that, in each such case, the injury or damage giving rise to
such Loss occurred on or prior to the Closing Date;
(iii) either (A) the investigation, treatment, removal,
containment, monitoring or other remediation or response actions taken (I) to
reduce to acceptable levels risks from concentrations of Hazardous Materials
present or released on, at or under, on or prior to the Closing Date (or that
may subsequently migrate from Hazardous Materials present or released on, at or
under, on or prior to the Closing Date) and otherwise to bring into compliance
with the
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Environmental Laws, as of the Closing Date, any of the properties set
forth on Schedule 9.1(c)(iii) (the "Seller Indemnified Properties"), or (II) to
prevent or mitigate the presence or release of Hazardous Materials that were at,
on or under any of the Seller Indemnified Properties on or prior to the Closing
Date, or (B) any third party or governmental inquiry, action, claim, lawsuit,
proceeding or governmentally mandated remediation relating to (I) compliance or
noncompliance with any Environmental Laws, on or prior to the Closing Date, in
connection with any of the Seller Indemnified Properties, or (II) the
transportation, treatment, storage, handling or disposal of any Hazardous
Materials, on or prior to the Closing Date, by or on behalf of any Company Party
or Atlantic, any predecessor to any Company Party or Atlantic, or any entities
previously owned by any Company Party or Atlantic at or to any Off-Site Location
from any of the Seller Indemnified Properties transferred to the Seller or an
affiliate of the Seller pursuant to Section 1.1(d) or (j);
(iv) any matters for which Seller is responsible, or for
which Seller has agreed to indemnify Buyer Parties, in each case pursuant to
Article VII and specifically Section 7.6; and
(v) any liability arising out of the assets and liabilities
of CPLP and the Company, respectively, that are to be distributed to the Seller
or an affiliate of Seller pursuant to Sections 1.1(d) and 1.1(j), not including
any Seller Indemnified Properties, for which the Seller's indemnification
obligations are set forth in Section 9.1(c)(iii).
(d) Subject to the limitations set forth in Section 11.2(c), Buyer
Parties severally agree to indemnify and hold harmless Seller, its directors,
officers, partners, employees, agents and affiliates, and the successors and
assigns of such entities and persons (collectively, the "Seller Indemnitees")
from and against all Losses that the Seller Indemnitees may incur, suffer or
sustain to the extent arising from or related to:
(i) any breach of the representations and warranties of the
Buyer Parties contained in this Agreement (other than the representations and
warranties set forth in Section 10.2 (captioned "Representations, Warranties and
Covenants of the Buyer Parties"), which are governed by Section 10.3); or
(ii) any breach of any of the covenants, obligations and
agreements of the Buyer Parties contained in this Agreement (other than the
covenants set forth in Article X which are governed by Section 10.3);
provided, however, that the Buyer Parties shall not have any liability under
clause (i) above unless the aggregate of all Losses for which the Buyer Parties
would, but for this proviso, be liable, exceeds on a cumulative basis an amount
equal to 1% of the Purchase Price (the "Buyer Indemnification Basket"), and then
only to the extent of any such excess; provided further, that the Buyer Parties
shall not have any liability under clause (i) above for any individual breach
where the Loss relating thereto is less than $50,000 and the Losses with respect
to such breaches shall not be aggregated for purposes of the first proviso to
this Section 9.1(d) (the "Buyer Indemnification Threshold"); and provided
further, that the maximum amount for which the Buyer Parties shall be liable in
the aggregate under Section 9.1(d)(i) shall not exceed 25% of the Purchase Price
(the "Buyer Indemnification Cap").
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(e) Notwithstanding the limitations in Section 9.1(d) but subject to
the limitations set forth in Section 11.2(c), Buyer Parties agree to indemnify
and hold harmless the Seller Indemnitees from and against all Losses that the
Seller Indemnitees may incur, suffer or sustain, at any time, to the extent
arising from or related to any matters for which the Buyer Parties are
responsible, or for which the Buyer Parties have agreed to indemnify the Seller
pursuant to Article VII and specifically Section 7.6.
SECTION 9.2 Control of Remediation of Company Party Properties for
Which Seller Is Providing Indemnification. Seller shall have the right to
control the remediation of (i) any of the Seller Indemnified Properties or (ii)
any Unknown Coal Tar Sites or other Company Party or Atlantic Properties with
respect to which Buyer has given notice of a Third Party Claim pursuant to
Section 11.1(a) and Seller has elected to assume the defense pursuant to Section
11.1(b). In the event that the property to be remediated is owned by a Company
Party or Atlantic or used by a Company Party or Atlantic in the conduct of its
business, Seller and Buyer Parties agree as follows:
(a) The development, planning, administration and performance of the
remediation, including but not limited to the development and execution of plans
and selection of contractors, shall be at Seller's sole and exclusive direction
and discretion, subject to the Seller's compliance with the provisions of this
Section 9.2. Seller shall provide the Buyer on a reasonably current basis copies
of all site assessment work plans and reports which are filed with any
governmental authority in connection with any such remediation (the "Site
Remediation Work Plans").
(b) Seller shall use reasonable commercial efforts to conduct the
remediation in a manner that does not unduly interfere with the conduct of the
business of the Company Parties or Atlantic. Seller shall be responsible for
ensuring that its employees, agents and representatives perform all remediation
work in accordance with the applicable Site Remediation Work Plan and any and
all applicable required federal, state and local laws and shall obtain all
required permits, licenses or governmental approvals in connection with such
remediation. All remediation work shall be conducted by personnel qualified to
perform the work and in accordance with accepted practices. Seller or the
independent contractor performing the remediation work shall maintain general
liability and workers' compensation insurance in customary amounts and, upon the
request of the Buyer Parties, shall furnish Buyer Parties with proof of such
coverage prior to beginning the remediation. Seller shall be liable to Buyer
Parties for any Losses incurred by Buyer Parties as the result of any claims for
personal injury (including workers' compensation claims) or property damage
arising out of the performance of the remediation work by Seller or its agents,
including any independent contractor engaged by Seller.
(c) Upon Seller's request, the Buyer Parties shall grant, or cause
the Company Parties and Atlantic to grant, access to the Seller and its
employees, agents, independent contractors, subcontractors or representatives
(the "Seller Representatives") to the property to be remediated during
commercially reasonable hours for the purpose of conducting the remediation in
accordance with the Site Remediation Work Plans. Buyer Parties shall use
commercially reasonable efforts not to interfere with or otherwise impede, nor
shall Buyer Parties cause or permit any person within their control to interfere
with or otherwise impede, Seller's access to
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the property to be remediated or the execution of the remediation project. Buyer
Parties shall be liable to Seller for any Losses incurred by Seller as a result
of the Buyer Parties' breach of the provisions of this Section 9.2(c), including
any refusal by the Buyer Parties, the Company Parties, or Atlantic to grant the
Seller and Seller Representatives access to the property in a manner sufficient
to enable the Seller to complete the remediation in a timely manner and in
accordance with the requirements of any governmentally mandated or court-ordered
remediation or the terms and conditions of any agreement with a third party
providing for such remediation.
(d) Seller, its agents, employees and contractors, shall have the
right to use, store and maintain on the property to be remediated machinery and
equipment necessary or appropriate for execution of the remediation until such
time as the remediation is completed, provided that any machinery and equipment
stored on the property is stored in a manner which does not unreasonably
interfere with the conduct of the business of the Company Parties or Atlantic.
Buyer shall not use, remove or otherwise disturb, nor shall Buyer Parties cause
or permit any person within its control to use, remove or otherwise disturb such
machinery or equipment while stored at the property. Subject to the preceding
sentence, Seller shall bear the risk of loss related to, and assume and
indemnify the Buyer Parties against, any loss or other damage to any machinery
or equipment stored on such property.
(e) Upon Seller's request, Buyer Parties shall make available to
Seller access to utilities, including water and electricity, and Seller shall
either arrange to have its use of the utilities separately metered or shall
reimburse the Buyer Parties for such amount as Buyer Parties and Seller shall
agree represents the portion of utilities charges attributable to Seller's use
of utility services in connection with the remediation.
(f) Upon completion of the remediation project, Seller shall use
reasonable commercial efforts to restore to its pre-work condition any Company
Party or Atlantic Property then held or used by the Buyer or a Company Party
consistent with the Site Remediation Work Plan. Buyer Parties acknowledge and
agree that, at the completion of the remediation project certain restrictions or
limitations may be placed on the current and future use of the real property
affected by the remediation, and the Buyer Parties consent to the placement of
any such limitations or restrictions, provided that such limitations or
restrictions do not materially interfere with or deprive the Buyer Parties of
the reasonable use of the property as a propane distribution facility. Seller
shall provide the Buyer Parties with a copy of all reports produced, or the
analysis of any samples taken, in connection with the remediation.
ARTICLE X
NATIONAL PROPANE PURCHASE AGREEMENT
SECTION 10.1 Representations and Warranties of the Seller. Seller
represents and warrants that the copy of the National Propane Purchase Agreement
provided by the Seller to the Buyer Parties and attached as Schedule 10.1 (i) is
the complete agreement, (ii) is in full force and effect according to its terms
and has not been amended, either orally or in writing, nor has any provision of
the same been waived, (iii) assuming it is enforceable against Triarc, the
Special
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Limited Partner, and National Propane SGP, Inc., is enforceable against, and
constitutes the valid and binding agreement of, the Company Parties executing
the same, except that (A) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Company Parties have complied in all material respects with
the terms and conditions of the National Propane Purchase Agreement prior to the
Closing. No material breach or default by any Company Party (or event that, with
notice, lapse of time, or both, would constitute a material breach or default by
any Company Party) has occurred under the National Propane Purchase Agreement
prior to the Closing.
SECTION 10.2 Representations, Warranties and Covenants of the Buyer
Parties.
(a) The Buyer Parties acknowledge and confirm that (i) they have
received a copy, certified by Seller to be true and complete, of the National
Propane Purchase Agreement, and (ii) they have read and are familiar with, and
understand the effect and import of the National Propane Purchase Agreement,
including the last paragraph of Section 5.2, Section 5.9, and Section 5.14 (as
defined in Section 9.1(c) of the National Propane Purchase Agreement, the "Tax
Indemnity Provisions") and Section 9.1(c) and Section 9.2(a) of such Agreement.
Each of the Buyer Parties acknowledges and agrees that, following the Closing,
the Company Parties that are parties to the National Propane Purchase Agreement
shall continue to be bound by all of their obligations under the National
Propane Purchase Agreement.
(b) Each of the Buyer Parties hereby agrees that, from and after the
Closing Date and until such time as the Company or any of the Company Parties is
no longer bound by any of the Tax Indemnity Provisions of the National Propane
Purchase Agreement, it will cause the Company Parties to conduct their business
and take, or refrain from taking, any and all actions necessary and/or required
to perform their obligations under the National Propane Purchase Agreement and
not to breach materially any of the covenants or agreements contained therein,
including any of the Tax Indemnity Provisions of the National Propane Purchase
Agreement.
(c) Effective upon the consummation of the Principal Closing
Transactions, the Buyer shall enter into an agreement, in the form of Exhibit I,
pursuant to which the Buyer will guarantee that the Company has adequate cash
resources to meet its payment obligations, if any, under the National Propane
Purchase Agreement (the "Buyer Keep Well Agreement").
SECTION 10.3 Indemnification.
(a) Seller's Indemnification. Subject to the limitations set forth
in Section 11.2(c), Seller agrees to indemnify and hold harmless the Buyer
Indemnitees from and against all Losses that the Buyer Indemnitees may incur,
suffer or sustain pursuant to the National Propane Purchase Agreement, the CPLP
Partnership Agreement, the Intercompany Loan Agreement or applicable Delaware
partnership law or arising out of any other claim asserted by Triarc or the
Special Limited Partner to the extent arising from or related to any acts or
omissions of the
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Seller, the Company Parties or any of their affiliates prior to the
consummation, on the Closing Date, of any of the Principal Closing Transactions.
(b) Buyer's Indemnification. Subject to the limitations set forth in
Section 11.2(c), Buyer Parties severally agree to indemnify and hold harmless
the Seller Indemnitees from and against all Losses that the Seller Indemnitees
may incur, suffer or sustain pursuant to the National Propane Purchase
Agreement, the CPLP Partnership Agreement, the Intercompany Loan Agreement or
applicable Delaware partnership law or arising out of any other claim asserted
by Triarc or the Special Limited Partner to the extent arising from or related
to any acts or omissions of the Buyer Parties, the Company Parties or any of
their affiliates after the consummation, on the Closing Date, of all of the
Principal Closing Transactions.
(c) Seller's and Buyer Parties' Cross Indemnification. The Buyer
Parties, on one hand, and the Seller, on the other hand, intend and believe that
the consummation of the Principal Closing Transactions will not result in any
material liability or obligations under the Tax Indemnity Provisions or any
other provisions of the National Propane Purchase Agreement, the CPLP
Partnership Agreement, the Intercompany Note, the Intercompany Loan Agreement or
applicable Delaware partnership law. However, if the parties' intention and
belief is incorrect and any of the Principal Closing Transactions occurring on
the Closing Date results in or gives rise to a legal or equitable claim by
Triarc or the Special Limited Partner on any grounds or alleged grounds,
including but not limited to any of the grounds set forth in the preceding
sentence (each a "Triarc Claim"), then subject to the limitations set forth in
Section 11.2(c), any Losses sustained by the Seller Indemnitees and the Company
Parties (including their respective directors, officers, partners, employees,
agents and affiliates and the successors and assigns of such entities and
persons), on the one hand, or by the Buyer Indemnitees, on the other hand, as
the result of such Triarc Claims shall be apportioned between the Seller, on one
hand, and the Buyer Parties, on the other hand, with (x) the Seller bearing
66.67%, and the Buyer Parties jointly and severally bearing 33.33%, of the first
$3 million of such Losses, and (y) the Buyer Parties jointly and severally
bearing 66.67%, and the Seller bearing 33.33%, of any Losses in excess of $3
million. For purposes of this Section 10.3(c), the term "Losses" shall not
include attorneys' fees or any losses, liabilities or obligations incurred by
the Buyer or CPH following the Closing for any adjustment to the percentage
interests of the Buyer, CPH or the Special Limited Partner under the CPLP
Partnership Agreement pursuant to Section 6 of the Capital Contribution
Agreement.
(d) Absence of Certain Limitations on Indemnification Obligations.
The indemnification obligations of the Seller under this Section 10.3 shall not
be subject to the Seller Indemnification Cap, the Seller Indemnification Basket,
or the Seller Indemnification Threshold, and the indemnification obligations of
the Buyer under this Section 10.3 shall not be subject to the Buyer
Indemnification Cap, the Buyer Indemnification Basket, or the Buyer
Indemnification Threshold.
(e) Effect of Buyer Keep Well Agreement and Seller Guaranty. The
Buyer Parties acknowledge that the Seller has entered into a guaranty, dated
April 5, 1999, in favor of the Special Limited Partner, guaranteeing the
obligations of the Company Parties pursuant to the Tax Indemnity Provisions of
the National Propane Purchase Agreement (including any replacement
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guarantee of the Seller's parent corporation that may, from time to time, be in
effect, the "Seller Guaranty"). The Seller acknowledges and agrees that the
Buyer Parties may seek indemnification from the Seller, pursuant to Sections
9.1(a), (b) and (c) and 10.3(a) and (c) of this Agreement, for any amounts paid
under the Buyer Keep Well Agreement for Losses for which the Buyer Parties are
entitled to indemnification under such provisions, and the Buyer Parties
acknowledge and agree that the Seller may seek indemnification from the Buyer
Parties, pursuant to Sections 9.1(d) and 10.3(b) and (c) of this Agreement, for
any amounts paid under the Seller Guaranty for Losses for which the Seller is
entitled to indemnification under such provisions.
ARTICLE XI
INDEMNIFICATION PROCEDURES;
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
EFFECT OF INSURANCE
SECTION 11.1 Indemnification Procedures.
(a) The party seeking indemnification under Sections 9.1 or 10.3 of
this Agreement (the "Indemnified Party") agrees to give the party from which
such indemnification is sought (the "Indemnifying Party") notice in writing of
the assertion of any claim or demand made by, or an action, proceeding or
investigation instituted by, any person not a party to this Agreement (a "Third
Party Claim") in respect of which indemnity may be sought under such Section
promptly after such Indemnified Party learns of the Third Party Claim; provided,
however, that failure to give such notice shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
materially prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period in which
the Indemnified Party failed to give such notice). Thereafter, the Indemnified
Party shall deliver to the Indemnifying Party, within five calendar days after
the Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party for
which indemnification may be sought under Sections 9.1 or 10.3(a) or (b), the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party. Should the Indemnifying Party so elect to assume the defense
of a Third Party Claim, the Indemnifying Party will not as long as it conducts
such defense be liable to the Indemnified Party for legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel employed
by the Indemnified Party for any period during which the Indemnifying Party has
not assumed the defense thereof (other than during any period in which the
Indemnified Party shall have not yet given notice of the Third Party Claim as
provided above). If the Indemnifying Party chooses
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to defend or prosecute any Third Party Claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent. All pending Litigation set forth
on Schedule 9.1(c)(ii) with respect to which the Seller has agreed to indemnify
the Buyer Indemnitees pursuant to Section 9.1(c)(ii)(A) of this Agreement shall
be deemed to constitute Third Party Claims for which the Seller has elected to
assume the defense pursuant to this Section 11.1(b), and the defense or
prosecution of such Litigation shall be subject to the terms and provisions of
this Section 11.1(b).
(c) If a Third Party Claim is made against an Indemnified Party for
which indemnification may be sought from the other party under Section 10.3(c),
the following procedures shall apply:
(i) If the Third Party Claim results from a Contest, the
defense of such Third Party Claim shall be controlled by the party that has the
right to control the Contest from which such Third Party Claim results, in each
case as determined pursuant to Section 12.5(b) of this Agreement.
Notwithstanding any other provision in this Section 11.1(c)(i), neither the
Buyer Parties, on the one hand, nor the Seller, on the other hand, shall
undertake any defense of a Third Party Claim resulting from a Contest for which
indemnification may be sought under Section 10.3(c) unless the controlling party
shall have obtained, on behalf of both the controlling party and the
non-controlling party, an opinion of independent counsel selected by the
controlling party to the effect that a reasonable basis (within the meaning of
Section 6662(d)(2)(B)(ii)(II) of the Code) exists for pursuing such contest.
(ii) If such Third Party Claim does not result from a
Contest, the defense of any such Third Party Claim (A) asserted against the
Seller shall be controlled by the Seller, (B) asserted against the Buyer Parties
shall be controlled by the Buyer Parties, or (C) asserted against the Company
Parties at any time, either before or after the Closing, shall follow the
ownership of the Company Parties and shall be controlled by the Seller prior to
the Closing and by the Buyer Parties following the Closing.
(iii) The Seller, on the one hand, and the Buyer Parties, on
the other hand, shall each employ their own counsel, at their own expense, to
conduct the defense of any Third Party Claim that the Seller or the Buyer
Parties, respectively, have the right to control pursuant to this Section
11.1(c). The non-controlling party shall have the right to participate in the
defense of any Third Party Claim against the Company Parties for which
indemnification may be sought against such non-controlling party pursuant to
Section 10.3(c) and to employ counsel, at its own expense, separate from the
counsel employed by the controlling party, it being understood that such
participation shall not constitute control of the defense of such Third Party
Claim.
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(iv) No party shall be entitled to settle any dispute
governed by this Section 11.1(c) without first obtaining the written consent of
the other parties, which written consent shall not be unreasonably withheld.
(v) The Seller, the Buyer Parties and the Company Parties,
as applicable, shall enter into a joint defense agreement in connection with any
Third Party Claim for which indemnification may be sought under Section 10.3(c)
and shall conduct the defense of such Third Party Claim in accordance with the
terms and conditions of such agreement. The Seller and the Buyer Parties shall
cooperate and provide each other with such information as either of them or
their respective affiliates may reasonably request of the other in conducting
the defense of any such Third Party Claim. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules, related work papers and documents relating
to rulings or other determinations by taxing authorities and of any
correspondence or other documents relating to such Third Party Claim. Each party
and its affiliates shall make its employees and agents available on a basis
mutually convenient to both parties to provide explanations of any information
or documents provided hereunder.
(d) The indemnification procedures set forth in this Section 11.1
shall not apply to the rights to indemnification contained in Section 12.1,
which are governed by the provisions of Article XII.
SECTION 11.2 Survival; Termination; Insurance; Claims against Third
Parties.
(a) The representations and warranties set forth in Section 2.16
(captioned "Taxes"), other than the representations set forth in Section
2.16(a)(vii), (viii) and (ix), shall not survive the Closing. The
representations and warranties in Section 10.1 (captioned "Representations and
Warranties of the Seller") and 10.2 (captioned "Representations, Warranties and
Covenants of the Buyer Parties") shall survive the Closing and shall remain in
effect for so long as the Tax Indemnity Provisions of the National Propane
Purchase Agreement remain in effect. The representations and warranties set
forth in Section 2.16(a)(vii), (viii), and (ix) shall survive the Closing and
shall remain in effect until the expiration of the applicable statute of
limitations period for the payment of Taxes. The representations and warranties
in Section 2.11 (captioned "Environmental Matters") shall survive the Closing
but shall terminate and expire at the close of business on the second
anniversary of the Closing Date. All other representations and warranties
contained in this Agreement (including the representation and warranty made by
the Seller pursuant to Section 5.15(c)) shall survive the Closing but shall
terminate and expire at the close of business on the date that is 18 months
after the Closing Date. All covenants and agreements contained in this Agreement
shall be perpetual, unless otherwise specified.
(b) The indemnities provided in this Agreement shall survive the
Closing and shall be perpetual; provided, however, that the indemnities provided
under Sections 9.1(a)(i), 9.1(b)(i) and 9.1(d)(i) shall terminate when the
applicable representation or warranty terminates and the indemnities set forth
in Section 9.1(b)(ii) and (iii) shall terminate, in accordance with their terms,
on the fourth and second anniversary, respectively, of the Closing Date, except
as to any item as to which the person to be indemnified shall have, before the
expiration of the applicable
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indemnification period, previously made a claim by delivering a notice (stating
in reasonable detail the basis of such claim) to the Indemnifying Party in
accordance with Section 11.1(a). After the Closing, the indemnities provided in
Section 9.1, Section 10.3, and Article XII shall be the sole and exclusive
remedy at law or in equity for any breach of representation, warranty, covenant
or agreement or other claim arising out of this Agreement or the Transactions,
other than a breach of the covenants contained in Sections 5.8 and 5.10 with
respect to which injunctive relief may be sought.
(c) The amount of any Losses for which indemnification is provided
under this Agreement shall be (i) reduced by any amounts recovered or
recoverable by the Indemnified Party under insurance policies with respect to
such Losses, including any of the environmental insurance policies identified on
Schedule 5.12, (ii) increased to take account of any Tax cost incurred (grossed
up for such increase) by the Indemnified Party arising from the receipt of
indemnity payments hereunder and (iii) reduced to take account of any Tax
benefit realized by the Indemnified Party arising from the incurrence or payment
of any such Losses. Such Tax cost or Tax benefit, as the case may be, shall be
computed for any year using the Indemnified Party's actual Tax liability with
and without (i) the receipt of any indemnification payments made pursuant to
this Agreement and (ii) the incurrence or payment of any Losses for which
indemnification is provided under this Agreement in such year. In the event that
the Indemnified Party actually realizes a Tax cost or Tax benefit for a year(s)
subsequent to the year in which the indemnity payment is made, the Indemnifying
Party shall pay the amount of such Tax cost or the Indemnified Party shall pay
the amount of such Tax benefit, as the case may be, in such subsequent year(s).
(d) Upon Seller's request and at Seller's cost and expense, the
Buyer Parties shall cause the Company Parties to assert any claim that the
Company Parties may have against any third party for Losses arising out of the
Seller Indemnified Properties, unless the Buyer Parties shall have reasonably
determined, in their good faith judgment, that the assertion of such a claim
would have an adverse effect on the business or operations of the Company
Parties for which adequate indemnification would not be available under Section
9.1(c)(iii). The Seller shall indemnify the Buyer Indemnitees for any Losses
incurred by the Buyer Indemnitees arising out of the assertion of such a claim,
including any Losses arising out of any cross-claims or counterclaims asserted
against the Company Parties to the extent that such cross-claims or
counterclaims arise out of acts or omissions of the Company Parties or their
predecessors prior to the Closing or any actions taken by the Buyer Parties or
the Company Parties at the Seller's request under this Section 11.2(d). If a
Company Party has retained, at Closing, the Seller Indemnified Property with
respect to which such a claim is asserted, the amount of the Losses for which
the Buyer Indemnitees are entitled to indemnification under this Agreement shall
be reduced by the amount of the net after-tax proceeds recovered by the Company
Party as a result of such claim. If the Company Parties have transferred to the
Seller or an affiliate of the Seller, pursuant to Section 1.1(d) or (j) of this
Agreement, the Seller Indemnified Property with respect to which such a claim is
asserted, the Company Party asserting the claim for the benefit of the Seller or
an affiliate of the Seller shall either (i) assign such claim to the Seller or,
(ii) in the event that the claim is not assignable, assign to the Seller or such
affiliate of the Seller, the net after-tax proceeds of such claim.
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SECTION 11.3 Environmental Insurance. Seller and Buyer shall
cooperate to ensure the continuity of insurance coverage under the environmental
policies set forth on Schedule 5.12. Without limitation of the foregoing, the
Seller and the Buyer agree that Seller may, at Seller's expense, take such
action as may be necessary to effect the following changes to the policies set
forth on Schedule 5.12: (i) include the Seller as a named insured under each
environmental policy set forth in Schedule 5.12; (ii) include the Seller's
indemnification obligations to the Buyer Indemnitees under this Agreement as an
"insured contract" under the National Propane Environmental Insurance Policy;
(iii) eliminate from coverage under the National Propane Environmental Insurance
Policy liabilities arising from acts or omissions of the Company Parties or the
Buyer Parties after the Closing; and (iv) eliminate any of the Company Parties
as a named insured on one or more of the environmental insurance policies set
forth in Schedule 5.12 which relate solely to the Seller Indemnified Properties
if the Seller should determine that such elimination is appropriate; provided,
however, in no event shall part (iv) hereof apply to the National Propane
Environmental Insurance Policy. Buyer shall bear the cost associated with
transferring the National Propane Environmental Insurance Policy to the extent
any change of ownership resulting from the Transactions is determined to be an
assignment of such policy, except to the extent that such cost arises out of the
transfer to the Seller of any coal tar site included in the Seller Indemnified
Properties, which cost shall be borne by Seller. Seller and Buyer agree to
cooperate in making and prosecuting claims against the insurance policies of
Seller and the Company Parties in effect prior to the Closing Date that may
provide coverage for any Losses, regardless of the party entitled to
indemnification hereunder.
ARTICLE XII
TAX MATTERS
SECTION 12.1 Tax Indemnity.
(a) Seller agrees to indemnify and hold harmless the Buyer
Indemnitees from and against the following Taxes (except for the Buyer
Indemnitees' share of the Taxes referred to in Section 12.8 or to the extent
reflected in the Closing Date Financial Statements) and, except as otherwise
provided in Section 12.5 and 12.9(d), against any costs or expenses (including
reasonable attorneys fees and expenses of outside counsel) incurred in
contesting such Taxes ("Contest Expenses"): (i) all Taxes imposed on the Company
Parties with respect to Taxable periods of such person ending on or before the
Closing Date, including all income, gains and other amounts earned or realized
by the Company Parties through the Closing Date, all of which shall be included
in the Seller's tax returns or in tax returns of consolidated or combined groups
of which Seller is a member, (ii) the Company's proportionate share, based on
its ownership interest in Atlantic, of all Taxes imposed on Atlantic with
respect to Taxable periods of Atlantic ending on or before the Closing Date,
including all income, gains and other amounts earned or realized by Atlantic
through the Closing Date, (iii) all Taxes, if any, that would not otherwise have
been payable by the Company or CPH in a period that ends after the Closing Date
if the items of income, gain, loss and deduction that would be allocated to the
general partnership interest in CPLP that is held by CPH for the period ended at
the end of the Closing Date under the "closing of the books" method were
excluded from the income of CPH, (iv) with respect to
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Taxable periods beginning on or before the Closing Date and ending after the
Closing Date, all Taxes imposed on the Company Parties or the Company's
proportionate share, based on its ownership interest in Atlantic, of all Taxes
imposed on Atlantic, in each case which are allocable, pursuant to Section
12.1(c), to the portion of such period ending on the Closing Date, and (v) all
Taxes, if any, payable by the Company Parties or the Company's proportionate
share, based on its ownership interest, of all Taxes payable by Atlantic after
the Closing Date arising from or related to a breach of the representations and
warranties of the Seller in Section 2.16(a)(vii), (viii) and (ix) and that would
not otherwise have been payable by the Company Parties or Atlantic. The
obligations of the Seller under this Section 12.1 shall not be subject to the
Seller Indemnification Cap, the Seller Indemnification Basket or the Seller
Indemnification Threshold, but shall be subject to Section 12.9(d).
(b) The Buyer Parties agree jointly and severally to indemnify and
hold harmless the Seller Indemnitees for (i) all Taxes and associated expenses
not allocated to Seller pursuant to clauses (i), (ii) and (iii) of Section
12.1(a) (except as otherwise provided herein) and (ii) any obligation of Seller
arising from or relating to any act or failure to act by any Company Party,
Atlantic, or any Buyer Party or any affiliate, successor or assignee of any of
them occurring after the Closing Date. The obligations of the Buyer Parties
under this Section 12.1 shall not be subject to the Buyer Indemnification Cap,
the Buyer Indemnification Basket or the Buyer Indemnification Threshold.
(c) In the case of Taxes that are payable with respect to a Taxable
period that begins on or before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or
related to income or receipts, or (B) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, as provided
under Section 12.8), deemed equal to the amount which would be payable if the
Taxable period ended with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of any Company Party or Atlantic, or otherwise measured by
the level of any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis, the amount
of such Taxes for the immediately preceding period), multiplied by a fraction
the numerator of which is the number of calendar days in the period ending on
the Closing Date and the denominator of which is the number of calendar days in
the entire period.
(d) For purposes of this Article XII, the term "Closing Date" means
the day on which the Principal Closing Transactions are consummated.
SECTION 12.2 Returns and Payments.
(a) Seller shall prepare and file or otherwise furnish in proper
form to the appropriate taxing authority (or cause to be prepared and filed or
so furnished) in a timely manner all Tax
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Returns relating to the Company Parties (i) that are due on or before the
Closing Date and (ii) that relate to any period through the Closing Date, and
pay or cause to be paid all Taxes shown as due thereon (and the Buyer Parties
shall do the same, including making or causing to be made payments shown as due,
with respect to any Tax Return for the Company Parties due after the Closing
Date). Tax Returns of the Company Parties not yet filed for any Taxable period
that begins before the Closing Date shall be prepared in a manner consistent
with past practices employed with respect to the Company Parties (except to the
extent counsel for Seller or counsel for the Company renders a legal opinion
that there is no reasonable basis in law therefor or determines that a Tax
return cannot be so prepared and filed without being subject to penalties). With
respect to any Tax Return required to be filed by Buyer or Seller with respect
to the Company Parties and as to which an amount of Tax is allocable to the
other party under Section 12.1(c), the filing party shall provide the other
party and its authorized representatives with a copy of such completed Tax
Return and a statement certifying the amount of Tax shown on such Tax Return
that is allocable to such other party pursuant to Section 12.1(c) (the "Tax
Allocation Statement"), together with appropriate supporting information and
schedules at least 45 days (or such other time period as is agreed by the
parties, such agreement not to be unreasonably withheld) prior to the due date
(including any extension thereof) for the filing of such Tax Return, and such
other party and its authorized representatives shall have the right to review
and comment on such Tax Return and Tax Allocation Statement prior to the filing
of such Tax Return. If after such review, the reviewing party disagrees with any
item on such Tax Return or Tax Allocation Statement and the parties cannot agree
as to the appropriate treatment or calculation thereof, the issue in dispute
shall be reviewed by an independent nationally recognized accounting firm (the
"Tax Referee") agreed to by the parties. If the parties are unable to agree upon
an independent nationally recognized accounting firm, Buyer and Seller shall
each have the right to request that the American Arbitration Association appoint
such a firm (provided that such firm has not performed any services for any
party with respect to the Transactions and is not the customary Tax advisor to
any party). Each party agrees to execute, if requested by the Tax Referee, a
reasonable engagement letter. All fees and expenses relating to the work, if
any, to be performed by the Tax Referee shall be borne pro rata by Seller and
Buyer in proportion to the allocation of the dollar amount of the items as to
which there is a disagreement between Seller and Buyer made by the Tax Referee
such that the prevailing party pays a lesser proportion of the fees and
expenses. The Tax Referee shall determine in accordance with the terms of this
paragraph the appropriate treatment or calculation of any items as to which
there is a disagreement. The findings of the Tax Referee shall be binding on all
parties, and the Tax Return shall be completed and filed in a manner consistent
with such findings. Any amounts allocated to the non-filing party on the Tax
Allocation Statement shall be paid to the filing party in accordance with the
provisions of Section 12.6 hereof.
(b) Seller and Buyer agree to report the Transactions and file all
Tax Returns in a manner consistent with the obligations imposed by the National
Propane Purchase Agreement upon the Company Parties.
(c) CPLP shall divide the items of income, gain, loss and deduction
that are allocated to the CPLP Limited Partnership Interest between the Company
and Buyer for the CPLP taxable
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year in which the Closing occurs by closing the books of CPLP at the end of the
day on which the Closing occurs.
SECTION 12.3 Tax Benefits. Any indemnifiable Tax Losses payable by an
indemnifying party under this Article XII shall be reduced by the present value
of (a) any benefit that was (or will) be realized by the indemnified party, or
any affiliate thereof, resulting from any refund, credit or reduction in
otherwise required Tax payments (including any interest payable thereon)
attributable to any item that generated or that relates to the indemnified Tax
Losses and (b) any Tax savings (including any refund, credit or other Tax
reduction) attributable to the deductibility of the indemnified party's or its
affiliate's payment of any Tax Losses for which it receives an indemnification
payment. Such present value shall be computed as of the first date on which the
right to the refund, credit or other Tax reduction arises or otherwise becomes
available to be utilized (i) using the maximum marginal rate of the relevant Tax
payable by the indemnified party for any Tax year in which such savings or
refund were or will be available after first reflecting all other items of
income, gain, deduction, loss or credit for such period, and (ii) using a
discount rate of 5.5% per annum. To the extent that the parties cannot agree
whether any Tax savings exists (or will be realized) or on the appropriate
treatment of any Tax savings, such disagreement shall be resolved by the Tax
Referee (selected, and all fees and expenses related thereto borne by the
parties, in a manner consistent with that provided in Section 12.2). Seller
shall be entitled to the benefit of any indemnification right or payment
(including any insurance or similar payment), other than an indemnification
payment made pursuant to this Agreement, available to or received by Buyer, the
Company Parties, or any affiliate of either, in connection with a Tax loss for
which Seller has an obligation to indemnify Buyer.
SECTION 12.4 Tax Refunds. Any Tax refund (including any interest with
respect thereto) relating to the Company Parties for Taxes paid for any Taxable
period or portion thereof prior to the Closing Date shall be: (a) the property
of Seller, and if received by Buyer or the Company Parties shall be paid over
promptly to Seller, to the extent it was not included as an asset in the Closing
Date Financial Statements and relates solely to a tax period ending on or before
the Closing Date, or (b) the property of the Buyer, and if received by Seller or
any of its affiliates shall be paid over promptly to the Buyer, in all other
cases.
SECTION 12.5 Contests.
(a) After the Closing, Buyer shall promptly notify Seller in writing
of the commencement of any Tax audit or administrative or judicial proceeding or
of any demand or claim on Buyer, Atlantic or the Company Parties which, if
determined adversely to the taxpayer, would be grounds for indemnification under
this Article XII. Such notice shall contain factual information (to the extent
known to Buyer, Atlantic or any Company Party) describing the asserted Tax
liability in reasonable detail and shall include copies of any notice or other
document received from any taxing authority in respect of any such asserted Tax
liability. If Buyer fails to give Seller prompt notice of an asserted Tax
liability as required by this Section 12.5, then (i) if Seller is precluded by
the failure to give prompt notice from contesting the asserted Tax liability in
either the administrative or the judicial forum, then Seller shall not have any
obligation to indemnify for any Tax or Contest Expense arising out of such
asserted Tax
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liability, and (ii) if Seller is not so precluded from contesting but such
failure to give prompt notice results in a detriment to Seller, then any amount
which Seller is otherwise required to pay Buyer pursuant to Section 12.1 with
respect to such liability shall be reduced by the amount of such detriment, if
calculable.
(b) Prior to the Closing Date, Seller shall control any audit, claim
for refund or administrative or judicial proceeding involving any asserted Tax
liability (any such audit, claim for refund or proceeding relating to an
asserted Tax liability is referred to herein as a "Contest"). After the Closing
Date, in the case of a Contest that relates to a Tax Return (or any item
relating thereto or reported thereon) for a Taxable period ending on or before
the Closing Date, Seller shall at its expense undertake and control the conduct
of such Contest, and for all Taxable periods straddling or beginning on the day
after the Closing Date, Buyer shall control such Contests; provided, however,
that Buyer shall control a contest solely as to any portion of the Tax Return of
CPLP for the taxable year ending on the Closing Date, the resolution of which
could cause a payment to be made to Triarc pursuant to the Tax Indemnity
Provisions of the National Propane Purchase Agreement. If Seller does not assume
the defense of any such Contest for a Taxable period ending on or before the
Closing Date, Buyer may defend the same in such manner as it may deem
appropriate, including settling such Contest (subject, however, to Section
12.5(d) if such settlement would adversely affect Seller) after giving ten days'
prior written notice to Seller setting forth the terms and conditions of
settlement. In the event of a Contest covered by the second sentence of this
paragraph that involves issues relating to a potential adjustment for which
Seller has liability that also involves separate issues relating to a potential
adjustment for which Buyer would be liable, Buyer shall have the right, at its
expense, to control the Contest but only with respect to the latter issues.
(c) Neither Buyer nor Seller shall enter into any compromise or
agree to settle any claim pursuant to any Contest which would adversely affect
the other party for such year or a subsequent or prior year without the written
consent of the other party, which consent may not be unreasonably withheld,
conditioned or delayed.
(d) Notwithstanding any other provision of this Section 12.5, the
defense of any Third Party Claim in respect of which indemnity may be sought
under Section 10.3 shall be subject to all obligations imposed by the National
Propane Purchase Agreement with respect to the Contest of such Third Party
Claim.
SECTION 12.6 Time of Payment. Payment of any amounts due under this
Article XII in respect of Taxes shall be made (i) at least three Business Days
before the due date of the applicable estimated or final Tax Return required to
be filed by either Buyer or Seller, as the case may be, that shows Taxes due for
which the other party is responsible under Sections 12.1(a), (b) or (c), and
(ii) within three Business Days following an agreement between Seller and Buyer
that an indemnity amount is payable, an assessment of a Tax by a Taxing
authority, or a "determination" having been made as such term is defined in
Section 1313(a) of the Code. If liability under this Article XII is in respect
of Contest Expenses, payment of any amounts due under this Article XII shall be
made within five Business Days after the date when the relevant
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party has been notified that such party has a liability for a determinable
amount under this Article XII and is provided with calculations or other
materials supporting such liability.
SECTION 12.7 Cooperation and Exchange of Information. Seller and
Buyer shall provide each other with such cooperation and information as either
of them or their respective affiliates reasonably may request of the other in
filing any Tax Return, amended Tax Return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes or participating in or
conducting any Contest in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules, related work papers and documents relating
to rulings or other determinations by taxing authorities. Each party and its
affiliates shall make its employees available on a basis mutually convenient to
both parties to provide explanations of any documents or information provided
hereunder. Each of Seller and Buyer shall retain all Tax Returns, schedules and
work papers, records and other documents in its possession relating to Tax
matters of the Company and the Subsidiaries for each Taxable period first ending
after the Closing Date and for all prior Taxable periods until the later of (i)
the expiration of the statute of limitations of the Taxable periods to which
such Tax Returns and other documents relate, without regard to extensions except
to the extent notified in writing of such extensions for the respective Tax
periods, or (ii) three years following the due date (without extension) for such
Tax Returns. Any information obtained under this Section 12.7 shall be kept
confidential except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting a Contest or as otherwise
may be required by law, regulation or the rules of any stock exchange.
SECTION 12.8 Conveyance Taxes. The Buyer and the Seller shall each
pay 50% of any real or personal property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, any transfer, recording,
registration, and other fees, and any similar Taxes (collectively, "Conveyance
Taxes") which become payable in connection with the sale of the Company Assets
and Liabilities to the Buyer pursuant to Section 1.1(e). The Buyer shall pay
88%, and the Seller shall pay 12%, of any Conveyance Taxes which become payable
in connection with the transfer of the Buyer Blend Assets and Liabilities to
CPLP on the Closing Date. Seller and Buyer shall file such applications and
documents as shall permit any such Conveyance Taxes to be assessed and paid on
or prior to the Closing Date in accordance with any available pre-sale filing
procedures. Buyer or Seller, as appropriate, shall execute and deliver all
instruments and certificates necessary to enable the other to comply with any
filing requirements relating to any such Conveyance Taxes.
SECTION 12.9 Miscellaneous.
(a) To the extent permitted by law, Seller and Buyer agree to treat
all payments made by either of them to or for the benefit of the other
(including any payments to any Company Party) under this Article XII or under
other indemnity provisions of this Agreement as adjustments to the Purchase
Price or as capital contributions for Tax purposes and that such treatment shall
govern for purposes hereof except to the extent that the laws of a particular
jurisdiction provide otherwise.
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(b) Neither Seller nor any Buyer Party shall make or cause to be
made any election or take or cause to be taken any action which would materially
increase the other party's liability to pay Taxes pursuant to the terms of this
Agreement unless (i) such election or action is required by law, (ii) such
election or action is required in order to comply with such party's obligations
under Article X of this Agreement, or (iii) the party making such election or
taking such action provides a written waiver of its rights to any claim for any
additional Taxes that such party might have pursuant to the terms of this
Agreement resulting from such election or action.
(c) The Buyer Parties, on the one hand, and the Seller, on the other
hand, will report for all Tax purposes the Tax consequences of the Principal
Closing Transactions in a manner consistent with the form and order of the
Principal Closing Transactions, as described in Section 1.1 (the "Reporting
Position"). In the event that any Tax authority proposes to characterize the
Principal Closing Transactions in a manner other than that of the Reporting
Position, the Buyer Parties, on the one hand, and the Seller, on the other hand,
agree to contest such proposed recharacterization of the Principal Closing
Transactions by a Tax authority (a "Structure Controversy") in good faith using
commercially reasonable efforts to defend the Reporting Position. In addition,
the Buyer Parties, on the one hand, and the Seller, on the other hand, agree
that an alternative method of analyzing the Principal Closing Transactions, is
that the Company would have (i) exchanged a portion of the Intercompany Note for
Buyer Limited Partnership Interests, (ii) exchanged the Buyer Limited
Partnership Interests for Buyer Parent Units, and (iii) distributed the Buyer
Parent Units to Seller in connection with the transactions described in Section
1.1(h) (the "Alternative Structure") in lieu of (y) the Seller cash transfers
and partnership contributions described in Section 1.1 (a) and (b), and (z) the
portion of Section 1.1(h) relating to the cash sale of the Intercompany Note. To
the extent that issues relating to the substance of the Principal Closing
Transactions are raised by a Tax authority in a Structure Controversy, the
parties agree to present the Alternative Structure as a secondary argument to
the Reporting Position as representing the intent of the parties (absent certain
financing constraints) and as being consistent with the substance of the
Principal Closing Transactions. To the extent that the Principal Closing
Transactions are recharacterized by a Tax authority as involving a contribution
by Seller of any property to Buyer in exchange for Buyer Limited Partnership
Interests, the Buyer may make remedial allocations within the meaning of Treas.
Reg. Section 1.704-3(d), if any, with respect to such property.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices. Any notice, request, instruction,
correspondence or other document to be given hereunder by either party to the
other (each, a "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
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If to Seller, addressed to:
Columbia Energy Group
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer Parties, in person, by courier or telecopier, to:
AmeriGas Propane, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Law
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer Parties by U.S. Mail, to:
AmeriGas Propane, L.P.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President - Law
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by facsimile shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next Business Day after receipt if not received
during the recipient's normal business hours. All Notices by facsimile shall be
confirmed promptly after transmission in writing by certified mail or personal
delivery. Any
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party may change any address to which Notices are to be given to it by giving
Notice as provided above of such change of address.
SECTION 13.2 Governing Law; Dispute Resolution; Enforcement.
(a) The provisions of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the conflicts of laws principles thereof.
(b) Any claim by the Buyer Parties against the Seller, or by the
Seller against the Buyer Parties, not involving a Third Party Claim shall be
asserted by written notice to the other party in accordance with Section 13.1,
stating the nature of such claim in reasonable detail and indicating the
estimated amount, if practicable. In the event of any such claim or any other
dispute arising under this Agreement, prior to the commencement of litigation,
an officer of API and an officer of Seller shall attempt in good faith to
resolve the dispute consistent with the terms of this Agreement. If they are
unable to resolve the dispute in this manner within a reasonable period of time,
the parties may pursue judicial remedies with respect to such dispute.
(c) Each party hereto hereby irrevocably and unconditionally (i)
consents and submits to the exclusive jurisdiction of the courts of the State of
Delaware and of the United States of America located in the State of Delaware
(each, a "Delaware Court") for any actions, suits or proceedings arising out of
or relating to this Agreement or the Transactions, (ii) agrees that any such
action, suit or proceeding may be brought or maintained only in a Delaware Court
and in no other forum, (iii) irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of or related to this Agreement or the Transactions in any Delaware Court
located in Wilmington, Delaware, and further irrevocably and unconditionally
waives and agrees not to plead a claim in any such court that any such action,
suit or proceeding has been brought in an inconvenient forum, and (iv)
irrevocably and unconditionally waives any right to a trial by jury in any
action, suit or proceeding arising out of or related to this Agreement or the
Transactions and agrees that any such action, suit or proceeding shall be tried
before a court and not before a jury.
SECTION 13.3 Entire Agreement; Amendments and Waivers. This Agreement
(including all exhibits and schedules hereto), the Confidentiality Agreement,
the Special Redemption Side Letter and the letter agreement, dated as of the
date hereof, regarding reimbursement of certain communication expenses
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. This
Agreement amends and restates in its entirety the Purchase Agreement, dated as
of January 30, 2001, among the Seller, the Company, CPLP and the Buyer Parties.
The Buyer Parties acknowledge that neither Seller nor any affiliate nor any
officer, director, employee, representative, agent or advisor of any of them
makes or has made any representation or warranty, express or implied, or any
other inducement or promise to the Buyer Parties except as specifically made in
this Agreement, the Confidentiality Agreement, the Special Redemption Side
Letter or other side letters dated the date hereof or the Closing Date or any
officer's certificates dated the Closing Date delivered pursuant to Section 1.3
of this
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Agreement. Buyer has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the risks and merits of its
purchase of the Interests and the other Transactions and is capable of bearing
the economic risks thereof. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
SECTION 13.4 Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned by any party hereto
without the prior written consent of either Buyer or Seller, as applicable, and
any such assignment that is not consented to shall be null and void; provided,
however, that a party may assign this Agreement, upon notice to the other
parties, to (a) a subsidiary or parent or other entity owned or controlled by
(or owning or controlling) that party, or (b) a person that (i) purchases all or
substantially all of the assets that are being conveyed hereunder or (ii) merges
with the Company or any of the Subsidiaries, provided, further, however, that
any assignment under clause (a) or (b) shall not release, affect or reduce in
any way the assigning party's obligations under this Agreement, and provided,
further that the right to assign shall not be construed to permit any Buyer
Party or any of its affiliates to take any action that is prohibited by the
National Propane Purchase Agreement or by Section 10.2 of this Agreement.
Nothing in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
SECTION 13.5 Severability. If any provision of the Agreement is
rendered or declared illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by decree of a court of last resort, the
parties hereto shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
SECTION 13.6 Disclosure. Disclosure of a matter in any schedule to
this Agreement shall not be deemed disclosure with respect to any other
schedule, unless it is obvious from the disclosure itself that it also applies
to another schedule. The mere inclusion of an item in any schedule shall not be
deemed an admission that such item represents a material exception of fact,
event or circumstance. The Buyer Parties shall be entitled to rely upon the
representations and warranties contained herein without undertaking any
independent investigation or being held to any minimal or "reasonable person"
standard of due diligence.
SECTION 13.7 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Agreement.
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SECTION 13.8 References; Construction. References to any "Article,"
"Exhibit," "Schedule" or "Section," without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only and
in no way limit the generality of the matters thus exemplified; such term shall
be given the meaning commonly associated with the phrase, "including, without
limitation." For the purposes of this Agreement, except as used in Section
5.15(c), "Knowledge" means the actual knowledge of (a) with respect to Seller,
those persons listed on Schedule 13.8(a), and (b) with respect to the Buyer
Parties, those persons listed on Schedule 13.8(b). For purposes of this
Agreement, "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity. For
purposes of this Agreement, "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person. For purposes
of this Agreement, "Business Day" means any day other than (i) a Saturday, (ii)
a Sunday or (iii) any other day on which commercial banks in New York are
authorized or obligated by law to close. To the extent that any of the Seller's
representations and warranties in Article II speak as to operating matters
relating to Atlantic, they shall be unqualified except as otherwise stated in
the applicable representation or warranty. To the extent that any of the
Seller's representations and warranties in Article II speak as to any other
matters concerning Atlantic, they shall be qualified by, and be made subject to,
the Seller's Knowledge.
SECTION 13.9 Context. Whenever the context so requires, the singular
number includes the plural and vice versa, and a reference to one gender
includes the other gender and the neuter.
SECTION 13.10 No Prejudice. This Agreement has been jointly prepared
by the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
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SECTION 13.11 Execution. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one instrument.
EXECUTED as of the date first set forth above.
COLUMBIA ENERGY GROUP
By: /s/ ▇ ▇ ▇'▇▇▇▇▇▇▇
------------------------------
Name:
------------------------------
Title:
------------------------------
COLUMBIA PROPANE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name:
------------------------------
Title:
------------------------------
CP HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
------------------------------
Title:
------------------------------
COLUMBIA PROPANE, LP, by CP Holdings,
Inc., as General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
------------------------------
Title:
------------------------------
87
AMERIGAS PROPANE, L.P.,
by AmeriGas Propane, Inc., as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President - Law
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AMERIGAS PARTNERS, L.P.,
by AmeriGas Propane, Inc., as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President - Law
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AMERIGAS PROPANE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President - Law
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