Exhibit 10.29
PURCHASE AND NONCOMPETITION AGREEMENT
THIS PURCHASE AND NONCOMPETITION AGREEMENT (this "Agreement") is made
and entered into this 9th day of January, 2004, by and between Ferrellgas, L.P.,
a Delaware limited partnership ("Buyer"), and Suburban Propane, L.P., a Delaware
limited partnership ("SP"), and Suburban Sales and Service, Inc., a Delaware
corporation ("SSS" and, collectively with SP, "Seller").
W I T N E S S E T H
That in consideration of the mutual covenants herein contained, the
parties agree as follows:
I. SALE AND PURCHASE.
1.1 Agreements to Sell and Purchase. Seller agrees to sell, transfer,
assign and deliver to Buyer, and Buyer agrees to purchase and accept from
Seller, on the Closing Date (hereinafter defined), the property of Seller
referred to in this Section 1.1 (not specifically excluded under Section 1.2
below), relating to Seller's propane operations (the "Operations") within the
states of Texas, Oklahoma, Missouri and Kansas as carried on at the locations
identified in Exhibit 1.1 ("the "Locations"), as follows:
a. All propane inventory held by Seller at the Locations on the
Closing Date;
b. All propane tanks, cylinders, dispensers, regulators, piping,
vehicles, fixtures constituting Seller's bulk facilities, tools and other
equipment at or serviced from the Locations, including, without limitation,
those assets described on Exhibit 1.1b;
c. To the extent assignable, all of Seller's right, title and
interest in and to permits, licenses (including truck licenses) and
telephone numbers used in connection with the Operations at the Locations;
d. All of Seller's propane products accounts, retail accounts and
service customers serviced from or at the Locations, including without
limitation, all of Seller's right, title and interest in and to the
originals and all copies of customer lists and records;
e. All customer contracts and fuel supply contracts with customers
serviced from or at the Locations, including, without limitation, contracts
on product tanks and customer locations; and all contract rights arising
from non-compete and non-solicit agreements;
f. All customer leases and lease option agreements covering the
propane tanks and cylinders owned or leased by Seller to customers serviced
from the Locations;
g. All real estate owned by Seller for use in the Operations, as
more particularly described in the deeds attached hereto as Exhibit 2.2.3,
including all fixtures attached thereto and improvements and buildings
thereon;
h. Unless specifically excluded, all rights of Seller under real
property leases for leased real estate used in the Operations, and contracts
of the Operations;
i. Trade accounts receivable of the Operations for account debtors
serviced from the Locations, as of the Closing Date (the "Purchased Accounts
Receivable");
j. All warranty rights of Seller, express or implied, with respect
to the property described in this Section 1.1;
k. All of Seller's propane parts and fittings which are used at
the Locations as operating supplies to maintain and repair propane tanks and
lines, whether or not generally billed to Seller's customers;
l. All of Seller's appliance inventory at the Locations.
1.2 Excluded Assets. The assets and properties of Seller to be sold and
purchased under Section 1.1 shall not include (i) cash on hand or in banks; (ii)
any Underground Storage Tanks (as defined by 40 C.F.R. 280); (iii) the Retained
Accounts Receivable (as defined in Section 1.3c); (iv) any right, title, or
interest in or to the names Suburban Propane, L.P., Suburban Propane, Suburban
Sales and Service, Inc., or any derivatives thereof, or any other trademarks,
service marks or trade names, or any software or intellectual property used in
connection with or otherwise attributable to the Seller's business at any
business locations, whether or not such marks, names, or property are
registered; (v) any item, instrument, property, claim, right, equipment,
furniture, fixture, appliance, inventory, tool/or machinery or other asset
associated with the Seller's businesses other than at the Locations; and (vi)
those assets and properties of Seller listed on Exhibit 1.2.
1.3 Purchase Price; Noncompetition Payment.
a. Price of Assets. The price to be paid for the assets to be sold
and purchased pursuant to Sections 1.1b, 1.1c, 1.1d, 1.1e, 1.1f, 1.1g, 1.1h,
and 1.1j shall be $23,000,000, allocated to the assets pursuant to Exhibit
1.8.
b. Price of Inventory. To determine the price of the assets
described in Section 1.1a (the "Propane Inventory), a physical inventory of
propane in bulk storage, bobtails, in cylinders on trucks, and in customer
tanks in the yard at the Locations shall be taken by representatives of
Buyer and Seller as of the open of business on the Closing Date. The price
to be paid shall be determined based upon the pricing information on
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Exhibit 1.3b for that inventory (corrected to 60 degrees Fahrenheit based on
the temperature of the propane in the vessel containing the greatest
quantity) which Buyer and Seller so verify.
c. Price of Accounts Receivable. To determine the price of the
Purchased Accounts Receivable, Seller's total Purchased Accounts Receivable
for the Operations shall be verified by representatives of Buyer and Seller
as of the close of business on the day preceding the Closing Date by review
of the business records. The price to be paid shall be the applicable
percentage (as set forth below) of the amount of the Purchased Accounts
Receivable; provided, however, that Buyer shall not be obligated to purchase
any account (i) which is due from a customer that is at the time of such
verification a debtor in bankruptcy or reorganization proceedings; or (ii)
which otherwise appears to be uncollectible or unwanted as determined by
Buyer in its sole discretion (the "Retained Accounts Receivable").
Account Receivable Age Percentage of Face Amount
---------------------- -------------------------
0 - 30 days after statement date 100%
31 - 60 days after statement date 75%
61 - 90 days after statement date 50%
over 90 days after statement date 0%
d. Price of Appliances and Parts. The price for the assets
described in Section 1.1k and 1.1l (parts and fittings and appliances,
hereinafter "Appliance Inventory") shall be an amount equal to 90% of
Seller's cost, determined by an inventory of said items at the Locations
conducted jointly by Seller and Buyer on Closing Date.
1.4 Seller's Liabilities.
a. Excluded Liabilities. Other than the assumed liabilities
described in Section 1.4b, all liabilities, debts and obligations of every
character or description, known or unknown, of Seller accruing or arising
from acts (whether or not the resulting event or occurrence of damage is
before, on or after the Closing Date), transactions or occurrences prior to
the Closing (hereinafter defined) shall be Seller's sole obligation and
responsibility and Buyer is not assuming any such liability, debt or
obligation and Buyer shall have no responsibility therefor.
b. Assumed Liabilities. Notwithstanding the above, Buyer agrees to
assume and pay the liabilities and obligations (i) arising after the Closing
Date with regard to the assigned leases, (ii) listed on Exhibit 1.4b, (iii)
that arise on or after the Closing Date pursuant to executory contracts,
orders and commitments that relate to the sale of equipment, merchandise or
services of the Operations at the Locations, (iv) that are incurred with
respect to, result from, are caused by or arise out of the assets acquired
pursuant to Section 1.1, provided that Buyer does not assume any liability
with respect to any asset or installation at a customer location until the
earlier of (x) the date on which the Buyer first delivers propane into,
services or inspects such asset and (y) 120 days after
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the Closing Date. Buyer agrees that it shall bear all costs and expenses
associated with the foregoing and that said costs and expenses shall be in
addition to the purchase price of the assets.
1.5 Proration of Certain Items. Provided the Closing occurs, Buyer
shall receive a credit with respect to the following items (the "Prorations"):
(a) Real and Personal Property Taxes. With respect to the assets
being transferred pursuant to this Agreement, Buyer will pay all real and
personal property taxes, if any, (prorated as of the Closing Date) for the
calendar year within which the Closing Date occurs, which are not payable
until after the Closing Date. Buyer will make such payments as and when due
and Buyer shall receive a credit for Seller's prorated share of the amounts
to be paid by Buyer.
(b) Customer Propane Prepayments or Level Payments. Customer
prepayments for propane and level payment plan payments shall be prorated as
of the Closing Date. Buyer shall receive a credit for the amount by which
the retail price of gas provided to customers before the Closing is less
than the retail amount paid to Seller by such customers.
(c) Customer Tank Rent Prepayment. Prepayments of tank rent and
all tank rent accounts receivable shall be prorated over the period to which
the prepayment applies. Buyer shall receive a credit for the amount by which
the prepayment of tank rent and tank rent accounts receivable exceeds the
tank rent due through the end of the day prior to the Closing Date.
(d) Customer Deposits and Balances. Buyer shall receive a credit
for (i) all customer deposits made with Seller in connection with the use,
lease or purchase of propane or propane tanks, cylinders, regulators or
equipment and (ii) all customer credit balances of any kind.
The foregoing items will be computed as of the time of the Closing and
will be offset against the payment to be made by Buyer to Seller within three
business days after the calculation of the Purchased Accounts Receivable, the
Propane Inventory and Appliance Inventory, and the Prorations, as further
described in Section 2.3.
1.6 Accounts Receivable Payments. Seller hereby irrevocably constitutes
and appoints Buyer and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Seller and in the name of Seller
or in its own name, without notice to or assent by Seller, for the sole and
exclusive purposes of signing, endorsing and negotiating any check, draft,
deposit item or other instruments received by Buyer as a customer payment on the
Purchased Accounts Receivable transferred or assigned hereunder. The power and
authority granted to Buyer pursuant to this Section 1.6 shall expire 90 days
after the Closing Date. Seller will immediately remit to Buyer any payments
received by Seller on any Purchased Accounts Receivable transferred to
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Buyer hereunder. Buyer will immediately remit to Seller any payments received by
Buyer with respect to the Retained Accounts Payable.
1.7 Adjustments.
a. As promptly as practicable, but no later than ten (10) days
after the Closing Date, Seller shall cause to be prepared and delivered to
Buyer the Closing Statement (as defined below) and a certificate based on
such Closing Statement setting forth Seller's calculation of inventory
price, Prorations, and Purchased Accounts Receivable ("Closing
Adjustments"). The closing statement (the "Closing Statement") shall fairly
present in all material respects calculation of the Closing Adjustments.
b. If Buyer disagrees with Seller's calculation of Closing
Adjustments delivered pursuant to Section 1.7a, Buyer may, within ten (10)
days after delivery of the Closing Statement, deliver a notice to Seller
disagreeing with such calculation and setting forth Buyer's calculation of
such amount. Any such notice of disagreement shall specify those items or
amounts as to which Buyer disagrees, and Buyer shall be deemed to have
agreed with all other items and amounts contained in the Closing Statement
and the calculation of Closing Adjustments delivered pursuant to Section
1.7a and shall pay those undisputed amounts within 10 days of delivery of
the Closing Statement .
c. If a notice of disagreement shall be duly delivered pursuant to
Section 1.7b, Buyer and Seller shall, during the ten (10) days following
such delivery, use their reasonable best efforts to reach agreement on the
disputed items or amounts in order to determine, as may be required, the
amount of Closing Adjustments. If during such period, Buyer and Seller are
unable to reach such agreement, they shall promptly thereafter cause Ernst &
Young (the "Accounting Referee") to review this Agreement and the disputed
items or amounts for the purpose of calculating Closing Adjustments (it
being understood that in making such calculation, the Accounting Referee
shall be functioning as an expert and not as an arbitrator). In making such
calculation, the Accounting Referee shall consider only those items or
amounts in the Closing Statement and Seller's calculation of Closing
Adjustments as to which Buyer has disagreed. The Accounting Referee shall
deliver to Buyer and Seller, as promptly as practicable (but in any case no
later than thirty (30) days from the date of engagement of the Accounting
Referee), a report setting forth such calculation. Such report shall be
final and binding upon Buyer and Seller. The cost of such review and report
shall be borne equally by Buyer and Seller.
d. Buyer and Seller shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Closing
Statement and the calculation of Closing Adjustments and in the conduct of
the review referred to in this Section 1.7, including, without limitation,
the making available to the extent necessary of books, records, work papers
and personnel.
e. The Closing Adjustments remaining due, as finally determined by
the process described in Section 1.7c, shall be paid within three (3) days
of calculation by
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wire transfer. The amount of any payment to be made pursuant to this Section
1.7e shall bear interest from and including the thirteenth day after the
Closing Date to but excluding the date of payment at a rate per annum equal
to the rate of interest = published from time to time by The Wall Street
Journal as the "prime rate" at large U.S. money center banks during the
period from the thirteenth day after the Closing Date to the date of
payment. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of
three hundred sixty five (365) days and the actual number of days elapsed.
1.8 Purchase Price Allocation. The Buyer and Seller agree to allocate
the aggregate purchase price among the purchased assets hereunder for all
purposes (including financial accounting and tax purposes) as in accordance with
the Allocation Schedule attached hereto as Exhibit 1.8. Buyer and Seller shall
each report the federal, state and local income and other tax consequences of
the transactions contemplated by this Agreement in a manner consistent with such
allocation, including, without limitation, the preparation and filing of Form
8594 (or any successor form or successor provision of any future tax law) under
Section 1060 of the Internal Revenue Code of 1986, as amended, with their
respective federal income tax returns for the taxable year that includes the
Closing Date, and neither Buyer nor Seller will take any position inconsistent
with such allocation unless otherwise required by applicable law.
II. CLOSING.
2.1 Closing Date. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place on January 9, 2004, or such
earlier or later date as may be mutually agreeable and set by the parties (the
"Closing Date"). The Closing shall be conducted by mail and deemed held at the
offices of Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A. Hackensack, New Jersey,
at a time to be set by the parties. At the Closing, all actions taken and all
documents delivered will be deemed to have been taken and delivered
contemporaneously and no action will be taken nor any documents deemed delivered
until all actions have been taken and all documents have been delivered.
2.2 Closing Deliveries by Seller. At the Closing, as a condition to the
Closing for Buyer, Seller shall transfer and assign all of the properties and
assets to be sold hereunder and shall deliver to Buyer a General Xxxx of Sale
(as set forth in Exhibit 2.2.1), an Assignment of Customer Leases (as set forth
in Exhibit 2.2.2), the Special and General Warranty Deeds (as set forth in
Exhibit 2.2.3), an Assignment of Real Property Leases (as set forth in Exhibit
2.2.4), vehicle titles and such other appropriate instruments of transfer and
physical possession as shall, in the reasonable opinion of counsel for Buyer, be
effective to vest in Buyer good and marketable title to said properties and
assets, including, but not limited to, releases of all outstanding security
interests in the properties and assets being transferred (other than the
Permitted Liens). Seller shall prepare a customer list based solely on its
readily available computer files of all customers who have purchased inventory
from the Locations during the fifteen (15) months preceding the Closing
("Customer List") and, at the Closing, transfer possession of such Customer
List, accounts receivable records and all other records concerning the
Operations at the Locations,
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including, without limitation, all customer records at the Locations. Seller may
retain historical records compiled at its corporate office.
2.3 Delivery and Payment by Buyer. At the Closing, Buyer will wire
transfer: (i) to an account designated by Seller funds in the amount of
$21,000,000 and (ii) to the U.S. Bank ("Escrow Agent") funds in the amount of
$2,000,000 and will deliver to Seller resale exemption certificates in the form
set forth in Exhibit 2.3a. Within three business days following the final
calculation of the Purchased Accounts Receivable, the Propane Inventory, the
Appliance Inventory, and the Prorations, and the Seller's and Buyer's execution
of the final Closing Statement (substantially in the form of Exhibit 2.3
attached hereto) evidencing their agreement to the calculation of such amounts,
Buyer will wire transfer to Seller the amount due pursuant to Section 1.3b
(Propane Inventory), Section 1.3c (Purchased Accounts Receivable) and Section
1.3d (Appliance Inventory), less any credits due Buyer under Section 1.5
(Prorations) or otherwise. On the first anniversary date of the Closing, Escrow
Agent shall wire transfer to the Seller the amount of $2,000,000, less any
amount that is not subject to disbursement or is payable to Buyer pursuant to
the Escrow Agreement.
2.4 Further Assurances. Without further consideration, Seller or Buyer,
as the case may be, will at any time, and from time to time, execute and deliver
such further instruments of transfer or assignment and take such other action as
Buyer or Seller, as the case may be, reasonably may request to give effect to
the transactions contemplated by the terms of this Agreement.
2.5 Procedures Pending Closing. Between the date of this Agreement and
the Closing Date:
a. Access. Seller will give to Buyer and Buyer's representatives
reasonable access during normal business hours to Seller's properties,
books, records, and personnel files related solely to the Operations, and
will allow such persons to make copies (at Buyer's expense) of all of such
documents and all such financial and operating data and information as any
such person shall reasonably request from time to time, provided, that no
such access shall be requested or required to be given at any time or in any
manner which interferes with the normal conduct of Seller's business. All
such documents, data, and other materials are confidential and Buyer shall
not release them to anyone except its employees and agents, and then only
for the purposes of this transaction; provided, however, that any such
documents, data, or other materials shall not be deemed confidential for
purposes of this paragraph to the extent that the same (1) is a part of the
public domain at the time of disclosure, (2) subsequently becomes a part of
the public domain by publication or otherwise through no fault of Buyer or
its representatives, (3) may be shown by Buyer to have been contained in a
writing in its possession at the time of disclosure, which information had
not been wrongfully acquired, directly or indirectly, from Seller and Buyer
is not under an obligation of confidentiality with respect thereto, or (4)
is subsequently disclosed to Buyer by a third party not in violation of any
rights of, or obligations to, Seller. Such examination and investigation by
Buyer shall not operate as a waiver of, or limit in any way, the warranties
and representations of Seller hereunder. If for any reason the transactions
contemplated by
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this Agreement are not consummated, then upon Seller's written request Buyer
shall return to Seller (and not thereafter use in its own business or
otherwise, or disclose the contents of) all documents, data and other
materials respecting Seller's business furnished to or obtained by Buyer or
its representatives from Seller or its representatives.
b. Conduct of Business. Without the prior written consent of Buyer
and solely with respect to the Operations:
(1) Seller will not sell or otherwise dispose of, or purchase
or acquire any assets at the Locations in any manner, except in the
ordinary course of business;
(2) Seller will not make, accrue, or become liable in any way
for any bonus, profit sharing, pension or incentive compensation
payments to any employee of Seller other than in conformity with
arrangements existing on or before November 24, 2003;
(3) Seller will not make or enter into any material agreement
providing for any change in rates of wages or salaries or employment
benefits or term or duration of employment of any employee of Seller;
(4) Seller will carry on its business in the same manner as
heretofore conducted and will not take any action or enter into any
contracts other than in conformity with prior practice in the ordinary
and regular course of business as heretofore conducted; and
(5) Seller will use commercial good faith to maintain and
preserve the Operations, consistent with past practice..
2.6 Verification of Tanks. During the period commencing on the Closing
Date and ending June 30, 2004 (the "Verification Period"), Buyer shall use
commercially reasonable efforts to locate and verify (a) the quantity and sizes
of the tanks and cylinders as listed on Exhibit 1.1b (b) ownership of the tanks
and cylinders, and (c) proper identification (i.e., data plates) with respect to
the tanks and cylinders. At the end of the Verification Period, Buyer shall
submit to Seller a report (x) of all tanks and cylinders that cannot be located
and/or verified by Buyer, (y) with respect to which ownership is being contested
by a customer or other third party and (z) that do not have proper
identification as required by applicable laws or regulations, in each case,
within the Verification Period (the "Verification Report"). If Seller is unable
to resolve any claim by Buyer with respect to a tank or cylinder included in the
Verification Report within the thirty (30) day period following the Seller's
receipt of the Verification Report, Seller shall, at its option, (1) pay to
Buyer the replacement value of such tanks and cylinders in accordance with the
replacement costs set forth on Exhibit 2.6 or (2) provide Buyer with replacement
tanks and cylinders, which shall be equivalent in size, in good condition and
otherwise in accordance with Exhibit 1.1b. In the event that Seller pays the
replacement value or replaces an unverified or missing tank or cylinder, Seller
shall be assigned all of Buyer's
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ownership interest in the unverified or missing tank or cylinder, and Buyer
shall notify Seller if such unverified or missing tank is located.
2.7 Closing Date Receipts. Provided the Closing occurs, the proceeds
resulting from the Operations conducted on the Closing Date shall accrue to the
benefit of and be deemed to be the property of Buyer. This Section does not
affect in any way the liabilities of Seller referenced in Section 1.4a.
III. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of Seller. Seller represents,
warrants and agrees to and with Buyer as follows:
a. Organizational Status. SP is a limited partnership, and SSS is
a corporation, both duly organized, validly existing and in good standing
under the laws of the state of Delaware and have full power and authority to
carry on their business as presently conducted and to own and operate their
assets, properties and business. SP and SSS are qualified to do business and
are in good standing under the laws of the states of Texas, Oklahoma,
Missouri and Kansas. Seller has full power and authority to execute this
Agreement and carry out its obligations hereunder.
b. Financial Information. Seller has delivered to Buyer copies of
certain information (including financial information, operational data and
sales information), copies of which are attached as Exhibit 3.1b hereto,
relating to Seller's Operations ("Financial Information"). The Financial
Information represents fairly the financial position of the Operations as of
the dates thereof and the information included in the Financial Information
presents fairly and accurately the financial and operational results of the
Operations for the periods referred to therein, all prepared on a basis
consistent with prior periods.
c. Changes During Preceding Year. Except as set forth on Exhibit
3.1c, during the year preceding the date hereof, with respect to the
Operations there has not been:
(1) Any material change, financial or otherwise, in the
condition of the properties, assets, liabilities, prospects or
business, except normal and usual changes in the ordinary course of
business or changes disclosed in the Financial Information, which have
not in the aggregate been adverse to the Operations at the Locations;
(2) Any damage, destruction or loss (whether or not covered
by insurance) suffered by Seller in an aggregate amount exceeding
$10,000;
(3) Any sale, lease, abandonment or other disposition by
Seller of any interest in any real property, or, except in the ordinary
course of business,
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in any machinery, equipment or other operating property, or any lease
or sale of any propane tanks owned by Seller;
(4) Any other occurrence, event or condition which materially
and adversely affects or, to Seller's knowledge, is likely to
materially and adversely affect the Operations; or
(5) Any material and adverse change in the Financial
Information.
d. Personal Property. Except for the leased assets listed on
Exhibit 3.1d (including the real property leases and vehicle leases), Seller
owns and has good and marketable title to the personal and intangible
property to be sold to Buyer hereunder including, without limitation, the
propane tanks, equipment, vehicles and other assets described on Exhibit
1.1b. Except for the Permitted Liens, none of the personal property and
assets to be transferred to Buyer pursuant to this Agreement at the Closing
are subject to any contract of sale, encumbrance, security agreement, lien
or charge of any kind or character. Except for the leased assets, no person,
corporation or firm other than Seller has any ownership interest in the
personal property being transferred pursuant to this Agreement. All
appliances and other equipment installed by Seller, and the propane tanks,
cylinders, regulators, vehicles and other equipment transferred hereunder,
are in working order and are in compliance with all applicable safety
regulations. The assets listed on Exhibit 1.1b attached hereto along with
the leased assets are sufficient to enable Buyer to continue to conduct the
Operations in the ordinary course of business, consistent with past
practices. "Permitted Lien" means, as to real property, Permitted Real
Estate Liens, and, as to all other property, (i) any lien for taxes not yet
due or delinquent or being contested in good faith by appropriate
proceedings, (ii) any statutory lien arising in the ordinary course of
business by operation of law with respect to a liability that is not yet due
or delinquent, AND (iii) any other lien which individually or in the
aggregate with other such liens could not reasonably be expected to
materially impair the use or value of the asset to which it attaches.
e. Real Property. The Special and General Warranty Deeds attached
hereto as Exhibit 2.2.3 set forth a complete legal description of each
parcel of real property owned by Seller and used in the Operations. Seller
has good and marketable title in fee simple absolute to such real property
and to the improvements thereon, free and clear of all liens, security
interests, leases, encumbrances, easements, covenants, restrictions, defects
or other burdens, except for Permitted Real Estate Liens. The transfer of
such real property will pass to Buyer good and marketable fee simple title
and full entitlement to the use and enjoyment of each parcel being
transferred. Seller does not own, and the real property described in the
General Warranty Deeds attached hereto as Exhibit 2.2.3 does not contain,
any Underground Storage Tanks. "Permitted Real Estate Liens" means (i)
statutory liens for current taxes or other governmental charges with respect
to the real property (x) not yet due and payable or (y) with respect to
which Seller retains all liability and the amount or validity of which is
being contested in good faith by appropriate proceedings by Seller; (ii)
mechanics', carriers', workers', repairers' and
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similar statutory liens arising or incurred in the ordinary course of
business for amounts which are not delinquent and which are not,
individually or in the aggregate, material to the business Locations; (iii)
zoning, entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the real property which are
not violated by the current use and operation of the real property; and (iv)
covenants, conditions, restrictions, easements and other matters or record
affecting title to the real property which do no materially impair the use
or value of the affected parcel of real property for the purposes for which
it is used in connection with the applicable Location.
f. Other Contracts and Encumbrances. Except as disclosed on
Exhibit 3.1f, Seller is not a party to any written or oral (i) contract not
made in the ordinary course of business, (ii) franchise agreement, (iii)
chattel mortgage, equipment lease, security agreement or conditional sales
contract or (iv) partnership, joint venture or other business agreement with
respect to the Operations, in each case where the consideration to be paid
or received by Seller exceeds $5,000 or which cannot be terminated by Seller
upon notice of thirty (30) or fewer days without penalty. Seller has
performed all obligations and is not in default in any respect under any
contract to which Seller is a party. Attached hereto as Exhibit 3.1f is a
listing of, and Seller has provided complete copies of, all contracts and
agreements to which Seller is a party for the future sale by Seller of
propane for a fixed or capped price, or in volumes in excess of 5,000
gallons per year.
g. Taxes. Seller has filed all income tax returns and all real and
personal property tax returns required to have been filed, and has paid all
taxes as shown on said returns, all assessments received by it and all
amounts due any governmental authority to the extent that such taxes,
assessments and amounts have become due.
h. Restrictions. Seller is not subject to any restriction
contained in any charter, articles of incorporation, bylaw, mortgage, lien,
lease, agreement, instrument, order, judgment or decree, which would prevent
the consummation of the transactions contemplated by this Agreement.
i. Easements. Seller has all easements and rights of ingress and
egress necessary for the conduct of the Operations, for placement of its
propane tanks, and all easements for utilities and services necessary for
the conduct of the Operations on the real property to be sold to or leased
by Buyer pursuant to this Agreement. The transfer, conveyance and assignment
by Seller to Buyer at the Closing of the property and rights described in
Section 1.1 will pass to Buyer good and marketable title to such property,
together with all necessary easements and rights of ingress and egress
associated therewith. Seller expressly represents and warrants that it will
execute and deliver any additional deeds, instruments or documents required
to convey to Buyer all easements necessary for the lawful conduct of the
Operations at the Locations (including, without limitation, placement of all
equipment and tanks on Seller's property) in the manner in which such
Operations were conducted on the last business day before the Closing.
11
j. Litigation. Except as set forth on Exhibit 3.1j, Seller is not
engaged in, or to its knowledge threatened with, any legal action or other
proceeding before any court or administrative agency, has not been charged
with, and to its knowledge is not under investigation with respect to any
charge concerning, any material violation of any provision of federal, state
or local law or administrative regulation in respect of or affecting either
the property and assets conveyed hereunder or the Operations.
k. Employees. Seller has not made any representations to its
employees with respect to any undertaking or commitment by Buyer to continue
the employment of such employees. None of Seller's employees at the
Locations is or has been subject to any union, labor or collective
bargaining agreement nor have there been any demands for such an agreement.
Seller has no liability under the Employee Retirement Income Security Act,
the National Labor Relations Act, the Fair Labor Standards Act, the Civil
Rights Act, the Equal Employment Opportunity Act or any other social,
employment or labor law affecting Seller which is not being retained by
Seller as Seller's obligation. Seller has no accrued liability to any
employee for wages, fringe benefits or otherwise which is not being retained
by Seller as Seller's obligation.
l. Environment.
(1) With respect to the Operations and except as disclosed on
Exhibit 3.1l, Seller is in full compliance with all aspects of each (i)
federal, state or local law relating to pollution or the environment,
including but not limited to laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes (collectively
"Hazardous Wastes") into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transportation or handling of Hazardous Wastes (collectively
"Environmental Laws"); and (ii) regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved pursuant to or in connection with any
Environmental Laws (which collectively with Environmental Laws are
hereinafter referred to as "Environmental Laws and Regulations"). With
respect to the Operations and except as disclosed on Exhibit 3.1l,
there is no civil, criminal, administrative or other action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter pending, received or, to the knowledge of
Seller, threatened against Seller relating in any way to Environmental
Laws and Regulations.
(2) With respect to the Operations and except as disclosed on
Exhibit 3.1l, during the period of ownership, leasehold interest or
operation by Seller or its affiliates with respect to such parcel of
Transferred Property there have occurred no and there are no
anticipated, releases or substantial threats of a release of any
Hazardous Wastes, from or onto any Transferred Property (as defined
below) which release or threatened release is or may be subject to
regulation under Environmental Laws and Regulations. Without limiting
the
12
foregoing, no asbestos fibers or materials or polychlorinated biphenyls
(PCBs) are on or in any Transferred Property. None of the Transferred
Property has previously been used, is now being used or is contemplated
to be used for the generation, transportation, treatment, storage,
abatement or disposal of any Hazardous Wastes subject to regulation
under Environmental Laws and Regulations. "Transferred Property" means
any Location which (i) is currently owned, leased or utilized by Seller
and (ii) which Buyer is purchasing, leasing, assuming the existing
lease or otherwise obtaining the right to utilize such property in
connection with the transactions contemplated by this Agreement.
(3) With respect to each parcel of Transferred Property and
except as disclosed on Exhibit 3.1l, during the period of ownership,
leasehold interest or operation by Seller or its affiliates with
respect to such parcel of Transferred Property, there have occurred no
conditions, circumstances, activities, practices, incidents, actions or
plans which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation, based
on or related to the manufacture, generation, ownership, possession,
distribution, use, treatment, abatement, storage, disposal,
transportation or handling, or the emission, discharge, release or
threatened release into the environment of any Hazardous Wastes. For
purposes of this Section 3.1, the affiliates of Seller shall be defined
as: Suburban Propane, a division of Quantum Chemical Corporation;
Quantum Chemical Corporation; Xxxxxx PLC; and Millennium
Petrochemicals, Inc.
m. Licenses and Permits. Seller and its employees have all
material licenses, permits and approvals required under federal law, the
laws of the states of Texas, Oklahoma, Missouri and Kansas, or any local or
regional governmental authority to conduct the business of Seller at all
Locations. Seller will cooperate with Buyer in transferring to Buyer or its
employees those licenses, permits or approvals which may be transferable.
Seller has no knowledge of any facts or occurrences which constitute
violations of any licensing, permit or other laws to which Seller, its
employees or the Operations are subject.
n. Compliance with Law and Applicable Government Regulations. With
respect to the Operations, Seller has not previously failed nor is currently
failing to comply with any applicable federal, state or local law or
regulation, including without limitation, any energy, antitrust, health and
safety or Environmental Laws and Regulations. With respect to the
Operations, there are no proceedings of record, no proceedings are pending
or to Seller's knowledge threatened, nor has Seller received any written
notice regarding any violation of any law, ordinance, requirement, order,
rule or regulation enforced by any governmental agency or other entity
(federal, state or local) claiming jurisdiction over Seller, including
without limitation, any requirement of OSHA or any pollution and/or
environmental control agency.
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o. Insurance. Seller maintains in effect insurance covering
Seller's Operations and any liabilities relating thereto in an amount
believed adequate by Seller, and such insurance coverage shall be maintained
by Seller through the Closing Date. The products liability and personal
injury insurance maintained by Seller has been on an "occurrence" basis
during the six-year period prior to the Closing Date. Seller has previously
delivered to Buyer a true and complete schedule of its general liability
insurance policies.
p. Authorization. This Agreement and all documents and actions
required to consummate the transactions contemplated hereby have been duly
approved and authorized by the SP's Board of Supervisors and SSS's Board of
Directors.
q. Brokerage Fees and Expenses. Seller has no liability for
brokerage fees or other commissions relative to this Agreement, or to the
transactions contemplated hereby.
r. Exhibits Correct. The exhibits and schedules attached hereto
are true, complete and accurate as of the date hereof and Seller shall
notify Buyer of all changes in such information in writing at the Closing so
that such exhibits and schedules will be true, complete and correct as of
the Closing Date.
s. Warranties Correct, Etc. The representations and warranties of
Seller contained in this Agreement or otherwise made in writing in
connection with the transactions contemplated by this Agreement shall be
true on and as of the Closing Date with the same effect (except as to
transactions contemplated by this Agreement) as though such representations
and warranties had been made on and as of such date, and each and all of the
agreements and conditions to be performed or observed by Seller on or before
the Closing Date pursuant to the terms hereof shall have been duly performed
or observed.
t. Disclaimer of other Representations and Warranties. Except as
expressly set forth in this Section 3.1 or otherwise provided in this
Agreement, Seller makes no representation or warranty, express or implied,
at law or in equity, including any representation or warranty in respect of
the Operations or the assets transferred or the liabilities assumed, or the
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE of the acquired assets
and any such other representations or warranties are hereby expressly
disclaimed.
3.2 Representations and Warranties of Buyer. Buyer represents, warrants
and agrees to and with Seller as follows:
a. Organizational Status. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the state
of Delaware and has the power and authority to own its property and to carry
on its business as
14
presently conducted. Buyer has full power and authority to execute this
Agreement and carry out its obligations hereunder.
b. Restrictions. Buyer is not subject to any restriction contained
in any charter, partnership agreement, mortgage, lien, lease, agreement,
instrument, order, judgment or decree, which would prevent the consummation
of the transactions contemplated by this Agreement.
c. Authorization. This Agreement and the transactions contemplated
hereby have been duly approved and authorized by all necessary corporate
action of the Board of Directors of Buyer's general partner.
d. Brokerage Fees and Expenses. Buyer shall indemnify Seller and
hold Seller harmless against and in respect of any claim for brokerage fees
or other commissions incurred or owing by Buyer relative to this Agreement,
or to the transactions contemplated hereby, and also in respect of all
expenses of any character incurred by Buyer in connection with this
Agreement or such transactions.
e. Investigation by Buyer. Buyer acknowledges that except for
Seller's express representations and warranties set forth in this Agreement,
Buyer is relying upon Buyer's own independent investigation of the assets
acquired hereunder and liabilities assumed in entering into this Agreement.
In entering into this Agreement, Buyer has relied solely upon the express
representations, warranties and covenants of Seller set forth in Section 3
hereof and Buyer's own investigation and analysis. Buyer further
acknowledges, that except as expressly set forth in the representations and
warranties in Section 3 there are NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
f. Warranties Correct, Etc. The representations and warranties of
Buyer contained in this Agreement or otherwise made in writing in connection
with the transactions contemplated by this Agreement shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.
15
IV. CONDITIONS TO CLOSING.
4.1 Conditions to Buyer's Obligations. If, for any reason whatsoever,
the following conditions are not satisfied (or waived by Buyer) by the Closing,
then Buyer, at its option, may terminate this Agreement without further
obligation to Seller (other than for confidentiality, return of Seller
confidential information, liability for any prior breach of the Agreement and
those other provisions of this Agreement intended to survive):
a. Documents. Seller shall have furnished Buyer with all
documents, certificates and other instruments required to be furnished by
Seller pursuant to the terms of this Agreement, including without
limitation, the Customer List, vehicle titles, and certified copies of
resolutions duly adopted by the SP's Board of Supervisors and SSS's Board of
Directors authorizing all action necessary to enable Seller to comply with
the terms of this Agreement.
b. No Actions or Proceedings. No material action or proceeding
against Seller which is adverse to the Operations shall have been instituted
or, to the knowledge of Seller, threatened before a court or other
governmental body or instituted or threatened by any public authority.
c. Title Insurance. Buyer shall obtain a commitment for title
insurance evidencing the obligation of a title insurer to insure
merchantable fee simple title in Buyer subject to Permitted Real Estate
Liens, as of the Closing Date, to the real property described in the deeds
attached hereto as Exhibit 2.2.3, and Buyer's reasonable objections to the
state of title shown on such commitment shall have been satisfied.
d. No Material Adverse Change. No material adverse change in the
amount or condition of the properties, assets, liabilities or business of
Seller with respect to the Operations at the Locations, taken as a whole,
shall have occurred during the period between the date of execution hereof
and the Closing.
e. Representations, Warranties, Etc. The representations and
warranties of Seller hereunder shall be true when made and shall be true in
all material respects at the Closing Date as though such representation and
warranty had been made on the Closing Date, and Seller shall have
substantially performed all covenants and agreements on its part required to
be performed, and shall not be in default under any of the provisions of
this Agreement, at the Closing Date.
4.2 Conditions to Seller's Obligations. If, for any reason whatsoever,
the following conditions are not satisfied (or waived by Seller) by the Closing,
then Seller, at its option, may terminate this Agreement with no further
obligation to Buyer (other than for confidentiality, liability for any prior
breach of the Agreement and those other provisions of this Agreement intended to
survive):
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a. Deliveries. Buyer shall have furnished Seller with all
documents, payments, certificates and other instruments required to be
furnished to Seller by Buyer pursuant to the terms of this Agreement.
b. Representations, Warranties, Etc. Each and every representation
and warranty of Buyer hereunder shall be true in all material respects at
the Closing Date as though such representation and warranty had been made on
the Closing Date, and Buyer shall have substantially performed all covenants
and agreements on its part required to be performed, and shall not be in
default under any of the provisions of this Agreement, at the Closing Date.
V. FURTHER AGREEMENTS.
5.1 Survival of Representations and Warranties; Indemnity.
a. Warranty Survival. All of the representations and warranties of
the Seller contained in Sections 3.1b, 3.1c, 3.1d, 3.1e, 3.1f, 3.1h, 3.1i,
3.1j, 3.1k, 3.1m, 3.1n, 3.1o, 3.1q, 3.1r, and 3.1s above shall survive the
Closing Date and continue in full force and effect for a period of eighteen
(18) months thereafter. All of the representations and warranties of the
Seller contained in Section 3.1g above shall survive the Closing Date and
continue in full force and effect for a period of five (5) years thereafter.
All of the representations and warranties of Seller contained in Section
3.1l above shall survive the Closing Date and continue in full force and
effect for a period of three (3) years thereafter. All of the covenants and
the other representations and warranties of the parties contained in this
Agreement shall survive the Closing Date and continue in full force and
effect forever thereafter (subject to any applicable statutes of
limitations).
b. Seller Indemnification. Seller will indemnify and hold Buyer,
Buyer's directors, officers and employees harmless against any loss, cost,
liability or expense (including, without limitation, costs and expenses of
litigation and reasonable attorneys' fees) (hereinafter "Damages") incurred
or suffered by Buyer or any affiliate of Buyer as a result of (i) the
incorrectness or breach of any of the representations, warranties, covenants
or agreements of Seller contained in this Agreement or given on the Closing
Date or (ii) the assertion against Buyer of any liability of Seller;
provided, however, that the Seller shall not have any obligation to
indemnify the Buyer from and against any Damages resulting from, arising out
of, relating to, in the nature of, or caused by (A) the breach of any such
representation or warranty listed above until the Buyer has Damages by
reason of all such breaches in excess of a $250,000 aggregate threshold (at
which point the Seller will be obligated to indemnify the Buyer from and
against all such Damages relating back to the first dollar), or for Damages
in excess of a maximum aggregate of $5,000,000, or (B) the breach of the
representations or any violation of Environmental Laws and Regulations
except caused by the Operations or, with respect to the Transferred
Properties, which occurred during the period of ownership, leasehold
interest or operation by Seller or its affiliates. Without limiting the
remedies available to Buyer to enforce the indemnities provided by this
Section 5.1 and subject to the Escrow
17
Agreement, Seller agrees that the amount of any Damages suffered by Buyer
may be credited and set off against any sums of money at any time or from
time to time payable or deliverable by Buyer or its successors to Seller.
Individual Damages of less than $5,000 shall not be subject to
indemnification and shall not count toward the aggregate threshold or the
maximum aggregate. Seller shall have a further duty to indemnify Buyer for
Damages incurred or suffered by Buyer arising out of or with respect to the
environmental conditions listed on Exhibit 3.1l (to the extent the event or
condition arose or occurred during the period of ownership, leasehold
interest or operation by Seller or its affiliates) and the litigation listed
on Exhibit 3.1j, subject to the aggregate threshold, maximum aggregate and
individual Damages threshold set forth above.
c. Buyer's Indemnification. Buyer will indemnify and hold Seller
and Seller's directors, officers, and employees harmless against any Damages
incurred or suffered by Seller or affiliate of Seller as a result of or
arising from (i) the incorrectness or breach of any of the representations,
warranties, covenants and agreements of Buyer contained in this Agreement or
given on the Closing Date; or (ii) any Assumed Liability.
5.2 Indemnification Procedures
a. In the event that any legal proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any third person in
respect of which payment may be sought under Section 5.1 hereof, the
indemnified party shall reasonably and promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice (which must be reasonably satisfactory to the
indemnified party), and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Damages indemnified against
hereunder. If the indemnifying party elects to defend against, negotiate,
settle or otherwise deal with any Claim which relates to any Damages
indemnified against hereunder, it shall within five (5) days (or sooner, if
the nature of the Claim so requires) notify the indemnified party of its
intent to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, fails to notify the indemnified party
of its election as herein provided or contests its obligation to indemnify
the indemnified party for such Damages under this Agreement, the indemnified
party may defend against, negotiate, settle or otherwise deal with such
Claim. If the indemnified party defends any Claim, then the indemnifying
party shall reimburse the indemnified party for the costs and expenses
(including reasonable attorneys' and other professionals' fees and expenses)
of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified party
and the indemnifying party that would make such separate
18
representation advisable; and provided, further, that the indemnifying party
shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The parties agree to
cooperate fully with each other in connection with the defense, negotiation
or settlement of any such Claim.
b. In the case of a Claim brought by a third party, the party to
be indemnified shall be reimbursed for any legal or other expenses
reasonably incurred by the party to be indemnified in connection with
investigating or defending any such Claim as such expenses are incurred. In
the case of a Claim brought by Seller against Buyer, or by Buyer against
Seller, after any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal there from, or a
settlement shall have been consummated, or Buyer and Seller shall have
arrived at a mutually binding agreement with respect to such a Claim, the
indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with
respect to such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party by wire transfer
of immediately available funds within 10 business days after the date of
such notice.
c. No settlement of any Claim may be made by the indemnifying
party without the consent of the indemnified party unless such settlement
releases the indemnified party from any liability in respect thereof and
does not include any admission of culpability on the part of the indemnified
party.
d. In the event that an indemnified party should have a claim
against the indemnifying party hereunder which does not involve a claim or
demand being asserted by a third party, the indemnified party shall send a
written notice with respect to such claim to the indemnifying party. The
indemnifying party shall have 10 days from the date such notice is delivered
during which to notify the indemnified party in writing of any good faith
objections it has to the indemnified party's notice or claims for
indemnification, setting forth in reasonable detail each of the indemnifying
party's objections thereto. If the indemnifying party does deliver such
written notice of objection within such 10-day period, the indemnifying
party and the indemnified party shall attempt in good faith to resolve any
such dispute within 10 days of the delivery by the indemnifying party of
such written notice of objection.
5.3 Indemnification as Sole Remedy. Except in connection with fraud or
specific performance, Buyer acknowledges that the indemnification provisions
contained in this Section 5 constitute Buyer's sole and exclusive remedy with
respect to any claims or disputes arising out of or in connection with the
Agreement.
5.4 Covenants Against Competition.
a. Seller agrees that Seller, and Seller's affiliates and officers
will not (i) for the period commencing on the Closing Date and ending five
years after such date, reveal, make known or use, directly or indirectly,
any confidential business information
19
(including without limitation, customer lists and records) sold to Buyer
pursuant to this Agreement, nor (ii) for the period commencing on the
Closing Date and ending three years after such date, within a 50-mile radius
of the location of any of Seller's Operations in Texas, Oklahoma, Missouri
or Kansas, directly or indirectly (whether as owner, director, shareholder
(with the exception of beneficial ownership by such persons or entities,
individually and in the aggregate, of not more than five percent of the
outstanding equity securities of any publicly held corporation), employee,
officer, agent, broker, dealer, representative or in any other capacity),
(a) solicit, market or provide or attempt to market or provide to any person
or entity either propane, tanks, cylinders or any other products or services
associated with the Operations, (b) divert or attempt to divert from Buyer
any business with any customer or account with which Seller had any contact
or association, which was under the supervision of Seller, or the identity
of which was learned by Seller as a result of conducting the Operations, (c)
induce any salesperson, distributor, manufacturer, representative, agent,
jobber or other person transacting business with Buyer at the Locations to
terminate his, her or its relationship or association with Buyer, or to
represent, distribute or sell services or products in competition with the
services or products of Buyer, (d) induce or cause any employee of Buyer at
the Locations to leave the employ of Buyer or (e) lend money to, invest in
or otherwise assist in any manner any individual or entity engaged in
activities described in (a), (b), (c) or (d) above. Notwithstanding the
preceding, the restrictions of this Section 5.4 shall not be construed in
any manner to prohibit or restrict the Seller, from directly or indirectly
(i) acquiring all or substantially all of the assets or capital stock of any
of the entities listed on Exhibit 5.4, or their successors or assigns.
Recognizing the irreparable nature of the injury which would be caused Buyer
by violation of this Section 5.4, Seller agrees that in addition to and
without limitation of any rights which Buyer might have hereunder, any
violation of this Section 5.4 shall be the proper subject matter for
immediate injunctive relief and Buyer shall have the right to offset any
Damages it might have incurred by reason of any breach hereof against any
sums of money at any time deliverable by Buyer or its successors to Seller
subject to the Escrow Agreement.
b. If any covenant, undertaking or other provision of Section 5.4a
hereof shall be determined to be invalid, illegal or incapable of being
enforced by reason of any rule of law or public policy, all other covenants,
undertakings and provisions of such Section shall nevertheless remain in
full force and effect and shall be deemed separable and divisible from all
other covenants, undertakings and provisions thereof and none shall be
deemed to be dependent upon any other unless so expressed herein. If any
provision of such Section relating to time periods or geographical area is
found by a court of competent jurisdiction to exceed the maximum time period
or geographical area such court deems reasonable and enforceable, the
parties agree that such court may enforce such provisions for the maximum
time period and/or geographical area as the court finds to be reasonable.
5.5 Retained Access. Following the Closing, to the extent reasonably
required for any bona fide business purpose, Buyer will allow, and will use its
reasonable efforts to cause its affiliates to allow, Seller (and Seller's
agents, representatives and affiliates) access to all business records
concerning the Operations, the acquired assets hereunder or the Assumed
20
Liabilities which relate to the period prior to the Closing Date and will permit
such person to make copies of same. Such access will be granted upon reasonable
advance notice, during normal business hours, and in such a manner so as not to
interfere unreasonably with the operations of the Business. Without limiting the
generality of the foregoing, if either Buyer or Seller or any of its affiliates
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand in connection with (a) any
transaction contemplated hereby, or (b) any fact, situation, circumstances,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing relating to
the Operations, then the other party will cooperate, and use its reasonable
efforts to cause its affiliates to cooperate, with the contesting or defending
party and its counsel in such contest or defense, make available such other
party's and its affiliates' personnel and provide such testimony and access to
books and records as are reasonably requested in connection with such contest or
defense, all at the contesting or defending party's expense.
5.6 Taxes. Buyer shall be solely responsible for the payment of any
sales or transfer or other taxes as may be required to paid in connection with
the transactions provided for herein, together with all documentary, filing and
recording taxes, fees and charges associated with the transactions contemplated
by this Agreement. All personal property and other taxes and assessments based
upon or measured by the ownership of property, or the receipt of proceeds
therefrom, shall be prorated between Seller and Buyer as of the Closing Date;
provided, however, that each party shall be responsible for its own income and
franchise taxes. Seller may require Buyer to remit any and all applicable taxes
to Seller; under these circumstances, Seller shall be responsible for remitting
said taxes to the appropriate taxing authorities.
5.7 Employees. Except as set forth on Exhibit 5.7, Buyer agrees to
extend offers of employment to all employees of Seller who shall be working as
of the Closing Date at any of the Locations and who meet Buyer's employment
qualifications and criteria, and shall employ such employees who accept such
offers ("Hired Employees") at no less than the same wage or salary rate in
effect and on other terms, conditions, and benefits as are provided to similarly
situated employees of the Buyer.
5.8 Name Change; Use of Seller's Name. Buyer shall remove the name and
logo of Seller from the assets at the Locations within a commercially reasonable
time, but in no event later than ninety (90) days after the Closing for primary
locations, and at secondary locations and customer locations six (6) months
after the Closing, at Buyer's sole cost and expense. From and after the Closing,
Buyer shall use only Buyer's own name when taking action in respect of the
Operations or in connection with any Location. Buyer shall not state, represent
or imply that Buyer is connected in any manner with, or acting for or on behalf
of, Seller or any of Seller's affiliates. Buyer shall not (a) use the marks
and/or names of, or otherwise refer to Seller or any of Seller's affiliates or
(b) use any names and/or marks similar to the names and/or marks of any Seller
or any of Seller's affiliates.
5.9 Confidential Information. The parties acknowledge and agree that
the Confidentiality Agreements dated February 26, 2003 and April 4, 2003 between
Seller as "Discloser" and Buyer as "Disclosee" remain in full force and effect
and shall survive the
21
termination of this Agreement, but shall not survive the Closing, and if Closing
occurs, shall be null and void thereafter.
5.10 Public Announcements. All public announcements prior to and on the
Closing Date relating to this Agreement or the transactions contemplated hereby,
including announcements to employees, will be made only as may be agreed upon
jointly by the parties hereto; provided, however, that Buyer or Seller may make
any public disclosure it believes in good faith is required by applicable law or
stock exchange requirement (in which case the disclosing party will use its
reasonable best efforts to advise the other party prior to making the
disclosure)..
5.11 Notices. Any notice, request, instrument or other document to be
given hereunder shall be in writing and delivered personally or sent by
certified or registered mail, postage prepaid:
If to Buyer, addressed as follows:
Ferrellgas, L.P.
c/o Ferrellgas, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx. Vice President,
Corporate Development
with a copy to:
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Seller, addressed as follows:
Suburban Propane, L.P.
000 Xxxxx 00 Xxxx, X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
with a copy to:
Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A.
Court Plaza North
00 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
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or to such other address as any of the parties hereto may designate by notice
given as above provided. Any item sent by registered or certified mail, as above
provided, will be deemed given when deposited in the United States mails.
5.12 Risk of Loss. Seller shall bear the risk of loss or damage to the
properties and assets to be sold hereunder until the Closing.
5.13 Bulk Sales Law. Buyer waives compliance by Seller with the
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors of any jurisdiction that may otherwise be applicable
in connection with the transfer of the assets under this Agreement and in
consideration of such waiver, Seller agrees to indemnify Buyer and hold Buyer
harmless from and against any Damages arising out of or resulting from such
non-compliance.
5.14 Vehicle Leases. Seller shall negotiate a settlement of the vehicle
leases for all vehicles used in the Operations at the Locations and Buyer shall
then direct its vehicle leasing company to purchase of all such vehicles, at
which xxxx Xxxxxx shall arrange for its leasing company to provide title to such
vehicles as directed by Buyer. Buyer shall pay all transfer taxes relating to
such transaction. The parties acknowledge that the leased vehicles transactions
will not be consummated prior to Closing, and Seller shall make all leased
vehicles available for use by Buyer in conducting operations effective on the
Closing Date. In the event that the buyout of the leases owned by LeasePlan,
Donlen, Fleet Capital, Verizon, GE Capital, Emigrant and All First (with respect
to leased vehicles) are not executed at the time of the Closing, Buyer and
Seller agree as follows:
(a) Buyer may operate in the ordinary course of business, but
shall not remove from the Locations, the vehicles corresponding to those
leases until the buyout and purchase by Buyer's leasing company are executed
by all relevant parties; and
(b) Provided Buyer has diligently pursued good faith efforts to
complete the transactions contemplated by this Section, if a buyout for any
vehicle is not executed within sixty (60) days of the Closing Date, Seller
shall buyout the lease on any such vehicles and Buyer shall reimburse Seller
for the buyout amount, after which Seller shall transfer title to said
vehicles. Each party shall pay its own transfer taxes in that event. In the
event that Seller, after good faith efforts, is unable to transfer title to
any vehicle to Buyer pursuant to the terms above, Buyer may purchase a new
vehicle of a similar make, model and type in which case Seller shall pay to
Buyer the difference between the cost of the replacement vehicle and the
buyout value of the existing vehicle.
(c) At all times that Seller is a guarantor or otherwise remains
potentially liable in any manner with respect to any motor vehicle lease
(each, a "Vehicle Lease") set forth on Exhibit 3.1d: (i) Buyer shall
faithfully abide by, perform and discharge, at its sole cost and expense,
each and every obligation, covenant and agreement under such Vehicle Lease
arising after the Closing Date and shall do so prior
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to the expiration of any applicable grace or cure period. Buyer hereby
agrees to indemnify and hold Seller harmless from and against any and all
loss, cost, expense (including reasonable attorneys' fees), damage and
liability incurred by Seller as a result of claims brought against Seller
with respect to the performance of all of the terms, covenants and
conditions of such Vehicle Lease to be performed from and after the Closing
Date. (ii) Buyer shall not modify, amend or alter the terms or provisions of
such Vehicle Lease, and otherwise shall not take any action that could, in
either case, reasonably be expected to increase the aggregate liability of
Buyer or Seller thereunder. (iii) Buyer shall not (A) sell, encumber,
assign, transfer or otherwise dispose of such Vehicle Lease, the motor
vehicles in respect thereof (in respect of any such Lease, the "Leased Motor
Vehicle") or Buyer's interest therein, whether effected voluntarily or
involuntarily, directly or indirectly, by operation of law or otherwise, or
(B) consent to or enter into any contract, agreement or arrangement to take
any action prohibited by clause (A) above. (iv) Buyer shall faithfully
maintain any and all insurance requirements set forth by the Lessor of the
Leased Motor Vehicles.
(d) If Buyer shall fail to perform any covenant contained in any
Vehicle Lease and does not cure said failure within ten days of receipt of
written notice of said failure, (i) Seller may (but shall have no obligation
to) make advances to perform the same on Buyer's behalf, and all sums so
advanced shall be repaid by Buyer immediately upon the demand of Seller,
(ii) Buyer shall transfer such Vehicle Lease and surrender possession of the
related Leased Motor Vehicle to Seller immediately upon the demand of Seller
and (iii) Seller shall be authorized, absent voluntary surrender by Buyer,
to assume the obligations of Buyer under the applicable Vehicle Lease and to
take possession of the Leased Motor Vehicle subject to such Lease. To secure
the prompt and complete performance and observance of the covenants and
other obligations of Buyer above, Buyer hereby grants, conveys, pledges,
hypothecates and transfers to Seller a security interest in and to all of
Buyer's right, title and interest in and to the Vehicle Leases and the
Leased Motor Vehicles.
5.15 Tax Disclosures. Notwithstanding any other agreement among the
parties or anything else herein to the contrary, each party to this Agreement
(and any employee, representative or other agent thereof) may disclose to any
and all persons, without limitation of any kind, the U.S. federal income tax
treatment and any tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, that no party (or any employee, representative or other
agent thereof) shall disclose pursuant to this section (i) any information that
is not relevant to an understanding of the U.S. federal income tax treatment of
the transactions contemplated by this Agreement, including the identity of any
party to this Agreement (or its employees, representatives or agents) or other
information that could lead any person to determine such identity or (ii) any
information to the extent such disclosure could result in a violation of any
federal or state securities laws; and provided further, that this section shall
not apply until the earliest of (a) the date of public announcement of
discussions relating to the transactions, (b) the date of public announcement of
the transactions, or (c) the date of execution of an agreement, with or without
consideration, to enter into the transactions.
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5.16 Miscellaneous. This Agreement, including the documents and
exhibits referred to herein, contains the entire understanding of the parties
hereto and supersedes all prior understandings, agreements or undertakings of
the parties with respect to the subject matter contained herein, and may be
amended only by a written instrument executed by all of the parties hereto.
Wherever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or declared invalid under applicable
law, such provision shall be void and of no effect and the remaining provisions
of this Agreement shall remain in full force and effect. This Agreement shall be
a contract made under, governed by and construed under, the laws of the state of
Delaware, except no doctrine of choice of law shall be used to apply any law
other than that of the state of Delaware. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors,
assigns and personal representatives; provided, however, that no assignment by
any party hereto of any right hereunder shall be made on or prior to the Closing
Date, and no assignment, by operation of law or otherwise, shall relieve any
party of its obligations hereunder. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
shall constitute together but one and the same instrument.
(SIGNATURES ON NEXT PAGE)
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase and
Noncompetition Agreement to be executed as of the day and year first above
written.
SELLER: BUYER:
SUBURBAN PROPANE, L.P. FERRELLGAS, L.P.
By: Ferrellgas, Inc., General Partner
By: /s/Xxxxxxx X. Xxxx, Xx. By: /s/Xxxxxxx X. Xxxxx, Xx.
----------------------- ------------------------
Senior Vice President, Senior Vice President, Corporate
Corporate Development Development
Fed. ID # 00-0000000 Fed. ID # 00-0000000
SUBURBAN SALES AND SERVICE, INC.
By: /s/Xxxxxxx X. Xxxx, Xx
----------------------
Fed. ID # 00-0000000
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