Exhibit 2.1
Execution
Version
BY AND AMONG
REGENCY GP ACQUIRER, L.P.
AND
AND
ETE GP ACQUIRER LLC
May 10, 2010
TABLE OF CONTENTS
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ARTICLE I |
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DEFINITIONS AND INTERPRETATIONS |
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1.1 Definitions |
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1.2 Interpretations |
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ARTICLE II |
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ACQUISITION OF THE ACQUIRED GP INTERESTS; CLOSING |
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2.1 Acquisition of the Acquired GP Interests |
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2.2 Time and Place of Closing |
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2.3 Deliveries and Actions at Closing |
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2.4 Pro Ration of Closing Quarterly Distribution |
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ARTICLE III |
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REPRESENTATIONS AND WARRANTIES OF SELLER |
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3.1 Organization; Qualification |
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3.2 Authority; Enforceability |
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3.3 Non-Contravention |
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3.4 Governmental Approvals |
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3.5 Capitalization |
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3.6 Ownership of Acquired GP Interests |
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3.7 Compliance with Law |
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3.8 Title to Properties and Assets |
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3.9 Rights-of-Way |
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3.10 Regency SEC Reports; Financial Statements; Operating Surplus |
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3.11 Absence of Certain Changes |
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3.12 Environmental Matters |
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3.13 Material Contracts |
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3.14 Legal Proceedings |
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3.15 Permits |
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3.16 Taxes |
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3.17 Employee Benefits; Employment and Labor Matters |
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3.18 Brokers’ Fee |
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3.19 Regulatory Matters; Compliance |
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3.20 Intellectual Property |
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3.21 Matters Relating to Acquisition of the Convertible Preferred Units |
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ARTICLE IV |
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4.1 Organization; Qualification |
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4.2 Authority; Enforceability; Valid Issuance |
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4.3 Non-Contravention |
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4.4 Governmental Approvals |
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Table of Contents
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4.5 Capitalization |
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4.6 Compliance with Law |
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4.7 Title to Properties and Assets |
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4.8 Rights-of-Way |
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4.9 ETE SEC Reports; Financial Statements; Operating Surplus |
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4.10 Absence of Certain Changes |
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4.11 Environmental Matters |
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4.12 Legal Proceedings |
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4.13 Permits |
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4.14 Taxes |
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4.15 Employee Benefits; Employment and Labor Matters |
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4.16 Brokers’ Fee |
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4.17 Regulatory Matters; Compliance |
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4.18 Intellectual Property |
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4.19 Matters Relating to Acquisition of the Acquired GP Interests |
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ARTICLE V |
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COVENANTS OF THE PARTIES |
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5.1 Conduct of Business |
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5.2 Notice of Certain Events |
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5.3 Access to Information |
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5.4 Governmental Approvals |
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5.5 Expenses |
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5.6 Further Assurances |
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5.7 Public Statements |
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5.8 Convertible Preferred Units |
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5.9 No Solicitation |
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5.10 Confidential Information |
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5.11 No Hire |
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5.12 Tax Matters |
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5.13 Books and Records; Financial Statements; Litigation Support |
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5.14 Commitment Regarding Indemnification Provisions; D&O Insurance Continuation |
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5.15 GECC Names and Marks |
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ARTICLE VI |
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CONDITIONS TO CLOSING |
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6.1 Conditions to Obligations of Each Party |
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6.2 Conditions to Obligations of the Buyer Parties |
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6.3 Conditions to Obligations of Seller |
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ARTICLE VII |
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TERMINATION RIGHTS |
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7.1 Termination Rights |
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Table of Contents
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7.2 Effect of Termination |
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ARTICLE VIII |
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8.1 Indemnification by Seller |
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8.2 Indemnification by the Buyer Parties |
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8.3 Limitations and Other Indemnity Claim Matters |
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8.4 Indemnification Procedures |
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8.5 No Reliance |
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ARTICLE IX |
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GOVERNING LAW AND CONSENT TO JURISDICTION |
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9.1 Governing Law |
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9.2 Consent to Jurisdiction |
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9.3 Waiver of Jury Trial |
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ARTICLE X |
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GENERAL PROVISIONS |
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10.1 Amendment and Modification |
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10.2 Waiver of Compliance; Consents |
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10.3 Notices |
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10.4 Assignment |
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10.5 Third Party Beneficiaries |
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10.6 Entire Agreement |
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10.7 Severability |
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10.8 Representation by Counsel |
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10.9 Disclosure Schedules |
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10.10 Facsimiles; Counterparts |
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iii
Exhibits
Exhibit A—Definitions
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Schedules |
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Schedule 2.3(a)(iv)
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Required Consents (Seller Parties) |
Schedule 2.3(a)(v)
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Amendments to Regency Credit Agreement |
Schedule 2.3(b)(v)
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Required Consents (Buyer Parties) |
Schedule 3.3
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Non-Contravention (Seller Parties) |
Schedule 3.4
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Governmental Approvals |
Schedule 3.5(a)
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Capitalization |
Schedule 3.11
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Absence of Certain Changes |
Schedule 3.12
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Environmental Matters |
Schedule 3.13
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Material Contracts |
Schedule 3.14
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Legal Proceedings |
Schedule 3.17
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Employee Matters |
Schedule 3.19
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Regulatory Status |
Schedule 4.3
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Non-Contravention (Buyer Parties) |
Schedule 4.4
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Governmental Approvals |
Schedule 4.5
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Employee Benefit Plan |
Schedule 4.10
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Absence of Certain Changes |
Schedule 4.11
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Environmental Matters |
Schedule 4.12
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Legal Proceedings |
Schedule 4.15(b)
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Employee Matters |
Schedule 5.1
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Conduct of Regency Entities’ Business |
Schedule 5.11
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No Hire |
Schedule 5.14
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Continuing D&O Insurance Policies |
Schedule 6.1(a)
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Approvals |
Schedule 6.1(c)
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Required Consents |
Schedule 6.2(d)
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Amendment to Regency Credit Agreement |
Schedule 6.2(e)
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Amendment to ETE Credit Agreement |
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Annex A
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Form of Amendment No. 3 to the ETE Partnership Agreement |
Annex B
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Form of Assignment of Interests |
Annex C
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Form of Opinion of Xxxxxx & Xxxxxx L.L.P. |
Annex D
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Form of Registration Rights Agreement |
Annex E
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Government Policies |
ETE and Buyer are sometimes referred to individually in this Agreement as a “Buyer Party” and
are sometimes collectively referred to in this Agreement as the “Buyer Parties.”
Each of the parties to this Agreement is sometimes referred to individually in this Agreement
as a “Party” and all of the parties to this Agreement are sometimes collectively referred to in
this Agreement as the “Parties.”
WHEREAS, pursuant to that certain Redemption and Exchange Agreement dated as of the date
hereof (the “ETP Redemption Agreement”), by and between ETE and Energy Transfer Partners, L.P., a
Delaware limited partnership (“
ETP”), subject to the terms and conditions contained therein, ETP
has agreed to redeem (the “
Redemption and Exchange”) certain limited partner interests of ETP held
by ETE in exchange for (a) all of the outstanding membership interests in ETC Midcontinent Express
Pipeline III, L.L.C., a
Delaware limited liability company (“
ETC III”) and (b) an option to acquire
all of the outstanding membership interests in ETC Midcontinent Express Pipeline II, L.L.C., a
Delaware limited liability company (“
ETC II”);
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Seller 3,000,000 convertible preferred units of ETE (the “
Convertible Preferred Units”),
having the terms set forth in Amendment No. 3 to the Third Amended and Restated Agreement of
Limited Partnership of
Energy Transfer Equity, L.P. (the “
Third Amendment”) a form of which is
attached hereto as
Annex A, all on the terms and subject to the conditions set forth
herein.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. Capitalized terms used in this Agreement but not defined in the body of this
Agreement shall have the meanings ascribed to them in Exhibit A. Capitalized terms defined
in the body of this Agreement are listed in Exhibit A with reference to the location of the
definitions of such terms in the body of this Agreement.
1.2 Interpretations. In this Agreement, unless a clear contrary intention appears: (a) the
singular includes the plural and vice versa; (b) reference to a Person includes such Person’s
successors and assigns but, in the case of a Party, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity; (c) reference to any gender includes each other gender; (d)
references to any Exhibit, Schedule, Section, Article, Annex, subsection and other subdivision
refer to the corresponding Exhibits, Schedules, Sections, Articles, Annexes, subsections and other
subdivisions of this Agreement unless expressly provided otherwise; (e) references in any Section
or Article or definition to any clause means such clause of such Section, Article or definition;
(f) “hereunder,” “hereof,” “hereto” and words of similar import are references to this Agreement as
a whole and not to any particular provision of this Agreement; (g) the word “or” is not exclusive,
and the word “including” (in its various forms) means “including without limitation”; (h) each
accounting term not otherwise defined in this Agreement has the meaning commonly applied to it in
accordance with GAAP; (i) references to “days” are to calendar days; and (j) all references to
money refer to the lawful currency of the United States. The Table of Contents and the Article and
Section titles and headings in this Agreement are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.
ARTICLE II
ACQUISITION OF THE ACQUIRED GP INTERESTS; CLOSING
2.1 Acquisition of the Acquired GP Interests. Upon the terms and subject to the satisfaction
or due waiver of the conditions contained in this Agreement, Seller shall sell, transfer and
deliver to Buyer, and Buyer shall purchase from Seller the Acquired GP Interests. In exchange for
the Acquired GP Interests, at the Closing, ETE shall issue and deliver to Seller the Convertible
Preferred Units.
2.2
Time and Place of Closing. The closing of the transactions contemplated by this Agreement
(the “
Closing”) will take place at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000 on the second Business Day after all of the conditions set forth in
Article VI (other than those conditions which by their terms are only capable of being
satisfied at the Closing, but subject to the satisfaction or due waiver of those conditions) have
been satisfied or waived by the Party or Parties entitled to waive such conditions, unless another
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time, date and place are agreed to in writing by the Parties. The date of the Closing is
referred to in this Agreement as the “Closing Date.” The Closing will be deemed effective as of
12:01 a.m., Houston, Texas time, on the Closing Date.
(a) At the Closing, Seller shall deliver, or shall cause to be delivered, the following to the
Buyer Parties:
(i) Assignment of Interests. A counterpart of an assignment (the “Assignment
of Interests”), a form of which is attached hereto as Annex B, evidencing the
contribution, assignment, transfer and delivery to Buyer of the Acquired GP Interests, duly
executed by Seller;
(ii) FIRPTA Certificate. A certificate of Seller in the form specified in
Treasury Regulation Section 1.1445-2(b)(2)(iv) that Seller is not a “foreign person” within
the meaning of Section 1445 of the Code, duly executed by Seller;
(iii) Closing Certificate. The certificate contemplated by Section
6.2(c);
(iv) Required Consents. The consents, approvals and waivers set forth on
Schedule 2.3(a)(iv);
(v) Amendment to Regency Credit Agreement. A duly executed amended Regency
Credit Agreement, which address the matters set forth on Schedule 2.3(a)(v); and
(vi) Registration Rights Agreement. A counterpart of a registration rights
agreement, a form of which attached hereto as Annex D (the “Registration Rights
Agreement”) duly executed by Seller.
(b) At the Closing, the Buyer Parties shall deliver, or shall cause to be delivered, the
following to Seller:
(i) Preferred Unit Certificate. Original unit certificates representing the
Convertible Preferred Units;
(ii) Assignment of Interests. A counterpart of the Assignment of Interests
duly executed by Buyer;
(iii) Third Amendment. A copy of the Third Amendment duly executed by the
general partner of ETE, as general partner of ETE and as attorney-in-fact for all limited
partners pursuant to the powers of attorney granted pursuant to Section 2.6 of the ETE
Partnership Agreement, a form of which is attached hereto as Annex A;
(iv) Closing Certificate. The certificate contemplated by Section
6.3(c);
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(v) Required Consents. The consents, approvals and waivers set forth on
Schedule 2.3(b)(v);
(vi) MEP Contribution. A duly executed copy of the MEP Contribution Agreement;
(vii) ETP Redemption Agreement. A duly executed copy of the ETP Redemption
Agreement;
(viii) Legal Opinion. An opinion from Xxxxxx & Xxxxxx L.L.P., counsel to Buyer
Parties, dated as of the Closing Date and reasonably satisfactory to Seller, a form of which
is attached hereto as Annex C;
(ix) Registration Rights Agreement. A counterpart of the Registration Rights
Agreement, duly executed by ETE; and
(x) Governance Policies. A copy of the Governance Policies adopted by the
general partner of ETE, a form of which is attached hereto as Annex E.
(a) Within three (3) Business Days after Buyer receives its regular quarterly cash
distribution in respect of the quarter in which the Closing occurs, Buyer shall pay to Seller an
amount in cash equal to the Pro Rata Distribution Amount. The “Pro Rata Distribution Amount” shall
equal the product of (a) $1,574,073.87 multiplied by (b) a fraction, the numerator of which is the
number of days in the quarter preceding the date of the Closing Date, plus the Closing Date, and
the denominator of which is the number of days in such quarter.
(b) In the event that the Closing Date occurs on or before the record date relating to the
distribution for the quarter immediately prior to the quarter in which the Closing Date occurs (the
“Preceding Quarter”), in addition to any amounts to be paid by Buyer to Seller pursuant to
Section 2.4(a), Buyer shall pay to Seller 100% of the applicable cash distribution for the
Regency GP LP Interest for the Preceding Quarter. The payment shall be made no later than three
(3) Business Days following the receipt by Buyer of such distribution from Regency.
Seller hereby represents and warrants to the Buyer Parties as follows:
3.1
Organization; Qualification. Seller and each Regency Entity are entities duly formed,
validly existing and in good standing under the laws of the State of
Delaware and have all
requisite corporate, limited partnership or limited liability company power and authority to own,
lease and operate their properties and to carry on their business as it is now being conducted, and
are duly qualified, registered or licensed to do business as a foreign entity and are in good
standing in each jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where the failure to be
so duly qualified, registered or licensed and in good standing would not reasonably
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be expected to have a Regency Material Adverse Effect or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or to materially impair Seller’s
ability to perform its obligations under this Agreement. Seller has made available to the Buyer
Parties true and complete copies of the Organizational Documents of each Regency Entity, as in
effect on the Execution Date.
3.2 Authority; Enforceability.
(a) Seller has the requisite corporate, partnership or limited liability company power and
authority to execute and deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery by Seller of this Agreement and the consummation by
Seller of the transactions contemplated by this Agreement have been duly and validly authorized by
Seller, and no other corporate, partnership or limited liability company proceedings on the part of
Seller is necessary to authorize this Agreement or to consummate the transactions contemplated by
this Agreement.
(b) This Agreement has been duly executed and delivered by Seller, and, assuming the due
authorization, execution and delivery by the Buyer Parties, this Agreement constitutes the valid
and binding agreement of Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws relating to or affecting creditors’ rights generally
and subject, as to enforceability, to legal principles of general applicability governing the
availability of equitable remedies, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether such enforceability is considered in a proceeding in equity
or at law) (collectively, “Creditors’ Rights”).
3.3 Non-Contravention. Except as set forth on Schedule 3.3 of the Seller Disclosure
Schedule, the execution, delivery and performance of this Agreement and the consummation by Seller
of the transactions contemplated by this Agreement does not and will not: (a) result in any breach
of any provision of the Organizational Documents of Seller or any Regency Entity; (b) constitute a
default (or an event that with notice or passage of time or both would give rise to a default)
under, or give rise to any right of termination, cancellation, amendment or acceleration (with or
without the giving of notice, or the passage of time or both) under any of the terms, conditions or
provisions of any Contract to which Seller or any Regency Entity is a party or by which any
property or asset of Seller or any Regency Entity is bound or affected; or (c) assuming compliance
with the matters referred to in Section 3.4, violate any Law to which Seller or any Regency
Entity is subject or by which any of Seller’s or any Regency Entity’s properties or assets is
bound; or (d) constitute (with or without the giving of notice or the passage of time or both) an
event which would result in the creation of any Lien (other than Permitted Liens) on any asset of
any Regency Entity, except, in the cases of clauses (b), (c) and (d) for such defaults or rights of
termination, cancellation, amendment, acceleration, violations or Liens, as would not reasonably be
expected to have a Regency Material Adverse Effect or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or to materially impair Seller’s
ability to perform their obligations under this Agreement.
3.4 Governmental Approvals. Except as set forth on Schedule 3.4 of the Seller
Disclosure Schedule, no declaration, filing or registration with, or notice to, or authorization,
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consent or approval of, any Governmental Authority is necessary for the consummation by Seller
of the transactions contemplated by this Agreement, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not obtained or made, would
not reasonably be expected to have a Regency Material Adverse Effect or to prevent or materially
delay the consummation of the transactions contemplated by this Agreement or to materially impair
Seller’s ability to perform their obligations under this Agreement.
(a) Schedule 3.5(a) of the Seller Disclosure Schedule sets forth a correct and
complete description of the following: (i) all of the issued and outstanding equity interests in
each of the Regency GP Entities; and (ii) the record owners of each of the outstanding equity
interests in each of the Regency GP Entities. Except as set forth on Schedule 3.5(a) of
the Seller Disclosure Schedule, there are no other outstanding equity interests of any Regency GP
Entity. All of the issued and outstanding equity interests in each of the Regency GP Entities have
been duly authorized, validly issued and fully paid and are nonassessable (except as such
nonassessability may be affected by Sections 17-303 and 17-607 of the Delaware LP Act or Section
18-607 of the Delaware LLC Act) and have not been issued in violation of any preemptive rights,
rights of first refusal or other similar rights of any Person. All of the issued and outstanding
equity interests in each of the Regency GP Entities are owned by the Persons set forth on
Schedule 3.5(a) of the Seller Disclosure Schedule named as owning such interests free and
clear of all Liens other than (A) transfer restrictions imposed by federal and state securities
laws and (B) any transfer restrictions contained in the Organizational Documents of the Regency GP
Entities.
(b) At the Closing, (i) the Acquired GP Interests will constitute 100% of the issued and
outstanding membership interests in RGPLLC and a 99.999% limited partner interest in RGPLP and (ii)
RGPLLC will own a 0.001% general partner interest in, and serve as the sole general partner of,
RGPLP.
(c) There are no preemptive rights or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements,
calls, subscription agreements, commitments or rights of any kind that obligate any of the Regency
GP Entities to issue or sell any equity interests or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any
equity interests in any of the Regency GP Entities, and no securities or obligations evidencing
such rights are authorized, issued or outstanding.
(d) No Regency GP Entity has outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for securities having
the right to vote) with the holders of equity interests in any Regency GP Entity on any matter.
(e) RGPLP is the sole general partner of Regency with a 2.0% general partner interest in
Regency (the “Regency GP Interest”) and owns 100% of the Regency Incentive Distribution Rights
(collectively with the Regency GP Interest, the “Regency GP LP Interests”). The Regency GP LP
Interests are owned by RGPLP free and clear of all Liens, other than (i) transfer
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restrictions imposed by federal and state securities laws and (ii) any transfer restrictions
contained in the Regency Partnership Agreement.
(f) Except as set forth in Schedule 3.5(a) of the Seller Disclosure Schedule or
Section 3.5(e), no Regency GP Entity owns any equity interest in any other Person.
(g) As of the Execution Date: (i) 93,191,602 Regency Common Units were issued and outstanding,
(ii) 4,371,586 Series A Cumulative Convertible Preferred Units of Regency (“Regency Series A
Units”), which Regency Series A Units are convertible into Regency Common Units at an initial
conversion price of $18.30 per unit, subject to adjustment, were issued and outstanding and (iii)
1,155,129 Regency Common Units were available for issuance under Regency’s employee benefit plans,
of which 297,651 Regency Common Units were subject to issuance upon exercise of outstanding Regency
options, 267,135 Regency Common Units were subject to issuance upon the vesting of outstanding
phantom units and 355,609 Regency Common Units were subject to issuance upon the vesting of
outstanding un-vested restricted units.
(h) All of the limited partner interests in Regency are duly authorized and validly issued in
accordance with the Organizational Documents of Regency, and are fully paid (to the extent required
under the Organizational Documents of Regency) and nonassessable (except as nonassessability may be
affected by Sections 17-303 and 17-607 of the Delaware LP Act) and were not issued in violation of
any preemptive rights, rights of first refusal or other similar rights of any Person.
(i) Except as set forth in the Organizational Documents of Regency and except as otherwise
provided in Section 3.5(g), there are no preemptive rights or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, subscription agreements, commitments or rights of any kind
that obligate any of the Regency Entities to issue or sell any equity interests of Regency or any
securities or obligations convertible or exchangeable into or exercisable for, or giving any Person
a right to subscribe for or acquire, any equity interests in Regency, and no securities or
obligations evidencing such rights are authorized, issued or outstanding.
(j) Except for the Regency Series A Units, none of the Regency Entities has outstanding any
bonds, debentures, notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with the holders of equity
interests in Regency on any matter.
(a) Upon the consummation of the transactions contemplated by this Agreement, Seller will
assign, convey, transfer and deliver to Buyer good and valid title to the Acquired GP Interests
free and clear of all Liens other than (i) any transfer restrictions imposed by federal and state
securities laws, (ii) any transfer restrictions contained in the Organizational Documents of
Regency GP Acquirer and (iii) any Liens on the Acquired GP Interests as a result of actions by the
Buyer Parties.
7
(b) Seller is not a party to any agreements, arrangements or commitments obligating Seller to
grant, deliver or sell, or cause to be granted, delivered or sold, the Acquired GP Interests, by
sale, lease, license or otherwise, other than this Agreement.
(c) There are no voting trusts, proxies or other agreements or understandings to which Seller
is bound with respect to the voting of the Acquired GP Interests.
3.7
Compliance with Law. Except as to specific matters disclosed in the Regency SEC Documents
filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding any
disclosures included in any “risk factor” section of such Regency SEC Documents or any other
disclosures in such Regency SEC Documents to the extent they are predictive or forward looking and
general in nature), and except for Environmental Laws, Laws requiring the obtaining or maintenance
of a Permit, Tax matters, Laws relating to employee benefits, employment and labor matters, and
Laws relating to regulatory and compliance matters, which are the subject of
Sections 3.12,
3.15,
3.16,
3.17, and
3.18, respectively, and except as to matters
that would not reasonably be expected to have a Regency Material Adverse Effect, (a) each Regency
Entity is in compliance with all applicable Laws, (b) none of Seller, or, to the Knowledge of
Seller any Regency Entity, has received written notice of any violation of any applicable Law, and
(c) to the Knowledge of Seller, none of the Regency Entities is under investigation by any
Governmental Authority for potential non-compliance with any Law.
3.8
Title to Properties and Assets. To the Knowledge of Seller, except as to matters that
would not reasonably be expected to have a Regency Material Adverse Effect, each Regency Entity has
title to or rights or interests in its real property and personal property, free and clear of all
Liens (subject to Permitted Liens), sufficient to allow it to conduct its business as currently
being conducted.
3.9
Rights-of-Way. To the Knowledge of Seller, except as to matters that would not reasonably
be expected to have a Regency Material Adverse Effect, (a) each Regency Entity has such
Rights-of-Way from each Person as are necessary to use, own and operate each Regency Entity’s
assets in the manner such assets are currently used, owned and operated by each Regency Entity, (b)
each Regency Entity has fulfilled and performed all of its obligations with respect to such
Rights-of-Way and (c) no event has occurred that allows, or after the giving of notice or the
passage of time, or both, would allow, revocation or termination thereof or would result in any
impairment of the rights of the holder of any such Rights-of-Way.
(a) Regency has furnished or filed all reports, schedules, forms, statements and other
documents (including exhibits and other information incorporated therein) required to be furnished
or filed by Regency with the Securities and Exchange Commission (“SEC”) since January 1, 2009 (such
documents being collectively referred to as the “Regency SEC Documents”).
(b) Each Regency SEC Document (i) at the time filed, complied in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Regency
8
SEC Document and (ii) did not at the time it was filed (or if amended or superseded by a
filing or amendment prior to the Execution Date, then at the time of such filing or amendment)
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) Each of the financial statements of Regency or RGPLP included in the Regency SEC Documents
(“Regency Financial Statements”) complied at the time it was filed as to form in all material
respects with the applicable accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP, applied on a consistent basis
throughout the periods presented thereby and fairly present in all material respects the
consolidated financial position and operating results, equity and cash flows of Regency as of, and
for the periods ended on, the respective dates thereof, subject, however, in the case of unaudited
financial statements, to normal year-end audit adjustments and accruals and the absence of notes
and other textual disclosures as permitted by Form 10-Q of the SEC.
(d) To the Knowledge of Seller, none of the Regency Entities has any liability, whether
accrued, contingent, absolute or otherwise, except for (i) liabilities set forth on the
consolidated balance sheet of Regency dated as of March 31, 2010 or the notes thereto,
(ii) liabilities that have arisen since March 31, 2010 in the ordinary course of business, and
(iii) liabilities which would not reasonably be expected to have a Regency Material Adverse Effect.
(e) The Regency GP Entities do not have assets or liabilities other than in connection with
their direct or indirect ownership of the 2.0% general partner interest in Regency and the Regency
Incentive Distribution Rights.
(f) Seller does not have assets or liabilities other than in connection with its ownership of
the Acquired GP Interests and the relationships of the parties under its partnership agreement with
respect thereto.
(g) All distributions made by Regency since its initial public offering have been made from
Operating Surplus (as defined in the Regency Partnership Agreement) and in accordance with the
terms of the Regency Partnership Agreement.
3.11
Absence of Certain Changes. Except as to specific matters disclosed in the Regency SEC
Documents filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding
any disclosures included in any “risk factor” section of such Regency SEC Documents or any other
disclosures in such Regency SEC Documents to the extent they are predictive or forward looking and
general in nature), and except as set forth on
Schedule 3.11 of the Seller Disclosure
Schedule or as expressly contemplated by this Agreement, since December 31, 2009 (a) to the
Knowledge of Seller, the business of the Regency Entities has been conducted in the ordinary course
and in a manner consistent with past practice; and (b) there has not been (i) any event, occurrence
or development which has had, or would be reasonably expected to have, a Regency Material Adverse
Effect or (ii) to the Knowledge of Seller, the occurrence of any of the transactions or matters
described in
Section 5.1(b).
9
3.12
Environmental Matters. Except as to specific matters disclosed in the Regency SEC
Documents filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding
any disclosures included in any “risk factor” section of such Regency SEC Documents or any other
disclosures in such Regency SEC Documents to the extent they are predictive or forward looking and
general in nature), and except for matters set forth on
Schedule 3.12 of the Seller
Disclosure Schedule and except for matters that would not reasonably be expected to have a Regency
Material Adverse Effect:
(a) each of the Regency Entities is in compliance with all applicable Environmental Laws;
(b) each of the Regency Entities possesses all Permits required under Environmental Laws for
its operations as currently conducted and is in compliance with the terms of such Permits, and such
Permits are in full force and effect;
(c) none of the Regency Entities nor any of their properties or operations are subject to any
pending or, to the Knowledge of Seller, threatened Proceeding arising under any Environmental Law,
nor has any of the Regency Entities received any written and pending notice, order or complaint
from any Governmental Authority alleging a violation of or liability arising under any
Environmental Law; and
(d) to the Knowledge of Seller, there has been no Release of Hazardous Substances on, at,
under, to, or from any of the properties of the Regency Entities, or from or in connection with the
Regency Entities’ operations in a manner that would reasonably be expected to give rise to any
liability pursuant to any Environmental Law.
(a) Except as set forth on Schedule 3.13 of the Seller Disclosure Schedule or filed
with any Regency SEC Document (including incorporation by reference) filed with the SEC on or after
January 1, 2010 and prior to the date hereof, as of the Execution Date, to the Knowledge of Seller,
none of the Regency Entities is a party to or bound by any Contract that:
(i) is of a type that would be required to be included as an exhibit to a Registration
Statement on Form S-1 pursuant to Items 601(b)(2), (4), (9) or (10) of Regulation S-K of the
SEC if such a registration statement was filed by Regency on the Execution Date;
(ii) includes Seller or any Affiliate of Seller (other than Regency or its
Subsidiaries) as a counter party or third party beneficiary;
(iii) contains any provision or covenant which materially restricts any Regency Entity
or any Affiliate thereof from engaging in any lawful business activity or competing with any
Person;
(iv) (A) relates to the creation, incurrence, assumption, or guarantee of any
indebtedness for borrowed money by any Regency Entity or (B) creates a capitalized
10
lease obligation (except, in the cases of clauses (A) and (B), any such Contract with
an aggregate principal amount not exceeding $10,000,000);
(v) is in respect of the formation of any partnership or joint venture or otherwise
relates to the joint ownership or operation of the assets owned by any of the Regency
Entities involving assets or obligations in excess of $75,000,000;
(vi) includes the acquisition or sale of assets with a book value in excess of
$50,000,000 (whether by merger, sale of stock, sale of assets or otherwise);
(vii) any Contract or commitment that involves a sharing of profits, losses, costs or
liabilities by any Regency Entity with any other Person other than gas processing contracts;
or
(viii) otherwise involves the annual payment by or to any of the Regency Entities of
more than $10,000,000 and cannot be terminated by the Regency Entities on 90 days or less
notice without payment by the Regency Entities of any material penalty.
(b) Except as set forth on Schedule 3.13 of the Seller Disclosure Schedule, each Contract
required to be disclosed pursuant to Section 3.13(a) and each Contract to which any of the
Regency Entities is bound as of the Execution Date that relates to (A) the purchase of materials,
supplies, goods, services or other assets, (B) the purchase, sale, transporting, treatment,
gathering, processing or storing of, or gas compression services rendered in connection with,
natural gas, condensate or other liquid or gaseous hydrocarbons or the products therefrom, or the
provision of services related thereto or (C) the construction of capital assets, in the cases of
clauses (A), (B) and (C) that (i) provides for either (1) annual payments by or to any of the
Regency Entities in excess of $10,000,000 or (2) aggregate payments by or to any of the Regency
Entities in excess of $10,000,000 (collectively, the “Regency Material Contracts”) has been made
available to the Buyer Parties and to the Knowledge of Seller is a valid and binding obligation of
the applicable Regency Entity, and is in full force and effect and enforceable in accordance with
its terms against such Regency Entity and, to the Knowledge of Seller, the other parties thereto,
except, in each case, as enforcement may be limited by Creditors’ Rights.
(c) To the Knowledge of Seller, none of the Regency Entities nor any other party to any
Regency Material Contract is in default or breach in any material respect under the terms of any
Regency Material Contract and no event has occurred that with the giving of notice or the passage
of time or both would constitute a breach or default in any material respect by such Regency Entity
or, to the Knowledge of Seller, any other party to any Regency Material Contract, or would permit
termination, modification or acceleration under any Regency Material Contract.
3.14
Legal Proceedings. Except as to specific matters disclosed in the Regency SEC Documents
filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding any
disclosures included in any “risk factor” section of such Regency SEC Documents or any other
disclosures in such Regency SEC Documents to the extent they are predictive or forward looking and
general in nature), and other than with respect to Proceedings arising under Environmental Laws
which are the subject of
Section 3.12 or as is set forth on
Schedule 3.14 of
11
Seller Disclosure Schedule, there are no Proceedings pending or, to the Knowledge of Seller,
threatened against the Regency Entities, except such Proceedings as would not reasonably be
expected to have a Regency Material Adverse Effect or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or to materially impair Seller’s
ability to perform their obligations under this Agreement.
3.15
Permits. To the Knowledge of Seller, other than with respect to Permits issued pursuant
to or required under Environmental Laws which are the subject of
Section 3.12, the Regency
Entities have all Permits as are necessary to use, own and operate their assets in the manner such
assets are currently used, owned and operated by the Regency Entities, except where the failure to
have such Permits would not reasonably be expected to have a Regency Material Adverse Effect.
(a) All material Tax Returns required to be filed with respect to the Regency GP Entities or,
to the Knowledge of Seller, the other Regency Entities have been filed and all Tax Returns with
respect to the Regency GP Entities and, to the Knowledge of Seller, the other Regency Entities are
complete and correct in all material respects and all material Taxes due relating to the Regency GP
Entities and, to the Knowledge of Seller, the other Regency Entities have been paid in full.
Except as disclosed on Schedule 3.16 of Seller Disclosure Schedule, there is no claim
(other than claims being contested in good faith through appropriate proceedings and for which
adequate reserves have been made in accordance with GAAP) against any Regency GP Entity or, to the
Knowledge of Seller, any other Regency Entity for any material Taxes, and no material assessment,
deficiency, or adjustment has been asserted or proposed in writing with respect to any material
Taxes or material Tax Returns of or with respect to any Regency GP Entity or, to the Knowledge of
Seller, any other Regency Entity.
(b) Except as set forth on Schedule 3.16 of the Seller Disclosure Schedule, no
material Tax audits or administrative or judicial proceedings are being conducted or are pending
with respect to any Regency GP Entity or, to the Knowledge of Seller, any other Regency Entity.
(c) All material Taxes required to be withheld, collected or deposited by or with respect to
any Regency GP Entity or, to the Knowledge of Seller, any other Regency Entity have been timely
withheld, collected or deposited as the case may be, and to the extent required, have been paid to
the relevant taxing authority.
(d) There are no outstanding agreements or waivers extending the applicable statutory periods
of limitation for any material Tax of, or any material Taxes associated with the ownership or
operation of the assets of, any Regency GP Entity or, to the Knowledge of Seller, any other Regency
Entity.
(e) No Regency GP Entity nor, to the Knowledge of Seller, any other Regency Entity is a party
to any Tax sharing agreement.
(f) No Regency GP Entity nor, to the Knowledge of Seller, any other Regency Entity, has
engaged in a transaction that would be reportable by or with respect to any Regency Entity pursuant
to Treasury Regulation § 1.6011-4 or any predecessor thereto.
12
(g) Immediately prior to the consummation of the transactions contemplated by this Agreement,
each Regency GP Entity is an entity disregarded as separate from its owner for United States
federal income tax purposes and neither of the Regency GP Entities has elected to be treated as a
corporation for federal Tax purposes.
(h) Regency has not elected to be treated as a corporation for federal Tax purposes, and
Regency qualifies as a “publicly traded partnership” within the meaning of Section 7704(b) of the
Code and has met, and continues to meet, the “gross income requirements” (within the meaning of
Section 7704(c) of the Code) in each Tax year since its formation. Regency has filed a federal
income tax return that has in effect an election pursuant to Section 754 of the Code.
(a) Except as set forth on Schedule 3.17(a) of the Seller Disclosure Schedule or filed
with any Regency SEC Documents (including by incorporation by reference) filed with the SEC on or
after January 1, 2010 and prior to the date hereof, no Regency Entity, nor any ERISA Affiliate of
any Regency Entity, sponsors, maintains or contributes to, or has sponsored, maintained or
contributed to within six years prior to the Closing Date any of the following:
(i) any “employee benefit plan,” as such term is defined in Section 3(3) of ERISA
(including, but not limited to, employee benefit plans, such as foreign plans, which are not
subject to the provisions of ERISA, but excluding any multiemployer plan within the meaning
of Section 3(37) of ERISA or multiple employer plan within the meaning of Section 4063(a) of
ERISA); or
(ii) any material personnel policy, equity-based plans (including, but not limited to,
stock option plans, stock purchase plans, stock appreciation rights and phantom stock
plans), collective bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan or arrangements, change in control policies
or agreements, deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or understanding which is
not described in Section 3.17(a)(i) (collectively, along with any plan described in
Section 3.17(a)(i) above, the “Regency Benefit Plans”).
(b) True and correct and complete copies of each of the Regency Benefit Plans, related trusts,
insurance or group annuity contracts and each other funding or financing arrangement relating to
any Plan, including all amendments thereto, have been made available to the Buyer Parties and there
has been made available to the Buyer Parties, with respect to each Regency Benefit Plan required to
file such report and description, the most recent report on Form 5500 and the summary plan
description. Additionally, the most recent determination letter or opinion letter from the Internal
Revenue Service for each of the Regency Benefit Plans intended to be qualified under Section 401 of
the Code, and any outstanding determination letter application for such plans has been furnished.
13
(c) Except as disclosed on Schedule 3.17(c) of the Seller Disclosure Schedule and
except for matters that would not reasonably be expected to have a Regency Material Adverse Effect:
(i) each Regency Benefit Plan has been administered in compliance with its terms, the
applicable provisions of ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements;
(ii) there are no actions, suits or claims pending (other than routine claims for
benefits) or threatened, with respect to any Regency Benefit Plan and no Regency Benefit
Plan is under audit or is subject to an investigation by the Internal Revenue Service, the
Department of Labor or any other federal or state governmental agency nor is any such audit
or investigation pending;
(iii) no Regency Benefit Plan is subject to Title IV of ERISA;
(iv) all contributions and payments required to be made by any Regency Entity or an
ERISA Affiliate of any Regency Entity to or under each Regency Benefit Plan have been timely
made;
(v) as to any Regency Benefit Plan intended to be qualified under Section 401 of the
Code, there has been no termination or partial termination of such plan within the meaning
of Section 411(d)(3) of the Code; and
(vi) none of the Regency Entities or any of their ERISA Affiliates has any liability
with respect to any multiemployer plan within the meaning of Section 3(37) of ERISA or
multiple employer plan with the meaning of Section 4063(a) of ERISA.
(d) In connection with the consummation of the transaction contemplated by this Agreement, no
payments have or will be made under the Regency Benefit Plans which, in the aggregate, would result
in imposition of the sanctions imposed under Sections 280G and 4999 of the Code.
(e) No Regency Benefits Plan provides retiree medical or retiree life insurance benefits to
any person and neither the Regency Entities nor any ERISA Affiliate of a Regency Entity is
contractually or otherwise obligated (whether or not in writing) to provide any person with life
insurance or medical benefits upon retirement or termination of employment, other than as required
by the provisions of Section 601 through 608 of ERISA and Section 4980B of the Code. Additionally,
each Regency Benefits Plan which is an “employee welfare benefit plan,” as such term is defined in
Section 3(1) of ERISA, may be unilaterally amended or terminated in its entirety without liability
except as to benefits accrued thereunder prior to such amendment or termination.
(f) Except as would not reasonably be expected to have a Regency Material Adverse Effect, (a)
each of the Regency Entities is in compliance with all applicable labor and employment Laws
including, without limitation, all Laws, rules, regulations, orders, rulings, decrees, judgments
and awards relating to employment discrimination, payment of wages, overtime compensation,
immigration, occupational health and safety, and wrongful discharge;
14
(b) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by
or before any Governmental Authority, brought by or on behalf of any employee, prospective or
former employee or labor organization or other representative of the employees or of any
prospective or former employees of any of the Regency Entities is pending or threatened against any
of the Regency Entities, any present or former director or employee (including with respect to
alleged sexual harassment, unfair labor practices or discrimination); (c) no grievance is pending
or threatened against any of the Regency Entities; and (d) none of the Regency Entities is subject
to or otherwise bound by, any material consent decree, order, or agreement with, any Governmental
Authority relating to employees or former employees of any of the Regency Entities. To the
Knowledge of Seller, none of the Regency Entities is a signatory party to or otherwise subject to
any collective bargaining agreements, and none of the employees of the Regency Entities is
represented by a labor union; and there is no labor dispute, strike, work stoppage or other labor
trouble (including any organizational drive) against any of the Regency Entities pending or
threatened.
3.18
Brokers’ Fee. Except for the fee payable to Xxxxxx Xxxxxxx & Co. Incorporated which
shall be paid by Seller, no broker, investment banker, financial advisor or other Person is
entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.
(a) To the Knowledge of Seller, except as set forth on Schedule 3.19 of the Seller
Disclosure Schedule, there are no currently effective tariffs authorized and approved by the FERC
as of the Execution Date applicable to the Regency Entities, or currently pending material rate
filings, certificate applications, or other filings that relate to any of the Regency Entities made
with FERC prior to the Execution Date.
(b) The Regency Entities (i) have all necessary approvals from FERC to provide service to
customers pursuant to the Natural Gas Act and the Natural Gas Policy Act of 1978, as amended, and
(ii) have made all required FERC filings necessary to offer such service, except where the failure
to have any such approval or to have made any such filing would not reasonably be expected to have
a Regency Material Adverse Effect.
(c) Regency is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
3.20
Intellectual Property. To the Knowledge of Seller (a) the Regency Entities own or have
the right to use pursuant to license, sublicense, agreement or otherwise all material items of
Intellectual Property required in the operation of the business as presently conducted; (b) no
third party has asserted in writing delivered to the Regency Entities an unresolved claim that any
of the Regency Entities is infringing on the Intellectual Property of such third party and (c) no
third party is infringing on the Intellectual Property owned by the Regency Entities.
15
(a) Seller has such knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks of their investment in the Convertible Preferred Units
and is capable of bearing the economic risk of such investment. Seller is an “accredited investor”
as that term is defined in Rule 501 of Regulation D (without regard to Rule 501(a)(4)) promulgated
under the Securities Act. Seller is acquiring the Convertible Preferred Units for investment for
its own account and not with a view toward or for sale in connection with any distribution thereof,
or with any present intention of distributing or selling the Convertible Preferred Units. Seller
is not a party to any Contract or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to the Convertible Preferred
Units. Seller acknowledges and understands that (i) the acquisition of the Convertible Preferred
Units has not been registered under the Securities Act in reliance on an exemption therefrom and
(ii) that the Convertible Preferred Units will, upon their sale by Seller, be characterized as
“restricted securities” under state and federal securities laws. Seller agrees that the
Convertible Preferred Units may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of except pursuant to an effective registration statement under the
Securities Act or pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with other applicable state and federal securities laws.
(b) Seller has undertaken such investigation as they deemed necessary to enable them to make
an informed and intelligent decision with respect to the execution, delivery and performance of
this Agreement and the acquisition of the Convertible Preferred Units. Seller has had an
opportunity to ask questions and receive answers from the Buyer Parties regarding the terms and
conditions of the offering of the Convertible Preferred Units and the business, properties,
prospects, and financial condition of ETE. The foregoing, however, does not modify the
representations and warranties of the Buyer Parties in Article IV and such representations
and warranties constitute the sole and exclusive representations and warranties of the Buyer
Parties to Seller in connection with the transactions contemplated by this Agreement.
The Buyer Parties hereby jointly and severally represent and warrant to Seller as follows:
4.1 Organization; Qualification. Each of the Buyer Parties is an entity duly formed, validly
existing and in good standing under the laws of the state of Delaware and has all requisite
partnership or limited liability company power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and are duly qualified,
registered or licensed to do business as a foreign entity and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to be so duly
qualified, registered or licensed and in good standing would not reasonably be expected to have an
ETE Material Adverse Effect or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement or to materially impair the ability of the Buyer Parties to perform
their obligations under this Agreement. The Buyer Parties have made
16
available to Seller true and complete copies of the Organizational Documents of each Buyer
Party, as in effect on the Execution Date.
4.2 Authority; Enforceability; Valid Issuance.
(a) Each Buyer Party has the requisite partnership or limited liability company power and
authority to execute and deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery by the Buyer Parties of this Agreement and the
consummation by the Buyer Parties of the transactions contemplated by this Agreement have been duly
and validly authorized by the Buyer Parties, and no other partnership or limited liability company
proceedings on the part of the Buyer Parties are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement.
(b) This Agreement has been duly executed and delivered by the Buyer Parties, and, assuming
the due authorization, execution and delivery by Seller, this Agreement constitutes the valid and
binding agreement of the Buyer Parties, enforceable against the Buyer Parties in accordance with
its terms, except as such enforceability may be limited by Creditors’ Rights.
(c) The issuance of the Convertible Preferred Units and the ETE Common Units issuable upon
conversion of the Convertible Preferred Units have been duly authorized in accordance with the
Organizational Documents of ETE. The Convertible Preferred Units, when issued and delivered to
Seller in accordance with the terms of this Agreement, and the ETE Common Units issuable upon
conversion of the Convertible Preferred Units, when issued upon conversion of the Convertible
Preferred Units, in each case will be validly issued, fully paid (to the extent required under the
ETE Partnership Agreement), nonassessable (except to the extent nonassessability may be affected by
Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and free of any restrictions upon voting
or transfer thereof pursuant to the Organizational Documents of ETE or any Contract to which any of
the ETE Entities is a party or by which any property or asset of any such Person is bound or
affected. Upon issuance and delivery of the Convertible Preferred Units, Seller will be duly
admitted to ETE as an additional limited partner.
4.3 Non-Contravention. Except as set forth on Schedule 4.3 of the Buyers Disclosure
Schedule, the execution, delivery and performance of this Agreement and the consummation by the
Buyer Parties of the transactions contemplated by this Agreement does not and will not: (a) result
in any breach of any provision of the Organizational Documents of the Buyer Parties; (b) constitute
a default (or an event that with notice or passage of time or both would give rise to a default)
under, or give rise to any right of termination, cancellation, amendment or acceleration (with or
without the giving of notice, or the passage of time or both) under any of the terms, conditions or
provisions of any Contract to which any of the ETE Entities is a party or by which any property or
asset of any ETE Entity is bound or affected; (c) assuming compliance with the matters referred to
in Section 4.4, violate any Law to which any ETE Entity is subject or by which any of the
ETE Entities’ properties or assets is bound or (d) constitute (with or without the giving of notice
or the passage of time or both) an event which would result in the creation of any Lien (other than
Permitted Liens) on any asset of any ETE Entity, except, in the cases of clauses (b), (c) and (d),
for such defaults or rights of termination, cancellation, amendment, acceleration, violations or
Liens as would not reasonably be expected to have an ETE Material Adverse Effect or to prevent or
materially delay the consummation of the
17
transactions contemplated by this Agreement or to materially impair the Buyer Parties’ ability
to perform their obligations under this Agreement. Except as set forth on Schedule 4.3 of
the Buyers Disclosure Schedule, the ETE Entities are in material compliance with all Contracts
evidencing indebtedness, including the ETE Credit Agreement.
4.4 Governmental Approvals. Except as set forth on Schedule 4.4 of the Buyers
Disclosure Schedule, no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority is necessary for the consummation by the Buyer
Parties of the transactions contemplated by this Agreement, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not obtained or made, would
not reasonably be expected to have an ETE Material Adverse Effect or to prevent or materially delay
the consummation of the transactions contemplated by this Agreement or to materially impair the
Buyer Parties’ ability to perform their obligations under this Agreement.
4.5 Capitalization.
(a) As of the Execution Date: (i) 222,941,172 ETE Common Units were issued and outstanding and
(ii) 3,000,000 ETE Common Units were reserved for issuance under ETE’s employee benefit plans, of
which 0 ETE Common Units were subject to issuance upon exercise of outstanding ETE options and 0
ETE Common Units were subject to issuance upon the vesting of outstanding phantom units.
(b) All of the limited partner interests in ETE are duly authorized and validly issued in
accordance with the Organizational Documents of ETE, and are fully paid (to the extent required
under the Organizational Documents of ETE) and nonassessable (except as nonassessability may be
affected by Sections 17-303 and 17-607 of the Delaware LP Act) and were not issued in violation of
any preemptive rights, rights of first refusal or other similar rights of any Person.
(c) Except as set forth in the Organizational Documents of ETE and except as otherwise
provided in Section 4.5(a), there are no preemptive rights or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, subscription agreements, commitments or rights of any kind
that obligate ETE to issue or sell any equity interests of ETE or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for
or acquire, any equity interests in ETE, and no securities or obligations evidencing such rights
are authorized, issued or outstanding.
(d) ETE does not have any outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for securities having
the right to vote) with the holders of equity interests in ETE on any matter.
(e) L.E. GP, LLC, a Delaware limited liability company (“LEGPLLC”) is the sole general partner
of ETE with a 0.3% general partner interest in ETE (the “LEGP Interest”) as of the Execution Date.
The LEGP Interest has been duly authorized and validly issued in accordance with the ETE
Partnership Agreement and has not been issued in violation of any preemptive rights, rights of
first refusal or other similar rights of any Person. The LEGP Interest
18
is owned by LEGPLLC free and clear of all Liens, other than (i) transfer restrictions imposed
by federal and state securities laws and (ii) any transfer restrictions contained in the ETE
Partnership Agreement.
(f) As of the Execution Date, ETE owns 100% of the issued and outstanding membership interests
in ETP GP LLC. Such membership interests have been duly authorized and validly issued in
accordance with the Organizational Documents of ETP GP LLC and are fully paid (to the extent
required under the Organizational Documents of ETP GP LLC) and non-assessable (except as such
non-assessability may be affected by matters described in Sections 18-303 and 18-607 of the
Delaware LLC Act). ETE owns such membership interests free and clear of all Liens other than (i)
Liens arising under the ETE Credit Agreement, (ii) transfer restrictions imposed by federal and
state securities laws and (iii) any transfer restrictions contained in the Organizational Documents
of ETP GP LLC.
(g) As of the Execution Date, ETP GP LLC is the sole general partner of ETP GP LP, with a
0.01% general partner interest in ETP GP LP; (ii) such general partner interest has been duly
authorized and validly issued in accordance with the Organizational Documents of ETP GP LP; (iii)
ETP GP LLC owns such general partner interest free and clear of all Liens, other than (a) Liens
arising under the ETE Credit Agreement, (b) transfer restrictions imposed by federal and state
securities laws and (c) any transfer restrictions contained in the Organizational Documents of ETP
GP LP; (iv) ETE owns 100% of the Class A limited partner interests of ETP GP LP and 100% of the
Class B limited partner interests of ETP GP LP; (v) such limited partner interests have been duly
authorized and validly issued in accordance with the Organizational Documents of ETP GP LP and are
fully paid (to the extent required under the Organizational Documents of ETP GP LP) and
non-assessable (except as such non-assessability may be affected by Sections 17-303 and 17-607 of
the Delaware LP Act); and (vi) ETE owns its limited partner interests in ETP GP LP free and clear
of all Liens other than (1) Liens arising under the ETE Credit Agreement, (2) transfer restrictions
imposed by federal and state securities laws and (3) any transfer restrictions contained in the
Organizational Documents of ETP GP LP.
(h) As of the Execution Date, ETP GP LP is the sole general partner of ETP with a 1.8% general
partner interest in ETP (the “ETP GP Interest”) and owns the ETP Incentive Distribution Rights
(collectively with the ETP GP Interest, the “ETP GP LP Interests”). The ETP GP LP Interests have
been duly authorized and validly issued in accordance with the ETP Partnership Agreement and have
not been issued in violation of any preemptive rights, rights of first refusal or other similar
rights of any Person. As of the Execution Date, the ETP GP LP Interests are owned by ETP GP LP
free and clear of all Liens, other than (i) Liens arising under the ETE Credit Agreement, (ii)
transfer restrictions imposed by federal and state securities laws and (iii) any transfer
restrictions contained in the ETP Partnership Agreement.
(i) As of the Execution Date, ETE owns 62,500,797 ETP Common Units, representing approximately
a 32.7% limited partner interest (collectively, the “Owned Units”), in each case free and clear of
all Liens, other than (i) Liens arising under the ETE Credit Agreement, (ii) transfer restrictions
imposed by federal and state securities laws and (iii) any transfer restrictions contained in the
ETP Partnership Agreement. All of the Owned Units have been duly authorized and validly issued in
accordance with the ETP Partnership Agreement and are fully paid (to the extent required under the
ETP Partnership Agreement) and non-assessable
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(except as such non-assessability may be affected by Sections 17-303 and 17-607 of the
Delaware LP Act).
4.6 Compliance with Law. Except as to specific matters disclosed in the ETE SEC Documents
filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding any
disclosures included in any “risk factor” section of such ETE SEC Documents or any other
disclosures in such ETE SEC Documents to the extent they are predictive or forward looking and
general in nature), and except for Environmental Laws, Laws requiring the obtaining or maintenance
of a Permit, Tax matters, Laws relating to employee benefits, employment and labor matters, and
Laws relating to regulatory compliance matters, which are the subject of Sections 4.11,
4.13, 4.14, 4.15 and 4.17, respectively, and except as to matters
that would not reasonably be expected to have an ETE Material Adverse Effect, (a) each ETE Entity
is in compliance with all applicable Laws, (b) none of the ETE Entities has received written notice
of any violation of any applicable Law and (c) to the Knowledge of the Buyer Parties, none of the
ETE Entities is under investigation by any Governmental Authority for potential non-compliance with
any Law.
4.7 Title to Properties and Assets. To the Knowledge of the Buyer Parties, except as to
matters that would not reasonably be expected to have an ETE Material Adverse Effect, each ETE
Entity has title to or rights or interests in its real property and personal property free and
clear of all Liens (subject to Permitted Liens), sufficient to allow it to conduct its business as
currently being conducted.
4.8 Rights-of-Way. To the Knowledge of the Buyer Parties, except as to matters that would not
reasonably be expected to have an ETE Material Adverse Effect, (a) each ETE Entity has such
Rights-of-Way from each Person as are necessary to use, own and operate each ETE Entity’s assets in
the manner such assets are currently used, owned and operated by each ETE Entity, (b) each ETE
Entity has fulfilled and performed all of its obligations with respect to such Rights-of-Way and
(c) no event has occurred that allows, or after the giving of notice or the passage of time, or
both, would allow, revocation or termination thereof or would result in any impairment of the
rights of the holder of any such Rights-of-Way.
4.9 ETE SEC Reports; Financial Statements; Operating Surplus.
(a) ETE has furnished or filed all reports, schedules, forms, statements and other documents
(including exhibits and other information incorporated therein) required to be furnished or filed
by ETE with the SEC since January 1, 2009 (such documents being collectively referred to as the
“ETE SEC Documents”).
(b) Each ETE SEC Document (i) at the time filed, complied in all material respects with the
requirements of the Exchange Act and the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such ETE SEC Document and (ii) did not
at the time it was filed (or if amended or superseded by a filing or amendment prior to the
Execution Date, then at the time of such filing or amendment) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading.
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(c) Each of the financial statements of ETE or LEGPLLC included in the ETE SEC Documents (“ETE
Financial Statements”) complied at the time it was filed as to form in all material respects with
the applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, has been prepared in accordance with GAAP, applied on a consistent basis
throughout the periods presented thereby and fairly present in all material respects the
consolidated financial position and operating results, equity and cash flows of ETE as of, and for
the periods ended on, the respective dates thereof, subject, however, in the case of unaudited
financial statements, to normal year-end audit adjustments and accruals and the absence of notes
and other textual disclosures as permitted by Form 10-Q of the SEC.
(d) To the Knowledge of the Buyer Parties, none of the ETE Entities has any liability, whether
accrued, contingent, absolute or otherwise, except for (i) liabilities set forth on the
consolidated balance sheet of ETE dated as of March 31, 2010 or the notes thereto, and
(ii) liabilities that have arisen since March 31, 2010 in the ordinary course of business.
(e) All distributions made by ETP since its initial public offering have been made from
Operating Surplus (as defined in the ETP Partnership Agreement) and in accordance with the terms
of the ETP Partnership Agreement.
(f) A true and correct copy of an ownership schedule setting forth the owners of record of the
membership interests in LEGPLLC has been provided to Seller.
4.10 Absence of Certain Changes. Except as to specific matters disclosed in the ETE SEC
Documents filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding
any disclosures included in any “risk factor” section of such ETE SEC Documents or any other
disclosures in such ETE SEC Documents to the extent they are predictive or forward looking and
general in nature), except as set forth on Schedule 4.10 of the Buyers Disclosure Schedule
or as expressly contemplated by this Agreement, since December 31, 2009, there has not been any
event, occurrence or development which has had, or would be reasonably expected to have, an ETE
Material Adverse Effect.
4.11 Environmental Matters. Except as to specific matters disclosed in the ETE SEC Documents
filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding any
disclosures included in any “risk factor” section of such ETE SEC Documents or any other
disclosures in such ETE SEC Documents to the extent they are predictive or forward looking and
general in nature), except as to matters set forth on Schedule 4.11 of the Buyers
Disclosure Schedule and except as to matters that would not reasonably be expected to have an ETE
Material Adverse Effect:
(a) each of the ETE Entities is in compliance with all applicable Environmental Laws;
(b) each of the ETE Entities possesses all Permits required under Environmental Laws for their
operations as currently conducted and is in compliance with the terms of such Permits, and such
Permits are in full force and effect;
(c) none of the ETE Entities nor any of their properties or operations are subject to any
pending or, to the Knowledge of the Buyer Parties, threatened Proceeding arising under any
21
Environmental Law, nor has any of the ETE Entities received any written and pending notice,
order or complaint from any Governmental Authority alleging a violation of or liability arising
under any Environmental Law; and
(d) to the Knowledge of the Buyer Parties, there has been no Release of Hazardous Substances
on, at, under, to, or from any of the properties of the ETE Entities, or from or in connection with
the ETE Entities’ operations in a manner that would reasonably be expected to give rise to any
liability pursuant to any Environmental Law.
4.12 Legal Proceedings. Except as to specific matters disclosed in the ETE SEC Documents
filed or furnished on or after January 1, 2010 and prior to the date hereof (excluding any
disclosures included in any “risk factor” section of such ETE SEC Documents or any other
disclosures in such ETE SEC Documents to the extent they are predictive or forward looking and
general in nature), and other than with respect to Proceedings arising under Environmental Laws
which are the subject of Section 4.11 or as is set forth on Schedule 4.12 of Buyers
Disclosure Schedule, there are no Proceedings pending or, to the Knowledge of the Buyer Parties,
threatened against the ETE Entities, except such Proceedings as would not reasonably be expected to
have an ETE Material Adverse Effect or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or to materially impair the Buyer Parties’ ability to
perform their obligations under this Agreement.
4.13 Permits. To the Knowledge of the Buyer Parties, other than with respect to Permits
issued pursuant to or required under Environmental Laws which are the subject of Section
4.11, the ETE Entities have all Permits as are necessary to use, own and operate their assets
in the manner such assets are currently used, owned and operated by the ETE Entities, except where
the failure to have such Permits would not reasonably be expected to have an ETE Material Adverse
Effect.
4.14 Taxes.
(a) All material Tax Returns required to be filed with respect to ETE and, to the Knowledge of
Buyer, the other ETE Entities have been filed and all the Tax Returns of ETE and, to the Knowledge
of Buyer, the other ETE Entities are complete and correct in all material respects and all material
Taxes due relating to ETE and, to the Knowledge of Buyer, the other ETE Entities have been paid in
full. Except as disclosed on Schedule 4.14 of the Buyers Disclosure Schedule, there is no claim
(other than claims being contested in good faith through appropriate proceedings and for which
adequate reserves have been made in accordance with GAAP) against ETE or, to the Knowledge of
Buyer, the other ETE Entities for any material Taxes, and no material assessment, deficiency, or
adjustment has been asserted, proposed in writing with respect to any material Taxes or material
Tax Returns of or with respect to ETE or, to the Knowledge of Buyer, the other ETE Entities.
(b) Except as set forth on Schedule 4.14 of the Buyer Disclosure Schedule, no material Tax
audits or administrative or judicial proceedings are being conducted or are pending with respect to
ETE or, to the Knowledge of Buyer, the other ETE Entities.
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(c) All material Taxes required to be withheld, collected or deposited by or with respect to
ETE or, to the Knowledge of Buyer, the other ETE Entities have been timely withheld, collected or
deposited as the case may be, and to the extent required, have been paid to the relevant taxing
authority.
(d) There are no outstanding agreements or waivers extending the applicable statutory periods
of limitations for any material Tax of, or any material Taxes associated with the ownership or
operation of the assets of, ETE or, to the Knowledge of Buyer, any other ETE Entities.
(e) Neither ETE nor, to the Knowledge of Buyer, any other ETE Entities is a party to any Tax
sharing agreement.
(f) Neither ETE nor, to the Knowledge of Buyer, the other ETE Entities has engaged in a
transaction that would be reportable by or with respect to any ETE Entity pursuant to Treasury
Regulation § 1.6011-4 or any predecessor thereto.
(g) Neither ETE nor ETP has elected to be treated as a corporation for federal Tax purposes.
ETE and ETP each qualify as a “publicly traded partnership” within the meaning of Section 7704(b)
of the Code and each have met, and continue to meet, the “gross income requirements” (within the
meaning of Section 7704(c) of the Code) in each Tax year since its formation. Both of ETE and ETP
have filed a federal income tax return that has in effect an election pursuant to Section 754 of
the Code.
4.15 Employee Benefits; Employment and Labor Matters. To the Knowledge of the Buyer Parties:
(a) Except as set forth on Schedule 4.15(a) of the Buyers Disclosure Schedule or filed
with any ETE SEC Documents (including by incorporation by reference) filed with the SEC on or after
January 1, 2010 and prior to the date hereof, no ETE Entity, nor any ERISA Affiliate of any ETE
Entity, sponsors, maintains or contributes to, or has sponsored, maintained or contributed to
within six years prior to the Closing Date any of the following:
(i) any “employee benefit plan,” as such term is defined in Section 3(3) of ERISA
(including, but not limited to, employee benefit plans, such as foreign plans, which are not
subject to the provisions of ERISA, but excluding any multiemployer plan within the meaning
of Section 3(37) of ERISA or multiple employer plan within the meaning of Section 4063(a) of
ERISA); or
(ii) any material personnel policy, equity-based plans (including, but not limited to,
stock option plans, stock purchase plans, stock appreciation rights and phantom stock
plans), collective bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan or arrangements, change in control policies
or agreements, deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or understanding which is
not described in
23
Section 4.15(a)(i) (collectively, along with any plan described in Section
4.15(a)(i) above, the “ETE Benefit Plans”).
(b) Except as disclosed on Schedule 4.15(b) of the Buyers Disclosure Schedule and
except for matters that would not reasonably be expected to have a ETE Material Adverse Effect;
(i) each ETE Benefit Plan has been administered in compliance with its terms, the
applicable provisions of ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements;
(ii) there are no actions, suits or claims pending (other than routine claims for
benefits) or threatened, with respect to any ETE Benefit Plan and no ETE Benefit Plan is
under audit or is subject to an investigation by the Internal Revenue Service, the
Department of Labor or any other federal or state governmental agency nor is any such audit
or investigation pending;
(iii) no ETE Benefit Plan is subject to Title IV of ERISA;
(iv) all contributions and payments required to be made by any ETE Entity or an ERISA
Affiliate of any ETE Entity to or under each ETE Benefit Plan have been timely made;
(v) as to any ETE Benefit Plan intended to be qualified under Section 401 of the Code,
there has been no termination or partial termination of such plan within the meaning of
Section 411(d)(3) of the Code;
(vi) none of the ETE Entities or any of their ERISA Affiliates have any liability with
respect to any multiemployer plan within the meaning of Section 3(37) of ERISA or multiple
employer plan with the meaning of Section 4063(a) of ERISA.
(c) Except as would not reasonably be expected to have an ETE Material Adverse Effect, (a)
each of the ETE Entities is in compliance with all applicable labor and employment Laws including,
without limitation, all Laws, rules, regulations, orders, rulings, decrees, judgments and awards
relating to employment discrimination, payment of wages, overtime compensation, immigration,
occupational health and safety, and wrongful discharge; (b) no action, suit, complaint, charge,
arbitration, inquiry, proceeding or investigation by or before any Governmental Authority, brought
by or on behalf of any employee, prospective or former employee or labor organization or other
representative of the employees or of any prospective or former employees of any of the ETE
Entities is pending or threatened against any of the ETE Entities, any present or former director
or employee (including with respect to alleged sexual harassment, unfair labor practices or
discrimination); (c) no grievance is pending or threatened against any of the ETE Entities; and (d)
none of the ETE Entities is subject to or otherwise bound by, any material consent decree, order,
or agreement with, any Governmental Authority relating to employees or former employees of any of
the ETE Entities.
4.16 Brokers’ Fee. Except for the fee payable to Credit Suisse Securities (USA) LLC, which
shall be paid by the Buyer Parties, no broker, investment banker, financial advisor or other Person
is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission
24
in connection with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Buyer Parties.
4.17 Regulatory Matters; Compliance.
(a) The ETE Entities (i) have all necessary approvals from FERC to provide service to
customers pursuant to the Natural Gas Act and the Natural Gas Policy Act of 1978, as amended, and
(ii) have made all required FERC filings necessary to offer such service, except where the failure
to have any such approval or to have made any such filing would not reasonably be expected to have
an ETE Material Adverse Effect.
(b) Neither ETE nor ETP is an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
4.18 Intellectual Property. To the Knowledge of the Buyer Parties (a) the ETE Entities own or
have the right to use pursuant to license, sublicense, agreement or otherwise all material items of
Intellectual Property required in the operation of the business as presently conducted; (b) no
third party has asserted in writing delivered to the ETE Entities an unresolved claim that any of
the ETE Entities is infringing on the Intellectual Property of such third party; and (c) no third
party is infringing on the Intellectual Property owned by the ETE Entities.
4.19 Matters Relating to Acquisition of the Acquired GP Interests.
(a) The Buyer Parties have such knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and risks of their investment in the Acquired GP
Interests and are capable of bearing the economic risk of such investment. The Buyer Parties are
“accredited investors” as that term is defined in Rule 501 of Regulation D (without regard to Rule
501(a)(4)) promulgated under the Securities Act. The Buyer Parties are acquiring the Acquired GP
Interests for investment for their own account and not with a view toward or for sale in connection
with any distribution thereof, or with any present intention of distributing or selling the
Acquired GP Interests. The Buyer Parties do not have any Contract or arrangement with any Person
to sell, transfer or grant participations to such Person or to any third Person, with respect to
the Acquired GP Interests. The Buyer Parties acknowledge and understand that (i) the acquisition
of the Acquired GP Interests has not been registered under the Securities Act in reliance on an
exemption therefrom and (ii) that the Acquired GP Interests will, upon its sale by Seller, be
characterized as “restricted securities” under state and federal securities laws. The Buyer
Parties agree that the Acquired GP Interests may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of except pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act, and in compliance with other applicable state and federal
securities laws.
(b) The Buyer Parties have undertaken such investigation as they have deemed necessary to
enable them to make an informed and intelligent decision with respect to the execution, delivery
and performance of this Agreement and the acquisition of the Acquired GP Interests. The Buyer
Parties have had an opportunity to ask questions and receive answers from
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Seller regarding the terms and conditions of the offering of the Acquired GP Interests and the
business, properties, prospects, and financial condition of Regency. The foregoing, however, does
not modify the representations and warranties of Seller in Article III and such
representations and warranties constitute the sole and exclusive representations and warranties of
Seller to the Buyer Parties in connection with the transactions contemplated by this Agreement.
5.1 Conduct of Business.
(a) From the Execution Date through the Closing, except as described in Schedule 5.1
of the Seller Disclosure Schedule, and except as required by this Agreement or consented to or
approved in writing by the Buyer Parties (which shall not be unreasonably withheld, conditioned or
delayed), Seller shall cause the Regency GP Entities to, and shall use reasonable best efforts to
cause each other Regency Entity to:
(i) conduct its business and activities in the ordinary course of business consistent
with past practice;
(ii) use reasonable best efforts to preserve intact their goodwill and relationships
with customers, suppliers and others having business dealings with them with respect
thereto;
(iii) comply in all material respects with all applicable Laws relating to them; and
(iv) use reasonable best efforts to maintain in full force without interruption its
present insurance policies or comparable insurance coverage of the Regency Entities.
(b) Without limiting the generality of Section 5.1(a), and, except as described in
Schedule 5.1(b) of the Seller Disclosure Schedule, as required by this Agreement or
consented to or approved in writing by the Buyer Parties (which shall not be unreasonably withheld,
conditioned or delayed), Seller shall cause the Regency GP Entities not to, and shall use
reasonable best efforts to cause each other Regency Entity not to:
(i) make any material change or amendment to its Organizational Documents;
(ii) purchase any securities or ownership interests of, or make any investment in any
Person, other than in respect of the Regency Entities (excluding the Regency GP Entities)
(A) ordinary course overnight investments consistent with the cash management policies of
such Person and (B) purchases and investments in addition to those contemplated by clause
(A) not in excess of $50,000,000 in the aggregate;
(iii) make any capital expenditure; provided that the Regency Entities (excluding the
Regency GP Entities) may make capital expenditures that are not in excess of $50,000,000 in
the aggregate or as required on an emergency basis or for the safety of individuals or the
environment;
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(iv) make any material change to its tax methods, principles or elections;
(v) except as required under its Organizational Documents, declare or pay any
distributions in respect of any of its equity securities or partnership units except (A) in
the case of Regency, the declaration and payment of regular quarterly cash distributions of
Available Cash from Operating Surplus (each as defined in the Regency Partnership Agreement)
not in excess of $0.46 per Regency Common Unit per quarter, plus any corresponding
distribution on the general partner interest and Regency Incentive Distribution Rights, (B)
in the case of Regency, regular quarterly distributions of Available Cash from Operating
Surplus, not in excess of $0.445 per quarter in respect of the Regency Series A Units and
(C) the declaration and payment of distributions from any direct or indirect wholly owned
Subsidiary of Regency;
(vi) split, combine or reclassify any of its equity securities or partnership units or
issue or authorize the issuance of any other securities in respect of, in lieu of or in
substitution for, its equity securities or partnership units, except for any such
transaction by a direct or indirect wholly owned Subsidiary of Regency that remains a direct
or indirect wholly owned Subsidiary of Regency after consummation of such transaction;
(vii) repurchase, redeem or otherwise acquire any of its equity securities or
partnership units or any securities convertible into or exercisable for any equity
securities or partnership units other than redemptions to satisfy federal income tax
withholding obligations (calculated using the applicable federal income tax rates) in
connection with the vesting of units under Regency’s long-term incentive plan;
(viii) issue, deliver, sell, pledge or dispose of, or authorize the issuance, delivery,
sale, pledge or disposition of, any (A) equity securities or partnership units of any class,
(B) debt securities having the right to vote on any matters on which holders of capital
stock or members or partners of the same issuer may vote or (C) securities convertible into
or exercisable for, or any rights, warrants, calls or options to acquire, any such
securities, other than issuances (1) by a direct or indirect wholly owned Subsidiary of
Regency of equity securities or partnership units to such Person’s parent or any other
direct or indirect wholly owned Subsidiary of Regency and (2) pursuant to awards outstanding
prior to the Execution Date under Regency Benefit Plans which are reflected on Schedule
3.17(a) of the Seller Disclosure Schedule;
(ix) purchase or sell assets (including any general partner or limited partner interest
or any other equity interests in any other Person) or waive any rights or benefits held by
either of the Regency GP Entities attributable to RGPLP’s ownership of the general partner
interest in Regency and the Regency Incentive Distribution Rights, other than purchases or
sales of inventory in the ordinary course by any of the Regency Entities (excluding the
Regency GP Entities), with a value not exceeding $50,000,000 individually or $50,000,000 in
the aggregate;
(x) create, incur, guarantee or assume any indebtedness for borrowed money other than
borrowings by the Regency Entities (excluding the Regency GP Entities) of less than
$100,000,000 in the aggregate;
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(xi) enter into any joint venture or similar arrangement with a third party other than
joint ventures or similar arrangements entered into by any of the Regency Entities
(excluding the Regency GP Entities) in the ordinary course of business including assets or
obligations of less than $75,000,000;
(xii) (A) settle any claims, demands, lawsuits or state or federal regulatory
proceedings for damages to the extent such settlements assess damages in excess of
$10,000,000 in the aggregate (other than any claims, demands, lawsuits or proceedings to the
extent insured (net of deductibles), reserved against in the Regency Financial Statements or
covered by an indemnity obligation not subject to dispute or adjustment from a solvent
indemnitor) or (B) settle any claims, demands, lawsuits or state or federal regulatory
proceedings seeking an injunction or other equitable relief where such settlements would
have or would reasonably be expected to have a Regency Material Adverse Effect;
(xiii) except as otherwise expressly permitted under this Section 5.1, merge
with or into, or consolidate with, any other Person or acquire all or substantially all of
the business or assets of any other Person;
(xiv) take any action with respect to or in contemplation of any liquidation,
dissolution, recapitalization, reorganization, or other winding up;
(xv) change or modify any accounting policies, except as required by applicable
regulatory authorities or independent accountants;
(xvi) approve or make material modifications of the salaries, bonuses or other
compensation (including incentive compensation) payable to any individual whose base salary
exceeds $200,000 per annum or adopt or make any material amendment to any employee
compensation, benefit or incentive plans;
(xvii) modify, make any material amendment to or voluntarily terminate, prior to the
expiration date thereof, any Regency Material Contracts or waive any default by, or release,
settle or compromise any claim against, any other party thereto; or
(xviii) agree, or commit to take any of the actions described above.
Notwithstanding anything in this Agreement to the contrary, nothing in Section 5.1 shall
prohibit Regency or any of its Subsidiaries from taking any action, or Seller from approving the
taking by Regency or any of its Subsidiaries of any action, in each case that would otherwise be
prohibited by this Section 5.1 without consent or approval of the Buyer Parties, if, prior
to taking such action, or approving the taking of such action, Seller or Regency, as applicable,
determines in good faith, after consultation with outside legal counsel, that failure to take such
action, or to approve the taking of such action, would be reasonably likely to be a breach of the
implied contractual covenant of good faith and fair dealing owed to an unaffiliated third party and
imposed on Seller, Regency or such Subsidiary, as applicable, in its capacity as the general
partner of Regency and a party to the Regency Partnership Agreement or a partner in the RIGS JV and
a party to the RIGS JV Agreement under the Delaware Revised Uniform Partnership Act, as applicable.
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(c) From the Execution Date though the Closing, ETE shall not: (i) amend the ETP Redemption
Agreement in any manner that would reasonably be expected to adversely affect Seller’s rights under
this Agreement or (ii) exercise its rights under Section 7.1(a) of the ETP Redemption Agreement to
terminate the ETP Redemption Agreement,
(d) From the Execution Date through the Closing, except as described in
Schedule 5.1(d) of the Buyers Disclosure Schedule, or consented to or approved in writing
by Seller (which shall not be unreasonably withheld, conditioned or delayed), the Buyer Parties
shall not take any action that would require the consent of Seller pursuant to Section
5.13(b)(v) of the Third Amendment (which for purposes of this Section 5.1(d) shall be
deemed to be in full force and effect).
5.2 Notice of Certain Events.
(a) Subject to applicable Law, each Party shall promptly notify the other Parties of:
(i) any event, condition or development that has resulted in the inaccuracy or breach
of any representation or warranty, covenant or agreement contained in this Agreement made by
or to be complied with by such notifying Party at any time during the term hereof and that
would reasonably be expected to result in any of the conditions set forth in Article
VI not to be satisfied and which notice shall identify the applicable representation or
warranty, covenant or agreement and disclosure schedule, if any, for which such breach or
inaccuracy relates; provided, however, that no such notification shall be deemed to cure any
such breach of or inaccuracy in such notifying Party’s representations and warranties or
covenants and agreements or in the Seller Disclosure Schedule or the Buyers Disclosure
Schedule for any purpose under this Agreement and no such notification shall limit or
otherwise affect the remedies available to the other Parties;
(ii) any notice or other communication from any Person alleging that the consent of
such Person is or may be required in connection with the transactions contemplated by this
Agreement;
(iii) any notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement; or
(iv) any Proceedings commenced that would be reasonably expected to prevent or
materially delay the consummation of the transactions contemplated by this Agreement or
materially impair the notifying Party’s ability to perform its obligations under this
Agreement.
(b) Seller shall promptly notify the Buyer Parties of the occurrence of any of the events
described in Section 5.1(b) regardless of whether Seller used reasonable best efforts to
prevent the occurrence of such event.
5.3 Access to Information. From the Execution Date until the Closing Date, Seller on the one
hand, and Buyer Parties, on the other hand, will subject to compliance with Law governing the use
of such information, (a) give the other party and their counsel, financial
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advisors, auditors and other authorized representatives (collectively, “Representatives”)
reasonable access to the offices, properties, books and records of the Regency Entities or ETE
Entities, as the case may be, and permit such party to make copies thereof, in each case during
normal business hours and (b) furnish such financial and operating data and other information
relating to the Regency Entities or ETE Entities, as the case may be, as such Persons may
reasonably request. For two (2) years after the Closing Date, Seller, its Affiliates and its
Representatives shall have reasonable access during normal business hours to the offices,
properties, books and records of the Buyer Entities with respect to information of the nature and
scope described on Schedule 5.3, and which the Buyer Parties acknowledge and agree Seller
may share with its Representatives; provided that Seller and its applicable Affiliates and
Representatives shall have entered into a confidentiality agreement relating to such information
reasonably acceptable to the Buyer Parties. Any investigation pursuant to this Section 5.3
shall be conducted in such manner as not to interfere with the conduct of the business of any
Party. Notwithstanding the foregoing, no Party shall be entitled to perform any intrusive or
subsurface investigation or other sampling of, on or under any of the properties of a Party without
the prior written consent of the other Party. Notwithstanding the foregoing provisions of this
Section 5.3, no Party shall be required to grant access or furnish information to the
extent that such information is subject to an attorney/client or attorney work product privilege or
that such access or the furnishing of such information is prohibited by Law or an existing
Contract. To the extent practicable, such Party shall make reasonable and appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the preceding sentence
apply, including the execution of a joint defense agreement to allow the parties to exchange
information protected by the attorney client privilege or work product doctrine. To the fullest
extent permitted by Law, (1) no party nor any of their respective Representatives or Affiliates
shall be responsible or liable to another party for personal injuries sustained in connection with
the access provided pursuant to this Section 5.3 and (2) shall be indemnified and held
harmless by the visiting party for any losses suffered by any such Persons in connection with any
such personal injuries; provided such personal injuries are not caused by the gross negligence or
willful misconduct of the hosting party. The Parties agree that they will not, and will cause
their Representatives not to, use any information obtained pursuant to this Section 5.3 for
any purpose unrelated to the consummation of the transactions contemplated by this Agreement.
5.4 Governmental Approvals.
(a) The Parties will cooperate with each other and use reasonable best efforts to obtain from
any Governmental Authorities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained and to make any filings with or notifications or submissions to any
Governmental Authority that are necessary in order to consummate the transactions contemplated by
the Transaction Agreements and shall diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such matters.
(b) The Parties agree to cooperate with each other and use reasonable best efforts to contest
and resist, any Proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or permanent) of any
Governmental Authority that is in effect and that restricts, prevents or prohibits the consummation
of the transactions contemplated by the Transaction Agreements.
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5.5 Expenses. All costs and expenses incurred by Seller in connection with this Agreement and
the transactions contemplated thereby, and any documented, out-of-pocket expenses reasonably
incurred by the other Regency Entities (not to exceed $50,000), shall be paid by Seller, and all
costs and expenses incurred by the Buyer Parties or the ETE Entities in connection with this
Agreement and the transactions contemplated thereby shall be paid by the Buyer Parties; provided,
however, that if any action at law or equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees and expenses in
addition to any other relief to which such Party may be entitled.
5.6 Further Assurances. Subject to the terms and conditions of this Agreement, each of the
Parties shall use its reasonable best efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable Law to consummate
the transactions contemplated by the Transaction Agreements. Without limiting the generality of
the foregoing, each Party will use its reasonable best efforts to obtain timely all authorizations,
consents and approvals of all third parties necessary in connection with the consummation of the
transactions contemplated by the Transaction Agreements prior to the Closing. The Parties will
coordinate and cooperate with each other in exchanging such information and assistance as any of
the Parties hereto may reasonably request in connection with the foregoing.
5.7 Public Statements. The Parties shall consult with each other prior to issuing any public
announcement, statement or other disclosure with respect to this Agreement or the transactions
contemplated thereby and neither Seller nor its Affiliates, on one hand, nor the Buyer Parties and
their Affiliates, on the other hand, shall issue any such public announcement, statement or other
disclosure without having first notified Seller, on one hand, or the Buyer Parties on the other;
provided, however, that any of Seller and its Affiliates, on one hand, and any of the Buyer Parties
and their Affiliates, on the other hand, may make any public disclosure without first so consulting
with or notifying the other Party or Parties if such disclosing party believes that it is required
to do so by Law or by any stock exchange listing requirement or trading agreement concerning the
publicly traded securities of Seller or its Affiliates, on one hand, or the Buyer Parties or any of
their Affiliates, on the other hand.
5.8 Convertible Preferred Units. Seller agrees to the imprinting, so long as the restrictions
described in the legend are applicable, of the following legend on any certificates evidencing all
or any portion of the Convertible Preferred Units or any ETE Common Units issuable upon conversion
thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT”) AND ARE SUBJECT TO THE TERMS OF THE THIRD
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
ENERGY TRANSFER EQUITY, L.P., AS AMENDED,
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF
ENERGY TRANSFER EQUITY, L.P. THAT THIS
SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD
(A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR
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RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE
THE EXISTENCE OR QUALIFICATION OF
ENERGY TRANSFER EQUITY, L.P. UNDER THE LAWS OF THE STATE OF
DELAWARE, OR (C) CAUSE
ENERGY TRANSFER EQUITY, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE AS A
CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT
NOT ALREADY SO TREATED OR TAXED). L.E. GP, THE GENERAL PARTNER OF
ENERGY TRANSFER EQUITY, L.P.,
MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF
COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF
ENERGY TRANSFER EQUITY,
L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL
INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY
TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES
EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
5.9 No Solicitation.
(a) Neither Seller nor the Regency GP Entities or their respective officers, directors,
employees, stockholders, representatives, agents, or anyone acting on behalf of them, shall,
directly or indirectly, (i) encourage, solicit, engage in discussions or negotiations with, or
provide any information to, any Person (other than the Buyer Parties or their Representatives)
concerning any Competing Proposal, (ii) accept any offer or respond to any indications of interest
from any Person concerning any Competing Proposal, (iii) enter into an agreement, arrangement or
understanding with any Person other than the Buyer Parties or their Affiliates concerning any
Competing Proposal or (iv) make or authorize any statement, recommendation or solicitation in
support of or concerning or otherwise facilitate any purchase or sale of securities or similar
transaction involving any Competing Proposal; provided, however, that this Section 5.9
shall in no way prohibit the board of directors of RGPLLC, in its capacity as the general partner
of RGPLP, in its capacity as the general partner of Regency, from taking any action required by its
fiduciary duty.
(b) At every meeting of limited partners of Regency called with respect to any of the
following, and at every adjournment or postponement thereof, and on every action or approval by
written consent of limited partners of Regency with respect to any of the following, Seller shall
and shall cause the Regency GP Entities and any of its other Affiliates to vote:
(i) against approval of any proposal made in opposition to, or in competition with,
consummation of the transactions contemplated by this Agreement, including, without
limitation, any proposal to remove RGPLP as the general partner of Regency; and
(ii) except as otherwise agreed to in writing in advance by the Buyer Parties, against
any Competing Proposal.
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(c) For purposes of this Agreement, “Competing Proposal” means any contract, proposal, offer
or indication of interest relating to any transaction or series of transactions involving: (i) any
merger, amalgamation, unit exchange, recapitalization, consolidation, liquidation or dissolution of
any of the Regency Entities, (ii) any direct or indirect acquisition of beneficial ownership (as
defined under Section 13(d) of the Exchange Act) by any Person or “group” of any equity interests
in any of the Regency GP Entities, (iii) any direct or indirect acquisition of beneficial ownership
(as defined under Section 13(d) of the Exchange Act) by any Person or “group” of all or any portion
of the general partner interest in Regency, (iv) any direct or indirect acquisition of beneficial
ownership (as defined under Section 13(d) of the Exchange Act) by any Person or “group” of 15% or
more of the limited partner interests in Regency or any tender or exchange offer that if
consummated would result in any Person or group beneficially owning 15% or more of the limited
partner interests in Regency, (v) any direct or indirect acquisition (by asset purchase, unit
purchase, merger or otherwise) by any Person or “group” (as defined under Section 13(d) of the
Exchange Act) of any business or material amount of assets of the Regency Entities (including
capital stock of or ownership interest in any Subsidiary of Regency or any of its Subsidiaries)
(other than sales of assets by the Regency Entities in the ordinary course of business consistent
with past practice) or (vi) any transaction that would compete with or serve to interfere with,
delay, discourage, adversely affect or inhibit the timely consummation of the transactions
contemplated by this Agreement.
5.10 Confidential Information.
(a) For a period of two (2) years after the Closing, Seller and its Affiliates shall not,
directly or indirectly, disclose to any Person any secret, confidential or proprietary business
information, data or material developed by, or on behalf of, any Regency Entity relating to the
business and operations of the Regency Entities, whether acquired prior to or after the Closing
Date, which has not been disclosed to the public.
(b) Notwithstanding the foregoing, Seller or its Affiliates may disclose any information
relating to the business and operations of the Regency Entities, if required by Law or applicable
stock exchange rule, or to such other Persons if, at the time such information is provided, such
Person is already in the possession of such information.
5.11 No Hire. Except for the individuals listed on Schedule 5.11, for a period of one
year from and after the Execution Date, neither Seller nor the Energy Financial Service business
unit of GECC shall solicit for employment or hire any executive officers or other management level
employees of any of the Regency Entities who were employed by the Regency Entities within six
months prior to the Closing Date. The restrictions in this Section 5.11 regarding the prohibition
on solicitations (as opposed to hires) shall not apply to any solicitation directed at the general
public.
5.12 Tax Matters.
(a) Post-Closing Tax Returns. Buyer shall cause the Regency Entities to prepare all
Tax Returns relating to the Regency Entities for periods beginning on or before the Closing Date
and ending after the Closing Date. With respect to any such Tax Returns for the Regency GP
Entities, Buyer shall determine (by an interim closing of the books as of the Closing Date except
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for ad valorem and property taxes owed or owing by the Regency GP Entities, which shall be
prorated on a daily basis) the Taxes that would have been due with respect to the period covered by
such Tax Return if such taxable period ended on and included the Closing Date (the “Pre-Closing
Tax”).
(i) Not later than 20 days prior to the due date of any estimated Tax payment relating
to any Pre-Closing Tax, Buyer shall deliver to Seller for its review a statement calculating
the excess, if any, of the Pre-Closing Tax included in such payment over the amount set up
as a liability for such Tax on the financial statements of Regency Entities. Buyer shall
make or cause to be made such changes in such statement as Seller may reasonably request,
which changes shall be subject to Buyer’s approval, which shall not be unreasonably
withheld. Thereafter, and not later than 5 days prior to the due date of such estimated Tax
payment, Seller shall pay to Buyer the amount of such excess.
(ii) Not later than 20 days prior to the due date of any Tax Return covering a
Pre-Closing Tax, Buyer shall deliver to Seller for its review a copy of such Tax Return and
a statement calculating the amount by which the Pre-Closing Tax reflected on such Tax Return
is greater than or less than the amount set up as a liability for such Tax on the financial
statements of Regency Entities and the amount of any payments paid by Seller to Buyer with
respect to estimated Tax payments of such Pre-Closing Tax pursuant to Section
5.12(a)(i), which amount of estimated Tax payments shall be treated as a credit against
Pre-Closing Tax owed to Buyer by Seller. Buyer shall make or cause to be made such changes
in such Tax Returns or such statement as Seller may reasonably request, which changes shall
be subject to Buyer’s approval, which shall not be unreasonably withheld. Not later than 5
days prior to the due date of such Tax Return, Seller shall pay to Buyer (or Buyer pay to
Seller, if appropriate) the amount of such difference. Upon receipt thereof, Buyer shall
file or cause to be filed such Tax Return and shall pay all Taxes shown to be due thereon.
(b) Transfer Taxes. All excise, sales, use, transfer (including real property
transfer or gains), stamp, documentary, filing, recordation and other similar taxes, together with
any interest, additions or penalties with respect thereto and any interest in respect of such
additions or penalties, resulting directly from the transactions contemplated by this Agreement
(the “Transfer Taxes”), shall be borne 50% by Seller and 50% by the Buyer. Notwithstanding
anything to the contrary in this Section 5.12, any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed when due by the party primarily or
customarily responsible under the applicable local law for filing such Tax Returns, and such party
will use reasonable best efforts to provide such Tax Returns to the other party at least ten days
prior to the due date for such Tax Returns. Upon the filing of Tax Returns in connection with
Transfer Taxes, the filing party shall provide the other party with evidence satisfactory to the
other party that such Transfer Taxes have been filed and paid.
(c) Cooperation on Tax Matters.
(i) Buyer and Seller Parties shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax Returns and any audit,
litigation or other proceeding with respect to Taxes for taxable periods
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beginning on or before the Closing Date. Such cooperation shall include the retention
until the expiration of the relevant statute of limitations and (upon the other Party’s
request) the provision of records and information in such Party’s possession that are
reasonably relevant to any such audit, litigation or other proceeding and making employees
available on the basis of reasonable best efforts to provide additional information and
explanation of any material provided hereunder. Prior to the destruction or discarding of
any books and records with respect to Tax matters pertinent to the Regency Entities relating
to any taxable period beginning on or before the Closing Date, each Party shall give the
other Party reasonable written notice and, if the other Party so requests, shall itself
allow, or cause the Regency Entities to allow the other Party to take, possession of such
books and records. In connection with any audit, litigation or other proceeding with
respect to Taxes for taxable periods beginning on or before the Closing Date, Buyer and
Seller shall promptly notify each other upon receipt by such party of written notice of any
inquiries, claims, assessments, audits, or similar events. Buyer shall have sole control of
the conduct of all such audit, litigation or other proceedings with respect to Taxes for
periods beginning on or before the Closing Date, including any settlement or compromise
thereof, provided, however, Buyer shall keep Seller reasonably informed of the progress of
any such audit, litigation or other proceeding and shall not effect any such settlement or
compromise with respect to which Seller is liable without obtaining Seller’s prior written
consent thereto, which shall not be unreasonably withheld.
(ii) Buyer and Seller Parties further agree, upon request, to use their reasonable best
efforts to obtain any certificate or other document from any Governmental Authority or any
other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed as a result of the transactions contemplated hereby or for any taxable period
beginning on or before the Closing Date.
5.13 Books and Records; Financial Statements; Litigation Support.
(a) Seller shall provide the Buyer Parties access to Seller’s books and records relating to
the Regency Entities to the extent reasonably necessary to enable the Buyer Parties to prepare
financial statements of the Regency Entities and such other financial statement of the Buyer
Parties and their Affiliates in such forms and covering such periods as may be required by any
applicable securities laws to be filed with the SEC by ETE as a result of the transactions
contemplated by this Agreement. Seller shall use reasonable best efforts to cause their
independent accountants and the Regency Entities’ independent accountants to provide any consent
necessary to the filing of such financial statements with the SEC and to provide such customary
representation letters as are necessary in connection therewith.
(b) Seller hereby consents to the inclusion or incorporation by reference of the financial
statements of the Regency Entities in any registration statement, report or other filing of the
Buyer Parties or any of their Affiliates as to which the Buyer Parties or any of their Affiliates
reasonably determines that such financial statements are required to be included or incorporated by
reference to satisfy any rule or regulation of the SEC or to satisfy relevant disclosure
obligations under the Securities Act or the Exchange Act. Seller shall use reasonable best efforts
to cause the Audit Firm to consent to the inclusion or incorporation by reference of its audit
35
opinion with respect to any of the financial statements of the Regency Parties in any such
registration statement, report or other filing of the Buyer Parties or their Affiliates, and Seller
shall cause representation letters, in form and substance reasonably satisfactory to the Audit
Firm, to be executed and delivered to the Audit Firm in connection with obtaining any such consent
from the Audit Firm.
(c) Seller shall cooperate with the Buyer Parties in connection with the preparation of any
pro forma financial statements of the Buyer Parties or any of their Affiliates that are derived in
part from the financial statements of Seller that Buyer or their Affiliates reasonably determines
are required to be included or incorporated by reference in any registration statement, report or
other filing of the Buyer Parties or their Affiliates to satisfy any rule or regulation of the SEC
or to satisfy relevant disclosure obligations under the Securities Act or the Exchange Act.
(d) Seller shall provide access to its books and records as may be reasonably necessary for
the Buyer Parties or any of their Affiliates, or any of their respective advisors or
representatives, to conduct customary due diligence with respect to the financial statements of
Seller in connection with any offering of securities by the Buyer Parties or any of their
Affiliates or to enable an accounting firm to prepare and deliver a customary comfort letter with
respect to financial information relating to Seller.
(e) In the event and for so long as any Party actively is contesting or defending against any
third-party Proceeding (other than any Proceedings in which the Buyer Parties or any of their
Affiliates and the Seller or any of its Affiliates are adverse parties) in connection with (i) the
transactions contemplated by this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving the Regency Entities, each of the other
Parties will cooperate with it and its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as shall be reasonably
requested and necessary in connection with the contest or defense, all at the sole cost and expense
of the contesting or defending Party; provided, however, that nothing in this Section 5.13(e) shall
limit in any respect any rights a Party may have with respect to discovery or the production of
documents or other information in connection with any such litigation..
5.14 Commitment Regarding Indemnification Provisions; D&O Insurance Continuation.
(a) Buyer Parties covenant and agree that during the period that commences on the Closing Date
and ends on the sixth (6th) anniversary of the Closing Date, Buyer Parties (i) shall not
cause any amendment, modification, waiver or termination to Section 7.7 or Section
7.8 of the Regency Partnership Agreement and (ii) shall not amend, modify, waive or terminate
Section 9.01 or Section 9.02 of the RGPLLC Agreement, the effect of which would be
to affect adversely the rights of any person serving as a member of the Board of Directors or
officer of RGPLLC existing as of the date of this Agreement under such provisions; provided,
however, that the foregoing restriction shall not apply to any such amendment, modification, waiver
or termination to the extent required to cause such provisions (or any portion thereof) to comply
with applicable law.
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(b) Buyer Parties covenant and agree that, during the period that commences on the Closing
Date and ends on the sixth (6th) anniversary of the Closing Date, with respect to any
person serving as a member of the Board of Directors or officer of RGPLLC as of the date of this
Agreement and any former member of the Board of Directors or officer of RGPLLC appointed by Seller,
Buyer Parties shall cause RGPLLC (i) to continue in effect the current director and officer
liability insurance policy or policies that RGPLLC has as of the date of this Agreement, as
reflected on Schedule 5.14 hereto, or (ii) upon the termination or cancellation of any such
policy or policies, (A) to provide director and officer liability insurance in substitution for, or
in replacement of, such cancelled or terminated policy or policies or (B) to provide a ‘tail” or
run-off policy, in each case so that any person serving as a member of the Board of Directors of
RGPLLC as of the date of this Agreement, any former member of the Board of Directors appointed by
Seller and any officer has coverage thereunder for acts, events, occurrences or omissions occurring
or arising at or prior to the Closing to the same extent (including, without limitation, policy
limits, exclusions and scope) as such person has coverage for such acts, events, occurrences or
omissions under the director and officer insurance policy maintained by RGPLLC as of the date of
this Agreement, as reflected on Schedule 5.14 hereto.
5.15 GECC Names and Marks. From and after the Closing Date, the Buyer Parties shall not use
any of the GECC Names and Marks.
6.1 Conditions to Obligations of Each Party. The respective obligation of each Party to
consummate the Closing is subject to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any one or more of which may be waived in writing, in whole or in part,
as to a Party by such Party (in such Party’s sole discretion):
(a) Approvals. All authorizations, consents, orders or approvals of, or declarations
or filings with, or as set forth on Schedule 6.1(a) shall have been obtained or made.
(b) Governmental Restraints. No order, decree or injunction of any Governmental
Authority shall be in effect, and no Law shall have been enacted or adopted that enjoins, prohibits
or makes illegal the consummation of the transactions contemplated by this Agreement and no
Proceeding by any Governmental Authority with respect to the transactions contemplated by this
Agreement shall be pending that seeks to restrain, enjoin, prohibit or delay the transactions
contemplated by this Agreement.
(c) Amendment to Regency Credit Agreement. The Regency Credit Agreement shall have
been amended in a form reasonably acceptable to the Buyer Parties to address the matters set forth
on Schedule 6.1(c).
(d) Amendment to ETE Credit Agreement. The ETE Credit Agreement shall have been
amended in a form reasonably acceptable to the Buyer Parties to address the matters set forth on
Schedule 6.1(d).
(e) Redemption and Exchange. All conditions to consummation of the Redemption and
Exchange shall have been satisfied or validly waived pursuant to the terms of the ETP
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Redemption Agreement and each of the parties thereto shall have executed and delivered to the
Parties a certificate stating that such parties thereto will consummate the Redemption and Exchange
Agreement immediately following the Closing.
(f) MEP Contribution. All conditions to consummation of the MEP Contribution shall
have been satisfied and validly waived pursuant to the terms of the MEP Contribution Agreement and
each of the parties thereto shall have executed and delivered to the Parties a certificate stating
that such parties thereto will consummate the MEP Contribution Agreement immediately following the
Closing.
6.2 Conditions to Obligations of the Buyer Parties. The obligation of the Buyer Parties to
consummate the Closing is subject to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any one or more of which may be waived in writing, in whole or in part,
by the Buyer Parties (in the Buyer Parties’ sole discretion):
(a) Representations and Warranties of Seller. The representations and warranties of
Seller (i) in Article III (other than those contained in Sections 3.5 and
3.6) shall be true and correct in all respects as of the Closing Date as if remade on the
Closing Date (except for representations and warranties made as of a specific date, which shall be
true and correct in all respects as of such specific date), with only such failures to be so true
and correct as had not had, and would not reasonably be expected to have, a Regency Material
Adverse Effect and (ii) in Sections 3.5 and 3.6 shall be true and correct in all
material respects as of the Closing Date as if remade on the Closing Date (except for
representations and warranties contained therein made as of a specific date, which shall be true
and correct in all material respects as of such specific date).
(b) Performance. Seller shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or complied with by
Seller on or prior to the Closing Date.
(c) Closing Certificate. The Buyer Parties shall have received a certificate, dated
as of the Closing Date, signed by a Responsible Officer of Seller certifying that, to the best of
such Responsible Officer’s knowledge, the conditions set forth in Sections 6.2(a) and
6.2(b) have been satisfied.
(d) Closing Deliverables. Seller shall have delivered or caused to be delivered all
of the closing deliveries set forth in Section 2.3(a) and in the other documents
contemplated by this Agreement.
6.3 Conditions to Obligations of Seller. The obligation of Seller to consummate the Closing
is subject to the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any one or more of which may be waived in writing, in whole or in part, by Seller (in
the Seller’s sole discretion):
(a) Representations and Warranties of the Buyer Parties. The representations and
warranties of the Buyer Parties (i) in Article IV (other than those contained in
Section 4.5) shall be true and correct in all respects as of the Closing Date as if remade
on the Closing Date (except for representations and warranties made as of a specific date, which
shall be true and correct in all respects as of such specific date), with only such failures to be
so true and correct as had not
38
had, and would not reasonably be expected to have, an ETE Material Adverse Effect and (ii) in
Sections 4.5 shall be true and correct in all material respects as of the Closing Date as
if remade on the Closing Date (except for representations and warranties contained therein made as
of a specific date, which shall be true and correct in all material respects as of such specific
date).
(b) Performance. The Buyer Parties shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be performed or complied
with by the Buyer Parties on or prior to the Closing Date.
(c)
Closing Certificate. Seller shall have received a certificate, dated as of the
Closing Date, signed by a Responsible Officer of the Buyer Parties certifying that, to the best of
such Responsible Officer’s knowledge, the conditions set forth in
Sections 6.3(a) and
6.3(b) have been satisfied.
(d)
Closing Deliverables. The Buyer Parties shall have delivered or caused to be
delivered all of the closing deliveries set forth in
Section 2.3(b) and in the other
documents contemplated by this Agreement.
7.1
Termination Rights. This Agreement may be terminated at any time prior to the Closing as
follows:
(a) By mutual written consent of the Parties;
(b) By either Seller or the Buyer Parties if any Governmental Authority of competent
jurisdiction shall have issued a final and non-appealable order, decree or judgment prohibiting the
consummation of the transactions contemplated by this Agreement;
(c) By either Seller or the Buyer Parties in the event that the Closing has not occurred on or
prior to June 9, 2010 (the “Termination Date”); provided, however, that (i) Seller may not
terminate this Agreement pursuant to this Section 7.1(c) if such failure of the Closing to
occur is due to the failure of Seller to perform and comply in all material respects with the
covenants and agreements to be performed or complied with by Seller and (ii) the Buyer Parties may
not terminate this Agreement pursuant to this Section 7.1(c) if such failure of the Closing
to occur is due to the failure of either Buyer Party to perform and comply in all material respects
with the covenants and agreements to be performed or complied with by such Buyer Party;
(d) By the Buyer Parties if there shall have been a breach or inaccuracy of Seller’s
representations and warranties in this Agreement or a failure by Seller to perform its covenants
and agreements in this Agreement, in any such case in a manner that would result in, if occurring
and continuing on the Closing Date, the failure of the conditions to the Closing set forth in
Section 6.2(a) or Section 6.2(b), unless such failure is reasonably capable of
being cured, and Seller is using all reasonable efforts to cure such failure by the Termination
Date; provided, however, that the Buyer Parties may not terminate this Agreement pursuant to this
Section 7.1(d) if (i) any of the Buyer Parties’ representations and warranties shall have
become and continue to be untrue in a manner that would cause the condition set forth in
Section 6.3(a) not to be satisfied
39
or (ii) there has been, and continues to be, a failure by either Buyer Party to perform its
covenants and agreements in such a manner as would cause the condition set forth in Section
6.3(b) not to be satisfied;
(e) By Seller if there shall have been a breach or inaccuracy of the Buyer Parties’
representations and warranties in this Agreement or a failure by either Buyer Party to perform its
covenants and agreements in this Agreement, in any such case in a manner that would result in, if
occurring and continuing on the Closing Date, the failure of the conditions to the Closing set
forth in Section 6.3(a) or Section 6.3(b), unless such failure is reasonably
capable of being cured, and such Buyer Party is using all reasonable efforts to cure such failure
by the Termination Date; provided, however, that Seller may not terminate this Agreement pursuant
to this Section 7.1(e) if (i) Seller’s representations and warranties shall have become and
continue to be untrue in a manner that would cause the condition set forth in Section
6.2(a) not to be satisfied or (ii) there has been, and continues to be, a failure by Seller to
perform its covenants and agreements in such a manner as would cause the condition set forth in
Section 6.2(b) not to be satisfied; or
(f) By the Buyer Parties if either of the ETP Redemption Agreement or the MEP Contribution
Agreement has been terminated by the counterparty to such agreement pursuant to its terms.
7.2
Effect of Termination. In the event of the termination of this Agreement pursuant to
Section 7.1, all rights and obligations of the Parties under this Agreement shall
terminate, except for the provisions of this
Section 7.2,
Article IX and
Sections 5.5,
5.7,
10.1,
10.3,
10.6,
10.8 and
10.9, the last sentence of
Section 5.3;
provided, however, that no termination of
this Agreement shall relieve any Party from any liability for any willful and intentional breach of
this Agreement by such Party or for Fraud by such Party and all rights and remedies of a
non-breaching Party under this Agreement in the case of any such willful and intentional breach or
Fraud, at law and in equity, shall be preserved, including the right to recover reasonable
attorneys’ fees and expenses. In the event of the termination of this Agreement, pursuant to
Section 7.1, the Parties agree that for a period of one year from and after the Execution
Date, neither Seller, on the one hand, nor the Buyer Parties, on the other hand, shall solicit for
employment or hire any executive officers or other management level employees of the Regency
Entities, in the case of the Buyer Parties, and the Buyer Parties, in the case of Seller, who were
employed by such party within six months prior to the Execution Date. The restrictions in the
preceding sentence regarding the prohibition on solicitations (as opposed to hires) shall not apply
to any solicitation directed at the general public. Except to the extent otherwise provided in
this
Section 7.2, the Parties agree that, if this Agreement is terminated, the Parties
shall have no liability to each other under or relating to this Agreement.
8.1
Indemnification by Seller. Subject to the terms of this
Article VIII, from and
after the Closing, Seller shall jointly and severally indemnify and hold harmless the Buyer Parties
and their respective partners, members, managers, directors, officers, employees, consultants and
permitted assigns (collectively, the “
Buyer Indemnitees”), to the fullest extent permitted by Law,
from and against any losses (excluding any loss in the value of the Regency
40
Common Units issued to ETE pursuant to the Contribution Agreement), claims, damages,
liabilities and costs and expenses (including reasonable attorneys’ fees and expenses)
(collectively, “Losses”) incurred, arising out of or relating to:
(a) any breach of any of the representations or warranties (in each case, when made) of Seller
contained in Article III or of the certification of a Responsible Officer of Seller
delivered to the Buyer Parties pursuant to Section 6.2(c); and
(b) any breach of any of the covenants or agreements of Seller contained in this Agreement.
provided however; that any liability of Seller under this Section 8.1 shall be satisfied at
Seller’s option from (i) cash on hand; or (ii) by a redemption of the Convertible Preferred Units
at a price based off the original issue price of the Convertible Preferred Units (subject to
adjustment from time to time for stock dividends, stock splits, combinations of units,
reorganizations, recapitalizations, reclassifications or other similar events occurring after the
date hereof) plus all accrued and unpaid dividends (whether or not declared), in an amount equal to
such Losses.
8.2
Indemnification by the Buyer Parties. Subject to the terms of this
Article VIII,
from and after the Closing, the Buyer Parties shall jointly and severally indemnify and hold
harmless Seller and its directors, officers, employees, consultants and permitted assigns
(collectively, the “
Seller Indemnitees” and, together with the Buyer Indemnitees, the
“
Indemnitees”), to the fullest extent permitted by Law, from and against Losses incurred, arising
out of or relating to:
(a) any breach of any of the representations or warranties (in each case, when made) of the
Buyer Parties contained in this Agreement or of the certification of a Responsible Officer of the
Buyer Parties delivered to Seller pursuant to Section 6.3(c); and
(b) any breach of any of the covenants or agreements of the Buyer Parties contained in this
Agreement.
8.3
Limitations and Other Indemnity Claim Matters. Notwithstanding anything to the contrary
in this
Article VIII or elsewhere in this Agreement, the following terms shall apply to any
claim for monetary damages arising out of this Agreement or related to the transactions
contemplated hereby:
(a)
De Minimis. No indemnifying party (an “
Indemnifying Party”) will have any
liability under this
Article VIII in respect of any individual claim involving Losses
arising under
Section 8.1(a) or
Section 8.2(a) to any single Buyer Indemnitee or
Seller Indemnitee, as applicable, of less than $125,000 (each, a “
De Minimis Claim”).
Notwithstanding the forgoing, this
Section 8.3(a) shall not apply to Losses arising from
any breach or inaccuracy of the representations or warranties set forth in
Section 3.16 or
Section 4.14.
(i) Seller will not have any liability under Section 8.1(a) until the Buyer
Indemnitees have suffered Losses in excess of in the aggregate $3,000,000 (the
41
“Deductible”) arising from Claims under Section 8.1(a) that are not De Minimis
Claims, and then recoverable Losses claimed under Section 8.1(a) shall be limited to
those that exceed the Deductible. Notwithstanding the forgoing, this Section
8.3(b)(i) shall not apply to Losses arising from any breach or inaccuracy of the
representations or warranties set forth in Section 3.16.
(ii) The Buyer Parties will not have any liability under Section 8.2(a) until
the Seller Indemnitees have suffered Losses in excess of the Deductible arising from Claims
under Section 8.2(a) that are not De Minimis Claims, and then recoverable Losses
claimed under Section 8.2(a) shall be limited to those that exceed the Deductible.
Notwithstanding the forgoing, this Section 8.3(b)(ii) shall not apply to Losses
arising from any breach or inaccuracy of the representations or warranties set forth in
Section 4.14.
(i) Seller’s aggregate liability under this Agreement and from the transactions
contemplated hereby shall not exceed $45,000,000 (the “Cap”); provided that the limitation
set forth in this Section 8.3(c)(i) shall not apply to Losses arising out of or
relating to (A) any breach or inaccuracy of the representations and warranties set forth in
Sections 3.1, 3.2, 3.5, 3.6 or 3.18 or (B)
any breach of any covenants or agreements of Seller set forth in this Agreement that by
their terms are to be performed after the Closing Date; provided, further, that in no event
shall Seller’s aggregate liability arising under this Agreement and from the transactions
contemplated hereby exceed $300,000,000.
(ii) The Buyer Parties’ aggregate liability under this Agreement and from the
transactions contemplated hereby shall not exceed the Cap; provided that the limitation set
forth in this Section 8.3(c)(ii) shall not apply to Losses arising out of or
relating to (A) any breach or inaccuracy of the representations and warranties set forth in
Sections 4.1, 4.2 or 4.16 or (B) any breach of any covenants or
agreements of the Buyer Parties set forth in this Agreement that by their terms are to be
performed after the Closing Date; provided, further, that in no event shall the Buyer
Parties’ aggregate liability arising under this Agreement and from the transactions
contemplated hereby exceed $300,000,000.
(i) The representations, warranties, covenants and agreements of the Parties under this
Agreement shall survive the execution and delivery of this Agreement and shall continue in
full force and effect until the one-year anniversary of the Closing Date (the “Expiration
Date”); provided that (i) the representations and warranties set forth in Sections
3.1 (Organization; Qualification), 3.2 (Authority; Enforceability),
3.4 (Governmental Approvals), 3.5 (Capitalization), 3.6 (Ownership
of Acquired GP Interests), 3.18 (Brokers’ Fee), 3.22 (Matters Relating to
Acquisition of the Convertible Preferred Units), 4.1 (Organization; Qualification),
4.2 (Authority; Enforceability; Valid Issuance), 4.4 (Governmental
Approvals), 4.5 (Capitalization), 4.16 (Brokers’ Fee) and 4.19
(Matters Relating to Acquisition of Acquired GP Interests) shall survive indefinitely,
42
(ii) the representations and warranties set forth in Section 3.16 and
Section 4.14 shall survive the execution and delivery of this Agreement and shall
continue in full force and effect until ninety (90) days after the expiration of the
applicable statute of limitations (which shall be deemed to be the Expiration Date with
respect to such representations and warranties) and (iii) any covenants or agreements
contained in this Agreement that by their terms are to be performed after the Closing Date
shall survive until fully discharged.
(ii) No action for a breach of any representation or warranty contained herein (other
than representations or warranties that survive indefinitely pursuant to
Section 8.3(d)(i)) shall be brought after the Expiration Date, except for claims of
which a Party has received a Claim Notice setting forth in reasonable detail the claimed
misrepresentation or breach of warranty with reasonable detail, prior to the Expiration
Date.
(e)
Calculation of Losses. In calculating amounts payable to any Seller Indemnitee or Buyer
Indemnitee (each such person, an “
Indemnified Party”) for a claim for indemnification hereunder,
the amount of any indemnified Losses shall be determined without duplication of any other Loss for
which an indemnification claim has been made or could be made under any other representation,
warranty, covenant, or agreement and shall be computed net of (i) payments actually recovered by
the Indemnified Party under any insurance policy with respect to such Losses and (ii) any prior or
subsequent actual recovery by the Indemnified Party from any Person with respect to such Losses.
(f)
Waiver of Certain Damages. Notwithstanding any other provision of this Agreement,
in no event shall any Party be liable for punitive, special, indirect, consequential, remote,
speculative or lost profits damages of any kind or nature, regardless of the form of action through
which such damages are sought, except for any such damages recovered by any third party against an
Indemnified Party in respect of which such Indemnified Party would otherwise be entitled to
indemnification pursuant to the terms hereof.
(g)
Sole and Exclusive Remedy. Except for the assertion of any Claim based on fraud
with the intent to deceive or willful misconduct, the remedies provided in this
Article
VIII shall be the sole and exclusive legal remedies of the Parties, from and after the Closing,
with respect to this Agreement and the transactions contemplated hereby.
(a) Each Indemnitee agrees that promptly after it becomes aware of facts giving rise to a
claim by it for indemnification pursuant to this Article VIII, such Indemnitee must assert
its claim for indemnification under this Article VIII (each, a “Claim”) by providing a
written notice (a “Claim Notice”) to the Indemnifying Party allegedly required to provide
indemnification protection under this Article VIII specifying, in reasonable detail, the
nature and basis for such Claim (e.g., the underlying representation, warranty, covenant or
agreement alleged to have been breached) and the amount (to the extent that the nature and amount
of such Claim is known or reasonably ascertainable at such time, provided that such amount or
estimated amount shall not be conclusive of the final amount, if any, of such Claim).
Notwithstanding the foregoing, an Indemnitee’s failure to send or delay in sending a third party
Claim Notice will not relieve the
43
Indemnifying Party from liability hereunder with respect to such Claim except to the extent
the Indemnifying Party is prejudiced by such failure or delay and except as is otherwise provided
herein, including in Section 8.3(d).
(b) In the event of the assertion of any third party Claim for which, by the terms hereof, an
Indemnifying Party is obligated to indemnify an Indemnitee, the Indemnifying Party will have the
right, at such Indemnifying Party’s expense, to assume the defense of same including the
appointment and selection of counsel on behalf of the Indemnitee so long as such counsel is
reasonably acceptable to the Indemnitee. If the Indemnifying Party elects to assume the defense of
any such third party Claim, it shall within 30 days of its receipt of the Claim Notice, notify the
Indemnitee in writing of its intent to do so. The Indemnifying Party will have the right to settle
or compromise or take any corrective or remediation action with respect to any such Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted by the Indemnifying Party
to a final conclusion or settled at the discretion of the Indemnifying Party. The Indemnitee will
be entitled, at its own cost, to participate with the Indemnifying Party in the defense of any such
Claim. If the Indemnifying Party assumes the defense of any such third-party Claim but fails to
diligently prosecute such Claim, or if the Indemnifying Party does not assume the defense of any
such Claim, the Indemnitee may assume control of such defense and in the event it is determined
pursuant to the procedures set forth in Article IX that the Claim was a matter for which
the Indemnifying Party is required to provide indemnification under the terms of this Article
VIII, the Indemnifying Party will bear the reasonable costs and expenses of such defense
(including reasonable attorneys’ fees and expenses). Notwithstanding the foregoing, the
Indemnifying Party may not assume the defense of the third-party Claim (but will be entitled at its
own cost to participate with the Indemnified Party in the defense of any such Claim) if the
potential damages under the third-party Claim could reasonably and in good faith be expected to
exceed, in the aggregate when combined with all claims previously made by the Indemnified Party to
the Indemnifying Party under this Article VIII, the maximum amount the Indemnifying Party may be
liable pursuant to Section 8.3(c); provided, however, that to the extent the Parties are not in
agreement with respect to the calculation of potential damages, the Indemnifying Party shall have
the right to assume the defense of the third-party Claim in accordance herewith until the Parties
have agreed or a final non-appealable judgment has been entered into, with respect to the
determination of the potential damages.
(c) Notwithstanding anything to the contrary in this Agreement, the Indemnifying Party will
not be permitted to settle, compromise, take any corrective or remedial action or enter into an
agreed judgment or consent decree, in each case, that subjects the Indemnified Party to any
criminal liability, requires an admission of guilt or wrongdoing on the part of the Indemnified
Party or imposes any continuing obligation on or requires any payment from the Indemnified Party
without the Indemnified Party’s prior written consent.
(a) THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN ARTICLE III CONSTITUTE
THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLER TO THE BUYER PARTIES IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE REPRESENTATIONS OF THE BUYER PARTIES
CONTAINED IN ARTICLE IV CONSTITUTE THE SOLE AND
44
EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES TO SELLER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, NO
PARTY NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH
RESPECT TO SUCH PARTY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH PARTY DISCLAIMS
ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH PARTY OR ANY OF ITS AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE
DISTRIBUTION OF, OR ANY PERSON’S RELIANCE ON, ANY INFORMATION, DISCLOSURE OR OTHER DOCUMENT OR
OTHER MATERIAL MADE AVAILABLE TO THE ANY PARTY IN ANY DATA ROOM, ELECTRONIC DATA ROOM, MANAGEMENT
PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT). EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, EACH PARTY
DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST,
STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO ANY OTHER
PARTY OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING
OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO ANY PARTY OR
ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT OR REPRESENTATIVE OF SUCH PARTY OR ANY OF ITS AFFILIATES).
(b) Except as provided in Sections 7.2, 8.1 and 8.2, no Party nor any
Affiliate of a Party shall assert or threaten, and each Party hereby waives and shall cause such
Affiliates to waive, any claim or other method of recovery, in contract, in tort or under
applicable Law, against any Person that is not a Party (or a successor to a Party) relating to the
transactions contemplated by this Agreement.
9.1 Governing Law. This Agreement shall be governed by and construed and interpreted in
accordance with the Laws of the State of Delaware, without giving effect to the conflicts of law
provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of Delaware.
9.2 Consent to Jurisdiction. The Parties irrevocably submit to the exclusive jurisdiction of
(a) the Delaware Court of Chancery, and (b) any state appellate court therefrom within the State of
Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a
particular matter, any state or federal court within the State of Delaware), for the purposes of
any Proceeding arising out of this Agreement or the transactions contemplated hereby (and each
agrees that no such Proceeding relating to this Agreement or the transactions contemplated hereby
shall be brought by it except in such courts). The Parties irrevocably and unconditionally waive
(and agree not to plead or claim) any objection to the laying of venue of any Proceeding arising
out of this Agreement or the transactions contemplated hereby in (i) the
45
Delaware Court of Chancery, or (ii) any state appellate court therefrom within the State of
Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a
particular matter, any state or federal court within the State of Delaware) or that any such
Proceeding brought in any such court has been brought in an inconvenient forum. Each of the
Parties hereto also agrees that any final and non-appealable judgment against a Party hereto in
connection with any Proceeding shall be conclusive and binding on such Party and that such award or
judgment may be enforced in any court of competent jurisdiction, either within or outside of the
United States. A certified or exemplified copy of such award or judgment shall be conclusive
evidence of the fact and amount of such award or judgment.
9.3 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY ACTION OR
PROCEEDING TO ENFORCE OR TO DEFEND ANY RIGHTS UNDER THIS AGREEMENT SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
10.1 Amendment and Modification. This Agreement may be amended, modified or supplemented only
by written agreement of the Parties hereto.
10.2 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any
failure of any of the Parties to comply with any obligation, covenant, agreement or condition in
this Agreement may be waived by the Party or Parties entitled to the benefits thereof only by a
written instrument signed by the Party or Parties granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
10.3 Notices. Any notice, demand or communication required or permitted under this Agreement
shall be in writing and delivered personally, by reputable overnight delivery service or other
courier or by certified mail, postage prepaid, return receipt requested, and shall be deemed to
have been duly given (a) as of the date of delivery if delivered personally or by overnight
delivery service or other courier or (b) on the date receipt is acknowledged if delivered by
certified mail, addressed as follows; provided that a notice of a change of address shall be
effective only upon receipt thereof:
If to Seller to:
Regency GP Acquirer LP
c/o GE Energy Financial Services
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Portfolio-Regency
46
With a copy (not itself constituting notice) to:
Regency GP Acquirer LP
c/o GE Energy Financial Services
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
and
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
If to the Buyer Parties to:
Energy Transfer Equity, L.P.
0000 Xxx Xxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000 or (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
and
Xxxxxx & Xxxxxx LLP
2500 First City Tower
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. XxXxxxxxxx
10.4 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties
and their successors and permitted assigns. No Party may assign or transfer this Agreement or any
of its rights, interests or obligations under this Agreement without the prior written consent of
the other Parties. Any attempted assignment or transfer in violation of this Agreement shall be
null, void and ineffective.
10.5 Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the
benefit of the Parties hereto and their respective successors and assigns. Except as
47
provided in Sections 8.1 and 8.2, none of the provisions of this Agreement
shall be for the benefit of or enforceable by any third party, including any creditor of any Party
or any of their Affiliates. No such third party shall obtain any right under any provision of this
Agreement or shall by reasons of any such provision make any claim in respect of any liability (or
otherwise) against any other Party.
10.6 Entire Agreement. Except for the Confidentiality Agreement which shall survive the
execution of this Agreement, this Agreement and the other transaction documents constitute the
entire agreement and understanding of the Parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both oral and written, among the Parties or
between any of them with respect to such subject matter.
10.7 Severability. Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under applicable Law but
if any provision or portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of any provision in
such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.8 Representation by Counsel. Each of the Parties agrees that it has been represented by
independent counsel of its choice during the negotiation and execution of this Agreement and the
documents referred to herein, and that it has executed the same upon the advice of such independent
counsel. Each Party and its counsel cooperated in the drafting and preparation of this Agreement
and the documents referred to herein, and any and all drafts relating thereto shall be deemed the
work product of the Parties and may not be construed against any Party by reason of its
preparation. Therefore, the Parties waive the application of any Law providing that ambiguities in
an agreement or other document will be construed against the Party drafting such agreement or
document.
10.9 Disclosure Schedules. The inclusion of any information (including dollar amounts) in any
section of the Seller Disclosure Schedule or the Buyers Disclosure Schedule shall not be deemed to
be an admission or acknowledgment by a Party that such information is required to be listed on such
section of the Seller Disclosure Schedule or the Buyers Disclosure Schedule or is material to or
outside the ordinary course of the business of such Party or the Person to which such disclosure
relates. The information contained in this Agreement, the Exhibits and the Schedules is disclosed
solely for purposes of this Agreement, and no information contained in this Agreement, the Exhibits
or the Schedules shall be deemed to be an admission by any Party to any third Person of any matter
whatsoever (including any violation of a legal requirement or breach of contract). The disclosure
contained in one disclosure schedule contained in the Seller Disclosure Schedule or Buyer
Disclosure Schedule may be incorporated by reference into any other disclosure schedule contained
therein, and shall be deemed to have been so incorporated into any other disclosure schedule so
long as it is readily apparent on its face that the disclosure is applicable to such other
disclosure schedule.
48
10.10 Facsimiles; Counterparts. This Agreement may be executed by facsimile signatures by any
Party and such signature shall be deemed binding for all purposes hereof, without delivery of an
original signature being thereafter required. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an original and all of which
together shall constitute one and the same document.
[Signature page follows.]
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REGENCY GP ACQUIRER LP
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By: |
REGENCY GP HOLDO
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I LLC, its general partner |
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By: |
AIRCRAFT SERVICES
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CORPORATION, its managing member |
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By: |
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, |
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Authorized Signatory |
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ENERGY TRANSFER EQUITY, L.P.
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By: |
LE GP, LLC, its general partner
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By: |
/s/ Xxxx X. XxXxxxxxxx
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Xxxx X. XxXxxxxxxx, |
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President and Chief Financial Officer |
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ETE GP ACQUIRER LLC
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By: |
/s/ Xxxxxx Xxxxxxx, Xx.
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Xxxxxx Xxxxxxx, Xx., |
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Chief Financial Officer |
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EXHIBIT A
“Acquired GP Interests” is defined in the recitals to this Agreement.
“Affiliate” means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a specified Person. A Person shall
be deemed to control another Person if such first Person possesses, directly or indirectly, the
power to direct, or cause the direction of, the management and policies of such other Person,
whether through the ownership of voting securities, by contract or otherwise.
“Agreement” is defined in the preamble to this Agreement.
“Assignment of Interests” is defined in Section 2.3(a)(i).
“Audit Firm” means the independent accounting firm regularly engaged by Seller to review their
quarterly financial statements and provide an audit report with respect to their annual financial
statements.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial
banks in the State of New York are authorized or obligated to be closed by applicable Laws.
“Buyer” is defined in the preamble to this Agreement.
“Buyer Indemnities” is defined in Section 8.1.
“Buyer Parties” is defined in the preamble to this Agreement.
“Buyers Disclosure Schedule” means the disclosure schedule to this Agreement prepared by the
Buyer Parties and delivered to Seller on the Execution Date.
“Claim” is defined in Section 8.4(a).
“Claim Notice” is defined in Section 8.4(a).
“Closing” is defined in Section 2.2.
“Closing Date” is defined in Section 2.2.
“Code” means the Internal Revenue Code of 1986, as amended.
“Competing Proposal” is defined in Section 5.9(c).
“Confidentiality Agreement” means that certain Confidentiality and Non-Disclosure Agreement,
dated as of February 8, 2010, by and among ETE, ETP and GE Energy Financial Services, Inc.
“Contract” means any written agreement, lease, license, note, evidence of indebtedness,
mortgage, security agreement, understanding, instrument or other legally binding arrangement.
A-1
“Control” means, where used with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such
Person, whether through ownership of Voting Interests, by contract or otherwise, and the terms
“Controlling” and “Controlled” have correlative meanings.
“Convertible Preferred Units” is defined in the recitals to this Agreement.
“Creditors’ Rights” is defined in Section 3.2(b).
“De Minimis Claim” is defined in Section 8.3(a).
“Deductible” is defined in Section 8.3(b)(i).
“Delaware LLC Act” means the Delaware Limited Liability Company Act, as amended from time to
time.
“Delaware LP Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from
time to time.
“Environmental Laws” means any and all Laws pertaining to prevention of pollution, protection
of the environment (including natural resources), remediation of contamination and workplace health
and safety.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity,
trade or business that is a member of a group described in Section 414(b),(c), (m) or (o) of the
Code or Section 4001(b)(l) of ERISA that includes the first entity, trade or business, or that is a
member of the same “controlled group” as the first entity, trade or business pursuant to section
4001(a)(14) of ERISA.
“ETC II” is defined in the recitals to this Agreement.
“ETC III” is defined in the recitals to this Agreement.
“ETE” is defined in the preamble to this Agreement.
“ETE Benefit Plans” is defined in Section 4.15.
“ETE Common Units” means a common unit representing a limited partner interest in ETE.
“ETE Credit Agreement” means that certain Credit Agreement dated February 8, 2006 between ETE
and Wachovia Bank, National Association, as administrative agent as amended from time to time.
“ETE Entities” means ETE and all Subsidiaries of ETE.
“ETE Financial Statements” are defined in Section 4.9(c).
A-2
“ETE Material Adverse Effect” means any Material Adverse Effect in respect to the ETE Entities
taken as a whole.
“ETE Partnership Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of Energy Transfer Equity, L.P., as amended from time to time.
“ETE SEC Documents” is defined in Section 4.9(a).
“ETP” is defined in the recitals to this Agreement.
“ETP Common Units” means a common unit representing a limited partner interest in ETP.
“ETP GP Interest” is defined in Section 4.5(h).
“ETP GP LLC” means Energy Transfer Partners, L.L.C., a Delaware limited liability company.
“ETP GP LP” means Energy Transfer Partners GP, L.P., a Delaware limited partnership.
“ETP GP LP Interests” is defined in Section 4.5(h).
“ETP Incentive Distribution Rights” means the “Incentive Distribution Rights” as such term is
defined in the ETP Partnership Agreement.
“ETP Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of
Energy Transfer Partners, L.P. as amended from time to time.
“ETP Redemption Agreement” is defined in the recitals to this Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Execution Date” is defined in the preamble to this Agreement.
“Expiration Date” is defined in Section 8.3(d)(i).
“FERC” means the Federal Energy Regulatory Commission of the United States of America.
“Fraud” means actual fraud involving a knowing and intentional misrepresentation of a material
fact.
“GAAP” means generally accepted accounting principles in the United States of America.
“GECC Names and Marks” means the names or marks of GECC or any of its Affiliates, including
“GE” (in block letters or otherwise), the GE monogram, “General Electric Company” and “General
Electric,” either alone or in combination with other words and all marks, trade
A-3
dress, logos, monograms, domain names and other source identifiers confusingly similar to or
embodying any of the foregoing either alone or in combination with other words; provided, however,
that “GECC Names and Marks” shall not include the names or marks of Regency or any of its
Subsidiaries, including “Regency” or “Regency Energy Partners,” either alone or in combination with
other words and all marks, trade dress, logos, monograms, domain names and other source identifiers
confusingly similar to or embodying any of the foregoing either alone or in combination with other
words.
“Governance Policies” means policies designed to address conflicts of interest,
non-overlapping director positions, confidential information and other related matters.
“Governmental Authority” means any executive, legislative, judicial, regulatory or
administrative agency, body, commission, department, board, court, tribunal, arbitrating body or
authority of the United States or any foreign country, or any state, local or other governmental
subdivision thereof.
“Hazardous Substances” means each substance, waste or material regulated, defined, designated
or classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant
or toxic substance under any Environmental Law.
“Indemnified Party” is defined in Section 8.3(e).
“Indemnifying Party” is defined in Section 8.3(a).
“Indemnitees” is defined in Section 8.2.
“Intellectual Property” means patents, trademarks, copyrights, and trade secrets.
“Law” means any law, statute, code, ordinance, order, rule, rule of common law, regulation,
judgment, decree, injunction, franchise, permit, certificate, license or authorization of any
Governmental Authority.
“LEGP Interest” is defined in Section 4.5(e).
“LEGPLLC” is defined in Section 4.5(e).
“Lien” means, with respect to any property or asset, (i) any mortgage, pledge, security
interest, lien or other similar property interest or encumbrance in respect of such property or
asset, and (ii) any easements, rights-of-way, restrictions, restrictive covenants, rights, leases
and other encumbrances on title to real or personal property (whether or not of record).
“Losses” is defined in Section 8.1.
“Master Services Agreement” is defined in the recitals to this Agreement.
A-4
“Material Adverse Effect” means, with respect to any Person, any change, event or development
that is materially adverse to the business, assets, financial condition, or operations of such
Person and its Subsidiaries, taken as a whole; provided, however, that, a Material Adverse Effect
shall not be deemed to have occurred as a result of any of the following changes, events or
developments (either alone or in combination): (a) any change in general economic, political or
business conditions (including any effects on the economy arising as a result of acts of
terrorism); (b) any change in oil or natural gas commodity prices; (c) any change affecting the
natural gas transportation industry generally but which does not have a materially disproportionate
impact on the business of such Person and its Subsidiaries; (d) any change in accounting
requirements or principles imposed by GAAP or any change in Law after the Execution Date but which
does not, in each case, have a materially disproportionate impact on the business of such Person
and its Subsidiaries; (e) any change resulting from the execution of this Agreement or the
announcement of the transactions contemplated hereby; or (f) any change resulting from compliance
by such Person with the terms of this Agreement or from any action by such Person that is expressly
permitted by this Agreement.
“MEP Contribution” is defined in the recitals to this Agreement.
“MEP Contribution Agreement” is defined in the recitals to this Agreement.
“Operating Subsidiaries” means Regency Gas Services LP, a Delaware limited partnership and all
other Subsidiaries of Regency.
“Organizational Documents” means, with respect to any Person, the articles of incorporation,
certificate of incorporation, certificate of formation, certificate of limited partnership, bylaws,
limited liability company agreement, operating agreement, partnership agreement, stockholders’
agreement and all other similar documents, instruments or certificates executed, adopted or filed
in connection with the creation, formation or organization of such Person, including any amendments
thereto.
“Owned Units” are defined in Section 4.5(i).
“Party” and “Parties” are defined in the preamble of this Agreement.
“Permits” means all permits, approvals, consents, licenses, franchises, exemptions and other
authorizations, consents and approvals of or from Governmental Authorities.
“Permitted Liens” means, with respect to any Person, (a) statutory Liens for current Taxes
applicable to the assets of such Person or assessments not yet delinquent or the amount or validity
of which is being contested in good faith and for which adequate reserves have been established in
accordance with GAAP; (b) mechanics’, carriers’, workers’, repairers’, landlords’ and other similar
liens arising or incurred in the ordinary course of business of such Person relating to obligations
as to which there is no default on the part of such Person, (c) Liens as may have arisen in the
ordinary course of business of such Person, none of which are material to the ownership, use or
operation of the assets of such Person; (d) any state of facts which an accurate on the ground
survey of any real property of such Person would show, and any easements, rights-of-way,
restrictions, restrictive covenants, rights, leases, and other encumbrances on title to real or
personal property filed of record that do not materially detract from the value of or materially
A-5
interfere with the use and operation of any of the assets of such Person; (e) statutory Liens
for obligations that are not delinquent, (f) Liens encumbering the fee interest of those tracts of
real property encumbered by Rights-of-Way, (g) legal highways, zoning and building laws, ordinances
and regulations, that do not materially detract from the value of or materially interfere with the
use of the assets of such Person in the ordinary course of business and (h) any Liens with respect
to assets of such Person, which, together with all other Liens, do not materially detract from the
value of such Person or materially interfere with the present use of the assets owned by such
Person or the conduct of the business of such Person.
“Person” means any natural person, corporation, limited partnership, general partnership,
limited liability company, joint stock company, joint venture, association, company, estate, trust,
bank trust company, land trust, business trust, or other organization, whether or not a legal
entity, custodian, trustee-executor, administrator, nominee or entity in a representative capacity
and any Governmental Authority.
“Preceding Quarter” is defined in Section 2.4(b).
“Pre-Closing Tax” is defined in Section 5.12(a).
“Proceeding” means any civil, criminal or administrative actions, suits, investigations or
other proceedings.
“Redemption and Exchange” is defined in the recitals to this Agreement.
“Regency” is defined in the recitals to this Agreement.
“Regency Benefit Plans” is defined in Section 3.17(a)(ii).
“Regency Common Unit” means a common unit representing a limited partner interest in Regency.
“Regency Credit Agreement” means the Fifth Amended and Restated Credit Agreement dated as of
March 4, 2010, by and among Regency, Wachovia Bank, National Association as Administrative Agent
and the lenders party thereto, as amended from time.
“Regency Entities” means Regency, RGPLP, RGPLLC and the Operating Subsidiaries, collectively.
“Regency Financial Statements” is defined in Section 3.10(c).
“Regency GP Entities” means RGPLP and RGPLLC.
“Regency GP Interest” is defined in Section 3.5(e).
“Regency GP LP Interests” is defined in Section 3.5(e).
“Regency Incentive Distribution Rights” means the “Incentive Distribution Rights” as such term
is defined in the Regency Partnership Agreement.
A-6
“Regency Material Adverse Effect” means any Material Adverse Effect in respect of the Regency
Entities taken as a whole.
“Regency Material Contracts” is defined in Section 3.13(b).
“Regency Partnership Agreement” means that certain Amended and Restated Agreement of Limited
Partnership of Regency Energy Partners LP, dated as of February 3, 2006, between RGPLP, as the
General Partner, and Seller, as the Organizational Limited Partner, together with any other Persons
who become Partners in the Partnership or parties thereto as provided therein, as amended by that
Amendment No. 1 to Agreement of Amended and Restated Agreement of Limited Partnership of Regency
Energy Partners LP, dated as of August 15, 2006, between RGPLP, as the General Partner, as further
amended by that Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Regency
Energy Partners LP, dated as of September 21, 2006, between RGPLP, as the General Partner.
“Regency SEC Documents” is defined in Section 3.10(a).
“Regency Series A Unit” is defined in Section 3.5(g).
“Registration Rights Agreement” is defined in Section 2.3(a)(vii).
“Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping,
or disposing.
“Representatives” is defined in Section 5.3.
“Responsible Officer” means, with respect to any Person, any vice-president or more senior
officer of such Person.
“RGPLLC” is defined in the recitals to this Agreement.
“RGPLP” is defined in the recitals to this Agreement.
“Rights-of-Way” means easements, rights-of-way and similar real estate interests.
“RIGS Contribution” is defined in the preamble to this Agreement.
“RIGS HPC” is defined in the preamble to this Agreement.
“SEC” is defined in Section 3.10(a).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Seller” is defined in the preamble to this Agreement.
“Seller Indemnitees” is defined in Section 8.2.
A-7
“Seller Disclosure Schedule” means the disclosure schedule to this Agreement prepared by
Seller and delivered to the Buyer Parties on the Execution Date.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which a majority of the Voting Interests are
at the time owned or Controlled directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that for purposes of this Agreement,
RIGS HPC and any of its Subsidiaries shall be deemed to be Subsidiaries of Regency.
“Tax” means (a) any tax, charge, fee, levy, penalty or other assessment imposed by any United
States federal, state, local or foreign taxing authority, including any excise, property, income,
sales, transfer, margin, franchise, payroll, withholding, social security or other tax, including
any interest, penalties or additions attributable thereto, whether disputed or not; and (b) any
liability for the payment of any amounts of the type described in clause (a) as a result of
being a member of a consolidated, combined or unitary group for any period; and (c) any liability
of for the payment of any amounts of the type described in clause (a) or (b) as a
result of the operation of law or any express or implied obligation to indemnify any other Person.
“Tax Return” means any return, report, information return, declaration, claim for refund or
other document (including any related or supporting information or schedules) supplied or required
to be supplied to any authority with respect to Taxes and including any supplement or amendment
thereof.
“Termination Date” is defined in Section 7.1(c).
“Third Amendment” is defined in the recitals to this Agreement.
“Transaction Agreements” means, collectively, this Agreement, the ETP Redemption Agreement and
MEP Contribution Agreement.
“Transfer Taxes” is defined in Section 5.12(b).
“Treasury Regulations” means the regulations (including temporary regulations) promulgated by
the United States Department of the Treasury pursuant to and in respect of provisions of the Code.
All references herein to sections of the Treasury Regulations shall include any corresponding
provision or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.
“Voting Interests” of any Person as of any date means the equity interests of such Person
pursuant to which the holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers, general partners or trustees of such
Person (regardless of whether, at the time, equity interests of any other class or classes shall
have, or might have, voting power by reason of the occurrence of any contingency) or, with respect
to a partnership (whether general or limited), any general partner interest in such partnership.
X-0
Xxxxx X
XXXXXXXXX XX. 0
TO
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ENERGY TRANSFER EQUITY, L.P.
This Amendment No. 3 (this “Amendment”) to the Third Amended and Restated Agreement of Limited
Partnership of Energy Transfer Equity, L.P., a Delaware limited partnership (the “Partnership”),
dated as of February 8, 2006 (the “Partnership Agreement”), is entered into effective as of
___, 2010, by LE GP, LLC, a Delaware limited liability company (the “General Partner”), as
the general partner of the Partnership, on behalf of itself and the Limited Partners of the
Partnership. Capitalized terms used but not defined herein are used as defined in the Partnership
Agreement.
WHEREAS, the Partnership has entered into a General Partner Purchase Agreement, dated as of
May 10, 2010 (the “
GP Purchase Agreement”), between the Partnership, ETE GP Acquirer LLC, a
Delaware limited liability company, Regency GP Acquirer, L.P., a Delaware limited partnership
(“
Regency GP Seller”), pursuant to which the Regency GP Seller will transfer (i) 100% of the
membership interests in Regency GP LLC, a Delaware limited liability company (“
RGPLLC”) and (ii)
the 99.999% limited partner interest in Regency GP LP, a Delaware limited
Annex A-1
partnership (“RGPLP” and, together with RGPLLC, the “Regency GP Entities”) and the general
partner of Regency Energy Partners, L.P., a Delaware limited partnership (“Regency”) (such
interests, together the “Acquired Regency GP Interests”) in exchange for the issuance by the
Partnership to Regency GP Seller of 3,000,000 units of a new class of Partnership Securities to be
designated as “Series A Convertible Preferred Units” with the rights, preferences and privileges
and such other terms as are set forth in this Amendment;
NOW, THEREFORE, the Partnership Agreement is hereby amended as follows:
Section 1.1 of the Partnership Agreement is hereby amended to add or amend and restate the
following definitions:
”Combined Accretion Multiple” has the meaning ascribed to such term in Section
5.13(b)(xi)(B).
”Election Notice Period” has the meaning ascribed to such term in Section
5.13(b)(ix)(A).
”Fair Market Value” means, as of a particular date, (i) for any Marketable
Security, the VWAP Price of such Marketable Security and (ii) for all property other
than a Marketable Security, the value of the property on the date it was distributed
by the Partnership in a Special Distribution, as determined in good faith by the
General Partner.
”Fractional Unit Cash Consideration” has the meaning ascribed to such term in
Section 5.13(b)(vii)(G).
”Fundamental Change” means (i) any merger or consolidation of the Partnership
with another entity, (ii) a sale of all or substantially all of the assets of the
Partnership, (iii) any dissolution or liquidation of the Partnership, (iv) any other
transaction pursuant to which the General Partner or any Affiliate of the General
Partner exercises its rights to purchase all of the Outstanding Common Units
pursuant to Section 15.1 of this Agreement, (v) the sale or transfer, directly or
indirectly, of the general partner interest of the MLP by the Partnership
Annex A-2
(excluding any such sale or transfer to a, direct or indirect, wholly-owned
Subsidiary of the Partnership), (vi) the failure of the Partnership to continue to
maintain, directly or through direct or indirect wholly-owned Subsidiaries,
ownership of at least 25,000,000 common units of the MLP (as appropriately adjusted
for unit splits, unit distributions and the like) or (vii) the declaration of a
distribution by the MLP to its unitholders that constitutes a distribution from
Capital Surplus as opposed to Operating Surplus (as each such term is defined in the
MLP Agreement as in effect on the Series A Issuance Date).
”Fundamental Change Conversion Consideration” means (x) if Common Units will
remain Outstanding and continue to constitute Marketable Securities upon
consummation of a Fundamental Change, a number of Common Units equal to (A) the sum
of (1) the Series A Liquidation Value as of the date of consummation of the
Fundamental Change plus (2) the lesser of (a) the Series A Accretion Amount as of
the date of the consummation of a Fundamental Change or (b) $10.00, divided by (B)
the VWAP Price as of the date of the consummation of the Fundamental Change and (y)
in any circumstance not described in clause (x), the consideration received in
connection with such Fundamental Change by a hypothetical holder of the number of
Common Units that would be received by the holder of one Series A Preferred Unit
pursuant to clause (x) had Common Units remained Outstanding and continued to
constitute Marketable Securities upon consummation of such Fundamental Change.
”Fundamental Change Documentation” means any documentation (in addition to any
certificates representing a holder’s Series A Preferred Units) that the General
Partner reasonably requests to be delivered by each holder of Series A Preferred
Units in connection with the conversion or redemption of the Series A Preferred
Units due to a Fundamental Change, including, if applicable, wire transfer
instructions in respect of any cash consideration to be received in connection with
such Fundamental Change.
”Fundamental Change Elected Common Unit Consideration” has the meaning ascribed
to such term in Section 5.13(b)(ix)(C)(a)(i).
”Fundamental Change Elected Cash Consideration” has the meaning ascribed to
such term in Section 5.13(b)(ix)(C)(a)(i).
”Fundamental Change Forced Redemption Election” has the meaning ascribed to
such term in Section 5.13(b)(ix)(A)(a).
”Fundamental Change Redemption Consideration” means (i) an amount in cash equal
to the Series A Liquidation Value as of the date of the consummation of a
Fundamental Change plus (ii) the Fundamental Change Redemption Consideration
Premium.
”Fundamental Change Redemption Consideration Premium” means, in respect of a
Fundamental Change, (x) if Common Units will remain Outstanding
Annex A-3
and continue to constitute Marketable Securities upon the consummation of the
Fundamental Change, a number of Common Units equal to (A) the greater of (1) the
Series A Accretion Amount as of the date of the consummation of a Fundamental Change
and (2) $10.00 divided by (B) the VWAP Price as of the date of consummation of the
Fundamental Change and (y) in any circumstance not described in clause (x), the
consideration received in connection with such Fundamental Change by a hypothetical
holder of the number of Common Units that would be received by the holder of one
Series A Preferred Unit pursuant to clause (x) had Common Units remained Outstanding
and continued to constitute Marketable Securities upon consummation of such
Fundamental Change.
”Fundamental Change Trigger Date” has the meaning ascribed to such term in
Section 5.13(b)(ix)(A).
”Investor” means, collectively, Regency GP Seller and each of its Affiliates
from time to time that is the registered holder of any Series A Preferred Units.
”Issue Price” means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting discount
charged to the Partnership and after taking into account any other form of discount
with respect to the price at which a Unit is purchased from the Partnership;
provided, however, that in the case of the Series A Preferred Units, the Issue Price
shall be $100.00 per Unit.
”Junior Securities” means any class or series of Partnership Securities that,
with respect to distributions on such Partnership Securities and distributions upon
liquidation of the Partnership, ranks junior to the Series A Preferred Units,
including but not limited to Common Units.
”Marketable Security” means any security listed on the New York Stock Exchange
or the NASDAQ Stock Market.
”Parity Securities” means any class or series of Partnership Securities that,
with respect to distributions on such Partnership Securities or distributions upon
liquidation of the Partnership, ranks pari passu with the Series A Preferred Units.
”Partnership Event” has the meaning ascribed to such term in Section
5.13(b)(xi)(A).
”Partnership Event Consummation Date” has the meaning ascribed to such term in
Section 5.13(b)(xi)(A).
”Post-Partnership Event Accretion Multiple” has the meaning ascribed to such
term in Section 5.13(b)(xi)(B)(b).
”Pre-Partnership Event Accretion Multiple” has the meaning ascribed to such
term in Section 5.13(b)(xi)(B)(a).
Annex A-4
”Public Equity Partnership Event” has the meaning ascribed to such term in
Section 5.13(b)(xi)(B).
”Record Date” means the date established by the General Partner for determining
(a) the identity of the Record Holders entitled to notice of, or to vote at, any
meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in
respect of any lawful action of Limited Partners, (b) the identity of Record Holders
entitled to receive any report or distribution or to participate in any offer or (c)
the identity of the Record Holders of Series A Preferred Units entitled to convert
such Units or whose Units are to be redeemed.
”
Regency GP Purchase Agreement” means the
General Partner Purchase Agreement,
dated May 10, 2010, by and between the Partnership, ETE GP Acquirer LLC, a Delaware
limited liability company and Regency GP Seller.
”Regency GP Seller” means Regency GP Acquirer, L.P., a Delaware limited
partnership.
”Regulation FD” means Regulation FD as promulgated by the Commission, as the
same may be amended from time to time.
”Securities Law Prohibition” has the meaning ascribed to such term in Section
5.13((b)(vii)(H).
”Senior Securities” means any class or series of Partnership Securities that,
with respect to distributions on such Partnership Securities or distributions upon
liquidation of the Partnership, ranks senior to the Series A Preferred Units.
”Series A Adjustment Event” has the meaning ascribed to such term in Section
5.13(b)(xii)(A).
”Series A Accretion Amount” means, as of a particular date (i) $100.00
multiplied by (ii) the Trading Price Accretion Percentage as of such date multiplied
by (iii) twenty-five percent (25%), expressed as a decimal.
”Series A Conversion Cash Consideration” has the meaning ascribed to such term
in Section 5.13(b)(vii)(A)(b)(ii).
”Series A Conversion Consideration” has the meaning ascribed to such term in
Section 5.13(b)(vii)(A).
”Series A Conversion Documentation” has the meaning ascribed to such term in
Section 5.13(b)(vii)(C)(c).
”Series A Conversion Notice” has the meaning ascribed to such term in Section
5.13(b)(vii)(C).
Annex A-5
”Series A Conversion Notice Date” has the meaning ascribed to such term in
Section 5.13(b)(vii)(B).
”Series A Distribution Payment Date” has the meaning ascribed to such term in
Section 5.13(b)(ii)(A).
”Series A Distribution Rate” means a fixed rate of $2.00 per Series A Preferred
Unit per Quarter; provided, however, that with respect to the period commencing on
the Series A Issuance Date and ending on the last day of the Quarter in which the
Series A Issuance Date occurs, “Series A Distribution Rate” shall mean a fixed rate
of the product of $2.00 per Series A Preferred Unit multiplied by a fraction of
which the numerator is the number of days in such period and the denominator is 90.
”Series A Exchange Cap” means that number of units of Common Units which the
Partnership may issue upon conversion or redemption, as the case may be, of the
Series A Preferred Units without breaching the Partnership’s obligations under the
rules or regulations of any National Securities Exchange on which the Common Units
are listed or admitted to trading.
”Series A Issuance Date” means [l], 2010.
”Series A Liquidation Value” means as of a particular date, with respect to a
Series A Preferred Unit, the sum of (i) the Issue Price, plus (ii) all accumulated
and unpaid and all accrued and unpaid distributions on such Series A Preferred Unit
pursuant to Section 5.13(b)(ii)(A) as of such date.
”Series A Maturity Date” means [l], 2014.1
”Series A Optional Redemption Trigger Date” means [l], 2013.2
”Series A Preferred Unit” means a Partnership Security representing a
fractional part of the Partnership Interests of all Limited Partners and Assignees,
and having the rights, preferences and privileges and duties and obligations
specified with respect to the Series A Preferred Units in this Agreement. The term
“Series A Preferred Unit” does not refer to a Common Unit prior to the conversion of
a Series A Preferred Unit into a Common Unit pursuant to the terms of this
Agreement.
”Series A Pro Rata Distribution” means, in respect of any Parity Security, the
distribution permitted to be made on such Parity Security in the event that the
Partnership fails to pay in full in cash any distribution (or portion thereof) which
any holder of Series A Preferred Units accrues and is entitled to receive, which is
equal to the distribution payable in respect of such Parity Security as of such
date, multiplied by a fraction (i) the numerator of which is the distribution paid
in
|
|
|
1 |
|
The fourth anniversary of the Series A
Issuance Date |
|
2 |
|
The third anniversary of the Series A
Issuance Date. |
Annex A-6
respect of each Series A Preferred Unit on the most recent Series A
Distribution Payment Date and (ii) the denominator of which is the distribution
accumulated and payable on each Series A Preferred Unit immediately prior to the
payment of such distribution on the most recent Series A Distribution Payment Date.
”Series A Redemption Confirmation” has the meaning ascribed to such term in
Section 5.13(b)(viii)(C).
”Series A Redemption Consideration” has the meaning ascribed to such term in
Section 5.13(b)(viii)(A).
”Series A Redemption Documentation” has the meaning ascribed to such term in
Section 5.13(b)(viii)(C).
”Series A Redemption Date” has the meaning ascribed to such term in Section
5.13(b)(viii)(C)(a).
”Series A Redemption Notice” has the meaning ascribed to such term in Section
5.13(b)(viii)(C)(b).
”Special Distribution” has the meaning ascribed to such term in Section
5.13(b)(xii)(A).
”Successor Securities” has the meaning ascribed to such term in Section
5.13(b)(xi)(B).
”Trading Price Accretion Percentage” as of a particular date means, subject to
adjustment pursuant to Sections 5.13(b)(xi)(B) and 5.13(b)(xii)(A), a fraction, (i)
the numerator of which equals (A) the VWAP Price of a Common Unit as of such date
minus (B) the VWAP Price of a Common Unit as of the Series A Issuance Date and (ii)
the denominator of which equals the VWAP Price of a Common Unit as of the Series A
Issuance Date, provided that, if the numerator of the foregoing fraction is a
negative amount, then the trading Price Accretion Percentage shall equal zero.
”VWAP Price” as of a particular date means the volume-weighted average trading
price of a Common Unit on the National Securities Exchange on which the Common Units
are listed or admitted to trading, calculated over the consecutive 10-Trading Day
period ending on the close of trading on the Trading Day immediately prior to such
date; provided, however, that the “VWAP Price” as of a particular date following
consummation of a Public Equity Partnership Event shall mean the volume-weighted
average trading price of the Successor Securities on the National Securities
Exchange on which the Successor Securities are listed or admitted to trading,
calculated over the consecutive 10-Trading Day period ending on the close of trading
on the Trading Day immediately prior to such date.
Section 1.1 of the Partnership Agreement is hereby further amended to add the following
sentence to the end of the definition of “Common Unit”:
Annex A-7
“The term “Common Unit” does not refer to a Series A Preferred Unit prior to
the conversion of such Unit into a Common Unit pursuant to the terms hereof.”
Section 4.7(c) of the Partnership Agreement is hereby amended and restated to read in its
entirety as follows:
”(c) The transfer of a Series A Preferred Unit shall be subject to the
restrictions imposed by Section 5.13(b)(x) and Section 6.6.”
Section 5.6(a) of the Partnership Agreement is hereby amended and restated to read in its
entirety as follows:
“The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the General Partner) owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv) and the methodology set forth in Proposed Treasury Regulation
Section 1.704-1(b)(2)(iv)(s). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of Partnership
income and gain (including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.6(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of
cash or Net Agreed Value of all actual and deemed distributions of cash or property
made with respect to such Partnership Interest pursuant to this Agreement and (y)
all items of Partnership deduction and loss computed in accordance with Section
5.6(b) and allocated with respect to such Partnership Interest pursuant to Section
6.1. The Partnership shall follow the methodology set forth in the proposed
noncompensatory option regulations under Proposed Treasury Regulation Sections
1.704-1, 1.721-2 and 1.761-3 at all times, including when the assets of the
Partnership are revalued or any Series A Preferred Units are converted pursuant to
Section 5.13. For the avoidance of doubt, the Series A Preferred Units will be
treated as a partnership interest in the Partnership for federal income tax
purposes, and, therefore, each holder of a Series A Preferred Unit will be treated
as a partner in the Partnership.”
Section 5.6(d)(i) of the Partnership Agreement is hereby amended and restated to read in its
entirety as follows:
”(i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f) and
Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s), on an issuance of
additional Partnership Interests for cash or Contributed Property, the issuance of
Partnership Interests as consideration for the provision of services, the conversion
of the General Partner’s Combined Interest to Units pursuant to
Annex A-8
Section 11.3(b) or the conversion of a Series A Preferred Unit, the Capital
Account of all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance, or immediately after such conversion (with
respect to the conversion of a Series A Preferred Unit), shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately prior to such
issuance or on the date of such conversion. Any such Unrealized Gain or Unrealized
Loss (or items thereof) shall be allocated (A) if the operation of this sentence is
triggered by the conversion of a Series A Preferred Unit, first to the Partners
holding converted Series A Preferred Units until the Capital Account of each
converted Series A Preferred Unit is equal to the Per Unit Capital Amount for a then
Outstanding Common Unit (other than a converted Series A Preferred Unit), and (B)
any remaining Unrealized Gain or Unrealized Loss shall be allocated among the
Partners pursuant to Section 6.1(c) in the same manner as any item of gain or loss
actually recognized would have been allocated. If the Unrealized Gain or Unrealized
Loss allocated as a result of the conversion of a Series A Preferred Unit is not
sufficient to cause the Capital Account of each converted Series A Preferred Unit to
equal the Per Unit Capital Amount for a then Outstanding Common Unit (other than a
converted Series A Preferred Unit), then Capital Account balances shall be
reallocated between the Partners holding converted Series A Preferred Units and the
Partners holding Common Units (other than converted Series A Preferred Units) so as
to cause the Capital Account of each converted Series A Preferred Unit to equal the
Per Unit Capital Amount for a then Outstanding Common Unit (other than a converted
Series A Preferred Unit), in accordance with Proposed Treasury Regulation Section
1.704-1(b)(2)(iv)(s)(3). In determining such Unrealized Gain or Unrealized Loss,
the aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to the
issuance of additional Partnership Interests shall be determined by the General
Partner using such method of valuation as it may adopt; provided, however, that the
General Partner, in arriving at such valuation, must take fully into account the
fair market value of the Partnership Interests of all Partners at such time and must
reduce the fair market value of all Partnership assets by the excess, if any, of the
fair market value of any Outstanding Series A Preferred Units that have not yet been
converted over the aggregate Issue Price of such Series A Preferred Units to the
extent of any Unrealized Gain that has not been reflected in the Partners’ Capital
Accounts previously, pursuant to Proposed Treasury Regulation Section
1.704-1(b)(2)(iv)(h)(2). The General Partner shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines) to arrive at a
fair market value for individual properties.”
Article V of the Partnership Agreement is hereby amended to add a new Section 5.13 creating a
new series of Units as follows:
Annex A-9
(a) General. The General Partner hereby designates and creates a series of
Units to be designated as “Series A Convertible Preferred Units” and consisting of
a total of 3,000,000 Series A Preferred Units, having the same rights, preferences
and privileges, and subject to the same duties and obligations, as the Common
Units, except as set forth in this Section 5.13 and in Sections 5.6(d)(i), 6.6 and
12.10. The class of Series A Preferred Units shall be closed immediately following
the Series A Issuance Date and thereafter no additional Series A Preferred Units
shall be designated, created or issued without the prior written approval of the
General Partner and the holders of a majority of the Outstanding Series A Preferred
Units. The initial Capital Account balance in respect of each Series A Preferred
Unit issued on the Series A Issuance Date shall be the Issue Price for such Series
A Preferred Unit.
(b) Rights of Series A Preferred Units. The Series A Preferred Units shall
have the following rights, preferences and privileges and shall be subject to the
following duties and obligations:
(i) Allocations.
(A) Notwithstanding anything to the contrary in Section
6.1(a), prior to any allocation made pursuant to Section 6.1(a),
but after giving effect to any special allocations set forth in
Section 6.1(d), any Net Income shall be allocated to all
Unitholders holding Series A Preferred Units, Pro Rata, until the
Capital Account in respect of each Outstanding Series A Preferred
Unit is equal to the Series A Liquidation Value.
(B) Notwithstanding anything to the contrary in Section
6.1(b), Unitholders holding Series A Preferred Units shall not
receive any allocation pursuant to Section 6.1(b) unless and until
the Adjusted Capital Accounts of all other Partners have been
reduced to zero, in which case prior to allocating any remaining
Net Losses to the General Partner, Net Losses shall be allocated to
all Unitholders holding Series A Preferred Units, Pro Rata, until
the Adjusted Capital Accounts of such Unitholders in respect of
such Units have been reduced to zero.
(C) Notwithstanding anything to the contrary in Section
6.1(c)(i), (x) Unitholders holding Series A Preferred Units shall be
allocated Net Termination Gain in accordance with Section
6.1(c)(i)(A) but shall not receive any allocation pursuant to
Sections 6.1(c)(i)(B) — (D) with respect to their Series A Preferred
Units, and (y) following any allocation made pursuant to Section
6.1(c)(i)(A) and prior to any allocation made pursuant to Section
6.1(c)(i)(B), any remaining Net Termination Gain shall be allocated
to all Unitholders holding Series A Preferred Units, Pro
Annex A-10
Rata, until the Capital Account in respect of each Outstanding
Series A Preferred Unit is equal to the Series A Liquidation Value.
(D) Notwithstanding anything to the contrary in Section
6.1(c)(ii), (x) Unitholders holding Series A Preferred Units shall
not receive any allocation pursuant to Sections 6.1(c)(ii)(A) with
respect to their Series A Preferred Units, and (y) following the
allocations made pursuant to Section 6.1(c)(ii)(A), and prior to any
allocation made pursuant to Section 6.1(c)(ii)(B), any remaining Net
Termination Loss shall be allocated to all Unitholders holding Series
A Preferred Units, Pro Rata, until the Capital Account in respect of
each Outstanding Series A Preferred Unit has been reduced to zero.
(ii) Distributions.
(A) Commencing on the Series A Issuance Date, the holders of the
Series A Preferred Units as of an applicable Record Date shall accrue
and be entitled to receive cumulative distributions, prior to any
other distributions pursuant to Section 6.3, in cash in an amount
equal to the Series A Distribution Rate on each Outstanding Series A
Preferred Unit. All such distributions shall be paid Quarterly, in
arrears, within fifty (50) days after the end of each Quarter (a
“Series A Distribution Payment Date”). If the Partnership fails to
pay in full in cash any distribution (or portion thereof) which any
holder of Series A Preferred Units accrues and is entitled to receive
pursuant to this Section 5.13(b)(ii)(A), then (x) the amount of such
accrued and unpaid distributions will accumulate until paid in full
in cash and (y) the Partnership shall not be permitted to, and shall
not, declare or make (i) any distributions in respect of any Junior
Securities and (ii) any distributions in respect of any Parity
Securities, other than Series A Pro Rata Distributions, unless and
until all accrued and accumulated distributions on the Series A
Preferred Units has been paid in full in cash.
(B) Notwithstanding anything in this Section 5.13(b)(ii) to the
contrary, with respect to Series A Preferred Units that are converted
into Common Units, the holder thereof shall not be entitled to a
Series A Preferred Unit distribution and a Common Unit distribution
with respect to the same period, but shall be entitled only to the
distribution to be paid based upon the class of Units held as of the
close of business on the Record Date for the distribution in respect
of such period.
Annex A-11
(C) Accrued and unpaid distributions in respect of the Series A
Preferred Units will not accrue interest.
(iii) Issuance of Series A Preferred Units. The Series A Preferred
Units shall be issued by the Partnership pursuant to the terms and
conditions of the Regency GP Purchase Agreement.
(iv) Liquidation Value. In the event of any liquidation, dissolution
or winding up of the Partnership, either voluntary or involuntary, the
holders of the Series A Preferred Units shall be entitled to receive, out of
the assets of the Partnership available for distribution to Unitholders,
prior and in preference to any distribution of any assets of the Partnership
to the holders of any other class or series of Partnership Securities, the
positive value in each such holder’s Capital Account in respect of such
Series A Preferred Units. If in the year of such liquidation, dissolution
or winding up any such holder’s Capital Account in respect of such Series A
Preferred Units is less than the aggregate Series A Liquidation Value of
such Series A Preferred Units, then notwithstanding anything to the contrary
contained in this Agreement, and prior to any other allocation pursuant to
this Agreement for such year and prior to any distribution pursuant to the
preceding sentence, items of gross income and gain shall be allocated to all
Unitholders holding Series A Preferred Units, Pro Rata, until the Capital
Account in respect of each Outstanding Series A Preferred Unit is equal to
the Series A Liquidation Value (and no other allocation pursuant to this
Agreement shall reverse the effect of such allocation). If in the year of
such liquidation, dissolution or winding up any such holder’s Capital
Account in respect of such Series A Preferred Units is less than the
aggregate Series A Liquidation Value of such Series A Preferred Units after
the application of the preceding sentence, then to the extent permitted by
law and notwithstanding anything to the contrary contained in this
Agreement, items of gross income and gain for any preceding taxable
period(s) with respect to which Schedule K-1s have not been filed by the
Partnership shall be reallocated to all Unitholders holding Series A
Preferred Units, Pro Rata, until the Capital Account in respect of each
Outstanding Series A Preferred Unit is equal to the Series A Liquidation
Value (and no other allocation pursuant to this Agreement shall reverse the
effect of such allocation).
(v) Voting Rights.
(A) The Series A Preferred Units shall not be entitled to vote on any
matters related to the Partnership other than as expressly provided in this
Section 5.13(b)(v).
(B) Notwithstanding any other provision of this Agreement, in addition
to all other requirements imposed by Delaware law, and all other
Annex A-12
voting rights granted under this Agreement, the affirmative vote of
holders of a majority of the Outstanding Series A Preferred Units, voting
separately as a class with one vote per Series A Preferred Unit, shall be
necessary to amend this Agreement in any manner that (i) alters or changes
the rights, preferences or privileges or duties and obligations of the
Series A Preferred Units, (ii) increases or decreases the authorized number
of Series A Preferred Units (including without limitation any issuance of
additional Series A Preferred Units), or (iii) otherwise adversely affects
the Series A Preferred Units in any material respect, including without
limitation the creation (by reclassification or otherwise) of any class of
Senior Securities (or amending the provisions of any existing class of
Partnership Securities to make such class of Partnership Securities a class
of Senior Securities); provided, however, that the Partnership may, without
the consent or approval of the holders of the Series A Preferred Units (a)
create (by reclassification or otherwise) and issue Junior Securities and
Parity Securities (including by amending the provisions of any existing
class of Partnership Securities to make such class of Partnership Securities
a class of Junior Securities or Parity Securities) in an unlimited amount
and (b) consummate any Fundamental Change.
(vi) Certificates.
(A) The Series A Preferred Units shall be evidenced by certificates in
such form as the General Partner may approve and, subject to the
satisfaction of any applicable legal, regulatory and contractual
requirements, may be assigned or transferred in a manner identical to the
assignment and transfer of other Units; unless and until the General Partner
determines to assign the responsibility to another Person, the General
Partner will act as the registrar and transfer agent for the Series A
Preferred Units. The certificates evidencing Series A Preferred Units shall
be separately identified and shall not bear the same CUSIP number as the
certificates evidencing Common Units.
(B) The certificate(s) representing the Series A Preferred Units may be
imprinted with a legend in substantially the following form (in addition to
the legend required pursuant to Section 4.7(e)):
“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) AND ARE SUBJECT TO THE TERMS OF THE THIRD AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT OF ENERGY TRANSFER EQUITY, L.P., AS
AMENDED. THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF ENERGY
Annex A-13
TRANSFER EQUITY, L.P. THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN
APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B)
TERMINATE THE EXISTENCE OR QUALIFICATION OF ENERGY TRANSFER EQUITY, L.P.
UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE ENERGY TRANSFER
EQUITY, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR
OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE
EXTENT NOT ALREADY SO TREATED OR TAXED). LE GP, LLC THE GENERAL PARTNER OF
ENERGY TRANSFER EQUITY, L.P., MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE
TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH
RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF ENERGY TRANSFER
EQUITY, L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE
AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH
ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS
SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES
EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.”
(vii) Conversion.
(A) Subject to adjustment as provided in Sections 5.13(b)(xi) and
(xii), immediately prior to the close of business on the Series A Maturity
Date, each Series A Preferred Unit shall convert into the right to receive,
upon the satisfaction of the terms and conditions of this Section
5.13(b)(vii), at the election of the Partnership, either:
a. a number of Common Units equal to:
i. the sum of (A) the Series A Liquidation Value as of the
Series A Maturity Date plus (B) the lesser of (1) the Series A
Accretion Amount as of the Series A Maturity Date and (2) $10.00,
divided by
ii. the VWAP Price as of the Series A Maturity Date; or
Annex A-14
b. a number of Common Units and an amount of cash equal to:
i. a number of Common Units equal to (x) the sum of (A) fifty
percent (50%) of the Series A Liquidation Value as of the Series A
Maturity Date plus (B) the lesser of (1) the Series A Accretion
Amount as of the Series A Maturity Date and (2) $10.00, divided by
(y) the VWAP Price as of the Series A Maturity Date, and
ii. an amount of cash equal to fifty percent (50%) of the
Series A Liquidation Value as of the Series A Maturity Date (the cash
consideration to be received pursuant to this clause (ii), the
“Series A Conversion Cash Consideration”).
The consideration to be received by the holder of a Series A Preferred Unit
upon the conversion of such Series A Preferred Unit as provided in this
Section 5.13(b)(vii)(A) is referred to as the “Series A Conversion
Consideration.”
(B) Any Common Units received by a holder of Series A Preferred Units
as the Series A Conversion Consideration shall be fully paid, validly issued
and non-assessable (except as such nonassessability may be affected by
matters described in Sections 17-303, 17-607 and 17-804 of the Delaware
Act). Immediately prior to the close of business on the Series A Maturity
Date, all Series A Preferred Units shall be converted automatically into and
shall thereafter represent solely the right to receive the Series A
Conversion Consideration. All Series A Preferred Units that have converted
into the right to receive the Series A Conversion Consideration shall be
automatically canceled and shall cease to exist, and the holders of
converted Series A Preferred Units shall cease to have any rights with
respect to such Series A Preferred Units other than the right to receive the
Series A Conversion Consideration. Upon such conversion, any certificates
representing Series A Preferred Units shall thereafter represent solely the
right to receive the Series A Conversion Consideration.
(C) Within two Business Days following the Series A Maturity Date, the
Partnership shall send written notice (a “Series A Conversion Notice”) to
each holder of record of Outstanding Series A Preferred Units as of the
Series A Maturity Date, stating:
a. the election of the Partnership as to whether the Series A
Preferred Units have converted into (i) Common Units pursuant to Section
5.13(b)(vii)(A)(a) or (ii) both Common Units and the Series A Conversion
Cash Consideration pursuant to Section 5.13(b)(vii)(A)(b);
Annex A-15
b. the Partnership’s computation of the number of Common Units to be
issued and the amount of Series A Conversion Cash Consideration, if any, to
be paid in respect of each Series A Preferred Unit pursuant to Section
5.13(b)(vii)(A) (including, in each case, any adjustments pursuant to
Sections 5.13(b)(xi) and (xii)), including the Partnership’s computation of
the Series A Liquidation Value, the Series A Accretion Amount and the VWAP
Price, in each case as of the Series A Maturity Date; and
c. that the holder must surrender the certificate or certificates
representing any Series A Preferred Units held by such holder to the
Partnership, and provide such other documentation as reasonably requested by
the General Partner including wire transfer instructions in respect of any
Series A Cash Conversion Cash Consideration or any Fractional Unit Cash
Consideration (the “Series A Conversion Documentation”), in order to receive
the Series A Conversion Consideration.
In addition to delivery in accordance with the general notice provisions
contained in Section 17.1, the Series A Conversion Notice shall be deemed
properly delivered on the date the Partnership issues a press release
distributed through a widely circulated news or wire service as would
satisfy the requirements of Regulation FD, containing the information
required to be included in the Series A Conversion Notice pursuant to this
Section 5.13(b)(vii)(C). The date any Series A Conversion Notice is deemed
delivered shall be referred to as the “Series A Conversion Notice Date.”
(D) As promptly as practicable following the Series A Conversion Notice
Date and subject to the book-entry provisions set forth below, the holders
of Series A Preferred Units shall surrender the certificate or certificates
representing the Series A Preferred Units being converted, duly endorsed, at
the office of the Partnership or, if identified in the Series A Conversion
Notice to such holder by the Partnership, at the offices of any transfer
agent for such Units, together with the Series A Conversion Documentation.
As promptly as practicable following the receipt of such certificate or
certificates (or a lost unit affidavit reasonably acceptable to the
Partnership in the event of a lost certificate) representing the Series A
Preferred Units and the Series A Conversion Documentation by the Partnership
or the Transfer Agent as provided in the immediately preceding sentence (but
in any event no later than five (5) Business Days thereafter), the
Partnership shall issue to such holder a certificate or certificates for the
number of Common Units to which such holder shall be entitled under Section
5.13(b)(vii)(A) (with the number of and denomination of such certificates
designated by such holder). In lieu of delivering physical certificates
representing the Common Units issuable
Annex A-16
upon conversion of Series A Preferred Units, provided the Transfer
Agent is participating in the Depository’s Fast Automated Securities
Transfer program, upon request of the holder, the Partnership shall use its
commercially reasonable efforts to cause the Transfer Agent to
electronically transmit the Common Units issuable upon conversion to the
holder, by crediting the account of the holder’s prime broker with the
Depository through its Deposit Withdrawal Agent Commission (DWAC) system.
The holders of Series A Preferred Units and the Partnership agree to
coordinate with the Depository to accomplish this objective. The conversion
pursuant to this Section 5.13(b)(vii) shall be deemed to have occurred
immediately prior to the close of business on the Series A Maturity Date
(whether or not the conversion includes the right to receive Series A Cash
Consideration under Section 5.13(b)(vii)(A)(b) or Fractional Unit Cash
Consideration under Section 5.13(b)(vii)(G)). The Person or Persons
entitled to receive the Common Units issuable upon such conversion shall be
treated for all purposes as the Record Holder or Holders of such Common
Units at the close of business on the Series A Maturity Date.
(E) If the Partnership (i) elects to have the Series A Preferred Units
convert into both Common Units and the right to receive the Series A
Conversion Cash Consideration under Section 5.13(b)(vii)(A)(b) or (ii) is
required to pay Fractional Unit Cash Consideration pursuant to Section
5.13(b)(vii)(G), then, as promptly as practicable following the receipt of
such certificate or certificates (or a lost unit certificate affidavit
reasonably acceptable to the Partnership in the event of a lost certificate)
representing the Series A Preferred Units and the Series A Conversion
Documentation by the Partnership or the Transfer Agent as provided in the
first sentence of Section 5.13(b)(vii)(D) (but in any event within five (5)
Business Days thereafter), the Partnership shall remit the Series A Cash
Conversion Consideration and the Fractional Unit Cash Consideration, as
applicable, to the holder surrendering such certificate or certificates
representing Series A Preferred Units by wire transfer of immediately
available funds to an account specified by such holder in writing.
(F) The Partnership shall pay any and all issue, documentary, stamp and
other taxes, excluding any income, franchise or similar taxes, that may be
payable in respect of any issue or delivery of Common Units on conversion
of, or payment of distributions on, Series A Preferred Units pursuant
hereto. However, the holder of any Series A Preferred Units shall pay any
tax that is due because the Common Units issuable upon conversion thereof or
distribution payment thereon are issued in a name other than such holder’s
name.
(G) No fractional Common Units shall be issued upon the conversion of
any Series A Preferred Units. All Common Units (including
Annex A-17
fractions thereof) issuable upon conversion of more than one Series A
Preferred Unit by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional unit. If, after the aforementioned aggregation, the conversion
would result in the issuance of a fraction of a Common Unit, the Partnership
shall, in lieu of issuing any fractional unit, either round up the number of
units to the next highest whole number or, at the Partnership’s option, pay
the holder otherwise entitled to such fraction a sum in cash equal to such
fraction multiplied by the VWAP Price as of the Series A Maturity Date. The
consideration payable in lieu of fractional Common Units pursuant to this
Section 5.13(b)(vii)(G) as well as any consideration payable in lieu of
fractional Common Units pursuant to Section 5.13(b)(viii)(F), are referred
to as “Fractional Unit Cash Consideration.”
(H) The Partnership shall not be obligated to issue any Common Units
upon conversion of the Series A Preferred Units, whether pursuant to this
Section 5.13(b)(vii), or otherwise, if the issuance of such Common Units
would exceed the Series A Exchange Cap or if such issuance could reasonably
be expected to violate any applicable federal or state securities laws or
rules and regulations of the Securities and Exchange Commission, any state
securities commission or any other governmental authority with jurisdiction
over such issuance (a “Securities Law Prohibition”). To the extent that a
holder’s Series A Preferred Units would otherwise be converted into a number
of Common Units that would exceed the Series A Exchange Cap, the Partnership
shall pay in cash to such holder an amount equal to the VWAP Price as of the
Series A Maturity Date multiplied by the number of Common Units that are not
so issued but would otherwise be issuable as part of the Series A Conversion
Consideration absent such Series A Exchange Cap or Securities Law
Prohibition.
(I) Any Common Units issued upon conversion of the Series A Preferred
Units pursuant to this Section 5.13(b)(vii) shall not be subject to the
first proviso contained in the definition of “Outstanding” contained in this
Agreement for so long as held by the Investor.
(viii) Optional Redemption.
(A) Subject to adjustment as provided in Sections 5.13(b)(xi) and
(xii), beginning on the Series A Optional Redemption Trigger Date and ending
on the last Business Day immediately prior to the Series A Maturity Date,
the Partnership may, at its option, cause all, but not less than all, of the
Series A Preferred Units to be redeemed by the Partnership for (a) cash in
an amount per Outstanding Series A Preferred Unit equal to the Series A
Liquidation Value on the Series A Redemption Date plus (b) a number of
Common Units per Outstanding Series A Preferred Units equal to (i) the
greater of (x) the Series A Accretion Amount on the Series A
Annex A-18
Redemption Date and (y) $10.00 (such cash amount, the “Series A
Redemption Consideration”) divided by (ii) the VWAP Price as of the Series A
Redemption Date.
(B) Any Common Units received by a holder of Series A Preferred Units
as the Series A Redemption Consideration shall be fully paid, validly issued
and non-assessable (except as such nonassessability may be affected by
matters described in Sections 17-303, 17-607 and 17-804 of the Delaware
Act). At the time of the redemption pursuant to this Section 5.13(b)(viii),
all Series A Preferred Units shall be converted automatically into and shall
thereafter represent solely the right to receive the Series A Redemption
Consideration. All such Series A Preferred Units that have converted into
the right to receive the Series A Redemption Consideration shall be
automatically canceled and shall cease to exist, and the holders of redeemed
Series A Preferred Units shall cease to have any rights with respect to such
Series A Preferred Units other than the right to receive the Series A
Redemption Consideration. Upon such conversion, any certificates
representing Series A Preferred Units shall thereafter represent solely the
right to receive the Series A Redemption Consideration.
(C) To redeem Series A Preferred Units pursuant to this Section
5.13(b)(viii), the Partnership shall:
a. no earlier than 30 days nor later than two days prior to the Series
A Redemption Date, send a written notice (the “Series A Redemption Notice”)
to each holder of record of Outstanding Series A Preferred Units as of the
date of such notice stating that the Series A Preferred Units will be
redeemed pursuant to this Section 5.13(b)(viii) effective as of the date set
forth in the Series A Redemption Notice (the “Series A Redemption Date”);
and
b. as promptly as practicable following the Series A Redemption Date,
send a written notice (a “Series A Redemption Confirmation”) to each holder
of record of Outstanding Series A Preferred Units as of the Series A
Redemption Date stating: (i) that the Series A Preferred Units have been
redeemed pursuant to this Section 5.13(b)(viii) effective as of the Series A
Redemption Date; (ii) the Partnership’s computation of the amount of Series
A Redemption Consideration to be paid in respect of each Series A Preferred
Unit pursuant to Section 5.13(b)(viii)(A) (including any adjustments
pursuant to Sections 5.13(b)(xi) and (xii)), including the Partnership’s
computation of the Series A Liquidation Value, the Series A Accretion Amount
and the VWAP Price, in each case as of the Series A Redemption Date; and
(iii) that such holder must surrender the certificate or certificates
representing any Series A Preferred Units held by such holder to the
Partnership and provide such
Annex A-19
other documentation as reasonably requested by the General Partner
including wire transfer instructions in respect of the Series A Redemption
Consideration (the “Series A Redemption Documentation”), in order to receive
the Series A Redemption Consideration.
In addition to delivery in accordance with the general notice provisions
contained in Section 17.1, the Series A Redemption Notice and/or a Series A
Redemption Confirmation shall be deemed properly delivered on the date the
Partnership issues a press release distributed through a widely circulated
news or wire service as would satisfy the requirements of Regulation FD,
containing the information required to be included in the Series A
Redemption Notice pursuant to this Section 5.13(b)(viii)(C).
(D) As promptly as practicable following the Series A Redemption Date,
the holders of Series A Preferred Units shall surrender the certificate or
certificates representing the Series A Preferred Units being redeemed, duly
endorsed, at the office of the Partnership or, if identified in the Series A
Redemption Notice to such holder by the Partnership, at the offices of any
transfer agent for such Units, together with the Series A Redemption
Documentation. As promptly as practicable following the receipt of such
certificate or certificates (or a lost unit affidavit reasonably acceptable
to the Partnership in the event of a lost certificate) representing the
Series A Preferred Units and the Series A Conversion Documentation by the
Partnership or the Transfer Agent as provided in the immediately preceding
sentence (but in any event no later than five (5) Business Days thereafter),
the Partnership shall:
a. issue to such holder a certificate or certificates for the number of
Common Units to which such holder shall be entitled under Section
5.13(b)(viii)(A) (with the number of and denomination of such certificates
designated by such holder). In lieu of delivering physical certificates
representing the Common Units issuable upon redemption of Series A Preferred
Units, provided the Transfer Agent is participating in the Depository’s Fast
Automated Securities Transfer program, upon request of the holder, the
Partnership shall use its commercially reasonable efforts to cause the
Transfer Agent to electronically transmit the Common Units issuable upon
redemption to the holder, by crediting the account of the holder’s prime
broker with the Depository through its Deposit Withdrawal Agent Commission
(DWAC) system. The holders of Series A Preferred Units and the Partnership
agree to coordinate with the Depository to accomplish this objective; and
b. remit the applicable cash portion of the Series A Redemption
Consideration to the holder surrendering such certificate or certificates
representing Series A Preferred Units by wire transfer of
Annex A-20
immediately available funds to an account specified by such holder in
writing.
The redemption pursuant to this Section 5.13(b)(viii) shall be deemed to
have occurred immediately prior to the close of business on the Series A
Redemption Date. The Person or Persons entitled to receive the Common Units
issuable upon such redemption shall be treated for all purposes as the
Record Holder or Holders of such Common Units at the close of business on
the Series A Maturity Date.
(E) The Partnership shall pay any and all issue, documentary, stamp and
other taxes, excluding any income, franchise or similar taxes, that may be
payable in respect of any issue or delivery of Common Units on redemption
of, or payment of distributions on, Series A Preferred Units pursuant
hereto. However, the holder of any Series A Preferred Units shall pay any
tax that is due because the Common Units issuable upon redemption thereof or
distribution payment thereon are issued in a name other than such holder’s
name.
(F) No fractional Common Units shall be issued upon the redemption of
any Series A Preferred Units. All Common Units (including fractions thereof)
issuable upon redemption of more than one Series A Preferred Unit by a
holder thereof shall be aggregated for purposes of determining whether the
redemption would result in the issuance of any fractional unit. If, after
the aforementioned aggregation, the redemption would result in the issuance
of a fraction of a Common Unit, the Partnership shall, in lieu of issuing
any fractional unit, either round up the number of units to the next highest
whole number or, at the Partnership’s option, pay the holder otherwise
entitled to such fraction a sum in cash equal to such fraction multiplied by
the VWAP Price as of the Series A Redemption Date.
(G) The Partnership shall not be obligated to issue any Common Units
upon redemption of the Series A Preferred Units, whether pursuant to this
Section 5.13(b)(viii), or otherwise, if the issuance of such Common Units
would exceed the Series A Exchange Cap or if such issuance could reasonably
be expected to conflict with a Securities Laws Prohibition. To the extent
that a holder’s Series A Preferred Units would otherwise be redeemed for a
number of Common Units that would exceed the Series A Exchange Cap, the
Partnership shall pay in cash to such holder an amount equal to the VWAP
Price as of the Series A Redemption Date multiplied by the number of Common
Units that are not so issued but would otherwise be issuable as part of the
Series A Redemption Consideration absent such Series A Exchange Cap or
Securities Law Prohibition.
Annex A-21
(H) Any Common Units issued upon redemption of the Series A Preferred
Units pursuant to this Section 5.13(b)(viii) shall not be subject to the
first proviso contained in the definition of “Outstanding” contained in this
Agreement for so long as held by the Investor.
(ix) Fundamental Change.
(A) If on the earlier of the date (x) the Partnership enters into a
definitive agreement to consummate a Fundamental Change, (y) of the
consummation of a Fundamental Change or (z) of the declaration of a
distribution by the MLP described in subsection (vii) of the definition of
Fundamental Change (the “Fundamental Change Trigger Date”), Investor holds,
in the aggregate, at least fifty percent (50%) of the Series A Preferred
Units issued pursuant to the Regency GP Purchase Agreement, then the
Partnership will within 10 Business Days of such date send a written notice
to the Investor stating the nature of the Fundamental Change, including a
description of the material terms of the transaction constituting a
Fundamental Change and, if the Fundamental Change has not yet occurred, the
date or expected date of consummation. No later than 10 Business Days
following delivery of the notice provided for in the previous sentence (the
“Election Notice Period”), the Investor may, in its sole discretion, deliver
written notice to the Partnership of its election, in its sole discretion,
to:
a. upon the occurrence of any of the events specified in
subsections (i), (ii), (iii) or (iv) of the definition of Fundamental
Change, require the Partnership to redeem all of the Outstanding
Series A Preferred Units pursuant to Section 5.13(b)(ix)(B)(a) (a
“Fundamental Change Forced Redemption Election”); or
b. upon the occurrence of any of the events specified in
subsections (v), (vi) or (vii) of the definition of Fundamental
Change, require the Partnership to elect to convert or redeem the
Series A Preferred Units pursuant to Section 5.13(b)(ix)(C).
If at any time the Investor does not hold, in the aggregate, at least fifty
percent (50%) of the Series A Preferred Units issued pursuant to the Regency
GP Purchase Agreement, then the provisions of this Section 5.13(b)(ix) shall
immediately cease to have any force or effect and the Investor and the
holders of Series A Preferred Units shall have no rights hereunder,
regardless of whether or not the Investor subsequently acquires additional
Series A Preferred Units.
(B) Upon the occurrence of any of the events specified in subsections
(i), (ii), (iii) or (iv) of the definition of Fundamental Change:
Annex A-22
a. If the Investor timely makes a Fundamental Change Forced Redemption
Election, then the Partnership will redeem all of the Outstanding Series A
Preferred Units for cash and Common Units in an amount per Outstanding
Series A Preferred Unit equal to the Fundamental Change Redemption
Consideration.
i. Subject to Section 5.13(b)(ix)(B)(a)(ii), in connection with
a redemption pursuant to this Section 5.13(b)(ix)(B)(a), the
Partnership will deliver notice of the redemption, the Series A
Preferred Units will be canceled, the certificates representing
Series A Preferred Units will be surrendered in exchange for the
issuance of Common Units and the cash portion of the Fundamental
Change Redemption Consideration and any Fractional Unit Cash
Consideration will be paid, each in a manner consistent with the
provisions of Section 5.13(b)(viii)(B)-(H), except that, for purposes
of applying such provisions to a redemption pursuant to this Section
5.13(b)(ix)(B)(a), (A) all references to the “Series A Redemption
Consideration” will mean the “Fundamental Change Redemption
Consideration,” (B) all references to “Series A Redemption Date” will
mean the time immediately prior to the consummation of the
Fundamental Change, (C) all references to “Series A Redemption
Documentation” will mean “Fundamental Change Documentation,” (D) the
Partnership must deliver the Series A Redemption Notice no later than
two Business Days following the later of the date of consummation of
the Fundamental Change and the expiration of the Election Notice
Period and (E) references to Section 5.13(b)(viii)(A) shall mean a
redemption pursuant to this Section 5.13(b)(ix)(B)(a).
ii. In the event the Fundamental Change Redemption Consideration
Premium does not consist of Common Units, the Partnership shall (i)
make appropriate provision, in the definitive transaction document
governing the Fundamental Change or otherwise, to ensure that the
holders of Series A Preferred Units receive the Fundamental Change
Redemption Consideration (including the Fundamental Change Redemption
Consideration Premium) reasonably promptly following such Fundamental
Change upon the surrender of their certificates representing Series A
Preferred Units and (ii) deliver reasonable notice of such provisions
to the holders of Series A Preferred Units (which notice may be
delivered in a manner consistent with that contemplated for delivery
of a Series A Redemption Notice pursuant to Section
5.13(b)(viii)(C)).
Annex A-23
b. If the Investor does not timely make a Fundamental Change Forced
Redemption Election, then each Series A Preferred Unit Outstanding
immediately prior to the consummation of the Fundamental Change will
automatically be converted into the right to receive the Fundamental Change
Conversion Consideration pursuant to this Section 5.13(b)(ix)(B)(b).
i. In the event the Fundamental Change Conversion Consideration
consists of Common Units, the Partnership will deliver notice of the
conversion, the Series A Preferred Units will be canceled, the
certificates representing Series A Preferred Units will be
surrendered in exchange for the issuance of Common Units and
Fractional Unit Cash Consideration will be paid, each in a manner
consistent with the provisions of Section 5.13(b)(vii)(B)-(I), except
that, for purposes of applying such provisions to a conversion
pursuant to this Section 5.13(b)(ix)(B)(b), (A) all references to the
“Series A Conversion Consideration” will mean the “Fundamental Change
Conversion Consideration,” (B) all references to the “Series A
Maturity Date” will mean the time immediately prior to the
consummation of the Fundamental Change, (C) all references to “Series
A Conversion Documentation” will mean “Fundamental Change
Documentation,” (D) the Partnership must deliver the Series A
Conversion Notice no later than two Business Days following the later
of the date of consummation of the Fundamental Change and the
expiration of the Election Notice Period, (E) Section
5.13(b)(vii)(C)(a) shall be inapplicable, (F) references to Section
5.13(b)(vii)(A) shall mean a conversion pursuant to Section
5.13(b)(ix)(B)(b) and (G) Section 5.13(b)(vii)(H) shall apply to any
Common Units that would otherwise be issuable as a result of the
Fundamental Change.
ii. In the event the Fundamental Change Conversion Consideration
does not consist of Common Units, the Partnership shall (i) make
appropriate provision, in the definitive transaction document
governing the Fundamental Change or otherwise, to ensure that the
holders of Series A Preferred Units receive the Fundamental Change
Conversion Consideration reasonably promptly following such
Fundamental Change upon the surrender of their certificates
representing Series A Preferred Units and (ii) deliver reasonable
notice of such provisions to the holders of Series A Preferred Units
(which notice may be delivered in a manner consistent with that
contemplated for delivery of a Series A Conversion Notice pursuant to
Section 5.13(b)(vii)(C)).
Annex A-24
(C) a. Upon the occurrence of any of the events specified in
subsections (v), (vi) or (vii) of the definition of Fundamental Change and
the election of the Investor to require the Partnership to elect to convert
or redeem the Series A Preferred Units pursuant to this Section
5.13(b)(ix)(C), the Partnership will, within two Business Days following the
later of the date of consummation of the Fundamental Change and the
expiration of the Election Notice Period, deliver written notice to the
holders of all Outstanding Series A Preferred Units as of the date of
consummation of such Fundamental Change, stating (i) the Partnership’s
election to either (x) convert each of the Series A Preferred Units
Outstanding immediately prior to the consummation of the Fundamental Change
into, for each Series A Preferred Unit then Outstanding, the right to
receive a number of Common Units equal to (A) the Series A Liquidation Value
on the date of consummation of the Fundamental Change divided by (B) the
VWAP Price as of the date of consummation of the Fundamental Change (the
“Fundamental Change Elected Common Unit Consideration”) or (y) redeem each
of the Series A Preferred Units Outstanding immediately prior to the
consummation of the Fundamental Change for an amount in cash per Series A
Preferred Unit then Outstanding equal to the Series A Liquidation Value on
the date of the consummation of the Fundamental Change (the “Fundamental
Change Elected Cash Consideration”), (ii) the Partnership’s calculation of
the Fundamental Change Elected Common Unit Consideration or Fundamental
Change Elected Cash Consideration, as applicable, and (iii) that the holder
must surrender the certificate or certificates representing Series A
Preferred Units to the Partnership, together with the Fundamental Change
Documentation, in order to receive the Fundamental Change Elected Common
Unit Consideration or the Fundamental Change Elected Cash Consideration, as
applicable. In addition to delivery in accordance with the general notice
provisions contained in Section 17.1, any notice required to be delivered by
the Partnership pursuant to this section shall be deemed properly delivered
on the date the Partnership issues a press release distributed through a
widely circulated news or wire service as would satisfy the requirements of
Regulation FD, containing the information required to be included in such
notice.
b. In addition to the requirements of Section 5.13(b)(ix)(C)(a) and
(c), upon the declaration of a distribution by the MLP described in
subsection (vii) of the definition of Fundamental Change, the Partnership
will promptly give written notice to the Investor of such declaration and,
if (x) the Investor delivers written notice to the Partnership no later than
two Business Days after receipt of such notice from the Partnership and the
Partnership elects to issue the Fundamental Change Elected Common Unit
Consideration pursuant to Section 5.13(ix)(C)(a), then the Partnership shall
cause such conversion to occur prior to the Record Date for the distribution
on the Common Units next succeeding
Annex A-25
such election by the Partnership so that the Investor will be a holder
of Common Units as of such Record Date; or (y) if the Investor delivers
written notice to the Partnership no later than two Business Days after
receipt of such notice from the Partnership and the Partnership elects to
redeem the Series A Preferred Units for the Fundamental Change Elected Cash
Consideration pursuant to Section 5.13(ix)(C)(a), then the Partnership shall
cause such redemption to occur prior to payment of the distribution in
respect of the Partnership’s Common Units for the Record Date for the
distribution on the Common Units next succeeding such election by the
Partnership.
c. In the event the Partnership elects to convert the Series A
Preferred Units into the right to receive the Fundamental Change Elected
Common Unit Consideration, the Series A Preferred Units will be canceled,
the certificates representing Series A Preferred Units will be surrendered
in exchange for the issuance of Common Units and the Fractional Unit Cash
Consideration, if any, will be paid, each in accordance with the provisions
of Section 5.13(b)(vii)(B)-(I), except that, for purposes of applying such
provisions to a conversion pursuant to Section 5.13(b)(ix)(C)(a)(i)(x), (A)
all references to the “Series A Conversion Consideration” will mean the
“Fundamental Change Elected Common Unit Consideration,” (B) all references
to the “Series A Maturity Date” will mean the time immediately prior to the
consummation of the Fundamental Change, (C) all references to “Series A
Conversion Documentation” will mean “Fundamental Change Documentation,” (D)
Section 5.13(b)(vii)(C)(a) shall be inapplicable, (E) references to Section
5.13(b)(vii)(A) shall mean a conversion pursuant to Section
5.13(b)(ix)(C)(a)(i)(x) and (F) Section 5.13(b)(vii)(G) shall apply to any
Common Units that would otherwise be issuable as a result of the Fundamental
Change.
d. In the event the Partnership elects to redeem the Series A
Preferred Unit for the Fundamental Change Elected Cash Consideration, the
Series A Preferred Units will be canceled, the certificates representing
Series A Preferred Units will be surrendered and the Fundamental Change
Elected Cash Consideration will be paid in accordance with the provisions of
Section 5.13(b)(viii)(B)-(H), except that, for purposes of applying such
sections to a redemption pursuant to Section 5.13(b)(ix)(C)(a)(i)(y) (A) all
references to the “Series A Redemption Consideration” will mean the
“Fundamental Change Elected Cash Consideration,” (B) all references to
“Series A Redemption Date” will mean the time immediately prior to the
consummation of the Fundamental Change and (C) all references to “Series A
Redemption Documentation” will mean “Fundamental Change Documentation” and
(D) references to Section 5.13(b)(viii)(A) shall mean a redemption pursuant
to this Section 5.13(b)(ix)(B)(b)(i)(y).
Annex A-26
(D) If any Fundamental Change that is contemplated by a definitive
agreement is not consummated and therefore the conditions to the applicable
redemption or exchange pursuant to this Section 5.13(b)(ix) have not been
satisfied, the Partnership will send written notice to such effect to the
Investor (which notice may be delivered in a manner consistent with that
contemplated for delivery of a Series A Conversion Notice pursuant to
Section 5.13(b)(vii)(C)). Notwithstanding anything to the contrary in this
Agreement, if a Fundamental Change is not consummated, no Series A Preferred
Units will be redeemed or converted pursuant to this Section 5.13(b)(ix).
(x) Limitations on Transfer. Series A Preferred Units may only be transferred to one
or more transferees that, after giving effect to such transfer, each hold at least
1,000,000 Series A Preferred Units, provided that the foregoing limitation shall not apply
to any transfer of Series A Preferred Units to (i) the holders of the class B units in
Regency GP Seller of up to eight percent (8%) of the Series A Preferred Units or (ii)
Regency GP Seller and its Affiliates. In addition, a Unitholder holding a Series A
Preferred Unit that has converted into a Common Unit pursuant to Section 5.13 shall be
subject to the restrictions on transfer imposed by Section 6.6(B). For the avoidance of
doubt, nothing contained in this Section 5.13(b)(x) shall in any way affect the
restrictions on transfers of Partnership Interests contained in Section 4.7, which shall
apply to transfers of Series A Preferred Units.
(xi) Extraordinary Partnership Transactions.
(A) Except to the extent that any such event is a Fundamental Change
as a result of which the Series A Preferred Units are redeemed or converted
pursuant to Section 5.13(b)(ix), prior to the consummation of any
recapitalization, reorganization, consolidation, merger, spin-off or other
business combination in which the holders of Common Units are to receive
securities, cash or other assets or any exchange or conversion of limited
partnership interests pursuant to which all of the Common Units are
converted into Parity Securities (other than, in each case, a Series A
Adjustment Event or a Special Distribution) (any such event being a
“Partnership Event”), the Partnership shall make appropriate provision to
ensure that the holders of Series A Preferred Units receive in such
Partnership Event a preferred security, issued by the Person surviving or
resulting from such Partnership Event and containing provisions
substantially equivalent to the provisions set forth in this Section 5.13
without abridgement, including, without limitation, the same powers,
preferences, rights to distributions, rights to accumulation upon failure
to pay distributions, and relative participating, optional or other special
rights and the qualifications, limitations or restrictions thereon, that
the Series A Preferred Units had immediately prior to such Partnership
Event, subject to the adjustments described in Section 5.13(b)(xi)(B) and
Section
Annex A-27
5.13(b)(xi)(C). The date on which a Partnership Event is consummated
is referred to as the “Partnership Event Consummation Date.”
(B) If in connection with a Partnership Event the Common Units are
converted in whole or in part into other Marketable Securities (such
securities the “Successor Securities” and such event, a “Public Equity
Partnership Event”), then, following the Partnership Event Consummation
Date, (i) upon the conversion of the Series A Preferred Units pursuant to
Section 5.13(b)(vii), the redemption of the Series A Preferred Units
pursuant to Section 5.13(b)(viii), or the redemption or conversion of the
Series A Preferred Units pursuant to Section 5.13(b)(ix), any portion of
the Series A Conversion Consideration, the Series A Redemption
Consideration, the Fundamental Change Redemption Consideration, the
Fundamental Change Conversion Consideration or the Fundamental Change
Elected Common Unit Consideration, as applicable, that would otherwise
consist of Common Units pursuant to the terms of Section 5.13(b)(vii),
5.13(b)(viii) or 5.13(b)(ix), as applicable, shall instead consist of
Successor Securities, (ii) references in Sections 5.13(b)(ii)(B),
5.13(b)(vii), 5.13(b)(viii), 5.13(b)(ix), 6.6(a) and 6.6(b) to “Common
Units” shall refer to the Successor Securities and (iii) the term “Trading
Price Accretion Percentage” shall be modified to mean an amount equal to (a)
the Combined Accretion Multiple less (b) 1.00. The “Combined Accretion
Multiple” shall mean an amount equal to the product of:
a. a fraction, (i) the numerator of which is the VWAP Price of
the Common Units as of the Partnership Event Consummation Date and
(ii) the denominator of which is the VWAP Price of the Common Units
as of the Series A Issuance Date (the “Pre-Partnership Event
Accretion Multiple”); multiplied by
b. a fraction, (i) the numerator of which is the VWAP Price of
the Successor Securities as of the Series A Conversion Date, the
Series A Redemption Date or the date of consummation of the
Fundamental Change, as applicable and (ii) the denominator of which
is the VWAP Price of the Successor Securities as of the eleventh
Trading Day following the Partnership Event Consummation Date (the
“Post-Partnership Event Accretion Multiple”),
provided that, if the foregoing product is less than 1.00, then the
Combined Accretion Multiple shall equal 1.00.
(C) If in connection with a Partnership Event the Common Units do not
remain Outstanding and are converted solely into cash or other assets or
securities that do not constitute Marketable Securities (or any combination
thereof), then following such Partnership Event
Annex A-28
Consummation Date, upon the conversion of the Series A Preferred Units
pursuant to Section 5.13(b)(vii), the redemption of the Series A Preferred
Units pursuant to Section 5.13(b)(viii), or the redemption or conversion of
the Series A Preferred Units pursuant to Section 5.13(b)(ix):
a. any portion of the Series A Conversion Consideration, the
Series A Redemption Consideration, the Fundamental Change Redemption
Consideration, the Fundamental Change Conversion Consideration or the
Fundamental Change Elected Common Unit Consideration, as applicable,
that would otherwise consist of Common Units pursuant to the terms of
Section 5.13(b)(vii), 5.13(b)(viii) or 5.23(b)(ix), as applicable,
shall instead be payable solely in cash;
b. the Series A Conversion Consideration or the Series A
Redemption Consideration, as applicable, shall be an amount equal to
the Series A Liquidation Amount as of the Series A Maturity Date or
the Series A Redemption Date, as applicable, plus:
i. in the event of a redemption, the greater of (i) the
Series A Accretion Amount as of the Partnership Event
Consummation Date and (ii) $10.00; or
ii. in the event of a conversion, the lesser of (i) the
Series A Accretion Amount as of the Partnership Event
Consummation Date and (ii) $10.00;
c. the term “Fundamental Change Redemption Consideration
Premium” shall be modified to mean an amount in cash equal to the
greater of (i) the Series A Accretion Amount as of the date of the
Partnership Event Consummation Date and (ii) $10.00;
d. the term “Fundamental Change Conversion Consideration” shall
be modified to mean an amount in cash equal to the Series A
Liquidation Value as of the date of the consummation of the
Fundamental Change plus the lesser of (i) the Series A Accretion
Amount as of the Partnership Event Consummation Date and (ii) $10;
and
e. the Partnership will no longer have the option to convert the
Series A Preferred Units into Common Units pursuant to Section
5.13(b)(ix)(C), but instead must convert them into the right to
receive the Fundamental Change Elected Cash Consideration.
Annex A-29
(xii) Distributions, Combinations and Subdivisions; Other Adjustments.
(A) If, after the Series A Issuance Date and prior to the earlier of
the Series A Maturity Date and the Series A Redemption Date, the
Partnership (a) makes a distribution on its Common Units in Common Units,
(b) subdivides or splits its Common Units into a greater number of Common
Units, (c) combines or reclassifies its Common Units into a smaller number
of Common Units, (each of the events described in clauses (a) through (c),
a “Series A Adjustment Event”) or (d) makes a distribution on its Common
Units in any property other than cash or Common Units (a “Special
Distribution”), then calculation of the Series A Conversion Consideration
and the Series A Redemption Consideration shall be adjusted as provided in
this Section 5.13(b)(xii)(A) and Sections 5.13(b)(xii)(C) and (D).
a. Solely for the purposes of determining the Trading Price Accretion
Percentage for purposes of Section 5.13(b)(vii)(A) (in the event of a
conversion) or Section 5.13(b)(viii)(A) (in the event of a redemption):
i. for each Series A Adjustment Event, the VWAP Price as of the
Series A Maturity Date or the Series A Redemption Date, as
applicable, shall be adjusted by multiplying such VWAP Price by a
fraction, (i) the numerator of which shall be the number of Common
Units Outstanding immediately following such Series A Adjustment
Event and (ii) the denominator of which shall be the number of Common
Units Outstanding immediately prior to such Series A Adjustment
Event; and
ii. for each Special Distribution, the VWAP Price as of the
Series A Maturity Date or the Series A Redemption Date, as
applicable, shall be adjusted by adding to such VWAP Price the Fair
Market Value of the property distributed on a Common Unit in such
Special Distribution.
b. Solely for the purposes of determining the Trading Price Accretion
Percentage for purposes of Section 5.13(b)(xi)(C) (in the event of
conversion or redemption following a Partnership Event Consummation Date)
and determining the Pre-Partnership Event Accretion Multiple pursuant to
Section 5.13(b)(xi)(B)(a):
i. for each Series A Adjustment Event prior to the Partnership
Event Consummation Date, the VWAP Price as of the Partnership Event
Consummation Date shall be adjusted by multiplying such VWAP Price
by a fraction, (i) the numerator of
Annex A-30
which shall be the number of Common Units Outstanding
immediately following such Series A Adjustment Event and (ii) the
denominator of which shall be the number of Common Units Outstanding
immediately prior to such Series A Adjustment Event; and
ii. for each Special Distribution prior to the Partnership
Event Consummation Date, the VWAP Price as of the Partnership Event
Consummation Date shall be adjusted by adding to such VWAP Price the
Fair Market Value of the property distributed on a Common Unit in
such Special Distribution.
c. Solely for the purposes of determining the Post-Partnership Event
Accretion Multiple pursuant to Section 5.13(b)(xi)(B)(b):
i. for each Series A Adjustment Event following the
Partnership Event Consummation Date, the VWAP Price as of the Series
A Maturity Date or the Series A Redemption Date, as applicable,
shall be adjusted by multiplying such VWAP Price by a fraction, (i)
the numerator of which shall be the number of shares of Successor
Securities outstanding immediately following such Series A
Adjustment Event and (ii) the denominator of which shall be the
number of shares of Successor Securities outstanding immediately
prior to such Series A Adjustment Event; and
ii. for each Special Distribution following the Partnership
Event Consummation Date, the VWAP Price as of the Series A Maturity
Date or the Series A Redemption Date, as applicable, shall be
adjusted by adding to such VWAP Price the Fair Market Value of the
property distributed on a share of Successor Securities in such
Special Distribution.
For purposes of this Section 5.13(b)(ix)(A)(c), references to “Common
Units” in the definitions of “Series A Adjustment Event” and “Special
Distribution” set forth in Section 5.13(b)(ix)(A) shall refer to Successor
Securities.
(B) If, after the Series A Issuance Date and prior to the date of the
consummation of a Fundamental Change, a Series A Adjustment Event or a
Special Distribution occurs, then the calculation of the Fundamental Change
Redemption Consideration or the Fundamental Change Conversion Consideration
shall be adjusted as provided in this Section 5.13(b)(xii)(B) and Sections
5.13(b)(xii)(C) and (D). Solely for the purposes of determining the
Trading Price Accretion Percentage for purposes of calculating the
“Fundamental Change Conversion
Annex A-31
Consideration” (in the event of a conversion) or the “Fundamental
Change Redemption Consideration” (in the event of a redemption):
a. for each Series A Adjustment Event, the VWAP Price as of the date of
the consummation of a Fundamental Change shall be adjusted by multiplying
such VWAP Price by a fraction, (i) the numerator of which shall be the
number of Common Units Outstanding immediately following such Series A
Adjustment Event and (ii) the denominator of which shall be the number of
Common Units Outstanding immediately prior to such Series A Adjustment
Event; and
b. for each Special Distribution, the VWAP Price as of the date of the
consummation of a Fundamental Change shall be adjusted by adding to such
VWAP Price the Fair Market Value of the property distributed on a Common
Unit in such Special Distribution.
(C) Subsequent adjustments to the applicable VWAP Price shall be made
successively in the order of occurrence of any Series A Adjustment Event or
Special Distribution whenever more than one Series A Adjustment Event or
Special Distribution occurs during an applicable period.
(D) If a Partnership Event, a Series A Adjustment Event or a Special
Distribution occurs during a ten Trading Day period used for purposes of
calculating a VWAP Price as of any particular date under any provision of
this Agreement, the Partnership shall make appropriate adjustments to the
VWAP Price to insure that the VWAP Price properly reflects the value of the
Common Units or Successor Securities, as applicable, as of any particular
date.
The first sentence of Section 6.1 of the Partnership Agreement is amended and restated in its
entirety to read as follows:
“For purposes of maintaining Capital Accounts and in determining the rights of
the Partners among themselves, the Partnership’s items of income, gain, loss and
deduction (computed in accordance with 5.6(b)) shall be allocated (subject to
Section 5.13(b)) among the Partners in each taxable year (or portion thereof) as
provided herein below.”
Section 6.1(d)(ix) is hereby amended and restated in its entirety to read as follows:
”(ix)
Redemption of Series A Preferred Units. Notwithstanding any other
provision of this 6.1 (other than the Regulatory Allocations), with respect to any
taxable period during which Series A Preferred Units are redeemed pursuant to the
terms of Section 5.13(b), each Partner holding redeemed Series A Preferred Units
shall be allocated items of income, gain, loss and deduction in a manner that
results in the Capital Account balance of each such Partner attributable to its
Annex A-32
redeemed Series A Preferred Units immediately prior to such redemption (and
after taking into account any applicable Regulatory Allocations) to equal (i) the
amount of cash paid to such Partner in redemption of such Series A Preferred Units,
and (ii) the product of the number of Common Units received in the redemption and
the Per Unit Capital Amount for a then Outstanding Common Unit (but only to the
extent not otherwise achieved by operation of section 5.6(d)(ii)).”
Section 6.2 of the Partnership Agreement is hereby amended to add the following as Section
6.2(i) immediately following Section 6.2(h):
“Section 6.2(i). If Capital Account balances are reallocated between the
Partners in accordance with Section 5.6(d)(i) hereof and Proposed Treasury
Regulation Section 1.704-1(b)(2)(iv)(s)(4), beginning with the year of reallocation
and continuing until the allocations required are fully taken into account, the
Partnership shall make corrective allocations (allocations of items of gross income
or gain or loss or deduction for federal income tax purposes that do not have a
corresponding book allocation) to take into account the Capital Account
reallocation, as provided in Proposed Treasury Regulation Section
1.704-1(b)(4)(x).”
Article VI of the Partnership Agreement is hereby amended to add a new Section 6.6 as
follows:
(A) A Unitholder holding a Series A Preferred Unit that has converted
into a Common Unit pursuant to Section 5.13 shall be required to provide
notice to the General Partner of the transfer of the converted Series A
Preferred Unit within the earlier of (i) thirty (30) days following such
transfer and (ii) the last Business Day of the calendar year during which
such transfer occurred, unless (x) the transfer is to an Affiliate of the
holder or (y) by virtue of the application of Section 5.6(d)(i), the General
Partner has previously determined, based on advice of counsel, that the
converted Series A Preferred Unit should have, as a substantive matter, like
intrinsic economic and federal income tax characteristics of an Initial
Common Unit. In connection with the condition imposed by this Section 6.6,
the General Partner shall take whatever steps are required to provide
economic uniformity to the converted Series A Preferred Unit in preparation
for a transfer of such Units; provided, however, that no such steps may be
taken that would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates (for this purpose the
allocations of income, gain, loss and deductions with respect to Series A
Preferred Units or Common Units will be deemed not to have a material
adverse effect on the Unitholders holding Common Units).
Annex A-33
(B) A Unitholder holding a Series A Preferred Unit that has converted
into a Common Unit pursuant to Section 5.13 shall not be permitted to
transfer, by assignment or otherwise, any such Common Unit until after 32
calendar days have elapsed from the date that the Series A Preferred Unit
was converted into such Common Unit.
(C) Notwithstanding anything to the contrary set forth in this
Agreement, the holders of the Series A Preferred Units (a) shall (i) possess
the rights, preferences and privileges and the duties and obligations
provided in this Agreement with respect to a Limited Partner pursuant to
Article III and Article VII and (ii) have a Capital Account as a Partner
pursuant to Section 5.6 and all other provisions related thereto and (b)
shall not (i) be entitled to vote on any matters requiring the approval or
vote of the holders of Outstanding Units, except as provided in Section
5.13, (ii) be entitled to any distributions other than as provided in
Section 5.13, Article VI or Article XII or (iii) be allocated items of
income, gain, loss or deduction other than as specified in Section 5.13 or
Article VI.”
Article XII of the Partnership Agreement is hereby amended to add a new Section 12.10 as
follows:
“Section 12.10.
Series A Liquidation Value. Notwithstanding anything to the
contrary set forth in this Agreement, the holders of the Series A Preferred Units
shall have the rights, preferences and privileges set forth in Section 5.13(b)(iv)
upon liquidation of the Partnership pursuant to this Article XII.”
The Partnership Agreement is hereby amended to eliminate any references therein to “Class B
Units” or “Class C Units.”
Ratification of Partnership Agreement. Except as expressly modified and amended
herein, all of the terms and conditions of the Partnership Agreement shall remain in full force
and effect.
Governing Law. This Amendment will be governed by and construed in accordance with
the laws of the State of Delaware.
Counterparts. This Amendment may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding that all such
parties are not signatories to the original or the same counterpart.
Annex A-34
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GENERAL PARTNER:
LE GP, LLC
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By: |
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[Name], [Title] |
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LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as limited
partners of the Partnership, pursuant to Powers of Attorney
now and hereafter executed in favor of, and granted and
delivered to, the General Partner.
By: LE GP, LLC, General Partner of
Energy Transfer Equity, L.P., as
attorney-in-fact for all Limited Partners pursuant to the
powers of Attorney granted pursuant to Section 2.6 of the
Partnership Agreement. |
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By: |
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[Name], [Title] |
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Annex A-35