Exhibit 10.5
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is made and entered into this 8th day of
September, 2000 by and among INVESTORS 300, INC., DOMEX, INC. and L&L LEASING,
INC., all Indiana corporations (hereinafter referred to individually as "SELLER"
and collectively as "SELLERS"), XXXXX XXXXX, XXXXX XXXX, XXXX X. XXXX and
XXXXXXX X. XXXXXX (hereinafter referred to as the "Shareholders"), and INERGY
PARTNERS, LLC, a Delaware limited liability company (hereinafter referred to as
"BUYER").
RECITALS
--------
A. Each SELLER desires to sell to BUYER substantially all of the
assets of such SELLER related to such SELLER's business upon the terms and
conditions hereinafter set forth; and
B. BUYER desires to acquire such assets from SELLERS upon the terms
and conditions hereinafter set forth.
AGREEMENT
---------
In consideration of the above premises, the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
----------------------
In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein, unless the
context otherwise dictates, both for purposes of this Agreement and all
Schedules and Exhibits hereto:
"Accounts Receivable" shall have the meaning set forth in Section
3.1(c) hereof.
"Accounts Receivable Date" shall have the meaning set forth in Section
3.1(c) hereof.
"Adverse Effect" shall mean a single event, occurrence or fact or
related series of events, occurrences or facts having an adverse effect on the
Assets, Business, operations, prospects or financial condition of any SELLER.
"Affiliate" shall mean "affiliate" and "associate" as such terms are
defined in Rule 405 of the Securities Act of 1933.
"Agreement" or "this Agreement" shall mean this Asset Purchase
Agreement, as amended from time to time by the parties hereto, together with all
Schedules and Exhibits hereto.
"Acquisition Proposal" shall have the meaning set forth in Section
9.10 hereof.
"Assets" shall mean all of the assets and properties used by each
SELLER in its Business (except the Excluded Assets as defined herein) including,
without limitation, the entire
right, title and interest in and to all of the assets and properties described
on Schedules 2.1A, 2.1B, 2.1C, 2.1D, 2.1F, 2.1J and 2.1K.
"Assumed Contracts" shall mean the Contracts and Other Agreements set
forth on Schedules 2.1B, 2.1D and Part A of Schedule 2.1F and those of the type
described on Part B of Schedule 2.1F that do not violate any other provisions of
this Agreement.
"Balance Sheet" shall mean the balance sheet of Domex, Inc., dated
October 31, 1999, the balance sheet of Investors 300, Inc., dated September 30,
1999 and the balance sheet of L&L Leasing, dated December 31, 1999.
"Balance Sheet Date" shall mean, with respect to each SELLER, the date
of the Balance Sheet of such SELLER.
"Benefit Plans" shall have the meaning set forth in Section 6.18(a)
hereof.
"Business" shall mean, in the case of Investors 300, Inc., the
business of marketing and distributing propane gas and selling, servicing and
installing parts, appliances and supplies related thereto on a retail basis; in
the case of Domex, Inc., the wholesale distribution of propane gas; and in the
case of L&L, Leasing, Inc., the business of truck transportation of propane gas,
natural gas liquids and other products and truck fabrication and refabrication.
"Carrier Permits" shall mean the licenses, permits and the like that
are required by Federal or state regulations to operate the truck transportation
business of L&L Leasing, Inc.
"Claim Notice" shall have the meaning set forth in Section 12.4
hereof.
"Closing" shall mean the transfer by each SELLER to BUYER of such
SELLER's Assets and by BUYER to such SELLER of the consideration set forth
herein and the consummation of the transactions contemplated by this Agreement.
"Closing Date" shall be the date of the Closing established pursuant
to Section 4.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contracts and Other Agreements" shall mean all contracts, agreements,
understandings, indentures, notes, bonds, loans, instruments, leases, subleases,
mortgages, franchises, licenses, commitments or binding arrangements, express or
implied, oral or written.
"Covered Person" shall have the meaning set forth in Section 9.16(b)
hereof.
"Customer Deposits" shall have the meaning set forth in Section 3.1(x)
hereof.
"Cut-Off Date" shall have the meaning set forth in Section 15.1(b)
hereof.
"Damages" shall have the meaning set forth in Section 12.1B hereof.
"Documents and Other Papers" shall mean and include any document,
agreement, instrument, certificate, notice, consent, affidavit, letter,
telegram, telex, statement, file, computer
disk, microfiche or other document in electronic format, schedule, exhibit or
any other paper whatsoever.
"Environmental Escrow" shall have the meaning set forth in Section 4.5
hereof.
"ERISA" shall have the meaning set forth in Section 6.18(a) hereof.
"Excluded Assets" shall have the meaning set forth in Section 2.2
hereof.
"Facility" shall have the meaning set forth in Section 6.21 hereof.
"Fixed Purchase Contracts" shall have the meaning set forth in Section
3.2 hereof.
"Fixed Sales Contracts" shall have the meaning set forth in Section
3.2 hereof.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Growth Capital Expenditures" shall mean capital expenditures that are
incurred to increase the amount of Business of a SELLER and that are approved in
writing by BUYER in advance of such incurrence; it being (i) agreed that the
expenditures for tractors, trailers, vehicles, land, buildings and other items
listed on Schedule 3.1(d) hereto are Growth Capital Expenditures, (ii) agreed
that expenditures for retail customer propane tanks are not Growth Capital
Expenditures but are covered in Section 3.1(h) below, and (iii) recognized that
not all capital expenditures increase the amount of Business of a SELLER and
therefore are not Growth Capital Expenditures hereunder, including, without
limitation, capital expenditures (a) made to maintain and serve existing
revenues of the Business, (b) made to replace equipment, or (c) made for
extraordinary maintenance.
"Hazardous Substances" shall have the meaning set forth in Section
6.21(a) hereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 12.4
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 12.4
hereof.
"IPO" shall have the meaning set forth in Section 9.12(a) hereof.
"Kendallville and Waterloo Properties" shall have the meaning set
forth in Section 9.19(a) hereof.
"Kendallville and Waterloo Environmental Claims" shall have the
meaning set forth in Section 12.1A(a) hereof.
"Knowledge" with respect to a SELLER shall encompass all facts and
information which are within the actual knowledge of any of the Shareholders and
any of the
following officers or employees of a SELLER: Xxxxx Xxxxxxxx, Xxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxx and Xxxxxx X. Xxxxxx.
"Lien" shall mean any lien, pledge, claim, charge, security interest
or encumbrance of any nature whatsoever.
"Liabilities" shall have the meaning set forth in Section 4.2(b)
hereof.
"Material Adverse Effect" shall mean with respect to the consequences
of any fact or circumstance (including the occurrence or non-occurrence of any
event) to any SELLER, that such fact or circumstance has caused, is causing or
will cause directly, indirectly or consequentially, any Damages in excess of One
Hundred Thousand Dollars ($100,000); provided that the foregoing shall not
include the consequences of any fact or circumstance attributable to (i) factors
generally affecting the industry in which the Business of such SELLER operates,
(ii) general national, regional or local economic or financial conditions, or
(iii) changes in governmental or legislative laws, rules or regulations.
"Material Contract" shall mean and involve any Contracts and Other
Agreements, if it involves, relates to or affects the Business or the Assets or
both and if any one or more of the following applies: (i) it involves, or may
reasonably be expected to involve, the payment or receipt of Ten Thousand
Dollars ($10,000) or more (whether in cash or in goods or services of an
equivalent value) over its term, including renewal options, or Five Thousand
Dollars ($5,000) during any one year, (ii) it imposes restrictions on the
conduct of the Business, (iii) it was not made in the ordinary and usual course
of the Business consistent with past practice, (iv) it is a continuing contract
for the purchase, sale or distribution of materials, supplies, equipment,
products or services, (v) it burdens, benefits, or imposes liabilities upon, or
otherwise with respect to, any real property owned or leased by a SELLER, (vi)
it is not cancelable on notice of not longer than thirty (30) days and without
liability, penalty or premium, (vii) the present or prospective Business is
dependent upon it, or (viii) it involves the future purchase or sales of propane
at a fixed price.
"MLP" shall have the meaning set forth in Section 9.12(a) hereof.
"Noncompetition Agreements" shall have the meaning set forth in
Section 3.4 hereof.
"Notice Period" shall have the meaning set forth in Section 12.4
hereof.
"Organizational Documents" of an entity shall mean, if a corporation,
its articles of incorporation or certificate of incorporation, as the case may
be, and Bylaws, and if a limited liability company, its certificate of formation
and limited liability company agreement, and any other documents, agreements or
instruments relating to the creation, formation, organization, governance or
ownership of such entity.
"Operating Loss Adjustment" shall have the meaning set forth in
Section 3.1(i) hereof.
"Other Properties" shall have the meaning set forth in Section 9.19(b)
hereof.
"Other Properties Environmental Claims" shall have the meaning set
forth in Section 12.1A(d) hereof.
"Parts and Appliances Inventory" shall have the meaning set forth in
Section 3.1(b) hereof.
"Permitted Encumbrances" shall have the meaning set forth in Section
9.15 hereof.
"Person" means a natural person, partnership, limited partnership,
corporation, limited liability company, trust, government, government agency and
any other legal entity.
"Preferred Interest" shall have the meaning set forth in the amendment
to the limited liability company agreement of Inergy Partners, LLC pursuant to
Section 3.7 hereof.
"Propane Inventory" shall have the meaning set forth in Section 3.1(a)
hereof.
"Propane Supply Contracts" shall mean contracts between a SELLER and a
third party whereby the third party agrees to supply such SELLER with propane,
at daily-posted prices, but such term does not include Fixed Purchase Contracts.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Purchase Price Increase" shall have the meaning set forth in Section
3.1(j) hereof.
"Real Property" shall have the meaning set forth in Section 6.10(a)
hereof.
"Registration Statement" shall have the meaning set forth in Section
9.12(e) hereof.
"Release" shall have the meaning set forth in Section 6.21(a) hereof.
"Retained Liabilities" shall have the meaning set forth in Article 5
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Subordinated Units" are those senior subordinated units
described in Exhibit C hereto.
"Supplemental Information" shall have the meaning set forth in Section
9.11 hereof.
"Survey" shall have the meaning set forth in Section 9.15 hereof.
"Title Commitment" shall have the meaning set forth in Section 9.15
hereof.
"Title Company" shall have the meaning set forth in Section 9.15
hereof.
"Title Policy" shall have the meaning set forth in Section 9.15
hereof.
"Vehicle Transfer Taxes" shall have the meaning set forth in Section
4.4 hereof.
ARTICLE 2. PURCHASE AND SALE OF ASSETS
--------------------------------------
2.1 Assets. Subject to the terms and conditions hereof and subject
------
to the representations and warranties made herein and except as otherwise
provided in Section 2.2, at the Closing each SELLER shall validly sell, assign,
transfer, grant, bargain, deliver and convey to BUYER (or to one or more of its
designees) the Assets.
2.2 Excluded Assets. Anything in Section 2.1 to the contrary
---------------
notwithstanding, the assets listed or described on Schedule 2.2 shall not be
transferred to BUYER (the "Excluded Assets").
2.3 Non-Assignable Contracts. This Agreement and any document
------------------------
delivered hereunder shall not constitute an assignment or an attempted
assignment by a SELLER of any right contemplated to be assigned to BUYER
hereunder:
(a) That is not assignable by such SELLER without the consent of
a third party if such consent has not been obtained and such assignment or
attempted assignment would constitute a breach thereof; or
(b) If the remedies for the enforcement or any other particular
provisions thereof available to such SELLER would not pass to BUYER.
Each SELLER shall use reasonable commercial efforts (but with no requirement to
make any out-of-pocket expenditures) to obtain such consents of third parties as
may be necessary for the assignment of such right by such SELLER. To the extent
that such right of a SELLER is not assignable or where consents to the
assignment thereof cannot be obtained as herein provided, such SELLER shall, at
the Closing, assign to BUYER the full benefit thereof (which shall be deemed to
be Assets) and grant to BUYER, to the extent permitted by applicable law, an
irrevocable power of attorney to perform such SELLER's covenants and obligations
under such rights in respect of the period after the Closing Date, and to
enforce such SELLER's rights thereunder in the name of such SELLER but for the
benefit of BUYER.
ARTICLE 3. PURCHASE PRICE
-------------------------
3.1 Aggregate Purchase Price. The aggregate purchase price (the
------------------------
"Purchase Price") for the Assets and the Noncompetition Agreements is Sixty-Six
Million Dollars ($66,000,000), plus an amount equal to the sum of the following:
(a) The inventory of propane gas (i) located in each SELLER's
bulk storage tanks and bobtails on the Closing Date and useable and
saleable in the ordinary course of the Business of such SELLER, the amount
of such inventory to be based upon a reading from the sight gauge located
on such bulk storage tanks and bobtails (adjusted to 60 degrees Fahrenheit)
taken jointly by a representative of BUYER and a representative of such
SELLER on the Closing Date and priced based upon the lowest wholesale
delivered price at which such SELLER could purchase propane on the Closing
Date, and (ii) owned by any SELLER and stored in third party storage
facilities, and priced based upon (x) the actual cost of (1) up to Two
Million (2,000,000) gallons of such inventory that is located
at the Marysville, Michigan underground storage facility on the Closing
Date and (2) any additional such inventory held by such SELLER to meet the
obligations of such SELLER pursuant to long-term contracts described in
Section 3.2 hereof, and (y) for all other such inventory, the lower of
actual cost or market price at such storage facility on the Closing Date
(the "Propane Inventory"). (The Parties recognize that BUYER will be
assuming certain Fixed Purchase Contracts for the purchase of propane
pursuant to Section 3.2 hereof.);
(b) The inventory of gasoline and diesel fuels owned by each
SELLER and priced at the lower of actual cost or market price at each
facility, and the inventory of parts, equipment held for resale, work in
progress and appliances of each SELLER on the Closing Date usable and
saleable in the ordinary course of the Business of such SELLER, with the
amount of such inventory to be based upon a physical inventory taken
jointly by a representative of BUYER and a representative of such SELLER on
the Closing Date and priced based upon the average cost method for
inventory regularly employed by such SELLER in its inventory accounting
practices; provided, however, that no amount shall be paid under this
Section 3.1(b) for new or used retail customer propane tanks (the "Parts
and Appliances Inventory");
(c) Accounts receivable (the "Accounts Receivable") arising from
the Business of each SELLER and owned by such SELLER as of the Closing Date
that are actually collected within one hundred eighty (180) days after the
Closing (the "Accounts Receivable Date");
(d) An amount equal to the sum of the Growth Capital Expenditures
incurred by all SELLERS on or after August 1, 1999 and prior to the Closing
Date (an itemized list of all Growth Capital Expenditures including the
amount of each item from August 1, 1999 to July 31, 2000 is attached hereto
as Schedule 3.1(d)), which are hereby approved by BUYER;
(e) An amount equal to the pre-paid expenses (such as, for
example, customer promotions and deposits for future expenditures) as
reflected on the books and records of each SELLER as of the Closing Date to
the extent such expenses have been approved in advance and in writing by
BUYER to be included for purposes of this Section 3.1(e), including the
pre-paid expenses incurred to date as set forth in Schedule 3.1(e) attached
hereto;
(f) An amount equal to the outstanding balance owed by River
Valley Cooperative on the Closing Date under that certain Promissory Note
dated January 25, 2000, executed by River Valley Cooperative, less $25,000;
(g) An amount equal to the amount calculated in this Section
3.1(g). First, a physical inventory of the number of new (not used) retail
customer propane tanks owned by each SELLER on the Closing Date usable and
saleable in the ordinary course of the Business of such SELLER shall be
taken jointly by a representative of BUYER and a representative of such
SELLER on the Closing Date. The cost per tank used to value this physical
inventory will be the most recent net price per tank paid for by such
SELLER. The total value of physical inventory of new tanks on the Closing
Date determined above shall be adjusted by the following number "x" to
arrive at the total
amount paid under this Section 3.1(g). The number "x" shall be equal to Net
Purchases minus Net Sets; where, "Net Purchases" is equal to the number of
all new (not used) retail customer propane tanks purchased by SELLERS from
August 1, 1999 to the Closing Date, minus the number of new tanks sold
during such period, in both cases in the ordinary course of business of
such SELLER consistent with past practices of such SELLER and consistent
with industry practices, and "Net Sets" is equal to the number of retail
customer propane tanks installed by SELLERS from August 1, 1999 to the
Closing Date, in the ordinary course of business of such SELLER consistent
with past practices of such SELLER and consistent with industry practices,
minus the number of used tanks picked up from retail customers during such
period. If the number of tanks calculated in "x" is negative, then 90% of
that number "x" shall be added to the value of the physical inventory of
new tanks on the Closing Date to arrive at the total net dollar amount paid
for under this Section 3.1(g). If the number of tanks calculated in "x" is
positive, then 90% of that number "x" shall be deducted from the value of
the physical inventory of new tanks on the Closing Date to arrive at the
total net dollar amount paid for under this Section 3.1(g). If the number
of tanks calculated in "x" is zero, then the actual physical inventory of
new tanks on Closing Date shall be paid with no adjustments. The value per
tank to be used in any adjustment for "x" shall be the most recent price
paid by SELLER for such tanks.
(h) An amount equal to the number of Net Sets (as defined in
Section 3.1(g) above) multiplied by the sum of $125, plus an amount equal
to the actual cost of all new (not used) tanks purchased by SELLERS, minus
the number of new tanks sold by SELLERS during such period, in both cases
since August 1, 1999 to the Closing Date. (An itemized calculation of the
sum payable pursuant to this Section 3.1(h) through July 31, 2000 is set
forth in Schedule 3.1(h) and is hereby approved by SELLERS and BUYER);
(i) An amount equal to $1,700 per day for each day between June
30, 2000 and the Closing Date (the "Operating Loss Adjustment");
(j) An amount equal to the sum of (A) plus (B), where (A) equals
nine percent (9%) of Six Million Dollars ($6,000,000) multiplied by a
fraction the numerator of which is the number of days between June 30, 2000
and the Closing Date and the denominator of which is 365, and (B) equals
five percent (5%) of Sixty Million Dollars ($60,000,000) multiplied by a
fraction the numerator of which is the number of days between June 30, 2000
and the Closing Date and the denominator of which is 365 (the "Purchase
Price Increase");
(k) In the event that (A) a SELLER at the time of the Closing has
in effect any property or casualty insurance covering the Assets or the
Business, and such insurance covers periods subsequent to the Closing, (B)
such SELLER cancels such insurance within ten (10) days following the
Closing, and (C) the policy does not provide for a pro rata refund of such
premiums paid by such SELLER, the purchase price shall be increased by an
amount equal to (i) minus (ii), where (i) equals the number of days from
the Closing Date to the end of the insurance policy period divided by 365
multiplied by the yearly premium paid, and (ii) equals the amount of the
insurance premium refunded or to be refunded to such SELLER with respect to
such policy;
(l) An amount equal to the sum of the deposits referred to in
Section 3.2(d) below; and
(m) An amount equal to the replacement capital expenditures
incurred by SELLERS between June 30, 2000 and the date hereof (and other
replacement capital expenditures incurred prior to June 30, 2000) as set
forth on Schedule 3.1(m) hereof and hereby approved by BUYER, plus those
replacement capital expenditures incurred after the date hereof and prior
to the Closing that have been approved in writing by BUYER in advance of
the incurrence; and
the Purchase Price shall be decreased by an amount equal to the sum of the
following:
(w) An amount equal to the loss, if any, calculated pursuant to
Section 3.2(c) below; and
(x) An amount equal to the sum of the customer deposits held by all
SELLERS on the Closing Date as determined from the books and records of
SELLERS on the Closing Date (the "Customer Deposits"); and
(y) An amount equal to the sum of (i) bonuses assumed by BUYER
pursuant to Section 3.3 below and (ii) accrued expenses as of the Closing
Date, if any, that BUYER and SELLERS agree in writing shall be assumed by
BUYER, including the accrued expenses set forth in Schedule 3.1(y), but
excluding any unused vacation days; and
(z) (i) In the event that the promissory note negotiated as part of
that certain Covenant Not to Compete, dated August 11, 1998 by and among
Investors 300, Inc., Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxx (see Section 9.18
below) is assumed by BUYER, an amount equal to the unpaid principal and
accrued interest under such promissory note as of the Closing Date; and
(ii) In the event BUYER exercises its right to reject certain real estate
pursuant to Section 9.15 of this Agreement, the fair market value of any
real estate which is excluded from this sale as determined by the average
of the values established by two certified real estate appraisers, with one
appraiser designated by SELLER and one appraiser designated by BUYER.
3.2 Long-Term Contracts. The parties acknowledge that in the
-------------------
ordinary course of the Business of SELLER(s), SELLER(s) enter into contracts
with third parties providing for the sale of propane to such third parties over
an extended period of time and at a fixed per unit sales price ("Fixed Sales
Contracts"), and SELLER(s) enter into contracts with third parties providing for
the purchase of propane from third parties over an extended period of time at a
fixed per unit sales price ("Fixed Purchase Contracts"). BUYER agrees that at
the Closing it will assume all such Fixed Sales Contracts and Fixed Purchase
Contracts, subject to the following:
(a) With respect to such contracts entered into after the date
hereof, such contracts shall have been entered into by SELLER(s) in the
ordinary course of business consistent with past practices.
(b) BUYER shall assume all Fixed Sales Contracts that have been
entered into by SELLERS prior to or following the date hereof with the
third parties set forth in Schedule 3.2(b), and the Fixed Sales Contracts
entered into by SELLERS with any other third parties that, in addition to
satisfying the provisions of clause (a) above, satisfy the creditworthiness
standards applied by BUYER in the ordinary course of its business.
(c) Any such Fixed Sales Contract shall be subject to BUYER
having offsetting Fixed Purchase Contracts (either assumed hereunder or
otherwise) and/or long positions of propane inventory that would result in
BUYER having no worse than a breakeven economic position upon BUYER's
assumption of such Fixed Sales Contract, and if BUYER would not be in such
economic position, then BUYER shall nevertheless assume such Fixed Sales
Contract but the Purchase Price shall be reduced by an amount equal to
BUYER's reasonably anticipated loss from such Fixed Sales Contract. In
determining such "reasonably anticipated loss," there shall be taken into
account the terms of such contracts, the transportation costs, the carrying
costs of any such propane inventory and the amount payable by BUYER under
Section 3.2(e) below for the offsetting Fixed Purchase Contract.
(d) No amount shall be payable by BUYER in connection with the
assumption by BUYER of any Fixed Sales Contract or any Fixed Purchase
Contract; provided, however, in the event a SELLER has made any deposit
with a counterparty to any Fixed Purchase Contract, any unapplied portion
of such deposit as of the time of Closing shall be paid by BUYER to such
SELLER as part of the Purchase Price; and provided, further, that with
respect to any Fixed Purchase Contract, BUYER agrees (i) to pay such
SELLER's amortized cost thereof that is traceable to the volume to be taken
under any such contract that is offset against volumes to be sold under any
Fixed Sales Contract assumed by BUYER under (c) above, and (ii) as to the
balance of such contract, to pay to such SELLER an amount equal to the
lower of such SELLER's amortized cost or the market value of such Fixed
Purchase Contract as of the Closing. Amortized cost of a Fixed Purchase
Contract shall be based upon industry accounting practice and in accordance
with GAAP. By way of example of the foregoing proviso, if there is a Fixed
Sales Contract for 1 million gallons of propane at $.50 per gallon and a
Fixed Purchase Contract for 1.5 million gallons of propane at $.45 per
gallon, then the purchase price for such Fixed Purchase Contract would be
(i) at such SELLER's cost for 1 million gallons, plus (ii) the lower of
such cost or the current market value for the remaining .5 million gallons.
(e) BUYER's agreement to assume any Fixed Sales Contract and any
Fixed Purchase Contract shall be subject to such SELLER obtaining any
consent of the third party to such contract that would be required to
permit the assignment of such contract to BUYER.
3.3 Employee Bonuses. SELLERS have in place a bonus program for
----------------
certain employees of SELLERS. At the time of the Closing, it is anticipated that
there will be bonuses that will have accrued but will not be payable or vested
under such program until a date subsequent to the Closing. Subject to the
provisions hereof, BUYER agrees to assume such bonus liability of SELLERS as
identified to BUYER prior the Closing. The Purchase Price shall be decreased
under Section 3.1(y) above by an amount equal to the sum of the projected
bonuses
for all employees. In determining the projected bonus for an employee, the
parties shall meet to discuss the anticipated earnings, revenue or other bonus
measurements for the entire bonus period and calculate the bonus based on such
anticipated amounts. Such bonus amount for each employee shall then be
multiplied by a fraction, the numerator of which is the number of days between
the beginning of the bonus period for such employee and the Closing Date and the
denominator of which is 365. By way of example, if (a) an employee is to receive
5% of profits as a bonus for a particular business segment, (b) the profits to
the Closing Date for such segment were $75,000, (c) the number of days between
the beginning of the bonus period and the Closing Date were 300 and (d) the
expected profits (as agreed to by the parties) for such segment for the entire
twelve-month bonus period were $60,000 (i.e., a projected loss of $15,000 for
the remaining 65 days), the bonus amount under this provision would be 300/365
times 5% of $60,000, or $2,465. In addition to BUYER assuming SELLERS' liability
to pay such bonuses under the terms of such SELLER's bonus program, BUYER agrees
that in the event an employee is terminated without cause subsequent to the
Closing Date and the Purchase Price has been decreased pursuant to Section
3.1(y) above with respect to such employee, BUYER agrees to pay to such employee
such credited amount, even though such bonus would not be payable under the
bonus program.
3.4 Noncompete Payments. At the Closing on the Closing Date, each
-------------------
SELLER and each Shareholder (other than Xxxxxxx X. Xxxxxx) will enter into a
noncompetition agreement with BUYER in the form of Exhibit A attached hereto
(the "Noncompetition Agreements"), pursuant to which SELLERS and the
Shareholders will receive a total of $465,000 (allocated pursuant to Section
3.5) in consideration for the Noncompetition Agreements. SELLERS and the
Shareholders each hereby agree that such $465,000 is included in the Purchase
Price and will be paid as set forth in the Noncompetition Agreements.
3.5 Allocation of Purchase Price. The parties agree to allocate the
----------------------------
Purchase Price to the Assets and the Noncompetition Agreements in the manner
provided in Schedule 3.5.
3.6 Xxxxxxx Money Deposit. Within 14 days after the date hereof,
---------------------
BUYER agrees to make an xxxxxxx money deposit of Seventy-Five Thousand Dollars
($75,000). Such deposit will be placed in escrow with Bank One, Indiana, N.A.,
Fort Xxxxx, Indiana and under an escrow agreement in the form attached as
Exhibit H. At the time of the Closing the deposit and interest thereon shall be
returned to BUYER. If the Closing does not occur on or before October 31, 2000
as a result of a breach of this Agreement by any SELLER or any Shareholder,
promptly thereafter BUYER shall be entitled to be paid the deposit and all
interest thereon. If the Closing does not occur on or before October 31, 2000
for any other reason, then SELLERS jointly shall be entitled to be paid $75,000,
and BUYER shall be entitled to be paid the interest thereon.
3.7 LLC Agreement Amendment and Put Agreement. At the Closing,
-----------------------------------------
SELLERS and BUYER agree to execute and deliver to each other the amendment to
limited liability company agreement in the form attached hereto as Exhibit E and
the Put Agreement in the form attached hereto as Exhibit F.
ARTICLE 4. CLOSING
------------------
4.1 Closing Date. The Closing shall take place at such place and
------------
time as established by BUYER upon at least five (5) business days advance notice
to SELLERS, but in
no event later than October 31, 2000, unless the parties agree to a later date
(such time of Closing is herein called the "Closing Date"). To the extent
practicable, BUYER agrees that the Closing will be held at the law offices of
Burt, Blee, Xxxxx & Xxxxxx, LLP, 000 Xxxx Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx.
4.2 Transfer of Assets. At the Closing:
------------------
(a) Each SELLER shall sell, transfer, assign, grant, bargain,
deliver and convey to BUYER (or one or more of its designees) all right,
title and interest in and to such SELLER's Assets, free and clear of any
and all Liens, subject to the Permitted Encumbrances. The transactions
contemplated by this Section 4.2(a) shall be effected or evidenced by
delivery by each SELLER to BUYER of bills of sale, assignments and other
documents of transfer acceptable in form and substance to BUYER.
(b) BUYER shall assume the liabilities for those accrued expenses
agreed to be assumed by BUYER as provided in Section 3.1(y) and Schedule
3.1(y), the liabilities of SELLERS with respect to vacation pay owing to
SELLERS' employees, the liabilities under SELLERS' bonus program as
provided in Section 3.3, the liabilities of each SELLER under the Assumed
Contracts to which such SELLER is a party and such other liabilities of a
SELLER as BUYER may agree in writing to assume prior to the Closing
(collectively, the "Liabilities"). Such assumption of the Liabilities shall
be effected or evidenced by delivery by BUYER to the appropriate SELLER of
an appropriate written instrument or instruments of assumption acceptable
in form and substance to such SELLER.
4.3 Payment of the Purchase Price. Subject to the terms and
-----------------------------
conditions of this Agreement, BUYER shall pay the Purchase Price, as determined
pursuant to Section 3.1 above, as follows:
(a) At the Closing (subject to the provisions of Section 4.5
below), delivering to SELLERS, cash in the aggregate amount of Sixty
Million Dollars ($60,000,000) plus an amount equal to the sum of any
amounts payable under Sections 3.1(d), 3.1(e), 3.1(f), 3.1(g), 3.1(h),
3.1(l) and 3.1(m), minus an amount equal to the sum of the amounts
calculated under Sections 3.1(w), 3.1(x), 3.1(y) and 3.1(z) above and minus
the amount in Section 4.3(c) below; provided, however, in the event any of
the foregoing amounts cannot be calculated at the time of the Closing, such
amounts shall be calculated by BUYER and SELLERS and paid to SELLERS by
BUYER or paid to BUYER by SELLERS, as the case may be, within thirty (30)
days after the Closing.
(b) At the Closing, delivering to SELLERS in proportion to their
respective fair market value, as agreed upon by BUYER and SELLERS, Senior
Subordinated Units in the MLP or a Preferred Interest in BUYER (bearing an
annual preferred distribution percentage of nine percent (9%)) with an
initial capital account balance equal to the sum of (i) Six Million Dollars
($6,000,000), (ii) an amount equal to the Operating Loss Adjustment under
Section 3.1(i), and (iii) an amount equal to the Purchase Price Increase
under Section 3.1(j);
(c) At the Closing, delivering to SELLERS and to the
Shareholders, cash in an aggregate amount of Four Hundred Sixty-Five
Thousand Dollars ($465,000), as set forth in the Noncompetition Agreements;
(d) At the Closing, assuming the Liabilities and only the
Liabilities;
(e) Fifteen (15) days after the Closing, delivering to each
SELLER, a check in an amount equal to the Propane Inventory of such SELLER
as determined pursuant to Section 3.1(a) above;
(f) Thirty (30) days after the Closing, delivering to each
SELLER, a check in an amount equal to (i) the Parts and Appliances
Inventory of such SELLER as determined pursuant to Section 3.1(b) above,
and (ii) any amounts owed pursuant to Section 3.1(k); and
(g) BUYER shall remit all amounts actually received by BUYER as
payment of Accounts Receivable after the Closing and prior to the Accounts
Receivable Date, such remittances to be no less frequent than every thirty
(30) days and shall be accompanied by information as to the Accounts
Receivable to which such remittance relates. Any monies received from a
customer after the Closing Date shall be applied first to the oldest
Accounts Receivable due from such customer. With regard to any such
Accounts Receivable not collected prior to the Accounts Receivable Date,
BUYER shall, at its sole election and promptly thereafter, either (i) pay
to SELLERS the amount of such Accounts Receivable or (ii) assign such
Accounts Receivable to SELLERS.
4.4 Sales and Transfer Taxes. Each SELLER shall be responsible for
------------------------
and agrees to pay when due all sales, use and transfer taxes arising out of the
transfer of the Assets by such SELLER and the other transactions contemplated
hereunder; provided, however, BUYER agrees to be responsible for all sales and
transfer taxes with respect to any vehicles to be transferred to BUYER hereunder
(the "Vehicle Transfer Taxes").
4.5 Environmental Escrow. At the Closing, Three Hundred Thousand
--------------------
Dollars ($300,000) of the cash otherwise payable to SELLERS under Section 4.3(a)
shall instead be placed in escrow pursuant to the Environmental Escrow Agreement
with Bank One, Indiana, N.A., Fort Xxxxx, Indiana in the form attached hereto as
Exhibit I (the "Environmental Escrow"). The parties agree that the Environmental
Escrow shall be to reimburse BUYER pursuant to the provisions of Section 12.1A
of this Agreement.
ARTICLE 5. LIABILITIES NOT ASSUMED BY BUYER
-------------------------------------------
Anything in this Agreement to the contrary notwithstanding, each
SELLER shall be responsible for all of its liabilities and obligations not
hereby expressly assumed by BUYER (the "Retained Liabilities"), and BUYER shall
not assume, or in any way be liable or responsible for, any liabilities or
obligations of any SELLER, except the Liabilities. Without limiting the
generality of the foregoing, BUYER shall not assume, or in any way be liable or
responsible for, the following:
(a) Any liability or obligation of any SELLER arising out of or
in connection with the negotiation and preparation of this Agreement and
the consummation
and performance of the transactions contemplated hereby, whether or not
such transactions are consummated, including, but not limited to, any tax
liability so arising;
(b) Any liability or obligation of any SELLER with respect to
employment or consulting agreements, pension, profit-sharing, welfare or
benefit plans, or amounts owing for commissions or compensation,
termination, severance or other payments to present or former employees,
officers, directors or shareholders of any SELLER, except bonuses, accrued
vacation and other accrued expenses, assumed pursuant to Section 4.2(b) of
this Agreement and except as provided in Section 9.16;
(c) Any liability or obligation of any SELLER, or any
consolidated group of which any SELLER is a member, for any foreign,
federal, state, county or local taxes of any kind or nature, or any
interest or penalties thereon, including without limitation any sales or
use tax obligations, applicable to the sale and purchase of the Business or
the Assets as contemplated by this Agreement, it being hereby agreed by the
parties hereto that such obligations shall be paid by any SELLER; provided,
however, BUYER agrees to be responsible for all Vehicle Transfer Taxes;
(d) Any liability (other than with respect to the Liabilities) to
which any of the parties may become subject as a result of the fact that
the transactions contemplated by this Agreement are being effected without
compliance with the provisions of any Bulk Transfer Law or any similar
statute as enacted in any jurisdiction, domestic or foreign; or
(e) Any liability with respect to any dispute, claim, complaint
or legal action arising between the shareholders of any SELLER or between a
shareholder of any SELLER and any SELLER, in any way resulting from or
claimed to be resulting from the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby or otherwise.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS
---------------------------------------------------------------------
SELLERS and each of the Shareholders hereby, jointly and severally,
represent and warrant to BUYER and agree as of the date hereof as follows:
6.1 Corporate Organization. Each SELLER is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of the State of
Indiana, and has all requisite power and authority to own, operate and lease its
Assets and to conduct its Business as and where such Business is now conducted.
Except as set forth in Schedule 6.1, no SELLER has any subsidiary and does not
hold any equity or other ownership interest in any other entity. Except as set
forth in Schedule 6.1, no subsidiary of any SELLER has any assets of any nature
whatsoever.
6.2 Due Qualification. Each SELLER is duly qualified to do business
-----------------
and is in good standing under the laws of each jurisdiction in which the nature
of its Business or of the properties owned or leased by it makes such
qualification necessary. A list of such jurisdictions is attached hereto as
Schedule 6.2.
6.3 Authority; Binding Effect. Each SELLER and each Shareholder has
-------------------------
the right, power, authority, and capacity to execute and deliver this Agreement
and all other agreements contemplated hereby, to perform the obligations
hereunder and thereunder on its part to be performed and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
SELLER and each Shareholder of this Agreement and all other agreements and
documents contemplated hereby and the performance by each SELLER and each
Shareholder of their respective obligations to be performed hereunder and
thereunder have been duly approved by all necessary action, and no further
approvals are required by the officers, directors or shareholders of any SELLER
in connection therewith. This Agreement constitutes, and when duly executed and
delivered, the agreements described in Schedule 6.3 hereto will constitute, the
legal, valid, and binding obligations of each SELLER and each Shareholder,
enforceable against such parties in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or affecting creditors' rights
generally and to general equity principles (whether such enforceability is
considered in a proceeding at law or in equity).
6.4 No Creation of Violation, Default, Breach or Encumbrance.
--------------------------------------------------------
The execution, delivery and performance of this Agreement by each SELLER and
each of the Shareholders does not, and the consummation by such Person of the
transactions contemplated hereby will not (i) violate (A) any statute, rule or
regulation to which such Person is subject or (B) any order, writ, injunction,
decree, judgment or ruling of any court, administrative agency or governmental
body to which such Person is subject, (ii) conflict with or violate any
provision of the Organizational Documents of any SELLER, or (iii) assuming
receipt of the consents set forth in Schedule 6.4, require the consent of any
Person or result in the breach of or constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default) under,
violate, conflict with, breach or give rise to any right of termination,
cancellation or acceleration of, or to a loss of benefit to which any SELLER is
entitled, under (A) any Material Contracts (not including Propane Supply
Contracts), or (B) any governmental licenses, authorizations, permits, consents
or approvals required for any SELLER to own, license or lease and operate its
properties or to conduct its Business as presently conducted by it, but not
including any Carrier Permits.
6.5 No Present Default. Except as disclosed in Schedule 6.5, all
------------------
contracts, agreements, leases and licenses to which any SELLER is a party are
valid and in full force and effect and constitute legal, valid and binding
obligations of such SELLER. Except as disclosed in Schedule 6.5 hereto, no
SELLER is in default under or in breach of any mortgage, indenture, note or
other instrument or obligation for the payment of money or any contract,
agreement, lease or license, and to the Knowledge of SELLERS, no other parties
to any such mortgage, indenture, note, instrument, obligation, contract,
agreement, lease or license is in default thereunder or in breach thereof; no
event has occurred that, with the passage of time or the giving of notice, would
constitute such a breach or default by any SELLER or, to the Knowledge of any
SELLER, by any such other party; no claim of default thereunder has been
asserted or, to the Knowledge of any SELLER, threatened; and neither the any
SELLER nor, to the Knowledge of any SELLER, any other party thereto, is seeking
the renegotiation thereof.
6.6 Approvals, Licenses and Authorizations.
--------------------------------------
(a) Except with respect to the HSR Act, the Carrier Permits and
the items set forth in Schedule 6.6(a), no (i) order, license, consent,
waiver, authorization or
approval of, or (ii) exemption by, or (iii) giving of notice to, or (iv)
registration with or the taking of any other action in respect of, any
Person not a party to this Agreement (including any federal, state,
local, foreign or other governmental department, commission, board,
bureau, agency or instrumentality), and no filing, recording, publication
or registration in any public office or any other place, in each case is,
necessary on behalf of any SELLER (x) to authorize any SELLER's
execution, delivery and performance of this Agreement or any other
agreement, document or instrument contemplated hereby to be executed and
delivered by any SELLER, (y) to authorize the consummation by any SELLER
of the transactions contemplated hereby or thereby, or (z) for the
legality, validity, binding effect or enforceability with respect to any
SELLER of any of the foregoing.
(b) All licenses, permits, concessions, warrants, franchises and
other governmental authorizations and approvals of all federal, state,
local or foreign governmental or regulatory bodies required or necessary
for any SELLER to carry on its Business as and where presently conducted
by it have been duly obtained and are in full force and effect and are
set forth truly, correctly and completely on Schedule 6.6(b). There are
no proceedings pending or, to the Knowledge of any SELLER, threatened
which are likely to result in the revocation, cancellation or suspension
or any material modification of any thereof.
6.7 Compliance With Law. To the Knowledge of SELLERS and the
-------------------
Shareholders and except as set forth on Schedule 6.7, no SELLER is in violation
of any statute, law, rule or regulation, or any order, writ, injunction or
decree of any court, administrative agency, governmental body or arbitration
tribunal, to which it or any of the Assets is subject in connection with the
operation of the Business of such SELLER.
6.8 Financial Statements and Source of Revenue.
------------------------------------------
(a) Each SELLER has delivered to BUYER the balance sheets of such
SELLER as of the Balance Sheet Date applicable to such SELLER and as of the
date that is one year prior to such Balance Sheet Date and the related
statements of income, stockholder's equity and cash flows for the fiscal
years then ended, and the July 31, 2000 balance sheet of such SELLER and
the related statements of income, stockholder's equity and cash flows for
the period from the Balance Sheet Date to July 31, 2000.
(b) The financial statements referred to in Section 6.8(a) above
fairly present the financial position, results of operation and cash flows
of each SELLER as and at the relevant dates thereof and for the periods
covered thereby in accordance with GAAP.
(c) Except as set forth in the Balance Sheet or in the Schedules
hereto, no SELLER has (i) any liabilities or obligations, direct or
contingent, accrued or otherwise, of a nature customarily reflected in
financial statements in accordance with GAAP, except those incurred after
the Balance Sheet Date in the ordinary course of business consistent with
past practice and except lease and other contract obligations and other
obligations or liabilities that are disclosed in this Agreement or the
Schedules hereto, and (ii) any liabilities or obligations under any Benefit
Plans except those incurred
after the Balance Sheet Date in the ordinary course of business consistent
with past practice and pursuant to the terms of the Benefit Plans described
in Schedule 6.18(a).
(d) Schedule 6.8(d) sets forth the source of all of each SELLER's
revenue generated by the Assets as a percentage of such SELLER's total
revenue for the period beginning one (1) year prior to such SELLER's
Balance Sheet Date through the Balance Sheet Date and the subsequent period
ending July 31, 2000 broken down into the following two (2) categories: (i)
revenues generated from the distribution of propane gas, and (ii) all other
revenues.
6.9 Absence of Certain Events. Except as set forth in Schedule 6.9,
-------------------------
since the Balance Sheet Date, the Business of each SELLER has been operated only
in the ordinary and normal course of Business and since the Balance Sheet Date:
(a) There has not been any Material Adverse Effect in the
financial condition, Assets, liabilities, results of operations, Business,
prospects or condition, financial or otherwise, of any SELLER and there has
been no occurrence, circumstance or combination thereof which might be
expected to result in any Material Adverse Effect thereto before or after
the Closing Date;
(b) There has not been any damage, destruction or loss, whether
covered by insurance or not, resulting in a Material Adverse Effect on the
Assets or the Business of any SELLER;
(c) There has not been any increase or decrease in the
compensation payable to or to become payable by any SELLER to any of the
salaried officers, key employees or agents of the Business, or change in
any insurance, pension or other beneficial plan, payment or arrangement
made to, for or with any of such salaried officers, key employees or agents
or any commission or bonus paid to any of such officers, key employees or
agents other than increases and bonuses in the normal course of business,
consistent with past practices and not exceeding in any one (1) case an
increase and bonus aggregating more than ten percent (10%) of such Person's
compensation;
(d) Except in the ordinary course of business, no SELLER has (i)
incurred any obligation or liability or assumed, guaranteed, endorsed or
otherwise become responsible for the liabilities or obligations of any
other Person (whether absolute, accrued, contingent or otherwise); (ii)
discharged or satisfied any Lien or paid any obligation or liability
(whether absolute, accrued, contingent or otherwise); (iii) mortgaged,
pledged, created or subjected to a Lien any of the Assets; (iv) sold,
assigned, transferred, leased or otherwise disposed of any of the Assets or
acquired any Assets or any interest therein; (v) amended, terminated,
waived or released any rights or canceled any debt owing to or claim by any
SELLER; (vi) transferred or granted any rights under any Contracts and
Other Agreements, patents, inventions, trademarks, trade names, service
marks or copyrights, or registrations or licenses thereof or applications
therefor, or with respect to any know-how or other proprietary or trade
rights; (vii) modified or changed any Material Contracts; or (viii) entered
into any transaction, contract or commitment which by reason of its size or
otherwise was material to the Business of any SELLER or financial condition
of any SELLER;
(e) No SELLER has terminated, discontinued, closed or disposed of
any plant, facility or business operation related to the Business of such
SELLER;
(f) There has not been any other event or condition of any
character whatsoever that has had or may reasonably be expected to have a
Material Adverse Effect on the Business of any SELLER.
6.10 Title to and Condition of Properties.
------------------------------------
(a) Schedule 2.1A contains a true, correct and complete list of
all real property related to the operation of the Business in which any
SELLER has any interest. Schedule 2.1B contains a true, correct and
complete list of all leases and subleases of real and mixed property
related to the operation of the Business under which any SELLER is a lessor
or lessee (true, accurate and complete copies of which have previously been
delivered to BUYER). Each SELLER has good, marketable and indefeasible fee
simple title to all of its real properties, including but not limited to
the real properties in which it has an interest as described on Schedule
2.1A, but not including any leased property, and good, marketable and
indefeasible title to all the leasehold estates created by the leases and
subleases described on Schedule 2.1B (such real properties and leasehold
estates collectively referred to herein as the "Real Property"). Without
limiting the generality of the foregoing, as to leasehold estates under the
leases and subleases of Real Property, each SELLER has quiet and peaceable
possession of each of the leased properties. All leases and subleases in
which a SELLER is a lessor or sublessor are in full force and effect, there
is no default or event of default thereunder and the rent thereunder has
not been prepaid for more than a one (1)-month period. Each SELLER has and
upon the transfer to BUYER as contemplated herein BUYER has rights of
ingress and egress to all of its real properties and to all its leasehold
estates, subject to the local zoning and development restrictions.
(b) A true, correct and complete list of all propane tanks which
are owned or serviced by any SELLER and all other personal property
included in the Assets having a fair market or book value per unit in
excess of Two Hundred Fifty Dollars ($250) is included in Schedule 2.1C and
a true, correct and complete list of all leases of personal property
included in the Assets under which any SELLER is a lessee or lessor
involving any propane tank or any other personal property having a fair
market or book value per unit in excess of Two Hundred Fifty Dollars ($250)
is included in Schedule 2.1D (true, accurate and complete copies of which
have previously been delivered to BUYER). Notwithstanding any other
provision of this Agreement, SELLERS and the Shareholders shall have
liability for the inaccuracy of the representations made in the first
sentence of this Section 6.10(b) only to the extent such inaccuracy exceeds
One Hundred Thousand Dollars ($100,000) in propane tank value (as measured
by the replacement cost of any such propane tank) and then only if the
claim for such inaccuracy is made by notice to SELLERS and the Shareholders
given by BUYER prior to the Accounts Receivable Date. All propane tanks
used in the Business which have a capacity of at least one hundred twenty
(120) gallons are under contract to customers or are physically located on
the plant lot of one of such SELLER's retail locations. Each SELLER has
good and indefeasible title to (i) all of the personal property set forth
on Schedule 2.1C and indicated as being owned by it, (ii) all of the Assets
reflected in the financial statements of each SELLER, and (iii) all Assets
purported to have been acquired by such
SELLER after the date of such financial statements, free and clear of all
Liens (except for Permitted Encumbrances), except for such Assets disposed
of in the usual and ordinary course of business consistent with past
practices, and all of such Assets are in such SELLER's possession and
control.
(c) The conduct of the Business of each SELLER in the ordinary
course is not dependent upon the right to use the property of others,
except under valid and binding agreements identified on Schedule 6.10(c)
hereto (true, accurate and complete copies of which have previously been
delivered to BUYER). To the Knowledge of any SELLER, the Real Property and
the improvements located thereon do not encroach upon the property of
others and there are no encroachments onto the Real Property from the
property of others. SELLERS have had access to all utility connections, and
the right to use the same, necessary for the conduct of the Business in the
ordinary course.
(d) Except as set forth in Schedule 6.10(d), each SELLER owns or
has irrevocable rights to use and is transferring to BUYER hereunder all
assets and property necessary for the conduct of such SELLER's Business in
the ordinary course.
(e) The Assets being transferred by each SELLER, including, but
not limited to, the machinery, equipment (including automobiles, trucks and
heavy machinery), furniture and fixtures are in good operating condition
and repair and of an appropriate character suitable for the uses for which
intended in the operation of the Business of such SELLER in the ordinary
course, except that at any given time approximately three (3) to five (5)
percent of the automobiles, trucks and heavy machinery being transferred
hereunder will be in the process of being repaired or refurbished.
(f) All inventories of each SELLER are of a quality and quantity
usable and salable in the ordinary course of such SELLER's Business and in
any event are not in excess of projected requirements over the next twelve
(12) months, and the values at which such inventories are carried on the
books of account fairly represent the value thereof, are not in excess of
realizable value, and reflect the normal inventory valuation policy of such
SELLER.
(g) The accounts receivable of each SELLER as shown on its books
and records have arisen in the ordinary course of Business, represent valid
and enforceable obligations owed to such SELLER and are recorded as
accounts receivable on the books of such SELLER in accordance with GAAP.
6.11 Intangible Properties.
---------------------
(a) Schedule 2.1J hereto contains a list of all patents and
applications therefor, trademarks, trademark registrations and applications
therefor, trade names, service marks, copyrights, copyright registrations
and applications therefor, both foreign and domestic, owned, possessed,
used or held by or licensed to any SELLER and related to the operation of
such SELLER's Business and such SELLER owns the entire right, title and
interest in and to the same, together with the goodwill associated
therewith. Each SELLER has the right to use and is transferring to BUYER
the unrestricted right to use
trade secrets, know-how, formulae, technical processes and information,
manufacturing, testing and operating techniques and procedures, all
engineering data and plans and all other data and information used by such
SELLER in its Business or which is necessary for its Business as now
conducted. None of the items in the categories listed in the preceding
sentence of this Section 6.11 are subject to any pending or threatened
challenge or infringement, and no impediment exists as to such SELLER's
exclusive ownership and use or validity of any such item, except as set
forth in Schedule 2.1J. The foregoing constitutes all information necessary
to permit the conduct from and after the Closing Date of the Business of
each SELLER, as such Business is and has normally been conducted. All acts
necessary under all provisions of applicable law to protect the items
listed on Schedule 2.1J, including, without limitation, the filing of
required affidavits of use and incontestability, applications for renewals
of registrations and notice of registration, have been taken by each
SELLER. All licenses granted to each SELLER by others which are essential
or useful to any part of such SELLER's Business are assignable to BUYER
without consent of or notice to any Person, without change in the terms or
provisions thereof and without premium, except as set forth in Schedule
2.1J. With respect to each SELLER, such SELLER has not infringed any
unexpired patent, trademark, trademark registration, trade name, copyright,
copyright registration, trade secret or any other proprietary or
intellectual property right of any party in connection with the operation
of its Business. No SELLER has given any indemnification for patent,
trademark, service xxxx or copyright infringements.
(b) Schedule 2.1K hereto contains a list, of each SELLER's trade
secrets related to the operation of its Business.
6.12 Contracts and Commitments.
-------------------------
(a) To the extent not listed on Schedule 2.1B or Schedule 2.1D,
Schedule 2.1F lists and briefly describes all Material Contracts related to
the operation of the Business to which any SELLER is a party or by which it
or any of its assets or properties are bound (true and correct copies of
each of which have been previously delivered to BUYER). Each Material
Contract (whether disclosed on Schedule 2.1B, Schedule 2.1D, Schedule 2.1F
or otherwise) is in full force and effect and embodies the complete
understanding between the parties thereto with respect to the subject
matter thereof. Except as expressly set forth on Schedule 2.1F, (i) there
exists no material default or claim thereof by any party to any Material
Contract, (ii) there are no facts or conditions that, if continued or
noticed, would result in a default having a Material Adverse Effect under
any Material Contract, (iii) no SELLER has received any notice that any
Person intends to cancel, modify or terminate any Material Contract, or to
exercise or not to exercise any options thereunder, (iv) no SELLER has
given any notice of cancellation, modification or termination of any
Material Contract or of exercise or non- exercise of any options
thereunder, (v) each Material Contract is a valid and binding agreement
enforceable in accordance with its terms and (vi) no consent or approval of
the other parties to any Material Contract or any Person pursuant to any
Material Contract is required for the consummation of the transactions
contemplated herein, except for Propane Supply Contracts and Fixed Purchase
Contracts that are not assignable, and except for those contracts described
on said Schedule.
(b) Except as set forth in Schedule 6.12(b), no SELLER is a
party to any contract for goods or services or any lease with any officer,
director, shareholder, employee or agent of SELLER or any Affiliate of any
such Person.
(c) No purchase or sale commitments by any SELLER are in excess
of the normal, ordinary and usual requirements of the Business; no SELLER
has any outstanding power of attorney to any Person for any purpose
whatsoever; no SELLER is restricted by law or agreement from carrying on
its Business anywhere in the world; no officer, director, shareholder or
Affiliate of any SELLER has any financial interest, direct or indirect, in
any SELLER's suppliers or customers; except as set forth in Schedule
6.12(c) hereto, no SELLER grants discounts or rebates to its customers.
(d) No SELLER has made any other contract or agreement or
granted any option to sell or otherwise transfer all or a significant part
of the capital stock or Assets of a SELLER.
(e) The Customer Deposits are all amounts owed to customers of
SELLERS as a result of amounts held by a SELLER as a customer deposit.
6.13 Insurance. A list of all policies of insurance and bonds of
---------
any type presently in force (including without limitation all occurrence-based
policies that provide coverage for events occurring in any of the five (5) years
prior to the date hereof) with respect to the Business of any SELLER, including,
without limitation, those covering product liability claims and its Assets and
operations, are set forth in Schedule 6.13. Such policies and bonds (a) provide
coverage in such amounts, and against such losses and risks, as maintained by
SELLERS consistent with past practices and in the ordinary course of business to
provide for the protection of the Business and Assets of SELLERS, and (b) will
be maintained in effect up to and including the Closing Date. Each SELLER will,
at the request of BUYER, use its best efforts to cause the policies of insurance
against fire and other casualty to property to be endorsed so as to include
BUYER as a party insured thereunder as its interest may appear, provided any and
all costs associated with such an endorsement are paid by BUYER.
6.14 Tax Returns and Tax Audits.
--------------------------
(a) Each SELLER has filed with all appropriate governmental
agencies all tax or information returns and tax reports required to be
filed. All such returns and reports as are based on income have been
prepared on the same basis as those of previous years; and all federal,
state, foreign and local income, profits, franchise, sales, use,
occupation, property, excise, ad valorem, employment or other taxes of each
SELLER, and all interest, penalties, assessments or deficiencies claimed to
be due by any such taxing authority with respect to the foregoing have been
fully paid.
(b) Each SELLER has made adequate accruals for the payment of
all income, profits, franchise, property, sales, use, occupation, excise,
ad valorem, employment and other taxes payable in respect of the period
subsequent to the last period for which such taxes were paid, and, to the
Knowledge of SELLERS, no SELLER has any liability for such taxes (including
Federal Excise Tax) in excess of the amounts so paid or accruals so made.
(c) No SELLER is a party to any pending action or proceeding,
nor, to the Knowledge of SELLERS, is any action or proceeding threatened or
contemplated by any governmental authority for assessment or collection of
taxes or any other governmental charges, and no claim for assessment or
collection of taxes or any other governmental charges has been asserted
against any SELLER, nor, to the Knowledge of SELLERS, is the assertion of
any such claim pending or contemplated nor is there any basis for any such
claim. To the Knowledge of SELLERS, there have been no reports prepared by
any agent of the Internal Revenue Service with respect to any tax matter
involving any SELLER.
(d) No SELLER is or has been required to file any tax returns
with, or pay any taxes to, any foreign countries or political subdivisions
thereof. No SELLER has in effect any powers of attorney with respect to any
tax matters involving it. At no time has a consent been filed by any SELLER
to have the provisions of Section 341(f)(2) of the Code apply, nor has any
agreement under Section 341(f)(3) of the Code been filed by any SELLER.
(e) Each SELLER agrees to provide to BUYER such other tax
information with respect to the Business or the Assets of such SELLER as
BUYER may reasonably request.
(f) There are no taxes, fees or governmental charges (including
without limitation sales taxes) payable by any SELLER, any Shareholder or
BUYER to any state, city or subdivision of either thereof as a result of
the sale of the Assets to BUYER, other than state and local income taxes
and Vehicle Transfer Taxes.
6.15 Books and Records.
-----------------
(a) The books, records and accounts of each SELLER (i) are in
all respects true, complete and correct, (ii) have been maintained in
accordance with good business practices on a basis consistent with prior
years, and (iii) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the Assets by such SELLER.
(b) Each SELLER has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; and (ii) transactions are recorded as necessary (A)
to permit preparation of financial statements in conformity with GAAP or
any other criteria applicable to such statements, and (B) to maintain
accountability for the assets of such SELLER.
6.16 Substantial Customers and Suppliers. Schedule 6.16 sets
-----------------------------------
forth a true and complete list of the fifteen (15) largest suppliers to Domex,
Inc. (on the basis of cost or, in the case of propane suppliers, on the basis of
volume) of goods or services purchased during the twelve (12) months ended
October 31, 1999, as well as the dollar amounts or volume taken of such goods or
services purchased during such year. Schedule 6.16 also sets forth a true and
complete list of the fifteen largest customers of each SELLER (in terms of
sales) during the twelve months ended September 30, 1999 for Investors 300,
Inc., October 31, 1999 for Domex, Inc. and December 31, 1999 for L&L Leasing,
Inc., as well as the dollar amounts of such sales
during such twelve-month period and from the respective fiscal years end through
July 31, 2000. Except to the extent set forth in Schedule 6.16, (i) since the
end of such twelve-month period, no such customer has ceased or reduced by more
than fifteen percent (15%) (by comparing each month with the same month of the
prior Period) its purchases from such SELLER, or given notice of an intention to
cease or reduce such sales or purchases, and (ii) no SELLER and no Shareholder
has any reason to believe that any such supplier or customer would likely reduce
or cease such sales or purchases as a result of the transactions contemplated
herein or the ownership of the Business by BUYER or the MLP. BUYER acknowledges
that SELLERS are not responsible for any reduction in customer purchases
following the Closing unless such reduction relates to a breach of a
representation made by SELLERS and the Shareholders under this Agreement.
6.17 No Litigation, Adverse Events or Violations. Except as set
-------------------------------------------
forth in Schedule 6.17, there is no action, suit, claim or legal,
administrative, arbitration, condemnation or other proceeding or, to the
Knowledge of any SELLER or the Shareholders, governmental investigation or
examination or, to the Knowledge of any SELLER or the Shareholders, any change
in any zoning or building ordinance affecting any of the Assets, pending or, to
the Knowledge of any SELLER, threatened or injunction or orders entered, pending
or threatened against any SELLER or any business, properties or assets of any
SELLER, at law or in equity, before or by any federal, state, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, to restrain or prohibit the consummation
of the transactions contemplated hereby or which, if determined adversely, is
reasonably likely to result in (i) an Adverse Effect, or (ii) materially and
adversely affect the consummation of the transactions contemplated by this
Agreement and there is no state of facts currently existing on which any of the
foregoing might be based. No SELLER has violated, or is currently in violation
of, any applicable federal, state, local or foreign law, ordinance (including
any zoning or building ordinance), regulation, order, requirement, statute,
rule, permit, concession, grant, franchise, license or other governmental
authorization relating or applicable to it, to any of the Assets or the Business
of such SELLER. In addition to the information required under the first sentence
of this Section 6.17, Schedule 6.17 also includes the status of all such claims.
Each SELLER and each Shareholder hereby represent and warrant that adequate
insurance coverage exists covering all such claims set forth in Schedule 6.17
and that any adverse result or settlement relating to such claims shall not
exceed the insurance limitation applicable to such claim.
6.18 Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Schedule 6.18(a) sets forth a true and complete list of any
and all pension, retirement, savings, disability, medical, dental, health,
life (including any individual life insurance policy as to which each
SELLER is the owner, beneficiary or both), death benefit, group insurance,
profit sharing, deferred compensation, stock options or other stock
incentive, bonus incentive, vacation pay, severance or termination pay,
employment agreement, "cafeteria" or "flexible benefit" plan under Section
125 of the Code, or other employee or director benefit plan, trust,
arrangement, contract, agreement, policy or commitment, whether formal or
informal, written or oral, under which employees, former employees,
directors or former directors of such SELLER are entitled to participate by
reason of their current or prior employment, or current or former
directorship, with such SELLER, including, without limitation, any
"employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (i) to which such SELLER is a party or a
sponsor or a fiduciary thereof, or (ii) with respect to which such SELLER
has made payments, contributions or commitments, or may otherwise have any
liability (collectively, the "Benefit Plans"). With respect to the Benefit
Plans, individually and in the aggregate, each SELLER has made available to
BUYER, a true and correct copy of (a) the most recent annual report (Form
5500) filed with the IRS, if any, (b) such Benefit Plan, (c) any summary
plan description relating to such Benefit Plan, and (d) each trust
agreement and group annuity contract, if any, relating to such Benefit
Plan.
(b) The Benefit Plans have been operated and administered by
each SELLER in compliance with all applicable laws relating to employment
or labor matters including ERISA and the Code. With respect to the Benefit
Plans, no event has occurred that would subject any SELLER to liability
(except liability for benefits, claims and funding obligations payable in
the ordinary course) under ERISA, the Code, or any other applicable
statute, order or governmental rule or regulation. With respect to the
Benefit Plans, individually and in the aggregate, there has been no
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code that would result in liability to any SELLER, and
there has been no action, suit, grievance, arbitration or other claim with
respect to the administration or investment of assets of the Benefit Plans
(other than routine claims for benefits made in the ordinary course of plan
administration) pending, or to the Knowledge of any SELLER, threatened.
(c) All contributions to and payments under any Benefit Plan
required in respect of periods ending on or before the Closing Date shall
be made by each SELLER on or within thirty (30) days after the Closing
Date. There is no agreement, contract or understanding between any SELLER,
on the one hand, and any employee, participant, labor union, collective
bargaining unit or other Person, on the other hand, that requires or may
require any amendment to any of the Benefit Plans.
(d) Each Benefit Plan that is intended to be tax qualified under
Section 401(a) of the Code is tax qualified and each such Benefit Plan has
received, or application has been made for, a favorable determination
letter from the IRS stating that the Plan meets the requirements of the
Code and that any trust or trusts associated with the Plan are tax exempt
under Section 501(a) of the Code. Each Benefit Plan that is funded with a
trust that is intended to be tax-exempt under Section 501(c)(9) of the Code
is exempt from taxation and each such trust has received a letter from the
IRS stating that the trust meets the requirements of the Code for
tax-exempt status, within the immediately preceding three (3)-year period.
(e) No SELLER and no entity that together with any SELLER would
be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code now maintains or contributes to or, within the
immediately preceding three (3)-year period, has maintained or contributed
to any defined plan that is (i) a benefit plan within the meaning of
Section 3(35) of ERISA, or (ii) subject to the requirements of Title IV of
ERISA.
(f) No SELLER is a party to any collective bargaining or other
labor union contract. There is no pending or threatened union
organizational effort, labor
dispute, strike or work stoppage relating to employees of any SELLER and
none has occurred within the immediately preceding five (5)-year period. No
SELLER and no representative or employee of any SELLER has committed any
unfair labor practice in connection with the operation of the Business of
any SELLER, and there is no pending or threatened charge or complaint
against any SELLER by the National Labor Relations Board or any comparable
state agency. Each SELLER is in compliance with all applicable laws
respecting employment, wages, hours, safety and health and other terms and
conditions of employment. No SELLER has experienced a "plant closing" or
"mass layoff" within the meaning of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S)(S) 2101 et seq. ("WARN") within the
immediately preceding three (3)-year period.
(g) There are no written or oral employment agreements,
employment contracts or understandings relating to employment (other than
ordinary course arrangements for "at-will" employment) to which any SELLER
is a party (excluding any such agreements, contracts or understandings
listed in Schedule 6.18(a)).
(h) The consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay or increase
in compensation, benefits or rights or otherwise) becoming due from any
SELLER to any of its employees, former employees, directors or former
directors, nor accelerate the timing of any payment or the vesting of any
rights or increase the amount of any compensation due to any such person.
As a direct or indirect result of the consummation of the transactions
contemplated hereby, no SELLER will be obligated to make a payment to any
person that would not be deductible as a result of the application of
Section 280G of the Code.
6.19 Business Names. No SELLER does business in any state or
--------------
country under any name other than "Hoosier Propane" or "Domex" or "Investors
300" or "L&L Leasing" or "L&L Repair & Testing" or "L&L Transportation" or "L&L
Transportation & Brokerage". The information on Schedule 9.6 attached hereto
(see Section 9.6) is accurate and complete.
6.20 Brokers and Finders. No broker or finder has acted for any
-------------------
SELLER or Shareholder in connection with this Agreement and the transactions
contemplated hereby; and no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in any way on any
agreement, arrangement or understanding made by any SELLER or Shareholder.
6.21 Environmental.
-------------
(a) Except as set forth in Schedule 6.21, to SELLERS' and the
Shareholders' Knowledge, there has not been, as of the date hereof, any
"release" (as defined in 42 U.S.C. (S)9601(22)) or threat of a "release" of
any "hazardous substances" (as defined in 42 U.S.C. (S)9601(14)) or oil or
other petroleum-related products on or about any of the Real Property.
(b) Except as set forth in Schedule 6.21, no SELLER has any
contract, agreement or otherwise arranged for disposal or treatment, or
arranged with a transporter
for transport for disposal or treatment, of hazardous substances at any
"facility" (as defined in 42 U.S.C. (S) 9601(9)) owned or operated by
another Person.
(c) Except as set forth in Schedule 6.21, no SELLER has accepted
any hazardous substances for transport to disposal or treatment facilities
or sites selected by a SELLER.
(d) Except as set forth in Schedule 6.21, to SELLERS' and the
Shareholders' Knowledge, the Real Property and the use thereof is in
compliance with and each SELLER is in compliance with all applicable laws,
statutes, ordinances, rules and regulations of any governmental or
quasi-governmental authority (federal, state or local) relating to
environmental protection, underground storage tanks, toxic waste, hazardous
waste, oil or hazardous substance handling, treatment, storage, disposal or
transportation, or arranging therefor, respecting any products or materials
previously or now located, delivered to or in transit to or from the Real
Property, including without limitation the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, and the Superfund Amendments and Reauthorization Act of
1986.
(e) To SELLERS' and the Shareholders' Knowledge, the past
disposal practices relating to hazardous substances and hazardous wastes of
each SELLER have been accomplished in accordance with all applicable laws,
rules, regulations and ordinances.
(f) Except as set forth in Schedule 6.21, no SELLER has been
notified that it has potential liability with respect to the cleanup of any
waste or disposal facility. No SELLER has any information to the effect
that any site at which a SELLER has disposed of hazardous substances or oil
has been or is under investigation by any local, state or federal
governmental body, authority or agency.
(g) No SELLER has received any notification of releases of
hazardous substances or oil from any governmental or quasi-governmental
agency.
6.22 Disclosure. To the best Knowledge of each SELLER and each
----------
Shareholder, none of the financial statements referred to in Section 6.8 above,
or any representation or warranty or other provision contained herein, or in any
document, schedule or certificate delivered or to be delivered to BUYER in
connection with this Agreement or the transactions contemplated hereby, or any
written statement, certificate or other document furnished to BUYER in
connection with this Agreement or the transactions contemplated hereby, contains
or will contain any untrue statement of a fact or omits or will omit to state a
fact necessary in order to make the statements contained therein not misleading.
To the best knowledge of each SELLER and each Shareholder, there is no fact
which has not been disclosed in writing to BUYER by SELLERS which would be
material to the purchase of the Assets.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF BUYER
--------------------------------------------------
BUYER represents and warrants to SELLERS and the Shareholders, both as
of the date hereof and as of the Closing Date, as follows:
7.1 Organization; Documentation. BUYER is a limited liability
---------------------------
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has the power and authority and all licenses,
authorizations, permits, consents and approvals required to own, license or
lease and operate its properties and to conduct its business as presently
conducted by it.
7.2 Authority; Binding Effect. BUYER has the power and authority to
-------------------------
execute and deliver this Agreement and all other agreements contemplated hereby,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
BUYER of this Agreement and all other agreements and documents contemplated
hereby and the performance by BUYER of all obligations on its part to be
performed hereunder and thereunder have been duly approved by all necessary
action by BUYER, and no further approvals are required by the members of BUYER
in connection therewith. This Agreement constitutes, and when duly executed and
delivered by BUYER, all other agreements contemplated hereby will constitute,
the legal, valid and binding obligation of BUYER, enforceable against BUYER, in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and to general equity principles (whether
such enforceability is considered in a proceeding at law or in equity).
7.3 No Creation of Violation, Default, Breach or Encumbrance. The
--------------------------------------------------------
execution and delivery by BUYER of this Agreement do not, and the consummation
by BUYER of the transactions contemplated hereby will not (i) conflict with or
violate any provision of the Organizational Documents of BUYER; (ii) assuming
receipt of the consents set forth in Schedule 7.3, require the consent of any
Person or result in the breach of or constitute a default under any contract,
agreement, lease, license, mortgage, indenture, note or other instrument or
obligation to which BUYER is a party, that could adversely affect the ability of
BUYER to consummate the transactions contemplated by this Agreement; or (iii)
violate (A) any statute, rule or regulation to which BUYER is subject, or (B)
any order, writ, injunction, decree, judgment or ruling of any court,
administrative agency or governmental body to which BUYER is subject.
7.4 Brokers and Finders. No broker or finder has acted for BUYER in
-------------------
connection with this Agreement and the transactions contemplated hereby; and no
broker or finder is entitled to any brokerage or finder's fee or other
commission in respect thereof based in any way on any agreement, arrangement or
understanding made by BUYER.
7.5 No Adverse Action. There are no actions, suits, claims or legal,
-----------------
administrative, arbitration or other proceedings or governmental investigations
or examinations pending or threatened or injunctions or orders entered, pending
or threatened against BUYER or its business, property or assets, at law or in
equity, before or by any federal, state, municipal or other governmental
department, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, to restrain or prohibit the consummation of the
transactions contemplated hereby or to obtain damages that if decided adversely
would adversely affect the ability of BUYER to consummate the transactions
provided for in this Agreement.
7.6 Approvals, Licenses and Authorizations. No (i) order, license,
--------------------------------------
consent, waiver, authorization or approval of, (ii) exemption by, (iii) giving
of notice to, or (iv) registration with or the taking of any other action in
respect of, any Person not a party to this Agreement or any federal, state,
local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality; and no filing, recording, publication
or registration in any public office or any other place in each case is now, or
under existing law in the future will be, necessary on behalf of BUYER to
authorize either the execution, delivery and performance of this Agreement or
any other agreement, document or instrument contemplated hereby to be executed
and delivered by them and the consummation by them of the transactions
contemplated hereby or thereby, or for the legality, validity, binding effect or
enforceability of any thereof.
7.7 Financial Statements of Buyer.
-----------------------------
(a) BUYER has delivered to SELLER the balance sheets of BUYER as
of September 30, 1999 and September 30, 1998 and the related statements of
income, member's equity and cash flows for the fiscal years then ended, and
the March 31, 2000 balance sheet of BUYER and the related statements of
income, member's equity and cash flows for the period from September 30,
1999 to March 31, 2000.
(b) The financial statements referred to in Section 7.7(a) above
fairly present the financial position, results of operation and cash flows
of BUYER as and at the relevant dates thereof and for the periods covered
thereby in accordance with GAAP.
(c) Except as set forth in the March 31, 2000 balance sheet or in
the Schedules hereto, BUYER has no liabilities or obligations, direct or
contingent, accrued or otherwise, of a nature customarily reflected in
financial statements in accordance with GAAP, except those incurred after
March 31, 2000 in the ordinary course of business consistent with past
practice.
7.8 Absence of Certain Events. Except as set forth in Schedule 7.8,
-------------------------
since March 31, 2000 the business of BUYER has been operated only in the
ordinary and normal course of business. Since March 31, 2000:
(a) There has not been any material adverse effect in the
financial condition, assets, liabilities, results of operations, business
or condition, financial or otherwise, of BUYER, and to BUYER's knowledge
there has been no occurrence, circumstance or combination thereof that
might be expected to result in any material adverse effect thereto before
or after the Closing Date; and
(b) There has not been any damage, destruction or loss, whether
covered by insurance or not, resulting in a material adverse effect on the
assets or the business of BUYER.
ARTICLE 8. ACCESS TO INFORMATION BY BUYER
-----------------------------------------
8.1 Prior to Closing. Until the Closing, each SELLER will furnish
----------------
BUYER, its members, officers, employees, accountants, attorneys, representatives
and agents, with all financial, operating, engineering and other data and
information concerning the Business and the Assets of such SELLER as BUYER shall
from time to time request and will accord BUYER or its authorized
representatives access to such SELLER's Assets, books, records, contracts and
documents (including tax returns filed and those in preparation) and will give
such persons the opportunity to ask questions of, and receive answers from,
appropriate representatives of such SELLER with respect to the Business and the
Assets of such SELLER, provided such inquiries
are made with reasonable notice to SELLER and are specifically authorized in
advance by one or more of the Shareholders, which authorization shall not be
unreasonably withheld. No investigations by BUYER, or its members, officers,
employees, accountants, attorneys, representatives or agents, shall reduce or
otherwise affect the obligation or liability of any SELLER with respect to any
representations, warranties, covenants or agreements made herein or in any other
certificate, instrument, agreement or document described in Schedule 6.3.
8.2 Public Information. Except as may be required by law, until the
------------------
Closing or termination of this Agreement, each SELLER and each Shareholder shall
consult with BUYER and BUYER shall consult with such SELLER and/or Shareholder
with respect to the content of any communications to be made to employees,
customers, suppliers or others having dealings with such SELLER as well as
communications made to the public and to the form and content of any application
or report to be made to any judicial or regulatory authority or other
governmental authority that relates to the transactions contemplated by this
Agreement.
8.3 Confidentiality. All information disclosed by any party to this
---------------
Agreement to any other party, shall be kept confidential by such receiving party
and shall not be used by such receiving party to compete with the other party or
in any manner other than as herein contemplated or required by court order,
except to the extent that such information was known by such receiving party
when received or is or hereafter becomes legally obtainable from other sources.
In the event of termination of this Agreement, each party hereto shall return,
upon request, to the other parties, all documents (and reproductions thereof)
received from such other parties (and in the case of reproductions, all such
reproductions made by the receiving party) that include information not within
the exceptions contained in the first sentence of this Section 8.3.
ARTICLE 9. COVENANTS OF THE PARTIES
-----------------------------------
9.1 Actions Pending Closing. From the date hereof to the Closing,
-----------------------
except as contemplated by this Agreement, each SELLER and each Shareholder
hereby represents, warrants, covenants and agrees that, unless the prior written
consent of BUYER is obtained, each SELLER will not take any action that would
result in a violation of any of the following proscriptions:
(a) The Business of each SELLER will be carried on in the usual,
regular and ordinary manner and each SELLER will use its reasonable
commercial efforts to preserve its present business organization intact,
keep available the services of its present officers and employees and
preserve its present relationships with Persons having business dealings
with it, all solely as the same relates to the Business, and shall not make
or institute any methods of manufacture, purchase, sale, lease, management,
accounting or operation in or affecting the Business that are not
consistent with SELLER's past practices;
(b) No SELLER will increase or decrease the compensation payable
or to become payable to any salaried officer or employee, or make any
change in any insurance, pension or other employee benefit plan nor pay any
commission or bonus to any of such officers or employees other than
increases and bonuses in the normal course of business, consistent with
past practices and not exceeding in any one (1) case an aggregate increase
and bonus of more than ten percent (10%) of such Person's compensation;
(c) No SELLER will make any change in its practices regarding
sales, credit or collection terms and conditions insofar as the same
relates to its Business;
(d) No SELLER will, with respect to its Business, (i) incur any
obligation or liability or assume, guarantee, endorse or otherwise become
responsible for the liabilities or obligations of any other Person (whether
absolute, accrued, contingent or otherwise), except normal trade or
business obligations incurred in the ordinary course of business; (ii)
discharge or satisfy any Lien or pay any obligation or liability (whether
absolute, accrued, contingent or otherwise), other than in the ordinary
course of business; (iii) except in the ordinary course of business,
mortgage, pledge, create or subject to a Lien any of its Assets; (iv) sell,
assign, transfer, lease or otherwise dispose of any of its Assets except in
the ordinary course of business, or acquire any assets or any interest
therein except in the ordinary course of business; (v) except in the
ordinary course of business, amend, terminate, waive or release any rights
or cancel any debt owing to or claim by such SELLER; (vi) except in the
ordinary course of business, transfer or grant any rights under any
Contracts and Other Agreements, patents, inventions, trademarks, trade
names, service marks or copyrights, or registrations or licenses thereof or
applications therefor, or with respect to any know-how or other proprietary
or trade rights; (vii) modify or change any Material Contracts; or (viii)
enter into any transaction, contract or commitment that by reason of its
size or otherwise is material to its Business or financial condition or
that is not in the ordinary course of such SELLER's Business as now
conducted;
(e) All tangible Assets of each SELLER will be used, operated,
maintained and repaired in a manner consistent with past practices;
(f) No SELLER will do any act or omit to do any act, or permit
any act or omission to act, that will cause a breach of any Material
Contract;
(g) No SELLER will make any investment of a capital nature
affecting its Business (except Growth Capital Expenditures as provided for
herein) without the prior written consent of BUYER;
(h) No SELLER will permit any insurance policy naming it as a
beneficiary or a loss payable payee and relating to its Assets or Business
to be canceled, terminated or modified or any of the coverage thereunder to
lapse unless simultaneously with such termination or cancellation,
replacement policies providing substantially the same coverage are in full
force and effect;
(i) No SELLER will fail to pay when due any of the following
insofar as they relate to its Business: (i) any trade accounts payable,
(ii) any payments required by any indentures, mortgages, financing
agreements, loan agreements or similar agreements, or (iii) taxes of
whatever kind or nature or payments related thereto (including, without
limitation, estimated payments and withholding remittances);
(j) No SELLER will, insofar as the same relates to its Business,
maintain its books, accounts and records in any manner other than the
usual, regular and ordinary manner, on a basis consistent with prior years
and will not knowingly fail to
comply with any laws applicable to such SELLER and to the conduct of its
Business or to its Assets;
(k) No SELLER will knowingly enter into any transaction or make
any agreement or commitment or take any other action, in each case which
would result in any of its representations, warranties or covenants
contained in this Agreement not being true and correct at and as of the
Closing Date.
9.2 Information. SELLERS and the Shareholders will promptly inform
-----------
BUYER in writing of any litigation commenced against them or any of them in
respect of (a) the transactions contemplated by this Agreement, or (b) the
Assets or Business of any SELLER.
9.3 Further Assurances. Each SELLER shall execute and deliver or
------------------
cause to be executed and delivered to BUYER such further instruments of
transfer, assignment and conveyance and take such other action as BUYER may
reasonably require to more effectively carry out the transfer of the Assets of
such SELLER and the consummation of the matters contemplated by this Agreement.
9.4 Compliance. Each SELLER and each Shareholder hereby agrees to
----------
and shall:
(a) cause all obligations imposed upon any SELLER or any
Shareholder in this Agreement to be duly complied with, and use their
respective best efforts to cause all conditions precedent to such
obligations to be satisfied prior to the Cut-Off Date;
(b) use its reasonable commercial efforts to obtain any and all
consents, waivers, amendments, modifications, approvals, authorizations,
notations and licenses necessary to the consummation of the transactions
contemplated by this Agreement, it being understood and agreed that the
foregoing does not apply to consents to assignments of Propane Supply
Contracts or action with respect to obtaining Carrier Permits for BUYER;
and
(c) immediately notify BUYER of the occurrence of any event or
the failure of any event to occur of which a SELLER has Knowledge that
results in a breach of any representation or warranty made by any SELLER or
any Shareholder in this Agreement or a failure by any SELLER or any
Shareholder to comply with any covenant, condition or agreement of such
Person contained in this Agreement.
9.5 Delivery of Corporate Documents. At or prior to the Closing,
-------------------------------
each SELLER shall deliver to BUYER all keys to any improvements located on any
of the Real Property of such SELLER, all Documents and other papers related to
the operation of the Business or the Assets of such SELLER, including without
limitation all files relating to the receivables and payables (whether current
or past), original certificates of letter patent, trademarks and copyrights, and
hard copies of any books or records or Documents and other papers or information
and data relating to the operation of the Business or the Assets of such SELLER
stored on any electronic media, including computers.
9.6 U.C.C. Search. At BUYER's expense, BUYER may seek Uniform
-------------
Commercial Code search reports. Schedule 9.6 sets forth a list of the following:
(i) the name of each SELLER, (ii) any name under which such SELLER is doing
business, and (iii) all counties and states in which such SELLER has any real or
personal property or otherwise maintains a place of business or in which such
SELLER's Assets are located.
9.7 Bulk Transfer Law. The parties hereto each waives compliance by
-----------------
the others with the provisions of the bulk transfer law of the State of Indiana
and the provisions of any statute of any other state or jurisdiction regulating
bulk sales or transfers which may be applicable to the sale of the Assets. Each
SELLER agrees that it will, so far as is practicable, apply so much of the
Purchase Price it receives under this Agreement as may be necessary to pay such
SELLER's Retained Liabilities that are then known to exist and to be due. Each
SELLER hereby agrees to indemnify and hold BUYER and its members, officers,
employees, agents, representatives, successors and assigns harmless from and
against any and all losses, claims, damages, expenses and liabilities (including
legal fees and expenses) to which BUYER may become subject pursuant to the bulk
transfer provisions of the Uniform Commercial Code of the State of Indiana or to
any other such bulk transfer or sale statute with regard to the sale of the
Assets contemplated by this Agreement.
9.8 BUYER's Insurance Endorsements. For a period of three (3) years
------------------------------
following the Closing Date, BUYER will cause (at BUYER's cost) SELLERS and the
Shareholders to be named insureds on BUYER's liability insurance policies and
will provide SELLERS with copies of documents indicating that such action has
been taken.
9.9 Noncompetition and Employment Agreements.
----------------------------------------
(a) Each of the Persons that are to enter into a Noncompetition
Agreement pursuant to Section 3.4 agree to and shall, at or prior to the
Closing, enter into such Noncompetition Agreement.
(b) Xxxxxxx X. Xxxxxx and BUYER agree to and shall at or prior to
the Closing enter into an Employment Agreement in the form attached hereto
as Exhibit K.
9.10 No Shop. Each SELLER and each Shareholder agrees that, from the
-------
date hereof and until the first to occur of the Closing or the termination of
this Agreement in accordance with Article 15, no SELLER, none of such SELLER's
respective officers or directors and no Shareholder will, and each SELLER and
each Shareholder will direct and use their best efforts to cause each of their
respective representatives not to, initiate, solicit, encourage or respond to,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including any proposal or offer to the Shareholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, a SELLER (any such proposal or offer being an
"Acquisition Proposal") or provide any Confidential Information respecting any
SELLER or BUYER or any affiliate of BUYER to, or engage in any activities or
have any discussions or negotiations with, any Person relating to an Acquisition
Proposal or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. Each SELLER and each Shareholder will: (a) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, and each will take the steps necessary to inform such Persons of the
obligations
undertaken in this Section 9.10, and (b) notify BUYER immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such discussions or negotiations are sought to be initiated or continued
with, any SELLER or any Shareholder.
9.11 Supplemental Information.
------------------------
(a) SELLERS, the Shareholders and BUYER each agree that, with
respect to the representations and warranties of such party contained in
this Agreement, such party will have the continuing obligation until the
Closing to promptly provide the other party with such additional
supplemental information (collectively, the "Supplemental Information"), in
the form of (i) amendments to then existing Schedules (ii) Additional
Schedules, as would be necessary, in light of the circumstances,
conditions, events and states of fact then known, to make each of those
representations and warranties true and correct as of the Closing, or (iii)
for purposes only of determining whether the conditions to the obligations
of BUYER have been satisfied, the Schedules to this Agreement as of the
Closing Date will be deemed to be the Schedules to this Agreement as of the
date hereof as amended or supplemented by the Supplemental Information
provided to BUYER prior to the Closing pursuant to this Section 9.11;
provided, however, that if the Supplemental Information so provided
discloses the existence of circumstances, conditions, events or states of
facts that, in any combination thereof, (i) have had a Material Adverse
Effect on any SELLER, (ii) in the sole judgment of BUYER are having or will
have a Material Adverse Effect on any SELLER or (iii) represent a breach of
Section 9.1 above, BUYER will be entitled to terminate this Agreement by
notice to SELLERS; and provided, further, that if the facts first disclosed
in the Supplemental Information were required to be disclosed at the time
of signing of this Agreement but were not, and BUYER does not terminate the
Agreement and proceeds to Closing, then BUYER will be entitled to be
indemnified for all Damages that are attributable to such failure to
disclose by SELLER(s) or the Shareholders.
(b) Additionally, notwithstanding any other provision herein to
the contrary, no SELLER and no Shareholder shall have any liability to
BUYER for the breach of any covenant contained in Section 9.1 above if (i)
such breach was not the result of conduct knowingly intended to result in
such a breach and (ii) such breach is disclosed to BUYER in the
Supplemental Information.
9.12 Concerning the IPO.
------------------
(a) The parties recognize that a condition to BUYER's obligation
to purchase the Assets and consummate the transactions contemplated herein
is the securing by BUYER of the necessary financing for the cash portion of
the Purchase Price (see Section 10.16). It is BUYER's intention to arrange
for the organization of a master limited partnership (the "MLP") that would
acquire the Business and Assets of SELLERS and other businesses and assets
that are similar to such Business and Assets from third parties and
concurrently effect a public offering of units of the MLP (the "IPO") in a
manner similar to public offerings made by publicly traded master limited
partnerships that are engaged in the distribution and sale of propane.
Accordingly, BUYER agrees to proceed in good faith to make appropriate
arrangements to make such acquisitions, secure an underwriter for the IPO
and proceed with the IPO.
(b) SELLERS and the Shareholders recognize that there are many
matters that must be completed before the IPO can be accomplished and
accordingly, there will be several months of work by BUYER on such matters.
In addition, it is recognized that, due to the nature of such matters, the
IPO may not be able to be completed at all, whether for legal, business or
other reasons, including unfavorable market conditions, prices or rates.
(c) It is agreed that BUYER shall have full control over the
manner, timing and other matters related to the IPO, subject only to the
specific agreements herein contained.
(d) While the parties recognize that the proceeds of the IPO are
anticipated to provide the funds necessary for the purchase from SELLERS of
the Assets, BUYER may have other funding sources and completion of the IPO
is not a condition to any SELLER's or any Shareholder's obligations to
consummate the purchase and sale of the Assets and Business.
(e) As used herein, "Registration Statement" means the
registration statement filed with the Federal Securities and Exchange
Commission to register the sale of MLP units in connection with the IPO. If
BUYER (or the MLP or other appropriate entity) shall not have filed a
Registration Statement on or prior to October 31, 2000, then any SELLER may
terminate this Agreement by notice thereof to BUYER.
(f) Each SELLER will provide BUYER with all the information
concerning such SELLER that is reasonably requested by BUYER, from time to
time in connection with the IPO; provided, however, in connection with the
foregoing or in connection with SELLERS' agreement contained in Section
9.13 below, SELLERS shall not be required to incur out-of-pocket costs in
excess of Fifteen Thousand Dollars ($15,000). Each SELLER hereby represents
and warrants that any financial statements of such SELLER provided for
inclusion in the Registration Statement have been prepared in accordance
with GAAP.
(g) BUYER agrees that from time to time it will advise SELLERS
as to the status of BUYER's efforts regarding the IPO.
(h) Notwithstanding any other provision of this Agreement to the
contrary, BUYER shall have the right to disclose such information
concerning SELLERS, the Shareholders, the Assets, the Business and this
Agreement as BUYER and its counsel deem necessary or appropriate in
connection with the IPO without obtaining any prior consent of SELLERS or
the Shareholders, provided that any SELLER or Shareholder will be provided
with copies of all such disclosures upon request.
9.13 Additional Financial Statements. Each SELLER agrees to furnish
-------------------------------
to BUYER:
(a) as soon as available and in any event within thirty (30)
days after the end of each SELLER's fiscal quarters that ends prior to the
IPO, an unaudited balance sheet of such SELLER as of the end of such fiscal
quarter and the related statements of income or operations, cash flows and
shareholders' equity for such fiscal quarter and for
the period of such SELLER's fiscal year ended with that quarter, in each
case (i) setting forth in comparative form the figures for the
corresponding portion of the such SELLER's previous fiscal year, and (ii)
prepared in accordance with GAAP (x) throughout the periods indicated
(excepting footnotes) and (y) on the same basis as the financial statements
referred to in Section 6.8 were prepared; and
(b) if requested by BUYER in connection with any amendment of
the Registration Statement and promptly following any such request, a
balance sheet, statements of income or operations, cash flows and
shareholders' equity of such SELLER as of the end of either the first or
second fiscal month in any of such SELLER's fiscal quarters as BUYER may
request.
9.14 HSR Act.
-------
(a) If filings pursuant to and under the HSR Act are required in
connection with the consummation of the transactions contemplated by this
Agreement, BUYER and each SELLER promptly will compile and file (or will
cause its "ultimate parent entity" (as determined for purposes of the HSR
Act) to file) under the HSR Act such information respecting such party as
the HSR Act requires of an entity to be acquired. HSR filing fees will be
paid by BUYER, but each SELLER shall pay all other expenses incurred in
connection with the preparation of any of the reports and other information
that it is required to file.
(b) If BUYER determines that a filing under the HSR Act is not
required and the failure to file causes any Shareholder or any SELLER to
incur Damages (as defined in Section 12.1B), then BUYER agrees to indemnify
such SELLER and such Shareholder as provided in Section 12.2.
9.15 Title Insurance. Subject to the provisions of this Section
---------------
9.15, on the Closing Date, each SELLER shall, at such SELLER's expense, cause to
be issued and delivered to BUYER a policy of title insurance (the "Title
Policy") respecting the Real Property and conforming to the following
specifications:
(a) The form of the policy will be ALTA Owner's Policy Form B
1970 (amended 10/17/70), or as to leasehold estates, ALTA Leasehold Owner's
Policy - 1975, or the approved form, for the jurisdiction in which the Real
Property is located, that is the substantial equivalent thereof;
(b) The policy will be issued by a mutually acceptable
insurance company (the "Title Company");
(c) The insured will be BUYER;
(d) The policy will be in an amount reflecting the value
thereof as agreed to by BUYER and SELLERS;
(e) The policy will be dated concurrent with or subsequent to
the Closing;
(f) There will be no exceptions to coverage other than the
Permitted Encumbrances. Without limiting the generality of the foregoing
provisions hereof, the Title Policy shall not contain any exceptions with
respect to:
(A) Rights or claims of parties in possession;
(B) Encroachments, overlaps, boundary line disputes or any
other matters that would be disclosed by an accurate survey and
inspection (provided that the Survey is sufficient to enable the
title insurance company to delete such exceptions pursuant to the
title company's standard underwriting requirements);
(C) Easements or claims of easements not shown by the
public records (provided that the Survey is sufficient to enable
the title insurance company to delete such exceptions pursuant to
the title company's standard underwriting requirements);
(D) Any lien, or right to a lien, for services, labor or
materials heretofore or hereafter furnished; and
(E) Any other exceptions that may be designated or included
as standard exceptions in the area where the Real Property is
located.
(g) The policy shall contain such additional coverages and
endorsements as BUYER may request or require, provided, however, any
additional expense for such additional coverages or endorsements shall be
paid by BUYER.
Within thirty (30) days after the date hereof, each SELLER shall deliver to
BUYER (i) a current commitment from the Title Company setting forth the basis
upon which the Title Company is willing to insure title to the Real Property
(the "Title Commitment"), and (ii) a current boundary survey of the Real
Property, prepared at such SELLER's expense (the "Survey"). The Survey shall be
prepared and certified to BUYER by a registered land surveyor or licensed civil
engineer (registered or licensed in the state where the Real Property is
located) showing (i) the boundaries and legal descriptions of such Real
Property, (ii) the location of all roadways and other accessways upon, across or
adjacent to such premises, and (iii) such other matters and items as BUYER may
request, provided that BUYER shall pay any additional expense charged by the
surveyor for such additional items. The surveyor shall locate or set bars at all
corners of the surveyed property and shall reflect the same on the Survey. If
the Title Commitment or the Survey disclose any liens, easements, restrictions,
reservations or other defects or any other matters objectionable to BUYER, BUYER
shall advise the appropriate SELLER of the same in writing within ten (10) days
after receipt by BUYER of the Title Commitment and the Survey. Matters not
objected to by BUYER within said period shall be deemed to be Permitted
Encumbrances. As to any matters to which BUYER objects, such SELLER shall use
reasonable commercial efforts to resolve the objections (but with no requirement
to make any out-of-pocket expenditures except to satisfy mortgages or liens) and
shall, within ten (10) days after BUYER gives such SELLER notice of objection to
such matters, have delivered to BUYER a revised Title Commitment and/or Survey
reflecting that such remedy has been effected. In the event such SELLER is
unable to deliver the Title Policy or the Survey in accordance with the
foregoing requirements, BUYER's sole remedy therefor shall be either of the
following options:
(x) consummating the transaction
contemplated hereby and accepting such title as such SELLER holds, without
change in or to the terms hereof, unless such matters are encumbrances or liens
for an ascertainable amount, in which case such SELLER shall pay the amount
thereof to BUYER in cash at the Closing and thereby waive any claims under
Section 12.1 of this Agreement with respect to such objections, or (y) rejecting
and excluding the subject property from the transaction contemplated by this
Agreement, exercising its rights under Section 3.1(z)(ii) to have the purchase
price reduced and entering into a lease agreement respecting such property in
the form of the Lease Agreement attached hereto as Exhibit J. If Buyer elects
option (y), then BUYER and such SELLER owning such property agree to enter into
the aforementioned Lease Agreement.
9.16 Employee Matters.
----------------
(a) Schedule 9.16(a) sets forth a list of all salaried and
hourly employees employed by each SELLER and such employees' current
compensation. All of such employees are employed at the will of such SELLER
and may be terminated without notice and without cause except as set forth
in Schedule 9.16(a). On the Closing Date, BUYER shall offer employment to
all persons who were employed by each SELLER on the Closing Date (other
than any Shareholder so employed) in a position and at a base salary
substantially equivalent to such employee's present position and base
salary. Except as set forth in Schedule 3.1(y), Section 4.2(b) and 9.16(b),
BUYER shall have no liability for any salary or benefits accrued prior to
the Closing Date.
(b) COBRA. Except as otherwise provided in Schedule 9.16(b), no
person is currently covered under any SELLER's health plan as a result of
an election under the Consolidated Omnibus Budget Reconciliation Act, as
amended, and the Tax Reform Act of 1986 ("COBRA"). BUYER agrees to offer
group health plan coverage in a manner that will satisfy SELLERS'
obligation to offer COBRA coverage with respect to the following persons:
(i) those persons whose employment with a SELLER has terminated prior to
the date hereof and who have elected COBRA coverage under any SELLER's
health plan after the date hereof, and (ii) any person whose employment
with a SELLER has terminated after the date hereof and prior to the Closing
Date (including those that did not accept BUYER's offer of employment) and
who has elected COBRA coverage under any SELLER's health plan; provided,
however, the foregoing agreement of BUYER shall not apply to any of the
Shareholders or their family members. Any person included within the above
clauses (i) or (ii) and that accepts such offer of COBRA coverage by BUYER
is referred to herein as a "Covered Person." In the event that, in any plan
year of BUYER's group health plan, a Covered Person shall incur medical
costs that are reimbursed or paid for under BUYER's group health plan in
excess of Two Thousand Five Hundred Dollars ($2,500), then SELLERS agree to
pay to BUYER the amount by which such medical costs exceed such amount up
to a maximum liability of SELLERS to BUYER in any such plan year for any
such person of Twenty-Seven Thousand Five Hundred Dollars ($27,500),
provided that SELLERS shall not be obligated to reimburse BUYER for
expenses incurred by any such individual after BUYER reaches the aggregate
attachment point for BUYER's plan year in question. Notwithstanding the
foregoing, SELLERS shall be responsible for all COBRA obligations of those
individuals listed in Schedule 9.16(b) and SELLERS shall purchase at their
own expense an insurance policy to cover such listed individuals.
(c) Health Care for Employees Hired by Buyer. BUYER agrees to
offer group health plan coverage on the same terms and conditions as apply
to BUYER's existing employees to employees of SELLER who accept employment
immediately after Closing with BUYER, except that each such employee shall
(i) be eligible for such coverage on their date of hire by BUYER, and (ii)
receive credit, for purposes of BUYER's group health plan for its plan year
ending December 31, 2000, for any deductibles under SELLER's health plan
during 2000.
(d) Employment-Related Claims. Subject to the provisions of
Sections 9.16(a), (b) and (c), each SELLER assumes all liability, costs and
expenses (including reasonable attorneys' fees) for all existing employment
claims that have been filed by any employee or former employee of such
SELLER prior to the Closing Date relating to arbitrations, unfair labor
practice charges, employment discrimination charges, lawsuits, any
employment- related tort claim or other claims or charges of or by
employees of such SELLER or any thereof filed after the Closing Date but
arising as a result of actions or events or series of actions or events
that occurred prior to the Closing Date. Schedule 9.16(d) sets forth a
brief description of all such claims that have been filed as of the date
hereof. Each SELLER shall promptly describe to BUYER in writing a brief
description of any of such claims that may be filed after the date hereof
but on or before the Closing Date.
(e) 401(k) Plan. SELLERS shall, prior to the Closing Date, adopt
any and all resolutions that are necessary or appropriate to (i) fund the
401(k) Profit Sharing Plan, as referenced in Schedule 6.18(a), (the "401(k)
Plan"), with any profit sharing and/or matching contributions that have
accrued as of the Closing Date or that otherwise customarily and
historically would have been made by the SELLERS prior to the 401(k) Plan
year end; (ii) except as provided immediately above, cease all other
contributions to the 401(k) Plan immediately before the Closing Date; (iii)
terminate the 401(k) Plan; (iv) fully vest all participant account balances
in the 401(k) Plan immediately before the Closing Date; and (v) provide for
distribution of the assets of the 401(k) Plan following receipt of a
favorable determination letter (which shall be obtained by SELLERS, at
their expense) from the Internal Revenue Service with respect to the
termination and distribution of the assets of the 401(k) Plan.
9.17 SELLERS' and Shareholders' Access to Records. For a period of
--------------------------------------------
at least six (6) years from the Closing Date, BUYER shall retain all books,
records and accounts of each SELLER. In the interests of facilitating each
SELLER and the Shareholders in the completion of their respective tax forms,
BUYER shall make available to copy at such SELLER's or Shareholder's expense
such books, records and accounts during normal business hours, and BUYER shall
not destroy any of such SELLER's books and records without reasonable advance
notice to such SELLER and without granting a reasonable opportunity for such
SELLER to take and retain possession of any and all such books and records at
such SELLER's expense.
9.18 Xxxxxx Agreement. Investors 300, Inc. and BUYER agree to work
----------------
toward an amendment of that certain Covenant Not to Compete dated August 11,
1998, by and among Investors 300, Inc., Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxx to
(i) permit the assignment of the rights of Investors 300, Inc. to BUYER, (ii)
permit BUYER to assume the promissory note without such promissory note being
payable in full on the Closing Date, and (iii) relieve Investors 300, Inc. from
any liability under the promissory note.
9.19 Environmental Studies.
---------------------
(a) Prior to the Closing, BUYER shall have the right, at BUYER's
expense, to undertake such environmental studies on real estate to be
acquired or leased pursuant to this Agreement as BUYER deems, in its sole
discretion, appropriate. Prior to the execution of this Agreement, BUYER,
at its expense, has been provided with an environmental audit of SELLERS'
properties at Kendallville and Waterloo, Indiana ("Kendallville and
Waterloo Properties"). The remaining provisions of this Section 9.19 do not
apply to the Kendallville and Waterloo Properties.
(b) With respect to the real estate owned or leased by SELLERS,
save for and excluding the Kendallville and Waterloo Properties (the "Other
Properties"), in the event any such environmental study reveals, prior to
Closing, any situation such that remediation or other corrective action is,
in BUYER's judgment, required by law, then BUYER shall notify SELLERS of
such fact, and SELLERS shall have ten (10) days to object to such proposed
remediation. If SELLERS object to such remediation within said ten (10) day
period by notice in writing to BUYER given within said ten (10) day period,
then the parties will meet to discuss and resolve their differences, and if
no agreement is reached, then a firm that is a recognized expert in
environmental remediation matters selected by SELLERS' and BUYER's
environmental firms that performed such studies shall meet to reach
agreement, and if they cannot reach agreement, then a third firm that is a
recognized expert in environmental matters shall be selected by such two
firms, and the third firm shall decide if remediation is required by law,
and if yes, provide an estimate as to how much it will cost to perform such
remediation, and the decision by such third firm shall be binding upon the
parties.
(c) If remediation of any parcel of the Other Properties is to
be effected or other action is to be taken, SELLERS shall cooperate and
assist BUYER in taking such action as to remediate such property.
(d) At the Closing, SELLERS agree to reimburse BUYER for up to
One Hundred Thousand Dollars ($100,000) per parcel of the Other Properties
for the out- of-pocket amounts spent by BUYER prior to the Closing with
respect to such remediation in accordance with the provisions of this
Section 9.19. SELLERS' obligation to reimburse BUYER is contingent upon the
occurrence of the Closing on all the transactions contemplated by this
Agreement. The obligations of SELLERS under this Section 9.19 shall not
affect the liability of SELLERS with respect to the environmental condition
of the Other Properties under any other representation, warranty or
provision of this Agreement. For purposes of this Section 9.19(d), the term
"out-of- pocket amounts" shall not include any attorneys' fees or
consultants' fees incurred prior to the commencement of a remediation.
ARTICLE 10. CONDITIONS TO BUYER'S OBLIGATION TO
-----------------------------------------------
CONSUMMATE THE TRANSACTION
--------------------------
Each and every obligation of BUYER to be performed at or before the
Closing hereunder is subject, at BUYER's election, to the satisfaction on or
prior to the Closing Date of the conditions set forth below. Notwithstanding the
failure of any one or more of such conditions, BUYER may nevertheless proceed
with Closing without satisfaction, in whole or in
part, of any one or more of such conditions, but which action shall not
prejudice BUYER's right to recover Damages for any such failure.
10.1 Compliance with Agreement. Each SELLER and each Shareholder
-------------------------
shall have performed all of their respective obligations and agreements, and
complied with all covenants, warranties and conditions contained in this
Agreement that are required to be performed or complied with by such party on or
prior to the Closing Date.
10.2 Representations and Warranties. The representations and
------------------------------
warranties of each SELLER and each Shareholder contained in this Agreement (as
supplemented pursuant to Section 9.11) shall be true, complete and correct on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made or given on the Closing Date.
10.3 Certificate. Each SELLER and each Shareholder shall have
-----------
delivered to BUYER a certificate, dated the Closing Date (in the case of each
SELLER, signed by such SELLER's duly authorized officers) to the effect stated
in Sections 10.1 and 10.2.
10.4 Corporate Authorization. BUYER shall have received a copy of
-----------------------
the resolutions of the directors and shareholders of each SELLER, certified as
of the Closing Date by the secretary or assistant secretary of such SELLER, duly
authorizing the execution, delivery and performance by such SELLER of this
Agreement and each other agreement and instrument contemplated hereby, together
with an incumbency certificate as to the persons authorized to execute and
deliver such documents and instruments on its behalf.
10.5 Opinion of Counsel. BUYER shall have been furnished with the
------------------
opinion of Burt, Blee, Xxxxx & Xxxxxx, LLP, counsel to SELLERS and the
Shareholders, dated the Closing Date and addressed to BUYER, in a form
acceptable to BUYER.
10.6 Good Standing. Each SELLER shall have delivered to BUYER
-------------
certificates issued by appropriate governmental authorities evidencing the good
standing of such SELLER as of a date or dates not more than fifteen (15) days
prior to the Closing Date as a corporation of the respective states in which it
was organized or qualified to do business.
10.7 Noncompetition and Employment Agreements.
----------------------------------------
(a) Each SELLER and each Shareholder (that is required to do so
hereunder) shall have executed and delivered to BUYER a Noncompetition
Agreement in the form attached hereto as Exhibit A as required by Section
9.9.
(b) Xxxxxxx X. Xxxxxx shall have executed and delivered to BUYER
an Employment Agreement with BUYER as contemplated in Section 9.9.
10.8 Tax Certificates. Each SELLER shall have obtained and delivered
----------------
to BUYER letters or certificates from the appropriate state agencies of Indiana,
Ohio, Michigan, Florida, Pennsylvania, Texas, Kentucky, Illinois, West Virginia,
New York, Georgia, South Carolina and Alabama indicating that all sales, use and
employment taxes payable by such SELLER on or prior to the Closing Date in such
states have been paid and that there is no lien for unpaid sales, use or
employment taxes on the Assets, provided that if such states do not, as
matters of procedure, provide such letters or certificates, then the same shall
not be required from such state.
10.9 Receipt. Each SELLER and each Shareholder shall have duly
-------
executed and delivered to BUYER an instrument acknowledging payment of the sums
required to be paid by BUYER on the Closing Date as specified in Section 4.3.
10.10 Instruments of Transfer. Each SELLER shall have executed and
-----------------------
delivered to BUYER such bills of sale, assignments (including specifically
assignments of the leases identified in Schedules 2.1B and 2.1D) and other
instruments of transfer and conveyance (in form and substance reasonably
satisfactory to counsel for BUYER) as shall be necessary or desirable to vest in
BUYER all the right, title and interest in and to the Assets to be transferred,
assigned, conveyed and delivered to BUYER by such SELLER hereunder.
10.11 No Litigation. No party hereto shall be a party to or be
-------------
threatened with any litigation or administrative proceeding relating to any of
such parties or any of their assets or properties or to this Agreement or the
transactions contemplated hereby that in the judgment of BUYER, would affect the
desirability of carrying out this Agreement.
10.12 Landlord Consents.
-----------------
(a) BUYER shall have received consents, executed by the
respective landlords of all Real Property leased or subleased by any
SELLER, to the effect that as of the Closing Date such leases are not in
default and are valid and continuing agreements and have not been modified
or amended. Each said consent shall also state that the landlord approves
of the assignment of such lease as part of this Agreement.
(b) With respect to any sublease by any SELLER, BUYER shall have
received the agreement of the fee owner and any landlord prior to any
SELLER that, notwithstanding any default by others it shall be entitled to
possession of the leased premises so long as BUYER performs the obligations
under the lease and that BUYER may cause any default on the part of prior
tenants to be cured and in such event to offset against subsequently
accruing rents the amounts so expended.
10.13 Third Party Consents. BUYER shall have received the consents
--------------------
(or in lieu thereof waivers) listed in Schedule 6.4. All filings with, and
approvals by, third parties required to be made or received by BUYER for the
consummation of the transactions contemplated hereby shall have been made or
obtained.
10.14 No Adverse Event. The Business and the Assets shall not be
----------------
adversely affected or threatened to be affected in any way as a result of fire,
explosion, hurricane, earthquake, disaster, accident or other casualty, shortage
of any material supplies, changes in technology, strike or labor disturbance,
obsolescence of product or service, any action or threatened action by the
United States or any other governmental authority, flood, drought, embargo,
riot, civil disturbance, uprising, activity of armed forces, act of God or
public enemy.
10.15 Proceedings Satisfactory. All proceedings, corporate or other,
------------------------
to be taken in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be satisfactory in form and substance
to BUYER.
10.16 Financing. BUYER shall have (i) satisfactory assurance that
---------
the IPO will be completed simultaneously with or immediately following the
Closing, or (ii) obtained other financing for the purchase of the Assets as
herein provided in such amount, at such rate of interest, with such lenders and
on such terms and conditions as are acceptable to BUYER.
10.17 Use of Names. Each SELLER shall have changed its corporate
------------
name and the name of each SELLER's subsidiary, if any, and adopted a name that
does not include any of the following words or phrases, or any derivatives
thereof: "Domex," "L&L Leasing," "Investors 300," "300", "Hoosier Propane",
"L&L", "L&L. Repair & Testing", "L&L Transportation" or "L&L Transportation &
Brokerage".
10.18 Amendment to LLC Agreement and Put Agreement. Each SELLER
--------------------------------------------
shall have entered into the amendment to limited liability company agreement in
the form attached hereto as Exhibit E and the Put Agreement in the form attached
hereto as Exhibit F.
ARTICLE 11. CONDITIONS TO OBLIGATIONS OF SELLERS AND SHAREHOLDERS TO
--------------------------------------------------------------------
CONSUMMATE THE TRANSACTION
--------------------------
Each and every obligation of each SELLER and each Shareholder to be
performed at or before the Closing hereunder is subject, at such party's
election, to the satisfaction on or prior to the Closing Date of the conditions
set forth below. Notwithstanding the failure of any one or more of such
conditions, SELLERS and the Shareholders may nevertheless proceed with the
Closing without satisfaction, in whole or in part, of any one or more of such
conditions, but which action shall not prejudice the rights of any SELLER or any
Shareholder to recover damages for any such failure.
11.1 Compliance With Agreement. BUYER shall have performed all of
-------------------------
its obligations and agreements and complied with all covenants, warranties and
conditions contained in this Agreement that are required to be performed or
complied with by BUYER on or prior to the Closing Date.
11.2 Representations and Warranties. The representations and
------------------------------
warranties of BUYER contained in this Agreement shall be true, complete and
correct on and as of the Closing Date with the same force and effect as though
such representations and warranties had been given on the Closing Date.
11.3 Certificate. BUYER shall have delivered to SELLERS and the
-----------
Shareholders a certificate dated the Closing Date and signed by one of BUYER's
duly authorized officers to the effect stated in Sections 11.1 and 11.2 hereof.
11.4 Amendment to LLC Agreement and Put Agreement. BUYER shall have
--------------------------------------------
executed and delivered to SELLERS the amendment to limited liability company
agreement in the form attached hereto as Exhibit E and the Put Agreement in the
form attached hereto as Exhibit F.
11.5 Opinion of Counsel. SELLERS shall have been furnished with the
------------------
opinion of Xxxxxxx, Mag & Fizzell, P.C., counsel to BUYER, dated the Closing
Date and addressed to SELLER, substantially in the form set forth in Exhibit F
hereto.
11.6 Noncompetition, Employment and Consulting Agreements.
----------------------------------------------------
(a) BUYER shall have executed and delivered to each SELLER and
each Shareholder (that is required to do so) a Noncompetition Agreement in
the form attached hereto as Exhibit A as required by Section 9.9.
(b) BUYER shall have executed and delivered to Xxxxxxx X. Xxxxxx
an Employment Agreement in the form attached hereto as Exhibit K as
required by Section 9.9.
11.7 BUYER Authorization. SELLERS shall have received a copy of the
-------------------
resolutions of the sole voting member of BUYER, certified as of the Closing
Date, duly authorizing the execution, delivery and performance of BUYER of this
Agreement and each other agreement and instrument contemplated hereby, together
with an incumbency certificate as to the persons authorized to execute and
deliver such documents and instruments on its behalf.
11.8 Consent. All filings with, and approvals by, third parties
-------
(including, without limitation, the Federal Trade Commission and U. S. Justice
Department pursuant to the HSR Act) required to be made or received by BUYER for
the consummation of the transactions contemplated hereby shall have been made or
obtained.
ARTICLE 12. INDEMNIFICATION
---------------------------
12.1 A. SELLERS' Indemnity with Respect to Environmental Matters
--------------------------------------------------------
Associated with the Kendallville and Waterloo Properties and the Other
----------------------------------------------------------------------
Properties.
-----------
(a) BUYER shall have the right to make claims ("Kendallville and
Waterloo Environmental Claims") against SELLERS or the Shareholders
relating to:
(A) Environmental contamination or other environmental
problems associated with the Kendallville and Waterloo Properties
(including without limitation, rights to or claims for
contribution or indemnification or otherwise under applicable
environmental laws now existing or hereafter amended or enacted),
or
(B) A breach of any of the representations or warranties
set forth in Section 6.21 with respect to the Kendallville and
Waterloo Properties; provided, however, that BUYER's sole and
exclusive remedy with respect to such claims is as set forth in
this Section 12.1A.
(b) As for all Kendallville and Waterloo Environmental Claims,
BUYER's sole and exclusive remedy is to obtain from the Environmental
Escrow reimbursement for all out-of-pocket amounts spent by BUYER to
correct the condition of such properties that gave rise to the claim of
BUYER under Section 12.1A(a) above. For purposes of this Section 12.1A(b),
the term "out-of-pocket amounts" shall not include any attorneys' fees or
consultants' fees incurred prior to the commencement of a remediation.
(c) As set forth in the Environmental Escrow Agreement, all
Kendallville and Waterloo Environmental Claims against the Environmental
Escrow
must be made on or before three (3) years after the Closing Date (it being
understood and agreed that the resolution of any such claim may extend
beyond such three (3) year period) and if made within such three-year
period, claims hereunder for reimbursement of out-of-pocket amounts spent
shall be resolved within five (5) years after the Closing Date.
(d) BUYER shall have the right to make claims (the "Other
Properties Environmental Claims") against SELLERS or the Shareholders
relating to:
(A) Environmental contamination or other environmental
problems associated with the Other Properties (including, without
limitation, rights to or claims for contribution or
indemnification otherwise under applicable environmental laws now
existing or hereafter amended or enacted), or
(B) A breach of any of the representations or warranties
set forth in Section 6.21 with respect to the Other Properties;
provided, however, that BUYER's sole and exclusive remedy with
respect to such claims is as set forth in this Section 12.1A.
(e) As for the Other Properties Environmental Claims, claims for
indemnification hereunder shall be limited as follows: (i) BUYER shall be
able to claim and be reimbursed only for all out-of-pocket amounts spent by
BUYER to correct the condition of such Other Property that gave rise to the
claim of BUYER under Section 12.1A(d) above, (ii) with respect to each
parcel of real estate included in the Other Properties, once SELLERS and
the Shareholders have paid to BUYER a total of $100,000 with respect to
Other Properties Environmental Claims relating to such parcel of real
estate, then SELLERS shall have no further liability under Section 12.1A(d)
with respect to such parcel of real estate, and (iii) claims made under
Section 12.1A(d) shall be made within two years after the Closing Date, and
if made within such two-year period, claims hereunder for reimbursement of
out-of-pocket amounts spent shall be resolved within five years after the
Closing Date. For purposes of this Section 12.1A(e), the term "out-of-
pocket amounts" shall not include any attorneys' fees or consultants' fees
incurred prior to the commencement of a remediation.
(f) Except for the rights granted to BUYER in this Section
12.1A, as for the environmental condition of the Kendallville and Waterloo
Properties and the Other Properties, BUYER hereby releases and gives up all
claims, causes of action, or rights, known or unknown, including without
limitation rights to or claims for contribution or indemnification under
applicable environmental laws now existing or hereafter amended or enacted,
that BUYER may have against SELLERS and/or the Shareholders arising from or
relating to the Kendallville and Waterloo Properties or the Other
Properties or the transfer of the Kendallville and Waterloo Properties or
the Other Properties to BUYER hereunder.
12.1 X. XXXXXXX' General Indemnity. Subject to the provisions of
--------------------------
this Article 12 and Article 13, SELLERS and the Shareholders, from and after the
Closing Date, jointly and severally agree to indemnify and hold BUYER and its
members, officers, agents, employees, representatives, successors and assigns,
harmless from and against any and all
damage, loss, cost, obligation, claims, demands, assessments, judgments or
liabilities (whether based on contract, tort, product liability, strict
liability or otherwise), including taxes, and all expenses (including interest,
penalties and attorneys' and accountants' fees and disbursements) (collectively
"Damages") incurred in litigation or otherwise, and any investigation relating
thereto, by any of the above-named persons, directly or indirectly, resulting
from or in connection with:
(a) Any misrepresentation, breach of warranty or failure to
perform any covenant or agreement made or undertaken by any SELLER or any
Shareholder in this Agreement or in any agreement, certificate or other
document listed in Schedule 6.3;
(b) The Retained Liabilities;
(c) All debts, obligations, expenses and liabilities and costs
incurred arising out of or in connection with any transaction or series of
transactions, any facts or series of facts existing, or any events or
series of events relating to the Business on or prior to the Closing Date;
and
(d) Any action, suit, proceeding or claim incident to any of the
foregoing;
it being understood and agreed that the foregoing provisions of this Section
12.1B do not apply to Kendallville and Waterloo Environmental Claims.
12.2 BUYER's Indemnity. BUYER, and the MLP if the IPO is
-----------------
consummated, from and after the Closing Date, shall indemnify and hold each
SELLER and each Shareholder and their assigns harmless from and against any
Damages incurred by such SELLER and/or Shareholder resulting from or in
connection with:
(a) Any misrepresentation, breach of warranty or failure to
perform any covenant or agreement made or undertaken by BUYER in this
Agreement or in any other agreement or certificates delivered by BUYER to
any SELLER or any Shareholder pursuant to this Agreement;
(b) The Liabilities;
(c) All debts, obligations, expenses and liabilities and costs
incurred by BUYER arising out of or in connection with any transaction or
series of transactions, any facts or series of facts existing, or any
events or series of events relating to the Business after the Closing Date;
(d) To the extent provided in Section 9.14 hereof, the failure
to file under the HSR Act; and
(e) Any action, suit, proceeding or claim incident to any of
the foregoing.
12.3 Limitations on Liability of SELLERS and the Shareholders.
--------------------------------------------------------
Notwithstanding anything to the contrary in this Article 12 or any of the other
terms and
conditions of this Agreement, SELLERS' and Shareholders' liability and BUYER's
claims under this Article 12 shall be limited as follows:
(a) SELLERS and the Shareholders shall have no liability or
obligation to indemnify under this Article 12 arising from a breach by the
other Shareholders or SELLERS under the Noncompetition Agreements (the
rights and remedies of the parties under the Noncompetition Agreements are
as set forth in the Noncompetition Agreements);
(b) With respect to a claim for indemnification based on a
breach of a representation or warranty as set forth in Section 6.21 of this
Agreement (i) with respect to the Kendallville and Waterloo Properties, the
sole and exclusive remedy of BUYER is to make a claim against the
Environmental Escrow pursuant to Section 12.1A above and (ii) with respect
to the Other Properties, the liability of SELLERS shall be limited as set
forth in Section 12.1A; and
(c) All such claims shall be subject to the time limitation (if
applicable) set forth in Section 13.1 of this Agreement.
12.4 Procedure. All claims for indemnification by a party under this
---------
Article 12 (the party claiming indemnification and the party against whom such
claims are asserted being hereinafter called the "Indemnified Party" and the
"Indemnifying Party," respectively) shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is
asserted against or sought to be collected from such Indemnified Party by a
third party, such Indemnified Party shall with reasonable promptness give
notice (the "Claim Notice") to the Indemnifying Party of such claim or
demand, specifying the nature of and specific basis for such claim or
demand and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount of
such claim and demand). The Indemnifying Party shall not be obligated to
indemnify the Indemnified Party under this Agreement with respect to any
such claim or demand if the Indemnified Party fails to notify the
Indemnifying Party thereof in accordance with the provisions of this
Agreement, and, as a result of such failure, the Indemnifying Party's
ability to defend against the claim or demand is materially prejudiced. The
Indemnifying Party shall have twenty (20) days from the delivery or mailing
of the Claim Notice (the "Notice Period") to notify the Indemnified Party
(i) whether or not it disputes the liability of the Indemnifying Party to
the Indemnified Party hereunder with respect to such claim or demand, and
(ii) whether or not it desires, at the cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such claim or demand;
provided, however, that any Indemnified Party is hereby authorized, but is
not obligated, prior to and during the Notice Period, to file any motion,
answer or other pleading that it shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party. If the
Indemnifying Party notifies the Indemnified Party within the Notice Period
that it desires to defend the Indemnified Party against such claim or
demand, the Indemnifying Party shall, subject to the last sentence of this
paragraph, have the right to control the defense against the claim by all
appropriate proceedings and any settlement negotiations, provided that to
the satisfaction of the Indemnified Party, the Indemnifying Party shall
secure the Indemnified Party against such contested claims by posting a
bond or otherwise. If the Indemnified Party desires to participate in, but
not control, any such defense or settlement, it may do so at its sole cost
and expense. If the Indemnifying Party fails to respond to the Indemnified
Party within the Notice Period, elects not to defend the Indemnified Party,
or after electing to defend fails to commence or reasonably pursue such
defense, then the Indemnified Party shall have the right, but not the
obligation, to undertake or continue the defense of, and to compromise or
settle (exercising reasonable business judgment), the claim or other matter
all on behalf, for the account and at the risk of the Indemnifying Party.
Notwithstanding the foregoing, if the basis of the proceeding relates to a
condition of operations that existed or were conducted both prior to and
after the Closing Date or if the Indemnified Party would be otherwise
adversely affected as a result of any adverse decision of such proceeding,
each party shall have the same right to participate at its own expense and
at its own risk (but without waiving any right to indemnification
hereunder) in the proceeding without either party having the right of
control.
(b) If requested by the Indemnifying Party, the Indemnified
Party agrees, at the Indemnifying Party's expense, to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand that
the Indemnifying Party elects to contest, or, if appropriate and related to
the claim in question, in making any counterclaim against the Person
asserting the third party claim or demand, or any cross-complaint against
any Person. No claim as to which indemnification is sought under this
Agreement may be settled without the consent of the Indemnifying Party,
except as provided in Section 12.4(a).
(c) If any Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to
the Indemnifying Party. If the Indemnifying Party disputes such claim, such
dispute shall be resolved by litigation in a state or federal court in
Indiana, in accordance with the terms of Section 16.9.
12.5 Costs. If any legal action or other proceeding is brought for
-----
the enforcement or interpretation of any of the rights or provisions of this
Agreement (including the indemnification provision), or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and all other costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
ARTICLE 13. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND
------------------------------------------------------------------
WARRANTIES; RIGHT OF OFFSET
---------------------------
13.1 Survival. All representations, warranties, covenants and
--------
agreements made by the parties each to the other in this Agreement or pursuant
hereto in any certificate, instrument or document shall survive the consummation
of the transactions contemplated by this Agreement, and may be fully and
completely relied upon by BUYER and by SELLERS and the Shareholders, as the case
may be, notwithstanding any investigation heretofore or hereafter made by such
party or on behalf of any of them for a period of two (2) years from the Closing
Date; provided, however, that with respect to any demand or claim as to which
notice has been given
within said period, the representations, warranties, covenants and agreements
with respect thereto shall survive until finally resolved by agreement or in the
courts; and provided, further, that the foregoing shall not apply to any
agreement that is to be entered into at Closing pursuant to the terms hereof,
the terms of which shall survive until fully performed in accordance with such
agreement.
13.2 Right of Offset. BUYER shall have the right to set off any
---------------
obligation it has under this Agreement, the Put Agreement (Exhibit F), the LLC
Agreement (Exhibit E) or otherwise to any SELLER or any Shareholder against any
obligation any SELLER or any Shareholder has to BUYER under this Agreement or
otherwise; provided, however, BUYER shall have no right of set off with respect
to amounts to be paid under Section 4.3 hereof; and provided further, any such
obligation of a SELLER or a Shareholder that is not represented by a final
judgment or as to which such SELLER or Shareholder has agreed to an offset, such
right of offset shall be limited to the preferred interest distribution payable
with respect to the Preferred Interest (or any interest substituted therefor)
issued pursuant to Section 4.3(b) above. In the event any offset (or any part
thereof) is ultimately determined to have been in excess of amounts owing by the
SELLERS or the Shareholders to BUYER, then the SELLERS and the Shareholders
shall be entitled to recover from BUYER (i) interest on such excess from the
date of the offset computed at the then prevailing prime interest rate as
published in The Wall Street Journal from time to time and (ii) reasonable
-----------------------
attorneys' fees. BUYER further agrees that in the event that any claim BUYER has
against SELLERS or any Shareholder that is represented by a final judgment or as
to which such SELLER or Shareholder has agreed to offset, then BUYER shall first
offset the amount of such claim against the capital account of such SELLER or
Shareholder before seeking payment of such claim.
ARTICLE 14. EXPENSES
--------------------
Except as otherwise set forth herein, each party agrees to pay,
without right of reimbursement from any other, the costs incurred by such party
incident to the preparation and execution of this Agreement and performance of
their respective obligations hereunder, whether or not the transactions
contemplated by this Agreement shall be consummated, including, without
limitation, the fees and disbursements of legal counsel, accountants and
consultants employed by the respective parties in connection with the
transactions contemplated by this Agreement.
ARTICLE 15. TERMINATION
-----------------------
15.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) By agreement of all of the parties hereto;
(b) By either BUYER or any SELLER if the Closing has not taken
place on or before October 31, 2000 (the "Cut-Off Date"); provided that the
right to terminate this Agreement under this Section 15.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or results in, the failure of the Closing
to occur within such period;
(c) By BUYER pursuant to Section 9.11 hereof;
(d) By BUYER or any SELLER, as the case may be, (i) if any of
the conditions precedent to the performance of the obligations of the party
giving notice of termination shall not have been fulfilled and cannot be
fulfilled on or prior to the Cut-Off Date and shall not have been waived in
writing by such party, or (ii) if a default shall be made by the other
party in observance or in the due and timely performance of any of the
covenants and agreements herein contained that cannot be cured on or prior
to the Cut-Off Date and shall not have been waived in writing by such
party; or (iii) if there exists an inaccuracy, failure or breach of a
warranty or representation set forth herein or in any other agreement or
instrument executed pursuant hereto that has not been waived in writing by
the party for whose benefit such warranty or representation was made or
given; and
(e) At the option of BUYER or any SELLER, if any action or
proceeding shall have been instituted and remain pending before a court or
other governmental body by any federal, state or local government or agency
thereof to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or if any federal, state or local
government or agency thereof shall have threatened to institute any
proceeding before a court or other governmental body to restrain the
consummation of such transactions or to force divestiture, provided that
neither party shall have the option to terminate this Agreement as provided
herein after any such action or notice by any federal, state or local
government or governmental agency or other Person shall be withdrawn or
settled.
15.2 No Liability. Except in the event of a termination of this
------------
Agreement pursuant to Section 15.1(d)(ii) or (iii), there shall be no liability
on the parties hereto or any of their respective members, managers, officers,
directors, shareholders or Affiliates as a result thereof under this Agreement.
A termination under Section 15.1(d)(ii) or (iii) hereof shall not prejudice any
claim for damages which any party may have hereunder or in law or in equity as a
consequence of any matter giving rise to a termination of the Agreement under
Section 15.1(d)(ii) or (iii) hereof. BUYER and SELLERS shall have the right to
specific performance if the Agreement is not otherwise terminated in accordance
with the terms hereof.
15.3 Notice. BUYER may exercise its right of termination of this
------
Agreement only by delivering written notice to that effect to SELLERS, provided
that such notice is received by SELLERS prior to the Closing. Any SELLER may
exercise its right of termination of this Agreement only by delivering written
notice to that effect to BUYER, provided that such notice is received by BUYER
prior to the Closing.
ARTICLE 16. MISCELLANEOUS
-------------------------
16.1 Notices. Any notice, request, consent or communication under
-------
this Agreement shall be effective only if it is in writing and personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
by a nationally recognized overnight delivery service, with delivery confirmed,
addressed as follows:
If to SELLERS and/or the Shareholders, at the address beneath their
respective signatures hereto, with a copy to:
Burt, Blee, Xxxxx & Xxxxxx, LLP
X.X. Xxx 00000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
If to BUYER to:
Inergy Partners, LLC
0000 Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
with a copy to:
Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxxxxx
or such other persons and/or addresses as shall be furnished in writing by any
party to the other party, and shall be deemed to have been given only upon its
delivery in accordance with this Section 16.1.
16.2 Parties in Interest and Assignment.
----------------------------------
(a) This Agreement is binding upon and is for the benefit of the
parties hereto and their respective successors and assigns. Except as
expressly provided herein, nothing in this Agreement, express or implied,
is intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies or obligations or
liabilities under or by reason of this Agreement.
(b) Except as provided in Section 16.2(c) below, neither this
Agreement nor any of the rights or duties of any party hereto may be
transferred or assigned to any Person except by a written agreement
executed by all of the parties hereto.
(c) Notwithstanding the above, BUYER may transfer and assign all
or any portion of its rights under this Agreement for purposes of or in
connection with the IPO, but any such assignment shall not relieve BUYER
from any of its obligations hereunder. Notwithstanding the above, each
SELLER may assign its rights under this Agreement to the Shareholders in
the event such SELLER is liquidated and/or dissolved in accordance with
applicable law. Any assignee hereunder shall assume all of the assignor's
obligations hereunder, including obligations under Article 12.
16.3 Modification. This Agreement may not be amended or modified
------------
except by a writing signed by an authorized representative of the party against
whom enforcement of the change is sought. No waiver of the performance or breach
of, or default under, any condition or obligation hereof shall be deemed to be a
waiver of any other performance, or breach of, or default under the same or any
other condition or obligation of this Agreement.
16.4 Waiver. Each party hereto may, by written notice to the other
------
party hereto: (a) extend the time for the performance of any of the obligations
or other actions of such other party under this Agreement; (b) waive any
inaccuracies in the representations or warranties of such other party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance by such other party with any of the conditions or covenants of
the other contained in this Agreement; or (d) waive or modify performance of any
of the obligations of such other party under this Agreement. Except as provided
in the preceding sentence, no action taken by or on behalf of any party,
including, without limitation, any investigation by or on behalf of such party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
16.5 Entire Agreement. This Agreement embodies the entire agreement
----------------
between the parties hereto and there are no agreements, representations or
warranties between the parties other than those set forth or provided herein.
All Exhibits and Schedules called for by this Agreement and delivered to the
parties shall be considered a part hereof with the same force and effect as if
the same had been specifically set forth in this Agreement. BUYER acknowledges
that it has had an opportunity to ask questions of SELLERS and to request
information and documents from SELLERS, in each case with respect to the
Business and Assets of SELLERS.
16.6 Execution in Multiple Originals. This Agreement may be executed
-------------------------------
in multiple originals, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
16.7 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.8 Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
16.9 Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed, interpreted and enforced in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed entirely within such
State, including all matters of enforcement, validity and performance. Each
party hereby irrevocably:
(a) agrees that any suit, action or proceeding with respect to
this Agreement shall be exclusively brought in the State of Indiana or in a
United States District Court located in the Northern District of the State
of Indiana;
(b) waives to the fullest extent permitted by law governing this
Agreement, any objection that it might have now or hereafter to the setting
of the venue of any such suit, action or proceeding under this Section 16.9
in such Indiana courts and
any claim that any such suit, action or proceedings under Section 16.9(a)
hereof has been brought in an inconvenient forum; and
(c) acknowledges the competence of any such Indiana courts,
submits to the jurisdiction of any such court in any such suit, action or
proceeding and agrees that the final judgment in any such suit, action or
proceeding brought in such court shall be conclusive and binding upon such
party and may be enforced in the courts of the jurisdiction in which such
party's principal office or principal residence is located.
16.10 Gender. Masculine pronouns used in this Agreement shall be
------
construed to include feminine and neuter pronouns, and words in the singular
shall include the plural, unless the context otherwise requires.
16.11 Exhibits and Schedules. All of the Exhibits and Schedules
----------------------
attached hereto are incorporated herein and made a part of this Agreement by
this reference thereto.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement on the date first above written.
/s/ XXXXX XXXXXX
______________________________ INVESTORS 300, INC.
Xxxxx Xxxxxx
/s/ XXXX X. XXXX
By:___________________________________
Name: Xxxx X. Xxxx
Title: Treasurer
/s/ XXXXX XXXX
_______________________________
Xxxxx Xxxx
DOMEX, INC.
/s/ XXXX X. XXXX
_______________________________ /s/ XXXX X. XXXX
Xxxx X. Xxxx By:_____________________________________
Name: Xxxx X. Xxxx
Title: Treasurer
/s/ XXXXXXX X. XXXXXX
_______________________________
Xxxxxxx X. Xxxxxx
L & L LEASING, INC.
/s/ XXXX X. XXXX
"Shareholders" By:________________________________________
Name: Xxxx X. Xxxx
Title: Treasurer
"SELLERS"
INERGY PARTNERS, LLC
/s/ XXXX X. XXXXXXX
By:_________________________________________
Name: Xxxx X. Xxxxxxx
Title: President
"BUYER"
