Exhibit 10.1

 

SPECIAL UNIT

 

PURCHASE AGREEMENT

 

by and between

 

INERGY, L.P.

 

and

 

INERGY HOLDINGS, L.P.

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Table of Contents

 

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ARTICLE I      DEFINITIONS     

Section 1.01

   Definitions    1

Section 1.02

   Accounting Procedures and Interpretation    5 ARTICLE II      AGREEMENT TO
SELL AND PURCHASE     

Section 2.01

   Authorization of Sale of Special Units    5

Section 2.02

   Sale and Purchase    5

Section 2.03

   Closing.    6

Section 2.04

   Conditions to the Closing.    6

Section 2.05

   Inergy Deliveries.    7

Section 2.06

   Purchaser Deliveries.    8

Section 2.07

   Price Per Unit.    9

Section 2.08

   Lock-Up.    9 ARTICLE III      REPRESENTATIONS AND WARRANTIES RELATED TO
INERGY     

Section 3.01

   Corporate Existence    9

Section 3.02

   Capitalization and Valid Issuance of Purchased Units.    10

Section 3.03

   Inergy SEC Documents    11

Section 3.04

   No Material Adverse Change    12

Section 3.05

   Litigation    12

Section 3.06

   No Conflicts    12

Section 3.07

   Authority    13

Section 3.08

   Approvals    13

Section 3.09

   MLP Status    13

Section 3.10

   Offering    13

Section 3.11

   Investment Company Status    13

Section 3.12

   Certain Fees    13

Section 3.13

   No Side Agreements    14

Section 3.14

   Accretive Acquisition    14 ARTICLE IV      REPRESENTATIONS AND WARRANTIES OF
PURCHASER     

Section 4.01

   Corporate Existence    14

Section 4.02

   No Conflicts    14

Section 4.03

   Certain Fees    15

Section 4.04

   No Side Agreements    15

Section 4.05

   Unregistered Securities    15

 

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ARTICLE V      INDEMNIFICATION, COSTS AND EXPENSES     

Section 5.01

   Indemnification by Inergy    16

Section 5.02

   Indemnification by Purchaser    16

Section 5.03

   Indemnification Procedure    16 ARTICLE VI      MISCELLANEOUS     

Section 6.01

   Interpretation and Survival of Provisions    17

Section 6.02

   Survival of Provisions    18

Section 6.03

   No Waiver: Modifications in Writing.    18

Section 6.04

   Binding Effect; Assignment.    18

Section 6.05

   Communications    19

Section 6.06

   Removal of Legend    19

Section 6.07

   Entire Agreement    19

Section 6.08

   Governing Law    20

Section 6.09

   Execution in Counterparts    20

Exhibit A – Amendment to Partnership Agreement

    

Exhibit B – Form of Registration Rights Agreement

    

Exhibit C – Form of Opinion of Inergy Counsel – Sale of Special Units under
Registration Statement

    

 

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SPECIAL UNIT PURCHASE AGREEMENT

 

This SPECIAL UNIT PURCHASE AGREEMENT, dated as of August 9, 2005 (this
“Agreement”), is by and between INERGY, L.P., a Delaware limited partnership
(“Inergy”), and INERGY HOLDINGS, L.P., a Delaware limited partnership and
affiliate of Inergy (“Purchaser”).

 

WHEREAS, Inergy has entered into a definitive agreement to acquire the
membership interests of the entities (collectively, “Stagecoach”) that own the
Stagecoach natural gas storage facility (the “Stagecoach Acquisition”);

 

WHEREAS, Inergy desires to conduct an expansion project (“Phase II Project”) of
the natural gas storage facility acquired in the Stagecoach Acquisition (the
“Stagecoach Facility”), and further, Inergy desires to finance a portion of the
Stagecoach Acquisition and the Phase II Project rights through the sale of the
Special Units from Inergy in accordance with the provisions of this Agreement;

 

WHEREAS, it is a condition to the obligations of Purchaser and Inergy hereunder
that the Stagecoach Acquisition be consummated;

 

WHEREAS, Inergy has agreed to provide Purchaser with certain registration rights
with respect to the Special Units acquired pursuant hereto.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling”, “controlled by”,
and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.

 

“Amendment” means the amendment to the Partnership Agreement providing for the
Special Unit Amendment as well as the other matters as are reflected on Exhibit
A hereto.

 

“Anniversary Date” means six months from the Closing Date.

 

“Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, and any and all other agreements or instruments executed and
delivered to Purchaser by Inergy or any Subsidiary of Inergy hereunder or
thereunder.

 

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“Business Day” means any day other than a Saturday, Sunday, or a legal holiday
for commercial banks in Wilmington, Delaware.

 

“Closing” shall have the meaning specified in Section 2.03.

 

“Closing Date” shall have the meaning specified in Section 2.03.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Units” means the common units representing limited partner interests in
Inergy.

 

“Delaware LLC Act” means the Delaware Limited Liability Company Act.

 

“Delaware LP Act” shall have the meaning specified in Section 3.02.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

 

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

 

“General Partners” means Inergy Partners, LLC, a Delaware limited liability
company and the non-managing general partner of Inergy, and Inergy GP, LLC, a
Delaware limited liability company and the managing general partner of Inergy.

 

“Governmental Authority” means, with respect to a particular Person, the
country, state, county, city and political subdivisions in which such Person or
such Person’s Property is located or which exercises valid jurisdiction over any
such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them and any monetary
authority which exercises valid jurisdiction over any such Person or such
Person’s Property. Unless otherwise specified, all references to Governmental
Authority herein with respect to Inergy means a Governmental Authority having
jurisdiction over Inergy, its Subsidiaries or any of their respective
Properties.

 

“Indemnified Party” shall have the meaning specified in Section 5.03.

 

“Indemnifying Party” shall have the meaning specified in Section 5.03.

 

“Inergy” has the meaning set forth in the introductory paragraph.

 

“Inergy Credit Facility” means the 5-year Credit Agreement dated as of December
17, 2004, as amended through the date hereof, among Inergy and the lenders named
therein.

 

“Inergy Financial Statements” shall have the meaning specified in Section 3.03.

 

“Inergy Material Adverse Effect” means any material and adverse effect on (a)
the assets, liabilities, financial condition, business, operations or affairs of
Inergy and its Subsidiaries taken as a whole; (b) the ability of Inergy and its
Subsidiaries taken as a whole to carry out their

 

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business as such business is conducted as of the date hereof or to meet their
obligations under the Basic Documents on a timely basis; or (c) the ability of
Inergy to consummate the transactions under any Basic Document; provided,
however, that an Inergy Material Adverse Effect shall not include any material
and adverse effect on the foregoing to the extent such material and adverse
effect results from, arises out of, or relates to (w) compliance with the terms
of the HSR Act as contemplated by the Stagecoach Purchase Agreement or the
agreements entered into in connection with the Stagecoach Acquisition, (x) a
general deterioration in the economy or changes in the general state of the
industries in which the Inergy Parties operate, except to the extent that the
Inergy Parties, taken as a whole, are adversely affected in a disproportionate
manner as compared to other industry participants, (y) the outbreak or
escalation of hostilities involving the United States, the declaration by the
United States of a national emergency or war or the occurrence of any other
calamity or crisis, including acts of terrorism, or (z) any change in accounting
requirements or principles imposed upon Inergy and its Subsidiaries or their
respective businesses or any change in applicable Law, or the interpretation
thereof.

 

“Inergy Parties” means Inergy, the General Partners, and all of Inergy’s
Subsidiaries.

 

“Inergy Related Parties” shall have the meaning specified in Section 5.02.

 

“Inergy SEC Documents” shall have the meaning specified in Section 3.03.

 

“Inergy Significant Subsidiaries” means Inergy Acquisition Company, LLC, a
Delaware limited liability company, Inergy Propane, LLC, a Delaware limited
liability company, Inergy Sales & Service, Inc., a Delaware corporation, L&L
Transportation, LLC, a Delaware limited liability company, Inergy
Transportation, LLC, a Delaware limited liability company and Stellar Propane
Service, LLC, a Delaware limited liability company.

 

“Inergy’s Knowledge” means the actual knowledge of Laura L. Ozenberger, R.
Brooks Sherman, Jr. and John J. Sherman, after reasonable inquiry.

 

“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law, rule or regulation.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. For the purpose of this Agreement, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

 

“NASDAQ” means the NASDAQ National Market.

 

“Partnership Agreement” means the Second Amended and Restated Agreement of
Limited Partnership of Inergy dated as of January 7, 2004, as amended.

 

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“Partnership Securities” means any class or series of equity interest in Inergy
(but excluding any options, rights, warrants and appreciation rights relating to
an equity interest in Inergy), including without limitation Common Units,
Subordinated Units and Incentive Distribution Rights (as defined in the
Partnership Agreement).

 

“Permits” means, with respect to Inergy or any of its Subsidiaries, any
licenses, permits, variances, consents, authorizations, waivers, grants,
franchises, concessions, exemptions, orders, registrations and approvals of
Governmental Authorities or other Persons necessary for the ownership, leasing,
operation, occupancy and use of its Properties and the conduct of its businesses
as currently conducted.

 

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

 

“Purchase Price” means the monetary commitment amount of $25,000,000.

 

“Purchased Units” means the number of Special Units equal to the quotient
determined by dividing (a) the Purchase Price by (b) the Special Unit Price,
rounded to the nearest whole number.

 

“Purchaser” has the meaning set forth in the introductory paragraph.

 

“Purchaser Material Adverse Effect” means any material and adverse effect on (a)
the assets, liabilities, financial condition, business, operations or affairs of
Purchaser; (b) the ability of Purchaser to carry out its business as such
business is conducted as of the date hereof or to meet its obligations under the
Basic Documents to which it is a party on a timely basis; or (c) the ability of
Purchaser to consummate the transactions under any Basic Document to which it is
a party.

 

“Purchaser Related Parties” shall have the meaning specified in Section 5.01.

 

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between Inergy and Purchaser in the form attached
hereto as Exhibit B.

 

“Representatives” of any Person means the officers, directors, employees,
agents, counsel, accountants, investment bankers and other representatives of
such Person.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

 

“Special Unit Amendment” shall have the meaning specified in Section 2.01.

 

“Special Unit Price” shall have the meaning specified in Section 2.07.

 

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“Special Units” means the special units representing limited partner interests
in Inergy.

 

“Stagecoach Acquisition” has the meaning set forth in the introductory recitals.

 

“Stagecoach Closing Date” means the date on which the Stagecoach Acquisition is
consummated.

 

“Stagecoach Purchase Agreement” means the purchase agreement among Stagecoach
Holding, LLC, Stagecoach Energy, LLC, Stagecoach Holding II, LLC, Inergy
Acquisition Company, LLC, Inergy Storage, Inc. and Inergy Stagecoach II, LLC
pursuant to which the parties thereto will consummate the Stagecoach
Acquisition.

 

“Subordinated Units” means the senior subordinated units and the junior
subordinated units representing subordinated limited partner interests in
Inergy.

 

“Subsidiary” means, as to any Person, any corporation or other entity of which:
(i) such Person or a Subsidiary of such Person is a general partner or manager;
or (ii) at least a majority of the outstanding equity interest having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or similar governing body of such corporation or other entity
(irrespective of whether or not at the time any equity interest of any other
class or classes of such corporation or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more of its
Subsidiaries.

 

Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all Inergy Financial Statements and certificates and reports as to financial
matters required to be furnished to Purchaser hereunder shall be prepared, in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q promulgated by the Commission) and in
compliance as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto.

 

ARTICLE II

AGREEMENT TO SELL AND PURCHASE

 

Section 2.01 Authorization of Sale of Special Units. Inergy has authorized the
issuance and sale to Purchaser of the Purchased Units. The Purchased Units shall
have those rights, preferences, privileges and restrictions governing the
Special Units which shall be reflected in an amendment to the Partnership
Agreement to be adopted immediately prior to the issuance and sale of the
Special Units contemplated hereby (the “Special Unit Amendment”).

 

Section 2.02 Sale and Purchase. Contemporaneous with the consummation of the
Stagecoach Acquisition and subject to the terms and conditions hereof, Inergy
hereby agrees to issue and sell to Purchaser, and Purchaser hereby agrees to
purchase from Inergy, the Purchased Units, and Purchaser agrees to pay Inergy
the Purchase Price.

 

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Section 2.03 Closing. Subject to the terms and conditions hereof, the
consummation of the purchase and sale of the Purchased Units hereunder (the
“Closing”) shall take place contemporaneous with the Stagecoach Closing Date,
provided that Inergy shall have given Purchaser at least two (2) Business Days
(or such shorter period as shall be agreeable to all parties hereto) prior
notice of such designated closing date (such date, the “Closing Date”), at the
offices of Vinson & Elkins L.L.P., 1001 Fannin Street, Suite 2300, Houston,
Texas 77002.

 

Section 2.04 Conditions to the Closing.

 

(a) Mutual Conditions. The respective obligations of each party to consummate
the purchase and issuance and sale of the Purchased Units shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by a particular party on behalf of
itself in writing, in whole or in part, to the extent permitted by applicable
Law):

 

(i) no statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Authority
of competent jurisdiction which temporarily, preliminarily or permanently
restrains, precludes, enjoins or otherwise prohibits the consummation of the
transactions contemplated hereby or makes the transactions contemplated hereby
illegal;

 

(ii) there shall not be pending any suit, action or proceeding by any
Governmental Authority seeking to restrain, preclude, enjoin or prohibit the
transactions contemplated by this Agreement; and

 

(iii) Inergy shall have consummated the Stagecoach Acquisition.

 

(b) Purchaser’s Conditions. The obligation of Purchaser to consummate the
purchase of the Purchased Units shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions (any or all of which may
be waived by Purchaser in writing, in whole or in part, to the extent permitted
by applicable Law):

 

(i) Inergy shall have performed and complied with the covenants and agreements
contained in this Agreement which are required to be performed and complied with
by Inergy on or prior to the Closing Date;

 

(ii) The representations and warranties of Inergy contained in this Agreement
that are qualified by materiality or Inergy Material Adverse Effect shall be
true and correct when made and as of the Closing Date and all other
representations and warranties shall be true and correct in all material
respects when made and as of the Closing Date, in each case as though made at
and as of the Closing Date (except that representations made as of a specific
date shall be required to be true and correct as of such date only);

 

(iii) Since the date of this Agreement, no Inergy Material Adverse Effect shall
have occurred and be continuing;

 

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(iv) Inergy shall have delivered, or caused to be delivered, to Purchaser at the
Closing, Inergy’s closing deliveries described in Section 2.05:

 

(c) Inergy’s Conditions. The obligation of Inergy to consummate the sale of the
Purchased Units to Purchaser shall be subject to the satisfaction on or prior to
the Closing Date of the condition (which may be waived by Inergy in writing, in
whole or in part, to the extent permitted by applicable Law) that the
representations and warranties of Purchaser contained in this Agreement that are
qualified by materiality or a Purchaser Material Adverse Effect shall be true
and correct when made and as of the Closing Date, all other representations and
warranties shall be true and correct in all material respects when made and as
of the Closing Date, in each case as though made at and as of the Closing Date
(except that representations made as of a specific date shall be required to be
true and correct as of such date only, and Inergy shall have received a
certificate signed on behalf of Purchaser to such effect), and Purchaser shall
have delivered, or caused to be delivered, to Inergy at the Closing Purchaser’s
closing deliveries described in Section 2.06.

 

Section 2.05 Inergy Deliveries. At the Closing, subject to the terms and
conditions hereof, Inergy will deliver, or cause to be delivered, to Purchaser:

 

(a) The Purchased Units to be purchased by such Purchaser by delivery of
certificates evidencing such Purchased Units (bearing the legend set forth in
Section 4.05(e)) and meeting the requirements of the Partnership Agreement, free
and clear of any Liens of any other Person, other than transfer restrictions
under applicable federal and state securities laws;

 

(b) Copies of the Certificate of Limited Partnership of Inergy and of the
Certificate of Formation of Inergy GP, LLC;

 

(c) A certificate of the Secretary of State of the State of Delaware, dated a
recent date, that Inergy is in good standing;

 

(d) A certificate of the Secretary or Assistant Secretary of Inergy GP, LLC, on
behalf of Inergy, certifying as to (1) the Partnership Agreement, (2) board
resolutions authorizing the execution and delivery of this Agreement and all of
the agreements and instruments to be executed and delivered by Inergy in
connection herewith, and the consummation of the transactions contemplated
hereby, (3) its incumbent officers authorized to execute and deliver this
Agreement and the other agreements and instruments contemplated hereby, setting
forth the name and title and bearing the signatures of such officers and (4) the
Certificate of Limited Partnership of Inergy and of the Certificate of Formation
of Inergy GP, LLC;

 

(e) A certificate, dated the Closing Date and signed by (x) the President and
Chief Executive Officer and (y) the Senior Vice President and Chief Financial
Officer of the Inergy GP, LLC, in their capacities as such, stating that:

 

(i) Inergy has performed and complied with the covenants and agreements
contained in this Agreement which are required to be performed and complied with
by Inergy on or prior to the Closing Date; and

 

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(ii) The representations and warranties of Inergy contained in this Agreement
that are qualified by materiality or Inergy Material Adverse Effect shall be
true and correct when made and as of the Closing Date and all other
representations and warranties shall be true and correct in all material
respects when made and as of the Closing Date, in each case as though made at
and as of the Closing Date (except that representations made as of a specific
date shall be required to be true and correct as of such date only);

 

(f) A certificate of the Secretary of State of the State of Delaware, dated a
recent date, that Inergy is in good standing;

 

(g) A cross-receipt executed by Inergy and delivered to Purchaser certifying
that it has received the Purchase Price as of the Closing Date;

 

(h) An opinion addressed to Purchaser from legal counsel to Inergy, dated as of
the Closing, in the form and substance attached hereto as Exhibit C; and

 

(i) The Registration Rights Agreement in substantially the form attached hereto
as Exhibit B, which shall have been duly executed by Inergy.

 

Section 2.06 Purchaser Deliveries.

 

(a) Payment to Inergy of the Purchase Price hereto by wire transfer of
immediately available funds to an account designated by Inergy in writing at
least three (3) Business Days (or such shorter period as shall be agreeable to
all parties hereto) prior to the Closing;

 

(b) A certificate of the Secretary or Assistant Secretary of the Purchaser, on
behalf of Purchaser, certifying as to (1) the Partnership Agreement, (2) board
resolutions authorizing the execution and delivery of this Agreement and all of
the agreements and instruments to be executed and delivered by Purchaser in
connection herewith, and the consummation of the transactions contemplated
hereby and (3) its incumbent officers authorized to execute and deliver this
Agreement and the other agreements and instruments contemplated hereby, setting
forth the name and title and bearing the signatures of such officers;

 

(c) A certificate, dated the Closing Date and signed by (x) the President and
Chief Executive Officer and (y) the Chief Financial Officer of Purchaser, in
their capacities as such, stating that:

 

(i) Purchaser has performed and complied with the covenants and agreements
contained in this Agreement which are required to be performed and complied with
by Purchaser on or prior to the Closing Date; and

 

(ii) The representations and warranties of Purchaser contained in this Agreement
that are qualified by materiality or Purchaser Material Adverse Effect shall be
true and correct when made and as of the Closing Date and all other
representations and warranties shall be true and correct in all material
respects when made and as of the Closing Date, in each case as though made at
and as of the Closing Date (except that representations made as of a specific
date shall be required to be true and correct as of such date only).

 

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(d) The Registration Rights Agreement in substantially the form attached hereto
as Exhibit B, which shall have been duly executed by Purchaser; and

 

(e) A cross-receipt executed by Purchaser and delivered to Inergy certifying
that it has received the Purchased Units as of the Closing Date.

 

Section 2.07 Price Per Unit. The amount per Special Unit the Purchaser will pay
to Inergy to purchase the Purchased Units (the “Special Unit Price”) shall be
$32.47, an amount which represents the average closing price of the Common Units
as reported by the Bloomberg Professional Financial Reporting Service for the
ten (10) trading days immediately ending prior to the Closing Date.

 

Section 2.08 Lock-Up. Purchaser agrees that from and after Closing it will not
sell any of the Purchased Units prior to the Anniversary Date.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATED TO INERGY

 

Inergy represents and warrants to Purchaser as follows:

 

Section 3.01 Corporate Existence. Inergy (a) is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware; and (b) has all requisite power and authority, and has all
governmental licenses, authorizations, consents and approvals necessary, to own,
lease, use and operate its Properties and carry on its business as its business
is now being conducted, except where the failure to obtain such licenses,
authorizations, consents and approvals would not be reasonably likely to have an
Inergy Material Adverse Effect. Each of Inergy’s Subsidiaries that is a
corporation is a corporation duly incorporated, validly existing and in good
standing under the laws of the State or other jurisdiction of its incorporation
and has all requisite power and authority, and has all governmental licenses,
authorizations, consents and approvals necessary, to own, lease, use or operate
its respective Properties and carry on its business as now being conducted,
except where the failure to obtain such licenses, authorizations, consents and
approvals would not be reasonably likely to have an Inergy Material Adverse
Effect. Each of Inergy’s other Subsidiaries has been duly formed, is validly
existing and in good standing under the laws of the State or other jurisdiction
of its organization and has all requisite power and authority, and has all
governmental licenses, authorizations, consents and approvals necessary, to own,
lease, use or operate its respective Properties and carry on its business as now
being conducted, except where the failure to obtain such licenses,
authorizations, consents and approvals would not be reasonably likely to have an
Inergy Material Adverse Effect. None of Inergy or any of its Subsidiaries are in
default in the performance, observance or fulfillment of any provision of, in
the case of Inergy, the Partnership Agreement or its Certificate of Limited
Partnership or, in the case of any Subsidiary of Inergy, its respective
certificate of incorporation, certification of formation, bylaws, limited
liability company agreement or other similar organizational documents. Each of
Inergy and its Subsidiaries is duly qualified or licensed and in good standing
as a foreign limited partnership,

 

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limited liability company or corporation, as applicable, and is authorized to do
business in each jurisdiction in which the ownership or leasing of its
respective Properties or the character of its respective operations makes such
qualification necessary, except where the failure to obtain such qualification,
license, authorization or good standing would not be reasonably likely to have
an Inergy Material Adverse Effect.

 

Section 3.02 Capitalization and Valid Issuance of Purchased Units.

 

(a) As of the date of this Agreement, the issued and outstanding limited partner
interests of Inergy consist of 26,254,645 Common Units, 5,478,568 Senior
Subordinated Units and 1,145,084 Junior Subordinated Units and the Incentive
Distribution Rights, as defined in the Partnership Agreement. The only issued
and outstanding general partner interests of Inergy are the interests of the
General Partners described in the Partnership Agreement. All outstanding Common
Units, Senior Subordinated Units, Junior Subordinated Units and Incentive
Distribution Rights and the limited partner interests represented thereby have
been duly authorized and validly issued in accordance with the Partnership
Agreement and are fully paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such nonassessability may be affected by
matters described in Section 17-607 of the Delaware Revised Uniform Limited
Partnership Act (the “Delaware LP Act”).

 

(b) Other than Inergy’s Long-Term Incentive Plan, as amended, and Inergy’s
Employee Unit Purchase Plan, as amended and restated, Inergy has no equity
compensation plans that contemplate the issuance of Common Units (or securities
convertible into or exchangeable for Common Units). No indebtedness having the
right to vote (or convertible into or exchangeable for securities having the
right to vote) on any matters on which Inergy unitholders may vote are issued or
outstanding. Except as set forth in the first sentence of this Section 3.02(b)
or as are contained in the Partnership Agreement, there are no outstanding or
authorized (i) options, warrants, preemptive rights, subscriptions, calls, or
other rights, convertible or exchangeable securities, agreements, claims or
commitments of any character obligating Inergy or any of its Subsidiaries to
issue, transfer or sell any partnership interests or other equity interest in,
Inergy or any of its Subsidiaries or securities convertible into or exchangeable
for such partnership interests, (ii) obligations of Inergy or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any partnership
interests or equity interests of Inergy or any of its Subsidiaries or any such
securities or agreements listed in clause (i) of this sentence or (iii) voting
trusts or similar agreements to which Inergy or any of its Subsidiaries is a
party with respect to the voting of the equity interests of Inergy or any of its
Subsidiaries, other than the Unitholder Agreement of United Propane, Inc.
relating to the voting of its Common Units. None of the offering or sale of the
Special Units or the registration of the Special Units pursuant to the
Registration Rights Agreement, all as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any Common Units or other
securities of the Partnership other than those rights granted under that certain
Investors Rights Agreement dated as of January 12, 2001, by and among Inergy
Partners, LLC (as predecessor to Inergy) and the investors named therein, that
certain Registration Rights Agreement dated as of December 19, 2001, by and
between Inergy and TJPCH Acquisition Corp., and those rights granted to the
General Partners or any of their Affiliates (as such term is defined in the
Partnership Agreement) under Section 7.12 of the Partnership Agreement.

 

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(c) (i) All of the issued and outstanding equity interests of each of Inergy’s
Subsidiaries are owned, directly or indirectly, by Inergy free and clear of any
Liens (except for such restrictions as may exist under applicable Law and except
for such Liens as may be imposed under the Inergy Credit Facility), and all such
ownership interests have been duly authorized, validly issued and are fully paid
(to the extent required in the organizational documents of Inergy’s
Subsidiaries, as applicable) and non assessable (except as such nonassessability
may be affected by matters arising under Section 18-607 of the Delaware LLC Act)
and free of preemptive rights, with no personal liability attaching to the
ownership thereof except where the failure to own such interests free and clear
of any Liens would not be reasonably likely to have an Inergy Material Adverse
Effect.

 

(d) The Special Units being purchased by Purchaser hereunder and the limited
partner interests represented thereby, will be duly authorized by Inergy
pursuant to the Partnership Agreement prior to the Closing and, when issued and
delivered to Purchaser against payment therefor in accordance with the terms of
this Agreement, will be validly issued, fully paid (to the extent required by
the Partnership Agreement) and nonassessable (except as such nonassessability
may be affected by matters described in Section 17-607 of the Delaware LP Act)
and will be free of any and all Liens and restrictions on transfer, other than
restrictions on transfer under the Partnership Agreement or this Agreement and
under applicable state and federal securities laws and other than such Liens as
are created by Purchaser.

 

(e) The Common Units are quoted on the NASDAQ.

 

Section 3.03 Inergy SEC Documents. Inergy has timely filed with the Commission
all forms, registration statements, reports, schedules and statements required
to be filed by it under the Exchange Act or the Securities Act (all such
documents together with the Registration Statement, collectively “Inergy SEC
Documents”). The Inergy SEC Documents, including, without limitation, any
audited or unaudited financial statements and any notes thereto or schedules
included therein (the “Inergy Financial Statements”) at the time filed (in the
case of registration statements, solely on the dates of effectiveness) (except
to the extent corrected by a subsequently filed Inergy SEC Document filed prior
to the date hereof) (a) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, (c) complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, (d) were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission), and (e) fairly present (subject in
the case of unaudited statements to normal, recurring and year-end audit
adjustments) in all material respects the consolidated financial position and
status of the business of Inergy as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended. Ernst &
Young LLP is an independent public accounting firm with respect to Inergy and
the General Partners and has not resigned or been dismissed as independent
public accountants of Inergy as a result of or in connection with any
disagreement with Inergy on a matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.

 

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Section 3.04 No Material Adverse Change. Except as set forth in or contemplated
by the Inergy SEC Documents filed with the Commission on or prior to the date
hereof and except for the proposed Stagecoach Acquisition which has been
discussed with Purchaser, since the date of Inergy’s most recent Form 10-K
filing with the Commission, Inergy and its Subsidiaries have conducted their
respective businesses in the ordinary course, consistent with past practice, and
there has been no (a) change, event, occurrence, effect, fact, circumstance or
condition that has had or would be reasonably likely to have an Inergy Material
Adverse Effect, other than those occurring as a result of general economic or
financial conditions or other developments that are not unique to Inergy and its
Subsidiaries but also affect other Persons who participate or are engaged in the
lines of business of which Inergy and its Subsidiaries participate or are
engaged, except, in each case, to the extent such condition or development
affects Inergy to a significantly greater extent than other similarly situated
companies generally, (b) acquisition or disposition of any material asset by
Inergy or any of its Subsidiaries or any contract or arrangement therefor,
otherwise than for fair value in the ordinary course of business or as disclosed
in the Inergy SEC Documents, or (c) material change in Inergy’s accounting
principles, practices or methods.

 

Section 3.05 Litigation. Except as set forth in the Inergy SEC Documents, there
is no action, suit, or proceeding pending (including any investigation,
litigation or inquiry) or, to Inergy’s Knowledge, contemplated or threatened
against or affecting any of the Inergy Parties or any of their respective
officers, directors, properties or assets, which (individually or in the
aggregate) (a) questions the validity of this Agreement or the Registration
Rights Agreement or the right of Inergy to enter into this Agreement or the
Registration Rights Agreement or to consummate the transactions contemplated
hereby and thereby or (b) would be reasonably likely to result in an Inergy
Material Adverse Effect.

 

Section 3.06 No Conflicts. The execution, delivery and performance by Inergy of
the Basic Documents, the Stagecoach Purchase Agreement and any and all other
agreements or instruments executed by Inergy in connection with the Stagecoach
Acquisition hereunder or thereunder, and compliance by Inergy with the terms and
provisions hereof and thereof, and the issuance and sale by Inergy of the
Purchased Units, do not and will not (a) violate any provision of any Law or
Permit having applicability to Inergy or any of its Subsidiaries or any of their
respective Properties, (b) conflict with or result in a violation or breach of
any provision of the Certificate of Limited Partnership or other organizational
documents of Inergy, or the Partnership Agreement, or any organizational
documents of any of Inergy’s Subsidiaries, (c) require any consent, approval or
notice under or result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any contract,
agreement, instrument, obligation, note, bond, mortgage, license, loan or credit
agreement to which Inergy or any of its Subsidiaries is a party or by which
Inergy or any of its Subsidiaries or any of their respective Properties may be
bound, or (d) result in or require the creation or imposition of any Lien upon
or with respect to any of the Properties now owned or hereafter acquired by
Inergy or any of its Subsidiaries; with the exception of the conflicts stated in
clause (b) of this Section 3.06, except where such conflict, violation, default,
breach, termination, cancellation, failure to receive consent or approval, or
acceleration with respect to the foregoing provisions of this Section 3.06 would
not be, individually or in the aggregate, reasonably likely to have an Inergy
Material Adverse Effect.

 

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Section 3.07 Authority. Inergy has all necessary partnership power and authority
to execute, deliver and perform its obligations under the Basic Documents, the
Stagecoach Purchase Agreement and any and all other agreements or instruments
executed by Inergy in connection with the Stagecoach Acquisition hereunder or
thereunder; and the execution, delivery and performance by Inergy of the Basic
Documents, the Stagecoach Purchase Agreement and any and all other agreements or
instruments executed by Inergy in connection with the Stagecoach Acquisition
hereunder or thereunder, have been duly authorized by all necessary action on
its part; and the Basic Documents, the Stagecoach Purchase Agreement and any and
all other agreements or instruments executed by Inergy in connection with the
Stagecoach Acquisition hereunder or thereunder, constitute the legal, valid and
binding obligations of Inergy, enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer and similar laws affecting creditors’ rights generally or by
general principles of equity. No approval from the holders of the Common Units
is required in connection with Inergy’s issuance and sale of the Purchased Units
to Purchaser.

 

Section 3.08 Approvals. Except for the approvals required by the Commission in
connection with Inergy’s obligations under the Registration Rights Agreement, no
authorization, consent, approval, waiver, license, qualification or written
exemption from, nor any filing, declaration, qualification or registration with,
any Governmental Authority or any other Person is required in connection with
the execution, delivery or performance by Inergy of any of the Basic Documents,
the Stagecoach Purchase Agreement and any and all other agreements or
instruments executed by Inergy in connection with the Stagecoach Acquisition
hereunder or thereunder, except where the failure to receive such authorization,
consent, approval, waiver, license, qualification or written exemption from, or
to make such filing, declaration, qualification or registration would not,
individually or in the aggregate, be reasonably likely to have an Inergy
Material Adverse Effect.

 

Section 3.09 MLP Status. Inergy has, for each taxable year beginning after
September 31, 2001, during which Inergy was in existence, met the gross income
requirements of Section 7704(c)(2) of the Internal Revenue Code of 1986, as
amended.

 

Section 3.10 Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in this Agreement, the sale and issuance
of the Purchased Units to the Purchaser pursuant to this Agreement is exempt
from the registration requirements of the Securities Act, and neither Inergy nor
any authorized agent acting on its behalf has taken or will take any action
hereafter that would cause the loss of such exemptions.

 

Section 3.11 Investment Company Status. Inergy is not an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

Section 3.12 Certain Fees. No fees or commissions are or will be payable by
Inergy to brokers, finders, or investment bankers with respect to the sale of
any of the Purchased Units or the consummation of the transaction contemplated
by this Agreement. Inergy agrees that it will indemnify and hold harmless
Purchaser from and against any and all claims, demands, or liabilities for
broker’s, finder’s, placement, or other similar fees or commissions incurred by
Inergy or alleged to have been incurred by Inergy in connection with the sale of
Purchased Units or the consummation of the transactions contemplated by this
Agreement.

 

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Section 3.13 No Side Agreements. There are no agreements by, among or between
Inergy or any of its Affiliates, on the one hand, and Purchaser or any of its
Affiliates, on the other hand, with respect to the transactions contemplated
hereby nor promises or inducements for future transactions between or among any
of such parties.

 

Section 3.14 Accretive Acquisition. The General Partners have determined, in
good faith, that the Stagecoach Acquisition is an “Acquisition” (as defined in
the Partnership Agreement) that satisfies the requirements of Section 5.7(b) of
the Partnership Agreement and thus allows the issuance of the Purchased Units
without the prior approval of the Inergy unitholders.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to Inergy that:

 

Section 4.01 Corporate Existence. Purchaser (a) is duly formed, legally existing
and in good standing under the laws of its jurisdiction of organization; and (b)
has all requisite power and authority, and has all governmental licenses,
authorizations, consents and approvals necessary, to own, lease, use and operate
its Properties and carry on its business as its business is now being conducted,
except where the failure to obtain such licenses, authorizations, consents and
approvals would not have or would not reasonably be expected to have a Purchaser
Material Adverse Effect. Purchaser is not in default in the performance,
observance or fulfillment of any provision of its organizational documents,
except where such default would not have or would not be reasonably likely to
have a Purchaser Material Adverse Effect.

 

Section 4.02 No Conflicts. The execution, delivery and performance by Purchaser
of this Agreement, the Registration Rights Agreement and all other agreements
and instruments to be executed and delivered by Purchaser pursuant hereto or
thereto or in connection with the transactions contemplated by this Agreement,
the Registration Rights Agreement or any such other agreements and instruments,
and compliance by Purchaser with the terms and provisions hereof and thereof,
and the purchase of the Purchased Units by Purchaser do not and will not (a)
violate any provision of any Law or Permit having applicability to Purchaser or
any of its Properties, (b) conflict with or result in a violation or breach of
any provision of the organizational documents of Purchaser, (c) require any
consent, approval or notice under or result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
contract, agreement, instrument, obligation, note, bond, mortgage, license, loan
or credit agreement to which Purchaser is a party or by which Purchaser or any
of its Properties may be bound, or (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the Properties now owned
or hereafter acquired by Purchaser; with the exception of the conflicts stated
in clause (b) of this Section 4.02, except where such conflict, violation,
default, breach, termination, cancellation, failure to receive consent or
approval, or acceleration with respect to the foregoing provisions of this
Section 4.02 would not, individually or in the aggregate, be reasonably likely
to have a Purchaser Material Adverse Effect.

 

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Section 4.03 Certain Fees. No fees or commissions are or will be payable by
Purchaser to brokers, finders, or investment bankers with respect to the
purchase of any of the Purchased Units or the consummation of the transaction
contemplated by this Agreement. Purchaser agrees that it will indemnify and hold
harmless Inergy from and against any and all claims, demands, or liabilities for
broker’s, finder’s, placement, or other similar fees or commissions incurred by
Purchaser or alleged to have been incurred by Purchaser in connection with the
purchase of the Purchased Units or the consummation of the transactions
contemplated by this Agreement.

 

Section 4.04 No Side Agreements. There are no other agreements by, among or
between Purchaser and any of its Affiliates, on the one hand, and Inergy or any
of its Affiliates, on the other hand, with respect to the transactions
contemplated hereby nor promises or inducements for future transactions between
or among any of such parties.

 

Section 4.05 Unregistered Securities.

 

(a) Investment. The Purchased Units are being acquired for its own account, not
as a nominee or agent, and with no intention of distributing the Purchased Units
or any part thereof, and that Purchaser has no present intention of selling or
granting any participation in or otherwise distributing the same in any
transaction in violation of the securities laws of the United States of America
or any State, without prejudice, however, to Purchaser’s right at all times to
sell or otherwise dispose of all or any part of the Purchased Units under a
registration statement under the Securities Act and applicable state securities
laws or under an exemption from such registration available thereunder
(including, without limitation, if available, Rule 144 promulgated thereunder).
If Purchaser should in the future decide to dispose of any of the Purchased
Units, Purchaser understands and agrees (a) that it may do so only (i) in
compliance with the Securities Act and applicable state securities law, as then
in effect, or (ii) in the manner contemplated by any registration statement
pursuant to which such securities are being offered, and (b) that stop-transfer
instructions to that effect will be in effect with respect to such securities.

 

(b) Nature of Purchaser. Purchaser represents and warrants to, and covenants and
agrees with, Inergy that, (a) it is an “accredited investor” within the meaning
of Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission pursuant to the Securities Act and (b) by reason of its business and
financial experience it has such knowledge, sophistication and experience in
making similar investments and in business and financial matters generally so as
to be capable of evaluating the merits and risks of the prospective investment
in the Purchased Units, is able to bear the economic risk of such investment
and, at the present time, would be able to afford a complete loss of such
investment.

 

(c) Receipt of Information; Authorization. Purchaser acknowledges that it has
(a) had access to Inergy’s periodic filings with the Commission, including
Inergy’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and the
current reports filed on Form 8-K, (b)had access to information regarding the
proposed Stagecoach Acquisition and its potential effect on Inergy’s operations
and financial results and (c) been provided a reasonable opportunity to ask
questions of and receive answers from Representatives of Inergy regarding such
matters.

 

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(d) Restricted Securities. Purchaser understands that the Purchased Units it is
purchasing are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from Inergy in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection,
Purchaser represents that it is knowledgeable with respect to Rule 144 of the
Commission promulgated under the Securities Act.

 

(e) Legend. It is understood that the certificates evidencing the Purchased
Units will bear the following legend: “These securities have not been registered
under the Securities Act of 1933, as amended. They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act.”

 

ARTICLE V

INDEMNIFICATION, COSTS AND EXPENSES

 

Section 5.01 Indemnification by Inergy. Inergy agrees to indemnify Purchaser and
its Representatives (collectively, “Purchaser Related Parties”) from, and hold
each of them harmless against, any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), demands, and causes of
action, and, in connection therewith, and promptly upon demand, pay or reimburse
each of them for all reasonable costs, losses, liabilities, damages, or expenses
of any kind or nature whatsoever, including, without limitation, the reasonable
fees and disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them as a
result of, arising out of, or in any way related to the breach of any of the
representations, warranties or covenants of Inergy contained herein, provided
such claim for indemnification relating to a breach of a representation or
warranty is made prior to the expiration of such representation or warranty.

 

Section 5.02 Indemnification by Purchaser. Purchaser agrees to indemnify Inergy,
the General Partners and their respective Representatives (collectively, “Inergy
Related Parties”) from, and hold each of them harmless against, any and all
actions, suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection therewith, and
promptly upon demand, pay or reimburse each of them for all reasonable costs,
losses, liabilities, damages, or expenses of any kind or nature whatsoever,
including, without limitation, the reasonable fees and disbursements of counsel
and all other reasonable expenses incurred in connection with investigating,
defending or preparing to defend any such matter that may be incurred by them or
asserted against or involve any of them as a result of, arising out of, or in
any way related to the breach of any of the representations, warranties or
covenants of Purchaser contained herein, provided such claim for indemnification
relating to a breach of the representations and warranties is made prior to the
expiration of such representations and warranties.

 

Section 5.03 Indemnification Procedure. Promptly after any Inergy Related Party
or Purchaser Related Party (hereinafter, the “Indemnified Party”) has received
notice of any

 

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indemnifiable claim hereunder, or the commencement of any action, suit or
proceeding by a third person, which the Indemnified Party believes in good faith
is an indemnifiable claim under this Agreement, the Indemnified Party shall give
the indemnitor hereunder (the “Indemnifying Party”) written notice of such claim
or the commencement of such action, suit or proceeding, but failure to so notify
the Indemnifying Party will not relieve the Indemnifying Party from any
liability it may have to such Indemnified Party hereunder except to the extent
that the Indemnifying Party is materially prejudiced by such failure. Such
notice shall state the nature and the basis of such claim to the extent then
known. The Indemnifying Party shall have the right to defend and settle, at its
own expense and by its own counsel, any such matter as long as the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all commercially reasonable respects in
the defense thereof and the settlement thereof. Such cooperation shall include,
but shall not be limited to, furnishing the Indemnifying Party with any books,
records and other information reasonably requested by the Indemnifying Party and
in the Indemnified Party’s possession or control. Such cooperation of the
Indemnified Party shall be at the cost of the Indemnifying Party. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability; provided, however, that the Indemnified Party shall be entitled (i)
at its expense, to participate in the defense of such asserted liability and the
negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party
has failed to assume the defense and employ counsel or (B) if the defendants in
any such action include both the Indemnified Party and the Indemnifying Party
and counsel to the Indemnified Party shall have concluded that there may be
reasonable defenses available to the Indemnified Party that are different from
or in addition to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, then the Indemnified Party shall have the right to
select a separate counsel and to assume such legal defense and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred. Notwithstanding any other
provision of this Agreement, the Indemnifying Party shall not settle any
indemnified claim without the consent of the Indemnified Party, unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party.

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.01 Interpretation and Survival of Provisions. Article, Section,
Schedule, and Exhibit references are to this Agreement, unless otherwise
specified. All references to instruments, documents, contracts, and agreements
are references to such instruments, documents, contracts, and agreements as the
same may be amended, supplemented, and otherwise modified from time to time,
unless otherwise specified. The word “including” shall mean “including but not
limited to.” Whenever Inergy has an obligation under the Basic Documents, the
expense of complying with that obligation shall be an expense of Inergy unless
otherwise specified. Whenever any determination, consent, or approval is to be
made or given

 

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by Purchaser, such action shall be in Purchaser’s sole discretion unless
otherwise specified in this Agreement. If any provision in the Basic Documents
is held to be illegal, invalid, not binding, or unenforceable, such provision
shall be fully severable and the Basic Documents shall be construed and enforced
as if such illegal, invalid, not binding, or unenforceable provision had never
comprised a part of the Basic Documents, and the remaining provisions shall
remain in full force and effect.

 

Section 6.02 Survival of Provisions. The representations and warranties set
forth in Sections 3.02, 3.12, 3.13, 4.03, 4.04 and 4.05 hereunder shall survive
the execution and delivery of this Agreement indefinitely, and the other
representations and warranties set forth herein shall survive for a period of
twelve (12) months following the Closing Date regardless of any investigation
made by or on behalf of Inergy or Purchaser. The covenants made in this
Agreement or any other Basic Document shall survive the Closing of the
transactions described herein and remain operative and in full force and effect
regardless of acceptance of any of the Purchased Units and payment therefor and
repayment, conversion, exercise or repurchase thereof. All indemnification
obligations of Inergy and Purchaser and the provisions of Article V shall remain
operative and in full force and effect unless such obligations are expressly
terminated in a writing referencing that individual Section, regardless of any
purported general termination of this Agreement.

 

Section 6.03 No Waiver: Modifications in Writing.

 

(a) Delay. No failure or delay on the part of any party in exercising any right,
power, or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any right, power, or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to a party at law or in equity or otherwise.

 

(b) Specific Waiver. Except as otherwise provided herein, no amendment, waiver,
consent, modification, or termination of any provision of this Agreement or any
other Basic Document shall be effective unless signed by each of the parties
hereto or thereto affected by such amendment, waiver, consent, modification, or
termination. Any amendment, supplement or modification of or to any provision of
this Agreement or any other Basic Document, any waiver of any provision of this
Agreement or any other Basic Document, and any consent to any departure by
Inergy from the terms of any provision of this Agreement or any other Basic
Document shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on Inergy in any case shall entitle
Inergy to any other or further notice or demand in similar or other
circumstances.

 

Section 6.04 Binding Effect; Assignment.

 

(a) Binding Effect. This Agreement shall be binding upon Inergy, Purchaser, and
their respective successors and permitted assigns. Except as expressly provided
in this Agreement, this Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and permitted assigns.

 

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(b) Assignment of Purchased Units. All or any portion of Purchased Units
purchased pursuant to this Agreement may be sold, assigned or pledged by
Purchaser, subject to compliance with applicable securities laws, Section 2.08
herein and the Registration Rights Agreement.

 

(c) Assignment of Rights. All or any portion of the rights and obligations of
Purchaser under this Agreement may not be transferred by Purchaser without the
written consent of Inergy.

 

Section 6.05 Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by registered or certified mail, return
receipt requested, telecopy, air courier guaranteeing overnight delivery or
personal delivery to the following addresses:

 

  (a) If to Purchaser:

 

Inergy Holdings, L.P.

Two Brush Creek Boulevard, Suite 200

Kansas City, Missouri 64112

Attention: Laura L. Ozenberger

Facsimile: (816) 531-4680

 

  (b) If to Inergy:

 

Inergy, L.P.

Two Brush Creek Boulevard., Suite 200

Kansas City, Missouri 64112

Attention: John J. Sherman

Facsimile: (816) 471-3854

 

or to such other address as Inergy or Purchaser may designate in writing. All
notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; upon actual receipt if sent by
certified mail, return receipt requested, or regular mail, if mailed; when
receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.

 

Section 6.06 Removal of Legend. Purchaser may request Inergy to remove the
legend described in Section 4.05(e) from the certificates evidencing the
Purchased Units by submitting to Inergy such certificates, together with an
opinion of counsel to the effect that such legend is no longer required under
the Securities Act or applicable state laws, as the case may be.

 

Section 6.07 Entire Agreement. This Agreement, the other Basic Documents and the
other agreements and documents referred to herein are intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein with respect to the rights granted by Inergy or
any of its Affiliates or Purchaser or any of their Affiliates set forth herein
or therein. This Agreement, the other Basic Documents and the other agreements
and documents referred to herein supersede all prior agreements and
understandings between the parties with respect to such subject matter.

 

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Section 6.08 Governing Law. This Agreement will be construed in accordance with
and governed by the laws of the State of Delaware without regard to principles
of conflicts of laws.

 

Section 6.09 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.

 

Section 6.10 Expenses.

 

Inergy hereby covenants and agrees to reimburse Purchaser for reasonable and
documented costs and expenses incurred in connection with the negotiation,
execution, delivery and performance of the Basic Documents and the transactions
contemplated hereby and thereby (including, without limitation, reasonable
legal, consulting and due diligence fees and expenses), provided that any
request for such expense reimbursement by Purchaser be accompanied by a detailed
invoice for such amount. If any action at law or equity is necessary to enforce
or interpret the terms of the Basic Documents, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

 

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20

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

 

INERGY, L.P. By:   Inergy GP, LLC,     its Managing General Partner By:  

 

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    R. Brooks Sherman, Jr.     Senior Vice President and Chief Financial Officer
INERGY HOLDINGS, L.P. By:   Inergy Holdings GP, LLC,     its General Partner By:
 

 

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    Laura L. Ozenberger     Vice President, General Counsel and Secretary

 

21

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EXHIBIT A

 

Amendment to Partnership Agreement

 

A-1

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EXHIBIT B

 

Form of Registration Rights Agreement

 

A-2