Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

By and Among

TITAN ENERGY PARTNERS LP,

TITAN ENERGY GP LLC,

ENERGY TRANSFER PARTNERS, L.P.,

HERITAGE MARKETING, L.P.

and

JEFFREY A. BRODSKY,

solely in his capacity as Titan Representative

Dated as of April 19, 2006

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TABLE OF CONTENTS

 

          Page ARTICLE I DEFINITIONS    1

Section 1.1

   Definitions    1

Section 1.2

   Other Defined Terms    13

Section 1.3

   Interpretation Provisions    14 ARTICLE II THE MERGER    15

Section 2.1

   The Merger; Effective Time; Surviving Partnership    15

Section 2.2

   Closing    15

Section 2.3

   Effects of the Merger    15

Section 2.4

   Partnership Governance    16

Section 2.5

   Federal Income Tax Treatment of the Merger    16 ARTICLE III MERGER
CONSIDERATION; STATUS AND CONVERSION OF INTERESTS    16

Section 3.1

   Effects on Interests    16

Section 3.2

   Payment    18

Section 3.3

   Exchange of Certificates    19

Section 3.4

   Purchase Price Determination    21

Section 3.5

   Transfer Taxes    23

Section 3.6

   Allocation of Purchase Price for Tax Purposes    24 ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP    24

Section 4.1

   Organization and Capitalization    24

Section 4.2

   Authorization    25

Section 4.3

   Subsidiaries    25

Section 4.4

   No Conflict    25

Section 4.5

   Financial Information    26

Section 4.6

   Undisclosed Liabilities    26

Section 4.7

   Absence of Certain Changes or Events    27

Section 4.8

   Contracts; No Defaults    28

Section 4.9

   Machinery and Equipment and Other Property    30

Section 4.10

   Intellectual Property    30

Section 4.11

   Real Property    31

Section 4.12

   Litigation and Proceedings    32

Section 4.13

   Employee Benefit Plans    32

Section 4.14

   Labor Matters    35

Section 4.15

   Legal Compliance    36

Section 4.16

   Environmental Matters    36

Section 4.17

   Taxes    38

Section 4.18

   Accounts Receivable    40

Section 4.19

   Inventory    40

Section 4.20

   Product Liability, Warranty and Product Recalls    40

 

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Section 4.21

   The General Partner    40

Section 4.22

   Affiliate Transactions    41

Section 4.23

   Governmental Authorities; Consents    41

Section 4.24

   Licenses, Permits and Authorizations    41

Section 4.25

   Books and Records    41

Section 4.26

   Insurance    42

Section 4.27

   Brokers and Finders    42

Section 4.28

   Plan of Reorganization    42

Section 4.29

   Full Disclosure    42 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT   
43

Section 5.1

   Organization and Good Standing; Requisite Power and Authority    43

Section 5.2

   No Conflict    43

Section 5.3

   Brokers and Finders    43

Section 5.4

   Financing    43

Section 5.5

   Tax Status    43 ARTICLE VI COVENANTS OF THE PARTIES    44

Section 6.1

   Maintenance of Business Prior to Closing    44

Section 6.2

   Investigation by Parent    46

Section 6.3

   Consents and Efforts    46

Section 6.4

   Partners Meeting    47

Section 6.5

   No Solicitation by the Partnership    47

Section 6.6

   Officers’ and Directors’ Indemnification    49

Section 6.7

   Notices of Certain Events    51

Section 6.8

   Employee Benefits    52

Section 6.9

   Tax Returns; Audits    52

Section 6.10

   Sales of Certain Interests    53 ARTICLE VII CONDITIONS TO OBLIGATIONS    53

Section 7.1

   Conditions to Obligations of the General Partner and the Partnership    53

Section 7.2

   Conditions to the Obligations of Parent and MergerCo.    54 ARTICLE VIII
CLOSING    55

Section 8.1

   Closing Transactions    55

Section 8.2

   Deliveries by the Partnership to Parent and MergerCo.    55

Section 8.3

   Deliveries by Parent and MergerCo to the Partnership    56 ARTICLE IX
TERMINATION    56

Section 9.1

   Termination    56

Section 9.2

   Termination Fee and Expenses    58 ARTICLE X GENERAL PROVISIONS    59

Section 10.1

   Non-Survival of Representations, Warranties, Covenants and Agreements    59

Section 10.2

   Notices    59

Section 10.3

   Titan Representative    61

 

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Section 10.4

   Binding Effect; Benefits    62

Section 10.5

   Public Announcements    62

Section 10.6

   Entire Agreement    62

Section 10.7

   Waivers and Amendments    62

Section 10.8

   Specific Performance    63

Section 10.9

   Counterparts    63

Section 10.10

   Headings    63

Section 10.11

   Assignment    63

Section 10.12

   Governing Law    63

Section 10.13

   Severability    63

 

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INDEX OF APPENDICES

Exhibits

 

Exhibit A    -      Voting Agreement Exhibit B    -      Escrow Agreement
Exhibit C    -      Estimated Purchase Price Certificate Exhibit D    -     
Press Releases

Sections of the Disclosure Letter

 

Section 1.1(a)    -      Agreed Upon Balance Sheet Adjustments Section 1.1(b)   
-      Persons with Knowledge Section 3.2(a)(vi)    -      Transaction Bonus
Allocation Section 4.1(b)    -      Capitalization Section 4.3(a)    -     
Subsidiaries Section 4.4    -      No Conflict Section 4.5    -      Financial
Information Section 4.6    -      Undisclosed Liabilities Section 4.7    -     
Certain Changes or Events Section 4.8(a)    -      Material Contracts Section
4.8(b)    -      Material Contracts (Enforceability) Section 4.8(c)    -     
Material Contracts (Breach of Warranty) Section 4.9    -      Machinery and
Equipment Section 4.10    -      Intellectual Property Rights Section 4.11(a)   
-      Owned Real Property Section 4.11(b)    -      Leased Real Property
Section 4.11(c)    -      Improvements; Easements Section 4.12    -     
Litigation and Proceedings Section 4.13(a)    -      Employee Benefit Plans
Section 4.13(b)    -      Employee Benefit Plan Representations Section 4.14(a)
   -      Labor Matters Section 4.15    -      Legal Compliance Section 4.16   
-      Environmental Matters Section 4.17    -      Taxes Section 4.18    -     
Accounts Receivable Section 4.19    -      Inventory Section 4.20    -     
Product Liability, Warranty and Product Recalls Section 4.22    -      Affiliate
Transactions Section 4.23    -      Governmental Authorities; Consents Section
4.24    -      Licenses, Permits and Authorizations Section 4.25    -      Books
and Records Section 4.26(a)    -      Insurance Policies Section 4.26(b)    -
     Insurance Policies (Validity) Section 6.1    -      Maintenance of Business
Prior to Closing Section 6.8(a)    -      Employee Benefits Covenants Section
6.8(c)    -      Employee Plans to be Terminated

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of April 19, 2006 (the ”Agreement”), by
and among Titan Energy Partners LP, a Delaware limited partnership (the
“Partnership”), Titan Energy GP LLC, a Delaware limited liability company (the
“General Partner”), Energy Transfer Partners, L.P., a Delaware limited
partnership (“Parent”), Heritage Marketing, L.P., a Delaware limited partnership
(“MergerCo”) and Jeffrey A. Brodsky, solely in his capacity as Titan
Representative.

RECITALS

WHEREAS, Parent, MergerCo, the General Partner and the members of the General
Partner, as applicable, have approved the merger of the Partnership into
MergerCo and the merger of the General Partner into MergerCo, each upon the
terms and subject to the conditions set forth herein; and

WHEREAS, in order to induce Parent and MergerCo to enter into this Agreement,
the General Partner and the members of the General Partner, among others, have
executed the Voting Agreement (the “Voting Agreement”) attached as Exhibit A
hereto.

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements set forth herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

As used herein, the terms below shall have the following meanings:

“Acquisition Proposal” shall mean any offer or proposal (whether or not in
writing and whether or not delivered to the Partnership’s limited partners
generally) from any Person relating to any (i) direct or indirect sale,
disposition, purchase or redemption of more than fifty percent (50%) of the
voting power in, or more than fifty percent (50%) of the outstanding equity
securities of, the General Partner, the Partnership or any of their
Subsidiaries, (ii) direct or indirect sale or disposition of all or
substantially all of the assets or business of the Partnership and its
Subsidiaries taken as a whole, or (iii) any merger, reorganization,
consolidation, recapitalization, management buyout, liquidation, or other
similar transaction involving the General Partner, the Partnership or any of
their Subsidiaries (other than the transactions contemplated herein).

“Aggregate Debt Payoff Amount” shall mean the aggregate amount necessary to pay
off and terminate each of (i) the Loan and Security Agreement dated as of
December 20, 2004 by and among the General Partner, the Partnership, Titan
Propane LLC, a wholly owned Subsidiary of the Partnership (“Titan Propane”), and
GMAC Commercial Finance, LLC, as Agent and Lender (the “Credit Revolver”), and
(ii) the Credit and Security Agreement (Second Lien) dated

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as of December 20, 2004 by and among the General Partner, the Partnership, Titan
Propane, the Bank of New York as Administrative Agent and the Lenders named
therein (the “Term Loan”), which amount shall include the total amount of the
prepayment penalties due and payable in connection with the payment of the
Credit Revolver and the Term Loan upon or as a result of the consummation of the
Merger.

“Aggregate Exercise Price” shall mean an amount equal to the aggregate exercise
price of all Options outstanding as of 12:01 a.m. (Eastern Daylight Time) on the
Closing Date.

“Aggregate GP Merger Consideration” shall mean an aggregate amount of cash in
immediately available funds equal to the GP Percentage of the Aggregate Purchase
Price; provided, however, that, if the Estimated Aggregate Purchase Price
exceeds the Aggregate Purchase Price, Aggregate GP Merger Consideration shall
mean an amount equal to (i) the Estimated Aggregate GP Merger Consideration,
minus (ii) an amount equal to (A) the product of (I) the Estimated Aggregate GP
Merger Consideration multiplied by (II) the Escrow Percentage multiplied by
(B) a fraction, the numerator of which shall be the Estimated Aggregate Purchase
Price minus the Aggregate Purchase Price, and the denominator of which shall be
the Escrow Amount.

“Aggregate Partnership Merger Consideration” shall mean an aggregate amount of
cash in immediately available funds equal to the Aggregate Purchase Price, plus
the Aggregate Exercise Price, minus the Aggregate GP Merger Consideration, minus
the Aggregate Phantom Units Amount, minus the Aggregate Transaction Bonus
Amount; provided, however, that, if the Estimated Aggregate Purchase Price
exceeds the Aggregate Purchase Price, Aggregate Partnership Merger Consideration
shall mean an amount equal to (i) the Estimated Aggregate Partnership Merger
Consideration, minus (ii) an amount equal to (A) the product of (I) the
Estimated Aggregate Partnership Merger Consideration multiplied by (II) the
Escrow Percentage multiplied by (B) a fraction, the numerator of which shall be
the Estimated Aggregate Purchase Price minus the Aggregate Purchase Price, and
the denominator of which shall be the Escrow Amount.

“Aggregate Phantom Units Amount” shall mean an amount equal to the product of
(i) the total number of Phantom Units multiplied by (ii) the Per Phantom Unit
Amount.

“Aggregate Purchase Price” shall mean $549,700,000, plus the Closing Date
Current Assets, minus the Closing Date Liabilities, minus the Closing Date
Transaction Costs (to the extent not included in the Closing Date Liabilities);
provided, however, that the Aggregate Purchase Price shall not be less than the
Estimated Aggregate Purchase Price minus the Escrow Amount.

“Aggregate Transaction Bonus Amount” shall mean the total amount payable
pursuant to the Titan Energy Partners Transaction Bonus Plan; provided, however,
that, if the Estimated Aggregate Purchase Price exceeds the Aggregate Purchase
Price, the Aggregate Transaction Bonus Amount shall mean the lesser of (i) the
total amount payable pursuant to the Titan Energy Partners Transaction Bonus
Plan, and (ii) an amount equal to (A) the Estimated Transaction Bonus minus
(B) the product of the Escrow Transaction Bonus Amount multiplied by a fraction,

 

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the numerator of which shall be the Estimated Aggregate Purchase Price minus the
Aggregate Purchase Price, and the denominator of which shall be the Escrow
Amount.

“Assets” shall mean all of the Partnership’s and its Subsidiaries’ right, title
and interest in and to all properties, assets and rights of any kind, whether
tangible or intangible, real or personal, owned by the Partnership or any of its
Subsidiaries or in which the Partnership or any of its Subsidiaries has any
interest whatsoever.

“Balance Sheet” shall mean a balance sheet of the Partnership as of a specified
date prepared in accordance with GAAP and consistent with the Partnership’s
audited balance sheet at June 30, 2005 (except that any unaudited balance sheet
may omit footnotes and normal year-end adjustments otherwise required by GAAP),
and subject to such other adjustments as mutually agreed by the parties hereto
and set forth in this Agreement or on Section 1.1(a) of the Disclosure Letter;
provided, however, that the Balance Sheet (i) shall include any cash paid before
the Closing with respect to the Aggregate Phantom Units Amount or the Aggregate
Transaction Bonus Amount and (ii) shall not include any accruals for Liabilities
relating to any portion of the Aggregate Phantom Units Amount, the Aggregate
Transaction Bonus Amount, Options, Deferred Units, or any severance payments
that shall become due and payable in connection with the Merger. Current Assets
and Liabilities as of a specified date will be derived from the Balance Sheet as
of such specified date.

“Certificate of Merger” shall mean the certificate of merger effectuating the
Merger to be executed and filed by the general partner of the Surviving
Partnership with the Secretary of State of the State of Delaware in accordance
with Section 17-211 of the DLPA and Section 18-209 of the Delaware LLC Act.

“Closing” shall mean the consummation of the Merger.

“Closing Date Balance Sheet” shall mean the Balance Sheet as of 12:01 a.m.
(Eastern Daylight Time) on the Closing Date.

“Closing Date Current Assets” shall mean the Current Assets as set forth on the
Closing Date Balance Sheet.

“Closing Date Liabilities” shall mean the Liabilities as set forth on the
Closing Date Balance Sheet.

“Closing Date Transaction Costs” shall mean the Transaction Costs calculated as
of 12:01 a.m. (Eastern Daylight Time) on the Closing Date.

“Closing Exchange Agent” shall mean an institution which shall be selected by
the Partnership, with the approval of the Parent, which is not to be
unreasonably withheld, to perform those duties set forth in Article III hereof.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” shall mean that confidentiality agreement between
the Partnership and a subsidiary of Parent dated February 15, 2006.

 

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“Confirmation Order” shall mean the Findings of Fact, Conclusions of Law, and
Order Confirming Debtors’ Joint Plan of Reorganization, as Modified, Pursuant to
Chapter 11 of the United States Bankruptcy Code, entered by the United States
Bankruptcy Court, Southern District of New York on November 8, 2004.

“Contract” shall mean any agreement, contract, lease, note, loan, evidence of
Indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation, commitment, purchase and sale order, quotation or other executory
commitment to which any of the General Partner, the Partnership or its
Subsidiaries is a party, whether oral or written, express or implied, and which
pursuant to its terms has not expired, terminated or been fully performed by the
parties thereto.

“Current Assets” shall mean the sum of the accounts receivable and inventory
(each net of reserves), cash, prepaid expenses and other assets which would be
classified as current assets on a balance sheet prepared in accordance with
GAAP, subject to such adjustments as are set forth in this Agreement or on
Section 1.1(a) of the Disclosure Letter.

“Deferred Units” shall mean (i) all deferred units representing rights to
acquire Titan Limited Partner Units granted pursuant to the Partnership’s
Deferred Unit Plan, as amended to date, that are outstanding as of 12:01 a.m.
(Eastern Daylight Time) on the Closing Date and (ii) the 20,353 Titan Limited
Partner Units to be granted to William Corbin upon a change of control pursuant
to Section 3.3(b) of the Executive Employment Agreement by and between William
Corbin and Titan Propane, dated as of December 20, 2004, as amended.

“Delaware LLC Act” shall mean the Delaware Limited Liability Company Act, as
amended.

“DLPA” shall mean the Delaware Revised Uniform Limited Partnership Act, as
amended.

“Emergence Date” shall mean December 20, 2004.

“Employee Plan” shall mean any “employee pension benefit plan” as defined in
Section 3(2) of ERISA, any “employee welfare benefit plan” as defined in
Section 3(1) of ERISA, any written and material non-written employment,
severance or other similar contract, arrangement or policy, and any other plan,
program, policy, practice, understanding, agreement or commitment, whether
written or oral, providing for compensation or other benefits to any current or
former director, officer or employee (whether active or on leave) of the
Partnership or its Subsidiaries, which are or have been administered,
maintained, sponsored or contributed to by the Partnership or its Subsidiaries
or under which any of the forgoing entities has or has had any liability or
obligation, whether actual or contingent, including, without limitation,
insurance coverage (including without limitation any self-insured arrangements),
workers’ compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health, disability or accident
benefits or deferred compensation, pension, savings and thrift, and
profit-sharing plans, bonuses, fringe benefits, retention, change in control,
stock ownership, restricted stock, phantom stock, stock options, stock
appreciation rights, stock purchases or other forms of cash or stock based
incentive compensation or post-retirement insurance.

 

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“Encumbrance” shall mean any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, encumbrance or other right of third parties, whether
voluntarily incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future, and any
contingent or conditional sale agreement or other title retention agreement or
lease in the nature thereof.

“Environmental Claims” shall mean all written notices of violation, liens,
claims, demands, administrative or judicial orders, suits, complaints and causes
of action for any damage, including, without limitation, personal injury,
property damage, lost use of property or consequential damages, arising directly
or indirectly out of Environmental Conditions or Environmental Laws.

“Environmental Conditions” shall mean the state of the environment on the Real
Property, including natural resources (e.g., flora and fauna), land surface,
soil, surface water, ground water, any present or potential drinking water
supply, river sediment, subsurface strata or air (including indoor air and
ambient air).

“Environmental Laws” shall mean all applicable foreign, federal, state, district
and local Laws, all rules or regulations promulgated thereunder, any related
common law and all orders, consent decrees, judgments, notices, Material Permits
and demand letters issued, promulgated or entered pursuant thereto, relating to
pollution or protection of human health and the environment (including, without
limitation, natural resources, air, surface water, ground water, land surface,
or subsurface strata), including, without limitation, (i) Laws relating to
emissions, discharges, releases or threatened releases of Hazardous Substances
into the environment and (ii) Laws relating to the identification, generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
recovery, transport or other handling of Hazardous Substances. Environmental
Laws shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (“CERCLA”), the Toxic
Substances Control Act, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, the Clean
Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air
Act, as amended, OSHA (but only as to its provision intended to protect human
health from adverse Environmental Conditions), and all analogous Laws
promulgated or issued by any Governmental Authority.

“Equity Securities” shall mean (i) the limited liability company interests, the
limited partnership interests, or shares of capital stock, as applicable, of the
General Partner, the Partnership or any of its Subsidiaries, (ii) subscriptions,
calls, warrants, options or commitments of any kind or character relating to, or
entitling any Person to purchase or otherwise acquire, any limited liability
company interests, limited partnership interests, or shares of capital stock, as
applicable, of the General Partner, the Partnership or any of its Subsidiaries,
(iii) securities convertible into or exercisable or exchangeable for limited
liability company interests, limited partnership interests, or shares of capital
stock, as applicable, of the General Partner or the Partnership or any of its
Subsidiaries, and (iv) equity equivalents, interests in the ownership or
earnings of other similar rights of, or with respect to, the General Partner,
the Partnership or any of its Subsidiaries.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“ERISA Affiliate” shall mean any entity which is (or within the period
commencing as of the Emergence Date through the date hereof was) a member of a
“controlled group of corporations” with, under “common control” with, or a
member of an “affiliated service group” with, or otherwise required to be
aggregated with, the Partnership as set forth in Section 414(b), (c), (m) or
(o) of the Code. Any representation made with respect to an ERISA Affiliate
applies only for the time that such entity was an ERISA Affiliate.

“Escrow” shall mean the account created pursuant to the Escrow Agreement into
which the Escrow Amount has been deposited.

“Escrow Agent” shall mean an institution which shall be selected by the
Partnership, with the approval of Parent, which is not to be unreasonably
withheld, to perform those duties set forth in Article III hereof and the Escrow
Agreement.

“Escrow Agreement” shall mean the Escrow Agreement in substantially the form
attached as Exhibit B hereto.

“Escrow Amount” shall mean $10,000,000.

“Escrow Percentage” shall mean the percentage obtained by dividing (i) the
Escrow Amount by (ii) the Estimated Aggregate Purchase Price plus the Aggregate
Exercise Price, minus the Aggregate Phantom Units Amount.

“Escrow Per LP Unit Partnership Merger Consideration” shall mean an amount equal
to (i) the Estimated Per LP Unit Partnership Merger Consideration multiplied by
(ii) the Escrow Percentage.

“Escrow Per Unit GP Merger Consideration” shall mean an amount equal to the
product of (i) the Estimated Per Unit GP Merger Consideration multiplied by
(ii) the Escrow Percentage.

“Escrow Transaction Bonus Amount” shall mean an amount equal to the product of
(i) the Estimated Transaction Bonus Amount multiplied by (ii) the Escrow
Percentage.

“Estimated Current Assets” shall mean the Current Assets set forth on the
Estimated Balance Sheet.

“Estimated Liabilities” shall mean the Liabilities set forth on the Estimated
Balance Sheet.

“Estimated Per LP Unit Partnership Merger Consideration” shall mean the
Estimated Aggregate Partnership Merger Consideration, divided by the sum of
(i) the total number of issued and outstanding Titan Limited Partner Units
(including all Deferred Units), plus (ii) the total number of Titan Limited
Partnership Units issuable upon the exercise of all Options, in each case as of
12:01 a.m. (Eastern Daylight Time) on the Closing Date. For purposes of
determining

 

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Estimated Per LP Unit Merger Partnership Consideration, each Deferred Unit shall
be deemed to be an issued and outstanding Titan Limited Partner Unit.

“Estimated Per Option Amount” shall mean, with respect to each right to acquire
one (1) Titan Limited Partner Unit represented by an outstanding Option, an
amount equal to the Estimated Per LP Unit Merger Partnership Consideration minus
the applicable exercise price per Titan Limited Partner Unit for such Option.

“Estimated Per Unit GP Merger Consideration” shall mean the Estimated Aggregate
GP Merger Consideration divided by the total number of issued and outstanding
General Partner Membership Units as of 12:01 a.m. (Eastern Daylight Time) on the
Closing Date.

“Existing LP Agreement” shall mean the Agreement of Limited Partnership of the
Partnership, dated as of December 20, 2004, as amended to date.

“GAAP” shall mean generally accepted accounting principles in the United States,
as in effect from time to time, applied on a basis consistent with their
application in the Partnership’s audited financial statements as of and for the
period ended June 30, 2005 (including the classification of items and amounts
and the interpretations and assumptions used therein so long as such
classifications, interpretations and assumptions are in accordance with
generally accepted accounting principles in the United States, as in effect from
time to time).

“General Partner Membership Unit” shall mean a unit of membership interest in
the General Partner.

“Governmental Authority” shall mean any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of any government,
including the United States or any state, county, city or other political
subdivision or any foreign government.

“GP Percentage” shall mean the percentage that $17,500,000 represents of the
Estimated Aggregate Purchase Price.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.

“Hazardous Substances” shall mean all hazardous pollutants, contaminants,
chemicals, wastes and any other carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) listed pursuant to or subject to regulation, control or remediation under
Environmental Laws.

“Improvements” shall mean any buildings, facilities, other structures and
improvements, building systems and fixtures located on or under any real
property owned or leased by the Partnership or its Subsidiaries.

“Indebtedness” of any Person shall mean all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments (including letters of credit), (iii) for the deferred purchase price
of goods or services (other than trade payables

 

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incurred in the ordinary course of business), (iv) under capital leases or
(v) in the nature of guarantees of the obligations described in clauses
(i) through (iv) above of any other Person.

“Intellectual Property Rights” shall mean (i) any and all inventions,
developments, improvements, discoveries, know-how, concepts and ideas, whether
patentable or not in any jurisdiction and whether or not reduced to practice,
(ii) any and all patents and patent applications (including without limitation
reissues, reexaminations, continuations, divisions, continuations-in-part,
extensions, revisions and counterparts thereof in any jurisdiction), patent
disclosures, revalidations, industrial designs, industrial models and utility
models, (iii) any and all trademarks, service marks, certification marks, logos,
trade dress, trade names, corporate names, brand names, domain names and all
other indicia of origin (whether registered or unregistered), and including all
goodwill associated therewith and all applications and registrations therefor in
any jurisdiction and any extension, modification or renewal of any such
application or registration, (iv) any and all copyrights, copyright
registrations and applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof, (v) any and all writings
and other works of authorship, whether copyrighted, copyrightable or not in any
jurisdiction, such works including, without limitation, computer programs and
software (including source code, object code, data, databases and documentation
therefor), together with all translations, adaptations, derivations and
combinations thereof, (vi) any and all non-public information, trade secrets and
proprietary or confidential information (including without limitation ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals) and rights in any jurisdiction to
limit the use or disclosure thereof by any person, (vii) any and all agreements,
licenses, immunities, covenants not to sue and the like relating to any of the
foregoing, (viii) any and all copies and tangible embodiments of any of the
foregoing (in whatever form or medium) and (ix) any and all claims or causes of
action arising out of or related to any infringement or misappropriation of any
of the foregoing; provided, however, that Intellectual Property Rights do not
include any “shrink wrap” or other similar non-exclusive licenses for generally
available commercial software.

“IRS” shall mean the Internal Revenue Service.

“Knowledge” shall mean, with respect to the General Partner or the Partnership,
the actual knowledge of the persons listed in Section 1.1(b) of the Disclosure
Letter, after reasonable inquiry within the scope of their respective business
responsibilities, provided that reasonable inquiry shall not require inquiry of
any individual other than the individuals listed in such Section 1.1(b) of the
Disclosure Letter.

“Laws” shall mean all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of any Governmental Authority.

“Lenders” shall mean the lenders under the Credit Revolver and the Term Loan.

“Liabilities” shall mean all liabilities of the sort that would be accrued on a
balance sheet prepared in accordance with GAAP, consistent with past practices,
subject to such adjustments as are set forth in this Agreement or on
Section 1.1(a) of the Disclosure Letter.

 

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“Loss Contract” shall mean any Contract for which the Partnership or any of the
Partnership Subsidiaries has accrued a loss on its financial statements or which
the Partnership reasonably expects, based on the Partnership’s Knowledge as of
the date hereof, to result in a loss which the Partnership would reasonably
expect to accrue on its financial statements, except as would not reasonably be
expected to have a Titan Material Adverse Effect.

“Material Permit” shall mean any license, permit, franchise, approval,
authorization, consent or order of any Governmental Authority that is necessary
for the operation of the business of the Partnership or the Partnership
Subsidiaries as currently conducted and with respect to which the failure to
have such license, permit, franchise, approval, authorization, consent or order
would reasonably be expected to result in a Titan Material Adverse Effect.

“Onerous Conditions” shall mean conditions that would require Parent to
(A) accept or offer to accept an order providing for the divestiture by Parent
or the Surviving Partnership of more than 7.5% of the assets, or assets that
generate more than 7.5% of the earnings before interest, taxes, depreciation and
amortization, of the General Partner, the Partnership and the Partnership
Subsidiaries taken as a whole, or Parent and its affiliates taken as a whole,
(B) offer or agree to hold separate such assets, pending divestiture, or
(C) agree to any other material conditions, restrictions or limitations on the
material operations or businesses of the General Partner, the Partnership and
the Partnership Subsidiaries taken as a whole or Parent and its affiliates taken
as a whole.

“Options” shall mean all options to acquire Titan Limited Partner Units granted
pursuant to the Partnership’s Equity Incentive Plan, as amended to date, that
are outstanding as of 12:01 a.m. (Eastern Daylight Time) on the Closing Date,
whether or not then vested or fully exercisable. In no event shall Options
include rights to acquire Titan Limited Partner Units pursuant to Titan
Propane’s Long Term Incentive Compensation Plan for Certain Key Employees.

“Partnership Approval” shall mean the approval of the limited partners of the
Partnership necessary to approve this Agreement and the Merger pursuant to the
Existing LP Agreement and the DLPA.

“Partnership Triggering Event” shall mean the occurrence of either of the
following: (i) the General Partner shall have failed to make the General Partner
Recommendation or (ii) a Partnership Adverse Recommendation Change.

“Per LP Unit Partnership Merger Consideration” shall mean the Aggregate
Partnership Merger Consideration, divided by the sum of (i) the total number of
issued and outstanding Titan Limited Partner Units (including all Deferred
Units), plus (ii) the total number of Titan Limited Partnership Units issuable
upon the exercise of all Options, in each case as of 12:01 a.m. (Eastern
Daylight Time) on the Closing Date. For purposes of determining the Per LP Unit
Partnership Merger Consideration, each Deferred Unit shall be deemed to be an
issued and outstanding Titan Limited Partner Unit.

“Per Option Amount” shall mean, with respect to each right to acquire one
(1) Titan Limited Partner Unit represented by an outstanding Option, an amount
equal to the Per LP Unit Partnership Merger Consideration minus the applicable
exercise price per Titan Limited Partner Unit for such Option.

 

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“Per Phantom Unit Amount” shall mean an amount equal to the lesser of (i) $8.26
and (ii) the Estimated Per LP Unit Partnership Merger Consideration less $14.74.

“Per Unit GP Merger Consideration” shall mean the Aggregate GP Merger
Consideration divided by the total number of issued and outstanding General
Partner Membership Units as of 12:01 a.m. (Eastern Daylight Time) on the Closing
Date.

“Permitted Encumbrances” shall mean (a) liens for Taxes or governmental charges
or claims (i) not yet due and payable or (ii) being contested in good faith, if
a reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor, (b) statutory liens of landlords, liens of
carriers, warehouse persons, mechanics and material persons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable or (ii) being contested in good faith, if a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (c) liens incurred or deposits made in connection with workers’
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, (d) purchase money liens incurred in
the ordinary course of business, consistent with past practice, (e) easements,
rights-of-way, restrictions and other similar charges or encumbrances on real
property, in each case which do not interfere with the ordinary conduct of
business of the Partnership or its Subsidiaries and do not materially detract
from the value of the property to which such encumbrance relates, (f) liens
associated with the Credit Revolver, the Term Loan and the other Indebtedness
disclosed in the Financial Statements, as such Indebtedness may increase or
decrease from time to time in accordance with its terms and (g) the judgment
lien against Titan Propane’s property in the state of Missouri relating to the
case captioned: Precision Investment, LLC, et al. v. Cornerstone Propane, L.P.

“Person” shall mean any natural person, corporation, limited partnership,
general partnership, limited liability partnership, joint stock partnership,
joint venture, association, Partnership, trust or other organization, or any
Governmental Authority.

“Personnel” shall mean all officers and employees of the General Partner, the
Partnership or any Partnership Subsidiary.

“Phantom Units” shall mean all phantom units granted pursuant to the
Partnership’s Equity Incentive Plan, as amended to date, that are outstanding as
of 12:01 a.m. (Eastern Daylight Time) on the Closing Date.

“Plan” shall mean the Debtors’ Joint Plan of Reorganization, as Modified,
Pursuant to Chapter 11 of the Bankruptcy Code dated October 18, 2004 attached to
the Confirmation Order.

“Subsidiary” shall mean, with respect to any Person, any corporation or other
business entity, whether or not incorporated, (i) of which at least 50% of the
outstanding equity securities

 

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of such entity having, by their terms, ordinary voting power to elect members of
the board of directors, or other persons performing similar functions with
respect to such entity, are held, directly or indirectly, by such Person or any
of its Subsidiaries or (ii) the operations of which are consolidated with such
Person, pursuant to GAAP, for financial reporting purposes.

“Superior Proposal” shall mean a bona fide Acquisition Proposal made by a third
party, that, in the good faith judgment of the General Partner, taking into
account, to the extent deemed appropriate by the General Partner, the various
legal, financial and regulatory aspects of the proposal and the person making
such proposal (i) if accepted, is reasonably likely to be consummated, and
(ii) if consummated, would result in a transaction that is more favorable to the
Partnership’s equity holders than the transactions contemplated herein.

“Tax(es)” shall mean all taxes, estimated taxes, withholding taxes, assessments,
levies, imposts, fees and other charges of any kind whatever, including, without
limitation, any interest, penalties, additions to tax in respect thereof,
imposed by any foreign, federal, state or local government or taxing authority,
which taxes shall include, without limitation, all income taxes, payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, value-added taxes, excise taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer
taxes, workers’ compensation and other obligations of the same or of a similar
nature.

“Tax Return” shall mean any return, declaration, report, claim for refund or
other document relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereto.

“Titan Limited Partner Unit” shall mean the Partnership’s Common Units and
Subordinated Units (as each such term is defined in the Existing LP Agreement).

“Titan Material Adverse Effect” shall mean any change, event, occurrence or
state of facts which has a material adverse effect on the business, properties,
assets, liabilities (contingent or otherwise), results of operations or
financial condition of the Partnership and its Subsidiaries taken as a whole;
provided, however, that none of the following shall be deemed either alone or in
combination to constitute, and none of the following shall be taken into account
in determining whether there has been, or would reasonably be expected to be, a
Titan Material Adverse Effect: (1) any change, event, occurrence of state of
facts relating to the United States or global economy, financial markets or
political conditions in general or in any of the industries or geographic
regions in which the Partnership and its Subsidiaries operate in general,
including such changes thereto as are caused by terrorist activities, entry into
or material worsening of war or armed hostilities, or other national or
international calamity (in each case under this clause (1) to the extent not
disproportionately affecting the Partnership and its Subsidiaries taken as a
whole relative to other industry participants); (2) any change, event,
occurrence or state of facts that directly arises out of or results from the
announcement or pendency of this Agreement or the Merger; (3) any change, event,
occurrence or state of facts directly arising out of or resulting from any
action taken, or failure to take an action, by the General Partner, the
Partnership or any of their Subsidiaries with Parent’s express consent or in
accordance with the express instructions of Parent or as otherwise expressly
required to be taken by the General Partner, the Partnership or any of their
Subsidiaries pursuant to the terms of this Agreement; (4) any change in the

 

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trading price of the Partnership’s Equity Securities or any failure to meet
internal projections or forecasts (provided that this clause (4) shall not be
construed as requiring that the change, event, occurrence or state of facts
giving rise to such change or failure also does not constitute or contribute to
a Titan Material Adverse Effect); and (5) any change, event, occurrence or state
of facts arising out of any change in GAAP or applicable accounting requirements
or principles which occur or become effective after the date of this Agreement.

“Titan Representative” shall mean Jeffrey A. Brodsky or such other Person
designated (i) by the General Partner prior to the Closing or (ii) by Persons
(other than Parent or the Surviving Partnership) holding a majority of the
interests in the Escrow Amount subsequent to the Closing.

“Transaction Costs” shall mean (i) all fees and expenses (including, without
limitation, all legal, accounting, and tax and financial advisory fees and other
fees, costs and expenses of third parties) incurred by or on behalf of the
General Partner or the Partnership in connection with the negotiation and
execution of this Agreement and the consummation of the Merger, (ii) the amount
of premiums for directors’ and officers’ liability insurance for the officers
and directors of the General Partner, the Partnership and its Subsidiaries for
periods after the Closing, but only for the cost of a policy secured by the
General Partner or the Partnership prior to the Closing in accordance with
Section 6.6(c), (iii) the amount of prepayment penalties due and payable in
connection with the payoff and termination of the Credit Revolver and the Term
Loan upon or as a result of the consummation of the Merger in excess of
$500,000, and (iv) the amount of $250,000 for preparation of final tax returns
for the Partnership and the General Partner (as contemplated by Section 6.9), in
each case to the extent such amounts are not paid on or before the Closing Date
or accrued as Closing Date Liabilities; provided, however, that Transaction
Costs shall not include any severance payments that shall become due and payable
in connection with the consummation of the Merger.

“Upfront Per Option Amount” shall mean an amount equal to (i) the Estimated Per
Option Amount, minus (ii) the Escrow Per LP Unit Partnership Merger
Consideration.

“Upfront Per LP Unit Partnership Merger Consideration” shall mean an amount
equal to (i) the Estimated Per LP Unit Merger Partnership Consideration, minus
(ii) the Escrow Per LP Unit Partnership Merger Consideration.

“Upfront Per Unit GP Merger Consideration” shall mean an amount equal to (i) the
Estimated Per Unit GP Merger Consideration, minus (ii) the Escrow Per Unit GP
Merger Consideration.

“Upfront Transaction Bonus Amount” shall mean an amount equal to (i) the
Estimated Transaction Bonus Amount, minus (ii) the Escrow Transaction Bonus
Amount.

 

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Section 1.2 Other Defined Terms.

In addition to the terms defined in Section 1.1 of this Agreement, the following
terms shall have the meanings defined for such terms in the Sections set forth
below:

 

TERM

   SECTION

“Agreement”

   Preamble

“Audited Financials”

   4.5

“CBA”

   4.14(a)

“Certificates”

   3.3(a)

“Claim”

   6.6(b)

“Closing Date”

   2.2

“Closing Date Purchase Price Certificate”

   3.4(b)

“Current Employees”

   6.8(a)

“D&O Policy”

   6.6 (c)

“Disclosure Letter”

   Article IV Preamble

“Early Satisfaction Date”

   2.2

“Effective Time”

   2.1

“Estimated Aggregate Exercise Price”

   3.4(a)

“Estimated Aggregate GP Merger Consideration”

   3.4(a)

“Estimated Aggregate Partnership Merger Consideration”

   3.4(a)

“Estimated Balance Sheet”

   3.4(a)

“Estimated Purchase Price Certificate”

   3.4(a)

“Estimated Transaction Bonus Amount”

   3.4(a)

“Estimated Transaction Costs”

   3.4(a)

“Final Aggregate Partnership Merger Consideration”

   3.4(d)

“Financial Statements”

   4.5

“General Partner”

   Preamble

“General Partner Recommendation”

   6.4

“GP Membership Certificates”

   3.1(c)

“Indemnifiable Amounts”

   6.6(a)

“Indemnified Party”

   6.6(a)

“Indemnitors”

   6.6(a)

“Independent Accountant”

   3.4(b)

“Independent Accountant’s Determination”

   3.4(b)

“Leased Real Property”

   4.11(b)

“LP Unit Certificate(s)”

   3.1(e)

“Machinery and Equipment”

   4.9

“Material Contract”

   4.8(a)

“Merger”

   2.1

“MergerCo”

   Preamble

“Multiemployer Plan”

   4.13(b)(i)

“Notice of Adverse Recommendation”

   6.5(b)

“OSHA”

   4.14

“Owned Real Property”

   4.11(a)

“Parent”

   Preamble

“Partnership”

   Preamble

“Partnership Adverse Recommendation Change”

   6.5(b)

 

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“Partnership Intellectual Property”

   4.10

“Partnership Representative”

   6.4

“Partnership Subsidiary”

   4.3(a)

“Real Property”

   4.11(b)

“Related Party Transaction”

   4.22

“Seller’s Adjustment Request”

   3.4(b)

“Surviving Partnership”

   2.1

“Termination Date”

   9.1(a)(ii)

“Termination Fee”

   9.2(b)

“Titan Tax Returns”

   6.9

“Unaudited Financials”

   4.5

“Withholding Tax”

   3.3(e)

Section 1.3 Interpretation Provisions.

(a) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, schedule and
exhibit references are to this Agreement unless otherwise specified. The meaning
of defined terms shall be equally applicable to the singular and plural forms of
the defined terms. The term “or” is disjunctive but not necessarily exclusive.
The terms “include” and “including” are not limiting and mean “including without
limitation.”

(b) References to agreements and other documents shall be deemed to include all
subsequent amendments and other modifications thereto.

(c) References to statutes shall include all regulations promulgated thereunder
and references to statutes or regulations shall be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation.

(d) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.

(e) The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.

(f) The annexes, schedules and exhibits to this Agreement are a material part
hereof and shall be treated as if fully incorporated into the body of the
Agreement.

 

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ARTICLE II

THE MERGER

Section 2.1 The Merger; Effective Time; Surviving Partnership.

In accordance with the provisions of this Agreement, the Delaware LLC Act and
the DLPA, each of the Partnership and the General Partner shall be merged with
and into MergerCo (the “Merger”), upon the effectiveness of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
at such later time as shall be agreed to by the Partnership and Parent and as
shall be set forth in such Certificate of Merger) in accordance with the DLPA
and the Delaware LLC Act. The date and time when the Merger becomes effective in
accordance with the DLPA and the Delaware LLC Act are herein referred to as the
“Effective Time.” At the Effective Time and in accordance with the provisions of
this Agreement, the DLPA and the Delaware LLC Act, each of the Partnership and
the General Partner shall cease to exist, and MergerCo shall be the surviving
partnership in the Merger (hereinafter sometimes called the “Surviving
Partnership”) and shall continue its existence under the laws of the State of
Delaware and shall succeed to all rights, privileges, powers, franchises,
assets, liabilities and obligations of the Partnership, the General Partner and
MergerCo in accordance with the provisions of the DLPA and the Delaware LLC Act.

Section 2.2 Closing.

Unless this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to the provisions of
Section 9.1, the Closing shall take place at such time and place as the parties
hereto may agree on the fourth (4th) business day after all conditions to the
obligations of the parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective parties will take
at the Closing itself, which must be capable of being satisfied) are satisfied
or waived, or the Closing may be held at such other place or on such other date
as may be mutually agreeable to Parent, the General Partner and the Partnership;
provided, however, that if all conditions to the obligations of Parent and
MergerCo set forth in Section 7.2 to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective parties
will take at the Closing itself) are satisfied or waived on a date (such date,
the “Early Satisfaction Date”) prior to June 1, 2006 and the parties agree, at
Parent’s request, to delay the Closing until June 1, 2006, then from and after
the Early Satisfaction Date, none of the conditions set forth in Section 7.2
shall be of any further force or effect, other than the conditions set forth in
Section 7.2(b) and Section 7.2(e). The date of such Closing is herein referred
to as the “Closing Date.” At the Closing, at least one general partner of the
Surviving Partnership shall execute the Certificate of Merger and cause the
Certificate of Merger to be delivered for filing and recordation with the
Secretary of State of the State of Delaware in accordance with the DLPA and the
Delaware LLC Act.

Section 2.3 Effects of the Merger.

(a) At the Effective Time, the effect of the Merger shall be as provided in this
Agreement, the Certificate of Merger and the applicable provisions of the DLPA
and the Delaware LLC Act.

(b) At the Effective Time, the Certificate of Limited Partnership of MergerCo,
as in effect immediately prior to the Effective Time, shall continue in effect
as the Certificate of Limited Partnership of the Surviving Partnership, subject
to the amendments thereto set forth in the Certificate of Merger, until
thereafter amended as provided by the DLPA and such Certificate of Limited
Partnership.

 

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Section 2.4 Partnership Governance.

The general partner of MergerCo at the Effective Time shall be the general
partner of the Surviving Partnership.

Section 2.5 Federal Income Tax Treatment of the Merger.

For U.S. federal income tax purposes, (a) the Merger is intended to be taxed as
a fully taxable sale of the Assets by the Partnership to the Parent for the
amounts paid or deemed paid under Article III (including any liabilities assumed
or deemed to be assumed), all as determined for federal income tax purposes,
followed by the complete liquidation and termination of the Partnership under
Code section 708(b)(1)(A), followed by the complete liquidation and termination
of the General Partner under Code section 708(b)(1)(A) and (b) any payment of
Per Phantom Unit Amount to any holder of a Phantom Unit, Per Option Amount to
any holder of an Option, any portion of the Aggregate Transaction Bonus Amount
to any Person and any Per LP Unit Partnership Merger Consideration to any holder
of a Deferred Unit hereunder shall be treated as compensation that accrued and
is deductible by the Partnership on the Closing Date and in the Tax period of
the Partnership ending on the Closing Date. The parties hereto shall treat the
transactions contemplated by this Agreement consistently with the provisions of
this Section 2.5 and shall not take any position that is inconsistent herewith.

ARTICLE III

MERGER CONSIDERATION; STATUS AND CONVERSION OF INTERESTS

Section 3.1 Effects on Interests.

As of the Effective Time, by virtue of the Merger and without any action on the
part of any of Parent, MergerCo, the General Partner, the Partnership, or any
holder of a General Partner Membership Unit, a Titan Limited Partner Unit or any
partnership interest in MergerCo, the following shall occur:

(a) Each limited partnership interest of MergerCo issued and outstanding
immediately prior to the Effective Time shall be converted into a limited
partnership interest of the Surviving Partnership.

(b) The general partner interest in MergerCo issued and outstanding immediately
prior to the Effective Time shall be converted into a general partner interest
in the Surviving Partnership.

(c) Each General Partner Membership Unit issued and outstanding immediately
prior to the Effective Time (other than those subject to Section 3.1(d)) shall
be converted into the right to receive the Per Unit GP Merger Consideration. As
of the Effective Time, all such General Partner Membership Units shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
each holder of any such General Partner Membership Units (or a

 

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certificate or certificates formerly representing any such General Partner
Membership Units (the “GP Membership Certificates”)) shall cease to have any
rights with respect thereto, except the right to receive the Per Unit GP Merger
Consideration with respect to the General Partner Membership Units held by such
holder (payable in accordance with this Article III).

(d) Each General Partner Membership Unit issued and outstanding immediately
prior to the Effective Time that is owned, directly or indirectly, by Parent or
MergerCo, if any, shall be automatically canceled and shall cease to exist, and
no consideration shall be delivered or deliverable in exchange therefor.

(e) Each Titan Limited Partner Unit issued and outstanding immediately prior to
the Effective Time (other than those subject to Section 3.1(f), but including
those deemed issued and outstanding pursuant to Section 3.1(j)) shall be
converted into the right to receive the Per LP Unit Partnership Merger
Consideration. As of the Effective Time, all such Titan Limited Partner Units
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of any such Titan Limited Partner Units (or a
certificate or certificates formerly representing any such Titan Limited Partner
Units (the ”LP Unit Certificates”)) shall cease to have any rights with respect
thereto, except the right to receive the Per LP Unit Partnership Merger
Consideration with respect to the Titan Limited Partner Units held by such
holder (payable in accordance with this Article III and the Escrow Agreement).

(f) Each Titan Limited Partnership Unit issued and outstanding immediately prior
to the Effective Time that is owned, directly or indirectly, by Parent or
MergerCo, if any, shall be automatically canceled and shall cease to exist, and
no consideration shall be delivered or deliverable in exchange therefor.

(g) Each of the General Partner Interest and the Incentive Distribution Right
(as each such term is defined in the Existing LP Agreement) held by the General
Partner (in its capacity as the general partner of the Partnership) in the
Partnership shall be automatically canceled and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.

(h) Immediately prior to the Effective Time, each Option shall become
immediately vested and exercisable in full, and at the Effective Time, all
Options shall be canceled. In consideration of such cancellation, each holder of
an Option canceled in accordance with this Section 3.1(h) shall be entitled to
receive the Per Option Amount.

(i) Immediately prior to the Effective Time, each Phantom Unit shall become
immediately vested and exercisable in full, and at the Effective Time, all
Phantom Units shall be canceled. In consideration of such cancellation, each
holder of Phantom Units canceled in accordance with this Section 3.1(i) shall be
entitled to receive the Per Phantom Unit Amount multiplied by the number of
Phantom Units held by such holder.

(j) Immediately prior to the Effective Time, each Deferred Unit shall become
vested in full and shall become an issued and outstanding Titan Limited Partner
Unit, which shall be treated in the Merger in accordance with Section 3.1(e)
above.

 

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Section 3.2 Payment.

(a) Prior to the Effective Time, Parent and MergerCo shall pay or cause to be
paid to the Closing Exchange Agent an amount of cash in immediately available
funds equal to (i) the Estimated Aggregate GP Merger Consideration applicable to
all issued and outstanding General Partner Membership Units (other than those
canceled pursuant to Section 3.1(d)) plus (ii) the aggregate Estimated Per LP
Unit Partnership Merger Consideration applicable to all issued and outstanding
Titan Limited Partner Units (other than Deferred Units and those canceled
pursuant to Section 3.1(f)), minus (iii) the Escrow Amount. The amounts referred
to in clauses (i) and (ii) of the preceding sentence shall be paid to the
holders of the General Partner Membership Units and Titan Limited Partner Units
in accordance with Section 3.3.

(b) Prior to the Effective Time, Parent and MergerCo shall pay or cause to be
paid to the Escrow Agent an amount of cash in immediately available funds equal
to the Escrow Amount.

(c) Parent and MergerCo shall (i) prior to the Effective Time, pay or cause to
be paid to a party designated by the Partnership an amount of cash in
immediately available funds equal to the aggregate Upfront Per Option Amount for
all outstanding Options and (ii) at the Closing, cause such party to:

(A) promptly pay to each holder of Options the Upfront Per Option Amount
multiplied by the number of Titan Limited Partner Units underlying the Options
held by such holder, net of any applicable Withholding Taxes; and

(B) remit any applicable Withholding Taxes to the applicable Governmental
Authority in accordance with all applicable laws.

(d) Parent and MergerCo shall (i) prior to the Effective Time, pay or cause to
be paid to a party designated by the Partnership an amount of cash in
immediately available funds equal to the Aggregate Phantom Units Amount and
(ii) at the Closing, cause such party to:

(A) promptly pay to each holder of Phantom Units an amount of cash in
immediately available funds equal to the Per Phantom Unit Amount multiplied by
the number of Phantom Units held by such holder, net of any applicable
Withholding Taxes; and

(B) remit any applicable Withholding Taxes to the applicable Governmental
Authority in accordance with applicable laws.

(e) Parent and MergerCo shall (i) prior to the Effective Time, pay or cause to
be paid to a party designated by the Partnership an amount of cash in
immediately available funds equal to the aggregate Upfront Per LP Unit
Partnership Merger Consideration applicable to all Deferred Units, and (ii) at
the Closing, cause such party to:

(A) promptly pay to each holder of Deferred Units an amount of cash in
immediately available funds equal to the Upfront Per LP Unit Partnership

 

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Merger Consideration multiplied by the number of Deferred Units held by such
holder, net of any applicable Withholding Taxes; and

(B) remit any applicable Withholding Taxes to the applicable Governmental
Authority in accordance with applicable laws.

(f) Parent and MergerCo shall (i) prior to the Effective Time, pay or cause to
be paid to a party designated by the Partnership an amount of cash in
immediately available funds equal to the Upfront Transaction Bonus Amount, and
(ii) at the Closing, cause such party to:

(A) promptly pay to each individual set forth on Section 3.2(f) of the
Disclosure Letter such individual’s applicable portion of the Upfront
Transaction Bonus Amount net of any applicable Withholding Taxes;

(B) remit any applicable Withholding Taxes to the applicable Governmental
Authority in accordance with applicable laws;

(g) Prior to the Effective Time, Parent and MergerCo shall pay or cause to be
paid to the Lenders, the Aggregate Debt Payoff Amount.

Section 3.3 Exchange of Certificates.

(a) At least ten (10) days prior to the Closing, the General Partner shall
prepare and make available, and after the Closing the Surviving Partnership
shall make available, to each holder of record of an LP Unit Certificate and GP
Membership Certificate (collectively, the “Certificates”) (i) a letter of
transmittal (which shall specify that, subject to the occurrence of the
Effective Time, delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Closing
Exchange Agent), (ii) instructions for use of the letter of transmittal in
surrendering Certificates in exchange for the consideration specified in this
Article III and (iii) IRS Forms W-8 or W-9, FIRPTA certificates or such other
certificates as may be necessary to provide an exemption from Withholding Taxes
in respect of cash payable under this Article III. Upon surrender of a
Certificate for cancellation to the Closing Exchange Agent, together with such
letter of transmittal, duly completed and executed, and such other documents as
may reasonably be required by the Closing Exchange Agent, the Certificate so
surrendered shall be canceled and the holder of such Certificate shall receive
in exchange therefor (x) promptly after such surrender, the Upfront Per LP Unit
Partnership Merger Consideration or the Upfront Per Unit GP Merger Consideration
with respect to the Titan Limited Partner Units or General Partner Membership
Units, as the case may be, represented by such surrendered Certificate, and
(y) promptly after the final determination of the Aggregate Purchase Price
pursuant to Section 3.4 (or, if later, such surrender), any additional amounts
determined pursuant to Section 3.4 to be paid to such holder with respect to the
Titan Limited Partner Units or General Partner Membership Units, as the case may
be, represented by such surrendered Certificate (including amounts to be
distributed and paid from the Escrow Amount). If a transfer of ownership of
Titan Limited Partner Units has not been registered in the Partnership’s
transfer records, payment may be made to a Person other than the Person in whose
name the Certificate so surrendered is registered if such Certificate is
properly endorsed or otherwise is in proper form for transfer and the Person
requesting such issuance shall pay any

 

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transfer or other Tax required by reason of the payment to a Person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such Tax has been paid or is not applicable. Other than interest
earned that becomes part of the Escrow Amount, no interest shall be paid or will
accrue on the cash payable to holders of Certificates in accordance with the
provisions of this Article III.

(b) All cash paid upon the surrender of Certificates in accordance with the
terms of this Article III shall be deemed to have been paid in full satisfaction
of all rights pertaining to the Titan Limited Partner Units or General Partner
Membership Units, as the case may be, represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Partnership of the Titan Limited Partner Units which were
outstanding immediately prior to the Effective Time.

(c) None of Parent, the Surviving Partnership or the Closing Exchange Agent
shall be liable to any Person with respect to any cash delivered to a public
official in accordance with any applicable abandoned property, escheat or
similar law.

(d) In the event any Certificate shall have been lost, stolen or destroyed, the
Surviving Partnership shall deliver or cause to be delivered in exchange for
such lost, stolen or destroyed Certificate, upon the making of an affidavit of
that fact by the holder thereof, such payment as may be required pursuant
hereto; provided, however, that the Surviving Partnership may, in its discretion
and as a condition precedent to any such payment, require or cause the Closing
Exchange Agent to require the owner of such lost, stolen or destroyed
Certificate to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against the Surviving Partnership,
Parent or MergerCo, or any other party with respect to the Certificate alleged
to have been lost, stolen or destroyed.

(e) To the extent required by Law, the Surviving Partnership or the Closing
Exchange Agent shall be entitled to deduct and withhold from amounts otherwise
payable in accordance with this Agreement to any former holder of General
Partner Membership Units, Titan Limited Partner Units, Deferred Units, Options
or Phantom Shares, or any person entitled to receive a portion of the Aggregate
Transaction Bonus Amount, such amounts as the Surviving Partnership or the
Closing Exchange Agent reasonably believes is required to be deducted and
withheld with respect to the making of such payment under the Code or any
provision of state, local or foreign Tax law (“Withholding Tax”); provided,
however, that the Surviving Partnership and/or the Closing Exchange Agent, as
the case may be, shall not be entitled to withhold any amounts pursuant to this
Section 3.3(e) if the Surviving Partnership or the Closing Exchange Agent, as
the case may be, has received, prior to Closing, such certificates or forms as
are sufficient, under the Code and applicable Treasury Regulations, to establish
that withholding is not required. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by the Surviving Partnership or
the Closing Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the recipient of such amounts
otherwise payable pursuant to this Agreement in respect of which such deduction
and withholding was made by the Surviving Partnership or the Closing Exchange
Agent.

 

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Section 3.4 Purchase Price Determination.

(a) For purposes of the Closing, the Partnership shall make a good faith
estimate of (i) the Balance Sheet as of 12:01 a.m. (Eastern Daylight Time) on
the Closing Date (the “Estimated Balance Sheet”), (ii) the Aggregate Purchase
Price as of 12:01 a.m. (Eastern Daylight Time) on the Closing Date (the
“Estimated Aggregate Purchase Price”), (iii) the Transaction Costs as of 12:01
a.m. (Eastern Daylight Time) on the Closing Date (the “Estimated Transaction
Costs”), (iv) the Aggregate Exercise Price as of 12:01 a.m. (Eastern Daylight
Time) on the Closing Date (the “Estimated Aggregate Exercise Price”), (v) the
Aggregate GP Merger Consideration as of 12:01 a.m. (Eastern Daylight Time) on
the Closing Date (the “Estimated Aggregate GP Merger Consideration”), (vi) the
Aggregate Partnership Merger Consideration as of 12:01 a.m. (Eastern Daylight
Time) on the Closing Date (the “Estimated Aggregate Partnership Merger
Consideration”), (vii) the Aggregate Phantom Units Amount, and (viii) the
Aggregate Transaction Bonus Amount (the “Estimated Transaction Bonus Amount”),
each of which shall be based upon the most recent ascertainable financial
information of the Partnership and its Subsidiaries. No less than three
(3) business days prior to the Closing, the Partnership will deliver to MergerCo
and Parent an Estimated Purchase Price Certificate (the “Estimated Purchase
Price Certificate”) in the form attached as Exhibit C and prepared in accordance
with the principles set forth in Section 1.1(a) of the Disclosure Letter,
setting forth the Estimated Balance Sheet, the Estimated Aggregate Purchase
Price, the Estimated Current Assets, the Estimated Liabilities, the Estimated
Transaction Costs, the Estimated Aggregate Exercise Price, the Estimated
Aggregate GP Merger Consideration, the Estimated Aggregate Partnership Merger
Consideration, the Aggregate Phantom Unit Amount and the Estimated Transaction
Bonus Amount, and the Partnership will consider in good faith any comments of
Parent thereon. For purposes of determining the Estimated Aggregate Purchase
Price before a final determination of the Aggregate Purchase Price, Closing Date
Current Assets, Closing Date Liabilities, the Aggregate Transaction Bonus Amount
and Closing Date Transaction Costs in accordance with Section 3.4(b), Aggregate
Purchase Price shall be calculated and paid using the Estimated Current Assets,
the Estimated Liabilities, and the Estimated Transaction Costs.

(b) The Surviving Partnership shall cause to be prepared and shall deliver to
the Titan Representative within seventy-five (75) days after the Closing, a
Closing Date Purchase Price Certificate (the “Closing Date Purchase Price
Certificate”), which shall set forth the Closing Date Balance Sheet, the
Aggregate Purchase Price, the Closing Date Liabilities, the Closing Date Current
Assets, the Closing Date Transaction Costs, the Aggregate Transaction Bonus
Amount and any other adjustments to the Aggregate Purchase Price, the Aggregate
GP Merger Consideration and the Aggregate Partnership Merger Consideration
occurring as a result of adjustments to the amounts set forth in the Estimated
Purchase Price Certificate, together with a description in reasonable detail of
each such adjustment and the facts and circumstances supporting such
adjustments. The Titan Representative shall have thirty (30) days following
delivery of the Closing Date Purchase Price Certificate to review any
adjustments to the amounts set forth in the Estimated Purchase Price
Certificate, and if, in the Titan Representative’s opinion, the Closing Date
Purchase Price Certificate, and any other adjustments to the amounts set forth
in the Estimated Purchase Price Certificate were not prepared in accordance with
the definitions thereof or were otherwise calculated in a manner inconsistent
with the terms of this Agreement, then the Titan Representative shall, within
such 30-day period, deliver to the Surviving Partnership written proposed
adjustments to the Closing Date Balance Sheet, and any

 

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other adjustments to the amounts set forth in the Closing Date Purchase Price
Certificate (the “Seller’s Adjustment Request”) setting forth in reasonable
detail (A) the amount of the proposed adjustment, (B) the item or items to which
such proposed adjustment relates, and (C) the facts and circumstances supporting
such adjustment. During such 30-day period the Surviving Partnership will
promptly provide the Titan Representative with all information, and full access
to the books and records and all appropriate personnel and accountants of the
Surviving Partnership that it may reasonably request for purposes of evaluating
the Surviving Partnership’s calculation of the Closing Date Balance Sheet, any
other adjustments to the amounts set forth in the Estimated Purchase Price
Certificate, and in no event shall the Seller’s Adjustment Request be required
to be delivered to the Surviving Partnership until fifteen (15) days after all
information and access reasonably requested by the Titan Representative has been
provided to it. The Titan Representative and the Surviving Partnership shall use
their respective good faith efforts for ten (10) days after delivery of the
Seller’s Adjustment Request to agree upon any adjustments to the Closing Date
Balance Sheet and any other adjustments to the amounts set forth in the Closing
Date Purchase Price Certificate proposed in the Seller’s Adjustment Request. At
any time after the expiration of such 10-day period, either the Titan
Representative or the Surviving Partnership may demand in writing that any or
all disputes reflected in the Seller’s Adjustment Request and not previously
resolved between the Titan Representative and the Surviving Partnership be
submitted for resolution to a firm of independent nationally recognized
accountants (the “Independent Accountant”), which firm shall be reasonably
acceptable to both parties. In the event the Titan Representative and the
Surviving Partnership fail to agree on the selection of the Independent
Accountant within five (5) days after the demand, each shall, within five
(5) days, select a certified public accounting firm of national standing, and
the two accounting firms so selected shall, within ten (10) days after
selection, designate a third firm as the Independent Accountant. As promptly as
practicable, but in no event later than fifteen (15) days after selection or
designation of the Independent Accountant, the Titan Representative and the
Surviving Partnership shall each deliver to the Independent Accountant written
submissions supporting their respective positions with respect to such dispute.
The Independent Accountant shall render a decision with respect to each disputed
amount regarding the Closing Date Purchase Price Certificate, and the Seller’s
Adjustment Request (the “Independent Accountant’s Determination”), within
fifteen (15) days of receipt of the written submissions, and such decision and
any dispute relating thereto, shall be final and binding on the parties hereto
and may be enforced as an arbitration award in any court of competent
jurisdiction; provided, however, that such decision shall be based solely upon
the written submissions of the Titan Representative and the Surviving
Partnership, shall be limited to the matters and amounts in dispute between the
parties, and shall be within the range of the amounts in dispute as calculated
by each of the parties.

(c) The costs and expenses of the Independent Accountant incurred in connection
with this Section 3.4 shall be borne by Parent, on the one hand, and the
Partnership, on the other hand, in inverse proportion as the Surviving
Partnership (on behalf of Parent) and the Titan Representative (on behalf of the
Partnership) may prevail on matters resolved by the Independent Accountant, and
such proportionate allocation also shall be determined by the Independent
Accountant when the Independent Accountant’s Determination is rendered on the
merits of the matters submitted. The sole and exclusive source for satisfaction
of the Partnership’s obligations under this Section 3.4 shall be the Escrow.

 

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(d) Within one (1) business day of the final determination of the Aggregate
Purchase Price pursuant to this Section 3.4:

(A) if the Estimated Aggregate Purchase Price exceeds the Aggregate Purchase
Price, then the Surviving Partnership shall be entitled to receive payment of
that portion of the Escrow Amount (which shall not exceed the entire Escrow
Amount) equal to such excess, and the remaining Escrow Amount, if any, in the
Escrow shall be paid to the Closing Exchange Agent or by the Surviving
Partnership for distribution to the former holders of General Partner Membership
Units, Titan Limited Partner Units, Deferred Units, and Options outstanding
immediately prior to the Effective Time and each individual entitled to receive
a portion of the Aggregate Transaction Bonus Amount (as determined in accordance
with this Article III), or

(B) if the Aggregate Purchase Price is equal to or exceeds the Estimated
Aggregate Purchase Price, then (I) the Escrow Amount shall be paid to the
Closing Exchange Agent or the Surviving Partnership for distribution to the
former holders of General Partner Membership Units, Titan Limited Partner Units,
Deferred Units and Options outstanding immediately prior to the Effective Time
and each individual entitled to receive a portion of the Aggregate Transaction
Bonus Amount (as determined in accordance with this Article III), and (II)
Parent and MergerCo shall pay (or cause to be paid) an amount equal to the
amount, if any, by which the Aggregate Purchase Price exceeds the Estimated
Aggregate Purchase Price, (x) to the Closing Exchange Agent for distribution to
the former holders of General Partner Membership Units and Titan Limited Partner
Units outstanding immediately prior to the Effective Time in accordance with
Section 3.3, and (y) to the former holders of Deferred Units and Options
outstanding immediately prior to the Effective Time and each individual entitled
to receive a portion of the Aggregate Transaction Bonus Amount (all as
determined in accordance with this Article III).

All payments to be paid to the former holders of General Partner Membership
Units, Titan Limited Partner Units, Deferred Units, and Options outstanding
immediately prior to the Effective Time and each individual entitled to receive
a portion of the Aggregate Transaction Bonus Amount (i) pursuant to clauses
(A) and (B)(I) of the preceding sentence shall be paid to such Persons pro rata
based on the amounts included in the Escrow Amount with respect to the such
Person as determined in accordance with this Article III; provided, however,
that the payments to be paid pursuant to clauses (A) of the preceding sentence
may be adjusted to reflect any needed changes relating to the Aggregate
Transaction Bonus Amount; and (ii) pursuant to clause (B)(II) of the preceding
sentence shall be paid to such Persons so that, together with all other payments
made pursuant to this Article III, each such Person will the amount payable to
such Person as determined in accordance with this Article III.

Section 3.5 Transfer Taxes.

Any applicable sales, transfer, stamp, documentary or other taxes that are due
and payable as a result of the Merger shall be borne by the Partnership.

 

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Section 3.6 Allocation of Purchase Price for Tax Purposes.

The General Partner and the Parent shall use commercially reasonable efforts to
reach agreement as to the allocation of the consideration payable under this
Agreement that would be included in “amount realized” for Federal and applicable
state and local income tax purposes to the Partnership Assets in accordance with
Code section 1060 and the regulations promulgated thereunder by the Closing. The
parties shall file all Tax Returns (including amended Tax Returns and claims for
refund) and information reports, including IRS Form 8594, in a manner consistent
with any such agreed allocations. The General Partner and Parent shall use
commercially reasonable efforts to resolve their differences; however,
resolution of such differences will not be a condition to the Closing.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

The Partnership and the General Partner hereby make, as of the date hereof and,
as of the Closing Date, the following representations and warranties to Parent
and MergerCo except as otherwise set forth in a written disclosure letter
delivered by the Partnership and the General Partner concurrently with the
execution of the Agreement (the “Disclosure Letter”). Unless otherwise
specified, (a) each reference in this Agreement to any numbered schedule is a
reference to that numbered schedule which is included in the Disclosure Letter
and (b) disclosure made in any particular numbered section of the Disclosure
Letter shall be deemed disclosed for purposes of any other representation and
warranty herein to the extent that it is reasonably apparent from such
disclosure that such disclosure is responsive or applicable to such
representation or warranty.

Section 4.1 Organization and Capitalization.

(a) Organization. The Partnership is duly formed and validly existing as a
limited partnership under the laws of the State of Delaware and has full limited
partnership power and authority to conduct its business as it is presently being
conducted and to own and lease its Assets. The General Partner is duly formed
and validly existing as a limited liability company under the laws of Delaware
and has full limited liability company power and authority to conduct its
business as it is presently being conducted and to own and lease its assets. The
Partnership and the General Partner are each duly qualified to do business in
good standing in each jurisdiction in which such qualification is necessary
under applicable law except where the failure to be so qualified would not
reasonably be expected to have a Titan Material Adverse Effect. Section 4.1(a)
of the Disclosure Letter sets forth a list of each jurisdiction in which each of
the Partnership and the General Partner are qualified to do business. The
Partnership and the General Partner have each, prior to the date hereof,
delivered to Parent true, correct and complete copies of their respective
organizational documents (as amended to date).

(b) Capitalization. The outstanding partnership interests of the Partnership and
the outstanding membership interests of the General Partner, including, in each
case, any Options, Phantom Units, Deferred Units and other rights to acquire
partnership interests of the Partnership or membership interests of the General
Partner, are as set forth in Section 4.1(b) of the Disclosure Letter.

 

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Section 4.2 Authorization.

The Partnership and the General Partner each has all necessary limited
partnership or limited liability company power and authority to execute and
deliver this Agreement and to perform their respective obligations hereunder
and, except for the Partnership Approval, no other proceedings on the part of
the Partnership or the General Partner are necessary to authorize this Agreement
or the transactions contemplated herein. Subject to the receipt of the
Partnership Approval, this Agreement has been duly authorized, executed and
delivered by the Partnership and the General Partner and is a legal, valid and
binding obligation of the Partnership and the General Partner, enforceable
against the Partnership and the General Partner in accordance with its terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors’ rights
generally or (ii) general principles of equity.

Section 4.3 Subsidiaries.

(a) Names of Subsidiaries. Section 4.3(a) of the Disclosure Letter sets forth a
list of each Subsidiary of the Partnership that is currently conducting
operations and each other Subsidiary of the Partnership (each, a “Partnership
Subsidiary”), including the jurisdiction of organization.

(b) Organization. Each Partnership Subsidiary is duly formed and validly
existing under the laws of the jurisdiction of its organization and has full
corporate, limited partnership or limited liability company power and authority
to conduct its business as it is presently being conducted and to own and lease
its Assets. Each Partnership Subsidiary is duly qualified to do business in each
jurisdiction in which such qualification is necessary under applicable law
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a Titan Material Adverse Effect. Section 4.3(b)
of the Disclosure Letter sets forth a list of each jurisdiction in which each
Partnership Subsidiary is qualified to do business. The Partnership has
delivered to Parent true, correct and complete copies of each Partnership
Subsidiary’s organizational documents (in each case, as amended to date).

Section 4.4 No Conflict.

Except as set forth in Section 4.4 of the Disclosure Letter, the consummation of
the transactions contemplated by the Agreement does not:

(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Existing Partnership Agreement or the operating
agreement, partnership agreement or other comparable governing document of the
General Partner, the Partnership or any Partnership Subsidiary;

(b) subject to obtaining the consents, approvals and actions, making the filings
and giving the notices disclosed in Section 4.4 of the Disclosure Letter,
conflict with or result in a violation or breach of any term or provision of any
Law applicable to the General Partner, the

 

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Partnership or any Partnership Subsidiary or any of their respective Assets,
except as would not reasonably be expected, individually or in the aggregate, to
have a Titan Material Adverse Effect; or

(c) (i) conflict with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default under, (iii) require
the General Partner, the Partnership or any Partnership Subsidiary to obtain any
consent, approval or action of, make any filing with or give any notice to, any
Person as a result or under the terms of, (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to or (v) result in the creation or imposition of any Encumbrance upon
the General Partner, the Partnership or any Partnership Subsidiary or any of
their respective Assets under, any Material Contract or any Material Permit to
which the General Partner, the Partnership or any Partnership Subsidiary is a
party or by which any of their respective Assets is bound, except as would not
reasonably be expected, individually or in the aggregate, to have a Titan
Material Adverse Effect.

Section 4.5 Financial Information.

Section 4.5 of the Disclosure Letter sets forth (i) the audited consolidated
balance sheet of the Partnership and its Subsidiaries at June 30, 2005 and the
related audited consolidated statements of operations, cash flows and changes in
partners’ capital for the period from the Emergence Date through June 30, 2005,
together with the audit report thereon (collectively, the “Audited Financials”),
and the unaudited balance sheet at March 31, 2006 and related unaudited
consolidated statement of operations, cash flow, and changes in partners’
capital for the nine months then ended (the “Unaudited Financials,” together
with the Audited Financials, the “Financial Statements”). Except as set forth in
Section 4.5 of the Disclosure Letter, the Financial Statements were prepared in
accordance with GAAP, applied consistently during the relevant period, and
present fairly, in all material respects, the consolidated financial condition
and results of operations of the Partnership and its Subsidiaries, taken as a
whole, at such dates and for the periods covered by such statements, except as
may be noted therein and except for normal year-end adjustments (in the case of
the Unaudited Financials).

Section 4.6 Undisclosed Liabilities.

Except as set forth in Section 4.6 of the Disclosure Letter, none of the General
Partner, the Partnership or any Partnership Subsidiary has any material
Liabilities or obligations (whether absolute or contingent, liquidated or
unliquidated, or due or to become due), except for Liabilities and obligations
(i) reflected or reserved for on the Financial Statements or disclosed in the
notes thereto, (ii) that have arisen since the date of the Financial Statements
in the ordinary course of the operation of business and consistent with past
practice of the Partnership and its Subsidiaries, (iii) not required to be
reflected on, or disclosed on the footnotes to, the Financial Statements under
GAAP, (iv) arising from executory obligations arising under Contracts disclosed,
or not required to be disclosed, pursuant to Section 4.8 of this Agreement,
(v) incurred as a result of or arising out of the transactions contemplated by
this Agreement, or (vi) which would not in the aggregate reasonably be expected
to have a Titan Material Adverse Effect.

 

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Section 4.7 Absence of Certain Changes or Events.

From March 31, 2006 through the date hereof, except as disclosed in Section 4.7
of the Disclosure Letter, there has not been any:

(a) Titan Material Adverse Effect;

(b) except for normal periodic increases in the ordinary course of business
consistent with past practice or in the aggregate not material to the
Partnership, increase in (i) the compensation payable or to become payable by
the General Partner, the Partnership or any Partnership Subsidiary to any of
their respective Personnel, (ii) bonus, incentive compensation, service award,
severance arrangements or other like benefit granted, made or accrued,
contingently or otherwise, for or to the credit of any of the Personnel or
(iii) new employment agreement to which the General Partner, the Partnership or
any Partnership Subsidiary is a party;

(c) addition to or modification of the Employee Plans other than
(i) contributions made in accordance with the normal practices of the
Partnership and the Partnership Subsidiaries, (ii) the extension of coverage to
other Personnel who became eligible after March 31, 2006 or (iii) additions or
modifications that in the aggregate are not material to the Partnership;

(d) sale, assignment or transfer of any material Assets of the General Partner,
the Partnership or any Partnership Subsidiary other than in the ordinary course
of business;

(e) cancellation of any material Indebtedness or waiver of any rights of
substantial value to the General Partner, the Partnership or any Partnership
Subsidiary, other than in the ordinary course of business;

(f) capital expenditure, or commitment to make a capital expenditure, by the
General Partner, the Partnership or any Partnership Subsidiary, involving
payments in excess of $500,000 in the aggregate (including payments to be made
after the date hereof) that cannot be canceled without penalty on less than 90
days notice;

(g) the execution of or amendment to any lease or any incurring of liability
therefor by the Partnership or any Partnership Subsidiary, involving annual
payments in excess of $100,000 that cannot be canceled without penalty on less
than 90 days notice;

(h) change in accounting methods or practices by the Partnership or any
Partnership Subsidiary, except as may have been required by a change in GAAP;

(i) revaluation by the Partnership or any Partnership Subsidiary of any of their
respective Assets, including without limitation, writing off notes or accounts
receivable, other than in the ordinary course of business, that has resulted in
a change in the value assigned to such Assets by the Partnership;

(j) Indebtedness incurred by the Partnership for borrowed money or any
commitment to incur Indebtedness entered into by the Partnership, or any loans
made or agreed to be made by

 

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the Partnership, other than trade debt or Indebtedness incurred under the Credit
Revolver, in each case in the ordinary course of business consistent with past
practice;

(k) declaration, setting aside for payment or payment of dividends or
distributions in respect of any Equity Securities of the Partnership or any
redemption, purchase or other acquisition of any of the Partnership’s or any
Partnership Subsidiary’s Equity Securities, other than distributions to the
limited partners of the Partnership in the ordinary course consistent with past
practice; or

(l) any agreement by the General Partner, the Partnership or any Partnership
Subsidiary to do any of the foregoing.

Section 4.8 Contracts; No Defaults.

(a) Section 4.8(a) of the Disclosure Letter contains a listing of all Contracts
of the types described in (i) through (xiv) below to which the Partnership or
any Partnership Subsidiary was a party as of the date hereof (each, a “Material
Contract”). True, correct and complete copies of Contracts referred to in
clauses (i)-(xiv) below have been delivered, or made available, to Parent or its
representatives.

(i) Each Contract, other than customer contracts but including fixed price
customer contracts, that involves performance of services or delivery of goods
and/or materials by or to the Partnership or any Partnership Subsidiary of an
amount or value in excess of $100,000 per year that cannot be canceled without
penalty on less than 90 days notice;

(ii) Each note, debenture, other evidence of Indebtedness, guarantee, loan,
letter of credit, surety-bond or financing agreement or instrument or other
contract for money borrowed or guaranteed by the Partnership or any Partnership
Subsidiary (including any agreement or commitment for future loans, credit or
financing) having a principal amount due in excess of $100,000;

(iii) Each lease, rental or occupancy agreement, license, installment and
conditional sale agreement and other Contract affecting the ownership of,
leasing of, title to, use of or any leasehold or other interest in, any real or
personal property having annual rental payments in excess of $100,000 that
cannot be canceled without penalty on less than 90 days notice;

(iv) Each licensing agreement or other Contract with respect to patents,
trademarks, copyrights or other intellectual property;

(v) Each employment, severance or retention agreement, collective bargaining
agreement or other Contract to or with any key employee relating to wages, hours
and other conditions of employment, except for any such contract which is
terminable either at will or on no more than 90 days notice without payment,
penalty or additional severance in connection therewith;

 

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(vi) Each joint venture Contract, partnership agreement, limited liability
company agreement or other Contract (however named) involving a sharing of
profits, losses, costs or liabilities by the Partnership or any Partnership
Subsidiary with any other Person, other than Contracts entered into in the
ordinary course of business, none of which in the aggregate is material to the
Partnership;

(vii) Each Contract containing covenants which in any way purport to materially
restrict the Partnership’s or any Partnership Subsidiary’s business activity or
purport to limit the freedom of the Partnership or any Partnership Subsidiary to
engage in any line of business or to compete with any Person, except for
confidentiality or non-disclosure agreements entered into in the ordinary course
of business;

(viii) Each Contract providing for sales commissions or other payments to any
Person based on sales, purchases or profits, other than direct payments for
goods or services, and other than Contracts entered into in the ordinary course
of business;

(ix) Each power of attorney granted by the Partnership or any Partnership
Subsidiary that is currently effective and outstanding;

(x) Each Contract requiring greater than $500,000 in future capital expenditures
that is not cancelable without penalty on less than 90 days notice;

(xi) Each written warranty, guaranty or other similar undertaking with respect
to contractual performance extended by the Partnership or any of Partnership
Subsidiary other than in the ordinary course of business;

(xii) Each Loss Contract;

(xiii) Each Contract or other arrangement providing for sales, purchases,
leasing, subleasing, licensing or sublicensing of goods, services, tangible or
intangible property or joint activities between the Partnership and any of the
Partnership’s directors, officers or limited partners, other than (A) Contracts
to provide residential propane products and services or (B) Contracts entered
into in the ordinary course of business containing “arm’s-length” terms; and

(xiv) Each material amendment, supplement and modification in respect of any of
the foregoing.

(b) Except as set forth in Section 4.8(b) of the Disclosure Letter, all of the
Material Contracts are (i) in full force and effect, (ii) represent the legally
valid and binding obligations of the Partnership or the Partnership Subsidiary
party thereto and are enforceable against the Partnership or such Partnership
Subsidiary in accordance with their terms (except to the extent such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting creditors’ rights generally or subject to general principles of
equity) and (iii) to the Knowledge of the Partnership, represent the legally
valid and binding obligations of the other parties thereto and are enforceable
against such parties in accordance with their terms. Except as set forth in
Section 4.8(b) of the Disclosure Letter, to the Knowledge of the Partnership, as
of the date hereof, no condition exists or event has occurred which, with notice
or lapse of time or both,

 

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would constitute a default or a basis for force majeure or the claim of
excusable delay or nonperformance under such Contracts, except as would not
reasonably be expected, individually or in the aggregate, to have a Titan
Material Adverse Effect.

(c) Except as set forth in Section 4.8(c) of the Disclosure Letter, to the
Knowledge of the Partnership, neither the Partnership nor any Partnership
Subsidiary has committed any act or omission which would result in, and to the
Knowledge of the Partnership, there has been no occurrence which would give rise
to, any liability for breach of warranty on the part of the Partnership or any
Partnership Subsidiary under any of the Material Contracts.

Section 4.9 Machinery and Equipment and Other Property.

Except as set forth in Section 4.9 of the Disclosure Letter, the Partnership or
a Partnership Subsidiary owns and has good and marketable title to the
machinery, equipment, tools, spare parts, furniture and automotive vehicles
reflected on the books of the Partnership and its Subsidiaries as owned by the
Partnership or its Subsidiaries (the “Machinery and Equipment”), free and clear
of all Encumbrances other than Permitted Encumbrances. The Machinery and
Equipment, taken as a whole, are suitable in all material respects for the
purposes for which they are presently or have historically been used. The
Machinery and Equipment, taken as a whole, (i) are in compliance with the rules
and regulations of applicable Governmental Authorities regulating the storage
and handling of propane (including liquefied propane) and (ii) are in compliance
with the current National Fire Protection Association Pamphlets 54 and 58
(including, but not limited to, bona fide valid data plates affixed to all bulk
storage tanks), except, in each case, where the failure to be in compliance
would not reasonably be expected to have a Titan Material Adverse Effect. Except
as otherwise contemplated by this Agreement, the Partnership and the Partnership
Subsidiaries own, or, in the case of leases and licenses, have valid and
subsisting leasehold interests or licenses in, all of the material properties
and assets of whatever kind (whether real or personal, tangible or intangible)
used in their businesses, in each case free and clear of any Encumbrances other
than Permitted Encumbrances.

Section 4.10 Intellectual Property.

Section 4.10 of the Disclosure Letter lists all material Intellectual Property
Rights owned by the Partnership or any Partnership Subsidiary (the “Partnership
Intellectual Property”). Section 4.10 of the Disclosure Letter lists all license
or sublicense agreements with respect to any licensed Intellectual Property
Rights to which the Partnership or any Partnership Subsidiary is a party and
which is material to the business and operations of the Partnership or any
Partnership Subsidiary as presently being conducted. Except as set forth in
Section 4.10 of the Disclosure Letter, the Partnership or a Partnership
Subsidiary has good title to each item of Partnership Intellectual Property,
free and clear of any Encumbrances other than Permitted Encumbrances. Except as
set forth in Section 4.10 of the Disclosure Letter, to the Knowledge of the
Partnership, the Partnership’s and the Partnership Subsidiaries’ use of the
Partnership Intellectual Property does not infringe or otherwise violate the
rights of any Person and no Person is infringing or otherwise violating the
rights of the Partnership or any Partnership Subsidiary in or to any material
Partnership Intellectual Property. Since the Emergence Date, no claims have been
asserted in writing by any Person against the Partnership or any Partnership
Subsidiary with respect to the use of any Partnership Intellectual Property
challenging or questioning the

 

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ownership or validity of the Partnership Intellectual Property or any license or
sublicense agreements to which the Partnership or any Partnership Subsidiary is
a party and, except as set forth in Section 4.10 of the Disclosure Letter, to
the Partnership’s Knowledge, no Person has a right to a royalty or similar
payment in respect of the Partnership Intellectual Property. Except as would not
reasonably be expected to have a Titan Material Adverse Effect, the Partnership
and the Partnership Subsidiaries own or have the right to use pursuant to a
valid license, sublicense, agreement or permission all the material Intellectual
Property Rights used in the operation of the business of the Partnership and its
Subsidiaries, as presently conducted.

Section 4.11 Real Property.

(a) Section 4.11(a) of the Disclosure Letter lists all real property (“Owned
Real Property”) owned by the Partnership and the Partnership Subsidiaries.
Except as set forth in Section 4.11(a) of the Disclosure Letter, with respect to
such owned real property, the identified owner has good and marketable fee
simple title free of all Encumbrances excepted Permitted Encumbrances.

(b) Section 4.11(b) of the Disclosure Letter describes and lists the name of the
lessor of all real property now leased or licensed for use by the Partnership or
any Partnership Subsidiary (the “Leased Real Property”) and the expiration date
relating thereto. The Partnership or a Partnership Subsidiary has a valid
leasehold interest in, and enjoys peaceful and undisturbed possession of, all
Leased Real Property, in each case free and clear of all Encumbrances except for
Permitted Encumbrances and as set forth in Section 4.11(b) of the Disclosure
Letter. Except as set forth in Section 4.11(b) of the Disclosure Letter, there
are no leases, subleases, licenses, occupancy agreements, options, rights (other
than those rights granted by law), concessions or other written or, to the
Knowledge of the Partnership, other agreements or arrangements granting to any
Person the right to purchase, use or occupy any of the Leased Real Property.
Except as set forth in Section 4.11(b) of the Disclosure Letter, the Owned Real
Property and the Leased Real Property (collectively, the “Real Property”)
includes all of the real property used in the business of the Partnership and
its Subsidiaries as currently conducted.

(c) All Improvements owned, leased or used by the Partnership or any Partnership
Subsidiary on the Real Property are suitable in all material respects for the
purposes for which they are currently used. Except as set forth in
Section 4.11(c) of the Disclosure Letter, the Partnership or a Partnership
Subsidiary has obtained permits from any Governmental Authority having
jurisdiction over any of the Real Property necessary to permit the lawful use
and operation of the Improvements and the Real Property except where the failure
to do so would not reasonably be expected to have a Titan Material Adverse
Effect. Each such permit is in full force and effect, and there is no pending
or, to the Knowledge of the Partnership, threatened proceeding that could result
in the modification or cancellation thereof except, in each case, for deviations
from the foregoing which would not reasonably be expected to have a Titan
Material Adverse Effect.

Except as set forth in Section 4.11(c) of the Disclosure Letter, the Partnership
or a Partnership Subsidiary has obtained any agreement, easement or other right
from any Person, necessary to permit the lawful use and operation of any
driveways, roads and other means of egress and ingress to and from any of the
Real Property, except where the failure to do so would

 

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not materially interfere with the use of the Improvements and the Real Property.
Each such agreement, easement or other right is in full force and effect, and
there is no pending or, to the Knowledge of the Partnership, threatened
proceeding that could result in the modification or cancellation thereof except,
in each case, for deviations from the foregoing which would not reasonably be
expected to materially interfere with the use of the Improvements and the Real
Property.

Except as set forth in Section 4.11(c) of the Disclosure Letter, no Improvement,
or the operation or maintenance thereof, violates any restrictive covenant, or
encroaches on any property owned or leased by any other Person, except for such
violations or encroachments which would not reasonably be expected to have a
Titan Material Adverse Effect.

The Real Property and the Improvements are sufficiently supplied in all material
respects with utilities and other services as necessary for the operation of
such Real Property and Improvements as currently operated including adequate
water, storm and sanitary sewer, gas, electric, cable and telephone facilities.

(d) Prior to the date hereof, the Partnership has delivered or made available to
Parent true and correct copies of all title reports, title policies and surveys
currently in the possession of the Partnership or any Partnership Subsidiary
with respect to any of the Real Property.

Section 4.12 Litigation and Proceedings.

Except as set forth in Section 4.12 of the Disclosure Letter or as would not
reasonably be expected to have a Titan Material Adverse Effect, there are no
lawsuits, actions, suits, claims or other proceedings at law or in equity,
including but not limited to Environmental Claims, or to the Knowledge of the
Partnership, investigations, before or by any Governmental Authority or before
any arbitrator pending or, to the Knowledge of the Partnership, threatened,
against the Partnership or any Partnership Subsidiary. Except as set forth in
Section 4.12 of the Disclosure Letter or as would not reasonably be expected to
have a Titan Material Adverse Effect, there is no unsatisfied judgment, order,
injunction or decree binding upon the Partnership or any Partnership Subsidiary.

Section 4.13 Employee Benefit Plans.

(a) Disclosure; Delivery of Copies of Relevant Documents and Other Information.
Section 4.13(a) of the Disclosure Letter contains a complete list of all
material Employee Plans. With respect to each material Employee Plan, the
Partnership has delivered or made available to Parent true, correct and complete
copies, including all amendments thereto, of: (i) all current plan documents,
trust agreements and other funding arrangements; (ii) all current summaries and
summary plan descriptions; (iii) the annual reports (Form 5500 series) for the
most recently completed three fiscal years for each Employee Plan required to
file such form, together with the most recent actuarial valuation report, if
any; (iv) the most recent determination or opinion letter, if any, issued by the
IRS and any pending request for such a determination letter; (v) copies of all
material documents and correspondence relating to any Employee Plan received
from or provided to the IRS, Department of Labor, or Pension Benefit Guaranty
Corporation; (vi) the most recent annual 401(k) and 401(m) nondiscrimination
tests performed under the Code;

 

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(vii) all summaries furnished employees, officers and directors of the
Partnership and the Partnership Subsidiaries of all incentive compensation,
other plans and fringe benefits for which a summary plan description is not
required; and (viii) the forms of notifications to employees of their rights
under Section 4980B of the Code.

(b) Representations. Except as set forth in Section 4.13(b) of the Disclosure
Letter:

(i) Neither the Partnership nor any Partnership Subsidiary or ERISA Affiliate
sponsors, maintains, contributes to or has an obligation to contribute to, or
has since the Emergence Date sponsored, maintained, contributed to or had an
obligation to contribute to, or has withdrawn in a partial or complete
withdrawal from, any multi-employer plan as defined in Section 4001(a)(3) or
Section 3(37) of ERISA (a “Multiemployer Plan”) or has any fixed or contingent
liability under Section 4204 of ERISA with respect to any of their current or
former employees.

(ii) Neither the Partnership nor any of its ERISA Affiliates maintains or has
since the Emergence Date maintained, contributed to or has had an obligation to
contribute to an Employee Plan subject to Title IV of ERISA or Section 412 of
the Code.

(iii) Each Employee Plan which is intended to qualify under Section 401(a),
Section 401(k), Section 401(m) or Section 4975(e)(7) of the Code has received a
favorable determination letter or opinion letter, as applicable, from the IRS as
to its tax qualified status, and each trust established in connection with any
Employee Plan that is intended to be exempt from federal income taxation under
Section 501(a) of the Code is so exempt, and, no matters are pending under the
IRS Employee Plans Compliance Resolution System, the IRS closing agreement
programs or other similar program.

(iv) Except as would not reasonably be expected to result, individually or in
the aggregate, in material liability to the Partnership or any Partnership
Subsidiary, as to each of the Employee Plans, the Partnership and the
Partnership Subsidiaries have complied with all applicable Law in the
administration thereof including the provisions of ERISA, and each Employee Plan
complies in all material respects in form and operation with its terms and all
applicable Laws.

(v) With respect to the Employee Plans, no event has occurred and, to the
Knowledge of the Partnership, there exists no condition or set of circumstances
in connection with which the Partnership or any Partnership Subsidiary is
reasonably likely to be subject to any material liability (other than for
routine claims for benefits under the Employee Plans) under the terms of, or
with respect to, such Employee Plans, ERISA, the Code or any other applicable
Law.

(vi) None of the Partnership or any Partnership Subsidiary or any fiduciary of
an Employee Plan has any material liability with respect to any transaction in
violation of Sections 404 or 406 of ERISA or any “prohibited transaction,” as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code. None of the
assets of the Partnership or any Partnership Subsidiary is, or would reasonably
be expected to become, the subject of

 

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any lien arising under ERISA or Section 412(n) of the Code. Neither the
Partnership nor any Partnership Subsidiary or ERISA Affiliate has any material
liability under Section 502 of ERISA. No material excise tax would reasonably be
expected to be imposed upon the Partnership or any Partnership Subsidiary under
Chapter 43 of the Code.

(vii) There is no action, order, writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, arbitral action,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan, including any audit or inquiry by the IRS or the United States
Department of Labor, that is pending, or, to the Knowledge of the Partnership,
threatened or anticipated, against the Partnership or any Partnership Subsidiary
or any ERISA Affiliate (other than routine benefits claims) and, to the
Knowledge of the Partnership, there exist no facts or circumstances that could
give rise to any such action, order, writ, injunction, judgment, decree, claim,
suit, litigation, proceedings, arbitral action, audit or investigation.

(viii) Neither the Partnership nor any Partnership Subsidiary has any present or
future obligation to make any payment to, or with respect to, any present of
former employee of the Partnership or the Partnership Subsidiaries pursuant to
any retiree medical benefit plan or other retiree welfare plan.

(ix) Neither the Partnership nor any Partnership Subsidiary has any announced
plan or legally binding commitment to create any additional Employee Plans or to
amend or modify any existing Employee Plan, except as required by Law.

(x) No Employee Plan is a voluntary employee benefit association under
Section 501(c)(9) of the Code. The Partnership and each Partnership Subsidiary
and ERISA Affiliate is in material compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations
thereunder and any similar state law and (ii) the applicable requirements of the
Health Insurance Portability and Accountability Act of 1996, as amended, and the
regulations thereunder. Neither the Partnership nor any Partnership Subsidiary
has contributed to a nonconforming group health plan (as defined in
Section 5000(c) of the Code).

(xi) Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated herein (either alone or in conjunction with any
other event, including a termination of employment) will result in any liability
to the Partnership or any Partnership Subsidiary or the acceleration or creation
of any rights of any person to benefits under any Employee Plan (including,
without limitation, the acceleration of the vesting or exercisability of any
stock options or restricted stock or the acceleration or creation of any rights
under any Employee Plan) or increase the amount of compensation due any such
person.

(xii) There is no Contract, agreement, plan or arrangement covering any
employee, director or consultant or former employee, director or consultant, of
the Partnership or any Partnership Subsidiary that, individually or
collectively, provides for

 

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the payment by the Partnership or any Partnership Subsidiary of any amount that
is not deductible under Section 404 of the Code or that is an “excess parachute
payment” pursuant to Section 280G of the Code.

(xiii) The Partnership and the Partnership Subsidiaries have, based on a
reasonable interpretation of applicable Laws, properly classified individuals
providing services to the Partnership or any Partnership Subsidiary as
independent contractors or employees, as the case may be, for all purposes,
including but not limited to payroll and employee benefit purposes. No “leased
employee,” as that term is defined in Section 414(n) of the Code, performs
services for the Partnership or any Partnership Subsidiary.

(xiv) No Employee Plan has participated in a “reportable transaction” within the
meaning of Treasury Regulation Section 1.6011-4(b).

(xv) Neither the Partnership nor any Partnership Subsidiary has any potential
liability under Code section 4978, and all deferred compensation arrangements of
the Partnership and each Subsidiary have been operated since January 1, 2005 in
good faith compliance with Code section 409A.

Section 4.14 Labor Matters.

(a) Except as set forth in Section 4.14(a) of the Disclosure Letter, neither the
Partnership nor any Partnership Subsidiary is a party to any collective
bargaining or other labor union agreements (a “CBA”), subject to a legal duty to
bargain with any labor organization on behalf of any employee or is presently
operating under an expired collective bargaining agreement. Except as set forth
in Section 4.14(a) of the Disclosure Letter, at no time since the Emergence Date
has there been any material work stoppage or material labor dispute (including
questions concerning representation, arbitration proceedings, labor strikes,
slow downs or stoppages, organizing attempts, picketing or boycotts) against the
Partnership or any Partnership Subsidiary and, to the Knowledge of the
Partnership, no such action is threatened and there is no organizational
activity underway as of the date hereof. The Partnership and the Partnership
Subsidiaries are in compliance in all material respects with all applicable Laws
respecting employment practices, employee documentation, terms and conditions of
employment, payment and termination of labor, including the provisions thereof
relative to severance, vacation, unemployment, wages and hours, equal employment
opportunity, nondiscrimination, immigration, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closings. Except as set forth in Section 4.14(a) of the
Disclosure Letter, neither the Partnership nor any Partnership Subsidiary is
engaged in, or received any written notice of, any unfair labor practice and no
such complaints are pending before the National Labor Relations Board or any
other Governmental Authority.

(b) There are no outstanding assessments, penalties, fines, liens, charges,
surcharges, or other amounts due or owing pursuant to any workplace safety and
insurance legislation and the Partnership and the Partnership Subsidiaries have
not been reassessed in any material respect under such legislation since the
Emergence Date and no audit of the Partnership or the Partnership Subsidiaries
is being performed as of the date hereof pursuant to any applicable

 

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workplace safety and insurance legislation. There are no claims under applicable
workplace safety and insurance legislation that would reasonably be expected to
have a Titan Material Adverse Effect.

There are no charges pending under Occupational Safety and Health Act (29 U.S.C.
§ 641 et seq.) and the regulations promulgated thereunder (“OSHA”). The
Partnership and the Partnership Subsidiaries have complied in all material
respects with any orders issued under OSHA and there are no appeals of any
orders under OSHA currently outstanding.

Section 4.15 Legal Compliance.

Except as set forth in Section 4.15 of the Disclosure Letter, and except for
(i) Environmental Law, which is governed by Section 4.16 of this Agreement,
(ii) ERISA, which is governed by Section 4.13 of this Agreement and
(iii) employment Law, which is governed by Section 4.14 of this Agreement,
(A) neither the Partnership nor any Partnership Subsidiary is, or at any time
since the Emergence Date has been, in material violation of or in material
default under any Law applicable to the Partnership or any Partnership
Subsidiary or any of their respective Assets, (B) to the Partnership’s
Knowledge, no action, proceeding, formal governmental investigation, complaint,
claim, demand or notice has been filed or commenced against the Partnership or
any Partnership Subsidiary alleging any such violation or default, nor to the
Partnership’s Knowledge are any such actions threatened and (C) neither the
Partnership nor any of its Subsidiaries has, since the Emergence Date, conducted
any internal investigation with respect to any actual, potential or alleged
material violation of any Law by the Partnership, its Subsidiaries or any of
their employees, officers, directors or agents except, in each case, for such
violations or defaults which would not reasonably be expected to have a Titan
Material Adverse Effect.

Section 4.16 Environmental Matters.

Except as otherwise disclosed in Section 4.16 of the Disclosure Letter or
specifically set forth in any of the reports or files made available to Parent
or its representatives that are listed in Section 4.16 of the Disclosure Letter:

(a) (i) The Partnership and the Partnership Subsidiaries are in material
compliance with all Environmental Laws, including, without limitation, the terms
and conditions of all Material Permits required under Environmental Laws and
(ii) the Partnership and the Partnership Subsidiaries hold all the Material
Permits required under Environmental Laws for the operation of their business.

(b) To the Partnership’s Knowledge, there are no facts, circumstances,
conditions, or occurrences which could reasonably be expected to require any
facility owned or operated by the Partnership or the Partnership Subsidiaries to
be upgraded or modified in a manner that would result in material capital
expenditures in order to remain in compliance with current and reasonably
foreseeable future requirements under Environmental Law, including without
limitation, any Material Permit required under Environmental Law.

 

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(c) (i) There are no Environmental Claims pending or, to the Knowledge of the
Partnership, threatened against the Partnership or any Partnership Subsidiary,
(ii) there are no settlement agreements, writs, injunctions, decrees, orders or
judgments outstanding, or, to the Knowledge of the Partnership, threatened
relating to compliance with or liability under any Environmental Law,
(iii) neither the Partnership nor any Partnership Subsidiary has any unaccrued
liability under any Environmental Law which would reasonably be expected to have
a Titan Material Adverse Effect, and (iv) there are no facts, circumstances,
conditions, or occurrences which could reasonably be expected to form the basis
of a Environmental Claim against the Partnership or any Partnership Subsidiary
that would reasonably be expected to have a Titan Material Adverse Effect.

(d) As of the date hereof, no judicial proceeding or governmental or
administrative action is pending or, to the Knowledge of the Partnership,
threatened, under any Environmental Law pursuant to which the Partnership or any
Partnership Subsidiary has been, or, to the Knowledge of the Partnership, is
reasonably likely to be, named as a party.

(e) To the Knowledge of the Partnership, there has been no spill, discharge, or
release of Hazardous Substances on or from, and there are no other Environmental
Conditions relating to the Real Property that (i) requires investigation or
remediation under Environmental Laws or (ii) could reasonably be expected to
result in any Environmental Claim.

(f) Neither the Partnership nor any Subsidiary has been notified in writing by
either a Governmental Authority or any other Person that it may be a potentially
responsible party or received any letter or request for information under
Section 104 of CERCLA or any comparable state or local law, and none of the Real
Property or, to the Partnership’s Knowledge, any former property owned, leased
or used by the Partnership or the Partnership Subsidiaries is listed on the
National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined
in CERCLA) or on any similar foreign, federal or state or local list of sites
requiring investigation or remediation, except as set forth in any reports or
files made available to Parent or its representatives.

(g) To the Knowledge of the Partnership, (i) there are no structures,
improvements, equipment, fixtures or facilities owned or granted by the
Partnership that are constructed with, use, or otherwise contain radioactive
materials, asbestos-containing materials, lead, urea formaldehyde or
polychlorinated biphenyls in amounts or in a condition requiring investigation
or remediation under Environmental Laws, (ii) there are no underground storage
tanks, or underground piping associated with such tanks, that do not have a full
secondary containment system in place, and (iii) there are no abandoned
underground storage tanks that have not been either abandoned in place or
removed pursuant to a permit issued by a Governmental Authority.

(h) There are no recorded liens, restrictive covenants or other land use or
transferability restrictions under Environmental Laws on the Real Property, and
no written notices of government actions have been received, or, to the
Partnership’s Knowledge, threatened that could subject any of such properties to
such liens, restrictive covenants or other land use restrictions, and neither
the Partnership nor the Partnership Subsidiaries are required to place any
notice or restriction relating to Hazardous Substances in any deed to such
property.

 

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(i) To the Knowledge of the Partnership, neither the Partnership nor any
Partnership Subsidiary: (i) has assumed any liability of any other Person under
Environmental Laws; (ii) has released any Person nor waived any rights or
defenses with respect to any Environmental Claim or Environmental Conditions; or
(iii) has provided an indemnity for or otherwise retained any liability under
Environmental Laws at any facility formerly owned or operated by the Partnership
or any Partnership Subsidiary.

(j) There is no environmental report prepared in the last five years in the
possession or control of the Partnership relating to the current or prior
business of the Partnership or its Subsidiaries that has not been delivered or
made available to Parent or its representatives and all such reports are listed
in Section 4.16 of the Disclosure Letter.

Section 4.17 Taxes.

Except as otherwise disclosed in Section 4.17 of the Disclosure Letter:

(a) All Tax Returns of the Partnership, the General Partner and the Partnership
Subsidiaries have been duly and timely filed with the appropriate governmental
authorities in each jurisdiction in which such Tax Returns are required to be
filed, and are correct and complete in all material respects. None of the
Partnership, the General Partner or any Partnership Subsidiary is currently the
beneficiary of any extension of time within which to file any Tax Return.

(b) All Taxes that are due and payable by the Partnership, the General Partner
or any Partnership Subsidiary have been timely and appropriately paid so as to
avoid penalties for underpayment.

(c) None of the Tax Returns of the Partnership, the General Partner or any
Partnership Subsidiary has been audited or is being audited by any taxing
authority.

(d) No deficiencies for Taxes of the Partnership, the General Partner or any
Partnership Subsidiary and no assessment, audit or other proceeding by any
taxing authority, court, or other Governmental Authority is proposed, pending,
or, to the Knowledge of the Partnership or the General Partner, threatened with
respect to the Tax Returns or Taxes owed or alleged to be owed by the
Partnership, the General Partner or any Partnership Subsidiary.

(e) There are no outstanding agreements, waivers, or arrangements extending the
statutory period of limitations applicable to any claim for or the period for
the collection or assessment of Taxes due and payable by the Partnership, the
General Partner or any Partnership Subsidiary for any taxable period.

(f) No closing agreement pursuant to a provision of any state, local or foreign
law has been entered into by or with respect to the Partnership, the General
Partner or any of the Partnership Subsidiaries or any of their Assets.

(g) The Partnership and the General Partner have previously made available to
Parent true, correct and complete copies of each of the United States federal,
state, local and foreign

 

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income Tax Returns filed since the Emergence Date by the Partnership, the
General Partner and the Partnership Subsidiaries.

(h) None of the Partnership, the General Partner or any Partnership Subsidiary
has been or is in violation of any applicable Law relating to the payment or
withholding of Taxes, except as would not reasonably be expected to have a Titan
Material Adverse Effect. The Partnership, the General Partner and the
Partnership Subsidiaries have duly and timely withheld from salaries, wages and
other compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable Laws.

(i) None of the Partnership, the General Partner or any Partnership Subsidiary
is a party to, is bound by, or has any obligation under any Tax sharing
agreement or similar agreement and no such agreement shall be entered into or
amended by the Partnership or any Partnership Subsidiary at or prior to the
Closing.

(j) None of the Partnership, the General Partner or any Partnership Subsidiary
has any liability for the Taxes of any person as defined in Section 7701(a)(1)
of the Code (other than the Partnership and the Partnership Subsidiaries) under
Treas. Reg. § 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.

(k) No claim been made since the Emergence Date by any Governmental Authority in
a jurisdiction where the Partnership, the General Partner or any Partnership
Subsidiary do not file Tax Returns that any of the Partnership or any
Partnership Subsidiary is, or may be, subject to taxation by that jurisdiction.

(l) None of the Partnership, the General Partner or any Partnership Subsidiary
has (i) made an election, or is required, to treat any asset as owned by another
person pursuant to the provisions of former Section 168(f) of the Code or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code, or (ii) acquired or owns any assets that directly or
indirectly secure any debt the interest on which is tax-exempt under
Section 103(a) of the Code.

(m) There are no liens for Taxes on any of the assets of the Partnership, the
General Partner or any Partnership Subsidiary, except for liens for Taxes not
yet due and payable.

(n) No power of attorney that is currently in force has been granted with
respect to any matter relating to Taxes that could affect the Partnership, the
General Partner or any Partnership Subsidiary.

(o) Neither the General Partner nor the Partnership is a foreign person within
the meaning of Section 1445(b)(2) of the Code. Each of the General Partner and
the Partnership is treated as a partnership for federal income tax purposes and
no election has been made with respect to either of the General Partner or the
Partnership under Treasury Regulation Section 301.7701-3. The gross income of
the Partnership has met the gross income requirements of Code Section 7704(c)
for each of its taxable years. Titan Propane is treated as an entity that is
disregarded for federal income tax purposes. Titan Propane Services, Inc. is
treated as a corporation for federal income tax purposes.

 

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(p) The Partnership does not own any equity interest in a company, trust,
partnership, or other entity formed under the laws of a country or jurisdiction
outside the United States.

Section 4.18 Accounts Receivable.

Except as set forth in Section 4.18 of the Disclosure Letter, the amount of
accounts receivable, unbilled invoices, and other debts due are recorded in the
records and books of account of the Partnership or the Partnership Subsidiaries
in the ordinary course of business as being due to the Partnership or the
Partnership Subsidiaries, after deducting the reserves reflected on the balance
sheet included in the Financial Statements and, to the Partnership Knowledge,
none of such accounts receivable or other debts is subject to any counterclaim
or set-off except to the extent of any such reserve. Since March 31, 2006, the
Partnership has not made any material change in its credit policies, nor has it
materially deviated therefrom. Except as set forth in the agreements described
in Section 4.18 of the Disclosure Letter, since March 31, 2005, neither the
Partnership nor Partnership Subsidiary has received accelerated payment of any
accounts receivable in excess of $10,000 (i.e., payments made by customers
materially in advance of such customers’ customary payment terms).

Section 4.19 Inventory.

Except as set forth in Section 4.19 of the Disclosure Letter, and after
deducting any valuation allowance or reserve for estimated obsolete or unsalable
Inventory on the Financial Statements, the Inventory reflected thereon
(a) existed as of the date of such Financial Statements in salable condition
and, (b) other than propane and other fuels, had a book value as reflected on
such Financial Statements which was consistent with past practice.

Section 4.20 Product Liability, Warranty and Product Recalls.

Except as set forth in Section 4.20 of the Disclosure Letter, neither the
Partnership nor any Partnership Subsidiary has committed any act or omission
which would result in, and to the Knowledge of the Partnership there are no
facts or circumstances that would give rise to, (i) any material product
liability not covered by insurance (other than deductibles or self-retention
amounts under such insurance policies), (ii) any obligation to recall any
products produced by the Partnership or any Partnership Subsidiary or (iii) any
material liability for breach of warranty not covered by insurance (other than
deductibles or self-retention amounts under such insurance policies) in excess
of the reserve established therefor on the March 31, 2006 Balance Sheet.

Section 4.21 The General Partner.

The General Partner was formed for the sole purpose of holding the general
partnership interest of the Partnership. Other than its ownership of the general
partnership interest in the Partnership, it has conducted no operations, has no
assets or liabilities, contingent or otherwise, and is not obligated under any
Contract to which the Surviving Partnership could become subject as a result of
the Merger.

 

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Section 4.22 Affiliate Transactions.

Except as set forth in Section 4.22 of the Disclosure Letter, no officer,
director or affiliate of the General Partner, the Partnership or any Partnership
Subsidiary, or any individual related by blood, marriage or adoption to any such
Person or in which any such Person owns a greater than 10% beneficial interest,
is a party to any agreement, Contract, commitment or transaction with the
Partnership or any Partnership Subsidiary or has a material interest in any
material property used by the Partnership or any Partnership Subsidiary (any
such agreement, contract, commitment, transaction or interest, a “Related Party
Transaction”), other than (A) Contracts to provide residential propane products
and services, (B) Contracts entered into in the ordinary course of business
containing “arm’s-length” terms, (C) Contracts with respect to employment
arrangements, employment terms and conditions and compensation arrangements that
are disclosed in Sections 4.8(a) or 4.13(a) of the Disclosure Letter, (D) the
Existing LP Agreement and (E) the limited liability company agreement of the
General Partner, as amended to date.

Section 4.23 Governmental Authorities; Consents.

No consent, approval or authorization of, or designation, declaration, notice or
filing with, any Governmental Authority is required on the part of the
Partnership with respect to the Partnership’s execution or delivery of this
Agreement or the consummation of the transactions contemplated herein, except as
otherwise disclosed in Section 4.23 of the Disclosure Letter.

Section 4.24 Licenses, Permits and Authorizations.

Section 4.24 of the Disclosure Letter contains a list of all Material Permits
(including, without limitation, all facility security clearances) of or with any
Governmental Authority which are held by the Partnership or any Partnership
Subsidiary. All such Material Permits are in full force and effect and there are
no proceedings pending or, to the Knowledge of the Partnership, threatened that
seek the revocation, cancellation, suspension or adverse modification thereof.
Such Material Permits constitute all of the Material Permits necessary to permit
the Partnership and the Partnership Subsidiaries to own, operate, use and
maintain their respective Assets in the manner in which they are now operated
and maintained and to conduct the business of the Partnership and its
Subsidiaries as currently conducted in all material respects.

Section 4.25 Books and Records.

Except as set forth on Section 4.25 of the Disclosure Letter, the books of
account, minute books, and stock records of the Partnership and each Partnership
Subsidiary have all been made available to Parent or its representatives (other
than such books and records that relate to the transactions contemplated by this
Agreement), and are complete and correct in all material respects and have been
maintained in accordance with ordinary business practices. The books of account
have been maintained in a manner that would permit preparation of financial
statements in accordance with GAAP. At the Closing, all of those books and
records will be in the possession of the Partnership or the Partnership
Subsidiaries. There have been no meetings of the limited partners of the
Partnership since the Emergence Date.

 

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Section 4.26 Insurance.

(a) Section 4.26(a) of the Disclosure Letter contains a list of all policies of
property, fire and casualty, product liability, workers’ compensation and other
forms of insurance currently in effect and held by the Partnership or any
Partnership Subsidiary. True, correct and complete copies of such insurance
policies have been made available to Parent.

(b) Except as otherwise set forth in Section 4.26(b) of the Disclosure Letter,
all policies listed in Section 4.26(a) of the Disclosure Letter (i) are valid,
outstanding and enforceable policies, and (ii) will not terminate or lapse by
reason of the transactions contemplated herein.

(c) Neither the Partnership nor any Partnership Subsidiary has received (i) any
written, or to the Knowledge of the Partnership any non-written, notice of
cancellation of any policy described in paragraph (a) hereof or refusal of
coverage thereunder, (ii) any written, or to the Knowledge of the Partnership
any non-written, notice that any issuer of such policy has filed for protection
under applicable bankruptcy laws or is otherwise in the process of liquidating
or has been liquidated or (iii) any other written, or to the Knowledge of the
Partnership any non-written, notice that such policies are no longer in full
force or effect or that the issuer of any such policy is no longer willing or
able to perform its obligations thereunder.

Section 4.27 Brokers and Finders.

None of the General Partner, the Partnership, any Partnership Subsidiary, or any
officer or director of the Partnership has employed any broker or finder or
incurred any liability for any investment banking advisory fees, brokerage fees,
commissions or finders’ fees in connection with the transactions contemplated
herein. Neither the Parent nor MergerCo will incur any liability through any
action of the General Partner, the Partnership, any Partnership Subsidiary, or
any officer or director of the Partnership for any investment banking fees,
brokerage fees or finders fees on account of any investment banker, broker or
finder.

Section 4.28 Plan of Reorganization.

The Plan has been substantially consummated and the Confirmation Order remains
in full force and effect and has not been stayed, reversed, modified or amended
in any respect.

Section 4.29 Full Disclosure.

The representations and warranties made by the General Partner or the
Partnership in this Agreement, together with the Disclosure Letter furnished by
the General Partner or the Partnership to Parent in connection with the
transactions contemplated by herein, when taken as a whole, do not contain any
untrue statement of material fact or omit to state any material fact necessary
in order to make the statements contained herein, in the light of the
circumstances under which they were made, not misleading.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby makes, as of the date hereof and as of the Closing Date, the
following representations and warranties to the General Partner and the
Partnership.

Section 5.1 Organization and Good Standing; Requisite Power and Authority.

Parent and MergerCo are each limited partnerships duly organized and validly
existing under the laws of the State of Delaware. Parent and MergerCo each has
all requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and no other actions on the part of Parent or
MergerCo are necessary to authorize this Agreement or the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by each of Parent and MergerCo and is a legal, valid and binding
obligation of each, enforceable against each in accordance with its terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditor’s rights
generally or (ii) general principles of equity.

Section 5.2 No Conflict.

Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein will (a) conflict with or result in a
violation or breach of any of the terms, conditions or provisions of the
organizational documents of Parent or MergerCo, (b) conflict with or result in a
violation or breach of any term or provision of any Law applicable to Parent or
MergerCo, (c) require the consent, approval or authorization of, filing with, or
notice to any Person which, if not obtained, would prevent Parent or MergerCo
from performing its obligations hereunder, or (d) be rendered void or
ineffective by or under any of the terms, conditions or provisions of any
agreement, instrument or obligation to which Parent or MergerCo is a party or by
which Parent or MergerCo is bound.

Section 5.3 Brokers and Finders.

Neither the Partnership nor the General Partner will incur any liability for any
investment banking fees, brokerage or finders fees on account of any investment
banker, broker or finder employed by the Parent to MergerCo.

Section 5.4 Financing.

Parent has, and at the Closing will have, sufficient funds to pay the Aggregate
Purchase Price payable hereunder.

Section 5.5 Tax Status.

MergerCo is an entity that is disregarded for United States federal income tax
purposes.

 

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ARTICLE VI

COVENANTS OF THE PARTIES

Section 6.1 Maintenance of Business Prior to Closing.

Prior to the Closing, unless set forth on Section 6.1 of the Disclosure Letter,
as contemplated or permitted by this Agreement or as otherwise approved by
Parent in writing (such approval not to be unreasonably withheld, delayed or
conditioned), the Partnership and the General Partner:

(a) shall, and shall cause the Partnership Subsidiaries to, use commercially
reasonable efforts to conduct its operations and business according to their
usual, regular and ordinary course consistent with past practice;

(b) shall use commercially reasonable efforts, and shall cause the Partnership
Subsidiaries to use commercially reasonable efforts, to preserve intact their
business organizations and goodwill, keep available the services of their
respective officers and employees consistent with past practice and maintain
their respective relationships with those persons having business relationships
with them;

(c) shall not, and shall cause the Partnership Subsidiaries not to, amend their
respective partnership agreements or comparable governing instruments;

(d) shall promptly notify Parent after gaining Knowledge of (i) any event that
has resulted in a Titan Material Adverse Effect or (ii) a breach of any
representation or warranty contained herein that would reasonably be expected to
cause the condition set forth in Section 7.2(a) to not be satisfied;

(e) shall not, and shall not permit any Partnership Subsidiary to, grant, confer
or award any options, warrants, conversion rights or other rights or Equity
Securities not existing on the date hereof, to acquire any securities of the
Partnership or the Partnership Subsidiaries, other than those that terminate as
of the Effective Time;

(f) shall not, and shall not permit any Partnership Subsidiary to, amend the
terms of the Employee Plans, including, without limitation, any employment,
severance or similar agreements or arrangements in existence on the date hereof,
or adopt any new employee benefit plans, programs or arrangements or any
employment, severance or similar agreements or arrangements, except to the
extent required by or under applicable Law or in connection with negotiating a
new CBA between Hank’s Southwestern Propane and International Brotherhood of
Teamsters Local 251, provided that the Partnership may and may permit the
Partnership Subsidiaries to (i) make contributions to the Employee Plans in
accordance with the normal practices of the Partnership and the Partnership
Subsidiaries or as required, and (ii) extend coverage to Personnel who become
eligible in accordance with the terms of any existing Employee Plan on or after
the date hereof;

(g) shall not, and shall not permit any Partnership Subsidiary to, (i) increase
or agree to increase the compensation payable or to become payable to its
officers or, other than increases

 

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in accordance with past practice which are not material or increases required by
existing Contracts (which increases are either not material, or are pursuant to
a Contract disclosed hereunder), to its employees and bonuses or other incentive
compensation in the ordinary course of business consistent with past practices
or required by existing Contracts or (ii) enter into any collective bargaining
agreement, except, in the case of either (i) or (ii), with respect to its
operations in Westport, Massachusetts (d/b/a Hank’s Southeastern Propane);

(h) shall not, and shall not permit any Partnership Subsidiary to, (i) incur,
create, assume or otherwise become liable for borrowed money or assume,
guarantee, endorse or otherwise become responsible or liable for the obligations
of any other individual, corporation or other entity or (ii) make any loans or
advances to any other person (excluding extensions of credit to customers in the
ordinary course of business), except, in the case of clause (i), for borrowings
under existing credit facilities in the ordinary course of business and except,
in the case of clause (ii), for advances consistent with past practice which are
not material;

(i) shall pay when due, and shall cause the Partnership Subsidiaries to pay when
due, all material Taxes required to be paid by the Partnership or any of the
Partnership Subsidiaries, as applicable, other than those being contested in
good faith, and shall not permit any Partnership Subsidiary to, (i) materially
change any practice with respect to Taxes, (ii) make, change or revoke any
material Tax election, (iii) settle or compromise any material dispute involving
a Tax liability or (iv) consent to the extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;

(j) shall not pledge or otherwise encumber any Equity Securities that it owns,
and shall not permit any Partnership Subsidiary to issue or sell any of its
Equity Securities or to pledge or otherwise encumber any Equity Securities that
it owns (in each case other than pledges to the Lenders in connection with the
Credit Revolver and the Term Loan) or permit any Partnership Subsidiary to issue
or sell any securities convertible into, or any rights, warrants or options to
acquire, any Equity Securities in such Partnership Subsidiary;

(k) shall not, and shall not permit any Partnership Subsidiary to, make or agree
to make any capital expenditure in excess of $500,000 in the aggregate;

(l) shall not, and shall not permit any Partnership Subsidiary to, change any
material accounting principles or practices;

(m) shall not, and shall not permit any Partnership Subsidiary to, enter into
any agreement to discharge, settle or satisfy any claim, liability or obligation
that imposes any material restriction on the future activities or business
operations of the Partnership or any Partnership Subsidiary or any material
portion of the assets of the Partnership or any Partnership Subsidiary.

(n) shall not, and shall not permit any Partnership Subsidiary to, acquire (by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or make any
investment in another entity (other than an entity that is a wholly owned
Subsidiary of the Partnership as of the date hereof) or to sell any of its
Assets except for inventory in the ordinary course of business; and

 

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(o) shall not, and shall not permit any Partnership Subsidiary to take, or agree
(in writing or otherwise) to take, any of the foregoing action.

Section 6.2 Investigation by Parent.

Subject to applicable laws relating to the exchange of information, the
Partnership and the General Partner shall allow Parent, its counsel,
accountants, business consultants and other representatives, during regular
business hours upon reasonable notice, to make such reasonable inspection of the
Assets, facilities, business and operations of the Partnership and the
Partnership Subsidiaries, and to inspect Contracts, books and records and all
other documents and information reasonably requested by Parent and related to
the operations and business of the Partnership and the Partnership Subsidiaries
including, without limitation, historical financial information concerning the
business of the Partnership and the Partnership Subsidiaries and to meet with
designated employees and officers of the Partnership or the Partnership
Subsidiaries and/or their respective representatives. The Partnership and the
Partnership Subsidiaries shall furnish to Parent (a) all additional documents
and information with respect to the affairs of the Partnership and the
Partnership Subsidiaries relating to their businesses and (b) access to the
Personnel and to the Partnership’s and the Partnership Subsidiaries’ accountants
and counsel in each case, as Parent, or its counsel or accountants, may from
time to time reasonably request; provided, however, that nothing in this
Agreement shall require the General Partner or the Partnership to provide
information or materials from which the identity of or information regarding
specific customers may be learned. As a condition to the provision of access
described above, each of Parent and MergerCo agree to hold, and to cause each of
its counsel, accountants, business consultants and other representatives to
hold, all such information in confidence in accordance with, and subject to, the
Confidentiality Agreement.

Section 6.3 Consents and Efforts.

(a) Upon the terms and subject to the conditions set forth in this Agreement,
the Partnership and General Partner on the one hand and Parent and MergerCo on
the other hand agree to use their respective reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other party hereto in doing, all things necessary, proper
or advisable under applicable Laws (including without limitation the HSR Act) to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated herein. The parties will use their reasonable best
efforts and cooperate with each other (i) in promptly determining whether any
filings are required to be made or consents, approvals, waivers, licenses,
permits or authorizations are required to be obtained (or, which if not
obtained, would result in an event of default, termination or acceleration of
any Contract) under any applicable Law or from any Governmental Authorities or
other Persons, including parties to loan agreements or other debt instruments,
in connection with the transactions contemplated herein and (ii) in promptly
making any such filings, in furnishing information required in connection
therewith and in timely seeking to obtain any such consents, approvals, permits
or authorizations and to use their respective reasonable best efforts to cause
to be lifted or rescinded any injunction or restraining order or other order,
injunction or decree adversely affecting the ability of the parties to
consummate the Merger.

 

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(b) Parent and MergerCo, on the one hand, and the General Partner and the
Partnership, on the other hand, shall have the right to review in advance, and,
to the extent practicable, each will consult the other on, in each case subject
to applicable Laws relating to the exchange of information, all the information
relating to Parent and MergerCo or the General Partner and the Partnership, as
the case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any Governmental Authority
in connection with the transactions contemplated by this Agreement, except
neither party shall be under any obligation to disclose or deliver to the other
party any materials that constitute so-called “4(c) documents” under the HSR
Act. In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all Governmental Authorities necessary
or advisable to consummate the transactions contemplated by this Agreement.
Parent and MergerCo, on the one hand, and the General Partner and the
Partnership, on the other hand, shall promptly advise each other upon receiving
any communication from any Governmental Authority whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
that causes such party to believe that there is a reasonable likelihood that
such consent or approval will not be obtained or that the receipt of any such
approval will be materially delayed.

(c) The parties hereto agree to cause the filings required under the HSR Act to
be made promptly after the date of this Agreement.

Section 6.4 Partners Meeting.

The General Partner shall, as soon as reasonably practicable following the date
of this Agreement, duly call, give valid notice of, convene and hold a meeting
of the limited partners of the Partnership to be held no later than May 15, 2006
for the purpose of seeking the Partnership Approval. The General Partner shall
recommend to the limited partners of the Partnership that they approve the
Merger (the “General Partner Recommendation”), except to the extent that the
General Partner shall have withdrawn, qualified or modified the General Partner
Recommendation in compliance with Section 6.5(b). The General Partner shall use
commercially reasonable efforts to take all such other actions, including the
solicitation of proxies for such meeting, necessary or desirable to obtain the
Partnership Approval.

Section 6.5 No Solicitation by the Partnership.

(a) Neither the Partnership nor the General Partner shall, nor shall they
authorize any of their managers, officers or employees or any investment banker,
financial advisor, attorney, accountant or other advisor, agent or
representative retained by it (each, a “Partnership Representative”), directly
or indirectly through another Person to (i) solicit, initiate or knowingly
encourage, or knowingly take any other action to facilitate, any inquiries or
the making of any proposal that constitutes or could reasonably be expected to
lead to an Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to the Partnership or otherwise knowingly cooperate in any way in
connection with, any Acquisition Proposal. The General Partner and the
Partnership shall immediately cease and cause to be terminated all existing
discussions or negotiations with any Person conducted heretofore with respect to
any Acquisition Proposal and request the prompt

 

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return or destruction of all confidential information previously furnished. The
General Partner and the Partnership agree that they will promptly inform the
Partnership Representatives of the obligations undertaken in this
Section 6.5(a). If this Agreement has not been publicly filed with the SEC by
Parent and the General Partner receives any unsolicited inquiry that could
reasonably be expected to lead to an Acquisition Proposal or an Acquisition
Proposal, then the General Partner and the Partnership may provide the Person
making such inquiry or proposal with a copy of this Section 6.5. Notwithstanding
the foregoing, at any time prior to the Partnership obtaining the Partnership
Approval, in response to a bona fide written Acquisition Proposal that the
General Partner determines in good faith (after consultation with outside
counsel) constitutes or is reasonably likely to be expected to lead to a
Superior Proposal, and which Acquisition Proposal was made after the date hereof
and was not solicited in breach of, or did not otherwise result from a breach
of, this Section 6.5(a), (I) the General Partner and the Partnership may contact
the Person making such Acquisition Proposal and its advisors for the sole
purpose of clarifying such Acquisition Proposal, including, without limitation,
its terms and feasibility, and (II) if the General Partner determines in good
faith (after consultation with outside counsel) that the failure to respond to
such Acquisition Proposal is reasonably likely to be inconsistent with its
fiduciary duties to the partners of the Partnership under applicable Law, and
subject to compliance with Section 6.5(c) and after giving Parent written notice
of such determination, the Partnership may (x) furnish information with respect
to the Partnership to the Person making such Acquisition Proposal (and its
representatives) pursuant to a customary confidentiality agreement not less
restrictive of such person than the Confidentiality Agreement, provided that all
such information has previously been provided to Parent or is provided to Parent
prior to or concurrently with the time it is provided to such Person, and
(y) participate in discussions or negotiations with the Person making such
Acquisition Proposal (and its representatives) regarding such Acquisition
Proposal.

(b) The General Partner shall not (i)(A) withdraw (or modify in a manner adverse
to Parent), or propose to withdraw (or modify in a manner adverse to Parent),
the General Partner Recommendation or (B) recommend, adopt or approve, or
propose publicly to recommend, adopt or approve, any Acquisition Proposal (any
action described in this clause (i) being referred to as a “Partnership Adverse
Recommendation Change”) or (ii) approve or recommend, or propose publicly to any
unaffiliated limited partner of the Partnership to approve or recommend, or
allow the Partnership or any of its Subsidiaries to execute or enter into, any
definitive agreement constituting or related to any Acquisition Proposal (other
than a confidentiality agreement). Notwithstanding the foregoing, at any time
prior to the Partnership obtaining the Partnership Approval, the General Partner
may make a Partnership Adverse Recommendation Change in response to a Superior
Proposal if the General Partner determines in good faith (after consultation
with outside counsel) that the failure to take such action would be reasonably
likely to be inconsistent with its fiduciary duties to the partners of the
Partnership under applicable Law; provided, however, that no Partnership Adverse
Recommendation Change may be made in response to a Superior Proposal until after
the third (3rd) business day following Parent’s receipt of written notice (a
“Notice of Adverse Recommendation”) from the Partnership advising Parent that
the General Partner intends to make such a Partnership Adverse Recommendation
Change and specifying the material terms and conditions of such Superior
Proposal. In determining whether to make a Partnership Adverse Recommendation
Change in response to a Superior Proposal, the General Partner shall take into
account any changes to the terms of this Agreement proposed by Parent (i) in
response to a Notice of Adverse Recommendation or otherwise during

 

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the three (3) business day period following receipt of such Notice of Adverse
Recommendation, or (ii) in the event of any amendment or other modification of
any financial or other material term of such Superior Proposal (whether in
response to any change to the terms of this Agreement proposed by Parent in
response to an initial Notice of Adverse Recommendation or otherwise), the
Partnership shall provide to Parent a new Notice of Adverse Recommendation, and
the General Partner shall take into account any change to the terms of this
Agreement proposed by Parent in response to such new Notice of Adverse
Recommendation during the 24-hour period following receipt of such new Notice of
Adverse Recommendation; provided, notwithstanding the foregoing, in no event
shall Parent have less than three (3) business days following the receipt of the
initial Notice of Adverse Recommendation to respond to the applicable Superior
Proposal if the terms of such Superior Proposal are modified prior to the
expiration of the initial three (3) business day period during which Parent is
entitled to respond. After providing the Notice of Adverse Recommendation, the
Partnership shall provide a reasonable opportunity to Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
General Partner to proceed with the General Partner Recommendation.

(c) In addition to the obligations of the Partnership set forth in paragraphs
(a) and (b) of this Section 6.5, the Partnership shall promptly (but in no event
later than two (2) days after the receipt thereof) advise Parent orally and in
writing of any bona fide Acquisition Proposal with respect to which it wishes to
take an action contemplated in Section 6.5(a)(II) and the material terms and
conditions of any such Acquisition Proposal (including any material changes
thereto and any changes to the material financial terms therein) and the
identity of the Person making any such Acquisition Proposal. The Partnership
shall keep Parent reasonably informed of the status and details (including any
change to the material terms thereof) of any such Acquisition Proposal.

(d) Nothing in this Section 6.5 shall (x) permit the Partnership to terminate
this Agreement (except as specifically provided in Article IX hereof) or
(y) affect any other obligation of Parent or the Partnership under this
Agreement.

Section 6.6 Officers’ and Directors’ Indemnification.

(a) In the event of any threatened or actual claim, action, suit, demand,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director or
officer of the General Partner, the Partnership or the Partnership Subsidiaries
(each, an “Indemnified Party” and collectively, the “Indemnified Parties”) is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he or she is or was
a trustee, director, officer, employee, or agent of the General Partner, the
Partnership or the Partnership Subsidiaries, or any Employee Benefit Plan of the
Partnership or Partnership Subsidiaries, or (ii) the negotiation, execution or
performance of this Agreement, any agreement or document contemplated hereby or
delivered in connection herewith, or any of the transactions contemplated
hereby, or thereby whether in any case asserted or arising at or before or after
the Effective Time, the parties hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that the Surviving

 

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Partnership shall indemnify and hold harmless, and after the Effective Time,
Parent and the Surviving Partnership (together with the Partnership, the
“Indemnitors”), shall indemnify and hold harmless, as and to the fullest extent
permitted by applicable law, each Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys’ fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, demand, proceeding or
investigation (collectively, “Indemnifiable Amounts”), and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), (A) the
Indemnitors, shall promptly (but in any event within ten (10) calendar days of
written request) pay expenses in advance of the final disposition of any such
threatened or actual claim, action, suit, demand, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by applicable law;
(B) the Indemnitors shall have the right to defend each Indemnified Party in any
proceeding which may give rise to the payment of Indemnifiable Amounts
hereunder; provided, however, that the Indemnitors shall notify such Indemnified
Party of any such decision to defend within ten (10) calendar days of receipt of
notice of any such proceeding, and, provided further, that the Indemnitors shall
not, without the prior written consent of such Indemnified Party, consent to the
entry of any judgment against such Indemnified Party or enter into any
settlement or compromise which (I) includes an admission of fault of such
Indemnified Party or (II) does not include, as an unconditional term thereof,
the full release of such Indemnified Party from all liability in respect of such
proceeding, which release shall be in form and substance reasonably satisfactory
to such Indemnified Party and (C) notwithstanding clause (B) above, if in a
proceeding to which an Indemnified Party is a party by reason of the Indemnified
Party’s service as a director, officer, employee, or agent of the General
Partner, the Partnership or any Partnership Subsidiary, (I) such Indemnified
Party reasonably concludes that he or she may have separate defenses or
counterclaims to assert with respect to any issue which may not be consistent
with the position of other defendants in such proceeding, (II) a conflict of
interest or potential conflict of interest exists between such Indemnified Party
and the Indemnitors, or (III) if the Indemnitors fail to assume the defense of
such proceeding in a timely manner, such Indemnified Party shall be entitled to
be represented by separate legal counsel of such Indemnified Party’s choice at
the expense of the Indemnitors; provided, however, that none of the Indemnitors
shall be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld, conditioned or delayed); and
provided further, that the Indemnitors shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification by such entities of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 6.6, upon learning of any
such threatened or actual claim, action, suit, demand, proceeding or
investigation, shall promptly notify the Partnership and, after the Effective
Time, the Surviving Partnership thereof; provided that the failure to so notify
shall not affect the obligations of the Partnership and the Surviving
Partnership except to the extent, if any, such failure to promptly notify
materially and adversely prejudices such party.

(b) Parent and MergerCo each agree that all rights to indemnification or
exculpation existing in favor of, and all limitations on the personal liability
of, each present and former director and officer of General Partner, the
Partnership and the Partnership Subsidiaries provided for in the respective
organizational documents or otherwise in effect as of the date hereof shall

 

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survive the Merger and continue in full force and effect for a period of six
(6) years from the Effective Time; (provided, however, that all rights to
indemnification in respect of any claims (each a “Claim”) asserted or made
within such period shall continue until the final disposition of such Claim) and
that Parent and MergerCo assume and will honor such obligations.

(c) Prior to the Effective Time, the Partnership shall, at its expense, purchase
a non-cancelable extended reporting period endorsement with respect to the
Partnership’s existing directors’ and officers’ liability insurance coverage for
the Partnership’s directors and officers (the “D&O Policy”) (provided that the
Partnership shall have the option to select a different carrier to write such
endorsement if such carrier has an A.M. Best rating at least as favorable as the
Partnership’s current carrier or is otherwise reasonably acceptable to Parent),
which shall provide such directors and officers and the Surviving Partnership
with coverage for six (6) years following the Effective Time of not less than
the existing coverage (and not more than $20,000,000) under, and have other
terms not less favorable to, the insured persons than the directors’ and
officers’ liability insurance coverage presently maintained by the Partnership.
The Surviving Partnership shall maintain such policies in full force and effect,
and continue to honor all obligations thereunder.

(d) The obligations under this Section 6.6 shall not be terminated or modified
in such a manner as to adversely affect any indemnitee to whom this Section 6.6
applies without the consent of such affected indemnitee (it being expressly
agreed that the indemnitees to whom this Section 6.6 applies shall be express
third party beneficiaries of this Section 6.6 and shall be entitled to enforce
the covenants contained herein).

(e) In the event Parent or the Surviving Partnership or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation, partnership or other
entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Partnership, as the case may
be, assume the obligations set forth in this Section 6.6.

Section 6.7 Notices of Certain Events.

(a) The General Partner and the Partnership shall notify Parent of:

(i) any notice or other communication from any Governmental Authority in
connection with the Merger; and

(ii) any actions commenced or, to its Knowledge threatened against, relating to
or involving or otherwise affecting the Partnership or any Partnership
Subsidiary which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.12 or which relate to the
consummation of the Merger.

(b) Parent and MergerCo shall notify the General Partner and the Partnership of:

(i) any notice or other communication from any Governmental Authority in
connection with the Merger; and

 

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(ii) any actions commenced or, to the best of its Knowledge threatened against,
relating to or involving or otherwise affecting Parent or MergerCo which, if
pending on the date of this Agreement, which relate to the consummation of the
Merger.

Section 6.8 Employee Benefits.

(a) On and after the Closing, Parent shall, and shall cause the Surviving
Partnership to, honor in accordance with their terms the employment and
compensation plans and agreements which are listed in Section 6.8(a) of the
Disclosure Letter. Subject to such employment and compensation plans and
agreements, the Surviving Partnership will provide to the employees of the
Partnership and Partnership Subsidiary immediately prior to the Effective Time,
employment on such terms and with such employee benefits substantially
equivalent to those provided to similarly situated employees of Parent;
provided, however, all employees of the Surviving Partnership will be “employees
at will,” and this provision will not constitute an on-going guarantee of
employment to any Current Employee;

(b) Each full time employee of the Partnership or the Partnership Subsidiaries
who becomes a full-time employee of the Surviving Partnership will: (i) be
entitled to participate in each “welfare plan” of the Parent in accordance with
its terms to the extent such employee was covered under a similar Employee Plan;
(ii) be entitled to participate in the Parent’s 401(k) plan in accordance with
its terms; (iii) be entitled to participate in the plans of Parent; and
(iv) shall be credited for all prior service with the Partnership and any
Partnership Subsidiary for the purpose of vacation accruals; and

(c) Those Employee Plans of the Partnership or Partnership Subsidiary listed in
Section 6.8(c) of the Disclosure Letter will terminate immediately prior to the
Closing Date.

Section 6.9 Tax Returns; Audits.

The Surviving Partnership shall (i) prepare and file, as directed by the Titan
Representative, the Federal income Tax Returns of the Partnership and the
General Partner for the tax periods ending on or before the Closing Date (“Titan
Tax Returns”) and (ii) prepare and provide Forms K-1 to the former holders of
partnership interests in the Partnership and membership interests in the General
Partner. The Titan Representative shall have the right to control (at its own
expense) all matters in connection with any audit, litigation or other
proceeding with respect to any Titan Tax Return; provided, that the Titan
Representative shall not take a position in the Titan Tax Returns or in any
audit, litigation or other proceeding related thereto which Parent, in its
reasonable judgment after consultation with its tax advisors, believes does not
have reasonable basis in the Code and other applicable federal income tax law.
Parent shall give Titan Representative prompt notice of the commencement of any
audit, litigation or other proceeding with respect to a Titan Tax Return and
shall provide such information regarding the proceeding as Titan Representative
may reasonably request. Parent and Titan Representative shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the preparation and filing of any Tax Return of the Partnership, General Partner
or any Partnership Subsidiary and any audit, litigation or other proceeding with
respect to Taxes relating to the Partnership, General Partner or any Partnership
Subsidiary. Such cooperation shall include the retention and (upon the other
party’s reasonable request) the provision of records and

 

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information which are reasonably relevant to any such Tax Return, audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.

Section 6.10 Sales of Certain Interests.

Parent and MergerCo, on the one hand, and the General Partner and the
Partnership, on the other hand, agree, upon the request of a member of the
General Partner, to negotiate in good faith to effect, immediately prior to the
Closing, the acquisition by Parent, MergerCo or any affiliate thereof of all of
the equity interests in each entity holding Equity Securities of the General
Partner and the Partnership that is owned or controlled by such member of the
General Partner or its affiliates and with respect to which such member has
requested such acquisition. The parties hereby agree that any such acquisition
shall be subject to the prior approval of the General Partner, not to be
unreasonably withheld or delayed.

ARTICLE VII

CONDITIONS TO OBLIGATIONS

Section 7.1 Conditions to Obligations of the General Partner and the
Partnership.

The obligations of the General Partner and the Partnership to consummate the
Merger are subject to the fulfillment, unless waived in writing at the sole
option of the General Partner and the Partnership, at or prior to the Closing
Date, of each of the following conditions precedent:

(a) Representations and Warranties. The representations and warranties of each
of Parent and MergerCo herein contained shall be true and correct in all
material respects on and as of the Closing Date (except that any representation
or warranty which by its terms is made as of a specified date shall be true and
correct in all material respects as of such specified date) with the same force
and effect as though made on and as of said date, except as affected by the
transactions contemplated or expressly permitted by this Agreement.

(b) Covenants. Each of Parent and MergerCo shall have performed in all material
respects all of the obligations and agreements and complied in all material
respects with all of the covenants contained in this Agreement to be performed
and complied with by it at or prior to the Closing Date.

(c) Closing Documents. The General Partner and the Partnership shall have
received all reports, agreements, certificates, instruments and other documents
required to be delivered by Parent and MergerCo on the Closing Date pursuant to
Section 8.3, and the form and substance of all such reports, agreements,
certificates, instruments and other documents shall be reasonably satisfactory
to the Partnership.

(d) HSR Act. Any approvals required under the HSR Act shall have been obtained,
or the waiting period required thereby shall have expired or otherwise been
terminated without the imposition of any Onerous Conditions, and no action shall
have been taken or threatened in writing by the United States Department of
Justice or the Unites States Federal Trade Commission (as applicable)
challenging or seeking to enjoin the transactions contemplated under this
Agreement.

 

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(e) Absence of Orders; Actions. No Law or order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Authority which
prohibits or makes illegal the Merger. None of the parties hereto shall be
subject to any temporary restraining order, ruling or preliminary or permanent
injunction or other order of a court of competent jurisdiction or other
Governmental Authority or other legal restraint or prohibition that prohibits or
prevents the consummation of the Merger.

(f) Approval of Partners. The Partnership shall have received Partnership
Approval.

(g) Payment. Parent and MergerCo shall have tendered all consideration required
by this Agreement to the Closing Exchange Agent.

Section 7.2 Conditions to the Obligations of Parent and MergerCo.

The obligations of the Parent and MergerCo are subject to the fulfillment,
unless waived in writing at the sole option of Parent and MergerCo, at or prior
to the Closing Date, of each of the following conditions precedent:

(a) Representations and Warranties. The representations and warranties of the
General Partner and the Partnership contained in Article IV of this Agreement
shall be true and correct on and as of the earlier of the Closing Date or the
Early Satisfaction Date, as applicable, as though made on such date (except to
the extent such representations and warranties are made expressly as of an
earlier date, in which case such representations and warranties shall be true
and correct on and as of such earlier date), except as affected by transactions
contemplated or expressly permitted by this Agreement and except where the
failure of the representations and warranties to be so true and correct (without
giving effect to any limitation as to “materiality” or “Titan Material Adverse
Effect” set forth therein or to any supplement to Parent’s disclosure schedule)
does not have a Titan Material Adverse Effect.

(b) Covenants. The General Partner and the Partnership shall have performed in
all material respects all of the obligations and agreements and complied in all
material respects with all of the covenants contained in this Agreement to be
performed and complied with by the General Partner and the Partnership on or
prior to the Closing Date, other than Section 6.1(d) which the General partner
and the Partnership shall have complied with in all material respects only on or
prior to the Early Satisfaction Date.

(c) Closing Documents. Parent and MergerCo shall have received all reports,
agreements, certificates, instruments and other documents required to be
delivered by the Partnership on the Closing Date pursuant to Section 8.2, and
the form and substance of all such reports, agreements, certificates,
instruments and other documents shall be reasonably satisfactory to the Parent
and MergerCo.

(d) HSR Act. Any approvals required under the HSR Act shall have been obtained,
or the waiting period required thereby shall have expired or otherwise been
terminated without the imposition of any Onerous Conditions, and no action shall
have been taken or threatened in

 

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writing by the Department of Justice or the Federal Trade Commission (as
applicable) challenging or seeking to enjoin the transactions contemplated under
this Agreement.

(e) Absence of Orders; Actions. No Law or order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Authority which
prohibits or makes illegal the Merger. None of the parties hereto shall be
subject to any temporary restraining order, ruling or preliminary or permanent
injunction or other order of a court of competent jurisdiction or other
Governmental Authority or other legal restraint or prohibition that prohibits or
prevents the consummation of the Merger.

(f) Approval of the Partners. The Partnership shall have received the
Partnership Approval.

(g) D&O Policy. The D&O Policy shall have been bound by the applicable insurer
in accordance with Section 6.6(c) hereof.

ARTICLE VIII

CLOSING

Section 8.1 Closing Transactions.

All documents and other instruments required to be delivered at the Closing
shall be regarded as having been delivered simultaneously, and no document or
other instrument shall be regarded as having been delivered until all have been
delivered.

Section 8.2 Deliveries by the Partnership to Parent and MergerCo.

At the Closing, the General Partner and Partnership shall deliver or cause to be
delivered to Parent and MergerCo:

(a) a certificate of a duly authorized officer of the General Partner certifying
to: (i) the Existing LP Agreement and the limited liability company agreement of
the General Partner; (ii) the resolutions of the General Partner authorizing and
approving the execution, delivery and performance by the Partnership of this
Agreement and the consummation of the transactions contemplated hereby; and
(iii) the incumbency and signatures of the officers of the General Partner
executing this Agreement and any other certificate or document delivered in
connection herewith;

(b) the certificate of formation of each of the General Partner and the
Partnership certified by the Secretary of State of its jurisdiction of
formation;

(c) a certificate executed by a duly authorized officer of the General Partner,
dated as of the Closing Date, certifying that the conditions set forth in
Sections 7.2(a) and (b) have been satisfied (except to the extent waived);

(d) an executed counterpart of the Escrow Agreement; and

 

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(e) such other instruments, documents and certificates that are required to be
delivered pursuant to this Agreement or are necessary to consummate the Merger.

Section 8.3 Deliveries by Parent and MergerCo to the Partnership.

At the Closing, Parent and MergerCo shall deliver or cause to be delivered to
the Partnership:

(a) a certificate of a duly authorized officer of the general partner of each of
Parent and MergerCo certifying to: (i) the partnership agreement (or comparable
organizational documents) of each of Parent and MergerCo; (ii) the resolutions
of the General Partner of each of Parent and MergerCo approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby; and (iii) the incumbency and signatures of the
officers of each of the general partner, Parent and MergerCo executing this
Agreement and any other certificate or document delivered in connection
herewith;

(b) the certificate of formation of each of Parent and MergerCo certified by the
Secretary of State of the jurisdiction of its establishment;

(c) a certificate executed by a duly authorized officer of each of the general
partner, of each of Parent and MergerCo, dated as of the Closing Date,
certifying that the conditions set forth in Sections 7.1(a) and (b) have been
satisfied (except to the extent waived);

(d) an executed counterpart of the Escrow Agreement; and

(e) such other instruments, documents and certificates that are required to be
delivered pursuant to this Agreement or are necessary to consummate the Merger.

ARTICLE IX

TERMINATION

Section 9.1 Termination.

(a) Termination Prior to Closing. This Agreement may be terminated prior to the
Effective Time by providing written notice to each of the other parties hereto
as follows:

(i) by mutual written consent of Parent and the General Partner and the
Partnership at any time;

(ii) by either Parent or the General Partner and the Partnership if the Merger
shall not have been completed by August 31, 2006 (the “Termination Date”);
provided that the party seeking to terminate this Agreement pursuant to this
Section 9.1(a)(ii) shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure to consummate the Merger on or before the Termination
Date;

 

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(iii) by the Partnership and the General Partner, if Parent or MergerCo breaches
or fails to perform in any material respect any of its representations,
warranties or covenants contained in this Agreement, which breach or failure to
perform would give rise to the failure of a condition set forth in
Section 7.1(a) or 7.1(b) and such condition is not satisfied (or is incapable of
being satisfied) by the Termination Date; provided that neither the Partnership
nor the General Partner shall have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to such breach or failure to perform by Parent or MergerCo;

(iv) by Parent and MergerCo, if the Partnership or the General Partner breaches
or fails to perform in any material respect any of its representations,
warranties or covenants contained in this Agreement, which breach or failure to
perform would give rise to the failure of a condition set forth in
Section 7.2(a) or 7.2(b) and such condition is not satisfied (or is incapable of
being satisfied) by the Termination Date; provided that neither Parent nor
MergerCo shall have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to such breach
or failure to perform by the Partnership or the General Partner;

(v) by the Partnership and General Partner or Parent, if there shall be any Law
that makes consummation of the transactions contemplated herein illegal or
otherwise prohibited or if any permanent judgment, injunction, order or decree
enjoining a party from consummating the transactions contemplated herein is
entered by a Governmental Authority of competent jurisdiction (which the
terminating Party shall have used its reasonable best efforts to lift) and such
judgment, injunction, order or decree shall have become final and
non-appealable;

(vi) by Parent, if a Partnership Triggering Event shall have occurred;

(vii) by the Partnership at any time on or prior to the Partnership obtaining
the Partnership Approval if, in response to a Superior Proposal, the General
Partner shall have determined in good faith (after consultation with outside
legal counsel) that the failure to take such action would be reasonably likely
to be inconsistent with its fiduciary duties to the partners of the Partnership
under applicable Law; provided, however, that it shall be a condition precedent
to the termination of this Agreement by the General Partner and the Partnership
pursuant to this Section 9.1(a)(vii) that (i) Parent shall have received a
Notice of Adverse Recommendation which shall include written notification of the
General Partner’s intention to terminate this Agreement, and (ii) Parent shall
not have made, within three (3) business days of receipt of the initial Notice
of Adverse Recommendation (or within 24 hours of any subsequent Notice of
Adverse Recommendation), an irrevocable offer to amend this Agreement from
Parent to the General Partner that the General Partner determines in good faith
is more favorable to the partners of the Partnership than the Superior Proposal;
or

(viii) by Parent or the Partnership, if the Partnership Approval is not
obtained.

(b) Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, this Agreement shall become void and shall have no effect, and none
of Parent, MergerCo, the

 

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Partnership, the General Partner, any of their respective Subsidiaries or any of
the officers or directors of any of them shall have any liability or obligation
of any nature whatsoever hereunder, or in connection with the transactions
contemplated hereby, except that (i) the last sentence of Section 6.2
(Investigation by Parent), Section 9.2 (Termination Fee and Expenses) and
Section 10.12 (Governing Law) shall survive any termination of this Agreement,
(ii) the Confidentiality Agreement will remain in full force and effect and
(iii) subject to Section 9.2, such termination shall not affect any liability
that any party may have for any loss, damage, liability, cost or expense
incurred by another party as a consequence of such party’s fraud or willful
breach of or willful default under this Agreement.

Section 9.2 Termination Fee and Expenses.

(a) Except as provided in Section 9.2(b) or elsewhere in this Agreement, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be borne solely and
entirely by the party that has incurred such costs and expenses.

(b) If (i) Parent terminates this Agreement pursuant to Section 9.1(a)(vi),
then, within one (1) business day of such termination, the Partnership shall pay
to Parent a termination fee of $17,500,000 by wire transfer of immediately
available funds, or (ii) the Partnership terminates this Agreement pursuant to
Section 9.1(a)(vii), then the Partnership shall pay to Parent a termination fee
of $17,500,000 by wire transfer of immediately available funds concurrently with
or prior to such termination.

(c) Each party will bear fifty percent (50%) of the filing fees for all filings
made pursuant to the HSR Act, except that if the transaction contemplated by
this Agreement is not consummated and (i) Parent and MergerCo do not terminate
this Agreement pursuant to Sections 9.1(a)(iv) or 9.1(a)(vi), or (ii) the
Partnership does not terminate this Agreement pursuant to Section 9.1(a)(vii),
Parent will reimburse the Partnership and the General Partner for such fees.

(d) Notwithstanding anything to the contrary in this Agreement, Parent and
MergerCo expressly acknowledge and agree that, with respect to any termination
of this Agreement in circumstances where the Termination Fee is payable in
accordance with Section 9.2(b), the payment of the Termination Fee shall
constitute liquidated damages with respect to any claim for damages or any other
claim which Parent or MergerCo would otherwise be entitled to assert against the
General Partner, the Partnership or any Partnership Subsidiary or any of their
respective assets, or against any of their respective directors, officers,
employees, partners, managers, members, shareholders or stockholders, with
respect to this Agreement and the transactions contemplated hereby and shall
constitute the sole and exclusive remedy available to Parent and MergerCo. The
parties hereto expressly acknowledge and agree that, in light of the difficulty
of accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement in circumstances where the Termination Fee is
payable in accordance with Section 9.2(b), the rights to payment under
Section 9.2(b): (i) constitute a reasonable estimate of the damages that will be
suffered by reason of any such proposed or actual termination of this Agreement
and (ii) shall be in full and complete satisfaction of any and all damages
arising as a result of the foregoing. Except for nonpayment of the amounts set
forth

 

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in Section 9.2(b), Parent and MergerCo hereby agree that, upon any termination
of this Agreement in circumstances where the Termination Fee is payable in
accordance with Section 9.2(b), in no event shall Parent or MergerCo (i) seek to
obtain any recovery or judgment against the General Partner, the Partnership or
any Partnership Subsidiary or any of their respective assets, or against any of
their respective directors, officers, employees, partners, managers, members or
stockholders or shareholders or (ii) be entitled to seek or obtain any other
damages of any kind, including, without limitation, consequential, indirect or
punitive damages.

ARTICLE X

GENERAL PROVISIONS

Section 10.1 Non-Survival of Representations, Warranties, Covenants and
Agreements.

Except for Article III and Sections 6.6, 6.9, 10.3 and 10.12 which shall survive
through the applicable statute of limitations and any covenant or agreement of
the parties which by its terms contemplates performance after the Effective Time
(a) none of the representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time and (b) thereafter there shall be no liability
on the part of Parent, MergerCo, the General Partner or the Partnership or any
of their respective officers, members, partners, directors or shareholders in
respect thereof. Except as expressly set forth in this Agreement, there are no
representations or warranties of any party hereto, express or implied.

Section 10.2 Notices.

All waivers, notices, consents, demands, requests, approvals and other
communications which are required or may be given hereunder shall be in writing
and shall be deemed to have been duly given when hand-delivered, sent by
telecopier (providing confirmation of transmission), delivered by national
overnight courier service (providing proof of delivery), or 72 hours after being
mailed by certified first class mail, return receipt requested, postage prepaid,
as follows:

 

  (h) If to the Partnership or General Partner:

Titan Energy Partners LP

500 Meijer Drive

Florence, KY 41042

Telephone: (859) 647-4206

Facsimile: (859) 647-8581

Attention: Stephen Zamansky

General Counsel

 

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with a copy to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Telephone: (617) 570-1000

Facsimile: (617) 523-1231

Attention: Mark H. Burnett, Esq.

      John T. Haggerty, Esq.

 

  (i) If to Parent or MergerCo:

Energy Transfer Partners, L.P.

2838 Woodside Street

Dallas, Texas 75204

Telephone: (918) 492-7272

Facsimile: (918) 493-7290

Attention: Robert A. Burk, Esq.

      Vice President - General Counsel

with a copy to:

Winston & Strawn LLP

200 Park Avenue

New York, NY 10166

Telephone: (212) 294-6700

Facsimile: (212) 294-4700

Attention: Robert W. Ericson, Esq.

 

  (c) If to the Titan Representative:

Jeffrey A. Brodsky

c/o Quest Turnaround Advisors, LLC

RiverView at Purchase

287 Bowman Avenue

Purchase, NY 10577

Telephone: (914) 253-8100

Facsimile: (914) 253-8103

with a copy to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Telephone: (617) 570-1000

Facsimile: (617) 523-1231

Attention: Mark H. Burnett, Esq.

      John T. Haggerty, Esq.

or to such other address or to such other Person as may be designated by a party
by written notice to the other parties hereto.

 

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Section 10.3 Titan Representative.

(a) The parties hereto agree that it is desirable to designate the Titan
Representative to act on behalf of the holders of Equity Securities of the
General Partner and the Partnership for certain limited purposes, as specified
herein. The General Partner and the Partnership have designated the Titan
Representative as the representative of the holders of Equity Securities of the
General Partner and the Partnership and any other parties entitled to receive a
portion of the Aggregate Purchase Price, and approval of this Agreement by such
holders shall constitute ratification and approval of such designation.

(b) The Titan Representative shall be authorized and empowered, as agent of and
on behalf of all holders of Equity Securities of the General Partner and the
Partnership and any other parties entitled to receive a portion of the Aggregate
Purchase Price, to take such actions contemplated by Section 3.4 hereof and
Section 6.9 hereof and to take all other actions that are either (i) necessary
or appropriate in the judgment of the Titan Representative for the
accomplishment of the foregoing or (ii) specifically mandated by the terms of
this Agreement.

(c) In dealing with this Agreement and any notice, instrument, agreement or
document relating thereto, and in exercising or failing to exercise all or any
of the powers conferred upon the Titan Representative hereunder or thereunder,
(i) the Titan Representative and its agents, counsel, accountants and other
representatives shall not assume any, and shall incur no, responsibility
whatsoever (in each case, to the extent permitted by applicable Law) to the
holders of Equity Securities of the Partnership or the General Partner, or to
Parent or the Surviving Partnership by reason of any error in judgment or other
act or omission performed or omitted hereunder or in connection with this
Agreement or any such other agreement, instrument or document, other than in
respect of an act or omission done in bad faith or with gross negligence on the
part of the Titan Representative, and (ii) the Titan Representative shall be
entitled to rely in good faith on the advice of counsel, public accountants or
other independent experts experienced in the matter at issue, and any error in
judgment or other act or omission of the Titan Representative pursuant to such
advice shall in no event subject the Titan Representative to liability to the
holders of Equity Securities of the Partnership or the General Partner, or to
Parent or the Surviving Partnership. Pursuant to the following sentence, and to
the fullest extent permitted by applicable Law, the holders of Equity Securities
of the Partnership and the General Partner shall be, severally (based on each
such holder’s pro rata share of the Escrow Amount) and not jointly, obligated to
indemnify the Titan Representative and hold the Titan Representative harmless
against any loss, liability or expense incurred without gross negligence or bad
faith on the part of the Titan Representative and arising out of or in
connection with the acceptance or administration of the Titan Representative’s
duties hereunder, including the reasonable fees and expenses of any legal
counsel, public accountants or other independent experts retained by the Titan
Representative; provided, however, that the aggregate amount of such
indemnification shall not exceed the Escrow Amount. Any amounts payable to the
Titan Representative pursuant to this Section 10.3 shall be disbursed to the
Titan Representative by the Escrow Agent pursuant to the terms of the Escrow
Agreement.

(d) In connection with the performance of its obligations hereunder, the Titan
Representative shall have the right at any time and from time to time to select
and engage, at the cost and expense of the holders of Equity Securities of the
Partnership and the General Partner

 

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(as contemplated by Section 10.3(c)), attorneys, accountants, investment
bankers, advisors, consultants and clerical personnel and obtain such other
professional and expert assistance, and maintain such records, as the Titan
Representative may deem necessary or desirable and incur other out-of-pocket
expenses related to performing its services hereunder.

(e) All of the immunities and powers granted to the Titan Representative under
this Agreement shall survive the Closing and/or any termination of this
Agreement.

Section 10.4 Binding Effect; Benefits.

This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that,
except with respect to Section 6.6, nothing in this Agreement shall be construed
to confer any rights, remedies, obligations or liabilities on any Person other
than the parties hereto or their respective successors and assigns. Section 6.6
is intended to be for the benefit of those Persons described therein and the
covenants contained therein may be enforced by such Persons.

Section 10.5 Public Announcements.

Until the Closing, the parties hereto shall advise and consult with each other
prior to the making of any public announcement with respect to the transactions
contemplated hereby and, in any event, shall not issue any press releases or
make any public announcement or statement without the prior consent of the other
parties, except for filings or registrations which are required by Law, and
except for the information statement or other disclosure provided to, and
communications with, the limited partners of the Partnership in connection with
obtaining the Partnership Approval or referring limited partners to
publicly-filed documents. If the party making such filing or registration has
used its reasonable best efforts to consult with the other parties and to obtain
each parties’ consent but has been unable to do so in a timely manner, the forms
of press releases to be made by each party upon the public announcement of the
signing of this Agreement are attached as Exhibit D hereto.

Section 10.6 Entire Agreement.

This Agreement, together with its Exhibits and Appendices, the Disclosure
Letter, the Confidentiality Agreement and any other agreement entered into
concurrently with this Agreement, embody the entire agreement and understanding
of the parties with respect to the transactions contemplated hereby and
supersedes any prior agreement or understanding between the parties with respect
to the subject matter thereof.

Section 10.7 Waivers and Amendments.

Except as provided below, this Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by Parent, MergerCo and the General Partner and the
Partnership or, in the case of a waiver, by Parent and MergerCo or by the
Partnership and the General Partner, as the case may be, waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof. No waiver on the part of any party
of any such right, power or privilege, and no single or partial exercise of any
such right, power or privilege, shall

 

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preclude any further exercise thereof or the exercise of any other such right,
power or privilege. Except as provided herein, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity.

Section 10.8 Specific Performance.

The parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that, prior to the termination of this Agreement pursuant to
Section 9.1, the parties hereto shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.

Section 10.9 Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same document.

Section 10.10 Headings.

Headings of the Sections and paragraphs in this Agreement are for reference
purposes only and shall not be deemed to have any substantive effect.

Section 10.11 Assignment.

This Agreement may not be assigned by any party without the prior written
consent of the other parties to this Agreement.

Section 10.12 Governing Law.

This Agreement shall be governed and construed and interpreted in accordance
with the laws of the State of Delaware, without regard to choice of laws
principles.

Section 10.13 Severability.

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validly or enforceability of any other provision of this Agreement,
each of which shall remain in full force and effect.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

TITAN ENERGY PARTNERS LP

By:

 

Titan Energy GP LLC,

 

its general partner

By:

 

/s/ Bill Corbin

Name:

 

Bill Corbin

Title:

 

Chief Executive Officer

TITAN ENERGY GP LLC

By:

 

/s/ Bill Corbin

Name:

 

Bill Corbin

Title:

 

Chief Executive Officer

ENERGY TRANSFER PARTNERS, L.P.

By:

 

Energy Transfer Partners GP, L.P.,

its general partner

By:

 

Energy Transfer Partners GP, L.L.C.,

its general partner

By:

 

/s/ H. Michael Krimbill

Name:

 

H. Michael Krimbill

Title:

 

Chief Financial Officer

HERITAGE MARKETING, L.P.

By:

 

Heritage Equity, L.L.C.,

 

its general partner

By:

 

/s/ H. Michael Krimbill

Name:

 

H. Michael Krimbill

Title:

 

Chief Financial Officer

TITAN REPRESENTATIVE

/s/ Jeffrey A. Brodsky

Jeffrey A. Brodsky