Exhibit 10.1

 

 

 

EQUITY PURCHASE AGREEMENT

by and among

INERGY PROPANE, LLC,

STERLING CAPITAL PARTNERS, L.P.,

STERLING CAPITAL PARTNERS GMBH & CO. KG,

and

CERTAIN OTHER PARTIES HERETO

December 31, 2009

 

 

 

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TABLE OF CONTENTS

 

              Page ARTICLE I. PURCHASED EQUITY INTERESTS AND REDEEMED INTERESTS
   2   1.01.    Purchased Equity Interests and Redemption of Limited Partner
Interests    2   1.02.    Purchase Price    2   1.03.    Adjustment of Purchase
Price    4   1.04.    The Post-Closing Adjustment Payments    6   1.05.    The
Closing    6   1.06.    Post-Closing Series A Preferred Redemption    6 ARTICLE
II. CLOSING DELIVERIES    6   2.01.    Closing Deliveries of the Sellers    6  
2.02.    Conditions to the Sellers’ Obligations    8 ARTICLE III. [RESERVED]   
9 ARTICLE IV. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS    9   4.01.
   Authority and Power    9   4.02.    Seller Entities    9   4.03.    Execution
and Delivery; Valid and Binding Agreement    10   4.04.    Noncontravention   
10   4.05.    Ownership of Equity Interests    10   4.06.    Litigation    10  
4.07.    Amounts Owed to Sellers    10   4.08.    Governmental Consents    10  
4.09.    Broker’s Fees    11 ARTICLE V. REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANIES    11   5.01.    Organization and Power    11   5.02.
   Subsidiaries    12   5.03.    Noncontravention    12   5.04.    Equity
Interests    12   5.05.    Financial Statements    13   5.06.    Absence of
Certain Developments    13   5.07.    Properties    14   5.08.    Tax Matters   
15   5.09.    Contracts and Commitments    17   5.10.    Intellectual Property
   19   5.11.    Litigation    19   5.12.    Governmental Consents    20   5.13.
   Employee Benefit Plans    20   5.14.    Insurance    21   5.15.    Compliance
with Laws    22   5.16.    Environmental Matters    22   5.17.    Affiliated
Transactions    24   5.18.    Employees    24   5.19.    Broker’s Fees    24  
5.20.    Notes and Accounts Receivable    25

 

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  5.21.    Customers and Suppliers Relations    25   5.22.    Licenses    25  
5.23.    Bank Accounts    25   5.24.    Books and Records    26 ARTICLE VI.
REPRESENTATIONS AND WARRANTIES CONCERNING BUYER    26   6.01.    Organization
and Power    26   6.02.    Authorization; Valid and Binding Agreement    26  
6.03.    No Breach    26   6.04.    Governmental Consents, etc    26   6.05.   
Litigation    26   6.06.    Broker’s Fees    27   6.07.    Investment
Representation    27   6.08.    Financing    27 ARTICLE VII. [RESERVED]    27
ARTICLE VIII. INDEMNIFICATION    27   8.01.    Survival of Provisions    27  
8.02.    Indemnification by the Sellers for the Benefit of the Buyer    28  
8.03.    Indemnification by the Buyer for the Benefit of the Seller    30  
8.04.    Determination of Loss Amount    30   8.05.    Mitigation    30   8.06.
   Manner of Payment    30   8.07.    Defense of Third Party Claims    31
ARTICLE IX. ADDITIONAL COVENANTS AND AGREEMENTS    31   9.01.    Disclosure
Generally    31   9.02.    Acknowledgment by the Buyer    32   9.03.    Tax
Matters    32   9.04.    Further Assurances    36   9.05.    Access to Books and
Records    36   9.06.    Employee Matters    37   9.07.    Noncompetition;
Nonsolicitation    37   9.08.    Assignment of Arbitration Award    38 ARTICLE
X. DEFINITIONS    39   10.01.    Definitions    45   10.02.    Cross Reference
of Other Definitions    46 ARTICLE XI. MISCELLANEOUS    46   11.01.    Press
Releases and Communications    46   11.02.    Expenses    46   11.03.   
Knowledge Defined    47   11.04.    Notices    47   11.05.    Assignment    47  
11.06.    Severability    48   11.07.    References    48   11.08.    No Strict
Construction    48   11.09.    Amendment and Waiver    48   11.10.    Complete
Agreement    48   11.11.    Counterparts    48

 

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  11.12.    Governing Law    48   11.13.    No Third-Party Beneficiaries    49  
11.14.    Waiver of Jury Trial    49   11.15.    Delivery by Electronic Mail   
49

 

EXHIBITS Exhibit A    Redemption Notice and Redemption Agreement Exhibit B   
Closing Certificate of Companies Exhibit C    Assignment Instrument Exhibit D   
Seller Releases Exhibit E    Closing Certificate of Buyer Exhibit F    Working
Capital Guidelines

 

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EQUITY PURCHASE AGREEMENT

THIS EQUITY PURCHASE AGREEMENT (this “Agreement”) is made as of December 31,
2009, by and among Inergy Propane, LLC, a Delaware limited liability company
(the “Buyer”), Sterling Capital Partners, L.P. a Delaware limited partnership
(“Sterling”), Sterling Capital Partners GmbH & Co. KG, a German limited
partnership (“Sterling GmbH” and together with Sterling, the “Sterling
Partners”), each Person set forth on the Other Sterling Equity Holders Schedule
attached hereto (each an “Other Sterling Equity Holder” and together with
Sterling, the “Sterling Sellers”), and each Person set forth on the Other Equity
Holders Schedule attached hereto (each an “Other Equity Holder” and together
with the Sterling Sellers each a “Seller” and collectively, the “Sellers”).
Buyer and any Sellers may be referred to herein as a “Party” and collectively,
as the “Parties.” Certain capitalized terms used herein, and not otherwise
defined, are defined in Article X.

WHEREAS, the Sterling Sellers collectively own beneficially and of record 100%
of the issued and outstanding shares of capital stock of SCP GP Propane Partners
I, Inc. (the “Sterling GP Blocker Shares”), a Delaware corporation (“Sterling GP
Blocker”), as set forth in Section 5.04 of the Disclosure Schedule (as defined
below);

WHEREAS, the Sterling Sellers collectively own beneficially and of record 100%
of the issued and outstanding shares of capital stock of SCP LP Propane Partners
I, Inc. (the “Sterling LP Blocker Shares”), a Delaware corporation (“Sterling LP
Blocker”), as set forth in Section 5.04 of the Disclosure Schedule;

WHEREAS, Sterling GP Blocker owns beneficially and of record the issued and
outstanding membership interests of Liberty Propane GP, LLC, a Delaware limited
liability company (“Liberty Propane GP”), as set forth in Section 5.04 of the
Disclosure Schedule;

WHEREAS, certain of the Other Equity Holders own the remaining issued and
outstanding membership interests of Liberty Propane GP as set forth in
Section 5.04 of the Disclosure Schedule (“Other Liberty Propane GP Interests”);

WHEREAS, Sterling LP Blocker and Liberty Propane GP own beneficially and of
record the issued and outstanding partnership interests of Liberty Propane, LP,
a Delaware limited partnership (“Liberty Propane LP”), as set forth in
Section 5.04 of the Disclosure Schedule;

WHEREAS, certain of the Other Equity Holders own the remaining issued and
outstanding partnership interests of Liberty Propane LP as set forth in
Section 5.04 of the Disclosure Schedule (“Other Liberty Propane LP Interests”
and together with the Sterling GP Blocker Shares, the Sterling LP Blocker Shares
and the Other Liberty Propane GP Interests, the “Equity Interests”);

WHEREAS, Liberty Propane LP owns beneficially and of record 100% of the issued
and outstanding membership interests of Liberty Propane Operations, LLC, a
Delaware limited liability company (“Liberty Propane Operations” and together
with Sterling GP Blocker, Sterling LP Blocker, Liberty Propane GP and Liberty
Propane LP, each a “Company” and collectively, the “Companies”), as set forth in
Section 5.04 of the Disclosure Schedule;

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WHEREAS, on the terms of this Agreement, Liberty Propane LP shall redeem all of
its Series A Preferred Limited Partner Interests and Series B Preferred Limited
Partner Interests (collectively, the “Redeemed Interests”); and

WHEREAS, on the terms of this Agreement, the Buyer desires to acquire from the
Sellers all of the Equity Interests (which term does not include the Redeemed
Interests, the Liberty Propane LP Interests held by Sterling LP Blocker or by
Liberty Propane GP, and the Liberty Propane GP Interests held by Sterling GP
Blocker) (the “Purchased Equity Interests”) and the Sellers desire to sell to
the Buyer all of the Purchased Equity Interests.

NOW, THEREFORE, in consideration of the representations and warranties and
mutual covenants contained herein and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I.

PURCHASED EQUITY INTERESTS AND REDEEMED INTERESTS

1.01. Purchased Equity Interests and Redemption of Limited Partner Interests.

(a) On the terms of this Agreement, at the Closing referred to in Section 1.05,
the Sellers shall sell, assign, transfer, convey and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from the Sellers, the Purchased
Equity Interests free and clear of all Liens.

(b) On or immediately prior to the Closing, Liberty Propane LP shall deliver to
each holder of Series A Preferred Limited Partner Interests the Redemption
Notice and the Redemption Agreement in substantially the forms attached hereto
as Exhibit A. Liberty Propane LP shall use its reasonable efforts to,
simultaneously with Closing, redeem all of the outstanding Series A Preferred
Limited Partner Interests from the holders thereof pursuant to and in accordance
with the terms of Section 10.5 of the LP Agreement, in each case in accordance
with applicable federal and state securities Laws (the “Series A Preferred
Redemption”).

(c) Simultaneously with the Closing, Liberty Propane LP shall redeem: (i) all of
the Series A Preferred Limited Partnership Interests from the holders thereof
who have, prior to or at Closing, delivered to Liberty Propane LP an executed
Redemption Agreement in substantially the form attached hereto as Exhibit A; and
(ii) all of the outstanding Series B Preferred Limited Partners Interests from
the holders thereof pursuant to and in accordance with the terms of
Section 10.12 of the LP Agreement, in each case in accordance with applicable
federal and state securities Laws (the “Series B Preferred Redemption” and
together with the Series A Preferred Redemption, the “Redemption”).

1.02. Purchase Price.

(a) The purchase price for the Purchased Equity Interests shall be equal to the
sum of (i) $195,000,000 (the “Base Purchase Price”) plus (ii) the amount of the
Working

 

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Capital as of the end of the business day immediately preceding the Closing,
plus (iii) Cash on Hand as of immediately prior to the Closing, less (iv) an
amount equal to the outstanding Indebtedness as of immediately prior to the
Closing, and less (v) the Transaction Expenses as of immediately prior to the
Closing (collectively, the “Purchase Price”), subject to post-closing adjustment
of the components in clauses (ii)-(v) above (collectively, the “Price
Components”) pursuant to Sections 1.03 and 1.04 below (the “Purchase Price
Adjustment”). The day before the Closing, the Representative in good faith will
prepare and deliver to the Buyer an estimate of the Purchase Price payable at
Closing (the “Estimated Purchase Price”), which Estimated Purchase Price shall
be equal to the sum of (I) the Base Purchase Price, plus (II) 95% of the
estimated Price Component in clause (ii) above, plus (III) 100% of the estimated
Price Component in clause (iii) above, less (IV) 100% of the estimated Price
Component in clause (iv) above, and less (V) 100% of the estimated Price
Component in clause (v) above. Additionally, the day before the Closing, the
Representative shall deliver to the Buyer a schedule indicating each Seller’s
Estimated Pro Rata Share (the “Estimated Sellers Allocation Schedule”). At the
Closing, the Buyer shall pay to the Representative, for the benefit of the
Sellers, an amount equal to the Estimated Purchase Price by wire transfer of
immediately available funds to an account or accounts designated by the
Representative the day before the Closing.

(b) Simultaneously with the Closing, the Buyer shall loan funds or make a
capital contribution to Liberty Propane LP in an amount sufficient to repay, or
cause to be repaid, the then outstanding balance of Indebtedness (but
specifically excluding the Acquisition Non-Compete Payments and any other
Indebtedness that the parties mutually agree will remain outstanding after the
Closing) by wire transfer of immediately available funds as directed by the
holders of such Indebtedness in instructions provided to Buyer the day before
the Closing (provided, however, that with respect to the Series A Redemption
Price payable to the holders of Series A Preferred Limited Partnership Interests
who have not, prior to or at Closing, delivered to Liberty Propane LP an
executed Redemption Agreement in substantially the form attached hereto as
Exhibit A, Liberty Propane LP shall fund the Series A Preferred Redemption
Escrow with the necessary funds to complete the Series A Preferred Redemption).
Also, simultaneously with the Closing, the Representative shall: (i) deliver to
the Buyer all applicable payoff letters and shall make arrangements for lenders
under the Indebtedness to deliver UCC-3 termination statements, mortgage, deed
of trust and other Lien releases and similar documents evidencing the
termination of all Liens, held by such lenders; and (ii) deliver to Liberty
Propane LP certificates, if any, evidencing the Redeemed Interests which are
being redeemed.

(c) At the Closing, each of the Sellers shall deliver to the Buyer certificates
representing the Purchased Equity Interests consisting of Sterling GP Blocker
Shares and Sterling LP Blocker Shares endorsed for transfer or accompanied by
executed stock powers or equivalent transfer documents acceptable to Buyer, and,
in the case of all other Purchased Equity Interests, executed assignment
instruments in proper form for transfer. The Parties acknowledge and agree that
the Companies will not be required to certificate any uncertificated Purchased
Equity Interests prior to Closing.

 

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(d) Simultaneously with the Closing, the Buyer shall pay, or cause to be paid,
on behalf of the Sellers and the Companies (as applicable), the Transaction
Expenses reflected in the calculation of Estimated Purchase Price, by wire
transfer of immediately available funds as directed by the Representative the
day before the Closing.

(e) The Purchase Price shall be allocated among the Sterling GP Blocker Shares,
the Sterling LP Blocker Shares, the Other Liberty Propane GP Interests and the
Other Liberty Propane LP Interests in accordance with the formula set forth on
Schedule 1.02(e)(i). The portion of the Purchase Price so allocated to the Other
Liberty Propane GP Interests and the Other Liberty Propane LP Interests shall be
allocated among the assets of Liberty Propane GP (including its indirect
interest in the assets of Liberty Propane LP) and Liberty Propane LP in
accordance with the formula set forth on Schedule 1.02(e)(ii). The Buyer and
each Seller agree to file all federal, state and other Tax Returns (including
Form 8308 and the informational statements required by Treasury Regulation
§ 1.751-1(a)(3)) in accordance with such allocations.

1.03. Adjustment of Purchase Price. Within 60 days following the Closing Date
(during which time, the Representative shall have reasonable access to the
Companies’ books and records during normal business hours upon reasonable prior
notice to the Buyer), the Buyer shall deliver to the Representative a combined
balance sheet of the Companies (the “Closing Balance Sheet”) and a calculation
of the Purchase Price, including each of the Price Components (collectively,
with the Closing Balance Sheet, the “Purchase Price Statement”) as of
immediately prior to the Closing, but in the case of Working Capital determined
as of the end of the business day immediately preceding the Closing. The
Purchase Price Statement shall be prepared and the Price Components shall be
determined using the same accounting methods, policies, principles, practices
and procedures as were used in preparation of the audited combined balance sheet
of the Companies as of the fiscal year ended June 30, 2009 and, except as
contemplated by this Agreement and the transactions contemplated hereby, shall
not include any changes in assets or liabilities as a result of purchase
accounting adjustments from the transaction contemplated by this Agreement. The
Parties agree that the purpose of preparing the Purchase Price Statement and
determining the Price Components contemplated by this Section 1.03 is to measure
changes in the Working Capital, and hereby agree that Working Capital shall be
determined in accordance with the Working Capital Guidelines attached hereto as
Exhibit F.

(a) During the period immediately following the Representative’s receipt of the
Purchase Price Statement, the Representative shall be permitted to review the
Buyer’s working papers related to the preparation of the Purchase Price
Statement and determination of the Price Components and the Purchase Price. The
Buyer shall cooperate and provide prompt access to the Companies’ books and
records and relevant personnel (including third party consultants and
accountants), in each case as reasonably requested by the Representative in
connection with the Representative’s review of the Purchase Price Statement. The
Purchase Price Statement, Price Components and Purchase Price shall become final
and binding upon the Parties 30 days after the Representative’s receipt of all
reasonably necessary supporting documentation related to the Purchase Price
Statement requested by the Representative (but in no event later than 60 days
after Representative’s receipt of the Purchase Price Statement), unless the
Representative shall give written notice of its disagreement (a “Notice of
Disagreement”)

 

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to the Buyer prior to such date. If a timely Notice of Disagreement is received
by the Buyer, then the Purchase Price, the Price Components and the Purchase
Price Statement (as revised in accordance with clause (x) or (y) below) shall
become final and binding upon the Parties on the earlier of (x) the date the
Parties resolve in writing any differences they have with respect to the matters
specified in the Notice of Disagreement or (y) the date all matters in dispute
are finally resolved in writing by the Accounting Firm (defined below). During
the 30 days following delivery of a Notice of Disagreement, the Buyer and the
Representative shall seek in good faith to resolve in writing any differences
which they have with respect to the matters specified in the Notice of
Disagreement.

(b) At the end of the second 30-day period referred to above, Grant Thornton,
LLP shall resolve all remaining disputed items, or if Grant Thornton, LLP is
unable or unwilling to act as the accounting firm to resolve the remaining
disputed items, the Buyer and the Representative shall mutually select a
nationally recognized accounting firm (Grant Thornton, LLP or such mutually
selected firm, the “Accounting Firm”) to do so. The Buyer and the Representative
shall submit to the Accounting Firm for review and resolution of all matters
(but only such matters) that remain in dispute. The Buyer and the Representative
shall instruct the Accounting Firm to select one of its partners experienced in
purchase price adjustment disputes to make a final determination of the Purchase
Price calculated with reference to the amounts that are in dispute. The Buyer
and the Representative will cooperate with the Accounting Firm during the term
of its engagement. The Buyer and the Representative shall instruct the
Accounting Firm to not assign a value to any item in dispute greater than the
greatest value for such item assigned by the Buyer, on the one hand, or the
Representative, on the other hand, or less than the smallest value for such item
assigned by the Buyer, on the one hand, or the Representative, on the other
hand. The Buyer and the Representative shall also instruct the Accounting Firm
to make its determination based solely on written submissions by the Buyer and
the Representative which are in accordance with the guidelines and procedures
set forth in this Agreement (i.e. not on the basis of an independent review).
The Accounting Firm may, at its discretion, conduct a conference concerning the
dispute, at which conference each of the Buyer and the Representative shall have
the right to present additional documents, materials and other information and
to have present its advisors, counsel and accountants. The Purchase Price
Statement and the determination of the Purchase Price shall become final and
binding on the Parties on the date the Accounting Firm delivers its final
resolution in writing to the Buyer and the Representative (which final
resolution shall be requested by the Buyer and the Representative to be
delivered not more than 45 days following submission of such disputed matters),
absent manifest clerical errors or fraud. The final resolution will be a
reasoned resolution setting forth the Accounting Firm’s reasoning in reaching
its determination. In the case of any dispute arising from this Agreement,
discovery of the Accounting Firm will not be permitted and only the Accounting
Firm’s work papers will be disclosed to the Buyer and the Representative. The
fees and expenses of the Accounting Firm shall be allocated between Buyer, on
the one hand, and the Sellers, on the other hand, based upon the percentage
which the portion of the contested amount not awarded to each Party bears to the
amount actually contested by such Party. As an example and for illustrative
purposes only, if the Buyer contends the Purchase Price is $95,000,000, the
Representative contends the Purchase Price is $100,000,000 and the

 

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Accounting Firm determines that the Purchase Price is $98,000,000, then the
Buyer shall pay 60% of the fees and expenses of the Accounting Firm and the
Sellers shall pay 40% of such fees and expenses.

(c) The Purchase Price as finally determined pursuant to this Section 1.03 is
referred to as the “Final Purchase Price.” Within five (5) days after the
determination of the Final Purchase Price, the Representative shall (i) deliver
to the Buyer a schedule indicating each Seller’s Final Pro Rata Share (the
“Final Sellers Allocation Schedule”), (ii) apply the formula set forth on
Schedule 1.02(e)(i) and deliver to the Buyer a schedule with the resulting final
allocation of the Purchase Price among the Sterling GP Blocker Shares, the
Sterling LP Blocker Shares, the Other Liberty Propane GP Interests and the Other
Liberty Propane LP Interests, and (iii) with respect to the portion of the
Purchase Price allocated to the Other Liberty Propane GP Interests and the Other
Liberty Propane LP Interests, apply the formula set forth on Schedule
1.02(e)(ii) and deliver to the Buyer a schedule with the resulting final
allocation of such portion of the Purchase Price among the assets of Liberty
Propane GP and Liberty Propane LP.

1.04. The Post-Closing Adjustment Payments. If the Final Purchase Price is
greater than the Estimated Purchase Price, the Buyer shall, within five (5) days
after the date the Final Purchase Price is determined under and in accordance
with Section 1.03 above, pay to the Representative, on behalf of the Sellers, by
wire transfer of immediately available funds to the account(s) designated by the
Representative above, the amount of such difference. If the Final Purchase Price
is less than the Estimated Purchase Price, the Representative, on behalf of the
Sellers, shall, within five (5) days after the date the Final Purchase Price is
determined under and in accordance with Section 1.03 above, pay to the Buyer by
wire transfer of immediately available funds to the account(s) designated by the
Buyer, the amount of such difference.

1.05. The Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of Greenberg Traurig,
LLP located at 77 W. Wacker Drive, Chicago, Illinois 60601 at 9:00 a.m., local
time, on the date hereof. The date and time of the Closing are referred to
herein as the “Closing Date.”

1.06. Post-Closing Series A Preferred Redemption. In the event that any of the
Series A Preferred Interests have not been redeemed at the Closing (“Remaining
Series A Preferred Interests”), the Buyer shall cause Liberty Propane LP to
deliver to any holder of such Remaining Series A Preferred Interests (a
“Remaining Holder”) its Series A Redemption Price (as set forth in Section 5.04
of the Disclosure Schedule) upon the delivery by such Remaining Holder of an
executed Redemption Agreement or at any other such time as may deemed
appropriate by the Buyer.

ARTICLE II.

CLOSING DELIVERIES

2.01. Closing Deliveries of the Sellers. At Closing, the Representative, on
behalf of the Sellers, shall have delivered to the Buyer each of the following:

(i) a certificate in the form set forth in Exhibit B, dated as of the Closing,
stating that: (i) All of the representations and warranties set forth in Article
IV and Article V that are qualified as to materiality or words of similar import
are true and correct in all respects, and those not so qualified are true and
correct in all material respects, in each case as of the Closing (except where
such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall have been true and correct
as of such earlier date), and (ii) to the Companies’ knowledge, no action or
proceeding before any court or Governmental Authority is pending or threatened
wherein an unfavorable judgment, decree or order which would prevent the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement or would reasonably be expected to cause such transactions to be
rescinded;

 

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(ii) copies of the material governmental and third party consents relating to
the matters indicated on Schedule 2.01(ii) in connection with the consummation
of the transactions contemplated hereby;

(iii) all payoff letters and releases (or other evidence of payment in full
satisfaction where applicable) relating to any Indebtedness, listed on Schedule
2.01(iii) hereof, that will be paid off at Closing;

(iv) the certificates representing the Purchased Equity Interests consisting of
Sterling GP Blocker Shares and Sterling LP Blocker Shares duly endorsed for
transfer or accompanied by duly executed stock powers or equivalent transfer
documents acceptable to Buyer, and, in the case of all other Purchased Equity
Interests, the duly executed assignment instrument of each holder of such
Purchased Equity Interests in the form set forth in Exhibit C, all as may be
necessary to vest in Buyer all right, title and interest in and to the Purchased
Equity Interests free and clear of all Liens.

(v) all existing minute books, stock books (or equivalent books reflecting the
ownership of equity interests), ledgers and registers, corporate seals, if any,
and other corporate records relating to the organization, ownership and
maintenance of the Companies, if not already located on the premises of the
Companies;

(vi) resignations effective as of the Closing Date from all directors and
officers (in their capacity as officers, but not as employees) of the Companies,
unless otherwise specified by Buyer in writing and delivered to the
Representative not less than five (5) days prior to the Closing Date;

(vii) a certified copy of the certificate or articles of incorporation and all
amendments thereto (or equivalent organizational documents) for each of the
Companies, and a certificate of good standing from the Secretary of State of the
state of incorporation or formation for each of the Companies dated within ten
(10) days of the Closing Date;

 

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(viii) a certified copy of the Companies’ by-laws and all amendments thereto (or
equivalent organizational documents, including limited partnership agreements,
limited liability company agreements and operating agreements);

(ix) certified copies of the resolutions duly adopted by the governing body of
each Company authorizing the execution, delivery and performance of this
Agreement and the other agreements contemplated hereby to which it is a party,
and the consummation of all transactions contemplated hereby and thereby;

(x) the fully executed Representative Agreement;

(xi) evidence of termination each of the Management Agreement, Stockholders
Agreement and Investor Rights Agreement, in each case, in form and substance
reasonably acceptable to Buyer;

(xii) the fully executed Misemer Noncompetition Agreement, in form and substance
reasonably acceptable to Buyer;

(xiii) releases in the form of Exhibit D hereto duly executed by each Seller;

(xiv) evidence reasonably satisfactory to Buyer that Liberty Propane LP (A) is
consummating, simultaneously with the Closing, the Series B Preferred Redemption
(which constitutes Indebtedness and as such reduces the Purchase Price), (B) has
delivered to each holder of Series A Preferred Limited Partner Interests the
Redemption Notice and the Redemption Agreement in substantially the forms
attached hereto as Exhibit A, and (C) is consummating, simultaneously with the
Closing, the Redemption of the Series A Preferred Limited Partnership Interest
(which constitutes Indebtedness and as such reduces the Purchase Price) from the
holders thereof who have, prior to or at Closing, delivered to Liberty Propane
LP an executed Redemption Agreement as contemplated by Section 1.01(c) hereof,
which evidence shall include each fully executed Redemption Agreement delivered
to Liberty Propane LP prior to or at Closing; and

(xv) such other documents reasonably requested by the Buyer for the consummation
of the transactions contemplated hereby.

2.02. Conditions to the Sellers’ Obligations. At the Closing, the Buyer shall
deliver:

(i) certified copies of the resolutions duly adopted by the Buyer’s board of
directors (or its equivalent governing body) authorizing the execution, delivery
and performance of this Agreement and the other agreements contemplated hereby
to which it is a party, and the consummation of all transactions contemplated
hereby and thereby;

(ii) a certificate of an authorized officer of the Buyer in the form set forth
in Exhibit E, dated as of the Closing, stating that: (i) all of the
representations and warranties set forth in Article VI that are qualified as to

 

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materiality or words of similar import are true and correct in all respects, and
those not so qualified are true and correct in all material respects, in each
case as of the Closing (except where such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date), and
(ii) to the Buyer’s knowledge, no action or proceeding before any court or
Governmental Authority is pending or threatened wherein an unfavorable judgment,
decree or order which would prevent the performance of this Agreement or the
consummation of any of the transactions contemplated hereby, declare unlawful
the transactions contemplated by this Agreement or would reasonably be expected
to cause such transactions to be rescinded;

(iii) the Estimated Purchase Price as contemplated in Section 1.02 above; and

(iv) such other documents reasonably requested by the Representative for the
consummation of the transactions contemplated hereby.

ARTICLE III.

[RESERVED]

ARTICLE IV.

REPRESENTATIONS AND

WARRANTIES CONCERNING THE SELLERS

Except as set forth in the Schedules accompanying this Agreement (each, a
“Schedule” and collectively, the “Disclosure Schedules”), each Seller,
individually and severally, makes the following representations and warranties
to the Buyer (solely with respect to such Seller):

4.01. Authority and Power. Such Seller has all requisite power, capacity (if
such Seller is an individual) and authority (if such Seller is a Seller Entity)
to execute and deliver this Agreement and the other agreements contemplated
hereby to which such Seller is a party and to perform its obligations hereunder
and thereunder.

4.02. Seller Entities. If such Seller is a corporation, limited partnership,
limited liability company, trust or entity (a “Seller Entity”), such Seller
Entity is duly existing and in good standing under the laws of its jurisdiction
of incorporation or formation. The execution and delivery by it of this
Agreement and all other agreements contemplated hereby to which it is a party
and the performance by it of all of its obligations hereunder and thereunder
have been duly approved by all requisite action of its board of directors,
shareholders, partners, managers, members, trustees or the like, as the case may
be; and neither the execution and delivery of this Agreement and such other
agreements by such Seller Entity, nor the consummation by it of the transactions
contemplated hereby and thereby will conflict with or constitute a breach of the
terms, conditions or provisions of its certificate or articles of incorporation
or formation, bylaws, agreement of limited partnership, operating agreement,
trust agreement or declaration of trust, or other organizational documents, as
the case may be.

 

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4.03. Execution and Delivery; Valid and Binding Agreement. This Agreement and
the other agreements contemplated hereby to which such Seller is a party each
has been duly executed and delivered by such Seller, and assuming that this
Agreement and each such other agreement is the valid and binding obligation of
the Buyer, this Agreement and each such other agreement constitutes the valid
and binding obligation of such Seller, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy laws, other similar laws
affecting creditors’ rights and general principles of equity affecting the
availability of specific performance and other equitable remedies.

4.04. Noncontravention. Neither the execution and the delivery of this Agreement
and the other agreements contemplated hereby to which such Seller is a party,
nor the consummation of the transactions contemplated hereby and thereby, will
conflict with or result in any breach of, constitute a default under, result in
a violation of, or require any authorization, consent, approval, exemption or
other action by or notice to any Person (including any court or other
governmental body) under (a) in the case of a Seller Entity, the provisions of
such Seller’s certificate or articles of incorporation or formation or bylaws,
agreement of limited partnership, operating agreement or equivalent
organizational documents, (b) any indenture, mortgage, lease, loan agreement or
other agreement or instrument to which such Seller is bound, (c) any License
held by such Seller, or (d) any law, statute, rule or regulation or order,
judgment or decree to which such Seller is subject.

4.05. Ownership of Equity Interests. Such Seller is the record and beneficial
owner of the Equity Interests indicated on Section 5.04 of the Disclosure
Schedule, and such Equity Interests are not subject to, and are being sold,
assigned, transferred, conveyed and delivered to Buyer at Closing free and clear
of, any and all Liens, preemptive rights, options, rights of first refusal or
similar arrangements that have not been waived by the Person entitled to the
benefit thereof.

4.06. Litigation. There are no suits, actions, claims, proceedings or
investigations pending or, to the knowledge of such Seller, threatened against,
relating to or involving such Seller which could reasonably be expected to
adversely affect such Seller’s ability to consummate the transactions
contemplated by this Agreement.

4.07. Amounts Owed to Sellers. No Company nor any Subsidiary of any Company owes
or is obligated to pay any Seller any amount, except for employee salaries,
wages, guaranteed payments to Senior Executives and benefits accrued prior to
the Closing in the Ordinary Course.

4.08. Governmental Consents. No permit, consent, approval or authorization of,
or declaration to or filing with, any governmental or regulatory authority is
required in connection with any of the execution, delivery or performance of
this Agreement by such Seller or the consummation by such Seller of any of the
transactions contemplated hereby.

 

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4.09. Broker’s Fees. Except for the fees and expenses of Wells Fargo Securities,
LLC and its respective Affiliates in connection with the transactions
contemplated hereby (which will be Transaction Expenses), no Seller has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
the Buyer, any Company or any Subsidiary of any Company, could become liable or
obligated.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

CONCERNING THE COMPANIES

Except as set forth in the Schedules accompanying this Agreement, each of the
Companies makes the following representations and warranties to the Buyer, with
each representation and warranty set forth in this Article V (including the
Disclosure Schedules referred to herein) being read separately with respect to
each Company:

5.01. Organization and Power.

(a) The Company is a corporation, limited partnership or limited liability
company, as applicable, duly organized, validly existing and in good standing
under the laws of the state of its incorporation or formation, and the Company
has all requisite power and authority and all material authorizations, licenses
and permits necessary to own and operate its properties and to carry on its
businesses as now conducted. The Company is qualified to do business in every
jurisdiction in which its ownership of property or the conduct of its businesses
as now conducted requires it to qualify, except where the failure to so qualify
would not materially affect the Company.

(b) The Company, as applicable, has heretofore made available to Buyer a
complete and correct copy of the certificate or articles of incorporation,
certificate of formation, operating agreement, partnership agreement or bylaws
of the Company, each, as amended to date. Each of such documents is in full
force and effect. The Company is not in violation of any of its organizational
documents.

(c) The Company has the necessary power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate, limited liability company, or partnership action and no other
corporate limited liability company, or partnership proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming its due authorization, execution and
delivery by the Buyer constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, other similar laws affecting
creditors’ rights and general principles of equity affecting the availability of
specific performance and other equitable remedies.

 

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(d) Liberty Propane GP was formed for the sole purpose of serving as the general
partner of Liberty Propane LP. Each of Sterling GP Blocker and Sterling LP
Blocker was formed for the sole purpose of holding Liberty Propane GP Interests
and Liberty Propane LP Interests, respectively. Since its formation, each of
Liberty Propane GP, Sterling GP Blocker and Sterling LP Blocker has not engaged
in any business operations or conducted any activities and has no liabilities,
in each case other than those solely associated with serving as the general
partner of Liberty Propane LP, or holding Liberty Propane GP Interests and
Liberty Propane LP Interests, respectively.

5.02. Subsidiaries. The Company has no Subsidiaries, except for a Subsidiary
that is also a Company.

5.03. Noncontravention. Neither the execution and the delivery of this Agreement
and the other agreements contemplated hereby to which the Company is a party,
nor the consummation of the transactions contemplated hereby and thereby
(a) will conflict with or result in any breach of, constitute a default under,
result in a violation of, or require any authorization, consent, approval,
exemption or other action by or notice to any Person (including any court or
other governmental body) under (i) the provisions of the Company’s certificate
or articles of incorporation or formation or bylaws, agreement of limited
partnership, operating agreement or equivalent organizational documents,
(ii) any material indenture, mortgage, lease, loan agreement or other agreement
or instrument to which the Company is bound, (iii) any License held by the
Company, or (iv) any law, statute, rule or regulation or order, judgment or
decree to which the Company is subject or (b) will result in the creation of any
Lien upon any assets of the Company.

5.04. Equity Interests. The authorized, issued and outstanding number of shares
of capital stock or other equity interests of the Company is set forth in
Section 5.04 of the Disclosure Schedules and such shares or interests are owned
of record and beneficially owned by the Sellers (and the Companies) set forth in
such Disclosure Schedule. All of the Equity Interests have been duly authorized
and (a) are validly issued, fully paid and nonassessable and (b) were not issued
in violation of any preemptive rights, options, rights of first refusal or
similar arrangements that have not been waived by the Person entitled to the
benefit thereof. None of the Equity Interests were issued in violation of any
applicable Law. The Company does not have any other capital stock, equity
securities or securities containing any equity features authorized, issued or
outstanding, and there are no agreements, options, warrants or other rights or
arrangements existing or outstanding which provide for the sale or issuance of
any of the foregoing by the Company. There are no agreements or other
obligations (contingent or otherwise) which require the Company to repurchase or
otherwise acquire any shares of the Company’s capital stock or other equity
securities. With the exception of the Sterling GP Blocker Shares and Sterling LP
Blocker Shares, none of the Equity Interests are outstanding in certificated
form. Section 5.04 of the Disclosure Schedule sets forth the name and address of
each holder of Series A Preferred Limited Partner Interests, together with the
Series A Redemption Price payable to each such holder on the date established
for the Series A Preferred Redemption in the Redemption Notice delivered
pursuant to Section 1.01(b) hereof.

 

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5.05. Financial Statements. The Representative has furnished the Buyer with
copies of (i) audited consolidated balance sheets with respect to Liberty
Propane LP as of June 30, 2008 and June 30, 2009, and the related audited
statements of income and cash flows for the fiscal years then ended, and the
notes thereto, and (ii) the unaudited consolidated balance sheet with respect to
Liberty Propane LP as of September 30, 2009 (the “Latest Balance Sheet”) and the
related statement of income for the three (3) month period then ended. Such
financial statements have been based upon the information concerning the Company
contained in the Company’s books and records, and present fairly in all material
respects the financial condition and results of operations of the Company (taken
as a whole) as of the times and for the periods referred to therein in
accordance with GAAP applied on a consistent basis, subject in the case of the
unaudited financial statements to (i) the absence of footnote disclosures and
other presentation items and (ii) changes resulting from normal year-end
adjustments and reclassifications. Except for matters reflected or reserved for
in the Latest Balance Sheet, the Company has no material liabilities or
obligations of any nature (whether absolute, accrued, contingent (including
guaranty and surety obligations), fixed or otherwise) that would be required
under GAAP consistently applied, based on information available to the Company
as of the date hereof, to be reflected in the consolidated balance sheet of the
Company (or in the notes thereto) except (x) liabilities and obligations that
were incurred since September 30, 2009 in the Ordinary Course, and (b) executory
obligations under the Company’s contracts and agreements (excluding obligations
relating to the breach thereof by the Company).

5.06. Absence of Certain Developments. Since June 30, 2009, the Company has
conducted its business in the Ordinary Course and there has not occurred any
Material Adverse Effect. Except as disclosed in Section 5.06 of the Disclosure
Schedule or except as expressly contemplated by this Agreement, since the date
of the Latest Balance Sheet, the Company has not:

(a) borrowed any amount (other than borrowings from banks (or similar financial
institutions) necessary to meet Ordinary Course working capital requirements);

(b) except for distributions to its members, partners or shareholders for Taxes
in the Ordinary Course, declared or paid any dividends or distributions or
received or repurchased any equity securities;

(c) mortgaged, pledged or subjected to any Lien, any of its assets, except
Permitted Liens;

(d) sold, assigned or transferred any of its tangible assets, except in the
Ordinary Course;

(e) sold, assigned or transferred any material Intellectual Property;

(f) sold, assigned or transferred any rights under any contract or agreement;

(g) except in the Ordinary Course, modified or changed any contract or
agreement;

 

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(h) issued, sold or transferred any of its capital stock or other equity
securities, securities convertible into its capital stock or other equity
securities or warrants, options or other rights to acquire its capital stock or
other equity securities, or any bonds or debt securities;

(i) made any capital expenditures or commitments therefor in an aggregate amount
in excess of $1,000,000; or

(j) entered into any transaction, contract or commitment that by reason of its
size or otherwise was material to the business or financial condition of the
Company.

5.07. Properties.

(a) The Companies have good and marketable title to, or hold pursuant to valid
leases or licenses, all of the equipment, property, assets and other items of
tangible personal property purported to be owned by the Companies or as set
forth in the balance sheet of the Audited Financial Statements, in each case
free and clear of all Liens except Permitted Liens (collectively, the “Personal
Property”). All Personal Property, that is currently used in the operation of
the Companies’ business, is in good operating condition, ordinary repair, wear
and tear excepted. The Company has no knowledge of any material defect or
problem with any Personal Property currently used in the operation of the
Companies’ business, other than ordinary repair, wear and tear. No Person other
than the Companies owns any Personal Property situated on the premises of the
Companies, except for the leased items that are subject to personal property
leases in favor of the Companies (an accurate and complete list of which leases
is set forth on Section 5.07(a) of the Disclosure Schedule). Since June 30,
2009, none of the Companies has sold, transferred or disposed of any assets in
excess of $100,000 per item, other than in the Ordinary Course. Section 5.07(a)
of the Disclosure Schedule sets forth a true, correct and complete list and
general description of each vehicle owned or leased by any Company (identifying
them as being owned or leased) and of each item of other Personal Property
having a fair market or book value per unit in excess of $100,000 (identifying
them as being owned or leased), together with an accurate and complete listing
of the number of propane tanks included in the Personal Property in each tank
size category, regardless of its fair market or book value per unit (identifying
them as being owned or leased).

(b) Section 5.07(b) of the Disclosure Schedule contains a true, correct and
complete list of all parcels of real property owned in fee simple by one or more
of the Companies (together with all fixtures and improvements thereon) (the
“Owned Real Property”), including the name of the Company that owns such parcel
and the street address of such parcel. The applicable Company as listed in
Section 5.07(b) of the Disclosure Schedule has good and marketable fee simple
title to the Owned Real Property, free and clear of all Liens other than
Permitted Liens.

(c) Section 5.07(c) of the Disclosure Schedule contains a true, correct and
complete list of all parcels of real property leased by one or more of the
Companies as lessee (together with all fixtures and improvements thereon) (the
“Leased Real Property”

 

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and together with the Owned Real Property, the “Company Real Property”),
including the name of the Company that leases such parcels and the street
address of such parcels. The applicable Company as listed in Section 5.07(c) of
the Disclosure Schedule has a valid and unencumbered leasehold interest in the
Leased Real Property.

(d) The Real Property Leases are in full force and effect, subject to proper
authorization and execution of any such Real Property Leases by the other party
to such lease, except as enforceability may be limited by bankruptcy laws, other
similar laws affecting creditors’ rights and general principles of equity
affecting the availability of specific performance and other equitable remedies.
The Companies have delivered or made available to the Buyer true, correct and
complete copies of each of the Real Property Leases, and none of the Real
Property Leases have been modified, except: (i) to the extent that such
modifications are disclosed by the copies delivered or made available to the
Buyer; or (ii) for the renewal of Real Property Leases (without other
modification, except for customary increases in rent) in the Ordinary Course.
The Company is not in default, in any material respect, under any Real Property
Lease, and none of the Companies have received any uncured written notice of
default on the part of the tenant or subtenant under any Real Property Lease. To
the Company’s knowledge, no landlord (including any sublessor) under any Real
Property Lease is in default, in any material respect, under such Real Property
Lease. Section 5.07(d) of the Disclosure Schedule identifies with an asterisk
(“*”) each Real Property Lease set forth therein that requires the consent of or
notice to the other party thereto to avoid any breach, default or violation of
such Real Property Lease in connection with the transactions contemplated
hereby.

(e) A true, correct and complete list of all leases affecting the Owned Real
Property (with Company, Sellers or any applicable affiliate thereof acting as
landlord thereunder), including the true, correct and complete street address of
each such affected Owned Real Property, is set forth in Section 5.07(e) of the
Disclosure Schedule (the “Owned Property Leases”). The Company is not in
default, in any material respect, under any Owned Property Lease, and none of
the Companies have received any uncured written notice of default on the part of
the landlord under any Owned Property Lease. To the Company’s knowledge, no
tenant under any Owned Property Lease is in default, in any material respect,
under such Owned Property Lease.

(f) To the Company’s knowledge, no condemnation proceedings are pending or
threatened against any portion of the Company Real Property, nor has any written
notice of the existence, institution or proposed institution of condemnation
proceedings relating to any portion of the Company Real Property been received.

5.08. Tax Matters.

(a) The Company has filed all material Tax Returns or the appropriate extensions
that it was required to file for such Tax Returns. All such Tax Returns were
correct and complete in all respects and were prepared in substantial compliance
with all applicable Laws. All Taxes due and owing (whether or not shown on any
Tax Return to be owed by the Company) have been paid or properly accrued on the
books and records of the Company. No claim in writing has been made by a taxing
authority in a

 

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jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax, except for Liens for Taxes not yet due.

(b) The Company has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid, owing, allocated or distributed to any
employee, independent contractor, creditor, stockholder, member, partner or
other third party.

(c) The Company has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.

(d) The Company is not a party to any Tax allocation or sharing agreement. The
Company: (i) has not been a member of an Affiliated Group filing a consolidated
Federal income Tax Return and (ii) has no liability for the Taxes of any Person
under Treasury Regulation § 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor or by contract, other than with
respect to the Affiliated Group of which the Company is the common parent.

(e) The Company has not been a U.S. real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.

(f) No federal, state, or local tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to the Company. The
Company has not received from any federal, state or local taxing authority
(including jurisdictions where the Company has not filed Tax Returns) any
(i) notice indicating an intent to open an audit or other review, (ii) request
for information related to a Tax matter, or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed by any
taxing authority against the Company. Section 5.08(f) of the Disclosure Schedule
lists all federal, state and local income Tax Returns filed with respect to the
Company for taxable periods ended on or after December 31, 2006, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Company has delivered to Buyer correct
and complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company filed or
received since January 1, 2006.

(g) The Company is not a party to any agreement, contract, arrangement or plan
that has resulted or could result, separately or in the aggregate, in the
payment of (i) any “excess parachute payment” within the meaning of Code § 280G
(or any corresponding provision of state or local Tax law), and (ii) any amount
that will not be fully deductible as a result of Code § 162(m) (or any
corresponding provision of state or local Tax law). The Company has disclosed on
its federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of Code
§ 6662.

 

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(h) Section 5.08(h) of the Disclosure Schedule sets forth the
following information with respect to each of the Sterling GP Blocker and the
Sterling LP Blocker as of December 22, 2009: each such Company’s good faith
estimate of the amount of any net operating loss or taxable income recognizable
by such Company for the period beginning on January 1, 2009 and ending on
December 22, 2009, based on information reasonably available to such Company as
of such date, without taking into account or giving effect to the transactions
contemplated hereby, and determined in a manner consistent with how such Company
has historically made such determinations.

(i) The unpaid Taxes of the Company (A) did not, as of the Latest Balance Sheet,
exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Latest Balance Sheet (rather than in any notes thereto), and
(B) do not exceed that reserve as adjusted for the passage of time and the
operations of the Company through the Closing Date in accordance with the past
custom and practice of the Company in filing its Tax Returns. Since the date of
the Latest Balance Sheet, the Company has not incurred any liability for Taxes
arising from extraordinary gains or losses, as that term is used in GAAP,
outside the Ordinary Course of Business consistent with past custom and
practice.

(j) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any:

(A) change in method of accounting for a taxable period ending on or prior to
the Closing Date;

(B) “closing agreement” as described in Code § 7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date;

(C) installment sale or open (i.e. contingent) transaction disposition made on
or prior to the Closing Date other than installment sale notes set forth on
Schedule 5.08(i)(C); or

(D) prepaid amount received on or prior to the Closing Date other than the
amounts set forth on Schedule 5.08(i)(D).

(k) Section 5.08(k) of the Disclosure Schedule sets forth a list of any
transfers, sales or exchanges or redemptions of any equity interest in the
Company since December 1, 2006, with the number of shares or percentage interest
(in profits and capital), as applicable, and the date of any such conveyance.

5.09. Contracts and Commitments.

(a) Except to the extent the following representations relate to Indebtedness
which is paid off or terminated at the Closing the Company is not a party to
any: (i) agreement relating to any completed business acquisition or divestiture
by the Company

 

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within the last two years; (ii) collective bargaining agreement or contract with
any labor union; (iii) written (or to the Company’s Knowledge, material oral)
bonus, pension, profit sharing, retirement or other form of deferred
compensation plan, other than as described in Section 5.13 or the Disclosure
Schedules relating thereto; (iv) stock purchase, stock option or similar plan;
(v) written contract for the employment of any officer, employee or other person
on a full time or consulting basis; (vi) agreement or indenture relating to the
borrowing of money or to mortgaging, pledging or otherwise placing a Lien on any
portion of the Company’s assets other than Permitted Liens; (vii) guaranty of
any obligation for borrowed money or other material guaranty; (viii) lease or
agreement under which it is lessee of, or holds or operates any personal
property owned by any other party, for which the annual rental exceeds $250,000;
(ix) contract that grants or confers any easement or mineral rights or other
material encumbrances or liabilities upon, or otherwise with respect to, any
real property owned or leased by it; (x) lease or agreement under which it is
lessor of, or permits any third party to hold or operate any real property;
(xi) lease or agreement under which it is lessor of, or permits any third party
to hold or operate any personal property, for which the annual rental exceeds
$250,000; (xii) contract or group of related contracts with the same party for
the purchase of products or services, under which the undelivered balance of
such products and services has a selling price in excess of $250,000 (other than
propane supply agreements delivered in the Ordinary Course); (xiii) contract or
group of related contracts with the same party for the sale of products or
services under which the undelivered balance of such products or services has a
sales price in excess of $250,000 (other than sale orders received in the
ordinary course of business); (xiv) contract which prohibits the Company from
freely engaging in business anywhere in the United States; (xv) a partnership,
joint venture or other similar contract; (xvi) a collective bargaining or other
collective labor contract; (xvii) a written (or to the Company’s Knowledge,
material oral) contract with any of its officers, directors, managers, partners,
shareholders or members, or any of their respective affiliates; or (xviii) a
contract not made in the Ordinary Course.

(b) The Buyer either has been supplied with, or has been given access to, a true
and correct copy of all written contracts which are referred to on the
Disclosure Schedules, together with all amendments, waivers or other changes
thereto. Each such contract is in full force and effect, is valid, binding and
enforceable in accordance with its terms, and embodies the complete
understanding between the parties thereto with respect to the subject matter
thereof.

(c) Neither the Company nor any other Person is in default in any material
respect under any contract listed on the Disclosure Schedules. The Company has
not received any written (or to the Company’s Knowledge, material oral) notice
that any Person intends to cancel, modify or terminate any contract listed on
the Disclosure Schedules, other than in the Ordinary Course.

(d) Section 5.09 of the Disclosure Schedule identifies with an asterisk (“*”)
each contract set forth therein that requires the consent of or notice to the
other party thereto to avoid any breach, default or violation of such contract
in connection with the transactions contemplated hereby.

 

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5.10. Intellectual Property.

(a) The attached Disclosure Schedules contain a complete and accurate list of
all: (i) patented or registered Intellectual Property Rights owned by the
Company, (ii) pending patent applications and applications for other
registrations of Intellectual Property Rights filed by or on behalf of the
Company, (iii) Internet domain names, and any unregistered trademarks, service
marks, trade dress, trade names, logos and corporate or company names used or
useful by the Company in connection with the operation of the business,
(iv) material licenses and other rights granted by the Company to any third
party with respect to any Intellectual Property Rights, and (v) all material
licenses and other rights granted by any third party to the Company with respect
to any Intellectual Property Rights (“Third Party IP License”). The Company owns
and possesses or has the right to use pursuant to a valid and enforceable
license, all Intellectual Property Rights necessary for the operation of the
businesses of the Company as presently conducted free and clear of all Liens
other than Permitted Liens. Except as set forth in the attached Disclosure
Schedule, (1) each Third Party IP License provides for the perpetual, royalty
free right to Company to use of the subject Intellectual Property Rights without
the payment of any additional or ongoing royalties or license fees, and
(2) Company has not agreed to indemnify any third party for claims relating to
the breach, misappropriation or infringement of any Intellectual Property Right.

(b) (i) During the five-year period prior to the date of this Agreement, there
have been no written claims made against the Company asserting the invalidity,
misuse or unenforceability of any of the Intellectual Property Rights owned or
used by the Company, (ii) during the five-year period prior to the date of this
Agreement, the Company has not received any written notice of, any infringement
or misappropriation by, or conflict with, any Intellectual Property Rights of
any third party (including any written demand or request that the Company
license any rights from a third party), (iii) to the Company’s knowledge, the
conduct of the Company’s business has not infringed, misappropriated or
conflicted with and does not infringe, misappropriate or conflict with any
Intellectual Property Rights of any third party and no third party is infringing
or misappropriating any of the Company’s Intellectual Property Rights, (iv) no
royalties, honorariums or fees are payable by the Company to any Person by
reason of the ownership or use of any of the Intellectual Property Rights, and
(v) the transactions contemplated by this Agreement will not have a Material
Adverse Effect on any Third Party IP License, or the Company’s right, title or
interest in and to the Intellectual Property Rights listed on the Schedule 5.10.

5.11. Litigation. There are no actions, suits or proceedings pending or, to the
Company’s knowledge, overtly threatened against the Company, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign and the Company is not subject to any outstanding judgment, order or
decree of any court or governmental body. All of the matters identified on
Section 5.11 of the Disclosure Schedule are, subject to any deductible or
reservation of rights of the insurer, covered under the insurance policies
listed in the Disclosure Schedules.

 

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5.12. Governmental Consents. Except for the applicable requirements of the HSR
Act, no permit, consent, approval or authorization of, or declaration to or
filing with, any governmental or regulatory authority is required in connection
with any of the execution, delivery or performance of this Agreement by the
Company or the consummation by the Company of any of the transactions
contemplated hereby.

5.13. Employee Benefit Plans.

(a) The Company does not maintain or contribute to, or have any liability with
respect to, any Company Benefit Plan. The Representative has made available to
the Buyer copies of each Company Benefit Plan document, and the most recent
Internal Revenue Service (the “IRS”) Form 5500 annual reports and determination
letter or opinion letter received from the IRS with respect thereto.

(b) Each of the Company Benefit Plans that is intended to be qualified under
Section 401(a) of the Code, has received a favorable determination letter from
the IRS or is a prototype plan that is entitled to rely on an opinion letter
from the IRS to the prototype plan sponsor regarding qualification of the form
of the prototype plan. The Company has performed in all material respects all
obligations required to be performed by them under, are not in default or
violation of, and have no knowledge of any default or violation by any other
party to, the material terms of any Company Benefit Plan, and each Company
Benefit Plan has been established and maintained in all material respects in
accordance with its terms and in compliance in all material respects with all
applicable legal requirements, including, without limitation, ERISA and the
Code. There are no actions, suits or claims pending, or to the Company’s
knowledge threatened or reasonably anticipated (other than routine claims for
benefits), against any Company Benefit Plan or against the assets of any Company
Benefit Plan. There are no audits, inquiries or proceedings pending or to the
Company’s knowledge threatened by the IRS, the Department of Labor, or any other
governmental entity with respect to any Company Benefit Plan. The Company has
made all contributions and other payments required by and due under the terms of
each Company Benefit Plan.

(c) Neither the Company nor any ERISA Affiliate has maintained, established,
sponsored, participated in, or contributed to any (i) Company Benefit Plan
subject to Title IV of ERISA, or (ii) “multiemployer plan” within the meaning of
Section (3)(37) of ERISA.

(d) No Company Benefit Plan provides, or reflects or represents any liability of
the Company to provide, retiree life insurance, retiree health or other retiree
employee welfare benefits to any person for any reason, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended or other applicable legal requirements.

(e) The Liberty Propane LP Employee Handbook does not allow vacation to be
carried over past December 31 and Liberty Propane LP is not otherwise obligated
to allow vacation to be carried over past December 31. Employees of Liberty
Propane LP are not entitled to payment for unused vacation except: (i) in the
case of no more than

 

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three (3) employees not yet converted from a prior vacation policy, or (ii) upon
termination of employment. In the event that an employee of Liberty Propane LP
is asked to forgo his or her scheduled vacation to meet Liberty Propane LP’s
needs, any such unused vacation days must be used prior to December 31 of the
following year or are forfeited (subject to (ii) above).

(f) The terms of each Company Benefit Plan which is a “nonqualified deferred
compensation plan” within the meaning of Code section 409A (and associated
Treasury Department guidance, including all transition guidance) comply with
Code Section 409A (and associated Treasury Department guidance, including all
transition guidance), each such “nonqualified deferred compensation plan” has
been operated in compliance with Code Section 409A (and associated Treasury
Department guidance, including all transition guidance), and no such
“nonqualified deferred compensation plan” has been materially modified within
the meaning of Code Section 409A (and associated Treasury Department guidance).
The Company has no indemnity obligation for any Taxes imposed under Code
Section 409A.

(g) The Company has made full and timely payment of all amounts required to be
contributed or paid as expenses or accrued such payments in accordance with
normal procedures under the terms of each Company Benefit Plan and applicable
Law.

(h) No Company Benefit Plan is under audit or is the subject of an investigation
by the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation, the Securities and Exchange Commission or any other Governmental
Authority, nor is any such audit or investigation pending or, to the Knowledge
of the Company, threatened. With respect to each Company Benefit Plan for which
financial statements are required by ERISA, there has been no adverse change in
the financial status of such Company Benefit Plan since the date of the most
recent such statements provided to Buyer.

(i) Each Company Benefit Plan that is a pension plan within the meaning of ERISA
Section 3(2) (regardless of whether such Company Benefit Plan is covered by
ERISA) but is not qualified under Code Section 401(a) or 403(a) is exempt from
Part 2, 3 and 4 of Title I of ERISA as an unfunded plan that is maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees, pursuant to ERISA Sections
201(2), 301(a)(3) and 401(a)(1). No assets of the Company are allocated to or
held in a “rabbi trust” or similar funding vehicle.

(j) No event has occurred and there exists no condition or set of circumstances
that presents a material risk that any Company Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has or is likely to experience a
partial termination within the meaning of Code Section 411(d)(3).

5.14. Insurance. The Disclosure Schedules list each insurance policy maintained
by the Company. All of such insurance policies are in full force and effect, and
the Company is not in default with respect to its obligations under any of such
insurance policies. Section 5.14 of the

 

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Disclosure Schedules provides an accurate and complete summary of the actual
out-of-pocket loss experience for the last three years under each such policy of
insurance maintained by the Company and a statement describing the actual
out-of-pocket loss experience for the last three years for all claims that were
self-insured.

5.15. Compliance with Laws. The Company is in compliance in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof, (“Laws”). The Company has not
received written notice of any material violation or does not have knowledge of
any alleged material violation of any Laws and is not subject to liability for
any past or continuing violation of any Laws. The Company has all material
government licenses, permits, approvals, certifications, and consents of all
governmental entities and all certification organizations required, and all
exemptions from requirements to obtain or apply for any of the foregoing, for
the conduct of its business (as currently conducted) and the operation of its
facilities.

5.16. Environmental Matters. Except as provided in Section 5.16 of the
Disclosure Schedule:

(a) The Companies have not generated, manufactured, refined, transported,
treated, stored, handled, disposed, transferred, produced or processed any
Hazardous Substances except in material compliance with all applicable
Environmental Requirements and related permits. The Company Real Property is not
being used and, to the Companies’ knowledge, has not been used by the Companies,
in material violation of any applicable Environmental Requirement for the
storage, treatment, generation, transportation, processing, handling, production
or disposal of any Hazardous Substances, or as a landfill, surface impoundment,
or other waste management or disposal site or for the storage of Hazardous
Substances.

(b) Sellers and the Companies have not assumed any material liability of or in
connection with the respective business operations or the Company Real Property,
other real property, Offsite Facility, Person, or the Environment, relating to
or arising from any Environmental Requirements.

(c) Except for those used in connection with the storage and handling of natural
gas, there are no underground storage tanks (as defined by applicable
underground storage tank regulations) or related pipes, pumps or other similar
related equipment regardless of their use or purpose whether active or abandoned
at the Owned Real Property or, to the Companies’ knowledge, Leased Real
Property.

(d) The Owned Real Property (including surface and subsurface soil, groundwater
and surface water) is not contaminated with and does not otherwise contain any
Hazardous Substances the concentrations or presence of which exceed thresholds
permitted by applicable Environmental Requirements for industrial properties.

(e) There has been no Release or to the Company’s Knowledge threat of a Release
of any Hazardous Substances in violation of any Environmental Requirement on,
at, from or affecting the Owned Real Property nor has there has been any Release
by the

 

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Company or to the Company’s Knowledge threat of any such Release by the Company
of any Hazardous Substances in violation of any Environmental Requirement on,
at, from or affecting the Leased Real Property.

(f) The Companies have not received any written form of notice or inquiry,
notice of violation or enforcement notice from any Governmental Authority or any
other Person with regard to a Release or the threat of a Release of any
Hazardous Substances on, at, from or affecting the Companies or Company Real
Property in violation of any Environmental Requirement.

(g) All material permits and approvals required by Environmental Requirements
for the construction, equipping, ownership, use and operation of the Companies
have been obtained and are in full force and effect, and an accurate and
complete list of such environmental permits and approvals is set forth in
Section 5.16 of the Disclosure Schedule.

(h) There are no pending or currently effective written agreements, consent
orders, decrees, or judgments of any Governmental Authority to which any of the
Companies is a party relating to the past, present or future construction,
equipping, ownership, use, operation of the Owned Real Property or the Companies
or, to the Companies’ knowledge, the Leased Real Property, that require any
work, repairs, construction, containment, clean up, investigation, study,
monitoring, removal or remedial action or capital expenditures necessary for
such facility or property to be in compliance with all applicable Environmental
Requirements.

(i) There are no actions, claims or law suits against the Companies by any third
party currently filed, pending or threatened in writing, that could reasonably
be anticipated to cause the incurrence of expenses or costs of any type or
description or that seek money damages, injunctive relief, or corrective action
that arise out of, relate to or result from: (1) the environmental condition of
the Company Real Property, any Offsite Facility, offsite property, or the
Environment; (2) a violation or alleged violation of any applicable
Environmental Law or non-compliance or alleged non-compliance with any
environmental permit; (3) the presence of any Hazardous Substances or a Release
or the threat of a Release of any Hazardous Substances; (4) arrangement for
treatment or disposal of any Hazardous Substances at any location other than the
Company Real Property; or (5) human exposure to any Hazardous Substance to the
extent the same arise from the operation of the Companies or from the condition
of the Company Real Property.

(j) There are no state or federal liens on the Owned Real Property resulting
from an environmental corrective action by any Governmental Authority or any
third party.

(k) There are no activity use limitations, institutional controls, or
engineering controls recorded in the chain of title to the Owned Real Property
which in any way restrict the use of the Owned Real Property.

 

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5.17. Affiliated Transactions. Other than employment agreements and benefit
arrangements listed in the Disclosure Schedules, no officer, director, or
stockholder or equity holder of the Company is a party to any written (or to
Company’s Knowledge, any material oral) agreement, contract, commitment or
transaction with the Company or has any interest in any property used by the
Company, other than the indirect ownership interests of stockholders and equity
holders through their equity ownership. No loans or advances (other than expense
advances to officers in the Ordinary Course) from the Company to any officer,
director, or stockholder or equity holder of the Company or any affiliate of any
such Person are presently outstanding.

5.18. Employees.

(a) Except as disclosed on Section 5.18 of the Disclosure Schedule, the Company
is in compliance with all applicable laws relating to the employment of
personnel and labor, including provisions thereof relating to wages and hours,
sexual harassment and other hostile work environment issues, discrimination,
equal opportunity, collective bargaining, plant closing and mass layoff, health
and safety, immigration and the payment of social security and other Taxes.

(b) The Company has not agreed to recognize any union or other collective
bargaining representative; and no union or other collective bargaining
representative has been certified as the exclusive bargaining representative of
any of the Company’s employees.

(c) There is no pending or, to the knowledge of the Company, threatened union
organizational effort, labor dispute, strike, slowdown, lockout, boycott,
sit-in, sick-out, union election, walkout, demonstration, leafleting, picketing,
representation or certification campaign, or work stoppage relating to employees
of the Company and none has occurred within the immediately preceding two
(2)-year period. The Company, and any representative or employee of the Company,
has not committed any unfair labor practice, in any material respect, in
connection with the operation of its business, and there is no pending or, to
the knowledge of the Company, threatened charge or complaint against the Company
before the National Labor Relations Board or any state agency responsible for
regulating employment practices. There have not been any plant closings or mass
layoffs of employees of the Company within the immediately preceding two-year
period that would be subject to the Worker Adjustment and Retraining
Notification Act or similar laws.

5.19. Broker’s Fees. Except for the fees and expenses of Wells Fargo Securities,
LLC and its Affiliates which are being paid by the Companies (which fees and
expenses will be Transaction Expenses), there are no claims for brokerage
commissions, finders’ fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company or any of its Affiliates.

 

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5.20. Notes and Accounts Receivable.

(a) Notes. All notes receivable and notes payable (the “Affiliate Loans”) of the
Companies owing by or to any director, officer, partner, manager, member,
stockholder, employee or Affiliate of any Company or by or to any Seller have
been paid in full, settled by way of capital contribution in-kind, cancelled or
otherwise discharged prior to the date hereof or shall have been paid in full,
settled by way of capital contribution in-kind, cancelled or otherwise
discharged prior to the Closing Date. Section 5.20(a) of the Disclosure Schedule
sets forth a true, correct and complete list of all Affiliate Loans and the
outstanding balance and applicable interest payments under each Affiliate Loan
as of the date hereof.

(b) Accounts Receivable. All receivables reflected as Working Capital, as
finally determined pursuant to Section 1.03 hereof (net of any reserves),
represent monies due for goods sold and delivered or services rendered in the
Ordinary Course. Notwithstanding the foregoing, any Receivable existing between
any Company, on the one hand, and any Seller and any of its Affiliates
(excluding the Companies), on the other hand, shall be paid in full, settled by
way of capital contribution in kind, cancelled or otherwise discharged prior to
the date hereof or prior to the Closing Date. None of the Companies has factored
any of its receivables.

(c) Accounts Payable. The accounts payable of the Companies reflected on the
Latest Balance Sheet (or that is reflected as Working Capital, as finally
determined pursuant to Section 1.03 hereof) arose from bona fide transactions in
the Ordinary Course.

5.21. Customers and Suppliers Relations. Section 5.21 of the Disclosure Schedule
contains a true, correct and complete list of the names and addresses of the
Customers and Suppliers, and the amount of sales to or purchases from each such
Customer or Supplier during the twelve (12)-month period ended June 30, 2009.

5.22. Licenses. Section 5.22 of the Disclosure Schedule contains a true, correct
and complete list of all material Licenses held by each Company. The Companies
own or possess all Licenses that are necessary to enable it to carry on its
operations as presently conducted. All such Licenses are valid, binding and in
full force and effect. The execution and delivery of this Agreement, the
performance of all obligations hereunder, the consummation of the transactions
contemplated hereby, and the fulfillment and compliance with the terms and
conditions hereof will not adversely affect any such License, or require consent
from, or notice to, any Governmental Authority. The Companies have taken all
necessary action to maintain each License, except where the failure to so act
shall not have an adverse effect on any Company or its respective operations.
The Companies have not received written notice that any loss or expiration of
any License is pending or, to the Company’s knowledge, threatened (other than
expiration upon the end of any term).

5.23. Bank Accounts. Section 5.23 of the Disclosure Schedule sets forth a true,
correct and complete list and description of each bank account used by a Company
and the name of each Person authorized to make withdrawals or other transfers
from each such account.

 

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5.24. Books and Records. The books, records and accounts of the Company (i) are
accurate and complete in all material respects, (ii) have been maintained in
accordance with good business practices on a basis consistent with prior years,
and (iii) state in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of the Company.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES CONCERNING BUYER

Buyer represents and warrants to the Sellers that:

6.01. Organization and Power. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with the necessary limited liability company power and authority to
enter into this Agreement and perform its obligations hereunder.

6.02. Authorization; Valid and Binding Agreement. The execution and delivery of
this Agreement by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby have been duly and validly authorized by all
necessary limited liability company action and no other limited liability
company proceedings on its part are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Buyer and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes a legal, valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as enforceability may be limited by bankruptcy laws,
other similar laws affecting creditors’ rights and general principles of equity
affecting the availability of specific performance and other equitable remedies.

6.03. No Breach. Neither the execution and the delivery of this Agreement and
the other agreements contemplated hereby to which the Buyer is a party, nor the
consummation of the transactions contemplated hereby and thereby will conflict
with or result in any breach of, constitute a default under, result in a
violation of, or require any authorization, consent, approval, exemption or
other action by or notice to any Person (including any court or other
governmental body) under (a) the provisions of the Buyer’s certificate or
articles of incorporation or formation or bylaws, agreement of limited
partnership, operating agreement or equivalent organizational documents, (b) any
material indenture, mortgage, lease, loan agreement or other agreement or
instrument to which the Buyer is bound, or (c) any law, statute, rule or
regulation or order, judgment or decree to which the Buyer is subject.

6.04. Governmental Consents, etc. Except for the applicable requirements of the
HSR Act, no permit, consent, approval or authorization of, or declaration to or
filing with, any governmental or regulatory authority is required in connection
with any of the execution, delivery or performance of this Agreement by the
Buyer or the consummation by the Buyer of any of the transactions contemplated
hereby.

6.05. Litigation. There are no actions, suits or proceedings pending or, to the
Buyer’s knowledge, overtly threatened against or affecting the Buyer at law or
in equity, or before or by

 

26

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any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which if
adversely determined would adversely affect the Buyer’s performance under this
Agreement or the consummation of the transactions contemplated hereby.

6.06. Broker’s Fees. There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Buyer or its Affiliates.

6.07. Investment Representation. The Buyer is purchasing the Purchased Equity
Interests for its own account with the present intention of holding such
securities for investment purposes and not with a view to or for sale in
connection with any public distribution of such securities in violation of any
federal or state securities laws. The Buyer is an “accredited investor” as
defined in Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the “Securities Act”). The Buyer
acknowledges that it is informed as to the risks of the transactions
contemplated hereby and of ownership of the Purchased Equity Interests and has
had an opportunity to ask the Sellers questions and receive answers concerning
the Company and an investment in the Purchased Equity Interests. The Buyer
acknowledges that the Purchased Equity Interests have not been registered under
the Securities Act or any state or foreign securities laws and that the
Purchased Equity Interests may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of unless such sale, transfer,
assignment, offer, pledge, hypothecation or other disposition is pursuant to the
terms of an effective registration statement under the Securities Act and are
registered under any applicable state or foreign securities laws or pursuant to
an exemption from registration under the Securities Act and any applicable state
or foreign securities laws.

6.08. Financing. The Buyer is solvent and has sufficient cash and committed
financing to pay the full consideration payable to the Sellers hereunder, to
make all other necessary payments by it in connection with the transactions
contemplated hereby (including the payment of any purchase price adjustment
pursuant to Section 1.03) and to pay all of its related fees and expenses.

ARTICLE VII.

[RESERVED]

ARTICLE VIII.

INDEMNIFICATION

8.01. Survival of Provisions. Except to the extent a different period is
expressly set forth herein, the representations, warranties, pre-Closing
covenants, pre-Closing agreements and other provisions in this Agreement shall
survive the Closing and shall terminate on the date that is eighteen (18) months
after the Closing Date, except for the representations and warranties in the
Full Indemnity Sections, which shall survive until the expiration of the
applicable statute of limitations. Post-Closing covenants and post-Closing
agreements in this Agreement shall survive the Closing and terminate on the
earlier of (i) the time period set forth in such covenant

 

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or agreement, or (ii) the expiration of the applicable statute of limitations
with respect to such covenant or agreement. No claim for indemnification
hereunder for breach of any such representations, warranties, covenants,
agreements and other provisions may be made after the expiration of the survival
period set forth in the immediately preceding sentences; provided that any
representation, warranty, covenant, agreement or other provision in respect of
which indemnity may be sought under Section 8.02 or under Section 8.03, and the
indemnity with respect thereto, shall survive (with respect to any claim that
has been made) the time at which it would otherwise terminate pursuant to this
Section 8.01 if written notice of a breach thereof giving rise to such right of
indemnity and a description with reasonable detail of the Loss associated
therewith (to the extent ascertainable) shall have been given to the Person
against whom such indemnity may be sought prior to such time of termination.

8.02. Indemnification by the Sellers for the Benefit of the Buyer.

(a) Provided that proper notice has been made within the prescribed survival
period set forth in Section 8.01 above, the Sellers and Sterling Partners
(severally, based on each such Seller’s Final Pro Rata Share of the Final
Purchase Price (and in the case of Sterling Partners, based on Sterling’s Final
Pro Rata Share of the Final Purchase Price), provided that, in addition to being
responsible for Sterling’s own Pro Rata Share, Sterling Partners also shall be
responsible, together with the Sellers, for each Seller’s Pro Rata Share of
indemnification obligations under Sections 8.02(a)(i), 8.02(a)(ii), 8.02(a)(iv),
8.02(a)(v), 8.02(a)(vi), 8.02(a)(vii) and 8.02(a)(viii)), shall indemnify the
Buyer and save and hold it harmless against its loss, liability, damage or
out-of-pocket expense (collectively, “Losses”) which the Buyer may suffer or
sustain as a result of: (i) any breach by any of the Sellers of any
representation or warranty made by it under Article IV, (ii) any breach by the
Companies of any representation or warranty made by them under Article V,
(iii) any nonfulfillment or breach of any covenant or agreement by the Sellers
expressly set forth in this Agreement, (iv) any nonfulfillment or breach of any
covenant or agreement by the Companies expressly set forth in this Agreement,
(v) any outstanding Indebtedness as of the Closing that is not reflected in the
Final Purchase Price and any Transaction Expenses that are not reflected in the
Final Purchase Price, (vi) the Redemption, including any action, lawsuit,
proceeding, investigation or other claim made with respect to the Redemption or
the calculation or payment of the Series A Redemption Price or the Series B
Redemption Price, except to the extent that the Loss is caused by Buyer’s breach
of the covenant in Section 1.06 hereof, (vii) any item or matter disclosed in
Section 5.01(b) of the Disclosure Schedules or Section 5.08(a) of the Disclosure
Schedules, and (viii) any failure to obtain any authorization, consent or
approval under any lease, agreement or instrument entered into by the Company
with respect to the obligations referred to in clauses (ii) and (iii) of the
definition of “Indebtedness” set forth in Section 10.01 or under the Agreement
of Lease, dated April 27, 2005 by and between Littell Realty Corp. and Liberty
Propane Operations, as amended by that certain First Amendment to Lease, dated
as of June 30, 2005, in connection with the execution and the delivery of this
Agreement and the other agreements contemplated hereby, or the consummation of
the transactions contemplated hereby and thereby. With the exception of Losses
relating to the Full Indemnity Sections, any nonfulfillment or breach of any
post-Closing covenants or post-Closing agreements in this Agreement, including
Section 1.04 hereof, or any matter referred to in Sections

 

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8.02(a)(v), 8.02(a)(vi), 8.02(a)(vii) or 8.02(a)(viii) (which Losses are not
subject to the limitation of liability provided by this sentence), the Sellers
and Sterling Partners shall have no liability under this Section 8.02(a),
(A) for any single Loss, series of related Losses, or group of Losses involving
substantially the same subject matter, in each case, which is less than $50,000
(the “Claims Threshold”) (it being understood that any such Loss or Losses for
amounts less than the Claim Threshold shall be ignored in determining whether
the Deductible has been exceeded) and (B) unless and until the aggregate of all
Losses relating thereto for which the Sellers and Sterling Partners would, but
for this sentence, be liable exceeds on a cumulative basis an amount equal to
$2,200,000 (the “Deductible”), and then only to the extent such Losses exceed
the Deductible (it being agreed that once the Deductible has been exceeded for
any Person or group of Persons, the Deductible shall be deemed to have been
exceeded by all Sellers and Sterling Partners. The Sellers’ and Sterling
Partners’ aggregate liability under this Section 8.02 shall in no event exceed
seven and one-half percent (7.5%) of the Base Purchase Price, and the aggregate
liability of each Seller under this Agreement shall in no event exceed such
Seller’s respective Purchase Price proceeds received by such Seller; provided,
however, that with respect to Losses relating to the Full Indemnity Sections,
any nonfulfillment or breach of any post-Closing covenants or post-Closing
agreements in this Agreement (other than Section 8.02(a)(iii)), or any matter
referred to in Sections 8.02(a)(v), 8.02(a)(vi), 8.02(a)(vii) or 8.02(a)(viii),
Sterling Partners also shall be responsible, together with each Seller, for such
Seller’s Final Pro Rata Share of such Losses. The Parties understand and agree
that with respect to any indemnification obligations under Section 8.02(a)(iii),
the individual Seller responsible for such breach or nonfulfillment shall be
solely responsible, subject to the limitations in this Article VIII, for Losses
suffered by the Buyer. Notwithstanding the foregoing, (1) except to the extent
paid by Buyer out-of-pocket to a third party in connection with a third party
claim, Losses shall not include any consequential, special, indirect or punitive
damages, including loss of future revenue or income, diminution of value, loss
measured by any multiple or loss of business reputation or opportunity relating
to a breach or alleged breach of this Agreement and (2) the amount of indemnity
payable pursuant to this Section 8.02 with respect to any Losses shall be
reduced (x) by any current reserves or accruals on the books of the Companies as
of the Closing relating to the subject matter of the applicable Losses, (y) to
the extent any such Loss amount has already been taken into account in making
any Purchase Price Adjustment contemplated in Article I and (z) as otherwise
provided in Section 8.04 and 8.05 below.

(b) From and after the Closing, recovery pursuant to this Article VIII
constitutes Buyer’s sole and exclusive remedy for any and all Losses or other
claims relating to or arising from this Agreement and the transactions
contemplated hereby. The Buyer may not avoid the limitations on liability of the
Sellers set forth in this Article VIII by seeking damages for breach of
contract, tort or pursuant to any other theory of liability. Without limiting
the generality of the preceding sentences of this Section 8.02(b), subject to
obtaining recovery pursuant to this Article VIII, effective on the Closing Date
the Buyer hereby waives any and all statutory rights of contribution or
indemnification that it might otherwise be entitled to under any federal, state
or local law, regulation or ordinance or any similar rules of law embodied in
the common law.

 

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8.03. Indemnification by the Buyer for the Benefit of the Seller.

(a) Provided that proper notice has been made within the prescribed survival
period set forth in Section 8.01 above, the Buyer shall indemnify each of the
Sellers and hold them harmless against any Losses which any of the Sellers may
suffer or sustain as a result of: (i) any breach of any representation or
warranty made by the Buyer under Article VI, (ii) any breach of any covenant or
agreement by the Buyer under this Agreement. Notwithstanding the foregoing,
(1) except to the extent paid by the Sellers out-of-pocket to a third party in
connection with a third party claim, Losses shall not include any consequential,
special, indirect or punitive damages, including loss of future revenue or
income, diminution of value, loss measured by any multiple or loss of business
reputation or opportunity relating to a breach or alleged breach of this
Agreement and (2) the amount of indemnity payable pursuant to this Section 8.03
with respect to any Losses shall be reduced (y) to the extent any such Loss
amount has already been taken into account in making any Purchase Price
Adjustment contemplated in Article I and (z) as otherwise provided in
Section 8.04 below.

(b) From and after the Closing, recovery pursuant to this Article VIII
constitutes each Seller’s sole and exclusive remedy for any and all Losses or
other claims relating to or arising from this Agreement and the transactions
contemplated hereby. The Sellers may not avoid the limitations on liability of
the Buyer set forth in this Article VIII by seeking damages for breach of
contract, tort or pursuant to any other theory of liability. Without limiting
the generality of the preceding sentences of this Section 8.03(b), subject to
obtaining recovery pursuant to this Article VIII, effective on the Closing Date
each Seller hereby waives any and all statutory rights of contribution or
indemnification that it might otherwise be entitled to under any federal, state
or local law, regulation or ordinance or any similar rules of law embodied in
the common law.

8.04. Determination of Loss Amount. The amount of any Loss subject to
indemnification under Section 8.02 or Section 8.03 shall be calculated net of
any insurance proceeds received or receivable by the Indemnitee on account of
such Loss. The Indemnitee shall seek full recovery under all insurance policies
covering any Loss to the same extent as it would if such Loss were not subject
to indemnification hereunder. In the event that an insurance or other recovery
is received by any Indemnitee with respect to any Loss for which any such Person
has been indemnified hereunder, then a refund equal to the aggregate amount of
the recovery shall be made promptly to the Person or Persons that provided such
indemnity payments to such Indemnitee.

8.05. Mitigation. Each Person entitled to indemnification hereunder shall take
all reasonable steps to mitigate all Losses after becoming aware of any event
which could reasonably be expected to give rise to any Losses that are
indemnifiable or recoverable hereunder or in connection herewith.

8.06. Manner of Payment. Any indemnification of the Buyer pursuant to
Section 8.02 shall be effected by wire transfer of immediately available funds
to an account designated by each applicable Indemnitee (as defined below) within
15 days after the final determination thereof. Any indemnification of the
Sellers pursuant to Section 8.03 shall be effected by wire

 

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transfer of immediately available funds to an account designated by each
applicable Indemnitee within 15 days after the final determination thereof. Each
indemnification payment made pursuant to this Article VIII shall, with respect
to the Sellers and the Buyer, be deemed to be an adjustment to the Final
Purchase Price unless otherwise required by Law.

8.07. Defense of Third Party Claims. Any Person making a claim for
indemnification under Section 8.02 or Section 8.03 (an “Indemnitee”) shall
notify the indemnifying party (an “Indemnitor”) of the claim in writing promptly
after receiving written notice of any action, lawsuit, proceeding, investigation
or other claim against it (if by a third party), describing with reasonable
specificity the claim, the amount thereof (if known and quantifiable) and the
basis thereof; provided that the failure to so notify an Indemnitor shall not
relieve the Indemnitor of its obligations hereunder except to the extent that
such failure shall have caused the damages for which the Indemnitor is obligated
to be greater than such damages would have been had the Indemnitee given the
Indemnitor prompt notice hereunder. Any Indemnitor shall be entitled to
participate in the defense of such action, lawsuit, proceeding, investigation or
other claim giving rise to an Indemnitee’s claim for indemnification at such
Indemnitor’s expense, and at its option shall be entitled to assume the defense
thereof by appointing a reputable counsel reasonably acceptable to the
Indemnitee to be the lead counsel in connection with such defense; provided that
the Indemnitee shall be entitled to participate in the defense of such claim and
to employ counsel of its choice for such purpose, but the fees and expenses of
such separate counsel shall be borne by the Indemnitee. If the Indemnitor shall
control the defense of any such claim then the Indemnitor shall be entitled to
settle such claim; provided that the Indemnitor shall obtain the prior written
consent of the Indemnitee (which consent shall not be unreasonably withheld or
delayed) before entering into any settlement of a claim or ceasing to defend
such claim if, pursuant to or as a result of such settlement or cessation,
injunctive or other equitable relief will be imposed against the Indemnitee or
if such settlement does not expressly release the Indemnitee from all
liabilities and obligations with respect to such claim, without prejudice,
except for payments that would be required to be paid by the Buyer representing
the Claims Threshold or Deductible. The Buyer covenants and agrees that if it
brings any claim for indemnification against the Sellers under this Agreement
(other than pursuant to Section 8.02(a)(iii)), it shall tender and pursue its
claim only jointly against all of the Sellers (i.e. it will name all Sellers in
any such claim) and, in pursuing such claim, it will only involve and deal with,
the Representative, as the exclusive representative of all of the Sellers
(unless Representative has resigned from serving as representative of the
Sellers under the terms of the Representative Agreement).

ARTICLE IX.

ADDITIONAL COVENANTS AND AGREEMENTS

9.01. Disclosure Generally. All exhibits and schedules attached hereto are
incorporated herein and expressly made a part of this Agreement as though
completely set forth herein. All references to this Agreement herein or in any
of the exhibits or schedules shall be deemed to refer to this entire Agreement,
including all exhibits and schedules. Any item or matter required to be
disclosed on a particular section of the Disclosure Schedule pursuant to this
Agreement shall be deemed to have been disclosed if information for such item or
matter complying with such disclosure requirements is set forth on another
section of the Disclosure Schedule under this

 

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Agreement if such disclosure with respect to such first section is reasonably
apparent. The specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the schedules hereto is not intended to imply that such amounts, or higher or
lower amounts, or the items so included, or other items, are or are not required
to be disclosed or are within or outside of the ordinary course of business, and
neither Party shall use the fact of the setting forth of such amounts or the
fact of the inclusion of any such item in the schedules in any dispute or
controversy with any Party as to whether any obligation, item or matter not
described herein or included in a schedule hereto is or is not required to be
disclosed (including, without limitation, whether such amounts or items are
required to be disclosed as material) or in the ordinary course of business for
the purposes of this Agreement. The information contained in the Disclosure
Schedule is disclosed solely for the purposes of this Agreement, and no
information contained therein shall be deemed to be an admission by any Party to
any third party of any matter whatsoever, including of any violation of law or
breach of any agreement. The Disclosure Schedules have been arranged for
purposes of convenience in separately titled sections corresponding to the
sections of the Agreement; however, each section of the Disclosure Schedules
shall be deemed to incorporate by reference all information disclosed in any
other section of the Disclosure Schedules if such disclosure is reasonably
apparent. Capitalized terms used in the Disclosure Schedules and not otherwise
defined therein shall have the meanings given to such terms in this Agreement.

9.02. Acknowledgment by the Buyer. THE BUYER ACKNOWLEDGES THAT THE
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY EXPRESSLY AND
SPECIFICALLY SET FORTH IN THIS AGREEMENT, INCLUDING THE DISCLOSURE SCHEDULES,
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE SELLERS
AND THE COMPANY, RESPECTIVELY, TO BUYER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL
OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED
(INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OR THE FUTURE FINANCIAL CONDITION, RESULTS OF OPERATIONS,
ASSETS OR LIABILITIES OF ANY OF THE COMPANIES) ARE SPECIFICALLY DISCLAIMED BY
THE SELLERS AND THE COMPANY.

9.03. Tax Matters.

(a) Responsibility for Filing Tax Returns. The Buyer shall, consistent with the
past practices of the Companies, prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the Companies for all periods ending prior
to, on or including the Closing Date (such taxable period, a “Pre-Closing Tax
Period”) which have not yet been filed as of the Closing Date. At least ten days
prior to the date on which each such Tax Return is filed, the Buyer shall submit
such Tax Return to the Representative for the Representative’s review and
approval, which approval may not be unreasonably withheld. Failure by the Buyer
to timely file the Tax Returns required under this Section 9.03 shall cause the
Sellers to have no liability for any penalty or interest due as a result of such
failure to timely file, provided that Representative received and approved the
Tax Return in a timely manner.

 

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(b) Taxes Resulting From Liquidation of Liberty Propane GP and Liberty Propane
LP: Straddle Periods. All Taxes (other than any Taxes arising from a breach by
the Companies of any representation or warranty or breach by the Sellers of any
covenant in this Agreement) resulting from any liquidation of Sterling GP
Blocker and Sterling LP Blocker (as permitted by Section 9.03(e)) shall be
allocated to and borne by the Buyer. In the case of Taxes that are payable with
respect to a taxable period that begins on or before the Closing Date and ends
after the Closing Date (a “Straddle Period”), the portion of any such Tax that
is allocable to the portion of the period ending on and including the Closing
Date shall be:

(i) in the case of Taxes that are either (x) based upon or related to income or
receipts, or (y) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible), deemed equal
to the amount which would be payable if the taxable year ended on and included
the Closing Date (an interim closing of the books for all purposes including
under Sections 5.5 and 16.13 of the LP Agreement); provided that Taxes resulting
from extraordinary actions taken by Buyer at or after the Effective Time on the
Closing Date and not otherwise contemplated by this Agreement shall be allocated
to the Buyer; and

(ii) in the case of Taxes imposed on a periodic basis with respect to the assets
of the Company, or otherwise measured by the level of any item, deemed to be the
amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period), multiplied by a fraction the numerator of which is the number
of calendar days in the period ending on and including the Closing Date and the
denominator of which is the number of calendar days in the entire period.

(c) Transfer Taxes. The Buyer will pay any transfer, documentary, sales, use,
stamp or registration Tax (but, except as otherwise provided in this Agreement,
specifically excluding any income Tax on income or gain) imposed on the
Companies or the Sellers as a result of the transactions contemplated by this
Agreement (collectively, “Transfer Taxes”), and any penalties or interest with
respect to the Transfer Taxes. The Representative agrees to cooperate with the
Buyer in the filing of any returns with respect to the Transfer Taxes, including
promptly supplying any information in its possession reasonably requested by the
Buyer that is reasonably necessary to complete and file such returns.

(d) Tax Proceedings.

(i) The Buyer shall promptly notify the Representative in writing upon receipt
by the Buyer or any of its Affiliates (including the Companies) of notice of any
Tax audits, examinations or assessments that could give rise to a liability for
which the Sellers are responsible under Article VIII of this Agreement. The
Representative shall have the right to control any such audit, examination or
proceeding to the extent that it relates to any Taxes for which the Sellers are
responsible pursuant to Article VIII of this Agreement (it being

 

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understood that if an audit, examination or proceeding relates to a Straddle
Period, the Representative shall have the right to participate in any such
audit, examination or proceeding to the extent related to the Pre-Closing Tax
Period, but if it is not feasible that the Representative participate in any
such examination or proceeding, the Buyer shall, if and to the extent such
matter is reasonably likely to materially adversely affect the Sellers, obtain
the Representative’s consent, which shall not be unreasonably withheld,
conditioned or delayed, prior to settling or compromising any such examination
or proceeding), provided, that the Representative provides notice to the Buyer
of its intent to control such proceeding within 20 days after receiving notice
of such matter the Sellers shall have the right at their expense to participate
in and control the conduct of such audit or proceeding; the Buyer also may
participate in any such audit or proceeding and, if the Sellers do not assume
the defense of any such audit or proceeding, the Buyer may defend the same in
such manner as it may deem appropriate, including settling such audit or
proceeding after five days prior written notice to the Sellers setting forth the
terms and conditions of settlement. In the event that issues relating to a
potential adjustment are required to be contested in the same audit or
proceeding as separate issues relating to a potential adjustment for which the
Buyer would be liable, the Buyer shall have the right, at its expense, to
control the audit or proceeding with respect to the latter issues.

(ii) With respect to issues relating to a potential adjustment for which both
the Sellers and the Buyer or any Company could be liable, (i) both the Sellers
and the Buyer may participate in the audit or proceeding and (ii) the audit or
proceeding shall be controlled by that party which would bear the burden of the
greater portion for the sum of the adjustment and any corresponding adjustments
that may reasonably be anticipated for future taxable periods. The principle set
forth in this Section 9.03(d) also shall govern for purposes of deciding any
issue that must be decided jointly (including choice of judicial forum) in
situations in which separate issues are otherwise controlled under this
Section 9.03 by the Buyer and the Sellers.

(iii) With respect to any Tax audit or proceeding for a taxable period that
begins before the Closing Date, neither the Buyer nor the Sellers shall enter
into any compromise or agree to settle any claim pursuant to such audit or
proceeding which would materially adversely affect the other party for such
taxable period or a subsequent taxable period without the written consent of the
other party, which consent may not be unreasonably withheld. The Buyer and the
Sellers agree to cooperate, and the Buyer agrees to cause the Company and the
Subsidiaries to cooperate, in the defense against or compromise of any claim in
any such audits or proceeding.

Except as provided above, the Buyer shall control all other matters relating to
Taxes of the Companies.

(e) Liquidation of Sterling GP Blocker and Sterling LP Blocker; Tax Elections.
Subject to Section 9.03(b), the Buyer shall be authorized, in its sole
discretion,

 

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to adopt a plan of liquidation and liquidate Sterling LP Blocker and Sterling GP
Blocker effective as of any time after the Closing Date; provided that the Buyer
shall be liable for any Taxes arising or resulting from, and shall indemnify the
Sellers from any Losses incurred by the Sellers directly in connection with,
such liquidation (other than any such Losses arising from a breach by the
Companies of any representation or warranty or breach by the Sellers of any
covenant in this Agreement). The Buyer shall not, and shall not permit any of
its Affiliates to, make any election under (i) Section 338 of the Code (or any
analogous or similar state or local, or foreign law or regulation, if any) with
respect to any transaction contemplated by this Agreement, or (ii) Treasury
Regulation 301.7701-3 (or any analogous or similar state or local, or foreign
law or regulation) for any Company effective on or before the Closing Date.

(f) Other Liabilities. The Buyer covenants that, without the prior written
consent of the Representative (which consent shall not be unreasonably
withheld), it will not, and will not cause or permit the Companies, or any
Affiliate of the Buyer to amend any Tax Returns for any Pre-Closing Tax Period
or any Straddle Period, if such action would have the effect of increasing the
Tax liability or reducing any Tax benefit of the Sellers or any Affiliate of the
Sellers or would give rise to any indemnification obligation of the Sellers
under Section 8.02 unless such amendment is required under applicable law. In
addition, the Buyer covenants that without the prior written consent of the
Representative (which consent shall not be unreasonably withheld) it will not
and will not cause or permit the Companies, or any Affiliate of the Buyer, to
(i) take any action on or after the Closing other than in the ordinary course of
business that would give rise to any Tax liability of the Sellers or any
Affiliate of the Sellers, or (ii) subject to Section 9.03(e), make or change any
material Tax election, amend any Tax Return, or take any Tax position on any Tax
Return, in each case if such action would have the effect of increasing the Tax
liability or reducing the Tax benefit of the Sellers or any Affiliate of the
Sellers unless such action is required under applicable law.

(g) Refunds. The Buyer shall, or shall cause the Companies to pay to the
Representative (for payment to the Sellers) any Tax refunds received by the
Buyer, the Companies or any of their Affiliates on account of any employee
payroll taxes and/or withholding refunded as a result of reclassification of an
employee to a partner or other self-employed individual related to any period
prior to the Closing Date.

(h) Statute of Limitations. After the Closing Date, the Buyer and its Affiliates
(including the Companies) will not, without the prior written consent of the
Representative, which consent shall not be unreasonably withheld, agree to the
waiver or any extension of the statute of limitations relating to any Taxes of
the Companies for any Pre-Closing Tax Period or Straddle Tax Period.

(i) Time of Payment. Payment by the Sellers or the Buyer, as applicable, of any
amounts due under this Article IX in respect of Taxes shall be made directly by
the Sellers or the Buyer, as applicable, (A) at least three Business Days before
the due date of the applicable estimated or final Tax Return required to be
filed by the Companies on which is required to be reported income for a taxable
period ending after the Closing Date for which the Sellers are responsible under
Sections 9.03(a) and 9.03(b) or (B)

 

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within three Business Days following an agreement between the Representative and
the Buyer that an indemnity amount is payable, an assessment of a Tax by a
taxing authority which is due and payable, or a “determination” as defined in
Section 1313(a) of the Code. If liability under this Article IX is in respect of
other Taxes, payment by the Sellers or the Buyer, as applicable, of any amounts
due under this Article IX in respect of such other Taxes shall be made within
five Business Days following an agreement between the Representative and the
Buyer that an indemnity amount is payable or an assessment of a Tax by a taxing
authority which is due and payable.

(j) Tax Cooperation and Exchange of Information. From and after the Closing, the
Sellers and the Buyer shall provide each other with such cooperation and
information as either of them reasonably may request of the other (and the Buyer
shall cause the Companies to provide such cooperation and information) in
(A) filing any Tax Return, amended Tax Return or claim for refund,
(B) determining a liability for Taxes or a right to a refund of Taxes,
(C) participating in or conducting any audit or other proceeding in respect of
taxes, or (D) furnishing information to parties subsequently desiring to
purchase any part of the Assets, the business, or the Companies from the Buyer.
Such cooperation and information shall include providing copies of relevant Tax
Returns or portions thereof, together with related work papers and documents
relating to rulings or other determinations by taxing authorities. The Sellers
and the Buyer shall make themselves (and their respective employees) reasonably
available on a mutually convenient basis during normal business hours and upon
reasonable notice to provide explanations of any documents or information
provided under this Section 9.03. Notwithstanding anything to the contrary in
this Agreement, each of the Sellers and the Buyer shall retain all Tax Returns,
work papers and all material records or other documents in its possession (or in
the possession of its Affiliates) relating to Tax matters of the Companies for
any taxable period that includes the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such Tax Returns and other documents relate,
without regard to extensions and (ii) six years following the due date (without
extension) for such Tax Returns. After such time, before the Sellers or the
Buyer shall dispose of any such documents in its possession (or in the
possession of its Affiliates), the other party shall be given an opportunity,
after 90 days prior written notice, to remove and retain all or any part of such
documents as such other party may select (at such other party’s expense). Any
information obtained under this Section 9.03 shall be kept confidential, except
as otherwise may be necessary in connection with the filing of Tax Returns or
claims for refund or in conducting an audit or other proceeding.

9.04. Further Assurances. From time to time, as and when requested by any Party
hereto and at such Party’s expense, any other Party shall execute and deliver,
or cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions as the
requesting Party may reasonably deem necessary or desirable to evidence and
effectuate the transactions contemplated by this Agreement.

9.05. Access to Books and Records. From and after the Closing, the Buyer shall,
and shall cause the Companies to, provide Representative and its authorized
representatives with reasonable access, during normal business hours and upon
reasonable notice, to the books and

 

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records and any relevant personnel of the Companies with respect to periods
prior to the Closing Date in connection with any matter that reasonably may be
indemnifiable hereunder. Unless consented to in writing by Representative, the
Buyer shall not permit the Companies, for a period of four (4) years following
the Closing Date or such longer period if required by Section 9.03(j), to
destroy, alter or otherwise dispose of any books and records of the Companies,
or any portions thereof, relating to periods prior to the Closing Date without
first giving reasonable prior written notice to the Representative and offering
to surrender to the Representative such books and records or such portions
thereof.

9.06. Employee Matters.

(a) The Buyer covenants that following the Closing it shall provide healthcare
continuation coverage pursuant to Section 4980B of the Code or Sections 601-608
of ERISA or similar state statute, to all current and former employees of the
Companies who are or become qualified beneficiaries (as defined in
Section 4980B(g)(1) of the Code) with respect to the Companies’ employee benefit
plans as well as make available to, and to the extent elected, provide
continuation coverage to all “M&A qualified beneficiaries” (as defined by
Treasury Regulation Section 54.4980B-9, Q&A-4).

(b) The Buyer shall be responsible for, and shall indemnify, hold harmless and
defend the Sellers with respect to, any notices, payments, benefits, fines,
penalties, backpay, and damages required under the Worker Adjustment and
Retraining Notification Act (“WARN Act”) relating to any plant closing or mass
layoff (or similar triggering event) caused by the termination of any of the
Companies’ employees by the Buyer on or after Closing.

(c) From and after the Closing Date, the Buyer shall be liable for all claims
and liabilities under all welfare plans which were not discharged by the Sellers
or the Companies prior to the Closing Date, regardless of when such claims or
liabilities arise or are asserted. Credit shall be given to all Employees and
their eligible dependants and beneficiaries for any premiums, co-payments and
deductibles paid on or prior to the Closing Date in satisfying any deductible
and out-of-pocket expense requirements under such new group medical plan for the
current plan year.

(d) The Buyer will continue to sponsor and maintain the 401(k) plan of the
Company referenced in Section 5.13 of the Disclosure Schedules (the “Liberty
401(k) Plan”) after the Closing until the Buyer determines it appropriate to
merge the Liberty 401(k) Plan into the Buyer’s 401(k) plan. The Buyer will
select the time at which the Employees will cease to participate in the Liberty
401(k) Plan and will become immediately eligible to participate in the Buyer’s
401(k) plan. All Employees will be credited with prior service with the
Companies and their Affiliates for purposes of eligibility to participate in and
vesting in the Buyer’s 401(k) plan.

9.07. Noncompetition; Nonsolicitation.

(a) Covenant. For and in consideration of the covenants, agreements and
conditions set forth in this Agreement, Sterling Partners hereby grants to the
Buyer

 

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certain covenants not to compete and/or solicit (the “Covenants”) on the terms
and conditions set forth in this Section 9.07. The Parties recognize and agree
that the Buyer would not be willing to enter into this Agreement nor consummate
the transactions contemplated hereby without Sterling Partners entering into the
Covenants and that each Sterling Partners’ performance and observance of this
Section 9.07 is valuable consideration for the Buyer and the Buyer’s willingness
to enter into this Agreement and pay the Purchase Price to the Sellers.

(b) Noncompetition. Sterling Partners covenants and agrees that, for and during
the three-year period commencing on the Closing Date, it shall not, directly or
indirectly, whether individually or in partnership or association with any one
or more Persons, or as a principal, partner, shareholder, agent, employee,
consultant, or contractor, or in any other capacity, engage in or carry on in
the Restricted Territory any activity that may be deemed to compete or conflict
with the Business other than on behalf of the Buyer and its Affiliates.

(c) No Interference with the Companies. Sterling Partners covenants and agrees
that, for and during the three-year period commencing on the Closing Date, it
shall not, directly or indirectly solicit or otherwise interfere with any
relationship between any Company, on the one hand, and any customer or supplier
of any Company, on the other hand. Sterling Partners covenants and agrees that,
for and during the three-year period commencing on the Closing Date, it shall
not, directly or indirectly, (i) solicit or hire for employment (or assist
anyone in soliciting or hiring for employment) any individual employed by any
Company as of the Closing Date; or (ii) induce, or assist anyone in inducing,
any individual employed by any Company as of the Closing Date to resign or sever
employment, or to terminate or breach any Employment Agreement, with such
Company.

(d) Geographic Coverage. The geographic coverage of the Covenants shall include
the area within a 50 mile radius of any Company Real Property, which geographic
coverage is referred to hereinafter collectively as the “Restricted Territory.”

(e) No Violation of Public Policy. The Parties expressly agree and acknowledge
the terms of this Section 9.07 are reasonable in scope, time and territory, and
are necessary to protect the value of the Purchased Equity Interests and the
Business purchased by the Buyer. The Parties further acknowledge and agree that
it is not their intention that the Covenants violate any public policy or
statutory or common law. If a court of competent jurisdiction renders a ruling
(sustained on appeal, if any) holding that any one or more of the provisions of
the Covenants, including the Restricted Territory or stated term of the
Covenants, constitute an unreasonable restriction, then the Parties specifically
agree that the Covenants shall not be rendered void but shall apply to such
extent and as to such time period and Restricted Territory as such court may
determine constitutes a reasonable restriction under the circumstances.

9.08. Assignment of Arbitration Award. Each of the Parties hereto confirms and
agrees that at any time on or prior to the Closing, the Arbitration Award shall
be assigned to Taurus Acquisitions, LLC.

 

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ARTICLE X.

DEFINITIONS

10.01. Definitions. For purposes hereof, the following terms, when used herein
with initial capital letters, shall have the respective meanings set forth
herein:

“Acquisition Non-Compete Payments” means the present value amount of non-compete
payments actually due and payable by the Company as set forth in the Company’s
books and records.

“Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person. For the
purposes of this definition, “control” means the possession, directly or
indirectly, of the power to direct the management and policies of a Person
whether through the ownership of voting securities, contract or otherwise.

“Affiliated Group” means an affiliated group as defined in Section 1504 of the
Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income Tax law) of which any of the Companies are or
have been a member.

“Arbitration Award” means the amount awarded (but yet to be received) to any of
the Companies in connection with the arbitration captioned Liberty Propane L.P.
and Liberty Propane Operations, L.L.C., as Plaintiffs, vs. R. David Feheley,
SunEnergy, Inc. and Inisfree Holdings, L.L.C., as Defendants.

“Cash on Hand” means, as of the date of determination, the aggregate of all cash
and cash equivalents, including readily marketable securities, of the Companies
and their Subsidiaries as determined in accordance with GAAP.

“Class A Common Limited Partner” has the meaning given to it in the LP
Agreement.

“Class A Member” has the meaning given to it in the LLC Agreement.

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

“Company Benefit Plan” means each pension, retirement, savings, disability,
medical, dental, health, life (including any individual life insurance policy as
to which a Company is the owner, beneficiary or both), death benefit, group
insurance, profit sharing, deferred compensation, stock options or other stock
incentive, bonus incentive, vacation pay, sick pay, severance or termination
pay, employment agreement, “cafeteria” or “flexible benefit” plan under
Section 125 of the Code, or other employee or director benefit plan, trust,
arrangement, contract, agreement, policy or commitment, whether formal or
informal, written or oral, under which employees, former employees, directors or
managers or former directors or managers of a Company are entitled to
participate by reason of their current or prior employment, or current or former
directorship or service as a manager, with a Company, including any “employee
benefit plan” as defined in Section 3(3) of ERISA, (i) to which a Company is a
party or a sponsor or a fiduciary thereof or (ii) with respect to which a
Company has made payments, contributions or commitments, or may otherwise have
any liability.

 

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“Customer” means each customer to which the Companies sold in the aggregate more
than $250,000 in products and/or services during the 12-month period ended
June 30, 2009.

“Employee” means each individual who is employed by any of the Companies after
the Closing Date or who receives guaranteed payments from and provides services
to Liberty Propane LP.

“Environment” means any water, including surface water, ground water and
drinking water, any land, including land surface and subsurface strata, ambient
air, storm water, and all other natural resources.

“Environmental Requirements” means all federal, state, local and foreign
environmental, health, chemical use and safety laws, regulations, and ordinances
relating to the protection, preservation or remediation of the Environment or
governing the use, storage, treatment, generation, transportation, processing,
handling, management, production, Release or threatened Release, control, or
disposal of Hazardous Substances, as enacted and in effect on or prior to the
Closing Date.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated or
organized) that is or has ever been under common control, or that is has ever
been treated as a single employer, with the Company.

“Estimated Pro Rata Share” means, with respect to any Seller, the percentage set
forth opposite such Seller’s name on the Estimated Sellers Allocation Schedule.

“Extended Termination Date” means the date that is 30 days after the Termination
Date.

“Final Pro Rata Share” means, with respect to any Seller, the percentage set
forth opposite such Seller’s name on the Final Sellers Allocation Schedule.

“Full Indemnity Sections” means Sections 4.01, 4.02, 4.03, 4.05, 5.01, 5.02,
5.04, 5.08 and 5.13 of the Agreement.

“GAAP” means United States generally accepted accounting principles applied in a
manner consistent with that used in preparing the financial statements of
Liberty Propane LP dated June 30, 2009.

“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States or
any state, county, city, foreign government, including any governmental or
quasi-governmental administering, regulating or having general oversight over
the Sellers, Companies, Company Real Property or any of the associated assets.

“Hazardous Substance” means any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, chlorinated solvents,
polychlorinated biphenyls, petroleum and petroleum-derived substances or wastes,
hazardous materials, hazardous wastes,

 

40

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hazardous or toxic substances or related materials as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9601, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §
6901, et seq.), the Clean Water Act (33 U.S.C. § 1251m et seq.), the Clean Air
Act (42 U.S.C. § 7401, et seq.), the Hazardous Materials Transportation Act (49
U.S.C. § 1801, et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601, et
seq.), the equivalent state laws, and any other applicable environmental laws
and associated regulations all as enacted and in effect on the Closing Date,
except that, notwithstanding the forgoing, the term “Hazardous Substance” shall
not include propane.

“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as
amended.

“Indebtedness” means, without duplication, (i) all obligations of the Companies
for borrowed money and any accrued interest, prepayment premiums or penalties
related thereto, (ii) all capital lease obligations of any of the Companies (it
being understood that the capital obligations of Liberty Propane LP to Wells
Fargo identified on Section 5.06(i) of the Disclosure Schedule will not be paid
off on the Closing Date, but will constitute Indebtedness which reduces the
Purchase Price pursuant to Section 1.02(a)(iv)), (iii) all vehicle lease payment
obligations (including any purchase option to acquire the underlying leased
assets), (iv) all obligations of the Companies for notes payable in connection
with an acquisition, (v) the Series A Redemption Price and the Series B
Redemption Price, including any accrued but unpaid dividends, and (vi) the
Acquisition Non-Compete Payments.

“Intellectual Property Rights” means (i) foreign and domestic patents and patent
applications and inventions, (ii) Internet domain names, trademarks, service
marks, trade dress, trade names, logos and corporate or company names (both
foreign and domestic) and registrations and applications for registration
thereof together with all of the goodwill associated therewith, (iii) copyrights
(registered or unregistered) and copyrightable works (both foreign and domestic)
and registrations and applications for registration thereof, (iv) computer
software, data, data bases and documentation thereof, including rights to third
party software used in the business, and (v) trade secrets and other
confidential information (including ideas, formulas, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know how,
processes and techniques, financial and marketing plans and customer and
supplier lists and information).

“Investor Rights Agreement” means the Investors’ Rights Agreement, dated as of
July 2, 2007, by and among Liberty Propane LP, Liberty Propane Operations and
each of the investors party thereto, as amended, restated, supplemented or
otherwise modified.

“Licenses” means all notifications, licenses, permits (including environmental,
construction and operation permits), franchises, certificates, approvals,
exemptions, classifications, registrations and other similar documents and
authorizations issued by any Governmental Authority, and applications therefor.

“Liens” means liens, security interests, charges or encumbrances.

 

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“LLC Agreement” means the Second Amended and Restated Limited Liability Company
Agreement of Liberty Propane GP, LLC, dated April 1, 2006.

“LP Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of Liberty Propane LP, dated July 2, 2007.

“Management Agreement” means the Management Agreement, dated as of August 12,
2003, by and between Liberty Propane Management, LLC and SC Partners, L.P., as
amended, restated, supplemented or otherwise modified.

“Material Adverse Effect” means an effect, event, occurrence or change that is
materially adverse to the results of operations or financial condition of the
Companies, taken as a whole or that is reasonably likely to prohibit or
materially burden or impair any party’s ability to consummate the transactions
contemplated by this Agreement provided, however, in no event shall any of the
following, individually or in the aggregate, be deemed to constitute, nor shall
any of the following be taken into account in determining whether there has
occurred a Material Adverse Effect: (a) changes in conditions in the U.S. or
global economy generally or the U.S. or global capital, credit or financial
markets generally, including changes in commercial bank loan interest risks or
currency exchange rates; (b) changes in, or required by, applicable Law or
general legal, tax, regulatory or political conditions; (c) changes required by
GAAP; (d) acts of war (whether or not declared), armed hostilities, sabotage or
terrorism occurring after the date of this Agreement or the continuation,
escalation or worsening of any such acts of war, armed hostilities, sabotage or
terrorism threatened or underway as of the date of this Agreement;
(e) unseasonably warm weather, earthquakes, hurricanes, floods, or other natural
disasters; (f) changes affecting the retail propane distribution industry
generally; (g) the effect of the negotiation, execution, announcement or
pendency of this Agreement or the transactions contemplated hereby or the
consummation of the transactions contemplated by this Agreement on any of the
Companies’ relationships, contractual or otherwise, with customers, suppliers,
vendors, bank lenders, strategic venture partners or employees; (h) any
affirmative action knowingly taken by Buyer or any of its Affiliates that
reasonably would be expected to result in a Material Adverse Effect (without
giving effect to this clause (h) or the proviso to this definition); (i) any
action taken by any of the Companies, the Sellers or their respective Affiliates
at the express request of Buyer; (j) the failure by any of the Companies to meet
any projections, estimates or budgets for any period prior to, on or after the
date of this Agreement (but excluding herefrom any effect, event, development,
occurrence or change underlying such failure to the extent such effect, event,
development, occurrence or change would otherwise constitute a Material Adverse
Effect); or (k) any deterioration in the business, results of operations,
financial condition, liquidity, stockholders’ equity and/or prospects of any of
the Companies to the extent it relates to or arises out of circumstances or
conditions existing as of the date of this Agreement that were known by, or
disclosed to, Buyer as of or prior to the date of this Agreement, including
those matters set forth in the Schedules hereto; except, in the case of clauses
(a) and (f), to the extent the Companies are disproportionately affected thereby
as compared to other Persons in the propane industry.

“Minority Seller” means each Seller other than (i) AVP Liberty Co-Investment,
L.P., (ii) Vesey Street Fund, L.P., (iii) Argosy Investment Partners III, L.P.
and (iv) Arthur Street Fund, L.P.

 

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“Misemer Noncompetition Agreement” means the Noncompetition Agreement to be
entered into by Kent Misemer and Buyer.

“Offsite Facility” means any facility which is not presently, and has not
heretofore been, owned, leased or occupied by one of the Companies.

“Ordinary Course” means the ordinary course of business of the Companies
consistent with past practice.

“Permitted Liens” means (i) statutory Liens for current Taxes or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith by appropriate proceedings by the Companies and
for which adequate reserves (determined in accordance with GAAP) have been
established on the Companies’ books and records; (ii) mechanics’, carriers’,
workers’, repairers’ and similar statutory Liens arising or incurred in the
ordinary course of business for amounts which are not delinquent and which are
not, individually or in the aggregate, material; (iii) zoning, entitlement,
building and other land use regulations imposed by governmental agencies having
jurisdiction over the Leased Real Property, none of which materially impair the
occupancy or use of the Leased Real Property for the purposes for which it is
currently used or proposed to be used in connection with the Companies’
businesses; (iv) covenants, conditions, restrictions, easements and other
similar matters of record affecting title to the Leased Real Property which do
not materially impair the occupancy or use of the Leased Real Property for the
purposes for which it is currently used or proposed to be used in connection
with the Companies’ businesses; (v) public roads and highways; (vi) matters
which would be disclosed by an inspection or accurate survey of each parcel of
real property; (vii) Liens arising under worker’s compensation, unemployment
insurance, social security, retirement and similar legislation; (viii) Liens
arising in connection with sales of foreign receivables; (ix) Liens on goods in
transit incurred pursuant to documentary letters of credit; and (x) purchase
money Liens and Liens securing rental payments under capital or operating lease
arrangements.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

“Receivables” means the Companies’ accounts receivable as of September 30, 2009.

“Release” means any spill, discharge, leak, emission, escape, injection,
dumping, or other release by one of the Companies in violation of Environmental
Requirements of any Hazardous Substances into the Environment.

“Representative Agreement” means the Agreement pursuant to which each of the
Sellers appoints the Representative.

“Representative” means Sterling Fund Management, LLC or its agents or
representatives and their respective successors and assigns.

“Senior Executives” means Kent A. Misemer, Boyd H. McGathey, Larry A. Weinstein,
Steven R. Dykeman and David T. Cunningham.

 

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“Series A Preferred Limited Partner Interests” has the meaning given to it in
the LP Agreement.

“Series A Preferred Redemption Escrow” means the escrow agreement between the
Representative and Wells Fargo Bank, National Association, pursuant to which,
such bank will hold the amount necessary in order to complete the Series A
Preferred Redemption.

“Series A Redemption Price” means the Redemption Price as defined in the LP
Agreement for the Series A Preferred Limited Partner Interests.

“Series B Preferred Limited Partner Interests” has the meaning given to it in
the LP Agreement.

“Series B Redemption Price” means the Series B Redemption Price as defined in
the LP Agreement.

“Stockholder Agreement” means the Stockholders Agreement, dated as of May 13,
2005, among Sterling LP Blocker, Sterling GP Blocker, Sterling, the stockholders
of Sterling LP Blocker party thereto, and the stockholders of Sterling GP
Blocker party thereto, as amended, restated, supplemented or otherwise modified.

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(a) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purpose hereof, a
Person or Person shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Person shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.

“Supplier” means any supplier to which the Companies and Subsidiaries have
incurred in the aggregate amounts of more than $250,000 during the 12-month
period ended June 30, 2009.

“Tax” or “Taxes” means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add on minimum, sales, use,
transfer, real property gains, value added, excise, windfall profit, real
property, personal property, social security, unemployment, payroll, employee or
other withholding, or other similar tax, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing.

“Tax Returns” means any return, report, information return or other document
(including schedules or any related or supporting information) filed or required
to be filed with any governmental entity or other authority in connection with
the determination, assessment or collection of any Tax or the administration of
any laws, regulations or administrative requirements relating to any Tax.

 

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“Termination Date” means December 31, 2009.

“Transaction Expenses” shall mean all fees and expenses of the Companies or the
Sellers payable in connection with the transactions contemplated by this
Agreement, including without limitation, any deduction arising from any
compensatory payments, severance and change of control payments, lease
termination fees, legal fees in connection with the transactions contemplated by
this Agreement, management or consulting fees, one-half ( 1/2) of the amount of
all filing fees under the HSR Act paid by the Buyer and certain other payments
to the extent set forth on the Transaction Expenses Schedule attached hereto.

“Working Capital” means as determined in accordance with Exhibit E hereto.

10.02. Cross Reference of Other Definitions. Each capitalized term listed below
is defined in the corresponding Section of this Agreement:

 

Term

  

Section No.

Accounting Firm

   1.03(b)

Affiliate Loans

   5.20(a)

Agreement

   Preamble

Base Purchase Price

   1.02(a)

Buyer

   Preamble

Buyer 401(k) Plan

   9.05(e)

Closing

   1.05

Closing Balance Sheet

   1.03

Closing Date

   1.05

Companies

   Recitals

Company

   Recitals

Company Real Property

   5.07(c)

Deductible

   8.02

Disclosure Schedule

   Article IV

Equity Interests

   Recitals

Estimated Purchase Price

   1.02(a)

Final Purchase Price

   1.03(c)

Indemnitee

   8.06

Indemnitor

   8.06

Interim Period

   3.01(a)

IRS

   5.13(a)

Latest Balance Sheet

   5.05

Laws

   5.15

Leased Real Property

   5.07(c)

Liberty Propane LP

   Recitals

Losses

   8.02(a)

Non-Disclosure Agreement

   7.02

Notice of Disagreement

   1.03(a)

 

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Owned Property Leases

   5.07(e)

Owned Real Property

   5.07(b)

Party

   Preamble

Personal Property

   5.07(a)

Pre-Closing Tax Period

   9.03(a)

Price Components

   1.02(a)

Purchase Price

   1.02(a)

Purchase Price Adjustment

   1.02(a)

Purchase Price Statement

   1.03

Purchased Equity Interests

   Recitals

Redeemed Interests

   Recitals

Redemption

   1.1(b)

Schedule

   Article IV

Securities Act

   6.07

Seller

   Preamble

Seller Entity

   4.02

Sterling

   Preamble

Sterling GmbH

   Preamble

Sterling Partners

   Preamble

Straddle Period

   9.03(b)

The Company’s Knowledge

   11.03

Third Party IP License

   5.10(a)

Transfer Taxes

   9.03(c)

WARN Act

   9.05(b)

ARTICLE XI.

MISCELLANEOUS

11.01. Press Releases and Communications. No press release or public
announcement related to this Agreement or the transactions contemplated herein,
or prior to the Closing, any other announcement or communication to the
employees, customers or suppliers of the Companies related to this Agreement or
the transactions contemplated herein, shall be issued or made by any party
hereto without the joint written approval of the Buyer and the Representative,
unless required by law (in the reasonable opinion of counsel) in which case the
Buyer and the Representative shall have the right to review such press release,
announcement or communication prior to its issuance, distribution or
publication.

11.02. Expenses. Except as otherwise expressly provided herein, each Party shall
pay all of its own expenses (including attorneys’ and accountants’ fees and
expenses) in connection with the negotiation of this Agreement, the performance
of its obligations hereunder and the consummation of the transactions
contemplated by this Agreement (whether consummated or not).

11.03. Knowledge Defined. For purposes of this Agreement, the term “the
Company’s Knowledge” as used herein shall mean the actual knowledge of Kent
Misemer, Boyd McGathey and Larry Weinstein.

 

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11.04. Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be
effective only if it is in writing and (a) personally delivered, (b) sent by
certified mail, return receipt requested, postage prepaid, or (c) sent by a
nationally recognized overnight delivery service, with delivery confirmed,
addressed as indicated below. Notices, demands and communications to the Buyer,
the Companies, and the Sellers shall, unless another address is specified in
writing, be sent to the addresses indicated below:

 

Notices to the Buyer and the Companies (after the Closing):

Inergy Propane, LLC

Two Brush Creek Blvd., Suite 200

Kansas City, Missouri 64112

Attn: Laura Ozenberger

email: lozenberger@inergyservices.com

with a copy to (which shall not constitute notice):

Stinson Morrison Hecker LLP

1201 Walnut Street, Suite 2900

Kansas City, MO 64106-2150

Attn: James W. Allen

email: JAllen@stinson.com

Notices to the Sellers and the Representative:

Sterling Fund Management, LLC

650 S. Exeter Street, Suite 1000

10th Floor

Baltimore, MD 21202

Attn: R. Alan Macksey, Jr.

email: amacksey@sterlingpartners.com

with a copy to (which shall not constitute notice):

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, Illinois 60601

Attn: E. Paul Quinn

Arie B. Zoller

email: quinnp@gtlaw.com; zollera@gtlaw.com

11.05. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations

 

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hereunder may be assigned or delegated by any party hereto without the prior
written consent of the other parties hereto; provided, however, the Buyer may
assign any of its rights, interests or obligations hereunder to a controlled
Affiliate of Buyer without the prior written consent of any party but,
notwithstanding any such assignment, the Buyer shall remain liable for all of
its obligations hereunder.

11.06. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

11.07. References. The table of contents and the section and other headings and
subheadings contained in this Agreement and the exhibits hereto are solely for
the purpose of reference, are not part of the agreement of the parties hereto,
and shall not in any way affect the meaning or interpretation of this Agreement
or any exhibit hereto. All references to days or months shall be deemed
references to calendar days or months. All references to “$” shall be deemed
references to United States dollars. Unless the context otherwise requires, any
reference to a “Section,” “Exhibit,” or “Schedule” shall be deemed to refer to a
section of this Agreement, exhibit to this Agreement or a schedule to this
Agreement, as applicable. The words “hereof,” “herein” and “hereunder” and words
of similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.

11.08. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Person.

11.09. Amendment and Waiver. Any provision of this Agreement or the schedules or
exhibits may be amended or waived only in a writing signed by the Buyer and the
Representative. No waiver of any provision hereunder or any breach or default
thereof shall extend to or affect in any way any other provision or prior or
subsequent breach or default, and no failure or delay to enforce, or partial
enforcement of, any provision hereof shall operate as a waiver of such provision
or of any other provision.

11.10. Complete Agreement. This Agreement and the documents referred to herein
(including the Non Disclosure Agreement and the Schedules and Exhibits hereto)
contain the complete agreement between the parties hereto and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.

11.11. Counterparts. This Agreement may be executed in multiple counterparts
(including by means of telecopied signature pages), any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same instrument.

11.12. Governing Law. All matters relating to the interpretation, construction,
validity and enforcement of this Agreement shall be governed by and construed in
accordance with the

 

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domestic laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of laws of any jurisdiction other
than the State of Delaware.

11.13. No Third-Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns.

11.14. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF BUYER, THE COMPANIES AND SELLERS HEREBY WAIVE,
AND COVENANT THAT NONE OF THE COMPANIES, BUYER OR SELLERS WILL ASSERT ANY RIGHT
TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN
ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE COMPANIES,
BUYER AND SELLERS HEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE. The Buyer acknowledges
that it has been informed by the Sellers that the provisions of this
Section 11.14 constitute a material inducement upon which the Sellers are
relying and will rely in entering into this Agreement. The Buyer or the Sellers
may file an original counterpart or a copy of this Section 11.14 with any court
as written evidence of the consent of the Buyer and the Sellers to the waiver of
its right to trial by jury.

11.15. Delivery by Electronic Mail. This Agreement and any signed agreement or
instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, to the extent signed and delivered by means of a PDF email,
shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any Party hereto or to any such agreement or instrument, each other Party
hereto or thereto shall re-execute original forms thereof and deliver them to
all other Parties. No Party hereto or to any such agreement or instrument shall
raise the use of a PDF email to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a PDF email as a defense to the formation of a contract and each such
Party forever waives any such defense.

[The remainder of this page intentionally has been left blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

COMPANIES:   LIBERTY PROPANE, L.P.   By: LIBERTY PROPANE GP, LLC, its general
partner   By:  

 

  Name:  

 

  Its:  

 

  LIBERTY PROPANE GP, LLC   By:  

 

  Name:  

 

  Its:  

 

  LIBERTY PROPANE OPERATIONS, LLC   By: LIBERTY PROPANE, L.P., its sole member
and manager   By: LIBERTY PROPANE GP, LLC, its general partner   By:  

 

  Name:  

 

  Its:  

 

[Signatures Continue on Following Page]

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SCP GP PROPANE PARTNERS I, INC. By:  

 

Name:  

 

Its:  

 

SCP LP PROPANE PARTNERS I, INC. By:  

 

Name:  

 

Its:  

 

STERLING: STERLING CAPITAL PARTNERS, L.P. By:  

 

Name:  

 

Its:  

 

STERLING GMBH: STERLING CAPITAL PARTNERS GMBH & CO. KG By:  

 

Name:  

 

Its:  

 

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--------------------------------------------------------------------------------

LIBERTY PROPANE GP MEMBERS: MANAGEMENT CAPITAL COMPANY, LLC By:  

 

Name:  

 

Its:  

 

LARRY A. WEINSTEIN REVOCABLE TRUST, DATED AUGUST 21, 2000 By:  

 

Name:  

 

Its:  

 

KENT A. MISEMER REVOCABLE TRUST, DATED 12-24-92 By:  

 

Name:  

 

Its:  

 

 

David T. Cunningham

 

G. Cook Jordan, Jr.

 

Thomas E. Knauff

 

Boyd H. McGathey

 

Bradley A. Cochennet

 

Samuel Morasca, Jr.

[Signatures Continue on Following Page]

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Steve R. Dykeman

[Signatures Continue on Following Page]

--------------------------------------------------------------------------------

LIBERTY PROPANE LP LIMITED PARTNERS: MANAGEMENT CAPITAL COMPANY, LLC By:  

 

Name:  

 

Its:  

 

LARRY A. WEINSTEIN REVOCABLE TRUST, DATED AUGUST 21, 2000 By:  

 

Name:  

 

Its:  

 

KENT A. MISEMER REVOCABLE TRUST, DATED 12-24-92 By:  

 

Name:  

 

Its:  

 

 

David T. Cunningham

 

G. Cook Jordan, Jr.

 

Thomas E. Knauff

 

Boyd H. McGathey

 

Bradley A. Cochennet

 

Samuel Morasca, Jr.

 

Steve R. Dykeman

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STERLING GP BLOCKER STOCKHOLDERS: ARTHUR STREET FUND, L.P. By: BlackRock DivPEP
I, LLC, its general partner By: BlackRock Private Equity, L.P., its member
manager By: Portfolio Administration & Management Ltd., its general partner By:
 

 

Name:  

 

Title:  

 

VESEY STREET FUND, L.P. By: BlackRock DivPEP I, LLC, its general partner By:
BlackRock Private Equity, L.P., its member manager By: Portfolio Administration
& Management Ltd., its general partner By:  

 

Name:  

 

Title:  

 

AVP LIBERTY CO-INVESTMENT, L.P. By: Portfolio Administration & Management, Ltd.,
its general partner By:  

 

Name:  

 

Title:  

 

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ARGOSY INVESTMENT PARTNERS III, L.P. By:     Argosy Associates III, L.P., its
general partner   By:      Argosy Associates III, Inc., its general partner By:
 

 

Name:  

 

Its:  

 

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STERLING LP BLOCKER STOCKHOLDERS: ARTHUR STREET FUND, L.P. By: BlackRock DivPEP
I, LLC, its general partner By: BlackRock Private Equity, L.P., its member
manager By: Portfolio Administration & Management Ltd., its general partner By:
 

 

Name:  

 

Title:  

 

VESEY STREET FUND, L.P. By: BlackRock DivPEP I, LLC, its general partner By:
BlackRock Private Equity, L.P., its member manager By: Portfolio Administration
& Management Ltd., its general partner By:  

 

Name:  

 

Title:  

 

AVP LIBERTY CO-INVESTMENT, L.P. By: Portfolio Administration & Management, Ltd.,
its general partner By:  

 

Name:  

 

Title:  

 

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ARGOSY INVESTMENT PARTNERS III, L.P. By:     Argosy Associates III, L.P., its
general partner   By:      Argosy Associates III, Inc., its general partner By:
 

 

Name:  

 

Its:  

 

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BUYER: INERGY PROPANE, LLC By:  

 

Name:  

 

Its: