Exhibit 10.2

 

NONCOMPETITION AGREEMENT

 

This Noncompetition Agreement (this “Noncompetition Agreement”) is entered into
on December     , 2004, among Star Gas Partners, L.P., a Delaware limited
partnership, Star Gas LLC, a Delaware limited liability company (collectively,
the “Sellers”), and Inergy Propane, LLC, a Delaware limited liability company
(“Buyer”).

 

On November 18, 2004, Buyer, the Sellers and Inergy, L.P. entered into an
Interest Purchase Agreement (the “Interest Purchase Agreement”) pursuant to
which Buyer is purchasing all of the propane business and certain other related
businesses of the Sellers. Section 4.4 of the Interest Purchase Agreement
contemplates and requires the execution and delivery of this Noncompetition
Agreement as a condition to the consummation of the transactions under the
Interest Purchase Agreement.

 

In consideration of the amounts paid by Buyer to the Sellers pursuant to the
Interest Purchase Agreement, the parties hereby agree as follows:

 

1. Covenant Not to Compete.

 

(a) The Sellers hereby acknowledge and recognize the highly competitive nature
of the Business (as defined in the Interest Purchase Agreement) being acquired
by Buyer pursuant to the Interest Purchase Agreement, including the intellectual
property, trade secrets and confidential information of the Business being
acquired. Accordingly, except as provided in Sections 1(b) and 1(c), the Sellers
hereby agree that they will not, directly or indirectly, during the period
commencing on the date of this Agreement and ending on the fifth anniversary of
such date (the “Noncompetition Period”), own, manage, operate, control or
participate in the ownership, management, operation or control of, or have any
interest, financial or otherwise, in or act as a partner, manager, member,
principal, agent, representative, consultant or independent contractor of,
licensor to, or lessor to, or in any way assist, any Person (as defined in the
Interest Purchase Agreement) in the conduct of any business that is engaged or
may become engaged in any business competitive to the Business now or at any
time during the Noncompetition Period in either (i) any of the Prohibited States
(as defined below) or (ii) the business locations in which the Business was
conducted on the date of this Agreement or within 50 miles of any of such
locations. In addition, the Sellers will not, directly or indirectly, during the
Noncompetition Period use or license in connection with any propane-related
activities any name, trade name or trademark that was previously used in
connection with the Business or that is similar to those previously used in
connection with the Business in either (A) any of the Prohibited States or (B)
the business locations in which the Business was conducted on the date of this
Agreement or within 50 miles of any of such locations. “Prohibited States” means
each of the following states: Florida, Indiana, Maine, Massachusetts, Michigan,
Minnesota and Ohio.

 

(b) Notwithstanding anything in Section 1(a) to the contrary, the Sellers may
own up to 5% of the outstanding equity securities in any Person that is listed
upon a national stock exchange or actively traded in the over-the-counter
market.

 

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(c) Notwithstanding anything in Section 1(a) to the contrary, the Sellers may
(i) continue to be involved in the Business, but only to the limited extent
involved in the Business on the date of this Agreement (after giving effect to
the consummation of the transactions contemplated by the Interest Purchase
Agreement) and (ii) expand their involvement in the Business pursuant to the
Sellers acquiring a third party (or its assets or operations) already engaged in
the Business prior to such acquisition, so long as the gross revenues of such
acquired third party for the most-recently completed fiscal year prior to such
acquisition and during the current fiscal year (after giving effect, on a pro
forma basis, to the acquisition of propane-related assets and the disposition of
non-propane-related assets) generated by such acquired third party from
propane-related activities is less than 10% of the total gross revenues of such
acquired third party for such period.

 

2. Potential Unenforceability of Section 1. Although the Sellers and Buyer
consider the restrictions contained in Section 1 to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that the
time or territory or any other restriction contained in Section 1 is an
unreasonable or otherwise unenforceable restriction against the Sellers, neither
this Noncompetition Agreement nor the provisions of Section 1 will be rendered
void, but will be deemed amended as to such restriction as such court may
judicially determine or indicate to be reasonable or, if such court does not so
determine or indicate, to the maximum extent that any pertinent statute or
judicial decision may indicate to be a reasonable restriction under the
circumstances.

 

3. Specific Performance. Recognizing that irreparable damage will result to
Buyer in the event of the breach or threatened breach of any of the foregoing
covenants and assurances by the Sellers contained in Section 1, and that Buyer’s
remedies at law for any such breach or threatened breach will be inadequate,
Buyer and its successors and permitted assigns, in addition to such other
remedies that may be available to them, are entitled to, and the Sellers agree
not to oppose Buyer’s request for, an injunction, including a mandatory
injunction, to be issued by any court of competent jurisdiction ordering
compliance with this Noncompetition Agreement or enjoining and restraining the
Sellers, and each and every Person acting in concert or participation with the
Sellers, from the continuation of such breach and, in addition thereto, the
Sellers will pay to Buyer all ascertainable damages, including costs and
reasonable attorneys’ fees sustained by Buyer by reason of the breach or
threatened breach of such covenants and assurances. Buyer is not required to
obtain a bond in an amount greater than $1,000. The covenants and obligations of
the Sellers set forth in Section 1 are in addition to and not in lieu of or
exclusive of any other obligations and duties of the Sellers to Buyer, whether
express or implied in fact or in law.

 

4. Entire Agreement; Modification. This Noncompetition Agreement, along with the
Interest Purchase Agreement, embodies the entire agreement between the parties
with respect to the subject matter hereof. This Noncompetition Agreement may not
be amended or modified except by a writing signed by an authorized
representative of the party against whom enforcement of the change is sought. No
waiver of the performance or breach of, or default under, any condition or
obligation of this Noncompetition Agreement will be deemed to be a waiver of any
other performance, or breach of, or default under the same or any other
condition or obligation of this Noncompetition Agreement.

 

5. Waiver of Breach. The waiver by any party, or the failure by either party to
claim a breach (or give notice with respect thereto), of any provision of this
Noncompetition

 

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Agreement will not be, or be deemed to be, a waiver of any subsequent breach, or
deemed to affect in any way the effectiveness, of such provision.

 

6. Parties in Interest and Assignment.

 

(a) This Agreement is binding upon and is for the benefit of the parties and
their respective successors and permitted assigns. Except as expressly provided
in this Agreement, nothing in this Agreement, express or implied, is intended to
confer on any Person other than the parties or their respective successors and
permitted assigns any rights, remedies or obligations or liabilities under or by
reason of this Agreement.

 

(b) Except as provided in Section 6(c), neither this Agreement nor any of the
rights, duties or obligations of any party may be transferred or assigned to any
Person except by a written agreement executed by all of the parties.

 

(c) Notwithstanding Section 6(b), Buyer may transfer and assign all or any
portion of its rights under this Agreement to an Affiliate (as defined in the
Interest Purchase Agreement) of Buyer or in connection with any merger,
consolidation or conversion of Buyer or any sale of all or a significant portion
of the assets associated with the Business.

 

7. Execution in Multiple Originals. This Noncompetition Agreement may be
executed in multiple originals, each of which is deemed an original but all of
which together constitute but one and the same instrument.

 

8. Notice. Any notice, request, consent or communication under this
Noncompetition Agreement will be effective only if it is sent in accordance with
Section 15.1 of the Interest Purchase Agreement.

 

9. Governing Law. This Noncompetition Agreement is governed by and construed,
interpreted and enforced in accordance with the Laws of the State of Delaware
applicable to agreements made and to be performed entirely within such State,
including all matters of enforcement, validity and performance.

 

10. Attorneys’ Fees. If any legal action or other proceeding is brought by Buyer
for the enforcement or interpretation of any of the rights, obligations or
provisions of this Noncompetition Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Noncompetition Agreement, Buyer is entitled to recover reasonable
attorneys’ fees and all other costs and expenses incurred in such action or
proceeding, in addition to any other relief to which it may be entitled.

 

11. Captions. The headings of the sections of this Noncompetition Agreement have
been inserted for convenience of reference only and do not restrict or otherwise
modify any of the terms or provisions of this Noncompetition Agreement.

 

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The parties have executed this Noncompetition Agreement on the date set forth in
the introductory paragraph.

 

STAR GAS PARTNERS, L.P.

By:

 

Star Gas LLC, its general partner

   

By:

           

Name: Irik P. Sevin

       

Title: Chief Executive Officer

STAR GAS LLC

By:

       

Name: Irik P. Sevin

   

Title: Chief Executive Officer

INERGY PROPANE, LLC

By:

       

Name: John J. Sherman

   

Title: President and CEO