Exhibit 10.1
EXECUTION VERSION
$225,000,000
INERGY, L.P.
INERGY FINANCE
CORP.
8
3
/
4
% S
ENIOR
N
OTES
DUE
2015
PURCHASE
AGREEMENT
January 28, 2009
J.P. M ORGAN S ECURITIES I NC
.
B ANC OF A
MERICA S ECURITIES LLC
W ACHOVIA C APITAL M ARKETS ,
LLC
B ARCLAYS C APITAL I NC
.
BOSC, I NC .
M ITSUBISHI UFJ S ECURITIES I NTERNATIONAL PLC
SG A MERICAS S ECURITIES ,
LLC
UBS S ECURITIES LLC
c/o J.P. Morgan Securities
Inc.
270 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
Inergy, L.P., a
Delaware limited partnership (the “ Partnership
”), and Inergy Finance Corp., a Delaware corporation (“
Finance Corp ” and together with the Partnership, the
“ Issuers ”), propose, upon the terms and
conditions set forth herein, to issue and sell to you, as the
initial purchasers (the “ Initial Purchasers ”),
$225,000,000 in aggregate principal amount of their 8
3
/
4 % Senior Notes due 2015 (the
“ Notes ”). The Notes will (i) have terms
and provisions that are summarized in the Offering Memorandum (as
defined below) and (ii) are to be issued pursuant to an
Indenture (the “ Indenture ”) to be entered into
among the Issuers, the Guarantors (as defined below) and U.S. Bank
National Association, as trustee (the “ Trustee
”).
The Issuers’ obligations under
the Notes, including the due and punctual payment of interest on
the Notes, will be guaranteed (the “ Guarantees
”) by Inergy Propane, LLC, a Delaware limited liability
company (the “ Operating Company ”), Inergy
Midstream, LLC, a Delaware limited liability company (“
Midstream ”), Inergy Sales & Service, Inc., a
Delaware corporation (“ Service Sub ”), L &
L Transportation, LLC, a Delaware limited liability company
(“ L & L Transportation ”), Inergy
Transportation, LLC, a Delaware limited liability company (“
Inergy Transportation ”), Inergy Gas Marketing, LLC, a
Delaware limited liability company (“ Inergy Gas
”), Stellar Propane Service, LLC, a Delaware limited
liability company (“ Stellar Propane ”), Inergy
Stagecoach II, LLC, a Delaware limited liability company (“
Stagecoach II ”), Inergy Storage, Inc., a Delaware
corporation (“ Storage ”), Central New York Oil
and Gas
Company, L.L.C., a New York limited liability
company (“ CNYOGC ”), Farm & Home
Retail Oil Company LLC, a Pennsylvania limited liability company
(“ FHR ”), Arlington Storage Company, LLC, a
Delaware limited liability company (“ Arlington
Storage ”) and US Salt, LLC, a Delaware limited liability
company (“ US Salt ”, and together with the
Operating Company, Midstream, Service Sub, L & L
Transportation, Inergy Transportation, Inergy Gas, Stellar Propane,
Stagecoach II, Storage, CNYOGC, FHR and Arlington Storage, the
“ Guarantors ”). As used herein, the term
“ Notes ” shall include the Guarantees, unless
the context otherwise requires. The Issuers and the Guarantors are
referred to as the “ Inergy Parties
.”
Inergy Holdings, L.P., a Delaware
limited partnership, owns (either directly or indirectly through
its wholly-owned subsidiaries) 100% of the issued and outstanding
membership interests in each of Inergy Partners, LLC, a Delaware
limited liability company (the “ Non-Managing General
Partner ”), and Inergy GP, LLC, a Delaware limited
liability company (the “ Managing General Partner
”) (the Managing General Partner and the Non-Managing General
Partner are sometimes collectively referred to herein as the
“ General Partners ”).
This is to confirm the agreement
concerning the purchase of the Notes from the Issuers by the
Initial Purchasers.
1. Certain Defined Terms . As
used in this Agreement:
(a) “ Applicable Time
” means 3:30 p.m. (New York City time) on the date of this
Agreement; and
(b) “ Pricing Disclosure
Supplement ” means the summary of the terms of the Notes
dated the date of this Agreement and attached hereto as Exhibit
A .
2. Preliminary Offering
Memorandum and Offering Memorandum . The Notes will be offered,
issued and sold to the Initial Purchasers without registration
under the Securities Act of 1933, as amended (the “
Act ”), in reliance on an exemption pursuant to
Section 4(2) under the Act. At or prior to the Applicable
Time, the Issuers and the Guarantors shall have prepared a
preliminary offering memorandum dated January 28, 2009 (the
“ Preliminary Offering Memorandum ”), and the
Pricing Disclosure Supplement. Except as provided in the last
sentence of this paragraph, as used herein, “ Offering
Memorandum ” shall mean the Preliminary Offering
Memorandum as supplemented by the Pricing Disclosure Supplement.
Promptly after the Applicable Time and in any event no later than
the second business day following the Applicable Time, the Issuers
and the Guarantors will prepare an offering memorandum dated the
date hereof (the “ Final Offering Memorandum ”).
The Issuers and the Guarantors hereby confirm that they have
authorized the use of the Preliminary Offering Memorandum, the
Pricing Disclosure Supplement and the Final Offering Memorandum in
connection with the offering and resale of the Notes by the Initial
Purchasers. From and after the time the Final Offering Memorandum
is prepared, all references herein to the Offering Memorandum shall
be deemed to be a reference to both the Offering Memorandum and the
Final Offering Memorandum.
Any reference to the Preliminary
Offering Memorandum or the Final Offering Memorandum shall be
deemed to refer to and include any documents incorporated by
reference
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therein. All documents filed under the United
States Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), and so deemed to be included in the
Offering Memorandum, as the case may be, or any amendment or
supplement thereto, are hereinafter called the “ Exchange
Act Reports .”
It is understood and acknowledged
that upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the
Act, the Notes (and all securities issued in exchange therefor, in
substitution thereof) shall bear the following legend (along with
such other legends as the Initial Purchasers and their counsel deem
necessary):
“THIS NOTE (OR ITS
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR
THE BENEFIT OF INERGY, L.P. AND INERGY FINANCE CORP. THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO AN ISSUER, (II) IN THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN
EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY SUBSEQUENT PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN
(A) ABOVE.”
You have advised the Issuers that
you will make offers (the “ Exempt Resales ”) of
the Notes purchased by you hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to
(i) persons whom you reasonably believe to be “qualified
institutional buyers” as defined in Rule 144A under the Act
(“ QIBs ”) and (ii) outside the United
States to certain persons in offshore transactions in reliance on
Regulation S under the Act. Those persons specified in clauses
(i) and (ii) are referred to herein as the (“
Eligible Purchasers ”). You will offer the Notes to
Eligible Purchasers initially at a price equal to 90.191% of the
principal amount thereof. Such price may be changed at any time
without notice.
3
Holders (including
subsequent transferees) of the Notes will have the registration
rights set forth in the registration rights agreement attached
hereto as Exhibit B (the “ Registration Rights
Agreement ”) among the Inergy Parties and the Initial
Purchasers to be dated February 2, 2009 (the “
Closing Date ”), for so long as such Notes constitute
“ Registrable Securities ” (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Inergy Parties will agree to file with the
Commission under the circumstances set forth therein, a
registration statement under the Act relating to the Issuers’
8 3 / 4 % Senior Notes due 2015 (the
“ Exchange Notes ”) and the Guarantors’
Exchange Guarantees (the “ Exchange Guarantees
”) to be offered in exchange for the Notes and the
Guarantees. Such portion of the offering is referred to as the
“ Exchange Offer .”
3. Representations, Warranties
and Agreements of the Inergy Parties . The Inergy Parties,
jointly and severally, represent, warrant and agree as
follows:
(a) No Material Misstatements or
Omissions . The Offering Memorandum, as of the Applicable Time,
does not, and at the Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading,
except that this representation and warranty does not apply to
statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information relating to the
Initial Purchasers furnished to the Issuers in writing by or on
behalf of the Initial Purchasers expressly for use therein, which
information is specified in Section 13.
(b) No Similar Class of
Registered Securities . When the Notes and Guarantees are
issued and delivered pursuant to this Agreement, such Notes and
Guarantees will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Issuers or the
Guarantors that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation
system.
(c) Incorporated Documents.
The documents incorporated by reference in the Offering Memorandum,
when filed with the Commission, conformed or will conform, as the
case may be, in all material respects to the requirements of the
Exchange Act, and the rules and regulations (“ Rules and
Regulations ”) of the United States Securities and
Exchange Commission (the “ Commission ”)
thereunder, and did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(d) No Issuer Written
Communications. The Partnership (including its agents and
representatives, other than the Initial Purchasers in their
capacity as such) has not prepared, made, used, authorized,
approved or referred to and will not prepare, make, use, authorize,
approve or refer to any written communication that constitutes an
offer to sell or solicitation of an offer to buy the Notes (each
such communication by the Partnership or its agents and
4
representatives (other than a communication
referred to in clause (i) below) an “Issuer Written
Communication”) other than (i) the Offering Memorandum
and (ii) any electronic road show or other written
communications, in each case used in accordance with
Section 6(m). Each such Issuer Written Communication, when
taken together with the Offering Memorandum as of the Applicable
Time, did not, and at the Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided that the Partnership makes no representation and warranty
with respect to any statements or omissions made in each such
Issuer Written Communication in reliance upon and in conformity
with information relating to any Initial Purchaser furnished to the
Partnership in writing by such Initial Purchaser expressly for use
in any Issuer Written Communication.
(e) No Solicitation or
Advertisement
(i) Assuming that your
representations and warranties in Section 4(b) are true, the
purchase and resale of the Notes pursuant hereto (including
pursuant to the Exempt Resales) is exempt from the registration
requirements of the Act. No form of general solicitation or general
advertising within the meaning of Regulation D (including, but not
limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general
solicitation or general advertising) was used by the Inergy Parties
or any of their respective representatives (other than you, as to
whom the Inergy Parties make no representation) in connection with
the offer, issuance and sale of the Notes.
(ii) No form of general solicitation
or general advertising was used by the Inergy Parties or any of
their respective representatives (other than you, as to whom the
Inergy Parties make no representation) with respect to Notes sold
outside the United States to non-U.S. persons (as defined in Rule
902 under the Act), by means of any directed selling efforts within
the meaning of Rule 902 under the Act, and the Issuers, any
affiliate of the Issuers and any person acting on its or their
behalf (other than you, as to whom the Issuers and the Guarantors
make no representation) has complied with and will implement the
“offering restrictions” required by Rule
902.
(f) No Order Preventing Exempt
Resales . The Preliminary Offering Memorandum and Offering
Memorandum have been prepared by the Inergy Parties for use by the
Initial Purchasers in connection with the Exempt Resales. No order
or decree preventing the use of the Preliminary Offering Memorandum
or the Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the
registration requirements of the Act has been issued and no
proceeding for that purpose has commenced or is pending or, to the
knowledge of the Inergy Parties, is contemplated.
(g) Formation, Good Standing and
Foreign Qualification of the Inergy Parties . Each of the
Inergy Parties and each of the General Partners has been duly
organized and is validly existing in good standing under the laws
of its jurisdiction of organization with all necessary power and
authority to own or lease its properties and to conduct its
business, in all material respects as described in the Offering
Memorandum. Each of the Inergy Parties and the General Partners is
duly registered or qualified as a foreign entity for the
transaction of business
5
under the laws of each jurisdiction in which the
character of the business conducted by it or the nature or location
of the properties owned or leased by it makes such registration or
qualification necessary, except where the failure so to register or
qualify would not have a material adverse effect on the business,
financial condition or results of operations of the Inergy Parties,
taken as a whole (“ Material Adverse Effect
”).
(h) Ownership of General Partner
Interests in the Partnership . The General Partners are the
only general partners of the Partnership. The Non-Managing General
Partner owns an approximate 0.9% general partner interest in the
Partnership and the Managing General Partner owns a non-economic,
managing general partner interest in the Partnership; such general
partner interests have been duly authorized and validly issued in
accordance with the Second Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended (the “
Partnership Agreement ”); and each General Partner
owns its general partner interest free and clear of all liens,
encumbrances, security interests, charges or claims (other than
those securing obligations under the 5-year Credit Agreement dated
as of December 17, 2004, as amended, by and among the
Partnership and the lenders therein (the “ Credit
Agreement ”).
(i) Capitalization . The
issued and outstanding limited partner interests of the Partnership
consist of 51,300,764 Common Units and the incentive distribution
rights, as defined in the Partnership Agreement (the “
Incentive Distribution Rights ”). All outstanding
Common Units and Incentive Distribution Rights and the limited
partner interests represented thereby have been duly authorized and
validly issued in accordance with the Partnership Agreement and are
fully paid (to the extent required under the Partnership Agreement)
and nonassessable (except as such nonassessability may be affected
by matters described in Sections 17-607 and 17-804 of the Delaware
Revised Uniform Limited Partnership Act (the “ Delaware LP
Act ”)).
(j) Ownership of Finance Corp.
and the Guarantors . The Partnership owns, directly or
indirectly, 100% of the issued shares of capital stock, membership
interests or limited partner interests, as applicable, in each of
Finance Corp. and the Guarantors; such shares of capital stock,
membership interests or limited partner interests have been duly
authorized and validly issued in accordance with the bylaws,
partnership agreement or limited liability company agreement of
such entity (collectively, the “ Organizational
Documents ”) and are fully paid (to the extent required
under such Organizational Documents) and nonassessable (except
(i) in the case of an interest in a Delaware limited liability
company, as such nonassessability may be affected by Sections
18-607 and 18-804 of the Delaware Limited Liability Company Act
(the “ Delaware LLC Act ”) and (ii) in the
case of an interest in a limited liability company formed under the
laws of another domestic state, as such nonassessability may be
affected by similar provisions of such state’s limited
liability company statute, as applicable); and the Partnership owns
such shares of capital stock, membership interests or limited
partner interests free and clear of all liens, encumbrances,
security interests, charges or claims (other than those securing
obligations under Credit Agreement).
(k) No Other Subsidiaries .
The Partnership does not own or control, directly or indirectly,
any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.1 to the Partnership’s
Annual Report on Form 10-K for the most recent fiscal year. Inergy
Canada Company, a Nova Scotia unlimited liability company (“
Inergy Canada ”), is not a significant subsidiary
within the meaning of Rule 1-02(w) of Regulation S-X. Neither
the
6
Partnership nor any of its subsidiaries own,
directly or indirectly, any equity or long-term debt securities of
any corporation, partnership, limited liability company, joint
venture, association or other entity, other than as set forth on
Exhibit 21.1 to the Partnership’s Annual Report on Form 10-K
for the fiscal year ended September 30, 2008. Other than its
ownership of its partnership interests in the Partnership, the
Managing General Partner does not own, and at the Closing Date will
not own, directly or indirectly, any equity or long-term debt
securities of any corporation, partnership, limited liability
company, joint venture, association or other entity.
(l) Authorization to Execute this
Agreement . This Agreement has been duly authorized, validly
executed and delivered by each of the Inergy Parties.
(m) Authorization to Issue and
Sell Notes . The Issuers have all requisite corporate or
partnership power and authority to issue, sell and deliver the
Notes. The Notes have been duly authorized by the Issuers and, when
duly executed by the Issuers in accordance with the terms of the
Indenture, assuming due authentication of the Notes by the Trustee,
upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will be validly issued and
delivered, and will constitute valid and binding obligations of the
Issuers entitled to the benefits of the Indenture, enforceable
against the Issuers in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights generally and by general
equitable principles (regardless whether such enforceability is
considered in a proceeding in equity or at law).
(n) Authorization to Issue
Exchange Notes . The Issuers have all requisite corporate or
partnership power and authority to issue the Exchange Notes. The
Exchange Notes have been duly and validly authorized by the Issuers
and if and when duly issued, executed and authenticated by the
Trustee in accordance with the terms of the Indenture and delivered
in accordance with the Exchange Offer provided for in the
Registration Rights Agreement, will constitute valid and binding
obligations of the Issuers entitled to the benefits of the
Indenture, enforceable against the Issuers in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless whether
such enforceability is considered in a proceeding in equity or at
law).
(o) Authorization and
Enforceability of Guarantees . Each Guarantor has all requisite
corporate or limited liability power and authority to issue the
Guarantees. The Guarantees have been duly and validly authorized by
the Guarantors and upon the due execution, authentication and
delivery of the Notes in accordance with the Indenture and the
issuance of the Notes in the sale to the Initial Purchasers
contemplated by this Agreement, will constitute valid and binding
obligations of the Guarantors, enforceable against the Guarantors
in accordance with their terms, except as such enforceability may
be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors’ rights generally and by general equitable
principles (regardless whether such enforceability is considered in
a proceeding in equity or at law).
(p) Authorization and
Enforceability of Exchange Guarantees . Each Guarantor has all
requisite corporate or limited liability power and authority to
issue the
7
Exchange Guarantees. The Exchange Guarantees
have been duly and validly authorized by the Guarantors and if and
when duly issued and delivered by the Guarantors in accordance with
the terms of the Indenture and upon the due execution and
authentication of the Exchange Notes in accordance with the
Indenture and the issuance and delivery of the Exchange Notes in
the Exchange Offer contemplated by the Registration Rights
Agreement, will constitute valid and binding obligations of the
Guarantors, entitled to the benefits of the Indenture, enforceable
against the Guarantors in accordance with their terms, except as
such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors’ rights generally and by
general equitable principles (regardless whether such
enforceability is considered in a proceeding in equity or at
law).
(q) Authorization and
Enforceability of the Indenture . Each of the Inergy Parties
has all requisite corporate, limited liability or partnership power
and authority to enter into the Indenture. The Indenture has been
duly and validly authorized by the Inergy Parties, and upon its
execution and delivery by the Inergy Parties and, assuming due
authorization, execution and delivery by the Trustee, will
constitute the valid and binding agreement of the Inergy Parties,
enforceable against the Inergy Parties in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless whether
such enforceability is considered in a proceeding in equity or at
law); no qualification of the Indenture under the Trust Indenture
Act of 1939 (the “ 1939 Act ”) is required in
connection with the offer, issuance and sale of the Notes
contemplated hereby or in connection with the Exempt Resales. The
Indenture conforms in all material respects to the requirements of
the 1939 Act and the Rules and Regulations applicable to an
indenture that is qualified thereunder.
(r) Authorization and
Enforceability of the Registration Rights Agreement . Each of
the Inergy Parties has all requisite corporate, limited liability
and partnership power and authority to enter into the Registration
Rights Agreement. The Registration Rights Agreement has been duly
authorized by the Inergy Parties and, when executed and delivered
by the Inergy Parties in accordance with the terms hereof and
thereof, will be validly executed and delivered and (assuming the
due authorization, execution and delivery thereof by you) will be
the legally valid and binding obligation of the Inergy Parties in
accordance with the terms thereof, enforceable against the Inergy
Parties in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting
creditor’s rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, as to rights of
indemnification and contribution thereunder may be limited by
federal or state law or by principles of public policy.
(s) Accuracy of Statements .
The Indenture, the Notes, the Guarantees and the Registration
Rights Agreement will or do, as applicable, conform in all material
respects to the description thereof in the Offering
Memorandum.
(t) Enforceability of Other
Agreements . At the Closing Date, each of the Organizational
Documents will have been duly authorized, executed and delivered by
the parties thereto and will be a valid and legally binding
agreement of such party, enforceable against such
8
party in accordance with its terms; provided
that, the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors’ rights
generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law); and provided, further, that the indemnity, contribution
and exoneration provisions contained in any of such agreements may
be limited by applicable laws and public policy.
(u) No Conflicts . None of
the offering, issuance and sale of the Notes and the Guarantees by
the Issuers and the Guarantors, respectively, the execution,
delivery and performance of the Notes, the Guarantees, the Exchange
Notes, the Indenture, the Registration Rights Agreement, the
Exchange Guarantees and this Agreement by the Inergy Parties, or
the consummation by each of them of the transactions contemplated
hereby (i) conflicts or will conflict with or constitutes or
will constitute a violation of the Organizational Documents,
(ii) constitutes or will constitute a breach or violation of,
or a default (or an event which, with notice or lapse of time or
both, would constitute such a default) under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which any of the Inergy Parties is a party or by
which any of them or any of their respective properties may be
bound; (iii) violates or will violate any law, administrative
regulation or administrative or court decree applicable to the
Inergy Parties, or (iv) results or will result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of any of the Inergy Parties, which breaches, violations,
defaults or liens, in the case of clauses (ii), (iii) or
(iv) would, individually or in the aggregate, have a Material
Adverse Effect.
(v) No Consents . No permit,
consent, approval, authorization, order, registration, filing or
qualification (“ consent ”) of or with any
court, governmental agency or body having jurisdiction over the
Inergy Parties or any of their respective properties is required
for the offering, issuance and sale of the Notes and the Guarantees
by the Issuers in the manner contemplated herein or in the Offering
Memorandum or the execution, delivery and performance by the Inergy
Parties of this Agreement, the Indenture, the Notes, the
Guarantees, the Exchange Notes, the Exchange Guarantees and the
Registration Rights Agreement, or the consummation by the Inergy
Parties of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations, orders and
registrations or qualifications as may be required (i) under
applicable state securities laws in connection with the purchase
and resale of the Notes by the Initial Purchasers and
(ii) with respect to the Exchange Notes under the Act and
applicable state securities laws as contemplated by the
Registration Rights Agreement.
(w) No Default . None of the
Inergy Parties is (i) in violation of its Organizational
Documents, or (ii) in violation of any law, statute,
ordinance, administrative or governmental rule or regulation
applicable to it or of any decree of any court or governmental
agency or body having jurisdiction over it or (iii) in breach,
default (or an event which, with notice or lapse of time or both,
would constitute such a default) or violation in the performance of
any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which it is a
party or by which it or any of its properties may be bound, which
breach, default or violation in the case of clause (ii) or
(iii) would, if continued, have a Material Adverse Effect or
could materially impair the ability of any of the Inergy Parties to
perform their obligations under this Agreement, the Indenture, the
Notes, the Guarantees, the Exchange Notes, the Exchange
9
Guarantees or the Registration Rights Agreement.
To the knowledge of the Inergy Parties, no third party to any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any of the Inergy Parties is a
party or by which any of them is bound or to which any of their
properties is subject, is in default under any such agreement,
which breach, default or violation would, if continued, have a
Material Adverse Effect.
(x) Independent Registered Public
Accounting Firm – Ernst & Young . The
accountants, Ernst & Young LLP, who have certified certain
audited financial statements contained or incorporated by reference
in the Offering Memorandum, are an independent registered public
accounting firm with respect to the Partnership and the General
Partners as required by the Act and the applicable Rules and
Regulations thereunder and the rules and regulations of the Public
Company Accounting Oversight Board (the “ PCAOB
”).
(y) Financial Statements . At
September 30, 2008, the Partnership would have had, on the
consolidated, as adjusted basis indicated in the Offering
Memorandum, a capitalization as set forth therein. The historical
financial statements (including the related notes and supporting
schedules) contained or incorporated by reference in the Offering
Memorandum present fairly in all material respects the financial
position, results of operations and cash flows of the entities
purported to be shown thereby on the basis stated therein at the
respective dates or for the respective periods to which they apply
and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except to the extent disclosed therein. The financial
information contained or incorporated by reference in the Offering
Memorandum and the selected historical information is accurately
presented in all material respects and prepared on a basis
consistent with the audited and unaudited historical consolidated
financial statements, as applicable, from which it has been
derived.
(z) No Material Adverse
Change . None of the Inergy Parties has sustained since the
date of the latest audited financial statements contained or
incorporated by reference in the Offering Memorandum any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, investigation, order or
decree that is reasonably likely to cause a Material Adverse Effect
or is otherwise set forth or contemplated in the Offering
Memorandum. Except as disclosed in the Offering Memorandum,
subsequent to the respective dates as of which such information is
given in the Offering Memorandum (exclusive of any amendment or
supplement thereto), (i) none of the Inergy Parties has
incurred any liability or obligation, indirect, direct or
contingent, or entered into any transactions, not in the ordinary
course of business, that, individually or in the aggregate, would
cause or result in a Material Adverse Effect, (ii) there has
not been any change in the capitalization, or increase in the
short-term debt or long-term debt, of the Inergy Parties that would
cause or result in a Material Adverse Effect and (iii) there
has not been any adverse change, or any development involving or
which may reasonably be expected to involve, individually or in the
aggregate, a prospective adverse change in or affecting the general
affairs, business, prospects, properties, management, condition
(financial or other), partners’ capital, stockholders’
equity, net worth or results of operations of the Inergy Parties,
taken as a whole, in each case except as could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
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(aa) Title to Properties .
The Inergy Parties have good and indefeasible title to all real
property and good title to all personal property described in the
Offering Memorandum as owned by any of them, free and clear of all
liens, claims, security interests or other encumbrances except
(i) those created, arising under or securing the Credit
Agreement; (ii) such as are described in the Offering
Memorandum or (iii) such as do not interfere with the use of
such properties taken as a whole as described in the Offering
Memorandum, and could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect. All real property and buildings
held under lease or license by the Inergy Parties are held by such
entity under valid and subsisting and enforceable leases or
licenses with such exceptions as do not interfere with the use of
such properties taken as a whole as they have been used in the past
and are proposed to be used in the future as described in the
Offering Memorandum and could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(bb) Permits . Each of the
Inergy Parties has such permits, consents, licenses, franchises,
certificates and authorizations of governmental or regulatory
authorities (“ permits ”) as are necessary to
own its properties and to conduct its business in the manner
described in the Offering Memorandum, subject to such
qualifications as may be set forth in the Offering Memorandum and
except for such permits which, if not obtained, would not,
individually or in the aggregate, have a Material Adverse Effect;
each of the Inergy Parties has fulfilled and performed all its
material obligations with respect to such permits which are due to
have been fulfilled and performed by such date and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any
impairment of the rights of the holder of any such permit, except
for such revocations, terminations and impairments that would not,
individually or in the aggregate, have a Material Adverse Effect,
subject in each case to such qualifications as may be set forth in
the Offering Memorandum; and, except as described in the Offering
Memorandum, none of such permits contains any restriction that is
materially burdensome to the Inergy Parties, taken as a
whole.
(cc) Books and Records . The
Partnership (i) makes and keeps books, records and accounts,
which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets and (ii) maintains
systems of “internal control over financial reporting”
(as defined in Rule 13a-15(f) of the Exchange Act) that comply with
the requirements of the Exchange Act and have been designed by, or
under the supervision of, their respective principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurances that
(A) transactions are executed in accordance with
management’s general or specific authorization;
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Except as disclosed in each
of the Offering Memorandum as of the Applicable Time, there are no
material weaknesses or significant deficiencies in the
Partnership’s internal controls.
(dd) Disclosure Controls .
The Partnership has established and maintains disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act), which are designed to provide reasonable
assurance that the information required
11
to be disclosed by the Partnership in reports
that it files under the Exchange Act is accumulated and
communicated to the Partnership’s management, including its
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required
disclosure. The Partnership has carried out evaluations of the
effectiveness of its disclosure controls and procedures and such
disclosure controls and procedures are effective in all material
respects to perform the functions for which they were
established.
(ee) No Recent Changes to
Internal Control Over Financial Reporting . Since the date of
the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal
controls or in other factors that materially affected our internal
control over financial reporting.
(ff) Sarbanes Oxley Act of
2002 . There is and has been no failure on the part of the
Partnership and, to the Partnership’s knowledge, any of the
General Partner’s directors or officers, in their capacities
as such, to comply with the provisions of the Sarbanes-Oxley Act of
2002 and the Rules and Regulations promulgated in connection
therewith.
(gg) Tax Returns . Each of
the Inergy Parties which are required to do so has filed (or has
obtained extensions with respect to) all material federal, state
and foreign income and franchise tax returns required to be filed
through the date hereof, which returns are complete and correct in
all material respects, and has timely paid all taxes shown to be
due, if any, pursuant to such returns, other than those
(i) which are being contested in good faith or
(ii) which, if not paid, would not have a Material Adverse
Effect.
(hh) Investment Company .
None of the Inergy Parties is now, and after sale of the Notes to
be sold by the Issuers hereunder, the issuance of the Guarantees
and application of the net proceeds from such sale as described in
the Offering Memorandum under the caption “Use of
proceeds,” none of the Inergy Parties will be an
“investment company” or a company “controlled
by” an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.
(ii) No Environmental
Problems . Each of the Inergy Parties (i) is in compliance
with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and
safety and the environment or imposing liability or standards of
conduct concerning any Hazardous Material (as hereinafter defined)
(“ Environmental Laws ”), (ii) has received
all permits required of it under applicable Environmental Laws to
conduct its respective businesses, (iii) are in compliance
with all terms and conditions of any such permit, and (iv) to
the knowledge of the Inergy Parties, does not have any liability in
connection with the release into the environment of any Hazardous
Materials, except where such noncompliance with Environmental Laws,
failure to receive required permits, or failure to comply with the
terms and conditions of such permits or liability in connection
with such releases would not, individually or in the aggregate,
have a Material Adverse Effect. The term “ Hazardous
Material ” means (A) any “hazardous
substance” as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
(B) any “hazardous waste” as defined in the
Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated
under or within the meaning of any other Environmental
Law.
12
(jj) No Labor Dispute . No
labor dispute with the employees of the Inergy Parties exists or,
to the knowledge of the Inergy Parties, is imminent which, in
either case, would reasonably be expected to result in a Material
Adverse Effect.
(kk) Insurance . The Inergy
Parties maintain insurance covering their properties, operations,
personnel and businesses against such losses and risks as are
reasonably adequate to protect them and their businesses in a
manner consistent with other businesses similarly situated. None of
the Inergy Parties has received notice from any insurer or agent of
such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such
insurance, and all such insurance is outstanding and duly in force
on the date hereof and will be outstanding and duly in force on the
Closing Date.
(ll) Litigation . Except as
described in the Offering Memorandum, there is (i) no action,
suit or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now
pending or, to the knowledge of the Inergy Parties, threatened, to
which any of the Inergy Parties is or may be a party or to which
the business or property of any of the Inergy Parties is or may be
subject, (ii) no statute, rule, regulation or order that has
been enacted, adopted or issued by any governmental agency or
proposed by any governmental agency and (iii) no injunction,
restraining order or order of any nature issued by a federal or
state court or foreign court of competent jurisdiction to which any
of the Inergy Parties is or may be subject, that, in the case of
clauses (i), (ii) and (iii) above, is reasonably likely
to (A) individually or in the aggregate have a Material
Adverse Effect or (B) prevent or result in the suspension of
the offer, issuance or sale of the Notes.
(mm) Stabilization . Prior to
the date hereof, none of the Inergy Parties has taken, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price the Notes in
violation of any law, rule or regulation.
(nn) No Integration . During
the six-month period preceding the date of the Offering Memorandum,
none of the Issuers, the Guarantors or any other person acting on
behalf of the Issuers or any Guarantor has offered or sold to any
person any Notes or Guarantees, or any securities of the same or a
similar class as the Notes or Guarantees, other than Notes or
Guarantees offered or sold to the Initial Purchasers hereunder. The
Issuers and the Guarantors will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in
the United States or to any U.S. person (as defined in Rule 902
under the Act), of any Notes or any substantially similar security
issued by the Issuers or any Guarantor, within six months
subsequent to the date on which the distribution of the Notes has
been completed (as notified to the Partnership by the Initial
Purchasers), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer, issuance
and sale of the Notes in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the
registration provisions of the Act; including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Act.
13
4. Purchase of the Notes by the
Initial Purchasers, Agreements to Sell, Purchase and
Resell.
(a) The Issuers hereby agree, on the
basis of the representations, warranties and agreements of the
Initial Purchasers contained herein and subject to all the terms
and conditions set forth herein, to issue and sell to the Initial
Purchasers and, upon the basis of the representations, warranties
and agreements of the Issuers and the Guarantors herein contained
and subject to all the terms and conditions set forth herein, each
Initial Purchaser agrees, severally and not jointly, to purchase
from the Issuers, at a purchase price of 88.191% of the principal
amount thereof, the total principal amount of Notes set forth
opposite the name of such Initial Purchaser in Schedule I hereto.
The Issuers and the Guarantors shall not be obligated to deliver
any of the securities to be delivered hereunder except upon payment
for all of the securities to be purchased as provided
herein.
(b) Each of the Initial Purchasers
severally and not jointly hereby represents and warrants to and
agrees with the Issuers that it will offer the Notes for sale upon
the terms and conditions set forth in this Agreement and in the
Offering Memorandum. Each of the Initial Purchasers hereby
represents and warrants to, and agrees with, the Issuers that such
Initial Purchaser: (i) is a QIB with such knowledge and
experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the
Notes; (ii) is purchasing the Notes pursuant to a private sale
exempt from registration under the Act; (iii) in connection
with the Exempt Resales, will solicit offers to buy the Notes only
from, and will offer to sell the Notes only to, the Eligible
Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; and (iv) will not
offer or sell the Notes, nor has it offered or sold the Notes by,
or otherwise engaged in, any form of general solicitation or
general advertising (within the meaning of Regulation D, including,
but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general
solicitation or general advertising) and will not engage in any
directed selling efforts within the meaning of Rule 902 under the
Act, in connection with the offering of the Notes. The Initial
Purchasers have advised the Issuers that they will offer the Notes
to Eligible Purchasers at a price initially equal to 90.191% of the
principal amount thereof, plus accrued interest, if any, from the
date of issuance of the Notes. Such price may be changed by the
Initial Purchasers at any time without notice.
(c) Each of the Initial Purchasers
severally and not jointly hereby represents and warrants and agrees
with the Issuers that each of the Initial Purchasers and each of
its affiliates (i) have only communicated or caused to be
communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services
and Markets Act 2000 (the “ FSMA ”)) received by
them in connection with the issue or sale of any notes in
circumstances in which Section 21(1) of the FSMA does not
apply to us; and (ii) have complied and will comply with all
applicable provisions of the FSMA with respect to anything done by
them in relation to the notes in, from or otherwise involving the
United Kingdom.
(d) Each of the Initial Purchasers
understands that the Issuers and, for purposes of the opinions to
be delivered to the Initial Purchasers pursuant to Sections 7(c)
and
14
7(f) hereof (as set forth in the form of
opinions), counsel to the Issuers and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations, warranties and agreements and the Initial
Purchasers hereby consent to such reliance.
5. Delivery of the Notes and
Payment Therefor . Delivery to the Initial Purchasers of and
payment for the Notes shall be made at the offices of
Vinson & Elkins L.L.P., 1001 Fannin Street, 2500 First
City Tower, Houston, Texas 77002-6760, at 9:00 A.M., central time,
on the Closing Date. The place of closing for the Notes and the
Closing Date may be varied by agreement between the Initial
Purchasers and the Issuers.
The Notes will be delivered to the
Trustee as custodian for The Depository Trust Company (“
DTC ”), against payment by or on behalf of the Initial
Purchasers of the purchase price therefor by wire transfer in
immediately available funds, by causing DTC to credit the Notes to
the account of the Initial Purchasers at DTC. The Notes will be
evidenced by one or more global securities in definitive form (the
“ Global Notes ”), and will be registered in the
name of Cede & Co. as nominee of DTC.
6. Agreements of the Inergy
Parties . The Inergy Parties, jointly and severally, agree with
each of the Initial Purchasers as follows:
(a) The Issuers and the Guarantors
will promptly furnish to the Initial Purchasers, without charge,
such number of copies of the Offering Memorandum as they may
reasonably request.
(b) The Issuers and the Guarantors
will not make any amendment or supplement to the Offering
Memorandum of which the Initial Purchasers shall not previously
have been advised or to which they shall reasonably object after
being so advised; provided , that this clause shall not
apply to any filing by the Partnership of any Annual Report on Form
10-K or Quarterly Report on Form 10-Q.
(c) If, at any time prior to
completion of the distribution of the Notes by the Initial
Purchasers to Eligible Purchasers, any event occurs or information
becomes known that, in the judgment of the Issuers, any of the
Guarantors or in the opinion of counsel for the Initial Purchasers,
should be set forth in the Offering Memorandum so that the Offering
Memorandum does not include any untrue statement of material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or if it should be necessary to
supplement or amend the Offering Memorandum as of the Applicable
Time or the Final Offering Memorandum, as then amended or
supplemented in order to comply with any law, the Issuers and the
Guarantors will, subject to paragraph (b) above, promptly
prepare an appropriate supplement or amendment thereto, and will
promptly furnish to the Initial Purchasers and dealers a reasonable
number of copies thereof.
(d) The Issuers and each of the
Guarantors will cooperate with the Initial Purchasers and with
their counsel in connection with the qualification of the Notes for
offering, issuance and sale by the Initial Purchasers and by
dealers under the securities or Blue Sky laws of such jurisdictions
as the Initial Purchasers may reasonably designate; provided
, that in no event shall the Issuers or any of the Guarantors be
obligated to qualify to do business in any
15
jurisdiction where it is not now so qualified or
to take any action that would subject it to service of process in
suits, other than those arising out of the offering, issuance or
sale of the Notes, in any jurisdiction where it is not now so
subject or subject itself to taxation in any such jurisdiction if
it is not otherwise so subject.
(e) For a period of 90 days from the
date of the Offering Memorandum, the Inergy Parties agree not to,
directly or indirectly, sell, offer to sell, contract to sell,
grant any option to purchase, issue any instrument convertible into
or exchangeable for, or otherwise transfer or dispose of (or enter
into any transaction or device that is designed to, or could be
expected to, result in the disposition in the future of), any debt
securities of the Issuers, the Guarantors or any of their
respective subsidiaries, except (i) in exchange for the
Exchange Notes and the Exchange Guarantees in connection with the
Exchange Offer or (ii) with the prior consent of J.P. Morgan
Securities Inc.
(f) The Issuers will make available
to the holders of the Notes as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and
statements of income, partners’/stockholders’ equity
and cash flows of the Issuers and its consolidated subsidiaries
certified by an independent registered public accou
