-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFeZKljgtJwtASzwdduHbNmrkk8u75doHwG+hcZ3vKVUi9Jek8DNXiUJ3+f6t9mo 1S5CforrwSNB2aGws+Eyew== 0000909518-06-000727.txt : 20060728 0000909518-06-000727.hdr.sgml : 20060728 20060728122623 ACCESSION NUMBER: 0000909518-06-000727 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060727 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060728 DATE AS OF CHANGE: 20060728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUBURBAN PROPANE PARTNERS LP CENTRAL INDEX KEY: 0001005210 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 223410353 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14222 FILM NUMBER: 06986789 BUSINESS ADDRESS: STREET 1: P O BOX 206 STREET 2: 240 ROUTE 10 WEST CITY: WIPPANY STATE: NJ ZIP: 07981 BUSINESS PHONE: 9738875300 MAIL ADDRESS: STREET 1: ONE SUBURBAN PLZ STREET 2: 240 RTE 10 WEST CITY: WHIPPANY STATE: NJ ZIP: 07981 8-K 1 mm7-2806_8k.txt 07-27-06 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): July 27, 2006 SUBURBAN PROPANE PARTNERS, L.P. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-14222 22-3410353 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 240 Route 10 West, Whippany, New Jersey 07981 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (973) 887-5300 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |X| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. ENTRY INTO EXCHANGE AGREEMENT On July 27, 2006, the Board of Supervisors of Suburban Propane Partners, L.P. ("Suburban") unanimously approved, upon the unanimous approval and recommendation of Suburban's Audit Committee, an Exchange Agreement (the "Exchange Agreement"), which was entered into as of July 27, 2006 by and among Suburban, Suburban Propane, L.P., Suburban's operating partnership (the "Operating Partnership"), and Suburban Energy Services Group LLC, the general partner of Suburban and the Operating Partnership (the "General Partner"). Pursuant to the terms of the Exchange Agreement, Suburban will issue 2,300,000 of its Common Units to the General Partner (which is majority-owned by members of Suburban's senior management) in exchange for the cancellation of the General Partner's Incentive Distribution Rights, the economic interest in Suburban included in the general partner interest therein and the economic interest in the Operating Partnership included in the general partner interest therein (the "Exchange"). The Common Units to be issued in the Exchange will represent approximately 7% of the total number of Common Units to be outstanding after giving effect to the Exchange. Following consummation of the Exchange, the General Partner will remain the general partner of Suburban and the Operating Partnership but its general partner interests will have no economic interest in future cash distributions. The Exchange is subject to customary closing conditions, including the affirmative vote, at the 2006 Tri-Annual Meeting of Unitholders, on the Exchange and certain amendments to Suburban's partnership agreement (the "1999 Partnership Agreement") discussed below, of (i) holders of a majority of the issued and outstanding Common Units and (ii) holders of a majority of the issued and outstanding Common Units other than the Common Units held by members of the General Partner or members of Suburban Energy Membership LLC ("LLC 2"), which holds a membership interest in the General Partner (collectively, the "General Partner Members"). ENTRY INTO DISTRIBUTION, RELEASE AND LOCKUP AGREEMENT Concurrently and in connection with the execution of the Exchange Agreement, Suburban, the Operating Partnership, the General Partner, LLC 2 and certain General Partner Members entered into a Distribution, Release and Lockup Agreement, dated as of July 27, 2006 (the "Distribution Agreement"), pursuant to which the Common Units received by the General Partner in the Exchange (other than a retained interest of 784 Common Units) will be distributed to the 40 current and former members of the management of Suburban who are General Partner Members (the "Distribution"). Among them are Mark A. Alexander, the Chief Executive Officer and an Appointed Supervisor of Suburban, and Michael J. Dunn, Jr., the President and an Appointed Supervisor of Suburban, as well as certain other executive officers of Suburban. Upon consummation of the Distribution, the Appointed Supervisors and other named executive officers of Suburban will receive the following numbers of Common Units: Mark A. Alexander - 1,026,010 (including the 784 Common Units to be retained by the General Partner), Michael J. Dunn, Jr. - 223,416, Robert M. Plante - 82,038 and Jeffrey S. Jolly - 92,641. Mr. Alexander will continue as the sole member of the 2 General Partner. Under the Distribution Agreement, subject to certain exceptions, each of Messrs. Alexander and Dunn has agreed not to transfer any of the Common Units to be received by him in the Distribution for a period of two years, and all other General Partner Members have agreed not to transfer any of the Common Units to be received by them for a period of 90 days. Following closing of the Exchange, Suburban will file with the Securities and Exchange Commission a shelf registration statement to register the resale by the General Partner Members of their Common Units. Such registration shall remain effective for two years following the closing. The General Partner Members will be entitled to indemnification from Suburban for certain securities law liabilities relating to the registration statement. Copies of the Exchange Agreement and the Distribution Agreement are attached to this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference. PROPOSED AMENDMENT OF SUBURBAN'S PARTNERSHIP AGREEMENT In order to effect the Exchange, the Board of Supervisors unanimously approved, upon the unanimous approval and recommendation of Suburban's Audit Committee, subject to the approval of the Unitholders by the same vote required to approve the Exchange, as described above, an amendment and restatement of the 1999 Partnership Agreement (the "Restated Partnership Agreement"). The Restated Partnership Agreement would also implement the following changes: o The 1999 Partnership Agreement sets the number of members of the Board of Supervisors at five, two appointed by the General Partner and three elected by the Unitholders. The Restated Partnership Agreement would provide for a minimum of five and a maximum of eleven Supervisors, all of whom would be elected by the Unitholders. o The Restated Partnership Agreement would provide for the adoption of a provision based on Section 203 of the Delaware General Corporation Law relating to transactions with interested Unitholders not approved in advance by the Board of Supervisors. If this provision is approved, the provision of the 1999 Partnership Agreement that currently disables a holder of more than 20% of the outstanding Common Units from voting any units in excess of 20% on the election of Supervisors will be eliminated. o The Restated Partnership Agreement would require a supermajority vote for the amendment of the provision discussed in the bullet above, as well as the existing provision governing nomination of Supervisors by Unitholders. The effectiveness of the Exchange is conditioned on approval of the amendments to the 1999 Partnership Agreement, other than the amendments set forth in the second and third bullets above. 3 OTHER MATTERS On July 27, 2006, the Board of Supervisors approved the following fees to be paid to the Audit Committee for meetings held in connection with the Exchange: $2,500 per meeting for the Chairman of the Audit Committee and $2,000 per meeting for each other member of the Audit Committee. ADDITIONAL INFORMATION In connection with the proposed transaction, Suburban will file a proxy statement with the Securities and Exchange Commission. UNITHOLDERS OF SUBURBAN ARE URGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE PROXY STATEMENT) REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Suburban's unitholders will be able to obtain a free copy of the proxy statement, as well as other filings containing information about Suburban, without charge, at the SEC's Internet site (http://www.sec.gov). Copies of the proxy statement and the filings with the SEC that will be incorporated by reference in the proxy statement can also be obtained, without charge, by directing a request to Suburban Propane Partners, L.P., 240 Route 10 West, P.O. Box 206, Whippany, NJ 07981-0206, Attention: Investor Relations, Telephone: (973) 887-5300. PARTICIPANTS IN THE SOLICITATION Suburban and its Supervisors and executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of Suburban in connection with the proposed transaction. Information regarding the special interests of these supervisors and executive officers in the transaction will be included in the proxy statement referred to above. Additional information regarding the Supervisors and executive officers of Suburban is also included in Amendment No. 1 on Form 10-K/A to Suburban's Annual Report on Form 10-K for the fiscal year ended September 24, 2005, which amendment was filed with the SEC on January 20, 2006. These documents are available free of charge at the SEC's website (http://www.sec.gov) and from Investor Relations at Suburban at the address set forth above. ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES. The information set forth in Item 1.01 above is incorporated herein by reference. The Common Units to be issued in the Exchange will be issued in a private placement made pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. ITEM 7.01 REGULATION FD DISCLOSURE. A copy of the press release announcing the Exchange is attached hereto as Exhibit 99.1. 4 ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. 10.1 Exchange Agreement, dated as of July 27, 2006, between Suburban Propane Partners, L.P., Suburban Propane, L.P. and Suburban Energy Services Group LLC. 10.2 Distribution, Release and Lockup Agreement, dated as of July 27, 2006, between Suburban Propane Partners, L.P., Suburban Propane, L.P., Suburban Energy Services Group LLC, Suburban Energy Membership LLC and certain holders of limited liability company interests in Suburban Energy Services Group LLC and Suburban Energy Membership LLC. 99.1 Press Release of Suburban Propane Partners, L.P., dated July 28, 2006. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SUBURBAN PROPANE PARTNERS, L.P. By: /s/ MICHAEL A. STIVALA ---------------------------------- Name: Michael A. Stivala Title: Controller and Chief Accounting Officer Date: July 28, 2006 6 EXHIBIT INDEX No. Description --- ----------- 10.1 Exchange Agreement, dated as of July 27, 2006, between Suburban Propane Partners, L.P., Suburban Propane, L.P. and Suburban Energy Services Group LLC. 10.2 Distribution, Release and Lockup Agreement, dated as of July 27, 2006, between Suburban Propane Partners, L.P., Suburban Propane, L.P., Suburban Energy Services Group LLC, Suburban Energy Membership LLC and certain holders of limited liability company interests in Suburban Energy Services Group LLC and Suburban Energy Membership LLC. 99.1 Press Release of Suburban Propane Partners, L.P., dated July 28, 2006. 7 EX-10 2 mm7-2806_8ke101.txt EX.10.1 - EXCHANGE AGREEMENT EXHIBIT 10.1 ------------ EXECUTION COPY EXCHANGE AGREEMENT This EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of July 27, 2006 by and among Suburban Propane Partners, L.P., a Delaware limited partnership (the "MLP"), Suburban Propane, L.P., a Delaware limited partnership and the operating partnership of the MLP (the "OLP"), and Suburban Energy Services Group LLC, a Delaware limited liability company (the "General Partner"). RECITALS WHEREAS, the General Partner is the general partner of each of the MLP and the OLP and holds the following interests: the General Partner Interest (the "MLP GP Interest") and the Incentive Distribution Rights (each as defined in the Second Amended and Restated Agreement of Limited Partnership of Suburban Propane Partners, L.P., dated as of May 26, 1999 (the "MLP Partnership Agreement")) in the MLP and the General Partner Interest (as defined in the Second Amended and Restated Agreement of Limited Partnership of Suburban Propane, L.P., dated as of May 26, 1999 (the "OLP Partnership Agreement")) in the OLP (the "OLP GP Interest"); and WHEREAS, the General Partner wishes to exchange the Incentive Distribution Rights, the entire economic interest in the MLP included in the MLP GP Interest and the entire economic interest in the OLP included in the OLP GP Interest for Common Units (as defined in the MLP Partnership Agreement) of the MLP ("Common Units"), and the MLP wishes to issue Common Units to the General Partner in exchange for the Incentive Distribution Rights, the entire economic interest in the MLP included in the MLP GP Interest and the entire economic interest in the OLP included in the OLP GP Interest. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Exchange. The General Partner hereby elects to exchange (the "Exchange") the Incentive Distribution Rights, in accordance with Section 5.8 of the MLP Partnership Agreement, the entire economic interest in the MLP included in the MLP GP Interest and the entire economic interest in the OLP included in the OLP GP Interest (collectively, the "Exchange Holdings") for an aggregate of two million, three hundred thousand (2,300,000) Common Units (the "Consideration Units"), thereby reducing the economic interest in the MLP included in the MLP GP Interest to zero, and the economic interest in the OLP included in the OLP GP Interest to zero, as provided in the Third Amended and Restated Agreement of Limited Partnership of the MLP (the "Restated MLP Partnership Agreement") and the Third Amended and Restated Agreement of Limited Partnership of the OLP (the "Restated OLP Partnership Agreement"), respectively, which are Exhibits A and B-2 hereto and will be entered into at the Closing (as defined herein). Without further action by the General Partner, as of the Closing, all of the General Partner's right, title and interest in and to the Exchange Holdings will be hereby assigned, transferred and delivered to the MLP free and clear of all mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances of any nature whatsoever (collectively, "Liens"), it being understood that, notwithstanding that the economic interest in the MLP included in the MLP GP Interest and the economic interest in the OLP included in the OLP GP Interest shall each be reduced to zero, the General Partner shall remain admitted to the MLP as the general partner of the MLP and shall remain admitted to the OLP as the general partner of the OLP. 2. Issuance, Retention and Registration of the Consideration Units. a. As consideration for the Exchange Holdings, at the Closing, the MLP will issue the Consideration Units to, and registered in the name of, the General Partner. The General Partner hereby acknowledges and agrees that receipt of the Consideration Units shall constitute complete satisfaction of all obligations or any other sums due to the General Partner with respect to the Exchange Holdings. Subject to the Distribution, Release and Lockup Agreement referred to below, the General Partner may distribute the Consideration Units to its members, including Suburban Energy Membership LLC ("LLC 2"), and LLC 2 may distribute its portion of the Consideration Units to its members, upon the effectiveness of the registration statement referred to below; provided, however, that the General Partner shall retain 784 of the Consideration Units, which will continue to be held in the name of the General Partner. All members of the General Partner and LLC 2 who are executive officers of the MLP or the OLP have executed that certain Distribution, Release and Lockup Agreement (the "Distribution Agreement") simultaneously with the execution and delivery hereof. If, for any reason, such agreement is not executed by all members of the General Partner by the Closing, as soon as practicable after the Closing, the General Partner agrees to effectuate the General Partner Merger as contemplated by such agreement. b. As soon as practicable but no later than five business days following the Closing, and subject to receipt of all required information from holders of Consideration Units, the MLP shall file with the Securities and Exchange Commission (the "SEC") a shelf registration statement (the "Registration Statement") to register the resale by members of the General Partner and/or LLC 2 of the Consideration Units. The MLP shall use commercially reasonable efforts to cause the Registration Statement to remain effective until the second anniversary of the Closing (or such earlier date as all Common Units registered thereunder have been sold); provided, however, that the Board of Supervisors of the MLP shall have the right to suspend the rights of any member of the General Partner and/or LLC 2 to make sales pursuant to the Registration Statement upon the happening of any event which makes any statement made in the Registration Statement or related prospectus untrue or which requires the making of any changes in such Registration Statement or prospectus so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, including as a result of a pending transaction, investigation or other event. As promptly as is reasonably practicable thereafter, but after such time period as the Audit Committee of the Board of Supervisors of the MLP determines in its good faith judgment is in the best interests of the MLP and its partners, the MLP shall prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as 2 thereafter deliverable to the purchasers of Common Units, such prospectus will not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If, for any reason, the Registration Statement is suspended or ceases to be effective, the MLP shall give notice thereof to each person named as a selling unitholder in the Registration Statement. c. The MLP shall, to the fullest extent permitted by law, indemnify and hold harmless the members of the General Partner and LLC 2 (collectively, the "Indemnified Persons") against any losses, claims, demands, actions, causes of action, assessments, damages, liabilities (joint or several), costs and expenses (including interest, penalties and reasonable attorneys' fees and disbursements), resulting from, imposed upon, or incurred by the Indemnified Persons, directly or indirectly, under the Securities Act of 1933, as amended (the "Securities Act"), or otherwise ("Claims"), based upon, arising out of or resulting from any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, in any preliminary prospectus (if used prior to the effective date of such Registration Statement), or in any summary or final prospectus or in any amendment or supplement thereto (if used during the period the MLP is required to keep the Registration Statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein not misleading; provided, however, that the MLP shall not be liable to any Indemnified Person to the extent that any such Claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, such preliminary, summary or final prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the MLP by or on behalf of such Indemnified Person specifically for use in the preparation thereof. 3. Cancellation of Incentive Distribution Rights and Economic Interest in the MLP Included in the MLP GP Interest. Upon the Exchange, without further action by the MLP, (i) the Incentive Distribution Rights shall be cancelled and have no further force or effect; and (ii) the economic interest in the MLP included in the MLP GP Interest shall be cancelled as provided in the Restated MLP Partnership Agreement. 4. OLP GP Interest. At the Closing and pursuant to an amendment to the OLP Partnership Agreement substantially in the form of Exhibit B-1 hereto to be entered into at the Closing by the General Partner, the MLP, a to be formed Delaware limited liability company and direct and indirect wholly-owned subsidiary of the MLP ("New LLC") and a to be formed Delaware corporation and wholly-owned subsidiary of the MLP ("New Corp."), the MLP shall make a capital contribution of, and assign, a 0.05% limited partner interest in the OLP to New LLC and a 0.05% limited partner interest in the OLP to New Corp., immediately following which New Corp. shall make a capital contribution of, and assign, a 0.05% limited partner interest in the OLP to New LLC. Simultaneously therewith, New LLC shall be admitted to the OLP as a limited partner with a 0.1% limited partner interest in the OLP, and the economic interest in the OLP included in the OLP GP Interest shall be assigned to the MLP and converted into a limited partner interest in the OLP, resulting in the MLP having a 99.9% limited partner interest in the OLP. The General Partner shall continue as the general partner 3 of the OLP with a 0% general partner interest, and the business of the OLP shall continue without dissolution, with the General Partner continuing as the General Partner of the OLP and with the MLP and New LLC as the two limited partners thereof. 5. Closing. The closing of the transactions contemplated hereby (the "Closing") shall take place at the offices of Weil, Gotshal & Manges LLP at 10:00 a.m. on the second business day following satisfaction of the conditions set forth in Section 10 of this Agreement (or such other place, date and/or time as are agreed upon by the parties hereto). 6. Change of Control. If, prior to the Closing, a Change of Control (as defined herein) shall occur, (i) the parties hereto agree that the MLP GP Interest, the Incentive Distribution Rights and the OLP GP Interest shall be exchanged or otherwise treated in any such transaction as if the Exchange had been consummated and, as a result thereof, the General Partner owned two million, three hundred thousand (2,300,000) Common Units, and (ii) the General Partner agrees to participate in any Change of Control as directed by the Audit Committee of the Board of Supervisors of the MLP. For purposes of this Section 6, a "Change of Control" shall mean: a. an acquisition (other than directly from the MLP) of Common Units or voting equity interests of the MLP ("Voting Securities") by any Person (as that term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than the MLP, the OLP, the General Partner and any of their affiliates, immediately after which such Person has beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than twenty five percent (25%) of the combined voting power of the MLP's then outstanding Voting Securities; provided, however, that in determining whether a Change of Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" shall not constitute an acquisition which would cause a Change of Control. For purposes of this definition of Change of Control, a "Non-Control Acquisition" means an acquisition by (1) an employee benefit plan (or trust forming a part thereof) maintained by (A) the MLP or the OLP or any of its affiliates or (B) any corporation, partnership or other Person of which a majority of its voting power or its voting equity securities or equity interests is owned, directly or indirectly, by the MLP (for purposes of this definition, a "Subsidiary"), (2) the MLP or its Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); or b. approval by the requisite percentage of the partners of the MLP of (A) a merger, consolidation or reorganization involving the MLP, unless (x) the holders of Voting Securities immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, 4 consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger, consolidation or reorganization (the "Surviving Entity") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and (y) no person or entity (other than the MLP, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the MLP, the OLP, the Surviving Entity or any person who, immediately prior to such merger, consolidation or reorganization had beneficial ownership of more than twenty five percent (25%) of the then outstanding Voting Securities), has beneficial ownership of more than twenty five percent (25%) of the combined voting power of the Surviving Entity's then outstanding voting securities; (B) a complete liquidation or dissolution of the MLP; or (C) the sale or other disposition of 50% or more of the net assets of the MLP to any Person (other than a transfer to a Subsidiary). A transaction described in clause (x) or (y) above shall be referred to as a "Non-Control Transaction." Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the MLP which, by reducing the number of Voting Securities outstanding, increases the proportional number of units Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the MLP, and after such acquisition by the MLP, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. 7. Representations and Warranties of the General Partner. To induce the MLP to issue the Consideration Units in exchange for the Exchange Holdings as herein provided, the General Partner makes the following representations and warranties to the MLP and the OLP, each and all of which are true and correct as of the date of this Agreement and shall be true and correct as of the Closing and shall not survive the Closing: a. Title to Exchange Holdings. The General Partner is the beneficial and record owner of the Exchange Holdings, and the Exchange Holdings are owned by the General Partner free and clear of all Liens. There is no subscription, option, warrant, call, right, agreement or commitment relating to the issuance, sale, delivery, repurchase or transfer by the General Partner of such Exchange Holdings except as set forth in the MLP Partnership Agreement 5 or the Distribution Agreement. Upon transfer of the Exchange Holdings as contemplated hereunder, the MLP will acquire good title to such Exchange Holdings, free and clear of all Liens. b. Authority; Binding Effect. The General Partner has full legal capacity and power, and has received the requisite approvals of its members and its Board of Managers, to execute and deliver this Agreement and any other agreements or instruments executed or to be executed by it in connection with the Exchange and to consummate the transactions contemplated herein or therein. This Agreement is, and the other agreements and instruments executed or to be executed by the General Partner in connection with the Exchange and the other transactions contemplated hereby will each be, a valid and binding obligation of the General Partner enforceable against it in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). c. No Violation. None of the execution and delivery of this Agreement by the General Partner, the exchange by the General Partner of the Exchange Holdings pursuant to this Agreement or the execution and delivery by the General Partner of any other agreements or instruments to be executed by it in connection herewith will (i) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement, lease or other instrument or obligation to which the General Partner or LLC 2 is a party, or (ii) violate any order, writ, injunction or decree applicable to the General Partner or any of the General Partner's assets. d. Securities Act Exemption. The General Partner acknowledges that the Consideration Units are being issued pursuant to an exemption from the Securities Act. The General Partner is an accredited investor, as defined in Regulation D under the Securities Act. It is acquiring the Consideration Units for its own account and without a view to the distribution thereof, except for the transfer of the Consideration Units to its members or by LLC 2 to its members as referred to in Section 2 hereof. 8. Representations and Warranties of the MLP. To induce the General Partner to deliver the Exchange Holdings in exchange for the Consideration Units as herein provided, the MLP makes the following representations and warranties to the General Partner and the OLP, each and all of which are true and correct as of the date of this Agreement and shall be true and correct as of the Closing and shall not survive the Closing: a. Authority; Binding Effect. The MLP has full legal capacity and power, and has received the unanimous approval of its Board of Supervisors and its Audit Committee (which constitutes Special Approval), subject to the requisite approval of the holders of Common Units, to execute and deliver this Agreement and any other agreements or instruments executed or to be executed by it in connection with the Exchange and to consummate the 6 transactions contemplated herein or therein. This Agreement is, and the other agreements and instruments executed or to be executed by the MLP in connection with the Exchange will each be, a valid and binding obligation of the MLP enforceable against it in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). b. No Violation. None of the execution and delivery of this Agreement by the MLP and, subject to the satisfaction of the conditions in Sections 10(a)(i) and 10(a)(iii), the issuance of the Consideration Units by the MLP as contemplated herein, or the execution and delivery by the MLP of any other agreements or instruments to be executed by it in connection herewith will (i) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement, lease or other instrument or obligation to which the MLP is a party, or (ii) violate any order, writ, injunction or decree applicable to the MLP or any of the MLP's assets. c. Issuance of the Common Units. The Consideration Units have been, subject to obtaining the Unitholder Approval referred to in Section 10(a)(i), duly authorized and, when issued upon the Exchange, will be validly issued and fully paid, and free and clear of all Liens. d. Capitalization. There are 30,314,262 outstanding Common Units, and an additional 341,911 outstanding restricted Common Units, granted under the MLP's 2000 Restricted Unit Plan, which shall become outstanding Common Units upon vesting. 9. Representations and Warranties of the OLP. To induce the General Partner and the MLP to exchange the Exchange Holdings for Common Units as herein provided, the OLP makes the following representations and warranties to the MLP and the General Partner, each and all of which are true and correct as of the date of this Agreement and shall be true and correct as of the Closing and shall not survive the Closing: a. Authority; Binding Effect. The OLP has full legal capacity and power, and has received the unanimous approval of its Board of Supervisors and its Audit Committee (which constitutes Special Approval), to execute and deliver this Agreement and any other agreements or instruments executed or to be executed by it in connection with the Exchange and to consummate the transactions contemplated herein or therein. This Agreement and the other agreements and instruments executed or to be executed by the OLP in connection with the Exchange will each be a valid and binding obligation of the OLP enforceable against it in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 7 b. No Violation. None of the execution and delivery of this Agreement by the OLP, or the execution and delivery by the OLP of any other agreements or instruments to be executed by it in connection herewith will (i) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement, lease or other instrument or obligation to which the OLP is a party, or (ii) violate any order, writ, injunction or decree applicable to the OLP or any of the OLP's assets. 10. Conditions to Closing. a. The respective obligations of each of the MLP, the OLP and the General Partner to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions: (i) Unitholder Approval. The MLP shall have received approval of this Agreement and the transactions contemplated hereby (including approval of the Restated MLP Partnership Agreement, other than those amendments relating to (x) restrictions on business combinations with interested unitholders and (y) requiring a 66-2/3% vote for changes to the procedures to nominate supervisors) by (A) the holders of a majority of the Outstanding (as defined in the MLP Partnership Agreement) Common Units and (B) the holders of a majority of the Outstanding (as defined in the MLP Partnership Agreement) Common Units other than the Common Units held by the General Partner or the members of the General Partner or LLC 2. (ii) Amendment of Agreements. The MLP Partnership Agreement (other than as to the items referred to in the first parenthetical in clause (i) above), the OLP Partnership Agreement and the Operating Agreement of the General Partner (the "GP Agreement") shall have been restated and/or amended substantially in the forms attached as Exhibit A, Exhibit B-1, Exhibit B-2 and Exhibit C hereto. (iii) NYSE Approval. The New York Stock Exchange shall have approved the supplemental listing application filed therewith in connection with the Consideration Units. b. The respective obligations of each of the MLP and the OLP to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions, unless any such condition is waived by the Board of Supervisors of the MLP: (i) Representations and Warranties of the General Partner; Officer's Certificate. The representations and warranties of the General Partner contained herein shall be true and correct in all material respects as of the date of the Closing as though made on and as of the date of the Closing, and the General Partner shall have furnished each of the MLP and OLP with a certificate to that effect, dated as of the date of the Closing and signed on its behalf by a duly authorized officer. (ii) No Material Adverse Effect. Since the date of this Agreement, there shall have been no material adverse effect on the 8 business, assets, condition (financial or otherwise) or prospects of the MLP and its subsidiaries, taken as a whole. c. The obligations of the General Partner to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following condition: (i) Representations and Warranties of the MLP and the OLP; Officer's Certificate. The representations and warranties of the MLP and the OLP contained herein shall be true and correct in all material respects as of the date of the Closing as though made on and as of the date of the Closing, and each of the MLP and the OLP shall have furnished the General Partner with a certificate, dated as of the date of the Closing and signed on its behalf by a duly authorized officer, to the effect that its respective representations and warranties are true and correct in all material respects as of the date of the Closing. 11. Termination. a. This Agreement and the rights and obligations of the parties hereto shall automatically terminate and be of no further force and effect if this Agreement and the transactions contemplated hereby do not receive unitholder approval as contemplated in Section 10(a)(i) hereof. b. This Agreement may be terminated by the MLP or the General Partner if the Closing has not occurred by December 31, 2006. 12. Miscellaneous. a. Amendments and Waivers. Amendments or modifications to this Agreement may only be made, and compliance with any term, covenant, agreement, condition or provision set forth herein may only be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon the written consent of the MLP, the OLP and the General Partner. Any action to be taken hereunder at the discretion of the MLP or the Board of Supervisors of the MLP shall be taken at the direction of the Audit Committee of the Board of Supervisors of the MLP. b. Further Assurances. The parties hereto hereby agree to enter into the amendments to the agreements referred to in Section 10(a)(ii) hereof at the Closing. The General Partner further agrees it shall not sell, transfer or otherwise dispose of the Exchange Holdings (whether directly or indirectly, by merger, consolidation or otherwise) from and after the date hereof except in accordance with this Agreement. From time to time, as and when requested by the MLP or the OLP, the General Partner will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement. 9 c. Entire Agreement. This Agreement and the Exhibits hereto constitute the full and complete agreement of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. d. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon the earlier of (i) delivery thereof if by hand; (ii) receipt if sent by mail (registered or certified mail, postage prepaid, return receipt requested); (iii) the second business day after deposit if sent by a recognized overnight delivery service; or (iv) transmission if sent by telecopy or facsimile transmission (with request of assurance of receipt in a manner customary for communication of such type) as follows: If to the MLP: Suburban Propane Partners, L.P. 240 Route 10 West Whippany, New Jersey 07981 Attn: Paul Abel, General Counsel and Secretary Facsimile No.: (973) 515-5982 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ellen J. Odoner, Esq. Ted S. Waksman, Esq. Facsimile No.: (212) 310-8007 If to the OLP: Suburban Propane, L.P. 240 Route 10 West Whippany, New Jersey 07981 Attn: Paul Abel, General Counsel and Secretary Facsimile No.: (973) 515-5982 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ellen J. Odoner, Esq. Ted S. Waksman, Esq. Facsimile No.: (212) 310-8007 If to the General Partner: 10 Suburban Energy Services Group LLC 240 Route 10 West Whippany, New Jersey 07981 Attn: Mark A. Alexander Facsimile No.: (973) 503-9995 with a copy to: Cadwalader, Wickersham & Taft LLP One World Financial Center New York, NY 10281 Attention: Dennis J. Block, Esq. Facsimile No.: (212) 504-6666 e. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflict of laws rules thereof. f. Assignment. This Agreement shall be binding upon the MLP, the OLP and the General Partner and each of their respective successors and permitted assigns. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties hereto. g. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. h. Headings. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. i. Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions shall not in any way be affected or impaired thereby. j. Fees and Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Closing occurs. [Signature Page Follows] 11 IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above. SUBURBAN PROPANE PARTNERS, L.P. By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chief Executive Officer SUBURBAN PROPANE, L.P. By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chief Executive Officer SUBURBAN ENERGY SERVICES GROUP LLC By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chairman 12 EX-10 3 mm7-2806_8ke102.txt EX.10.2 - DIST., RELEASE AND LOCKUP AGREEMENT EXHIBIT 10.2 ------------ EXECUTION COPY DISTRIBUTION, RELEASE AND LOCKUP AGREEMENT This DISTRIBUTION, RELEASE AND LOCKUP AGREEMENT (this "Agreement") is made and entered into as of July 27, 2006 by and among Suburban Energy Services Group LLC, a Delaware limited liability company (the "General Partner"), the holders of limited liability company interests in the General Partner who are signatories hereto (the "GP Members"), including Suburban Energy Membership LLC, a Delaware limited liability company ("LLC 2"), the holders of limited liability company interests in LLC 2 who are signatories hereto (the "LLC 2 Members"), Suburban Propane Partners, L.P., a Delaware limited partnership (the "MLP"), and Suburban Propane, L.P., a Delaware limited partnership and the operating partnership of the MLP (the "OLP"). RECITALS WHEREAS, the General Partner is the general partner of each of the MLP and OLP and holds the following interests: the General Partner Interest (the "MLP GP Interest") and the Incentive Distribution Rights (each as defined in the Second Amended and Restated Agreement of Limited Partnership of Suburban Propane Partners, L.P., dated as of May 26, 1999) in the MLP and the General Partner Interest (as defined in the Second Amended and Restated Agreement of Limited Partnership of Suburban Propane, L.P. , dated as of May 26, 1999) in the OLP (the "OLP GP Interest"); WHEREAS, concurrently with the execution of this Agreement, the General Partner, the MLP and the OLP are entering into an Exchange Agreement, a copy of which is attached as Appendix B hereto (the "Exchange Agreement"), pursuant to which, subject to the terms and conditions thereof, the General Partner will exchange its Incentive Distribution Rights, the entire economic interest in the MLP included in the MLP GP Interest and the entire economic interest in the OLP included in the OLP GP Interest for an aggregate of two million, three hundred thousand (2,300,000) Common Units (as defined in the MLP Partnership Agreement) of the MLP (the "Consideration Units"), thereby reducing the economic interest included in each of the MLP GP Interest and the OLP GP Interest to zero; WHEREAS, upon consummation of the transactions contemplated by the Exchange Agreement, each of the GP Members wishes to terminate his, her or its Membership Interest (as defined in the Operating Agreement of the General Partner, dated as of May 26, 1999 (the "GP Operating Agreement")) in the General Partner (the "GP Membership Interests") in exchange for the distribution to the GP Members from the General Partner of the Consideration Units (except to the extent set forth in the second succeeding recital); WHEREAS, upon LLC 2's receipt of Consideration Units from the General Partner in exchange for the termination of its GP Membership Interest, each of the LLC 2 Members wishes to terminate his or her Membership Interests (as defined in the Operating Agreement of LLC 2) in LLC 2 (the "LLC 2 Membership Interests" and, together with the GP Membership Interests, the "Membership Interests") in exchange for the distribution to the LLC 2 Members from LLC 2 of Consideration Units; and WHEREAS, seven hundred and eighty-four (784) of the Consideration Units which Mr. Mark A. Alexander is entitled to receive upon the distribution of the Consideration Units by the General Partner will not be distributed to him by the General Partner, and, as a result, Mr. Alexander will retain a GP Membership Interest and be the sole remaining member of the General Partner (the "Retained Interest"). NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Distribution of Consideration Units. Each of the GP Members and LLC 2 Members hereby elects to receive, as soon as practicable following the Closing and the effectiveness of the Registration Statement (each as defined in the Exchange Agreement), the number of Consideration Units to be delivered to him, her or it as set forth on his, her or its individual Appendix A hereto, which has been determined in accordance with the formula set forth on Appendix A, as consideration for the termination of his, her or its GP Membership Interest, except for the Retained Interest, and/or LLC 2 Membership Interest, as applicable. Without further action by the GP Members or LLC 2 Members, as of the Closing, all of the right, title and interest in and to each of the GP Membership Interests, except for the Retained Interest, and all of the right, title and interest in and to each of the LLC 2 Membership Interests, will be assigned, transferred and delivered to the General Partner and LLC 2, respectively, free and clear of all mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances of any nature whatsoever. In furtherance of the foregoing, each of the GP Members and LLC 2 Members agrees that he, she or it shall not sell, transfer or otherwise dispose of his, her or its Membership Interest(s) from and after the date hereof except in accordance with this Agreement. At the Closing, the General Partner will distribute to each GP Member and, immediately thereafter, LLC 2 will distribute to each LLC 2 Member the number of Consideration Units to be delivered to him, her or it as set forth on his, her or its individual Appendix A hereto, which has been determined in accordance with the formula set forth on Appendix A hereto, except for the Retained Interest (the "Distribution"). Each of the GP Members and LLC 2 Members hereby acknowledges and agrees that receipt of the Consideration Units distributed pursuant to this Section 1 shall constitute complete satisfaction of all obligations or any other sums due to such GP Member or LLC 2 Member with respect to his, her or its Membership Interest(s), including the termination thereof pursuant to Section 2 hereof, except for the Retained Interest, and no such member shall be entitled to any further consideration therefor, whether under the Delaware Limited Liability Company Act or otherwise. Each of the GP Members and LLC 2 Members hereby further acknowledges that the Consideration Units received by him, her or it in the Distribution may be sold, prior to the first anniversary of the Closing, only pursuant to the Registration Statement and, thereafter until the second anniversary of the Closing, only pursuant to the Registration Statement or Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), or, in either case, in a transaction exempt from registration under the Securities Act to a person who agrees in writing to be bound by this provision in form and 2 substance acceptable to the MLP. Any GP Member or LLC 2 Member who continues to be an affiliate of the MLP or OLP after the expiration of the Registration Statement shall dispose of his, her or its Consideration Units only pursuant to Rule 144 under the Securities Act or in a transaction exempt from registration under the Securities Act to a person who agrees in writing to be bound by this provision in form and substance acceptable to the MLP. 2. Termination of Membership Interests. Immediately following the Distribution, without further action by the General Partner and LLC 2, all Membership Interests, except for the Retained Interest, shall be terminated and have no further force or effect, and each member of the General Partner and LLC 2 whose entire GP Membership Interest or LLC 2 Membership Interest is terminated shall cease to be a member of the General Partner or LLC 2, as applicable, and shall cease to have or exercise any further rights as a member thereof. LLC 2 Members consent to the dissolution of LLC 2 following the Distribution. 3. Consents and Approvals. Each of the GP Members and LLC 2 Members hereby consents to and approves this Agreement and the Exchange Agreement and all of the transactions contemplated hereby and thereby. Messrs. Mark A. Alexander, Michael J. Dunn, Jr. and Robert M. Plante further represent that they constitute all the members of the Board of Managers of the General Partner and collectively own a Majority in Interest (as defined in the GP Operating Agreement) and have approved this Agreement and the Exchange Agreement and all of the transactions contemplated hereby and thereby in their capacities as managers and members of the General Partner. 4. Release. From and after the Closing, each of the GP Members and LLC 2 Members shall hereby, on behalf of themselves and each of their affiliates, heirs, executors, administrators, legal representatives and their respective successors or assigns (collectively, the "Releasor Related Parties"), unequivocally, irrevocably and unconditionally (i) release, surrender, acquit and forever discharge each of the MLP, the OLP, the General Partner, LLC 2, the Appointed Supervisors, Elected Supervisors and officers of the MLP and the OLP, the present and former members of the Board of Managers and officers of each of the General Partner and LLC 2, and each of their respective successors, affiliates, predecessors, agents, assigns, attorneys, financial advisors and representatives, and their respective successors and assigns (each, a "Released Party" and collectively, the "Released Parties"), of and from any and all actions, causes of action, claims, suits, debts, disputes, controversies, judgments, remedies, demands, damages and liabilities, of any nature whatsoever, in law, at equity or otherwise, whether direct, derivative or otherwise, fixed or contingent, currently known or unknown (collectively, "Claims"), which may be asserted against any of the Released Parties or which any GP Member, LLC 2 Member or Releasor Related Party now has, claims to have or ever could assert, either for themselves or otherwise for or on behalf of any other person or entity, arising out of or in connection with the negotiation, execution of or consummation of the transactions contemplated by the Exchange Agreement, including but not limited to the aggregate number of Consideration Units received by the General Partner in connection with such transactions and the subsequent Distribution to such GP Member or LLC 2 Member of the number of Consideration Units set forth on such GP Member's or LLC 2 Member's individual 3 Appendix A hereto in complete satisfaction of all obligations or any other sums due to such GP Member or LLC 2 Member with respect to his, her or its Membership Interest(s) except the Retained Interest (in the case of Mark A. Alexander); (ii) release, surrender, acquit and forever discharge each of the members of the Board of Managers and officers of the General Partner and LLC 2 for any prior actions or failures to act by them in their capacities as such; and (iii) covenant to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Released Party, based upon any matter purported to be Released hereby. 5. Lockups. For a period of two years from the date of Closing, each of Messrs. Mark A. Alexander and Michael J. Dunn, Jr. shall not Transfer any of the Consideration Units received by him in the Distribution except: (i) to a family member, or trust for the benefit of a family member, of such individual who agrees to be bound by this Section 5, the next to last sentence of Section 1 and Section 6; (ii) with the prior written consent of the Board of Supervisors of the MLP; (iii) pursuant to a Change of Control (as defined in the Exchange Agreement); (iv) by will or the laws of intestacy to such person's legal representative, heir or legatee; or (v) if such person is a partnership or corporation or similar entity, a distribution to partners or stockholders, but subject to the terms of this Section 5, the next to last sentence of Section 1 and Section 6. For a period of ninety (90) days from the date of Closing, all other GP Members and LLC 2 Members shall not Transfer any of the Consideration Units received by them in the Distribution except under the circumstances described in clauses (i) through (v) of the preceding sentence and except that LLC 2 may distribute its portion of such Consideration Units to its members as contemplated by Section 1. For a period of two years from the date of Closing, each of the GP Members and LLC 2 Members hereby agrees to notify the General Counsel of the MLP each time that he, she or it Transfers any or all of his, her or its Consideration Units. Each of the GP Members and LLC 2 Members hereby consents to the placing of stop transfer instructions with the transfer agent for the Common Units by the MLP on his, her or its Consideration Units for a period equal to his, her or its respective lockup period, beginning on the date of Closing. For purposes of this Section 5, "Transfer" shall mean (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer, whether directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, or (ii) enter into any swap or any other arrangement or any transaction that transfers to another, in whole or in part, directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, any of the economic consequences of ownership, whether any such swap or transaction is to be settled by delivery of Common Units or other securities, in cash or otherwise. 6. Registration Statement. Each of the GP Members and LLC 2 Members hereby (i) consents to the inclusion in the Registration Statement of his or her name and any other information as may be required to be included therein under the Securities Act and the rules and regulations thereunder, (ii) agrees to provide the MLP with any such information as the MLP requires and may reasonably request for this purpose and (iii) represents that any such information provided to the MLP for such purpose shall be true and correct as of the date provided. 4 7. Intentionally Omitted. 8. Fees and Expenses. Mark A. Alexander hereby agrees to pay the fees and expenses owed by the General Partner to its financial advisor, Redwall Partners, a division of RP&C International (Securities) Inc. The legal fees and expenses of the General Partner incurred in connection with the transactions contemplated by this Agreement and the Exchange Agreement shall be paid in the following manner: the Board of Managers of the General Partner shall have the discretion to withhold all or a portion of the quarterly distribution scheduled to be paid to the General Partner and then to be distributed by the General Partner to the GP Members and, at the direction of LLC 2, to the LLC 2 Members in August 2006 and November 2006 and to use such funds to pay such legal expenses. Any funds remaining after the payment of such legal expenses shall be paid to each of the GP Members (including LLC 2) and by LLC 2 to the LLC 2 Members in an amount based upon his, her or its combined profits interests in the General Partner and LLC 2. If, however, such funds are not sufficient to pay such legal expenses, each of the GP Members and LLC 2 Members will reimburse the General Partner for any such remaining unpaid legal expenses in an amount based upon his, her or its combined profits interests in the General Partner and LLC 2. 9. Certain State Taxes Imposed On the General Partner. a. The MLP or the OLP shall pay or reimburse Mark A. Alexander as the sole member of the General Partner following the Closing for taxes (including, without limitation, the State of Kentucky corporation tax, the State of California tax return filing fee, the state of Rhode Island minimum tax and the state of Tennessee single member LLC excise tax), imposed upon the General Partner by any state (other than a state in which Mr. Alexander resides) except to the extent that such taxes are attributable to activities or income of the General Partner that are unrelated to (a) its ownership of the Retained Interest or (b) its status as General Partner of the MLP. b. Following the Closing, the General Partner shall continue to be entitled to use the tax department services of the OLP and the services of the MLP's accounting firm or tax advisors, at no cost to the General Partner, consistent with past practices. 10. Additional Signatories. Subsequent to the execution of this Agreement, each of the General Partner and LLC 2 shall use its commercially reasonable efforts to obtain an executed counterpart of this Agreement from each member of the General Partner and LLC 2 who is not a signatory hereto as of the date of this Agreement. Upon executing and delivering a counterpart of this Agreement, each such GP Member or LLC 2 Member shall have the same rights and assume the same obligations he or she would have had he or she had executed and delivered this Agreement concurrently with the execution and delivery of this Agreement by the GP Members and LLC 2 Members who executed and delivered this Agreement on the date first written above. 11. Distribution Deliveries. Upon the Distribution, the General Partner shall deliver, or cause to be delivered, to each of the GP Members, and 5 immediately thereafter LLC 2 shall deliver, or cause to be delivered, to each of the LLC 2 Members, duly endorsed certificates representing the number of Consideration Units to be delivered to him, her or it as set forth on his, her or its individual Appendix A hereto, which has been determined in accordance with the formula set forth on such Appendix A, or, alternatively, by book entry. 12. Automatic Change in Form of Transaction. a. Immediately following the execution of this Agreement, Mark A. Alexander, Michael J. Dunn, Jr., and Robert M. Plante, who are currently all of the members of the Board of Managers of the General Partner, shall use their commercially reasonable efforts to obtain an executed counterpart of this Agreement from each of the members of the General Partner and LLC 2. In the event that any member of the General Partner has not executed and delivered a counterpart of this Agreement prior to the Closing, notwithstanding anything to the contrary contained in this Agreement, the General Partner shall not distribute any of the Consideration Units to its members (including LLC 2), except in connection with, and in the form of, the transactions described in this Section 12. b. In the event that, not later than five business days prior to the date of the MLP's 2006 Tri-Annual Meeting, any member of the General Partner has not executed and delivered a counterpart of the Agreement, the General Partner shall form a wholly-owned subsidiary in the form of a Delaware limited liability company, which, at the Closing (unless this Agreement has been signed by all such members), will be merged with and into the General Partner, with the General Partner as the surviving entity in such merger (the "General Partner Merger"). In the General Partner Merger, the holders of limited liability company interests in the General Partner shall receive the Consideration Units in exchange for their limited liability company interests in the General Partner (except for the Retained Interest of Mark Alexander) in accordance with the formula set forth in this Agreement, and their limited liability company interests in the General Partner shall be cancelled (except for the Retained Interest of Mark Alexander). The exchange of Consideration Units pursuant to the General Partner Merger shall be deemed a Distribution for all purposes of this Agreement. c. The General Partner agrees to enter into and to cause its subsidiary to enter into, an agreement and plan of merger, and to execute, deliver and file a certificate of merger and all other appropriate documentation to consummate the General Partner Merger. The GP Members by their signatures hereto, who collectively own a majority of the outstanding limited liability company interests in the General Partner, hereby approve the General Partner Merger, if required, in accordance with the terms and provisions of the operating agreement of the General Partner and agree to take, or cause the General Partner to take, any and all other actions necessary to authorize the General Partner and its subsidiary to enter into, deliver and perform its obligations under, the agreements and other documentation necessary to consummate the General Partner Merger. The terms and provisions of all documentation required under this Section 12 for the General Partner Merger shall be subject to the reasonable approval of the Board of Supervisors of the MLP. 6 13. Termination. This Agreement and the rights and obligations of the parties hereto shall automatically terminate and be of no further force and effect upon termination of the Exchange Agreement in accordance with its terms. 14. Miscellaneous. a. Amendments and Waivers. Amendments or modifications to this Agreement may only be made, and compliance with any term, covenant, agreement, condition or provision set forth herein may only be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon the written consent of each of the parties hereto, except that, no consent of the GP Members or LLC 2 Members shall be required if such amendment or modification has been approved by the Board of Managers of the General Partner, other than as to any amendments or modifications relating to the Consideration Units, which shall require approval of a Majority in Interest of the members of the General Partner and, if applicable, the members of LLC 2. Any action to be taken hereunder at the discretion of the MLP or the Board of Supervisors of the MLP shall be taken by the Audit Committee of the Board of the Supervisors of the MLP. b. Further Assurances. Each of the GP Members and LLC 2 Members hereby agrees that he, she or it shall not Transfer any of his, her or its Membership Interest(s) (whether directly or indirectly, by merger, consolidation or otherwise) from and after the date hereof except in accordance with this Agreement. From time to time, as and when requested by the MLP or the OLP, the General Partner, LLC 2, the GP Members and LLC 2 Members shall execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement and the Exchange Agreement. c. Entire Agreement. This Agreement and the Appendices hereto constitute the full and complete agreement of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. d. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon the earlier of (i) delivery thereof if by hand; (ii) receipt if sent by mail (registered or certified mail, postage prepaid, return receipt requested); (iii) the second business day after deposit if sent by a recognized overnight delivery service; or (iv) transmission if sent by telecopy or facsimile transmission (with request of assurance of receipt in a manner customary for communication of such type) as follows: If to the MLP: Suburban Propane Partners, L.P. 240 Route 10 West Whippany, New Jersey 07981 Attn: Paul Abel, General Counsel and Secretary 7 Facsimile No.: (973) 515-5982 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ellen J. Odoner, Esq. Ted S. Waksman, Esq. Facsimile No.: (212) 310-8007 If to the OLP: Suburban Propane, L.P. 240 Route 10 West Whippany, New Jersey 07981 Attn: Paul Abel, General Counsel and Secretary Facsimile No.: (973) 515-5982 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ellen J. Odoner, Esq. Ted S. Waksman, Esq. Facsimile No.: (212) 310-8007 If to the General Partner: Suburban Energy Services Group LLC 240 Route 10 West Whippany, New Jersey 07981 Attn: Mark A. Alexander Facsimile No.: (973) 503-9995 with a copy to: Cadwalader, Wickersham & Taft LLP One World Financial Center New York, NY 10281 Attention: Dennis J. Block, Esq. Facsimile No.: (212) 504-6666 If to the GP Members: c/o Suburban Energy Services Group LLC 240 Route 10 West 8 Whippany, New Jersey 07981 Attn: Mark A. Alexander Facsimile No.: (973) 503-9995 If to LLC 2: Suburban Energy Membership LLC 240 Route 10 West Whippany, New Jersey 07981 Attn: Mark A. Alexander Facsimile No.: (973) 503-9995 with a copy to: Cadwalader, Wickersham & Taft LLP One World Financial Center New York, NY 10281 Attention: Dennis J. Block, Esq. Facsimile No.: (212) 504-6666 If to the LLC 2 Members: c/o Suburban Energy Membership LLC 240 Route 10 West Whippany, New Jersey 07981 Attn: Mark A. Alexander Facsimile No.: (973) 503-9995 e. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflict of laws rules thereof. f. Assignment. This Agreement shall be binding upon the MLP, the OLP, the General Partner, each of the GP Members, LLC 2 and each of the LLC 2 Members and each of their respective successors and permitted assigns. This Agreement may not be assigned by any party hereto without the consent of the other parties hereto. g. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. h. Headings. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 9 i. Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions shall not in any way be affected or impaired thereby. [Signature Page Follows] 10 IN WITNESS WHEREOF, the parties have executed this Distribution, Release and Lockup Agreement as of the date first written above. SUBURBAN PROPANE PARTNERS, L.P. By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chief Executive Officer SUBURBAN PROPANE, L.P. By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chief Executive Officer SUBURBAN ENERGY SERVICES GROUP LLC By: /s/ MARK A. ALEXANDER ------------------------------- Name: Mark A. Alexander Title: Chairman SUBURBAN ENERGY MEMBERSHIP LLC By: /s/ MICHAEL J. DUNN, JR. ------------------------------- Name: Michael J. Dunn, Jr. Title: Member SUBURBAN ENERGY MEMBERSHIP LLC, AS A GP MEMBER By: /s/ MICHAEL J. DUNN, JR. ------------------------------- Name: Michael J. Dunn, Jr. Title: Member 11 GP MEMBERS: /s/ MARK A. ALEXANDER ----------------------------------- Name: Mark A. Alexander /s/ MICHAEL J. DUNN, JR. ----------------------------------- Name: Michael J. Dunn, Jr. /s/ MICHAEL M. KEATING ----------------------------------- Name: Michael M. Keating /s/ JEFFREY S. JOLLY ----------------------------------- Name: Jeffrey S. Jolly /s/ RUSSELL T. RUPP ----------------------------------- Name: Russell T. Rupp /s/ ROBERT PLANTE ----------------------------------- Name: Robert Plante /s/ MARK ANTON II ----------------------------------- Name: Mark Anton II /s/ JANICE MEOLA SOKOL ----------------------------------- Name: Janice Meola Sokol /s/ DOUGLAS BRINKWORTH ----------------------------------- Name: Douglas Brinkworth /s/ ELMER DANTE ----------------------------------- Name: Elmer Dante /s/ NEIL SCANLON ----------------------------------- Name: Neil Scanlon /s/ DAVIN D'AMBROSIO ----------------------------------- Name: Davin D'Ambrosio /s/ HELENE FISCHER ----------------------------------- Name: Helene Fischer /s/ ALAN SKOLNIK ----------------------------------- Name: Alan Skolnik 12 LLC 2 MEMBERS: /s/ MICHAEL J. DUNN, JR. ----------------------------------- Name: Michael J. Dunn, Jr. /s/ MICHAEL M. KEATING ----------------------------------- Name: Michael M. Keating /s/ JEFFREY S. JOLLY ----------------------------------- Name: Jeffrey S. Jolly /s/ MARK ANTON II ----------------------------------- Name: Mark Anton II /s/ JANICE MEOLA SOKOL ----------------------------------- Name: Janice Meola Sokol /s/ DOUGLAS BRINKWORTH ----------------------------------- Name: Douglas Brinkworth /s/ ELMER DANTE ----------------------------------- Name: Elmer Dante /s/ NEIL SCANLON ----------------------------------- Name: Neil Scanlon 13 EX-99 4 mm7-2806_8ke991.txt EX.99.1 - PRESS RELEASE EXHIBIT 99.1 ------------ NEWS RELEASE Contact: Robert M. Plante Vice President & Chief Financial Officer P.O. Box 206, Whippany, NJ 07981-0206 Phone: 973-503-9252 - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE SUBURBAN PROPANE PARTNERS, L.P. ANNOUNCES AGREEMENT TO ACQUIRE ITS GENERAL PARTNER'S INTERESTS AND DECLARES $0.10 PER COMMON UNIT INCREASE IN ANNUALIZED DISTRIBUTION RATE WHIPPANY, NEW JERSEY, JULY 28, 2006 -- Suburban Propane Partners, L.P. (the "Partnership") (NYSE: SPH), a nationwide marketer of propane gas, fuel oil and related products and services, today announced that it has entered into an agreement with the Partnership's general partner, Suburban Energy Services Group LLC (the "General Partner"), for the acquisition of the General Partner's incentive distribution rights ("IDRs"), as well as its general partnership interests in both the Partnership and its operating partnership, in exchange for 2,300,000 newly issued Common Units (the "Proposed Transaction"). The General Partner is majority-owned by senior management of the Partnership. The Partnership also declared the eleventh increase in its quarterly distribution from $0.6375 to $0.6625 per Common Unit. This increase equates to $0.10 per Common Unit annualized to $2.65 per Common Unit. The quarterly distribution at this increased level will be payable in respect of the fourth quarter of fiscal 2006 on November 14, 2006 to Common Unitholders of record on November 7, 2006. The business strategy of the Partnership is to deliver increasing value to its Unitholders through initiatives, both internal and external, that are directed at achieving sustainable profitable growth and increased quarterly distributions. Including this most recent increase to an annualized rate of $2.65 per Common Unit, the Partnership has raised its distribution eleven times since its recapitalization in 1999 -- an increase of 32.5% in the annualized rate. With the proposed elimination of the General Partner's IDRs, which currently provide the General Partner with a 15% share of future distribution increases, 100% of all future distribution increases will inure to the benefit of the Common Unitholders. In announcing the Proposed Transaction, Chairman John Hoyt Stookey stated, "Our Board believes that the Proposed Transaction will more nearly conform the Partnership's capital structure to that of a conventional corporation and will lower its future cost of capital. In addition, the interests of senior management in the Partnership will be entirely in the form of Common Units, further aligning the interests of management with those of the Common Unitholders." Chief Executive Officer Mark A. Alexander added, "With this transaction, the Board of Supervisors and the General Partner have taken a significant step in simplifying our capital structure for the benefit of our Unitholders and in support of our long-term growth strategies. Unlike most other publicly-traded partnerships, the dilutive effect of our General Partner's disproportionate 15% share of future distribution growth will be completely eliminated in exchange for approximately 7% of the total Common Units to be outstanding. As a result, our Common Unitholders will receive the benefit of 100% of all future growth opportunities. Additionally, with our second increase this year we have raised the level of our annualized distribution rate by a total of $0.20 per Common Unit to $2.65 per Common Unit." Consummation of the Proposed Transaction is subject to certain customary conditions, including the approval of the Proposed Transaction and amendments to the Partnership's partnership agreement by the Partnership's Common Unitholders at the Partnership's Tri-Annual Meeting, which is expected to be held during the fourth calendar quarter of 2006. Upon consummation of the Proposed Transaction, Suburban Energy Services Group LLC will remain the general partner of both the Partnership and its operating partnership with no economic interest in future cash distributions. Upon consummation of the Proposed Transaction, the General Partner will distribute the Common Units it receives in the transaction to its members, who have agreed to certain retention requirements. ADDITIONAL INFORMATION In connection with the Proposed Transaction, the Partnership will file a proxy statement with the Securities and Exchange Commission. COMMON UNITHOLDERS OF SUBURBAN ARE URGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE PROXY STATEMENT) REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Suburban's Common Unitholders will be able to obtain a free copy of the proxy statement, as well as other filings containing information about the Partnership, without charge, at the SEC's Internet site (http://www.sec.gov). Copies of the proxy statement and the filings with the SEC that will be incorporated by reference in the proxy statement can also be obtained, without charge, by directing a request to Suburban Propane Partners, L.P., 240 Route 10 West, P.O. Box 206, Whippany, NJ 07981-0206, Attention: Investor Relations, Telephone: 973-887-5300. PARTICIPANTS IN THE SOLICITATION The Partnership and its Board of Supervisors and executive officers may be deemed to be participants in the solicitation of proxies from the Common Unitholders of Suburban in connection with the proposed transaction. Information regarding the special interests of these supervisors and executive officers in the transaction will be included in the proxy statement referred to above. Additional information regarding the supervisors and executive officers of the Partnership is also included in Amendment No. 1 on Form 10-K/A to Suburban's Annual Report on Form 10-K for the fiscal year ended September 24, 2005, which amendment was filed with the SEC on January 20, 2006. These documents are available free of charge at the SEC's website (http://www.sec.gov) and from Investor Relations at Suburban at the address set forth above. 2 Suburban Propane Partners, L.P. is a publicly traded master limited partnership listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, Suburban has been in the customer service business since 1928. The Partnership serves the energy needs of approximately 1,000,000 residential, commercial, industrial and agricultural customers through more than 370 locations in 30 states. This press release contains certain forward-looking statements relating to future business expectations and financial condition and results of operations of the Partnership, based on management's current good faith expectations and beliefs concerning future developments. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such forward-looking statements, including the following: o The impact of weather conditions on the demand for propane, fuel oil and other refined fuels, natural gas and electricity; o Fluctuations in the unit cost of propane, fuel oil and other refined fuels and natural gas, and the impact of price increases on customer conservation; o The ability of the Partnership to compete with other suppliers of propane, fuel oil and other energy sources; o The impact on the price and supply of propane, fuel oil and other refined fuels from the political, military or economic instability of the oil producing nations, global terrorism and other general economic conditions; o The ability of the Partnership to acquire and maintain reliable transportation for its propane, fuel oil and other refined fuels; o The ability of the Partnership to retain customers; o The impact of energy efficiency and technology advances on the demand for propane and fuel oil; o The ability of management to continue to control expenses including the results of our recent field realignment initiative; o The impact of changes in applicable statutes and government regulations, or their interpretations, including those relating to the environment and global warming and other regulatory developments on the Partnership's business; o The impact of operating hazards that could adversely affect the Partnership's operating results to the extent not covered by insurance; o The impact of legal proceedings on the Partnership's business; and o The Partnership's ability to integrate acquired businesses successfully. Some of these risks and uncertainties are discussed in more detail in the Partnership's Annual Report on Form 10-K for its fiscal year ended September 24, 2005 and other periodic reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's view only as of the date made. The Partnership undertakes no obligation to update any forward-looking statement. -----END PRIVACY-ENHANCED MESSAGE-----