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EXHIBIT 2.1

 

AGREEMENT AND PLAN OF MERGER

 

AND

 

MEMBERSHIP INTEREST TRANSFER AGREEMENT

 

among

 

PETROLOGISTICS LP,

 

PETROLOGISTICS GP LLC,

 

PROPYLENE HOLDINGS, LLC,

 

FLINT HILLS RESOURCES, LLC,

 

and

 

FHR PROPYLENE, LLC,

Dated as of May 27, 2014

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TABLE OF CONTENTS

 

 

			Page
ARTICLE I           THE MERGER; THE GP EQUITY TRANSFER			2
	Section 1.1	The Merger	2
	Section 1.2	The GP Equity Transfer	2
	Section 1.3	Closing	2
	Section 1.4	Effects of the Merger	2
	Section 1.5	Organizational Documents of the Surviving Entity	3
ARTICLE II          EFFECT ON UNITS; TRANSFER OF GP EQUITY INTEREST			3
	Section 2.1	Effect of Merger	3
	Section 2.2	Exchange of Book-Entry Units	4
	Section 2.3	Treatment of Phantom Units	6
	Section 2.4	Distributions	6
	Section 2.5	Withholding Taxes	7
	Section 2.6	Adjustments	7
	Section 2.7	No Dissenters’ Rights	7
	Section 2.8	GP Equity Transfer Covenants	7
ARTICLE III         REPRESENTATIONS AND WARRANTIES OF THE MLP ENTITIES			8
	Section 3.1	Organization	8
	Section 3.2	Capitalization	8
	Section 3.3	Authorization	10
	Section 3.4	Noncontravention	10
	Section 3.5	Governmental Approvals	11
	Section 3.6	MLP SEC Documents; Undisclosed Liabilities	11
	Section 3.7	Absence of Certain Changes or Events	13
	Section 3.8	Legal Proceedings	14
	Section 3.9	Compliance with Laws; Permits	14
	Section 3.10	Prohibited Payments	15
	Section 3.11	Export Controls	16
	Section 3.12	Antitrust Laws	16
	Section 3.13	Tax Matters	17
	Section 3.14	Employee Benefits	19

 

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TABLE OF CONTENTS

(continued)

 

			Page
	Section 3.15	Labor Matters	21
	Section 3.16	Environmental Matters	22
	Section 3.17	Contracts	22
	Section 3.18	Real Property and Personal Property	25
	Section 3.19	Intellectual Property	26
	Section 3.20	Insurance	27
	Section 3.21	Customers and Suppliers	27
	Section 3.22	Related Party Transactions	28
	Section 3.23	Investment Company Act	28
	Section 3.24	Information Supplied	28
	Section 3.25	Takeover Laws	28
	Section 3.26	Opinion of Financial Advisors	29
	Section 3.27	Brokers	29
ARTICLE IV         REPRESENTATIONS AND WARRANTIES OF GP HOLDINGS AND THE MLP ENTITIES			29
	Section 4.1	Organization	29
	Section 4.2	Capitalization of MLP GP	30
	Section 4.3	Authorization	30
	Section 4.4	Noncontravention	30
	Section 4.5	Governmental Approvals	31
	Section 4.6	MLP GP	31
	Section 4.7	Acknowledgement by MLP Entities and GP Holdings	31
ARTICLE V          REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB			32
	Section 5.1	Organization	32
	Section 5.2	Capitalization of Merger Sub	32
	Section 5.3	Authorization	32
	Section 5.4	Noncontravention	33
	Section 5.5	Governmental Filings	33
	Section 5.6	Legal Proceedings	34
	Section 5.7	Information Supplied	34

 

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TABLE OF CONTENTS

(continued)

 

			Page
	Section 5.8	Available Funds	34
	Section 5.9	Brokers and Finders	34
	Section 5.10	Acknowledgement by Parent	34
ARTICLE VI         ADDITIONAL COVENANTS AND AGREEMENTS			35
	Section 6.1	Written Consent; Preparation of the Information Statement	35
	Section 6.2	Ordinary Course of Business	36
	Section 6.3	Interim Operations	36
	Section 6.4	No Solicitation or Withdrawal of Recommendation	39
	Section 6.5	Regulatory and Other Authorizations	45
	Section 6.6	Public Announcements	46
	Section 6.7	Access to Information; Confidentiality	46
	Section 6.8	Notification of Certain Matters	48
	Section 6.9	Indemnification and Insurance	48
	Section 6.10	Transaction Litigation	49
	Section 6.11	Cooperation Regarding MLP Debt	49
	Section 6.12	Fees and Expenses	50
	Section 6.13	Employee Benefits	50
	Section 6.14	Termination of Trading and Deregistration	52
	Section 6.15	Takeover Laws	52
	Section 6.16	Section 16 Matters	52
	Section 6.17	FIRPTA Certificates	52
	Section 6.18	Pre-Closing Tax Matters	53
	Section 6.19	Related Party Transactions	53
ARTICLE VII        CONDITIONS PRECEDENT			54
	Section 7.1	Conditions to Each Party’s Obligation to Effect the Transactions	54
	Section 7.2	Conditions to Obligations of Parent and Merger Sub to Effect the Transactions	54
	Section 7.3	Conditions to Obligations of the MLP Entities and GP Holdings to Effect the Transactions	56
	Section 7.4	Frustration of Closing Conditions	57

 

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TABLE OF CONTENTS

(continued)

 

			Page
ARTICLE VIII      TERMINATION			57
	Section 8.1	Termination	57
	Section 8.2	Effect of Termination	59
ARTICLE IX         MISCELLANEOUS			62
	Section 9.1	No Survival, Etc	62
	Section 9.2	Amendment or Modification	62
	Section 9.3	Extension of Time, Waiver, Etc	62
	Section 9.4	Assignment	62
	Section 9.5	Counterparts	63
	Section 9.6	Entire Agreement	63
	Section 9.7	No Third-Party Beneficiaries	63
	Section 9.8	Governing Law; Jurisdiction; Waiver of Jury Trial	63
	Section 9.9	Specific Enforcement	64
	Section 9.10	Notices	65
	Section 9.11	Severability	66
	Section 9.12	Construction	66
	Section 9.13	Non-Recourse	67
	Section 9.14	Obligations of Parent and of MLP	67
	Section 9.15	Tax Treatment	68
	Section 9.16	Definitions	68

 

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INDEX OF DEFINED TERMS

 

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AGREEMENT AND PLAN OF MERGER

AND

MEMBERSHIP INTEREST TRANSFER AGREEMENT

 

This AGREEMENT AND PLAN OF MERGER AND MEMBERSHIP INTEREST TRANSFER AGREEMENT, dated as of May 27, 2014 (this “Agreement”), is by and among PetroLogistics LP, a Delaware limited partnership (“MLP”), PetroLogistics GP LLC, a Delaware limited liability company and the general partner of MLP (“MLP GP” and, together with MLP, the “MLP Entities”), Propylene Holdings LLC, a Delaware limited liability company (“GP Holdings”), Flint Hills Resources, LLC, a Delaware limited liability company (“Parent”), and FHR Propylene, LLC, a Delaware limited liability company and Subsidiary of Parent (“Merger Sub” and, together with Parent, the “Parent Entities”).  MLP, MLP GP, GP Holdings, Parent, and Merger Sub are sometimes referred to individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

 

 

 

 

 

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NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

 

ARTICLE I

 

 

 

 

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ARTICLE II

 

 

 

 

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ARTICLE III

 

Except as disclosed in (a) the MLP SEC Documents filed with the SEC on or after December 31, 2013 and publicly available at least 24 hours prior to the date of this Agreement and only as and to the extent disclosed therein (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section relating to forward-looking statements and any other disclosures included therein to the extent they are primarily predictive or forward-looking in nature) or (b) the corresponding sections of the disclosure letter delivered by MLP to Parent (the “MLP Disclosure Letter”) prior to the execution of this Agreement (or disclosed in any other section, subsection or clause of the MLP Disclosure Letter if it is reasonably apparent from the face of such disclosure that such disclosure will be deemed to be disclosed with respect to any other section, subsection or clause of this Agreement), MLP and MLP GP jointly and severally represent and warrant to Parent and Merger Sub as follows:

 

 

 

 

 

 

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ARTICLE IV

 

Except as disclosed in the corresponding sections of the MLP Disclosure Letter prior to the execution of this Agreement (or disclosed in any other section, subsection or clause of the MLP Disclosure Letter if it is reasonably apparent from the face of such disclosure that such disclosure will be deemed to be disclosed with respect to any other section, subsection or clause of this Agreement), GP Holdings and the MLP Entities, jointly and severally, hereby represent and warrant to Parent and Merger Sub as follows:

 

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ARTICLE V

 

Parent and Merger Sub, jointly and severally, hereby represent and warrant to the MLP Entities and GP Holdings as follows:

 

 

 

 

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ARTICLE VI

 

 

 

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provided that the making of any determination of the MLP GP Board (or any committee thereof) to provide, or the provision of, a Superior Proposal Notice or an Intervening Event Notice in compliance with the terms of this Agreement shall not, in and of itself, be deemed a Withdrawal of Recommendation.

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ARTICLE VII

 

 

 

 

 

 

 

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ARTICLE VIII

 

 

 

 

 

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ARTICLE IX

 

 

 

 

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If to Parent, or Merger Sub, to:

Flint Hills Resources, LLC

4111 East 37^th Street North

Wichita, Kansas 67220

Fax No.: (316) 828-8245

 

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

Koch Companies Public Sector, LLC

4111 East 37^th Street North

Wichita, Kansas 67220

Fax No.: (316) 828-8602

and to:

Jones Day

1420 Peachtree Street

Atlanta, Georgia 30309

Fax No.: (404) 581-8330

Troy B. Lewis

 

If to MLP, MLP GP or GP Holdings

PetroLogistics LP

600 Travis

Suite 3250

Houston, Texas 77002

Fax No.: (713) 255-5991

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

 

Weil, Gotshal & Manges LLP

200 Crescent Court

Suite 300

Dallas, Texas 75201

Fax No.: (214) 746-7777

 

or to such other address as will be furnished in writing by any such Party to the other Party in accordance with the provisions of this Section 9.10.

 

 

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“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person.  For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

 

“Agreed Merger Consideration Differential” means the value differential by which the Public Merger Consideration to be paid to the Public Unitholders exceeds the Sponsor Merger Consideration to be paid to the Sponsors and Founding Unitholders on the terms and subject to the conditions of this Agreement (i.e., the $2.00 per Common Unit spread between the Public Merger Consideration and the Sponsor Merger Consideration).

 

“Alternative Proposal” means any proposal or offer made by a Person (other than Parent or Merger Sub) relating to (a) any direct or indirect acquisition or purchase, in a single transaction or a series of related transactions, of (i) 5% or more of the consolidated total assets of the MLP Group Entities, taken as a whole, or (ii) 5% or more of any class of outstanding Equity Interests of any MLP Group Entity, (b) any tender offer or exchange offer that if consummated would result in any Person beneficially owning, directly or indirectly, 5% or more of any class of outstanding Equity Interests of any MLP Group Entity, (c) any merger, consolidation, exclusive license, business combination, joint venture, partnership, share exchange or other transaction involving any MLP Group Entity pursuant to which any Person or its holders of Equity Interests would beneficially own, directly or indirectly, 5% or more of any class of outstanding Equity Interests of any MLP Group Entity or the direct or indirect parent of any MLP Group Entity or the surviving entity resulting, directly or indirectly, from any such transaction or (d) concerning any recapitalization, liquidation, dissolution or any other similar transaction involving any MLP Group Entity, in each case, other than the Transactions.  The Parties acknowledge that sales by the Founding Unitholders or the Sponsors of Common Units that occur within 12 months after termination of this Agreement by Parent under Section 8.1(c)(ii) by means of a secondary offering to the public of Common Units that has been registered under the Securities Act will not be deemed to involve an Alternative Proposal for the purposes of this definition.

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“Anti-corruption Laws” means Laws relating to anti-bribery or anti-corruption (governmental or commercial) which apply to the MLP Group Entities, including the FCPA and all other Laws that prohibit the corrupt payment, offer, promise or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any foreign Government Official, foreign government employee or commercial entity to obtain a business advantage.

 

“Antitrust Laws” means the Sherman Antitrust Act, the Clayton Antitrust Act, the HSR Act, the Federal Trade Commission Act of 1914, Council Regulation (EC) No. 139/2004 of 20th January 2004 on the control of concentrations between undertakings, and all other supranational, national, federal, state, county, provincial, municipal, local, foreign statutes and other statutes, rules, regulations, Orders, decrees, administrative and judicial doctrines and all other Laws designed or intended to require advance notification or approval of, or otherwise prohibit, restrict or regulate, a merger or other transaction that may be deemed to have the purpose or effect of monopolizing or restraining trade or lessening competition through merger or acquisition.

 

“Bona Fide Alternative Proposal” means an unsolicited written bona fide Alternative Proposal that was not received or obtained in violation of Section 6.4.

 

“Business Day” means a day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by Law to be closed.

 

“Common Unit” means an equity interest in MLP representing a fractional part of the Partnership Interests of all Limited Partners and having the rights and obligations specified with respect to Common Units in the MLP Partnership Agreement.

 

“Consents” means notices, reports, declarations, submissions or other filings that are required to be made with, or any waivers or Permits required to be obtained from any Governmental Authority or third party.

 

“Contract” means any agreement, commitment, understanding, contract, lease (whether for real or personal property), power of attorney, note, bond, mortgage, indenture, deed of trust, loan, evidence of indebtedness, settlement agreement, franchise agreement, undertaking, covenant not to compete, license, instrument or other legally binding arrangement, whether oral or written.

 

“Criminal Law” means any Law applicable to any MLP Group Entity or by which any property or asset of the MLP Group Entities is bound or affected the violation of which would result, or would reasonably be expected to result, in the imposition of a criminal sentence, criminal penalty or criminal fine or other criminal liability with respect to any MLP Group Entity or any of their respective Representatives (in their capacities as such).

 

“Criminal Penalty” means any criminal penalty, criminal fine or other criminal liability, in each case, imposed upon, or that would reasonably be expected to be imposed upon, any MLP Group Entity or any of their respective directors, managers, officers or employees (in his or her capacity as such) involving (a) a criminal offense where the maximum statutory fine is $10,000,000 or more per occurrence or series of related occurrences, (b) a felony criminal jail sentence, where the statutory maximum sentence of imprisonment is five years or more per occurrence or series of related occurrences as to matters over which the United States has jurisdiction or (c) a criminal jail sentence where the statutory maximum sentence of imprisonment is five years or more per occurrence, or series of related occurrences, as to matters over which jurisdiction is wholly outside of the United States.

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“Derivative Transaction” means any forward, future, hedge, swap, collar, put, call, floor, cap, option or other Contract that is intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in interest rates, basis risk or the price of commodities, including hydrocarbons and produced hydrocarbons, that binds any MLP Group Entity or any of their respective assets.

 

“Divestiture Condition” means (a) any restriction, prohibition or limitation of ownership or operation by Parent or Merger Sub or their respective Affiliates of all or any portion of the businesses or assets of the MLP Group Entities in any manner in any part of the world, (b) any requirement that Parent or Merger Sub or any of their respective Affiliates or any MLP Group Entity sell, divest, hold separate or otherwise dispose of, or enter into a voting trust, proxy or “hold separate” Contract or similar Contract with respect to, all or any portion of their respective businesses or assets or (c) any restriction, prohibition or limitation on the ability of Parent or Merger Sub or any of their respective Affiliates or any MLP Group Entity to conduct their respective businesses, enter into any new line of business or own or operate any of their respective assets, in each case, in any manner in any part of the world.

 

“Divestiture Request” means any request or requirement, whether or not in writing (including electronic communication), by a representative of the Antitrust Division of the Department of Justice, the Bureau of Competition of the Federal Trade Commission or a representative of any comparative non-U.S. Governmental Authority that Parent, Merger Sub, any MLP Group Entity or GP Holdings (or any of their respective Affiliates) offer, accept or agree, or commit to agree, to a Divestiture Condition with respect to one or more specific assets, Contracts, businesses or lines of business as a condition to the clearance or approval of, or consent or waiver with respect to, the Transactions under Antitrust Laws.

 

“DLLCA” means the Delaware Limited Liability Company Act.

 

“DRULPA” means the Delaware Revised Uniform Limited Partnership Act.

 

“Environment” means soil, water (including navigable waters, oceans, streams, ponds, reservoirs, wetlands, surface waters, ground waters, drinking waters and water vapor), land, stream sediments, surface or subsurface strata, ambient air, indoor air, noise, plant life, animal life and all other environmental media or natural resources, including any physical structure required by Environmental Laws.

 

“Environmental Laws” means any Laws, Permits, or Orders which regulate, impose liability or responsibility for or otherwise relate to (a) the protection, preservation, clean up or restoration of the Environment, or (b) the registration, generation, labeling, manufacture, handling, use, treatment, placing on the market, storage, transportation, transboundary movement, presence, collection, disposal, Release or threatened Release of any Hazardous Materials.

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“Environmental Permits” means any Permits required under any Environmental Law.

 

“Equity Interest” means any share, capital stock, partnership, limited liability company, membership or similar interest in any Person.

 

“Equity Security” means any (a) Equity Interest or (b) Right.

 

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

 

“ERISA Affiliate” means, with respect to any Person, any trade or business, whether or not incorporated, that together with such Person is a single employer for purpose of Section 414(b), (c), (m) or (o) of the Code.

 

“Exchange Act” means the Securities Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Facility” means the MLP Group Entities’ facility located at 9822 La Porte Freeway, Houston, Texas 77017.

 

“Founding Unitholders” means David Lumpkins, Nathan Ticatch, DKLF LP, a Texas limited partnership, and U.S. Trust Company of Delaware Trustee of the Ticatch Family 2012 GST Trusts, a trust formed under the Laws of the State of Delaware.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“General Partner Interest” means the “General Partner Interest” (as defined in the MLP Partnership Agreement).

 

“Government Official” means (a) any official, officer, employee or representative of, or any Person acting in an official capacity for or on behalf of, any Governmental Authority, (b) any political party or party official or candidate for political office or (c) any Person owned, in whole or in part, or controlled by any Person described in the foregoing clauses (a) or (b) of this definition.

 

“Governmental Authority” means any government, court, arbitrator, regulatory or administrative agency, commission or authority or other governmental instrumentality, federal, state or local, domestic, foreign or multinational.

 

“Hazardous Materials” means (a) petroleum, petroleum products and by-products, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, polychlorinated biphenyls, radon gas, mold, greenhouse gasses, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances and (b) any other chemical, material, substance or waste that is regulated by Environmental Laws.

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

 

“Indebtedness” of any Person means:

 

 

 

 

 

but “Indebtedness” does not include (i) accounts payable to trade creditors, or accrued expenses, arising in the ordinary course of business consistent with past practice, in each case, that are not yet due and payable, or are being disputed in good faith, (ii) the endorsement of negotiable instruments for collection in the ordinary course of business or (iii) deferred revenue, unearned revenue, or unearned income, arising in the ordinary course of business consistent with past practice.

 

“Indemnified Person” means any individual who is now, or has been or becomes at any time prior to the Effective Time, an officer, director or manager of any MLP Group Entity.

 

“Indenture” means the Indenture, dated March 28, 2013, by and among MLP, Finance Corp., OpCo, as guarantor thereunder, and Wells Fargo Bank, National Association, as trustee, with respect to the 6.25% senior notes due 2020.

 

“Intellectual Property” means all intellectual property and similar proprietary rights, including (a) trademarks, service marks, trade dress, logos, slogans, trade names and corporate names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same, (b) intellectual property rights in all inventions (whether or not patentable), patents and patent applications, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions, reexaminations and reissues, (c) intellectual property rights in confidential information, trade secrets and know-how, (d) intellectual property rights in copyrightable works of authorship (including intellectual property rights in databases and other compilations of information), copyrights, industrial designs and other design rights, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof, (e) intellectual property rights in databases and other compilations of information and (f) intellectual property rights in computer software.

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“Intervening Event” means any material event, development or change in circumstances that first occurs, arises or becomes known to the MLP Entities or the MLP GP Board after the date of this Agreement, to the extent that such event, development or change in circumstances was not reasonably foreseeable as of or prior to the date of this Agreement; provided, however, that in no event shall the following events, developments or changes in circumstances constitute an Intervening Event:  (a) the receipt, existence or terms of an Alternative Proposal or any matter relating thereto or consequence thereof, (b) any event, development or change (i) generally affecting the United States or global economy or the financial, credit, debt, securities or other capital markets in the United States or any other jurisdiction, including changes in interest rates or currency rates or (ii) in circumstances relating to Parent or Merger Sub or any of their respective Affiliates, (c) any change in Laws, the interpretation thereof or political, legislative or regulatory conditions (i) applicable to any MLP Group Entity or any of their respective properties or assets or (ii) generally affecting the industries in which the MLP Group Entities operate, (d) any development or change generally affecting the industries in which the MLP Group Entities operate, (e) the entry into, or announcement of, this Agreement and the Transactions, (f) acts of war or terrorism (or the escalation of the foregoing) or natural or weather-related disasters or other force majeure events (including hurricanes, floods or earthquakes) and (g) (i) any change in the market price or trading volume of the Common Units or (ii) any MLP Group Entity meeting or exceeding internal or published projections, forecasts or revenue or earnings predictions for any period (provided, however, that the underlying causes of such change or result will not be excluded by this clause (g), except to the extent such underlying causes are otherwise excluded pursuant to any of the foregoing clauses (a) through (f)).

 

“Knowledge” (a) when used with respect to any MLP Entity or GP Holdings, means the actual knowledge of the individuals listed on Section 9.16(a) of the MLP Disclosure Letter and (b) when used with respect to any Parent Entity, means the actual knowledge of the individuals listed on Section 9.16(b) of the MLP Disclosure Letter.

 

“Laws” means any supranational, national, federal, state, county, provincial, municipal, local, foreign or common law, statute, treaty, ordinance, judgment, decree, injunction, writ, regulation, arbitration award or finding, ordinance or other requirements promulgated, adopted or entered into by or with, any Governmental Authority (excluding Permits).

 

“Lien” means any lien, mortgage, pledge, encumbrance, charge, option, right of first refusal, easement, deed of trust, right-of-way, encroachment, or other claim or security interest of any nature, whether voluntarily incurred or arising by operation of Law, including any restriction on the voting of any security and any restriction on the transfer of any security or other asset.

 

“Limited Partner” has the meaning set forth in the MLP Partnership Agreement.

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“Limited Partner Interest” means a “Limited Partnership Interest” as defined in the MLP Partnership Agreement.

 

“Material Leased Real Property” means any real property with respect to which an MLP Group Entity is a party to a Contract for the lease or sub-lease of such real property involving annual payments of more than $100,000.

 

“Merger Related Consideration” means the Public Merger Related Consideration and/or the Sponsor Merger Related Consideration, as applicable.

 

“Merger Related Distribution” means the amount of any distribution declared in respect of each Common Unit and each Phantom Unit as contemplated by Section 6.3(d)(ii).

 

“MLP Benefit Plans” means (a) all “employee benefit plans” (within the meaning of Section 3(3) of ERISA) and (b) all other compensation or employee benefit plans, programs and other agreements, whether or not subject to ERISA, including cash or equity or equity-based, employment, retention, change of control, health, medical, dental, disability, accident, life insurance, vacation, severance, retirement, pension, savings, termination and other employee benefit plans, programs or other agreements, including the MLP Equity Plans, in each case of clauses (a) and (b) that are sponsored, maintained, contributed to or required to be contributed to by any MLP Group Entity for the benefit of current or former employees, individual managers, directors, individual independent contractors or individual consultants of an MLP Group Entity, or with respect to which an MLP Group Entity has any current or contingent liability.

 

“MLP Equity Plans” means any plans of MLP or MLP GP providing for the compensatory grant of awards of Common Units or awards denominated, in whole or in part, in Common Units, including the MLP LTIP, in each case as in effect on the date hereof.

 

“MLP Group Entities” means the MLP Entities and the Subsidiaries of MLP.

 

“MLP Income Tax Returns” means any Tax Returns of MLP or the Limited Partners (including Schedule K-1s) with respect to any period ending on or prior to the Closing Date for Taxes that are measured by net income or total gross receipts.

 

“MLP LTIP” means the PetroLogistics Long-Term Incentive Plan adopted on May 4, 2012.

 

“MLP Material Adverse Effect” means any change, event, effect, occurrence, state of facts or development that, individually or in the aggregate, (a) has had or would reasonably be expected to have a material adverse effect on the business, results of operations, assets, liabilities or condition (financial or otherwise) of the MLP Group Entities, taken as a whole, or (b) has a material adverse effect on the ability of either MLP Entity or GP Holdings to consummate the Transactions or perform its obligations under this Agreement, except, in the case of subsection (a), to the extent an Excluded Matter.  “Excluded Matter” means any: (i) changes, events, effects, occurrences, states of facts or developments generally affecting the United States or global economy or the financial, credit, debt, securities or other capital markets in the United States or any other jurisdiction, including changes in interest rates, (ii) changes in GAAP or the interpretation thereof or changes in Laws, the interpretation thereof or political, legislative or regulatory conditions (A) applicable to any MLP Group Entity or any of their respective properties or assets or (B) generally affecting the industries in which the MLP Group Entities operate, (iii) changes in currency exchange rates, (iv) acts of war or terrorism (or the escalation of the foregoing) or natural or weather-related disasters or other force majeure events (including hurricanes, floods or earthquakes), (v) changes in the market price or trading volume of the Common Units or any failure to meet internal or published projections, forecasts or revenue or earnings predictions for any period, except that the underlying causes of such change or failure will not be excluded by this clause (v), (vi) the entry into, and announcement of, this Agreement and the Transactions, (vii) any Transaction Litigation, (viii) changes, events, effects, occurrences, states of facts or developments generally affecting the prices of oil, gas, natural gas, natural gas liquids, propane or other commodities or (ix) any acts or omissions of any MLP Group Entity or GP Holdings taken pursuant to the express requirements of this Agreement, at the written request of Parent or with prior written consent of Parent after the date of this Agreement, except, in the case of clauses (ii), (iii) and (iv) to the extent disproportionately affecting any MLP Group Entity or GP Holdings when compared to other Persons operating in the same industries.

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“MLP Owned Intellectual Property” means any and all Intellectual Property that is owned by MLP or any of its Subsidiaries.

 

“MLP Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of MLP, dated as of May 3, 2012, as in effect on the date hereof.

 

“MLP Registered Intellectual Property” means any and all MLP Owned Intellectual Property that is the subject of an application, certificate, filing or registration issued, filed with, or recorded by any Governmental Authority, domain name registrar or other officially recognized registrar for Intellectual Property.

 

“MLP SEC Documents” means the Annual Reports on Form 10-K, the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K, forms schedules, certifications, prospectuses, registration statements and other documents required to be filed or furnished by MLP with or to the SEC, as applicable, pursuant to the Exchange Act or the Securities Act.

 

“NYSE” means the New York Stock Exchange.

 

“Orders” means any judgment, order, decision, writ, injunction, decree, stipulation, award, ruling, or other finding or agency requirement of a Governmental Authority, or arbitration award.

 

“Outside Date” means November 27, 2014, or, if extended to a later date pursuant to and in accordance with Section 8.1(b)(i), any such later date.

 

“Parent Financial Advisor” means Goldman, Sachs & Co.

 

“Parent Material Adverse Effect” means any change, event, development, condition, occurrence or effect that has a material adverse effect on the ability of either Parent or Merger Sub to consummate the Transactions or perform their respective obligations under this Agreement.

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“Partnership Interest” means an interest in MLP, which will include the General Partner Interest and Limited Partner Interests.

 

“Permits” means all franchises, authorizations, licenses, registrations, clearances, permits, variances, exceptions, exemptions, consents, certificates and approvals of any Governmental Authority.

 

“Permitted Liens” means (a) Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate Proceedings and for which adequate reserves have been established in accordance with GAAP in MLP’s financial statements included in the MLP SEC Documents, (b) Liens in favor of carriers, warehousemen, repairmen, mechanics, workmen, materialmen, construction or similar liens or encumbrances arising by operation of Law in the ordinary course of business, (c) Liens in respect of any liabilities and obligations reflected in the financial statements of MLP and its Subsidiaries included in or incorporated by reference into the MLP SEC Documents, (d) Liens under MLP’s existing credit facility, (e) any easements, rights-of-way, restrictions, restrictive covenants, rights, leases and other encumbrances on title to any real or personal property asset of any MLP Group Entity, (f) statutory Liens for obligations that are highway, zoning, and building laws, ordinances and regulations on any asset of any MLP Group Entity and (g) any other Liens with respect to any asset of the MLP Group Entities, which, in the case of clauses (e), (f) and (g) would not, on any such asset, materially interfere with the current occupancy or use of such asset by the MLP Group Entities or the conduct of the MLP Group Entities’ respective businesses thereon, (h) Liens imposed or promulgated by applicable Law or any Governmental Authority with respect to the real property, including zoning, building or similar restrictions, (i) all Liens of whatsoever nature affecting the title of the lessor under any lease of real property and/or affecting the title of the grantor of any easement, (j) the Liens or exceptions referred to in the Title Policies and (k) the Liens or exceptions set forth on Section 9.16(c) of the MLP Disclosure Letter.

 

“Person” means an individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity or group (as such term is used in Section 13 of the Exchange Act) of any kind or nature.

 

“Phantom Unit” has the meaning set forth in the MLP LTIP as in effect on the date hereof.

 

“Phantom Unit Consideration” means an amount in cash equal to $14.00 plus the Merger Related Distribution, for each Phantom Unit that is issued and outstanding as of immediately prior to the Effective Time.

 

“Proceeding” means any (a) action, claim, suit, investigation, charge, complaint, review, litigation, audit, inquiry or other hearing or proceeding by or before any Governmental Authority, whether civil, criminal, administrative, investigative or otherwise and whether or not such proceeding results in a formal civil or criminal litigation or regulatory action, (b) arbitration or (c) mediation.

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“Public Merger Consideration” means an amount in cash equal to $14.00, for each Common Unit that is issued and outstanding as of immediately prior to the Effective Time and held by a Public Unitholder.

 

“Public Merger Related Consideration” means an amount in cash equal to the Public Merger Consideration plus the Merger Related Distribution, for each Common Unit that is issued and outstanding as of immediately prior to the Effective Time and held by a Public Unitholder.

 

“Public Unitholders” means all Unitholders other than the Sponsors and the Founding Unitholders.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated May 9, 2012, by and between MLP and David Lumpkins, Nathan Ticatch, LG Propylene LLC and YSOF Propylene Investor, LLC.

 

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the Environment.

 

“Representatives” means employees, investment bankers, attorneys, accountants, and other advisors and representatives.

 

“Rights” means, with respect to any Person, (a) options, warrants, preemptive rights, subscriptions, calls or other rights, convertible securities, exchangeable securities or Contracts of any character obligating such Person (or the general partner of such Person) to issue, transfer or sell any Equity Interest of such Person or any of its Subsidiaries or any securities convertible into or exchangeable for such Equity Interests or (b) contractual obligations of such Person (or the general partner of such Person) to repurchase, redeem or otherwise acquire any Equity Interests in such Person or any of its Subsidiaries or any such securities or Contracts listed in clause (a) of this definition.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Sponsor Merger Consideration” means an amount in cash equal to $12.00, for each Common Unit that is issued and outstanding as of immediately prior to the Effective Time and held by a Sponsor or Founding Unitholder.

 

“Sponsor Merger Related Consideration” means an amount in cash equal to the Sponsor Merger Consideration plus the Merger Related Distribution, for each Common Unit that is issued and outstanding as of immediately prior to the Effective Time and held by a Sponsor or Founding Unitholder.

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“Sponsors” means (i) YSOF Propylene Investor, LLC, a Delaware limited liability company, and the related entities listed on Section 9.16(d)(i) of the MLP Disclosure Letter and (ii) LG Propylene LLC, a Delaware limited liability company, and the related entities listed on Section 9.16(d)(ii) of the MLP Disclosure Letter.

 

“Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the Equity Interests having by their terms ordinary voting power to elect a majority of the board of directors or managers or other individual performing similar functions is directly or indirectly owned or controlled by such Person (either alone or through or together with any other Subsidiary), or that would otherwise be deemed a “subsidiary” under Rule 12b-2 promulgated under the Exchange Act of such Person.

 

“Superior Proposal” means a Bona Fide Alternative Proposal that the MLP GP Board has determined in good faith, after consultation with its outside financial and legal advisors (taking into account the various legal, financial, regulatory and other aspects of such Bona Fide Alternative Proposal, including the financing terms thereof, the nature of the consideration offered, the provisions permitting the payment of distributions by MLP, the expected timing and risk and likelihood of consummation (including as a consequence of the impacts of any Antitrust Law on such Bona Fide Alternative Proposal)), (a) is reasonably likely to be consummated in accordance with its terms (provided, however, that the fact that any requisite vote or consent of the Unitholders that may be required to effect such Bona Fide Alternative Proposal has not yet been obtained shall not be taken into account in determining whether a proposal is reasonably likely to be consummated) and (b) if consummated, would result in a transaction (i) more favorable to each of the Unitholders from a financial point of view than the Transactions (after taking into account any revisions to the terms of the Transactions proposed by Parent, whether pursuant to Section 6.4(d) or otherwise) and (ii) in which the value differential between the consideration to be received by the Public Unitholders in such Bona Fide Alternative Proposal and the consideration to be received by the Sponsors and Founding Unitholders in such Bona Fide Alternative Proposal equals the Agreed Merger Consideration Differential; provided, however, that for purposes of the definition of “Superior Proposal,” the references to “5% or more” in the definition of Alternative Proposal shall be deemed to be references to “more than 95%.”

 

“Takeover Laws” means any state takeover Law or other state Law that purports to limit or restrict business combinations or the ability to acquire or vote Common Units or other Partnership Interests, including any “business combination,” “control share acquisition,” “fair price,” “moratorium” or other similar anti-takeover Law.

 

“Tax” or “Taxes” means any and all federal, state, local or foreign or provincial taxes, charges, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, withholding, property and estimated taxes, customs duties, fees, assessments, escheat or unclaimed property obligations, and charges similar to any of the foregoing, including any and all interest, penalties, fines, additions to tax or additional amounts imposed or required to be collected by any Governmental Authority in connection with respect thereto.

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“Tax Return” means any return, report, election or similar filing (including any attached schedules, supplements and additional or supporting material) filed or required to be filed with respect to Taxes, including any information return, claim for refund, amended return or declaration of estimated Taxes (and including any amendments with respect thereto).

 

“Title Policies” means the (a) Owner’s Policy of Title Insurance issued by Fidelity National Title Insurance Company (Policy No. O 1033003964) and (b) Owner’s Policy of Title Insurance issued by Fidelity National Title Insurance Company (Policy No. O 1033004110).

 

“Transactions” means the Merger, the GP Equity Transfer and the other transactions contemplated by this Agreement.

 

“Unit Majority” has the meaning set forth in the MLP Partnership Agreement.

 

“Unitholder” means a holder of the Common Units.

 

“Unitholder Consent Period” means the period commencing with the execution and delivery of this Agreement and ending at 11:59 p.m. Houston, Texas time on July 6, 2014.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first above written.

 

 

[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND

MEMBERSHIP INTEREST TRANSFER AGREEMENT]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first above written.

 

[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND

MEMBERSHIP INTEREST TRANSFER AGREEMENT]

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[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND

MEMBERSHIP INTEREST TRANSFER AGREEMENT]

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[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND

MEMBERSHIP INTEREST TRANSFER AGREEMENT]

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FORM OF

 

PETROLOGISTICS LP

 

WRITTEN CONSENT OF LIMITED PARTNERS

IN LIEU OF MEETING

May 27, 2014

 

The undersigned (the “Consenting Limited Partners”), each being a Limited Partner of PetroLogistics LP, a Delaware limited partnership (the “Partnership”), and owning the number of Common Units set forth opposite its name on Schedule I hereto, hereby consent in writing, pursuant to Sections 13.11 and 14.3 of the First Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of May 3, 2012 (the “Partnership Agreement”), to the adoption of the following resolutions by written consent in lieu of a meeting of the Limited Partners of the Partnership (this “Consent”):

 

WHEREAS, the Partnership has entered into an Agreement and Plan of Merger and Membership Interest Transfer Agreement, dated as of May 27, 2014 (the “Merger Agreement”), by and among the Partnership, PetroLogistics GP LLC, a Delaware limited liability company and the general partner of the Partnership (“MLP GP”), Propylene Holdings LLC, a Delaware limited liability company (“GP Holdings”), Flint Hills Resources, LLC, a Delaware limited liability company (“Parent”), and FHR Propylene, LLC, a Delaware limited liability company (“Merger Sub”), a copy of which has been provided to the Consenting Limited Partners and is attached hereto as Exhibit A (capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement);

 

WHEREAS, pursuant to the Merger Agreement, (i) Merger Sub will be merged with and into the Partnership, the separate limited liability company existence of Merger Sub will cease, and the Partnership will continue its existence as the surviving entity in the Merger and (ii) GP Holdings will transfer its 100% membership interest in MLP GP to Parent or an Affiliate of Parent, in each case upon the terms and subject to the conditions set forth in the Merger Agreement;

 

WHEREAS, pursuant to the Merger Agreement, at the Effective Time, (i) each Common Unit issued and outstanding as of immediately prior to the Effective Time and held by a Sponsor or Founding Unitholder will be canceled and converted into the right to receive the Sponsor Merger Related Consideration, which will be comprised of $12.00 in cash plus the Merger Related Distribution, (ii) each Common Unit issued and outstanding as of immediately prior to the Effective Time and held by a Public Unitholder will be canceled and converted into the right to receive the Public Merger Related Consideration, which will be comprised of $14.00 in cash plus the Merger Related Distribution and (iii) each Phantom Unit outstanding as of immediately prior to the Effective Time will be canceled and converted into the right to receive the Phantom Unit Consideration, which will be comprised of $14.00 in cash plus the Merger Related Distribution;

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WHEREAS, pursuant to Section 14.3 of the Partnership Agreement, the affirmative vote or written consent of Limited Partners holding a majority of the Outstanding (such term used herein with the meaning ascribed to it in the Partnership Agreement) Common Units is required to approve the Merger Agreement;

 

WHEREAS, as of the date first set forth above, the Consenting Limited Partners together own a majority of the Outstanding Common Units.

 

NOW, THEREFORE, BE IT RESOLVED, that the Merger Agreement and the Transactions are hereby approved; provided, however, that this Consent shall be of no further force or effect following any valid termination of the Merger Agreement in accordance with its terms; and

 

FURTHER RESOLVED, that this Consent is coupled with an interest and is irrevocable.

 

This Consent shall be deposited with the Partnership in care of MLP GP, in its capacity as the general partner of the Partnership, on the date first set forth above, and thereupon filed in the books and records of the Partnership.

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

 

	LIMITED PARTNERS:
	LG PROPYLENE LLC
	Name:	Alan E. Goldberg
	Title:	Executive Manager

	Name:	Robert D. Lindsay
	Title:	Executive Manager

 

[SIGNATURE PAGE TO WRITTEN CONSENT OF LIMITED PARTNERS IN LIEU OF MEETING]

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	YSOF PROPYLENE INVESTOR, LLC
	Name:
	Title:

 

[SIGNATURE PAGE TO WRITTEN CONSENT OF LIMITED PARTNERS IN LIEU OF MEETING]

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	NATHAN L. TICATCH

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	U.S. TRUST COMPANY OF DELAWARE TRUSTEE OF THE TICATCH FAMILY 2012 GST TRUSTS
	Name:
	Title:

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	DAVID LUMPKINS
	DKLF, L.P.
	Name:	David Lumpkins
	Title:	President, DKLF Management, LLC,
	General Partner of DKLF, L.P.

 

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Agreement and Plan of Merger

and Membership Interest Transfer Agreement

 

See attached.

 

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	GP HOLDINGS:
	PROPYLENE HOLDINGS LLC
	Name:
	Title:

	TRANSFEREE:
	[FLINT HILLS RESOURCES, LLC OR ITS AFFILIATE(S)]
	Name:
	Title:

	[Seller]
	By:
	Name:
	Title:

	Signature of Seller

	PetroLogistics GP LLC
	By:
	Name:
	Title: