COLUMBIA ENERGY GROUP
April 5, 1999
National Propane Corporation
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Dear Sirs:
Re: Payment Guaranty
As you are aware, Columbia Propane L.P. (the "Purchaser") has
agreed to purchase all the outstanding units of National Propane Partners, L.P.
and substantially all the outstanding units of National Propane, L.P. (after
such purchase, the "Purchaser OLP") upon the terms and subject to the conditions
set forth in the Purchase Agreement dated as of April 5, 1999 among the
Purchaser, CP Holdings, Inc. ("Purchaser General Partner"), Columbia Propane
Corporation ("Purchaser Holdings"), National Propane Partners, L.P., National
Propane Corporation (the "National MGP"), National Propane SGP, Inc. and Triarc
Companies, Inc. (the "Agreement"). Columbia Energy Group (the "Guarantor") is
the parent of Purchaser General Partner and Purchaser Holdings.
Pursuant to the Agreement, from and after the Closing Date (as
defined in the Agreement), Purchaser Holdings, Purchaser General Partner and
Purchaser OLP (the "Purchaser Indemnitors") have agreed to indemnify the
National MGP (and its successors and any permitted assigns in accordance with
the Agreement) for certain breaches of tax-related covenants under the
Agreement to the extent and in an amount as set forth in Sections 5.2 (the last
paragraph thereof), 5.9 and 9.1(c) and (d) of the Agreement (the "Obligations").
As an inducement to the National MGP to enter into the
Agreement, the Guarantor hereby irrevocably and unconditionally guarantees the
due and punctual payment of all such Obligations of the Purchaser Indemnitors
under the Agreement, subject to the limits (including, without limitation, the
Maximum Amount) set forth herein. Upon any failure by the Purchaser Indemnitors
to pay any of the Obligations, the Guarantor agrees that it will forthwith on
demand pay any such amounts which the Purchaser Indemnitors have failed to pay
the National MGP, at the place and in the manner specified in the Agreement.
This Guaranty is a guaranty of payment and not a guaranty of collection.
Notwithstanding anything in this Guaranty to the contrary, (i)
Guarantor's liability under this Guaranty and the National MGP's right of
recovery under the same shall be limited to the aggregate amount (the "Maximum
Amount") applicable to the period in which any claim for indemnity is made by
the National MGP in accordance with Section 9.4 of the Agreement (the
April 5, 1999
Page 2
"Claim Period"), each as set forth on Exhibit I to this Guaranty, (ii) the
Maximum Amount applicable to any period shall be reduced by any amounts paid by
the Purchaser Indemnitors under the Obligations, and (iii) in no event shall
the Maximum Amount subject to this Guaranty be more than the Maximum Amount in
the first claim period in which a claim for indemnity is made by the National
MGP in accordance with Section 9.4 of the Agreement.
The term of this Guaranty shall be from the Closing Date under the
Agreement to the fifteenth anniversary thereof (the "Expiration Date").
Guarantor's liability hereunder shall be and is specifically limited
to payments expressly required to be made under the Purchaser Indemnitors'
Obligations under the Agreement.
Upon making any payment hereunder, the Guarantor shall be subrogated
to the rights of the National MGP against the Purchaser Indemnitors with
respect to such payment; provided, that the Guarantor shall not enforce any
right or receive any payment by way of subrogation until all of the
Obligations then due shall have been paid in full and the National MGP agrees
to take at Guarantor's expense such steps as the Guarantor may reasonably
request to implement such subrogation. The Guarantor reserves the right to
assert defenses which the Purchaser Indemnitors may have to payment under the
Agreement, other than defenses arising from the bankruptcy or insolvency of any
Purchaser Indemnitor.
No provision of this Guaranty may be amended, supplemented or
modified, nor any of the terms and conditions hereof waived, except by a
written instrument executed by the Guarantor and the National MGP. Neither
party may assign its rights and obligations hereunder without the prior written
consent of the other party, and any such purported assignment without such
written consent will be void.
This Guaranty shall not be construed to create any third party
beneficiary relationship as to or with any person or entity other than the
National MGP (and its successors and any permitted assigns in accordance with
the Agreement).
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE.
April 5, 1999
Page 3
If the foregoing is acceptable to you, please sign and return to us the
enclosed counterpart of this letter.
Very truly yours,
Columbia Energy Group
By:
-------------------------------------
Title: Senior Vice President and
Chief Financial Officer
Accepted and agreed as of the
date first above written.
National Propane Corporation
By:
------------------------------------
Title: President & COO
April 5, 1999
Page 4
EXHIBIT 1
The Maximum Amount payable under the attached Guaranty to which this
Exhibit relates shall decline as follows:
Claim Period: Maximum Amount:
------------- ---------------
From the Closing Date
through One Day Before the Closing Date's First Anniversary $100,000,000
From the Closing Date's First Anniversary
through One Day Before the Closing Date's Second Anniversary $ 97,500,000
From the Closing Date's Second Anniversary
through One Day Before the Closing Date's Third Anniversary $ 95,000,000
From the Closing Date's Third Anniversary
through One Day Before the Closing Date's Fourth Anniversary $ 92,500,000
From the Closing Date's Fourth Anniversary
through One Day Before the Closing Date's Fifth Anniversary $ 90,000,000
From the Closing Date's Fifth Anniversary
through One Day Before the Closing Date's Sixth Anniversary $ 87,500,000
From the Closing Date's Sixth Anniversary
through One Day Before the Closing Date's Seventh Anniversary $ 85,000,000
From the Closing Date's Seventh Anniversary
through One Day Before the Closing Date's Eighth Anniversary $ 82,500,000
From the Closing Date's Eighth Anniversary
through One Day Before the Closing Date's Ninth Anniversary $ 80,000,000
From the Closing Date's Ninth Anniversary
through One Day Before the Closing Date's Tenth Anniversary $ 77,500,000
From the Closing Date's Tenth Anniversary
through One Day Before the Closing Date's Eleventh Anniversary $ 30,000,000
April 5, 1999
Page 5
From the Closing Date's Eleventh Anniversary
through One Day Before the Closing Date's Twelfth Anniversary $ 30,000,000
From the Closing Date's Twelfth Anniversary
through One Day Before the Closing Date's Thirteenth Anniversary $ 30,000,000
From the Closing Date's Thirteenth Anniversary
through One Day Before the Closing Date's Fourteenth Anniversary $ 30,000,000
From the Closing Date's Fourteenth Anniversary
through One Day Before the Closing Date's Fifteenth Anniversary $ 30,000,000
From and after the Closing Date's Fifteenth Anniversary (Expiration Date). $ 0
