EXHIBIT 8
SHAREHOLDER PUT/CALL AGREEMENT
AGREEMENT entered into as of this 21st day of December, 1993 among
Petroleum Heat and Power Co., Inc., a Minnesota corporation ("Petro"), American
Gas & Oil Investors, a New York partnership, AmGO II, a New York partnership,
AMGO III, a New York partnership, First Reserve Secured Energy Assets Fund,
L.P., a Delaware partnership, FRC Star Gas, Inc., and The Prudential Insurance
Company of America, a New Jersey corporation ("Prudential").
WHEREAS, American Gas & Oil Investors, First Reserve Secured Energy
Assets Fund, L.P., FRC Star Gas, Inc., AmGO II and AmGO III (collectively, the
"FRC Shareholders") own the outstanding shares of common stock, par value $1.00
per share of Star Gas Corporation, a Delaware corporation ("Star Gas") which,
together with such shares of Common Stock as the Investor Shareholders may
hereafter own, are referred to collectively as "Common Stock"; the FRC
Shareholders together with Prudential are referred to herein as the "Investor
Shareholders";
WHEREAS, the Investor Shareholders also own shares of 8% Cumulative
Convertible Preferred Stock of Star Gas, which together with all shares of such
preferred stock as the Investor Shareholders may hereafter own, are referred to
collectively as "8% Cumulative Convertible Preferred Stock".
WHEREAS, Star Gas has entered into an agreement to sell to Petro, and
Petro has agreed to buy, certain of Star Gas's 8% Cumulative Convertible
Preferred Stock and has further agreed to provide an option to Petro to
purchase shares of Common Stock; and
WHEREAS, as a further inducement to Petro and the FRC Shareholders to
enter into such agreements, the FRC Shareholders wish to xxxxx Xxxxx a call
option to buy all the shares of Common Stock owned by the FRC Shareholders as
well as the 8% Cumulative Convertible Preferred Stock and shares of Common
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Stock issued to them upon the conversion of the 8% Cumulative Convertible
Preferred Stock of Star Gas and the exercise of certain options and Petro
wishes to grant to the FRC Shareholders a put option to require Petro to
purchase all the shares of Common Stock that they own; and
WHEREAS, Prudential is also willing to grant to Petro a call option
to purchase all shares of its 8% Cumulative Convertible Preferred Stock and
shares of Common Stock issued upon the conversion of the 8% Cumulative
Convertible Preferred Stock of Star Gas, subject, however, to the prior rights
of Star Gas and Prudential under the Star Gas Put/Call Agreement of even date
and Petro wishes to grant to Prudential a put option to require Petro to
purchase all the shares of Common Stock and 8% Cumulative Convertible Preferred
Stock owned by Prudential; and
WHEREAS, the parties intend that this Agreement shall be binding upon
and inure to the benefit of any person who may acquire 8% Cumulative
Convertible Preferred Stock and Common Stock from them, so that (a) the term
"FRC Shareholders" shall include FRC and any transferee of an existing FRC
Shareholder, (b) the term "Prudential Shareholders" shall include Prudential
and any transferee of Prudential and (c) the term "Investor Shareholders" shall
include all FRC Shareholders and Prudential Shareholders as defined in this
paragraph; provided, however, that this Agreement shall not be binding upon or
inure to the benefit of any person who may acquire any such shares in a public
offering or in ordinary brokerage transactions pursuant to Rule 144 under the
Securities Act of 1933, as amended ("Rule 144") following a public offering of
the Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is hereby agreed as follows:
1. The Options.
1.1 Call Option. For the period beginning on the date on which Star
Gas' audited financial statements for the fiscal year ending September 30, 1994
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are first delivered to Petro and the Investor Shareholders and ending December
31, 1998, subject to Section 1.2 hereof, Petro shall have the option ("Call
Option") to acquire all, but not less than all, of the 8% Cumulative
Convertible Preferred Stock and Common Stock from time to time owned by the
Investor Shareholders including without limitation the shares of Common Stock
issuable upon the conversion of the 8% Cumulative Convertible Preferred Stock
of Star Gas and shares issued upon the exercise of the Shareholder Option
Agreement to the extent the Shareholder Option Agreement has been exercised
prior to its Expiration Date (as defined therein), in each case for an
aggregate purchase price ("Call Option Price") computed as follows:
(a) first, by calculating the product of (i) Star Gas' EBITDA
for the 12 months ended with its most recent fiscal quarter completed prior to
the notice of exercise of the Call Option and (ii) the greater of 7 or the
Petro EBITDA Multiple;
(b) next, by taking such product in (a) above and (i)
subtracting from it the amount of Long-Term Obligations of Star Gas as of the
last day of such 12 month period, and (ii) adding to it the amount of net
working capital of Star Gas (i.e. current assets less current liabilities) as
of the last day of such 12 month period in excess of $4,000,000 and (iii)
adding to it the proceeds that would be received by Star Gas upon the exercise
of all options, warrants and similar rights to purchase securities outstanding
on the last day of such 12 month period to the extent the shares issuable upon
exercise are included in Fully Diluted Shares;
(c) next, by taking the result of (b) above and dividing such
result by the number of Fully Diluted Shares;
(d) next, by taking the per share amount calculated in (c)
above and multiplying it by the number of shares of Common Stock of the
Investor Shareholders being purchased pursuant to such Call Option and the
number of shares of Common Stock then issuable upon the conversion of the 8%
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Cumulative Convertible Preferred Stock of the Investor Shareholders to be
purchased pursuant to the Call Option.
1.2 The Call Option of Petro to acquire shares owned by Prudential
is subject to the Star Gas Put/Call Agreement of even date pursuant to which
Star Gas has a call on the Series D 8% Cumulative Preferred Stock of Star Gas
owned by Prudential and shares of Star Gas Common Stock issued upon conversion
thereof and Prudential has the right to require Star Gas, under certain
circumstances to purchase said shares.
1.3 Put Option. For the period beginning January 1, 1999 or, if
earlier, from the date of a Change of Control with respect to Petro, through
and including December 31, 1999, each of the Investor Shareholders,
individually, will have an option ("Put Option") to require Petro to purchase
all but not less than all of their shares of Common Stock and 8% Cumulative
Convertible Preferred Stock for an aggregate purchase price ("Put Option
Price") computed as follows:
(a) first by calculating the product of (i) Star Gas' EBITDA
for the 12 months ended with its most recent fiscal quarter completed prior to
the notice of exercise of the Put Option and (ii) the greater of (A) 5 or (B)
.85 of Petro EBITDA Multiple;
(b) next, by taking such product in (a) above and (i)
subtracting from it the amount of Long-Term Obligations of Star Gas as of the
last day of such 12 month period, and (ii) adding to it the amount of net
working capital of Star Gas (i.e. current assets less current liabilities) as
of the last day of such 12 month period in excess of $4,000,000 and (iii)
adding to it the proceeds that would be received by Star Gas upon the exercise
of all options, warrants and similar rights to purchase securities outstanding
on the last day of such 12 month period to the extent the shares issuable upon
exercise are included in Fully Diluted Shares;
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(c) next, by taking the result in (b) above and
dividing such result by the number of Fully Diluted Shares;
(d) next, by taking the per share amount in (c) above and
multiplying such amount by the number of shares of Common Stock of the Investor
Shareholders being purchased pursuant to such Put Option and the number of
shares of Common Stock then issuable upon the conversion of the 8% Cumulative
Convertible Preferred Stock of the Investor Shareholders to be purchased
pursuant to the Put Option.
1.4 Definitions.
"Change of Control" means the occurrence of any event which results
in the number of directors of Petro's Board of Directors who are designated by
the Xxxxx Group (in an individual or fiduciary capacity) in accordance with a
Shareholders Agreement dated as of July 28, 1992 among Petro and certain
shareholders, constituting less than a majority of the Board. "Xxxxx Group"
shall mean collectively, the Estate of Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxx
X. Xxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx Ean Xxxxx and Xxxxxx Xxxxxx.
"EBITDA" for a company means consolidated income before interest,
depreciation and amortization and income taxes excluding gains or losses from
the sale of assets other than in the ordinary course of business, non-recurring
gains or losses, extraordinary items and the costs of any restructuring,
calculated in accordance with generally accepted accounting principles
consistently applied, all as reported in that company's financial statements;
provided that consolidated income of any other person (other than a corporation
of which a majority of the capital stock having voting power under ordinary
circumstances to elect a majority of the board of directors is owned by the
company or a subsidiary of such company) will be included only to the extent of
dividends and distributions received by the company. EBITDA shall include
(without duplication) EBITDA (defined as the same manner as in this Agreement)
of each business (on a pro forma basis) which has been acquired during the 12
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months ended with the most recently completed fiscal quarter of Star Gas or
Petro, as the case may be, using the pro forma adjustments comparable to those
customarily made by Petro in SEC reporting of its acquisitions of businesses
pursuant to the periodic reporting requirements of the Securities Exchange Act
of 1934.
"Fully Diluted Shares" means with respect to Star Gas, as of the date
of determination, the number of shares of Common Stock actually issued and
outstanding, plus the number of shares issuable upon the conversion of the 8%
Cumulative Convertible Preferred Stock, plus the number of shares of Common
Stock issuable pursuant to that certain option dated as of December 21, 1993
granted by Star Gas to Petro, plus the number of shares of Common Stock
issuable pursuant to all other options, warrants and similar rights to purchase
Common Stock, and plus the number of shares of Common Stock issuable upon the
conversion of any other class of convertible securities of the Corporation;
provided, however, that only those options, warrants and similar rights to
purchase shares of Common Stock, that have an exercise price that is less than
(i) the Call Price (determined without including the shares issuable upon
exercise of such options, warrants or similar rights), when "Fully Diluted
Shares" is being used to determine the Call Price, or (ii) the Put Price
(determined without including the shares issuable upon exercise of such
options, warrants or similar rights), when "Fully Diluted Shares" is being used
to determine the Put Price, shall be deemed to be included in this definition.
"Long-Term Obligations" of an entity means the face value of
indebtedness for money borrowed (excluding any discounts, including original
issue discount, or premiums) of such entity that pays cash interest or interest
in the form of instruments representing similar indebtedness plus the
amortization payments of all other debt discounted at an annual rate of 11%
plus the amounts of capitalized lease obligations and minus the current portion
of any such indebtedness and obligations; provided, however, that the amount of
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any debt security convertible into shares of common stock shall be excluded
from Long-Term Obligations to the extent that such security is deemed converted
for purposes of Fully Diluted Shares.
"Petro's EBITDA Multiple" means the amount determined by dividing (i)
the sum of the amount of Long Term Obligations of Petro other than securities
convertible into common stock and the face value of any preferred stock of
Petro outstanding on the date EBITDA is determined other than securities
convertible into common stock and the product of (a) the number of issued and
outstanding shares of all classes Petro's common stock on a fully diluted
basis, assuming the conversion of all convertible securities, on the date
EBITDA is determined and (b) the average of the last reported sales price for
each respective class of stock (with the sales prices for the Class C Common
Stock deemed to be the same as the sales prices for the Class A Common Stock)
for the 10 trading days preceding the date on which the Put Option or Call
Option is exercised as reported by the NASDAQ National Market System, or if a
class of stock is not included in the NASDAQ National Market System, then on
the stock exchange or listing service on which such class is included, or, if
no such sales prices exist, then the fair value of such class of stock as
determined by an investment banking firm of nationally recognized standing
selected by Petro by (ii) Petro's EBITDA (defined in the same manner as in this
Agreement) for the 12 months ended with its most recently completed fiscal
quarter completed prior to the exercise of the Put Option or the Call Option.
"Shareholder Option Agreement" means the Shareholder Option
Agreements of even date between Star Gas and each of the FRC Shareholders.
1.5 Minimum Prudential Call Option Price. Notwithstanding the
foregoing, if Petro exercises the Call Option to purchase the shares of Common
Stock and 8% Cumulative Convertible Preferred Stock owned by Prudential, the
Call Option Price for such shares shall be no less than $14.1350 per share of
Common Stock or share of Common Stock which would be receivable upon conversion
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of the 8% Cumulative Convertible Preferred Stock (in each case, as adjusted for
stock splits, stock dividends and the like) plus such additional amount as will
result in a yield to Prudential on the shares so purchased of 12.625% per annum
compounded semi-annually from December 1, 1993 ("Floor Option Price"). The
Floor Option Price shall include, and Prudential shall transfer to Petro for no
additional consideration, all shares of 8% Cumulative Convertible Preferred
Stock issued as a dividend on the shares of 8% Cumulative Convertible Preferred
Stock owned by Prudential to be repurchased pursuant to the Call Option.
1.6 Petro's Special Call Option on the Holdings of the Prudential
Shareholders. If at any time prior to the fifth anniversary of the execution
of this Agreement, any Prudential Shareholder shall vote any Star Gas equity
securities owned by it against any bona fide merger proposal or against the
liquidation or dissolution of Star Gas, then Petro may exercise the Call Option
to purchase the securities of all Prudential Shareholders subject thereto on
the terms set forth above except that (a) the one year waiting period in
Section 1.1 shall not apply (b) the EBITDA multiple of 7 in Section 1.1(a)(ii)
shall be reduced to 6 and (c) notwithstanding Article 2, the entire Call Option
Price would be payable by wire transfer of immediately available funds.
1.7 Option Agreement. Immediately upon the exercise of the Call
Option, Petro shall grant to the FRC Shareholders an option to purchase, on
terms and conditions identical to those set forth in those certain Option
Agreements, dated as of December 21, 1993, from Star Gas Corporation to various
FRC Shareholders (the "Option Agreement"), a total number of shares of Petro
Class A Common Stock equal to the number of shares of Star Gas Common Stock
which could then be purchased under the unexercised portion of the Option
Agreement, multiplied by a fraction, the numerator of which is the Call Price
and the denominator of which is the per share value of the Petro Class A Common
Stock determined pursuant to Clause 1.4(b) and the Purchase Price of such
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option shall be equal to the current Purchase Price under the Option Agreement
divided by the same fraction.
1.8 Minimum FRC Call Option Price. Anything in this Agreement to
the contrary notwithstanding, if Petro exercises the Call Option to purchase
the shares of Series A 8% Cumulative Convertible Preferred Stock owned by the
FRC Shareholders on the date hereof (or shares of Common Stock received on the
conversion thereof), the Call Option Price per share of Common Stock shall be
no less than $10.8368 per share (in each case, as adjusted for stock splits,
stock dividends and the like).
2. Exercise of Option.
2.1 Manner of Exercise.
Until the expiration date of the Call Option or the Put Option, the
holder thereof may exercise such option in accordance with the provisions
hereof.
(a) In order to exercise the Call Option, Petro shall deliver
on the exercise date to the Investor Shareholders, at their respective
principal offices or such other office or agency designated by each of them for
such purpose, written notice of Petro's election to exercise such option and at
Petro's election it shall (i) make a wire transfer in immediately available
funds equal to the Call Option Price to accounts designated by the Investor
Shareholders or (ii) deliver a certificate or certificate for the number of
shares of Petro's Class A Common Stock ("Class A Common Stock") having a value
determined in accordance with Section 2.2 equal to the Call Option Price;
provided, however, that in the case of Prudential, at least twenty percent
(20%) of the Call Option Price shall be paid by wire transfer in immediately
available funds. The certificate or certificates representing Class A Common
Stock so delivered shall be in such denomination or denominations as may be
specified by the applicable Investor Shareholder and shall be registered in the
name of such holder.
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Upon receipt of the materials delivered by Petro upon the exercise of
a Call Option under this section, each Investor Shareholder shall, against
payment, execute and deliver, or cause to be executed and delivered, to Petro a
certificate or certificates representing the aggregate number of shares of
Common Stock or 8% Cumulative Convertible Preferred Stock owned by such
Investor Shareholder together with executed stock transfer powers to Petro or
to any person designated by Petro.
The certificate or certificates representing Common Stock or 8%
Cumulative Convertible Preferred Stock and Class A Common Stock shall be deemed
to have been issued and the holder thereof or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock or 8% Cumulative Convertible Preferred Stock or Class A
Common Stock, as the case may be, as of the date such notice is received by the
Investor Shareholders as aforesaid if such option has been exercised in
compliance with the above provisions. Petro shall pay all expenses, taxes and
other charges payable in connection with the preparation, issuance and delivery
of share certificates under this section.
(b) In order to exercise the Put Option, an Investor Share-
holder shall deliver to Petro, at its principal office or such other office or
agency designated by it for such purpose, written notice of such holder's
election to exercise such option and within three days thereafter such Investor
Shareholder shall deliver to Petro a certificate or certificates representing
the number of shares of Common Stock or 8% Cumulative Convertible Preferred
Stock owned by such Investor Shareholder together with executed stock transfer
powers to Petro or to any person designated by Petro.
Simultaneously with receipt of the materials delivered by the
Investor Shareholders following the exercise of a Put Option, Petro shall, at
its election, either (i) wire transfer the amount of the purchase price in
immediately available funds to an account designated by the Investor
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Shareholder or (ii) execute and deliver, or cause to be executed and delivered,
to each such Investor Shareholder the shares of Petro Class A Common Stock
valued pursuant to Section 2.2 in payment of the Put Option Price. The
certificate or certificates so delivered shall be in such denomination or
denominations as may be specified in such notice and shall be registered in the
name of such holder.
Such certificate or certificates shall be deemed to have been issued
and such holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Class A Common
Stock, 8% Cumulative Convertible Preferred Stock or Common Stock, as the case
may be, as of the date such notice is received by Petro as aforesaid if such
option has been exercised in compliance with the above provisions. Petro shall
pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section.
2.2 Value of the Class A Common Stock. The value of Petro's Class A
Common Stock shall be deemed to be the average of the last reported sales price
for Petro's Class A Common Stock for the 10 trading days preceding the date on
which the option is exercised as reported by the NASDAQ National Market System,
or if the Class A Common Stock is not included in the NASDAQ National Market
System, then on the stock exchange or listing service on which the Class A
Common Stock is included. In the event that Petro's Class A Common Stock is
not listed on any national public securities exchange (including NASDAQ) in the
United States at the date of the exercise of the Call Option or the Put Option,
as the case may be, then the Call Option Price or the Put Option Price shall be
determined without regard to Petro's EBITDA multiple, and shall be paid by wire
transfer of immediately available funds.
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2.3 Option Shares Fully Paid.
All shares of Class A Common Stock issued upon the exercise of an
option shall be, when issued, duly authorized, validly issued, fully paid and
non-assessable.
2.4 Fractional Shares.
Petro shall not be required upon the exercise of an option to issue a
certificate representing any fraction of a share of Class A Common Stock, but,
at the option of Petro, in lieu of issuing such fractional share, may pay for
such fraction of a share in cash at the purchase price in effect on the date of
such exercise of such option.
2.5 Limits on Resale of Common Stock.
In no event shall Petro offer for sale, sell or otherwise transfer,
directly or indirectly, any shares of Common Stock that it owns, without the
prior written consent of all of the Investor Shareholders, during the
twelve-month period commencing on the exercise date of such Call Option;
provided, however, that this paragraph shall not prohibit Petro from selling
substantially all of its assets, merging or consolidating with or into another
entity or selling all its outstanding stock to another entity or person.
Petro agrees that it shall cause Star Gas not to make a public
offering of its Common Stock registered under the Securities Act of 1933,
without the prior written consent of all of the Investor Shareholders, during
the twelve-month period commencing on the exercise date of such Call Option;
provided, however, that such consent shall not be necessary if the number of
shares of Common Stock so offered are no more than an aggregate of twenty
percent (20%) of the number of Fully Diluted Shares.
3. Registration Rights.
3.1 Piggy-Back Registration Rights.
3.1.1 If Petro proposes to file, on its behalf and/or on behalf
of any of its securities holders, a Registration Statement under the Securities
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Act of 1993, as amended (the "Securities Act") other than in connection with a
dividend reinvestment, employee stock purchase, option or similar plan or in
connection with a merger, consolidation or reorganization, Petro shall give
written notice to each Investor Shareholder which acquired Petro Class A Common
Stock at its address set forth herein at least 30 days before the filing with
the Securities and Exchange Commission ("SEC") of such Registration Statement.
Each Investor Shareholder who desires to include any of its shares of Class A
Common Stock in such Registration Statement shall give written notice to Petro
within 20 days after the date of mailing of such offer, and shall deliver to
Petro a letter from counsel selected by such Investor Shareholder to the effect
that registration under the Securities Act is required. Petro shall thereupon
include in such filing the shares of Class A Common Stock designated by such
Investor Shareholder and, subject to its right to withdraw such filing, shall
use its best efforts to effect registration under the Securities Act of such
Shares.
3.1.2 The right of the Investor Shareholders to have shares
included in any Registration Statement in accordance with the provisions of
this Section 3.1 shall be subject to the following conditions:
3.1.2.1 Petro shall have the right to require that
Investor Shareholders participating in such Registration Statement
agree to refrain from offering or selling (other than in a private
sale) any shares of Common Stock that they own which are not included
in any such Registration Statement in accordance with this Section
3.1 for any time period (not to exceed 120 days) specified in writing
by any managing underwriter of the offering to which such
Registration Statement relates;
3.1.2.2 If any managing underwriter of the offering to
which the Registration Statement relates informs Petro in writing
that the total number of shares of Common Stock requested by the
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Investor Shareholders to be included in the Registration Statement is
sufficiently large to affect the success of such offering adversely,
then Petro will include only the number of shares, if any, in the
Registration Statement that such managing underwriter shall advise
Petro will not so affect the offering, and reductions in the number
of shares of Common Stock owned by the Investor Shareholders will be
made proportionate to their respective percentages of ownership of
shares to be included in the Registration Statement;
3.1.2.3 Petro shall furnish Investor Shareholders who have
shares included in a Registration Statement pursuant to this Section
3.1 with such number of copies of the prospectus relating to the
Offering (the "Prospectus") (including any preliminary prospectus or
supplemental or amended prospectus) as such Investor Shareholder may
reasonably request in order to facilitate the sale and distribution
of its shares; and
3.1.3 Notwithstanding the foregoing, Petro in its sole
discretion may determine not to file the registration statement or proceed
with the offering as to which the notice specified herein is given without any
liability to Investor Shareholders.
3.1.4 Each Investor Shareholder shall have the right to
register shares of Common Stock under this Section 3.1 on an unlimited number
of occasions.
3.2 Independent Registration Rights.
3.2.1 If either the FRC Shareholders or Prudential Shareholders
holding in either case a majority of the shares of Petro Class A Common Stock
held by the specific shareholder group (determined by reference to the
Shareholders' Agreement dated as of December 21, 1993 relating to Star Gas),
proposes to offer for sale, sell or transfer their respective shares of Petro
Class A Common Stock which may require registration under the Securities Act
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such shareholder shall give Petro written notice of their desire to sell such
shares, specifying the number of shares proposed to be sold and the plan for
distribution of such shares. Petro will thereafter:
3.2.1.1 Prepare and file with all deliberate speed a
Registration Statement with the SEC on the appropriate form and use
its best efforts to cause such Registration Statement to become
effective in order that such shareholders may sell their shares in
accordance with the proposed plan of distribution;
3.2.1.2 Prepare and file with the SEC such amendments and
supplements to such Registration Statement and Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for up to 120 days and to comply with the
provisions of the Securities Act with respect to the offer of the
shares covered by such Registration Statement during the period
required for distribution of such shares, which period shall not be
in excess of three months from the effective date of such
Registration Statement;
3.2.1.3 Furnish to such shareholders, if such shares have
been included in the Registration Statement pursuant to this Section
3.2, such number of copies of the Prospectus (including any
preliminary prospectus or supplemental or amended prospectus) as such
shareholders may reasonably request in order to facilitate the sale
and distribution of the shares;
3.2.1.4 Use reasonable efforts to register or qualify such
shares covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as the shareholders
shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such
shareholders to consummate the disposition in such jurisdictions of
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the shares owned by such shareholders, except that Petro shall not
for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction where, but for the
requirements of this clause 3.2.1.4, it would not be obligated to be
so qualified, to subject itself to taxation in any such jurisdiction,
or to consent to general service of process in any such jurisdiction;
3.2.1.5 Use reasonable efforts to cause such shares
covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the shareholders to consummate the dispositions
of such shares of Common Stock;
3.2.1.6 Notify promptly the shareholders selling any such
shares covered by such Registration Statement, at any time when a
Prospectus relating thereto is required to be delivered under the
Securities Act, of Petro's becoming aware that the Prospectus
included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and, at the request of any such selling shareholder,
prepare and furnish to such selling shareholder a reasonable number
of copies of an amended or supplemental Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
shares, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
3.2.1.7 Otherwise use reasonable efforts to comply with
all applicable rules and regulations of the SEC, and make available
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to its security holders, as soon as reasonably practicable (but not
more than eighteen months) after the effective date of the
Registration Statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
3.2.1.8 Use reasonable efforts to list or admit for
trading such shares of Common Stock on the National Association of
Securities Dealers, Inc. National Market System ("NASDAQ NMS") or
any securities exchange on which the Common Stock is then listed, if
such shares are not already so listed and if such listing is then
permitted under the rules of the NASDAQ NMS or such exchange, and to
provide a transfer agent and registrar for such shares covered by
such Registration Statement not later than the effective date of such
Registration Statement;
3.2.1.9 Enter into an underwriting agreement with a
managing underwriter or underwriters containing representations,
warranties, indemnities and agreements then customarily included by
an issuer in underwriting agreements with respect to secondary
distributions;
3.2.1.10 Use reasonable efforts to obtain a "cold comfort"
letter or letters from the Petro independent public accountants in
customary form and covering matters of the type customarily covered
by "cold comfort" letters as the shareholders selling such shares
shall reasonably request;
3.2.1.11 Make available for inspection by the shareholders
selling such shares covered by such Registration Statement, by any
underwriter participating in any disposition to be effected pursuant
to such Registration Statement and by any attorney, accountant or
other agent retained by any such shareholders or any such
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underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of Petro, and cause all of Petro's
officers, directors and employees to supply all information
reasonably requested by any such selling shareholders, underwriter,
attorney, accountant or agent in connection with such Registration
Statement; and
3.2.1.12 Obtain for delivery to the underwriters or agent
and to selling shareholders an opinion or opinions from counsel for
Petro in customary form and in form and scope reasonably satisfactory
to such underwriter or agent and their counsel.
3.2.2 The right of the Investor Shareholders to have shares
registered pursuant to the provisions of this Section 3.2 shall be subject to
the following conditions:
3.2.2.1 If a request for registration is made within 60
days prior to the conclusion of Petro's then current fiscal year,
Petro shall have the right to delay the filing of the Registration
Statement for such period of time until Petro receives its audited
financial statements for such fiscal year;
3.2.2.2 If any managing underwriter of the offering to
which the Registration Statement relates informs Petro that total
number of shares of Common Stock requested by the Investor
Shareholders to be included in the Registration Statement is
sufficiently large to affect the success of such offering adversely,
then Petro will include only the number of shares, if any, in the
Registration Statement that such managing underwriter shall advise
Petro will not so affect the offering and reductions in the number of
shares of Common Stock owned by the Investor Shareholders will be
made proportionate to their respective percentages of ownership;
provided, however, that the shareholders requesting such registration
18
shall not be required to reduce the number of shares of Common Stock
that such shareholders have requested to be included in the
registration statement without such shareholders' written consent;
3.2.2.3 Each of the Prudential Shareholders and the FRC
Shareholders shall each be entitled to request no more than two (a
total of four) Registration Statements; provided, however, that a
request will be disregarded in determining a shareholder's rights
under this paragraph if a Registration Statement based upon such
request does not actually become effective; and
3.2.2.4 Petro shall not be required to file a Registration
Statement on behalf of Investor Shareholders under this Section
within six months after the effective date of a Registration
Statement in which the Investor Shareholders are offered an
opportunity to include shares pursuant to Section 3.1 hereof.
3.3 Expenses. Petro will bear all the expenses in connection with
any Registration Statement under Section 3.1 or Section 3.2 hereof (including
the reasonable fees and expenses of counsel to any Investor Shareholders),
other than transfer taxes payable on the sale of such shares and fees and
commissions of brokers, dealers and underwriters.
3.4 "No Action" Letter; Opinion of Counsel. No Investor Shareholder
shall have registration rights under this Article with respect to any sales
proposed by them of shares as to which sales (i) a "no action" letter is
received from the SEC or its staff confirming the availability of an exemption
from the requirements of the Securities Act or (ii) an unqualified opinion of
counsel to Petro is rendered to the effect that registration of such shares for
such sales is not required; PROVIDED, FURTHER HOWEVER, that in both cases (i)
and (ii) above, the volume limitations of Rule 144(e) under the Securities Act
shall not limit the amount of shares of Common Stock that the Investor
19
Shareholders are entitled to offer and sell without registration under the
Securities Act.
3.5 Recall of Prospectuses, etc. With respect to a Registration
Statement or amendment thereto filed pursuant to this Article, if, at any time,
Petro notifies the selling Investor Shareholders that an amendment or
supplement to such Registration Statement or amendment or the prospectus
included therein is necessary or appropriate, the selling Investor Shareholders
will forthwith cease selling and distributing shares thereunder and will
forthwith redeliver to Petro all copies of such Registration Statement and
prospectuses then in their possession or under their control. Petro will use
its best efforts to cause any such amendment or supplement to become effective
as soon as practicable and will furnish the selling Investor Shareholders with
a reasonable number of copies of such amended or supplemented Prospectus (and
the period during which Petro is required to use its best efforts to maintain
such Registration Statement in effect pursuant to this Agreement will be
increased by the period from the date on which the selling Investor
Shareholders ceased selling and distributing shares thereunder to the date on
which such amendment or supplement becomes effective).
3.6 Cooperation of Investor Shareholders. Petro shall be entitled
to require that each selling Investor Shareholder cooperate with Petro in
connection with a registration of shares of Class A Common Stock pursuant to
this Article and furnish (i) such information regarding such selling Investor
Shareholders and the distribution as may be reasonably required by Petro or as
required by law in connection therewith and (ii) such representations,
undertakings and agreements regarding such selling Investor Shareholders and
the distribution or any other representation required by law in connection
therewith.
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3.7 Indemnification.
3.7.1 In the event of any registration of any securities under
the Securities Act pursuant to this Article, Petro will indemnify and hold
harmless each selling Investor Shareholder, each affiliate of such Investor
Shareholder and their respective directors and officers and general and limited
partners, any underwriter and each other person, if any, who controls such
selling Investor Shareholder or underwriter within the meaning of the
Securities Act, against any losses, claims, damages, expenses or liabilities,
joint or several, to which each such selling Investor Shareholder or
underwriter or controlling person may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement or preliminary prospectus (if used prior to the
effective date of such registration statement) or final or summary prospectus
contained therein (if used during the period the Petro is required to keep the
registration statement effective), or any amendment or supplement thereto, or
arise out of or are based upon 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, and will reimburse each such selling
Investor Shareholder, underwriter and controlling person for any legal or any
other expenses reasonably incurred as incurred by him in connection with
investigating or defending any such action or claim, excluding any amounts paid
in settlement of any litigation, commenced or threatened, if such settlement is
effected without the prior written consent of Petro; provided, however, that
Petro will not be liable to a particular selling Investor Shareholder or
underwriter in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
omission or alleged omission made in said registration statement, said
21
preliminary prospectus or said final or summary prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to Petro by that selling Investor Shareholder or its controlling
affiliates or representative, or by that underwriter, as the case may be,
specifically for use in the preparation thereof; and provided further that the
indemnity agreement contained in this Section 3.7 with respect to any
preliminary prospectus shall not inure to the benefit of any selling Investor
Shareholder or underwriter or to any person controlling the same in respect of
any loss, claim, damage, liability or action asserted by someone who purchased
shares from such person if a copy of the final prospectus (as the same may be
amended or supplemented) in connection with such registration statement was not
sent or given to such person with or prior to written confirmation of the sale
and if the untrue statement or omission or alleged untrue statement or omission
of a material fact contained in such preliminary prospectus was corrected in
the final prospectus.
3.7.2 In the event of any registration of securities under the
Securities Act pursuant to this Article, each selling Investor Shareholder
shall indemnify and hold harmless Petro, each of its directors and officers,
any underwriter and each other person, if any, who controls Petro or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Petro or any such
director, officer, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement or preliminary prospectus or final or summary
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
22
made therein not misleading, and will reimburse Petro, each such director,
officer, underwriter and controlling person for any legal or other expenses
reasonably incurred as incurred by them in connection with investigating or
defending any such action or claim, excluding any amounts paid in settlement of
any litigation, commenced or threatened, if such settlement is effected without
the prior written consent of the Investor Shareholder or his representative,
but in all such cases only if, and to the extent that, any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission therein made in
reliance upon and in conformity with written information furnished to Petro by
the selling Investor Shareholder or its controlling affiliates or
representative specifically for use in the preparation thereof.
3.7.3 Action Commenced. Promptly after receipt by a party
entitled to indemnification under Section 3.7.1 or 3.7.2 hereof of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under either of
such Sections, notify the indemnifying party in writing of the commencement
thereof; provided, however, that the indemnifying party is relieved of its
obligations hereunder by the failure to give such notice only to the extent the
indemnifying party is adversely affected by such failure. In case any such
action is brought against the indemnified party and it shall so notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it so chooses, to assume
the defense thereof with counsel reasonably satisfactory to such indemnified
party; provided that the indemnifying party will not agree to the entry of any
judgment or to any settlement without the prior consent of the indemnified
party (which consent shall not be unreasonably withheld) unless such settlement
requires no more than a monetary payment for which the indemnifying party
agrees to indemnify the indemnified party and includes a full, unconditional
23
and complete release of the indemnified party; provided, however, that the
indemnified party shall be entitled to take control of the defense of any claim
as to which, in the reasonable judgment of the indemnifying party's counsel,
representation of both the indemnifying party and the indemnified party would
be inappropriate under the applicable standards of professional conduct due to
actual or potential differing interests between them (except that if the
selling Investor Shareholders are the indemnifying party, such defense may be
assumed only in a manner chosen by the holders of a majority in interest of the
shares of Class A Common Stock included in the registration statement which is
the subject of such action), and, after notice from the indemnifying party that
it so chooses, such indemnifying party shall not be liable for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that if the indemnifying party
fails to take reasonable steps necessary to diligently defend such claim within
20 days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to take such steps, the
indemnified party may assume its own defense and the indemnifying party shall
be liable for any expenses therefor. The indemnity agreements in this Section
shall be in addition to any liabilities which the indemnifying parties may have
pursuant to law. In the event that an indemnifying party assumes the defense
of an action under this Section, then such indemnifying party shall, subject to
the provisions of this Section, indemnify and hold harmless the indemnified
party from any and all losses, claims, damages or liabilities by reason of such
settlement or judgment.
3.7.4 Contribution. If the indemnity provided for in the
foregoing paragraphs of this Section is unavailable or insufficient for any
reason to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, agrees to contribute to the amount
24
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other hand from the sale of securities under such
Registration Statement, (ii) the relative fault of the indemnifying party on
the one hand and the indemnified party on the other hand in connection with the
statements, actions or omissions which resulted in such losses, claims, damages
or liabilities and (iii) any other relevant equitable considerations. The
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other hand (i) in the case of an untrue or alleged untrue
statement of a material fact or an omission or alleged omission to state a
material fact, shall be determined by reference to, among other things, whether
such statement or omission relates to information supplied by the indemnifying
party or by the indemnified party, respectively, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and (ii) in the case of any other action or
omission, shall be determined by reference to, among other things, whether such
action or omission was taken or omitted to be taken by the indemnifying party
or the indemnified party, respectively, and the parties' relative intent,
knowledge, access to information and opportunity to prevent such action or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding sentences. The amount
paid or payable by the indemnified party as a result of the losses, claims,
damages or liabilities referred to in such sentences shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending any such action or claim.
25
3.7.5 Non-Exclusivity. The obligations of the parties under
this Section shall be in addition to any liability which any party may
otherwise have to any other party.
4. Rule 144.
For so long as Petro continues to be subject to the requirements of
Section 12 of the Exchange Act, Petro covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations adopted by the SEC thereunder (or, if the Company is
not required to file such reports, it will, upon the request of the holders of
a majority of the shares of the Prudential Shareholders or FRC Shareholders,
make publicly available such information), and it will take such further action
as the holders of a majority of the shares of the Prudential Shareholders or
FRC Shareholders may reasonably request, all to the extent required from time
to time to enable them to sell shares without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time ("Rule 144"), or
(ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of a shareholder, Petro will deliver to such shareholders a written
statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section, Petro may deregister under
Section 12 of the Exchange Act if it then is permitted to do so pursuant to the
Exchange Act and the rules and regulations thereunder.
5. Miscellaneous.
5.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of the
parties hereto.
5.2 Waiver of Compliance. Any failure of Petro, on the one hand, or
Investor Shareholders, on the other, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by a managing
26
director, vice president (of any designation) or a duly authorized officer of
each of the Investor Shareholders or Petro, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
5.3 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) If to Petro, to:
Petroleum Heat and Power Co., Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Senior Vice President
(with a copy to:)
Phillips, Nizer, Xxxxxxxx, Krim & Ballon
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, Esq.
(b) If to the FRC Shareholders, to:
First Reserve Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
(c) If to Prudential, to:
The Prudential Insurance Company of America
c/o Prudential Financial Restructuring Group
0 Xxxxxxx Xxxxxx - 0xx Xx.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Managing Director
Fax: 000-000-0000
27
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: 000-000-0000
or to such other person or address as shareholders shall furnish to the Company
in writing.
5.4 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that each Investor Shareholder shall be deemed to automatically assign
its rights, interests and obligations hereunder and shall be released from its
obligations hereunder (and no consent will be required) with respect to any
securities that are sold, transferred, assigned or otherwise disposed of by
such Investor Shareholder in accordance with the terms of the Star Gas
Shareholders' Agreement of even date herewith if such transferee agrees to be
bound by the terms hereof or if such transferee is Petro, provided that the
terms of this Agreement shall not be binding upon or inure to the benefit of
any person who may acquire any such shares in a public offering or in ordinary
brokerage transactions pursuant to Rule 144 following an initial public
offering of the Common Stock and the Investor Shareholder will be released from
all obligations hereunder in respect of any shares so transferred.
5.5 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to its conflicts of law doctrine.
28
5.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5.7 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
5.8 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto.
5.9 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or corporation other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be affixed hereto, all
as of the day and year first above written.
PETROLEUM HEAT AND POWER CO., INC.
By /s/ Xxxxxx Xxxxxxxxx
ACCEPTED AND AGREED:
AMERICAN GAS & OIL INVESTORS AmGO III
By: First Reserve By: First Reserve
Corporation, Corporation
as managing general as managing general
partner, partner,
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
Managing Director Managing Director
AmGO II THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: First Reserve
Corporation, By: /s/
as managing general Vice President
partner,
By: /s/ Xxxxxxx X. Xxxxxxxx
Managing Director
FIRST RESERVE SECURED ENERGY ASSETS FUND, L.P.
By: First Reserve Corporation,
as managing general partner
By: /s/ Xxxxxxx X. Xxxxxxxx
Managing Director
FRC STAR GAS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
30
