Star Gas Propane, L.P.
Star/Petro, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
$12,500,000 8.67% First Mortgage Notes, Series A, Due March 30, 2012
and
$15,000,000 8.72% First Mortgage Notes, Series B, Due March 30, 2015
Dated as of March 30, 2000
To Each of the Purchasers Listed
in the Attached Schedule A
Ladies and Gentlemen:
Star Gas Propane, L.P., a Delaware limited partnership (the "Star Gas"),
and Star/Petro, Inc., a Minnesota corporation ("Star/Petro"; Star Gas together
with Star/Petro are each hereinafter referred to as an "Obligor" and
collectively as the "Obligors"), hereby agree with the purchasers named on
Schedule A to this Agreement (the "Purchasers") as follows:
Section 1. Authorization of Notes.
The Obligors will authorize the issue and sale of (a) $12,500,000 aggregate
principal amount of their 8.67% First Mortgage Notes, Series A, due March 30,
2012 (the "Series A Notes") and (b) $15,000,000 aggregate principal amount of
their 8.72% First Mortgage Notes, Series B, due March 30, 2015 (the "Series B
Notes"; said Series B Notes together with the Series A Notes are hereinafter
referred to collectively as the "Notes," such term to include any Notes issued
in substitution therefor or replacement thereof pursuant to Section 14). The
Series A Notes and the Series B Notes shall be substantially in the forms of
Exhibits A1 and A2, respectively, with such changes therefrom, if any, as may be
approved by the Purchasers and the Obligors. Certain capitalized terms used in
this Agreement are defined in Section 13; references to a "Section" or a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Section of this
Agreement or to a Schedule or an Exhibit attached to this Agreement.
Section 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Obligors will
issue and sell to the Purchasers and the Purchasers will purchase from the
Obligors, at the Closing provided for in Section 3, Notes in the principal
amount and of the series specified opposite such Purchaser's name for purchase
by such Purchaser at the Closing in Schedule A, at the purchase price of 100% of
the principal amount thereof.
Section 3. Closing.
The sale of the Notes to the Purchasers shall take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, at 10:00 a.m., New York, New York time, at a closing (the "Closing")
on March 30, 2000, or such later date as may be agreed upon by the Obligors and
the Purchasers. At the Closing, the Obligors will deliver to each Purchaser
Notes of the series to be purchased by such Purchaser in the principal amount to
be purchased by such Purchaser, in the form of a single Note of such series (or
such greater number of Notes of such series as such Purchaser may request), each
dated the date of the Closing and registered in such Purchaser's name (or in the
name of such Purchaser's nominee as indicated in Schedule A), against payment of
the purchase price therefor by transfer of immediately available funds to the
Obligors, or as otherwise directed by the Obligors in writing, on the date of
the Closing. If at the Closing the Obligors shall fail to tender such Notes to
any such Purchaser as provided above in this Section 3 or if any of the
conditions specified in Section 4 shall not have been fulfilled to any such
Purchaser's satisfaction, such Purchaser shall, at its election, be relieved of
all further obligations under this Agreement, without thereby waving any other
rights such Purchaser may have by reason of such failure or such nonfulfillment.
Section 4. Conditions to Closing.
Each Purchaser's obligation to purchase and pay for the Notes to be sold to
it at the Closing is subject to the fulfillment to such Purchaser's
satisfaction, prior to or at the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations
and warranties of each of the Obligors and its Affiliates contained in this
Agreement, the other Operative Agreements, and those otherwise made in writing
by or on behalf of either Obligor or any of its Affiliates in connection with
the transactions contemplated by this Agreement, shall be true and correct when
made and at the time of the Closing, except as affected by the consummation of
such transactions.
Section 4.2. Performance; No Default. Each of the Obligors and
its Affiliates shall have performed and complied with all agreements and
conditions contained in this Agreement or any other Operative Agreement required
to be performed or complied with by it prior to or at the Closing, and at the
time of the Closing no Event of Default or Potential Event of Default under this
Agreement or default by any party under any other Operative Agreement shall have
occurred and be continuing.
Section 4.3. Compliance Certificates. Each of the Obligors shall
have delivered to such Purchaser an Officers' Certificate, dated the date of the
Closing and satisfactory in substance and form to such Purchaser, certifying
that the conditions specified in Sections 4.1 and 4.2 have been fulfilled and
certifying that no material adverse change has occurred in the financial
condition of the Business subsequent to the date of the most recent audited
financial statements delivered pursuant to Section 5.4(b).
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Section 4.4. Opinions of Counsel. Such Purchaser shall have
received favorable opinions from (a) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP,
counsel for the Obligors and their Affiliates, substantially in the form of
Exhibit B1, and (b) ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the Purchasers in
connection with the transactions contemplated by this Agreement, substantially
in the form of Exhibit B2, and in each case covering such other matters incident
to such transactions as such Purchaser may reasonably request, each addressed to
such Purchaser, dated the date of the Closing and otherwise reasonably
satisfactory in substance and form to such Purchaser. The Obligors hereby
direct their counsel referred to in clause (a) of this Section 4.4 to deliver to
such Purchaser such opinions and letters to be delivered by it and authorizes
such Purchaser to rely thereon.
Section 4.5. Legal Investment. On the date of the Closing, such
Purchaser's purchase of Notes shall be permitted by the laws and regulations of
each jurisdiction to which such Purchaser's investments are subject, but without
recourse to provisions (such as section 1404(b) or 1405(a)(8) of the New York
Insurance Law) permitting, limited investments by insurance companies in
securities not otherwise legally eligible for investment. If requested by such
Purchaser by prior written request to the Obligors, such Purchaser shall have
received, at least five Business Days prior to the Closing, an Officers'
Certificate of each Obligor certifying as to such matters of fact as such
Purchaser may reasonably specify to enable it to determine whether such purchase
is so permitted.
Section 4.6. Trust Agreement. Each of the Obligors, the General
Partner and the Trustee shall have duly authorized, executed and delivered the
Trust Agreement. The Trust Agreement shall be in full force and effect and
shall constitute the valid and binding obligation of each of the Obligors, the
General Partner and the Trustee and no default on the part of either of the
Obligors or the General Partner shall exist thereunder.
Section 4.7. Security Documents. (a) The General Partner, Star
Gas and the Restricted Subsidiaries shall have duly authorized, executed and
delivered the Mortgages (other than the All Star Gas Mortgages) relating to the
Mortgaged Property located in Connecticut, Indiana, Kentucky, Maine,
Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Rhode
Island. Each such Mortgage shall be in full force and effect and shall
(i) constitute the valid and binding obligation of the General Partner, Star Gas
and the Restricted Subsidiaries, (ii) constitute a valid first mortgage lien of
record on the real property and all other interests described therein which may
be subjected to a mortgage lien, subject only to Permitted Encumbrances, and
(iii) constitute a valid assignment of, and create a valid, presently effective
security interest of record in, equipment and all other interests (other than
real property interests) described therein, subject to no prior security
interest in any such property other than as specifically permitted therein, and
no default on the part of the General Partner, Star Gas or any Restricted
Subsidiary shall exist thereunder.
(b) Each of the Security Documents (other than the Mortgages) shall have
been duly authorized, executed and delivered by each of the Obligors and/or
their Affiliates party thereto, shall be in full force and effect and shall
(i) constitute the valid and binding obligation of each such party and
(ii) constitute a valid assignment of, and create a valid, presently effective
security interest of record in, property covered by such Security Document and
all other interests
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described therein, subject to no prior security interest in any such personal
property other than as specifically permitted therein, and no default on the
part of any such party shall exist thereunder.
Section 4.8. Recordation; Taxes, Etc. The Conveyance Agreements
referred to in clause (b) of the definition of such term and the Mortgage(s),
the Obligors Security Agreement and the Partners Security Agreement, or proper
notices, statements or other instruments in respect thereof, covering all or
substantially all of the Assets covered by such Conveyance Agreements and such
Security Documents, shall have been duly recorded, published, registered and
filed, and all other actions deemed necessary by special counsel to the
Purchasers shall have been duly performed or taken, in such manner and in such
places as is required by applicable law (a) to convey to Star Gas record and
beneficial ownership of the Assets purported to be conveyed by such Conveyance
Agreements and (b) to establish, perfect, preserve and protect the rights and
first priority liens and security interests purported to be granted by each such
Security Document to the Trustee with respect to the Assets for the benefit of
the holders of the Notes and their respective successors and assigns, and all
taxes, fees and other charges then due in connection with the execution,
delivery, recording, publishing, registration and filing of such documents or
instruments and the sale, transfer and delivery of the Notes shall have been
paid in full.
Section 4.9. Operative Agreements. Each of the Operative
Agreements (other than the All Star Gas Mortgages) shall have been duly
authorized, executed and delivered by the respective parties thereto, in form
and substance satisfactory to such Purchaser, shall be in full force and effect,
and shall constitute the legal, valid and binding obligations of the respective
parties thereto, and all actions required to be performed or taken thereunder on
or prior to the date of the Closing shall have been duly taken and no default or
accrued right of termination on the part of any of the parties thereto shall
exist thereunder as of the date of the Closing, and such Purchaser shall have
received a fully executed original, or a true and correct copy, of each such
document.
Section 4.10. Confirmation of Parity Debt; Etc. (a) Each of the
Obligors, the General Partner, the Restricted Subsidiaries party to the Obligor
Security Agreement, the Public Partnership, the Banks, the Administrative Agent
under the Bank Credit Facilities, the Documentation Agent under the Bank Credit
Facilities, the holders of the 1995 Notes, the holders of the 1998 Notes and the
Trustee shall have duly authorized, executed and delivered the Confirmation of
Parity Debt confirming that the Notes constitute Parity Debt under the Bank
Credit Facilities, the 1995 Note Agreements, the 1998 Note Agreement and the
Security Documents, and such Confirmation of Parity Debt shall be in full force
and effect.
(b) The conditions specified in Section 10.2(i) of the 1995 Note
Agreements, Section 10.2(i) of the 1998 Note Agreement and Section 6.02(h) of
the Bank Credit Facilities have been fulfilled and such Purchaser shall have
received such evidence as it may reasonably request (including copies of the
certificates and opinions required by such Sections) demonstrating fulfillment
of such conditions.
Section 4.11. Proceeding and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
such Purchaser and such Purchaser's special counsel, and such Purchaser and such
Purchaser's special counsel shall have received all such counterpart originals
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or certified or other copies of such documents as such Purchaser or its special
counsel may reasonably request.
Section 4.12. Insurance Broker's Certificate. Insurance complying
with the provisions of Section 15 of the Mortgages (other than the All Star Gas
Mortgages) shall be in full force and effect and such Purchaser shall have
received a certificate from Weeks & ▇▇▇▇▇▇▇▇ or such other independent insurance
brokers or consultants as shall be reasonably satisfactory to such Purchaser,
dated the date of the Closing.
Section 4.13. Payment of Closing Fees. The Obligors shall have paid
the fees and disbursements required by Section 16 to be paid by the Obligors on
the date of the Closing.
Section 4.14. Private Placement Numbers. The Obligors shall have
obtained for each series of the Notes a Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners).
Section 5. Representations and Warranties, Etc. of the Obligors.
Each of the Obligors and the General Partner represents and warrants that:
Section 5.1. Organization, Standing, Etc. Star Gas is a limited
partnership duly organized, validly existing and in good standing under the
Delaware Revised Uniform Limited Partnership Act and has all requisite
partnership power and authority to own and operate its properties (including,
without limitation, the Assets), to conduct the business it conducts and
proposes to conduct, to enter into this Agreement and the other Operative
Agreements to which it is a party, to issue and sell the Notes and to carry out
the terms of this Agreement, such other Operative Agreements and the Notes.
Star/Petro is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota and has all requisite
corporate power and authority to own and operate its properties, to conduct the
business it conducts and proposes to conduct, to enter into this Agreement and
the other Operative Agreements to which it is a party, to issue and sell the
Notes and to carry out the terms of this Agreement, such other Operative
Agreements and the Notes. The General Partner is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite limited liability company power and
authority to own and operate its properties, to conduct the business it conducts
and proposes to conduct, to enter into and carry out the terms of this Agreement
and the other Operative Agreements to which it is a party, and to execute and
deliver as the general partner of Star Gas this Agreement and the other
Operative Agreements to which Star Gas is a party and the Notes.
Section 5.2. Partnership Interests. The only general partner of
Star Gas is the General Partner, which owns a 0.8488% general partner interest
in Star Gas. The only limited partner of Star Gas is the Public Partnership
which owns a 99.1512% limited partner interest in Star Gas. Star Gas does not
have any other partner. Except as disclosed in Schedule 5.2, Star Gas does not
have any Subsidiaries or any Investments in any Person (other than Investments
of the types described in Section 10.3(a)).
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Section 5.3. Qualification. Star Gas is duly qualified or registered
and is in good standing as a foreign limited partnership for the transaction of
business, and the General Partner is duly qualified or registered and is in good
standing as a foreign limited liability company for the transaction of business,
in Connecticut, Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New
Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and West
Virginia which are the only jurisdictions in which the nature of their
respective activities or the character of the properties they own, lease or use
makes such qualification or registration necessary and in which the failure so
to qualify or to be so registered would have a Material Adverse Effect.
Star/Petro is qualified or registered and in good standing as a foreign
corporation for the transaction of business in New York, which is the only
jurisdiction in which the nature of its activities or the character of the
properties it owns, leases or uses makes such qualification or registration
necessary and in which the failure to be so qualified or registered would have a
Material Adverse Effect. Each of the Obligors and the General Partner has taken
all necessary partnership corporate or limited liability company action to
authorize the execution, delivery and performance by it of this Agreement, the
Notes and each other Operative Agreement to which it is a party. Each of the
Obligors and the General Partner has duly executed and delivered each of this
Agreement, the Notes and the other Operative Agreements to which it is a party,
and each of them constitutes its legal, valid and binding obligation enforceable
in accordance with its terms.
Section 5.4. Business; Financial Statements. (a) The Obligors
have delivered to each Purchaser complete and correct copies of (i) a
memorandum dated February 2000, prepared by Banc of America Securities LLC for
use in connection with the Obligors' private placement of the Notes, (ii) a
memorandum dated January 1999, prepared by Banc of America Securities LLC
relating to the private placement by Petro of its Senior Secured Notes due 2003-
2014 in the aggregate principal amount of $90,000,000, (iii) the Public
Partnership's SEC Form 10-K for the fiscal year ended September 30, 1999,
(iv) the Public Partnership's SEC Form 10-Q for the fiscal quarter ended
December 31, 1999 and (v) copies of each of the "operative agreements" delivered
to the 1995 Noteholders (including, without limitation, each of the financial
statements delivered pursuant thereto) (collectively, the "Offering Materials").
The financial statements and schedules included in the Offering Materials (other
than with respect to pro forma matters) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods specified and present
fairly the financial position of the corporation or partnership to which they
relate as of the respective dates specified and the results of their operations
and cash flows for the respective periods specified.
(b) The Obligors have delivered to each Purchaser copies of the financial
statements of each of the Obligors and its Subsidiaries listed on
Schedule 5.4(b). All of said financial statements (including the related
schedules and notes) fairly present in all material respects the financial
position of the Obligor and its Subsidiaries to which they relate as of the
respective dates specified in such Schedule and the results of their operations
and cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved,
except as set forth in the notes thereto (subject, in the case of any interim
financial statements, to normal year-end adjustments).
Section 5.5. Changes, Etc. Except as contemplated by this
Agreement, the other Operative Agreements or the Offering Materials, subsequent
to the date as of which information is
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given in the Offering Materials, (a) neither of the Obligors nor their
Affiliates have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transaction not in the ordinary course
of business except for material liabilities or obligations and material
transactions permitted by the 1998 Note Agreement, the 1995 Note Agreements and
the Bank Credit Facilities, (b) no events have occurred, which individually or
in the aggregate, could have a Material Adverse Effect, and (c) there has not
been (i) any Restricted Payment of any kind declared, paid or made by either of
the Obligors, the General Partner or the Public Partnership other than
Restricted Payments that were permitted under the 1998 Note Agreement, the 1995
Note Agreement and the Bank Credit Facilities or (ii) any Indebtedness incurred
under the Bank Credit Facilities except for Indebtedness incurred under the Bank
Credit Facilities that was and is permitted by the 1998 Note Agreement, the
1995 Note Agreements and the Bank Credit Facilities.
Section 5.6. Tax Returns and Payments. Each of the Obligors and its
Affiliates has filed all tax returns required by law to be filed by it and has
paid all taxes, assessments and other governmental charges levied upon it or any
of its properties, assets, income or franchises which are due and payable, other
than those which are not past due or are presently being contested in good faith
by appropriate proceedings diligently conducted for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP have been made.
Star Gas is a limited partnership not subject to taxation with respect to its
income or gross receipts under applicable Federal laws.
Section 5.7. Indebtedness. Other than the Indebtedness represented
by the Notes and the Indebtedness listed in Schedule 5.7, neither of the
Obligors nor the General Partner has any secured or unsecured Indebtedness
outstanding. No instrument or agreement to which either of the Obligors or,
other than Section 6.6(g) of the MLP Agreement, the General Partner is a party
or by which either of the Obligors or the General Partner is bound or which is
applicable to either of the Obligors or the General Partner (other than this
Agreement, the 1995 Note Agreements, the 1998 Note Agreement and the Bank Credit
Facilities) contains any restrictions on the incurrence by either of the
Obligors or the General Partner of additional Indebtedness.
Section 5.8. Transfer of Assets and Business. (a) Each of the
Obligors is in possession of and operating in compliance in all respects with
all franchises, grants, authorizations, approvals, licenses, permits, easements,
rights-of-way, consents, certificates and orders required to own, lease or use
its properties and to permit the conduct of the Business as now conducted and
proposed to be conducted, except for those franchises, grants, authorizations,
approvals, licenses, permits, easements, rights-of-way, consents, certificates
and orders (collectively, "Permitted Exceptions") (i) which are not required at
this time and are routine or administrative in nature and are expected in the
reasonable judgment of Star/Petro or the General Partner, as the case may be, to
be obtained or given in the ordinary course of business after the date of the
Closing, or (ii) which, if not obtained or given, would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Each of the Obligors has (i) good and marketable title to the portion
of the Assets constituting real property owned in fee simple by such Obligor,
(ii) good and valid leasehold interests in the portion of the Assets
constituting real property and leased by such Obligor and
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(iii) good and sufficient title to the portion of the Assets constituting
personal property for the use and operation of such personal property as it has
been used in the past and as it is proposed to be used in the Business, in each
case subject to no Liens except Permitted Encumbrances. The Assets are all of
the assets and properties necessary to enable the Obligors to conduct the
Business and include all options to purchase or rights of first refusal granted
to or for the General Partner with respect to any of the Assets leased by the
General Partner. Each of the Obligors enjoys peaceful and undisturbed
possession under all leases necessary for the operation of its properties and
assets, and all such leases are valid and subsisting and are in full force and
effect. Except to perfect and to protect security interests of the character
described by Section 10.2, (A) at the time of the Closing, no effective
financing statement under the Uniform Commercial Code which names either of the
Obligors or the General Partner (with respect to any of the Assets) as debtor,
which individually or in the aggregate relates to any part of the Assets, will
be on file in any jurisdiction and (B) at the time of the Closing, neither of
the Obligors nor the General Partner (with respect to the Assets) will have
signed any effective financing statement (other than financing statements in
favor of the Trustee) or any effective security agreement, which relates to any
part of the Assets, authorizing any secured party thereunder to file any such
financing statement, except for financing statements to be executed and filed in
connection with the Closing.
Section 5.9. Litigation, Etc. There is no action, proceeding or
investigation pending or, to the best knowledge of either of the Obligors or the
General Partner upon reasonable inquiry, threatened (or any basis therefor known
to either of the Obligors or the General Partner) which questions the validity
of this Agreement, any other Operative Agreement or the Notes or any action
taken or to be taken pursuant to this Agreement, any other Operative Agreement
or the Notes, or which might have, either in any case or in the aggregate, a
Material Adverse Effect.
Section 5.10. Compliance with Other Instruments, Etc. Neither of
the Obligors nor the General Partner (a) is in violation of, in the case of Star
Gas, any term of the Partnership Agreement or, in the case of Star/Petro, its
certificate of incorporation or by-laws, or, in the case of the General Partner,
its limited liability company agreement, or (b) is in violation of any term of
any other agreement or instrument to which such Obligor or the General Partner
is a party or by which any of them or any of their properties is bound or any
term of any applicable law, ordinance, rule or regulation of any governmental
authority or any term of any applicable order, judgment or decree of any court,
arbitrator or governmental authority, the consequences of which, in the case of
clause (b), would have a Material Adverse Effect; the execution, delivery and
performance by each of the Obligors and the General Partner of this Agreement
and the other Operative Agreements to which it is a party and the Notes will not
result in any violation of or be in conflict with or constitute a default under
any such term or result in the creation of (or impose any obligation on either
of the Obligors or the General Partner to create) any Lien upon any of the
properties or assets of either of the Obligors or the General Partner prohibited
by any such term; and there is no such term the compliance with which would
have, or in the future may in the reasonable judgment of either of the Obligors
or the General Partner be likely to have, a Material Adverse Effect.
Section 5.11. Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any governmental authority is
required for the valid execution, delivery
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and performance of this Agreement or the other Operative Agreements (other than
Permitted Exceptions), and no such consent, approval, authorization, declaration
or filing is required for the valid offer, issue, sale and delivery of the Notes
pursuant to this Agreement.
Section 5.12. Offer of Notes. Neither of the Obligors nor any of
their Affiliates nor anyone acting on any of their behalf has directly or
indirectly offered the Notes or any part thereof or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, anyone other than the
Purchasers and not more than nine other institutional investors. Neither of the
Obligors nor the General Partner nor anyone acting on any of their behalf has
taken or will take any action which would subject the issuance and sale of the
Notes to the registration and prospectus delivery provisions of the Securities
Act of 1933, as amended, or to the registration or qualification provisions of
any securities or Blue Sky law of any applicable jurisdiction or require
registration of any Security Document under the Trust Indenture Act of 1939, as
amended.
Section 5.13. Use of Proceeds. The proceeds of the sale of the
Notes will be used to repay Indebtedness incurred under the Bank Credit
Facilities and for general partnership purposes.
Section 5.14. Federal Reserve Regulations. Neither of the
Obligors nor the General Partner will, directly or indirectly, use any of the
proceeds of the sale of the Notes for the purpose, whether immediate, incidental
or ultimate, of buying a "margin stock" or of maintaining, reducing or retiring
any indebtedness originally incurred to purchase a stock that is currently a
"margin stock," or for any other purpose which might constitute this transaction
a "purpose credit," in each case within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System (12 C.F.R. 221, as amended), or
otherwise take or permit to be taken any action which would involve a violation
of such Regulation U or of Regulation X (12 C.F.R. 224, as amended) or any other
applicable regulation of such Board. No indebtedness being reduced or retired,
directly or indirectly, out of the proceeds of the sale of the Notes was
incurred for the purpose of purchasing or carrying any stock which is currently
a "margin stock," and none of the Obligors, the General Partner or the Public
Partnership owns or has any present intention of acquiring any amount of such
"margin stock."
Section 5.15. Investment Company Act. Neither of the Obligors nor
the General Partner is an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.16. Public Utility Holding Company Act; Federal Power Act.
Neither of the Obligors nor the General Partner is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended; none of
the Obligors, the General Partner or the issue and sale of the Notes is subject
to regulation under such Act; and neither of the Obligors nor the General
Partner is a "public utility" as such term is defined in the Federal Power Act,
as amended.
Section 5.17. ERISA. (a) None of the Obligors, the General Partner
or any Related Person (other than Petro or any of its Non-Related Subsidiaries)
has ever established, maintained,
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contributed to or been obligated to contribute to, and neither of the Obligors
nor any Related Person of either of the Obligors has any liability or obligation
with respect to, any Plan. Neither of the Obligors nor any Related Person of
either of the Obligors has assumed, either by agreement (including the
Partnership Agreement and the other Operative Agreements), by operation of law
or otherwise, any liability or obligation with respect to any "employee benefit
plan" (as defined in ERISA) or any other compensation or benefit arrangement,
agreement, policy, practice or understanding and neither of the Obligors nor any
Related Person of either of the Obligors has any liability or obligation to
provide any amount or type of compensation or benefit in respect of any employee
or former employee of the Business which relates to periods, services performed
or benefits or amounts accrued prior to the transfer of the Business or the
Assets pursuant to the Operative Agreements and the transactions contemplated
thereby. None of the Obligors, the General Partner nor any Related Person has
incurred any material liability under Title IV of ERISA with respect to any such
Plan and no event or condition exists or has occurred as a result of which such
a liability would reasonably be expected to be incurred. None of the Obligors,
the General Partner nor any Related Person has engaged in any transaction,
including the transactions contemplated hereunder which could subject either of
the Obligors or any Related Person of either of the Obligors to liability
pursuant to section 4069(a) or 4212(c) of ERISA. There has been no reportable
event (within the meaning of section 4043(b) of ERISA) or any other event or
condition with respect to any Plan which presents a risk of the termination of,
or the appointment of a trustee to administer, any such Plan by the PBGC. No
prohibited transaction (within the meaning of section 406(a) of ERISA or
section 4975 of the Code) exists or has occurred with respect to any Plan which
has subjected or could reasonably be expected to subject either of the Obligors
or the General Partner to a material liability under section 502(i) of ERISA or
section 4975 of the Code. No liability to the PBGC (other than liability for
premiums not yet due) has been or is expected to be incurred with regard to any
Plan by either of the Obligors, the General Partner nor any Related Person.
Neither of the Obligors, the General Partner nor any Related Person contributes
or is obligated to contribute or has ever contributed or been obligated to
contribute to any single employer plan that has at least two contributing
sponsors not under common control. Neither of the Obligors is, nor are either of
them expected to become, a "substantial employer" as defined in section
4001(a)(2) of ERISA with respect to any Plan. Neither of the Obligors nor the
General Partner has ever maintained or contributed to any plan or arrangement
which provides post-employment welfare benefits or coverage (other than
continuation coverage provided pursuant to section 4980B of the Code).
(b) The execution and delivery of this Agreement and the issue and sale of
the Notes will not involve any non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA or section 4975 of the Code. The
representations by each of the Obligors and the General Partner in the
immediately preceding sentence are made in reliance upon and subject to the
accuracy of each Purchaser's representation in Section 6.2 of this Agreement as
to the source of the funds to be used to pay the purchase price of the Notes to
be purchased by such Purchaser. With respect to each employee benefit plan
identified to the Obligors in accordance with clause (c) of Section 6.2 of this
Agreement, neither of the Obligors nor the General Partner nor any "affiliated"
(as defined in Section V(c) of the QPAM Exemption) of either of the Obligors or
the General Partner has at this time, and has not exercised at any time within
the one year period preceding the date of the Closing, the authority to appoint
or terminate any Purchaser as manager of any of the
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assets of any such plan or to negotiate the terms of any management agreement
with such Purchaser on behalf of any such plan.
Section 5.18. Environmental Matters. (a) Except as disclosed in
Schedule 5.18, each of the Obligors and the General Partner is in compliance
with all Environmental Laws applicable to it or to the Business or Assets except
where such noncompliance would not have a Material Adverse Effect. Each of the
Obligors has timely and properly applied for renewal of all environmental
permits or licenses that have expired or are about to expire and are necessary
for the conduct of the Business as now conducted and as proposed to be
conducted, except where the failure to timely and properly reapply would not
have a Material Adverse Effect. Schedule 5.18 lists (i) all notices from
Federal, state or local environmental agencies to either of the Obligors or to
the General Partner citing environmental violations that have not been finally
resolved and disposed of, and no such violation, whether or not notice regarding
such violation is listed on Schedule 5.18, if ultimately resolved against either
of the Obligors or the General Partner, as the case may be, would have a
Material Adverse Effect, and (ii) all current reports filed by either of the
Obligors or the General Partner with any Federal, state or local environmental
agency having jurisdiction over the Assets, true and complete copies of which
reports have been made available to the Purchasers and their special counsel and
environmental advisor, if any. Notwithstanding any such notice, the Obligors
and the General Partner are currently operating in all material respects within
the limits set forth in such environmental permits or licenses and any current
noncompliance with such permits or licenses will not result in any material
liability or penalty to either of the Obligors or the General Partner or in the
revocation, loss or termination of any such environmental permits or licenses,
the revocation, loss or termination of which would have a Material Adverse
Effect.
(b) Except as disclosed in Schedule 5.18, all facilities located on the
real property included in the Assets which are subject to regulation by RCRA are
and have been operated in compliance with RCRA, except where such noncompliance
would not have a Material Adverse Effect and neither of the Obligors nor the
General Partner has received, or, to the knowledge of either of the Obligors or
the General Partner, been threatened with, a notice of violation of RCRA
regarding such facilities.
(c) Except as disclosed in Schedule 5.18, no hazardous substance (as
defined in CERCLA) or hazardous waste (as defined in RCRA) is located or present
at any of the real property included in the Assets in violation of any
Environmental Law, which violation will have a Material Adverse Effect, and with
respect to such real property there has not occurred (i) any release or
threatened release of any such hazardous substance, (ii) any discharge or
threatened discharge of any substance into ground, surface, or navigable waters
which violates any Federal, state, local or foreign laws, rules or regulations
concerning water pollution, or (iii) any assertion of any Lien pursuant to
Environmental Laws resulting from any use, spill, discharge or clean-up of any
hazardous or toxic substance or waste, which occurrence will have a Material
Adverse Effect.
(d) None of the matters disclosed in Schedule 5.18, either individually or
in the aggregate, involves a violation of or a liability under any Environmental
Law the consequences of which will have a Material Adverse Effect.
-11-
(e) Star Gas has performed all of the investigatory and remedial work
recommended in the Environmental Assessment Report prepared by Fuss & O'Neil,
Inc. dated December 7, 1995 (the "Fuss & O'Neil Report"), covering the
properties owned by or to be transferred to Star Gas. To the extent that any
such additional investigation recommended by the Fuss & O'Neil Report indicated
that any additional work or remediation was required by applicable laws, Star
Gas has completed such additional work or remediation.
(f) With respect to the above ground storage tanks located at the
facilities owned by Star Gas at ▇▇▇▇▇▇▇ and Hebron, Ohio, Star Gas has completed
the construction of secondary containment walls or barriers designed to contain
any spills or leaks from such tanks. The construction of such secondary
containment walls or barriers were performed in accordance with all applicable
laws and current industry standards for such walls or barriers.
Section 5.19. Foreign Assets Control Regulations, Etc. The issue and
sale of the Notes by the Obligors and their use of the proceeds thereof as
contemplated by this Agreement will not violate any of the regulations (other
than those regulations, if any, that are implicated solely as a result of the
actions of the Purchasers) administered by the Office of Foreign Assets Control,
the United States Department of the Treasury.
Section 5.20. Disclosure. Neither this Agreement, the other
Operative Agreements, the Offering Materials, nor any other historical financial
statement, document, certificate or instrument delivered to any Purchaser by or
on behalf of either Obligor, any Restricted Subsidiary or the General Partner in
connection with the transactions contemplated by this Agreement, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein not misleading. There is no
fact known to either of the Obligors or the General Partner which has or in the
future would (so far as either of the Obligors or the General Partner can now
foresee) have a Material Adverse Effect which has not been set forth or referred
to in this Agreement or the Offering Materials.
Section 5.21. Chief Executive Office. The chief executive office of
each of the Obligors and the General Partner and the office where each maintains
its records relating to the transactions contemplated by the Operative
Agreements is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Section 6. Purchaser's Representations; Source of Funds.
Section 6.1. Purchase for Investment. Each Purchaser represents
that it is purchasing the Notes for its own account or for one or more separate
accounts maintained by such Purchaser or for the account of one or more pension
or trust funds, in each case not with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act of 1933, as
amended, or with any present intention of distributing or selling any of the
Notes, provided that the disposition of such Purchaser's property shall at all
times be within its control. If a Purchaser is purchasing for the account of
one or more pension or trust funds (other than pension or trust funds included
in the general account of an insurance company), such Purchaser represents that
(except to the extent that such Purchaser has otherwise advised ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ and the Obligors in writing) it has sole investment discretion with
respect to the purchase of the Notes to
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be purchased by such Purchaser pursuant to this Agreement and the determination
and decision on such Purchaser's behalf to purchase such Notes for such pension
or trust funds is being made by the same individual or group of individuals who
customarily pass on such investments.
Section 6.2. Source of Funds. Each Purchaser represents that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Purchaser to pay the purchase price of the
Notes purchased by such Purchaser hereunder:
(a) if such Purchaser is an insurance company, no part of such funds
constitutes assets allocated to any separate account maintained by such
Purchaser in which an employee benefit plan (or its related trust) has any
interest other than a separate account that is maintained solely in
connection with its fixed contractual obligations under which the amounts
payable, or credited, to such plan and to any participant or beneficiary of
such plan (including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(b) if such Purchaser is an insurance company, to the extent that
any of such funds constitutes assets allocated to any separate account
maintained by such Purchaser, (i) such separate account is a "pooled
separate account" within the meaning of Prohibited Transaction Class
Exemption 90-1, in which case such Purchaser has disclosed to the Obligors
the names of each employee benefit plan whose assets in such separate
account exceed 10% of the total assets or are expected to exceed 10% of the
total assets of such account as of the date of such purchase (and for the
purposes of this subdivision (b), all employee benefit plans maintained by
the same employer or employee organization are deemed to be a single plan),
or (ii) such separate account contains only the assets of a specific
employee benefit plan, complete and accurate information as to the identity
of which such Purchaser has delivered to the Obligors in writing; or
(c) if such Purchaser is a "qualified professional asset manager" or
"QPAM" (as defined in Part V of Prohibited Transaction Class Exemption 84-
14, issued March 13, 1984 (the "QPAM Exemption")), all of such funds
constitute assets of an "investment fund" (as defined in Part V of the QPAM
Exemption) managed by such Purchaser, no employee benefit plan assets which
are included in such investment fund, when combined with the assets of all
other employee benefit plans (i) established or maintained by the same
employer or an affiliate of such employer or by the same employee
organization and (ii) managed by such Purchaser, exceed 20% of the total
client assets managed by such Purchaser, the conditions of Section I(g) of
the QPAM Exemption are satisfied and such Purchaser has disclosed to the
Obligors the names of all employee benefit plans whose assets are included
in such investment fund; or
(d) if such Purchaser is other than an insurance company, all or a
portion of such funds consists of funds which do not constitute assets of
any employee benefit plan (other than a governmental plan exempt from the
coverage of ERISA) and the remaining portion, if any, of such funds
consists of funds which may be deemed to constitute assets of one or more
specific employee benefit plans, complete and accurate information as to
the identity of each of which such Purchaser has delivered to the Obligors
in writing; or
-13-
(e) if such Purchaser is an insurance company, to the extent that
any of such funds constitutes assets of such Purchaser's general account,
such Purchaser has disclosed to the Obligors the names of each employee
benefit plan with respect to which the amount of the reserves and
liabilities for such Purchaser's general account contracts held by or on
behalf of such plan (within the meaning of Prohibited Transaction Class
Exemption 95-60) exceed or are expected to exceed on the date of such
purchase 10% of the total reserves and liabilities of such Purchaser's
general account (and for the purposes of this subdivision (e), all employee
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan).
As used in this Section 6.2, the terms "employee benefit plan," "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in section 3 of ERISA.
Section 7. Accounting; Financial Statements and Other Information.
Each Obligor will maintain, and each Obligor will cause each Restricted
Subsidiary to maintain, a system of accounting established and administered in
accordance with GAAP, and will accrue, and will cause each Restricted Subsidiary
to accrue, all such liabilities as shall be required by GAAP. The Obligors will
deliver to each Purchaser (in duplicate, unless such Purchaser has advised the
Obligors otherwise), so long as such Purchaser shall be entitled to purchase
Notes under this Agreement or such Purchaser or such Purchaser's nominee shall
be the holder of any Notes, and to each other institutional investor holding any
Notes:
(a)(i) as soon as practicable, but in any event within 60 days after
the end of each of the first three quarterly fiscal periods in each fiscal
year of Star Gas, consolidated (and (a) if the Restricted Subsidiaries
constitute a Substantial Portion, then as to the Restricted Subsidiaries or
(b) if the Restricted Subsidiaries do not constitute a Substantial Portion,
but one or more Restricted Subsidiaries have outstanding Indebtedness owing
to Persons other than Star Gas or any Restricted Subsidiary, or other than
Star/Petro Intercompany Subordinated Debt, then as to such Restricted
Subsidiaries, consolidating) balance sheets of Star Gas and the Restricted
Subsidiaries as at the end of such period and the related consolidated
(and, as to statements of operations and cash flows, if applicable and as
appropriate, consolidating) statements of operations, partners' capital and
cash flows of Star Gas and the Restricted Subsidiaries (A) for such period
and (B) (in the case of the second and third quarterly periods) for the
period from the beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative form the
consolidated and, where applicable and as appropriate, consolidating
figures for the corresponding periods of the previous fiscal year, all in
reasonable detail and certified by the principal financial officer of the
general partner of Star Gas as presenting fairly, in all material respects,
the information contained therein (subject to changes resulting from normal
year-end adjustments), in accordance with GAAP applied on a basis
consistent with prior fiscal periods, (ii) as soon as practicable, but in
any event within 60 days after the end of each of the first three quarterly
fiscal periods in each fiscal year of Star Gas, financial statements of the
type described in clause (i) but adjusted to show Petro Holdings as an
investment of, and not consolidated with, Star Gas, provided that delivery
within the time period specified above of copies of the Public
Partnership's Quarterly
-14-
Report on Form 10-Q prepared in compliance with the requirements therefor
and filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements hereof, but only to the extent such reports
otherwise satisfy the requirements of clause (i) and clause (ii) of this
Section 7(a) (for purposes of this Section 7, "Substantial Portion" shall
mean that either (x) the book value of the assets of the Restricted
Subsidiaries exceed 5% of the book value of the consolidated assets of Star
Gas and the Restricted Subsidiaries, or (y) the Restricted Subsidiaries
account of more than 5% of the Consolidated Net Income of Star Gas and the
Restricted Subsidiaries, in each case in respect of the four fiscal
quarters ended as of the date of the applicable financial statement,
provided that, with respect to Star/Petro, (I) the book value of the common
stock of Petro Holdings shall be excluded from the determination of
Substantial Portion in clause (x) above and (II) the income of Petro
Holdings shall be excluded from the determination of Substantial Portion in
clause (y) above);
(b)(i) as soon as practicable, but in any event within 120 days
after the end of each fiscal year of Star Gas, consolidated (and (a) if the
Restricted Subsidiaries constitute a Substantial Portion, then as to the
Restricted Subsidiaries or (b) if the Restricted Subsidiaries do not
constitute a Substantial Portion, but one or more Restricted Subsidiaries
have outstanding Indebtedness owing to Persons other than Star Gas or any
Restricted Subsidiary, or other than Star/Petro Intercompany Subordinated
Debt, then as to such Restricted Subsidiaries, consolidating) balance
sheets of Star Gas and the Restricted Subsidiaries and the consolidated
balance sheet of the general partner of Star Gas as at the end of such year
and the related consolidated (and, as to statements of operations and cash
flows, if applicable and as appropriate, consolidating) statements of
operations, partners' capital and cash flows of Star Gas and the Restricted
Subsidiaries, and the consolidated statements of income, surplus, cash flow
and members' equity of the general partner of Star Gas for such fiscal
year, setting forth in each case in comparative form the consolidated and,
where applicable and as appropriate, consolidating figures for the previous
fiscal year, all in reasonable detail, and (ii) as soon as practicable, but
in any event within 120 days after the end of each fiscal year of Star Gas,
financial statements of the type described in clause (i) but adjusted to
show Petro Holdings as an investment of, and not consolidated with Star
Gas, provided that delivery within the time periods specified above of
copies of the Public Partnership's Annual Report on Form 10-K prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements hereof, but
only to the extent such reports otherwise satisfy the requirements of
clause (i) and clause (ii) of this Section 7(b) and (x) in the case of such
consolidated financial statements of Star Gas specified in clause (i) and
with respect to the financial statements specified in clause
(ii), accompanied by a report thereon of KPMG Peat Marwick LLP or other
independent public accountants of recognized national standing selected by
Star Gas and acceptable to the Required Holders, which report shall state
that such consolidated financial statements present fairly the financial
position of Star Gas and the Subsidiaries as at the dates indicated and the
results of their operations and cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and
that the audit by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards in effect in the United States
-15-
from time to time (except that with respect to the financial statements
specified in clause (ii), Petro Holdings and its Subsidiaries have not been
consolidated), and (y) in the case of such consolidated financial
statements of the general partner of Star Gas, such consolidating financial
statements of Star Gas as described in clause (i), and the financial
statements specified in clause (ii), certified by the principal financial
officer of the general partner of Star Gas, as presenting fairly the
information contained therein, in accordance with GAAP applied on a basis
consistent with prior fiscal periods;
(c) together with each delivery of financial statements pursuant to
subdivisions (a) and (b) of this Section 7, an Officers' Certificate of
each Obligor (i) stating that the signers have reviewed the terms of this
Agreement and the other Operative Agreements and the Notes, and have made,
or caused to be made under their supervision, a review in reasonable detail
of the transactions and condition of the Obligors and the Restricted
Subsidiaries during the accounting period covered by such financial
statements and that the signers do not have knowledge of the existence and
continuance as at the date of such Officers' Certificate of any condition
or event which constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event exists, specifying the nature
and period of existence thereof and what action the Obligors have taken or
are taking or propose to take with respect thereto, (ii) specifying the
amount available at the end of such accounting period for Restricted
Payments in compliance with Section 10.4 and showing in reasonable detail
all calculations required in arriving at such amount, (iii) demonstrating
in reasonable detail, if applicable, compliance during and at the end of
such accounting period with the restrictions contained in Sections 10.1(b),
(d), (e), (f), (h) and (i), 10.3(b), 10.7(a)(ii), 10.7(a)(iii) and
10.7(c)(iii), (iv) if not specified in the related financial statements
being delivered pursuant to subdivisions (a) and (b) above, specifying the
aggregate amount of interest paid or accrued by the Obligors and the
Restricted Subsidiaries, and the aggregate amount of depreciation,
depletion and amortization charged on the books of the Obligors and the
Restricted Subsidiaries, during the fiscal period covered by such financial
statements and describing in reasonable detail the number and nature of the
parcels of real property, or rights thereto or interests therein, caused to
be released by the Obligors from the Liens of the Security Documents
pursuant to the Trust Agreement and in the case of the fee owned property,
the value of the fee owned property caused to be released by the Obligors
during such accounting period;
(d) together with each delivery of consolidated financial statements
pursuant to subdivision (b) of this Section 7, a written statement by the
independent public accountants giving the report thereon (i) stating that
in connection with their audit examination, the terms of this Agreement,
the other Operative Agreements and the Notes were reviewed to the extent
considered necessary for the purpose of expressing an opinion on the
consolidated financial statements and for making the statement contained in
clause (ii) hereof ("it being understood that no special audit procedures
in addition to those required by generally accepted auditing standards then
in effect in the United States shall be required) and (ii) stating whether,
in the course of their audit examination, they obtained knowledge (and
whether, as of the date of such written statement, they have knowledge) of
the existence and continuance of any condition or event which constitutes
-16-
an Event of Default or Potential Event of Default, and, if so, specifying
the nature and period of existence thereof;
(e) promptly upon receipt thereof, copies of all reports submitted
to Star Gas by independent public accountants in connection with each
special audit or each annual or interim audit of the books of Star Gas or
any Restricted Subsidiary made by such accountants, including, without
limitation, the comment letter submitted by the accountants to management
in connection with their annual audit;
(f) promptly upon their becoming publicly available, copies of all
financial statements, reports, notices and proxy statements sent or made
available by either Obligor, the general partner of Star Gas or the Public
Partnership to all of its security holders in compliance with the
Securities Exchange Act of 1934, as amended from time to time, or any
comparable Federal or state laws relating to the disclosure by any Person
of information to its security holders, of all regular and periodic reports
and all registration statements and prospectuses filed by either Obligor,
the general partner of Star Gas or the Public Partnership with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions (other than
Registration Statements on Form S-8), and of all press releases and other
statements made available by either Obligor, the general partner of Star
Gas or the Public Partnership to the public concerning material
developments in the business of either Obligor, the general partner of Star
Gas or the Public Partnership, as the case may be;
(g) promptly, but in any event within five days, after any
Responsible Officer knows or should (in the course of the normal
performance of his or her duties) know that (i) any condition or event
which constitutes an Event of Default or Potential Event of Default has
occurred or exists, or is expected to occur or exist, (ii) the holder of
any Note has given any notice or taken any other action with respect to a
claimed Event of Default or Potential Event of Default under this Agreement
or default under any other Operative Agreement or (iii) any Person has
given any notice to either Obligor or any Restricted Subsidiary or taken
any other action with respect to a claimed default or event or condition of
the type referred to in Section 11(f), an Officers' Certificate of each
Obligor describing the same and the period of existence thereof and what
action the Obligors have taken, are taking and propose to take with respect
thereto;
(h) promptly, but in any event within five days, after any
Responsible Officer knows or should (in the course of the normal
performance of his or her duties) know of the commencement of or
significant development in any material litigation or material proceeding
(including those regarding environmental matters) with respect to either
Obligor or affecting either Obligor, any Restricted Subsidiary or any of
their assets, a written notice describing in reasonable detail such
commencement of or significant development in such litigation or
proceeding;
(i) promptly, but in any event within five days after any
Responsible Officer knows or should (in the course of the normal
performance of his or her duties) know that any of the events or conditions
specified below with respect to any Plan has occurred or exists, or is
expected to occur or
-17-
exist, a statement setting forth details respecting such event or condition
and the action, if any, that the Obligors or any Related Person has taken,
is taking and proposes to take or cause to be taken with respect thereto
(and a copy of any notice or report filed with or given to or communication
received from the PBGC, the Internal Revenue Service or the Department of
Labor with respect to such event or condition):
(i) any reportable event, as defined in section 4043(b) of
ERISA and the regulations issued thereunder;
(ii) the filing under section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) a substantial cessation of operations within the meaning
of section 4062(e) of ERISA under circumstances which could result in
the treatment of either Obligor or any Related Person as a substantial
employer under a "multiple employer plan" or the application of the
provisions of section 4062, 4063 or 4064 of ERISA to either Obligor or
any Related Person;
(iv) the taking of any steps by the PBGC or the institution by
the PBGC of proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by either Obligor or any Related Person of a
notice from a Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan;
(v) the complete or partial withdrawal by either Obligor or
any Related Person under section 4063, 4203 or 4205 of ERISA from a
Plan which is a "multiple employer plan" or a Multiemployer Plan, or
the receipt by either Obligor or any Related Person of notice from a
Multiemployer Plan regarding any alleged withdrawal or that it intends
to impose withdrawal liability on either Obligor or any Related Person
or that it is in reorganization or is insolvent within the meaning of
section 4241 or 4245 of ERISA or that it intends to terminate under
section 4041A of ERISA or from a "multiple employer plan" that it
intends to terminate;
(vi) the taking of any steps concerning the threat or the
institution of a proceeding against either Obligor or any Related
Person to enforce section 515 of ERISA;
(vii) the occurrence or existence of any event or series of
events which could result in a liability to either Obligor or any
Related Person pursuant to section 4069(a) or 4212(c) of ERISA;
(viii) the failure to make a contribution to any Plan, which
failure, either alone or when taken together with any other such
failure, is sufficient to result in the imposition of a Lien on any
property of either Obligor or any Related Person
-18-
pursuant to section 302(f) of ERISA or section 412(n) of the Code or
could result in the imposition of a material tax or material penalty
pursuant to section 4971 of the Code on either Obligor or any Related
Person;
(ix) the amendment of any Plan in a manner which would be
treated as a termination of such Plan under section 4041(e) of ERISA
or require either Obligor or any Related Person to provide security to
such Plan pursuant to section 307 of ERISA or section 401(a)(29) of
the Code; or
(x) the incurrence of liability in connection with the
occurrence of a "prohibited transaction" (within the meaning of
section 406 of ERISA or section 4975 of the Code);
(j) promptly, but in any event within five days, after an officer of
either of the Obligors, any Subsidiary or the general partner of Star Gas
receives any notice or request from any Person (other than any Affiliate or
any agent, attorney or similar party employed by either Obligor or the
general partner of Star Gas) for information, or if either Obligor, any
Subsidiary or the general partner of Star Gas provides any notice or
information to any such Person (other than any Affiliate or any agent,
attorney or similar party employed by either Obligor or the general partner
of Star Gas) concerning the presence or release of any hazardous substance
(as defined in CERCLA) or hazardous waste (as defined in RCRA) or other
contaminants (as defined by any applicable Federal, state, local or foreign
laws) within, on, from, relating to or affecting any property owned,
leased, or subleased by either Obligor, any Subsidiary or the general
partner of Star Gas, copies of each such notice, request or information;
and
(k) with reasonable promptness, such other financial reports and
information and data with respect to either Obligor, any Restricted
Subsidiary, any Subsidiary (to the extent such reports, information and
data relate to environmental matters or any material litigation or
proceeding) or the general partner of Star Gas as from time to time may be
requested by the holder of any Note.
Section 8. Inspection.
Each Obligor will permit or, in the case of Star Gas, cause the general
partner of Star Gas to permit any authorized representatives designated by a
Purchaser, so long as such Purchaser shall be entitled to purchase the Notes
under this Agreement or such Purchaser or such Purchaser's nominee shall be the
holder of any Notes, or by any other institutional holder of any Notes, to visit
and inspect any of the properties of either Obligor, any Restricted Subsidiary
and any other Subsidiary (to the extent relating to environmental or litigation
matters) and any properties of the general partner of Star Gas or of such
general partner's Subsidiaries relating to the Business, including the books of
account of the Obligors, the Restricted Subsidiaries, such other Subsidiaries,
the general partner of Star Gas and such general partner's Subsidiaries, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and (with reasonable notice)
independent public accountants (and by this provision each of the Obligors and
the general partner of Star Gas authorizes such accountants to
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discuss with such representatives the affairs, finances and accounts of such
Obligor, any Restricted Subsidiary, such other Subsidiaries, the general partner
of Star Gas or any of such general partner's Subsidiaries, as the case may be),
all at such times and as often as may be requested, provided that the Obligors
will bear the expense for the foregoing if an Event of Default or Potential
Event of Default has occurred and is continuing.
Section 9. Prepayment of Notes.
Section 9.1. Required Prepayments of the Notes. (a) The Series A Notes
shall not be subject to a required prepayment prior to the final maturity
thereof.
(b) On March 30, 2011 and on each March 30 thereafter to and including
March 30, 2014, the Obligors will prepay $3,000,000 aggregate principal amount
of the Series B Notes (or such lesser principal amount of the Series B Notes as
shall at the time be outstanding), at the principal amount of the Series B Notes
so prepaid, without premium, together with interest accrued thereon. No
acquisition of the Series B Notes by either Obligor or any of their Affiliates
shall relieve the Obligors from their obligation to make the required
prepayments provided for in this Section 9.1(b).
(c) Any partial prepayment of the Notes pursuant to Section 9.2, 9.3 or 9.4
shall be applied pro rata to the Series A Notes and the Series B Notes then
outstanding to reduce (i) in the case of the Series A Notes, the outstanding
principal amount of the Series A Notes and (ii) in the case of the Series B
Notes, the prepayments required under Section 9.1(b) pro rata; provided that, in
the case of the Series B Notes, any amounts prepaid pursuant to Section 9.3 on
March 30, 2011 or any March 30 thereafter to and including March 30, 2014, may
be applied first to satisfy the prepayment required on such date under
Section 9.1(b).
(d) On the maturity date of each series of Notes, the Obligors will pay
the then outstanding principal amount of such series of Notes together with
interest accrued thereon.
Section 9.2. Optional Prepayments of the Notes with Make Whole Amount.
The Notes shall be subject to prepayment, in whole at any time or from time to
time in part (in an amount of not less than $1,000,000), at the option of the
Obligors, upon notice as provided in Section 9.5 at 100% of the principal amount
of the Notes so prepaid plus interest thereon to the prepayment date and the
Make Whole Amount.
Section 9.3. Contingent Prepayments on Disposition of Property. If at
any time either Obligor or any of the Restricted Subsidiaries disposes
of property or such property shall be damaged, destroyed or taken in eminent
domain or there shall be title insurance proceeds with respect to such property,
in any such case, with the result that there are Excess Proceeds, and the
Obligors do not apply such Excess Proceeds in the manner described in
Section 10.7(c)(iii)(B)(x), the Obligors shall prepay, upon notice as provided
in Section 9.5 (which notice shall be given not later than 180 days after the
date of such sale of property), a principal amount of the outstanding Notes
equal to the amount of such Excess Proceeds allocable to the Notes, determined
by allocating such Excess Proceeds pro rata among the holders of the Notes, the
1998 Notes, the 1995 Notes and Parity Debt, if any, outstanding on the date such
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prepayment is to be made, according to the aggregate then unpaid principal
amounts of the Notes (and the Make Whole Amount, if any, on the principal amount
of the Notes to be prepaid), the 1998 Notes, the 1995 Notes and Parity Debt,
respectively; provided, that if such Excess Proceeds are received within 180
days of a scheduled prepayment of the Series B Notes pursuant to Section 9.1(b),
the Excess Proceeds allocable to the Series B Notes may first be applied to such
scheduled prepayment. If the Obligors shall have elected to apply any portion of
the Excess Proceeds in accordance with the proviso to the immediately preceding
sentence, the Obligors shall notify the holders of the Series B Notes of such
application within 5 days thereof. Each prepayment of Notes pursuant to this
Section 9.3 shall be made at 100% of the principal amount of the Notes to be
prepaid, plus interest thereon to the prepayment date plus, to the extent the
prepayment is not made in satisfaction of a required prepayment in accordance
with Section 9.1(b), the Make Whole Amount thereon.
Section 9.4. Prepayment on Taking or Destruction. In the event that
damage, destruction or a taking shall occur in respect of all or a portion of
the properties subject to any of the Security Documents, or there shall be
proceeds under title insurance policies with respect to any real property, all
Net Insurance Proceeds (as defined in the Mortgages), self-insurance amounts,
Net Awards (as defined in the Mortgages) or title insurance proceeds which, as
of any date, shall not theretofore have been applied to the cost of Restoration
(as defined in the Mortgages) shall be deemed to be proceeds of property
disposed of voluntarily, shall be subject to the provisions of Section 10.7(c)
and, if subdivision (iii)(B)(y) of Section 10.7(c) is applicable thereto, shall
be subject to the prepayment provisions of Section 9.3.
Section 9.5. Notice of Prepayments; Officers Certificate. The Obligors
will give each holder of any Notes irrevocable written notice of each prepayment
under Section 9.2, 9.3 or 9.4 not less than 10 days and not more than 30 days
prior to the date fixed for such prepayment, in each case specifying such
prepayment date, the aggregate principal amount of the Notes and the principal
amount of each Note held by such holder to be prepaid and the Section under
which such prepayment is to be made. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the Make Whole
Amount, if any, with respect thereto, shall become due and payable on such
prepayment date. The Obligors shall, on or before the day on which they provide
such written notice, give telephonic notice of the principal amount of the Notes
to be prepaid and the prepayment date to each holder of any Notes which shall
have designated a recipient of such notices in the Schedule of Purchasers
attached hereto or by notice in writing to the Obligors. Each holder of a Note
shall receive, on the Business Day immediately preceding the date scheduled for
any such prepayment, an Officers' Certificate from each of the Obligors
certifying that the conditions of the Section under which such prepayment is to
be made have been fulfilled and specifying the particulars of such fulfillment.
In the event that there shall have been a partial prepayment of the Notes under
Section 9.2, 9.3 or 9.4, the Obligors shall promptly give notice to the holders
of the Notes, accompanied by an Officers' Certificate from each of the Obligors
setting forth the principal amount of each of the Notes that was prepaid and
specifying how each such amount was determined and, in the case of the Series B
Notes, setting forth the reduced amount of each required prepayment thereafter
becoming due under Section 9.1(b), and certifying that such reduction has been
computed in accordance with Section 9.1(c).
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Section 9.6. Allocation of Partial Prepayments. Upon any partial
prepayment of the Notes, the principal amount so prepaid shall be allocated (in
integral multiples of $1,000 as nearly as practicable) to all Notes at the time
outstanding in proportion to the respective outstanding principal amounts
thereof not theretofore called for prepayment, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made exactly in such
proportion.
Section 9.7. Maturity; Surrender, Etc. In the case of each
prepayment, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable Make
Whole Amount, if any. From and after such date, unless the Obligors shall fail
to pay such principal amount when so due and payable, together with the interest
and Make Whole Amount, if any, as aforesaid, interest on such principal amount
shall cease to accrue. Any Note paid or prepaid in full shall, after such
payment or prepayment in full, be surrendered to the Obligors and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
Section 9.8. Acquisition of Notes. Neither of the Obligors nor
the general partner of Star Gas shall, nor shall either of the Obligors or the
general partner of Star Gas permit any of their respective Subsidiaries or
Affiliates to, prepay or otherwise retire in whole or in part prior to their
stated final maturity (other than by prepayment pursuant to Section 9.1, 9.2,
9.3 or 9.4 or upon acceleration of such final maturity pursuant to Section 11),
or purchase or otherwise acquire, directly or indirectly, Notes held by any
holder or any 1998 Notes, 1995 Notes or Parity Debt (other than pursuant to
scheduled prepayments in accordance with the terms of such Notes, 1998 Notes,
1995 Notes or Parity Debt or any other prepayment of indebtedness outstanding
under the Bank Credit Facilities or any other Parity Debt of a similar revolving
nature). Any Notes prepaid or otherwise retired or purchased or otherwise
acquired by either of the Obligors, the general partner of Star Gas or any of
their respective Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement.
Section 10. Business and Financial Covenants of the Obligors.
Each Obligor, jointly and severally, covenants that from the date of this
Agreement through the Closing and thereafter so long as any of the Notes are
outstanding:
Section 10.1. Indebtedness. Neither Obligor will, nor will either
Obligor permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except that:
(a) the Obligors may become and remain liable with respect to the
Indebtedness evidenced by the 1998 Notes, the 1995 Notes and the Notes;
(b) Star Gas and the Restricted Subsidiaries may become and remain
liable with respect to Funded Debt incurred by Star Gas and the Restricted
Subsidiaries to finance the making of expenditures for the improvement or
repair of or additions to the Assets, or to renew, refund, refinance or
replace any such Funded Debt provided that (i) the aggregate principal
amount of Funded Debt incurred under this Section 10.1(b)
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and outstanding at any time shall not exceed an amount equal to the net
cash proceeds received by Star Gas from the general partner of Star Gas or
from the Public Partnership as a capital contribution or as consideration
for the issuance by Star Gas of additional partnership interests, in each
case for the sole purpose of financing such expenditures, and (ii) if such
Funded Debt is to be secured under the Security Documents as provided in
Section 10.2(i), the agreement or instrument pursuant to which such Funded
Debt is incurred (A) contains no financial or business covenants that are
more restrictive on the Obligors or their Subsidiaries than, or that are in
addition to, those contained in this Section 10 (unless prior to or
simultaneously with the incurrence of such Funded Debt this Agreement is
amended to provide the benefits of such more restrictive covenants to the
holders of the Notes) and (B) specifies no events of default (other than
with respect to the payment of principal and interest on such Funded Debt
or the accuracy of representations and warranties made in connection with
such agreement or instrument) which are capable of occurring prior to the
occurrence of the Events of Default specified in Section 11 (unless prior
to or simultaneously with the incurrence of such Funded Debt this Agreement
is amended to provide the benefit of such events of default to the holders
of the Notes);
(c) any Restricted Subsidiary may become and remain liable with
respect to Indebtedness of such Restricted Subsidiary owing to Star Gas or
to another Restricted Subsidiary, provided that such Indebtedness is
created and is outstanding under an agreement or instrument pursuant to
which such Indebtedness is subordinated to the Notes and to Indebtedness
secured under the Security Documents at least to the extent provided in the
subordination provisions set forth in Exhibit C and provided further that
such Indebtedness is evidenced by an Intercompany Note pledged to the
Trustee;
(d) Star Gas and the Restricted Subsidiaries may become and remain
liable with respect to unsecured Indebtedness owing to the general partner
of Star Gas or an Affiliate of the general partner of Star Gas, provided
that (i) the aggregate principal amount of such Indebtedness of Star Gas
and the Restricted Subsidiaries outstanding at any time shall not be in
excess of $10,000,000 plus Star/Petro Intercompany Subordinated Debt and
(ii) such Indebtedness is created and is outstanding under an agreement or
instrument pursuant to which such Indebtedness is subordinated to the Notes
and to Indebtedness secured under the Security Documents at least to the
extent provided in the subordination provisions set forth in Exhibit C.
(e) Star Gas may become and remain liable with respect to
Indebtedness incurred under the Bank Credit Facilities, provided that
(i) the Initial Acquisition Facility will be in an aggregate
principal amount not in excess of $30,000,000 outstanding at any time,
and
(ii) in respect of the Working Capital Facility:
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(1) there shall be a period of at least 30 consecutive
days during each fiscal year of Star Gas on each day of which
there shall be no such Indebtedness outstanding under the Working
Capital Facility,
(2) the aggregate principal amount of loans in respect of
the Working Capital Facility at any time outstanding thereunder
plus any Tranche A Letter of Credit Exposure (or similar exposure
under letters of credit) in respect of the Working Capital
Facility (collectively, the "Exposure") shall not be in excess of
$30,000,000;
(3) on the date the Exposure exceeds $18,000,000 and on
each day thereafter until the date the Exposure no longer exceeds
$18,000,000 (x) the ratio of Consolidated Cash Flow to
Consolidated Interest Expense will be greater than 2.0 to 1.0,
(y) the Exposure shall not exceed the Borrowing Base except that,
for purposes hereof, the percentage in respect of Eligible
Commodities Inventory included in the definition of Loan Value of
Eligible Commodities Inventory shall be 80%, and (z) Star Gas
will deliver a Borrowing Base Certificate to each holder of a
Note at the same time it delivers a Borrowing Base Certificate to
the Agent or to any Bank under the Bank Credit Facilities;
(for purposes of this subdivision (e), the terms Borrowing Base,
Borrowing Base Certificate, Loan Value of Eligible Commodities
Inventory, Tranche A Letter of Credit Exposure and any other
capitalized term used by reference in any of the foregoing shall
have the meanings specified in the Bank Credit Facilities as in
effect on the date of the Closing);
(f) Star Gas and the Restricted Subsidiaries may become and remain
liable with respect to Indebtedness, in addition to that otherwise
permitted by the foregoing subdivisions of this Section 10.1, if on the
date Star Gas or any Restricted Subsidiary becomes liable with respect to
any such additional Indebtedness and immediately after giving effect
thereto and to the substantially concurrent repayment of any other
Indebtedness (i) the ratio of Consolidated Cash Flow to Consolidated Pro
Forma Debt Service is greater than 2.50 to 1.0 and (ii) the ratio of
Consolidated Cash Flow to Maximum Consolidated Pro Forma Debt Service is
greater than 1.25 to 1.0, provided that, in addition to the foregoing, if
such Indebtedness is Funded Debt incurred by Star Gas or any Restricted
Subsidiary to finance the making of expenditures for the improvement or
repair of or additions to the Assets, and if such Indebtedness is to be
secured under the Security Documents as provided in Section 10.2(i), such
Indebtedness shall be incurred pursuant to an agreement or instrument which
complies with the requirements set forth in clause (ii) of the proviso to
Section 10.1(b);
(g) [Intentionally omitted.]
(h) Star Gas and any Restricted Subsidiary may become and remain
liable with respect to pre-existing Indebtedness relating to any Person,
business or assets acquired by
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Star Gas or such Restricted Subsidiary, as the case may be, provided that
(1) no condition or event shall exist which constitutes an Event of Default
or Potential Event of Default, (2) such Indebtedness was not incurred in
anticipation of the acquisition of such Person, business or assets and
(3) after giving effect to such Person becoming a Restricted Subsidiary, or
the acquisition of such business or assets, Star Gas or such Restricted
Subsidiary could incur at least $1 of additional Indebtedness in compliance
with the requirements set forth in clauses (i) and (ii) of Section 10.1(f);
(i) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, Star Gas and the Restricted Subsidiaries may
become and remain liable with respect to Indebtedness evidenced by Funded
Debt incurred for any extension, renewal, refunding, or replacement of
Indebtedness permitted pursuant to subdivisions (a) and (e) of this
Section 10.1, provided that (i) the principal amount of such Funded Debt
shall not exceed the principal amount of such Indebtedness being extended,
renewed or refunded together with any accrued interest and Make Whole
Amount with respect thereto, (ii) such Funded Debt (if it is in respect of
the Notes) could be incurred in compliance with the requirements set forth
in clauses (i) and (ii) of Section 10.1(f) and (iii) the maturity date of
such Funded Debt shall not be sooner than the maturity date of such
Indebtedness being extended, renewed or refunded;
(j) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, Star Gas and the Restricted Subsidiaries may
become and remain liable with respect to unsecured Indebtedness incurred
for any extension, renewal, refunding or replacement of Indebtedness
permitted pursuant to subdivisions (a), (b), (e), (f) and (h) of this
Section 10.1, or other unsecured Indebtedness permitted by this
Section 10.1, provided that (i) the principal amount of such unsecured
Indebtedness to be incurred shall not exceed the principal amount of such
Indebtedness or such unsecured Indebtedness being extended, renewed or
refunded together with any accrued interest and Make Whole Amount with
respect thereto and (ii) the maturity date of such unsecured Indebtedness
shall not be sooner than the maturity date of such Indebtedness being
extended, renewed or refunded: and
(k) any Restricted Subsidiary may become and remain liable with
respect to Indebtedness evidenced by the Security Documents.
Notwithstanding the foregoing, the aggregate principal amount of all
Indebtedness of all Restricted Subsidiaries at any time outstanding (other than
Indebtedness permitted by Section 10.1(k)) shall not exceed $10 million plus
Star/Petro Intercompany Subordinated Debt. For the purpose of this
Section 10.1, any Person becoming a Restricted Subsidiary after the date of this
Agreement shall be deemed to have become liable with respect to all of its then
outstanding Indebtedness at the time it becomes a Restricted Subsidiary, and any
Person extending, renewing or refunding any Indebtedness shall be deemed to have
become liable with respect to such Indebtedness at the time of such extension,
renewal or refunding. Star Gas or any Restricted Subsidiary shall be deemed to
have become liable with respect to any Indebtedness securing any real property
acquired by Star Gas or such Restricted Subsidiary, as the case may be, at the
time of such acquisition.
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Section 10.2. Liens, Etc. Neither Obligor will, nor will either
Obligor permit any Restricted Subsidiary to, directly or indirectly create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset (including any document or instrument in respect of goods or accounts
receivable) of such Obligor or any Restricted Subsidiary, whether now owned or
held or hereafter acquired, or any income or profits therefrom (whether or not
provision is made for the equal and ratable securing of the Notes in accordance
with the provisions of Section 10.17), except:
(a) Liens for taxes, assessments or other governmental charges the
payment of which is not at the time required by Section 10.9;
(b) Liens of landlords and carriers, vendors, warehousemen,
mechanics, materialmen, repairmen and other like Liens incurred in the
ordinary course of business for sums not yet due or the payment of which is
not at the time required by Section 10.9, in each case not incurred or made
in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security, or (ii) to secure (or to obtain letters of credit that secure)
the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, performance bonds, purchase, construction or sales contracts
and other similar obligations, in each case not incurred or made in
connection with the borrowing of money, the obtaining of advances or credit
or the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after expiration of any such stay;
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, which, in each
case, are granted, entered into or created in the ordinary course of the
business of Star Gas or any Subsidiary and which do not interfere with the
ordinary conduct of the business of Star Gas or any Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary
securing Indebtedness of such Restricted Subsidiary owing to Star Gas or
any other Restricted Subsidiary;
(g) Liens existing on the Assets at the time of the acquisition
thereof by Star Gas and described in Schedule 10.2;
(h) Liens created by any of the Security Documents;
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(i) Liens created by any of the Security Documents securing
Indebtedness incurred in accordance with Section 10.1(b) or, to the extent
incurred to finance the making of capital improvements, repairs and
additions to Star Gas's Assets, Section 10.1(f) (but only to the extent it
complies with the requirements thereof), provided that (1) such Liens are
effected through an amendment to the Security Documents to the extent
necessary to provide the holders of such Indebtedness equal and ratable
security in the property and assets subject to the Security Documents with
the holders of the Notes and of other Indebtedness secured under the
Security Documents as provided in Section 10.1(b) or 10.1(f), (2) the
Security Documents are amended to the extent necessary to extend the Lien
thereof to any property or assets acquired or otherwise financed with the
proceeds of such Indebtedness, (3) Star Gas has delivered to the Trustee an
Officers' Certificate demonstrating that the principal amount of such
Indebtedness does not exceed the lesser of the cost to Star Gas of such
property or assets and the fair market value of such property or assets (as
determined in good faith by the general partner of Star Gas), that such
incurrence of Indebtedness pursuant to Section 10.1(b) or 10.1(f), as the
case may be, complies in all respects with the requirements of such Section
and that the amendments to the Security Documents required by this Section
10.2(i) and the filing and recordation of such amendments and related
supplements will not have a Material Adverse Effect, and (4) Star Gas has
delivered to the Trustee an opinion of counsel reasonably satisfactory to
the Trustee to the effect that the Lien of the Security Documents has
attached and is perfected with respect to such additional property and
assets;
(j) Liens existing on any property of any Person at the time it
becomes a Restricted Subsidiary, or existing prior to the time of
acquisition (and not created in anticipation of such acquisition) upon any
property acquired by Star Gas or any Restricted Subsidiary through
purchase, merger or consolidation or otherwise, whether or not assumed by
Star Gas or such Restricted Subsidiary, or created to secure Indebtedness
incurred under Section 10.1(f) to pay all or any part of the purchase price
("Purchase Money Lien") of property acquired by Star Gas or a Restricted
Subsidiary, provided that (i) any such Lien shall be confined solely to the
item or items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
acquired property, (ii) such item or items of property so acquired (other
than property (which may include stock or other equity interests) subject
to Liens existing prior to the time of acquisition and not created in
anticipation of such acquisition) are not required to become part of the
Mortgaged Property under the terms of the Security Documents, (iii) the
principal amount of the Indebtedness secured by any such Lien shall at no
time exceed an amount equal to the lesser of (A) the cost of such property
to Star Gas or such Restricted Subsidiary, as the case may be, and (B) the
fair market value of such property (as determined in good faith by the
general partner of Star Gas) at the time such Person owning such property
becomes a Restricted Subsidiary or at the time of such acquisition by Star
Gas or such Restricted Subsidiary, as the case may be, (iv) any such
Purchase Money Lien shall be created not later than 90 days after, in the
case of property, its acquisition, or, in the case of improvements, their
completion and (v) any such Lien (other than a Purchase Money Lien) shall
not have been created or assumed in contemplation of
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such Person's becoming a Restricted Subsidiary or such acquisition of
property by Star Gas or any Subsidiary;
(k) Liens in amounts not exceeding $100,000 incurred, required or
provided for under state law in connection with self-insurance
arrangements;
(l) Liens arising from or constituting Permitted Encumbrances; and
(m) any Lien renewing, extending or refunding any Lien permitted by
the foregoing subdivisions of this Section 10.2, provided that (i) the
Indebtedness secured by any such Lien shall not exceed the amount of such
Indebtedness outstanding immediately prior to the renewal, extension or
refunding of such Lien, (ii) no Assets encumbered by any such Lien other
than the Assets encumbered immediately prior to such renewal, extension or
refunding shall be encumbered thereby and (iii) the maturity date of the
Indebtedness secured by any such Lien shall not be sooner than the maturity
date of such Indebtedness outstanding immediately prior to the renewal,
extension or refunding of such Lien.
Section 10.3. Investments, Guaranties, Etc. Neither Obligor will,
nor will either Obligor permit any Restricted Subsidiary to, directly or
indirectly (i) make or own any Investment in any Person, or (ii) create or
become liable with respect to any Guaranty, except:
(a) Star Gas or any Restricted Subsidiary may make and own
Investments in:
(1) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any agency
thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition
thereof,
(2) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and having as at any date of
determination the highest generic rating obtainable from either
Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.,
(3) commercial paper maturing no more than 270 days from the
date of creation thereof and having as at any date of determination
one of the two highest generic ratings obtainable from either Standard
& Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.,
(4) certificates of deposit maturing one year or less from the
date of acquisition thereof issued by commercial banks incorporated
under the laws of the United States of America or any state thereof or
the District of Columbia or Canada, (A) the commercial paper or other
short-term unsecured debt obligations of which are rated either A-2 or
better (or comparably if the rating system is
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changed) by Standard & Poor's Ratings Group or Prime-2 or better (or
comparably if the rating system is changed) by ▇▇▇▇▇'▇ Investors
Service, Inc. or (B) the long-term debt obligations of which are rated
either AA- or better (or comparably if the rating system is changed)
by Standard & Poor's Ratings Group or Aa3 or better (or comparably if
the rating system is changed) by ▇▇▇▇▇'▇ Investors Service, Inc.
("Permitted Banks"),
(5) bankers' acceptances eligible for rediscount under
requirements of The Board of Governors of the Federal Reserve System
and accepted by Permitted Banks, and
(6) obligations of the type described in clause (1), (2), (3)
or (4) above purchased from a securities dealer designated as a
"primary" dealer by the Federal Reserve Bank of New York or from a
Permitted Bank as counterparty to a written repurchase agreement
obligating such counterparty to repurchase such obligations not later
than 14 days after the purchase thereof and which provides that the
obligations which are the subject thereof are held for the benefit of
Star Gas or a Subsidiary by a custodian which is a Permitted Bank and
which is not a counterparty to the repurchase agreement in question;
(b) Star Gas and any Restricted Subsidiary may make and own
Investments in any Restricted Subsidiary or Investments in capital stock
of, or other equity interests in, any Person which simultaneously therewith
becomes a Restricted Subsidiary, and any Restricted Subsidiary may make and
permit to be outstanding Investments in Star Gas and may create or become
liable with respect to any Guarantee in respect of the Obligors'
obligations under the Notes, the 1998 Notes and the 1995 Notes;
(c)(i) Star Gas or any Restricted Subsidiary may make and own
Investments in the capital stock of, or joint venture, partnership or other
equity interests in, or may make contributions to capital in the ordinary
course of business in any Unrestricted Subsidiary, except Petro Holdings,
if immediately after giving effect to the making of any such Investment,
(A) the aggregate amount of all such Investments made and outstanding
pursuant to this subdivision (c) shall not at any time exceed $15,000,000
and (B) the aggregate amount of all Investments made and outstanding
pursuant to this subdivision (c)(i) as at the end of any fiscal quarter of
Star Gas shall not exceed by more than $5,000,000 the amount of such
Investments outstanding as at the end of the corresponding fiscal quarter
of the immediately preceding fiscal year of Star Gas, in the case of both
clauses (A) and (B) of this subdivision (c)(i), disregarding any such
investment which on the date of determination could be made pursuant to
subdivision (b) of this Section 10.3 and net of cash distributions received
from all Unrestricted Subsidiaries, excluding Petro Holdings, for such
period; and
(ii) Star/Petro may make and own Investments in Petro Holdings, but
only with the Public Partnership Restricted Proceeds;
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(d) Star Gas or any Restricted Subsidiary may make and own
Investments (i) constituting trade credits or advances to any Person
incurred in the ordinary course of business, (ii) arising out of loans and
advances to employees for travel, entertainment and relocation expenses, in
each case incurred in the ordinary course of business or (iii) acquired by
reason of the exercise of customary creditors' rights upon default or
pursuant to the bankruptcy, insolvency or reorganization of a debtor;
(e) Star Gas or any Restricted Subsidiary may create or become
liable with respect to any Guaranty constituting an obligation, warranty or
indemnity, not guaranteeing Indebtedness of any Person, which is undertaken
or made in the ordinary course of business;
(f) Star Gas may create and become liable with respect to any
Interest Rate Agreements; and
(g) Star Gas may create and become liable with respect to Commodity
Hedging Agreements.
Section 10.4. Restricted Payments. (a) Star Gas will not directly
or indirectly declare, order, pay, make or set apart any sum for any Restricted
Payment, except that Star Gas may make, pay or set apart once within 45 days
from the last day of each calendar quarter a Restricted Payment if (i) such
Restricted Payment is in an amount not exceeding Available Cash, (ii) prior to
and immediately after giving effect to any such proposed action no condition or
event shall exist which constitutes an Event of Default or Potential Event of
Default under Section 11(b), (iii) the ratio of Consolidated Cash Flow to
Consolidated Interest Expense is greater than 1.75 to 1.00, and (iv) Star Gas
shall have given to each holder of a Note written notice thereof on the date
such Restricted Payment is declared, which date shall be at least 10 days prior
to the date such Restricted Payment is made. Star Gas will not, in any event
directly or indirectly declare, order, pay or make any Restricted Payment except
in cash.
(b) Notwithstanding 10.4(a) above, Star Gas may make, pay or set apart
once within 45 days from the last day of each calendar quarter a Restricted
Payment in an amount equal to the amount of dividends or distributions actually
received in cash indirectly from Petro Holdings within 45 days from the last day
of such calendar quarter, provided that the following conditions are met:
(i) prior to and immediately after giving effect to any such proposed action, no
condition or event shall exist which constitutes an Event of Default or
Potential Event of Default under Section 11(b), (ii) the ratio of Consolidated
Cash Flow plus dividends/distributions from Petro Holdings to Consolidated
Interest Expense is greater than 1.75 to 1.00, and (iii) Star Gas shall have
given to each holder of a Note written notice thereof on the date such
Restricted Payment is declared, which date shall be at least 10 days prior to
the date such Restricted Payment is made. Star Gas will not, in any event,
directly or indirectly declare, order, pay or make any Restricted Payment except
in cash.
(c) Notwithstanding any other provision of the Star/Petro Intercompany
Subordinated Note, (i) until all amounts due under the Notes and this Agreement
shall have been paid in full, no principal payment on the Star/Petro
Intercompany Subordinated Note may be made, except (A) if
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the proceeds used for such repayment have been received from the proceeds of
capital contributions or equity investments indirectly made by the Public
Partnership in Star/Petro and (B) prior to and immediately after giving effect
to any such prepayment no condition or event shall exist which constitutes an
Event of Default or Potential Event of Default; and (ii) no interest payment
shall be payable on the Star/Petro Intercompany Subordinated Debt, unless
(A) the ratio of Consolidated Cash Flow to Consolidated Interest Expense is
greater than 2.0 to 1.0 for the most recent four quarter period ending prior to
the time of such payment and (B) prior to and immediately after giving effect to
any such interest payment, no condition or event shall exist which constitutes
an Event of Default or Potential Event of Default.
Section 10.5. Transactions with Affiliates. Except for the
transactions or conduct effected pursuant to the Operative Agreements as in
effect on the date of the Closing, neither Obligor will, nor will either Obligor
permit any Restricted Subsidiary to, directly or indirectly, engage in any
transaction with any Affiliate of Star Gas, including, without limitation, the
purchase, sale or exchange of assets or the rendering of any service, except
pursuant to the reasonable requirements of Star Gas's or such Restricted
Subsidiary's business and upon fair and reasonable terms that are no less
favorable to Star Gas or such Restricted Subsidiary, as the case may be, than
those which might be obtained in an arm's-length transaction at the time such
transaction is agreed upon from Persons which are not such an Affiliate,
provided that the foregoing limitations and restrictions shall not apply to any
transaction between Star Gas and any Restricted Subsidiary or between Restricted
Subsidiaries.
Section 10.6. Subsidiary Stock and Indebtedness. Neither Obligor
will:
(a) directly or indirectly sell, assign, pledge or otherwise dispose
of any Indebtedness of or any shares of stock or similar interests of (or
warrants, rights or options to acquire stock or similar interests of) any
Subsidiary, except to a Restricted Subsidiary;
(b) permit any Restricted Subsidiary directly or indirectly to sell,
assign, pledge or otherwise dispose of any Indebtedness of (i) Star Gas or
(ii) any other Restricted Subsidiary, or any shares of stock or similar
interests of (or warrants, rights or options to acquire stock or similar
interests of) any other Subsidiary, except to, in the case of clause (i),
Star Gas or, in all other cases, a Restricted Subsidiary;
(c) permit any Restricted Subsidiary to have outstanding any shares
of stock or similar interests which are preferred over any other shares of
stock or similar interests owned by Star Gas unless such shares of
preferred stock or similar interests are owned by Star Gas; or
(d) permit any Subsidiary directly or indirectly to issue or sell
(including, without limitation, in connection with a merger or
consolidation of a Restricted Subsidiary otherwise permitted by Section
10.7(a)) any shares of its stock or similar interests (or warrants, rights
or options to acquire its stock or similar interests) except to Star Gas or
a Restricted Subsidiary;
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provided that, (i) any Restricted Subsidiary may sell, assign or otherwise
dispose of Indebtedness of Star Gas if, assuming such Indebtedness were incurred
immediately after such sale, assignment or disposition, such Indebtedness would
be permitted under Section 10.1 (and if such Indebtedness is secured, such Lien
would be permitted pursuant to Section 10.2) and (ii) subject to compliance with
Section 10.7(c), all Indebtedness and shares of stock or partnership interests
of any Restricted Subsidiary owned by Star Gas may be simultaneously sold as an
entirety for a cash consideration at least equal to the fair value thereof (as
determined in good faith by the general partner of Star Gas) at the time of such
sale if such Restricted Subsidiary does not at the time own (A) any Indebtedness
of Star Gas (other than Indebtedness which, if incurred immediately after such
transaction, would be permitted under Section 10.1) or (B) any Indebtedness,
stock or other interest in any other Restricted Subsidiary which is not also
being simultaneously sold as an entirety in compliance with this proviso or
Section 10.7(b)(ii).
Section 10.7. Consolidation, Merger, Sale of Assets, Etc. Neither
Obligor will, nor will either Obligor permit any Restricted Subsidiary to,
directly or indirectly,
(a) consolidate with or merge into any other Person or permit any
other Person to consolidate with or merge into it, except that:
(i) any Restricted Subsidiary may consolidate with or merge
into Star Gas or, except in the case of Star/Petro, another Restricted
Subsidiary if, in the case of a consolidation with or merger into Star
Gas, Star Gas shall be the surviving Person and if, immediately after
giving effect to such transaction, no condition or event shall exist
which constitutes an Event of Default or Potential Event of Default;
and
(ii) any entity (other than a Restricted Subsidiary) may
consolidate with or merge into Star Gas or a Restricted Subsidiary if
Star Gas or such Restricted Subsidiary, as the case may be, shall be
the surviving Person and if, immediately after giving effect to such
transaction, (A) Star Gas (1) shall not have a Consolidated Net Worth
(determined in accordance with GAAP applied on a basis consistent with
the financial statements of Star Gas most recently delivered pursuant
to Section 7(b)) of less than the Consolidated Net Worth of Star Gas
immediately prior to the effectiveness of such transaction, (2) shall
not be liable with respect to any Indebtedness or allow its property
to be subject to any Lien which it could not become liable with
respect to or allow its property to become subject to under this
Agreement on the date of such transaction, and (3) could incur, if the
consolidating or merging entity has outstanding Indebtedness, at least
$1 of additional Indebtedness in compliance with Section 10.1(f) after
giving effect to such transaction, (x) substantially all of the assets
of Star Gas and the Restricted Subsidiaries shall be located and
substantially all of their business shall be conducted within the
continental United States, (B) no condition or event shall exist which
constitutes an Event of Default or Potential Event of Default and
(C) at the expense of the Obligors, the Notes are promptly, but in any
event within 20 Business Days from the date of such transaction, re-
rated by an Approved Rating Agency; and
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(iii) Star Gas may consolidate with or merge into any other
entity if (A) the surviving entity is a corporation or limited
partnership organized and existing under the laws of the United States
of America or a state thereof or the District of Columbia, with
substantially all of its properties located and its business conducted
within the continental United States, (B) such corporation or limited
partnership expressly and unconditionally assumes the obligations of
Star Gas under this Agreement, each of the other Operating Agreements
and the Notes, and delivers to each holder of a Note at the time
outstanding in connection with such assumption an opinion of counsel
reasonably satisfactory to the Required Holders with respect to such
matters incident to such assumption as may be reasonably requested by
such holders, including, without limitation, as to the due
authorization and execution of the related agreement of assumption and
the enforceability of such agreement against such corporation or
partnership, (C) immediately after giving effect to such transaction,
such corporation or limited partnership (1) shall not have a
Consolidated Net Worth (determined in accordance with GAAP applied on
a basis consistent with the financial statements of Star Gas most
recently delivered pursuant to Section 7(b)) of less than the
Consolidated Net Worth of Star Gas immediately prior to the
effectiveness of such transaction, (2) shall not be liable with
respect to any Indebtedness or allow its property to be subject to any
Lien which it could not become liable with respect to or allow its
property to become subject to under this Agreement on the date of such
transaction and (3) could incur at least $1 of additional Indebtedness
in compliance with Section 10.1(f) after giving effect to such
transaction, (D) immediately after giving effect to such transaction
no condition or event shall exist which constitutes an Event of
Default or a Potential Event of Default and (E) at the expense of the
Obligors, the Notes are promptly, but in any event within 20 Business
Days from the date of such transaction, re-rated by an Approved Rating
Agency; or
(b) sell, lease, abandon or otherwise dispose of all or
substantially all its assets, except that:
(i) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or substantially all its assets to Star Gas or, except
in the case of Star/Petro, to another Restricted Subsidiary; and
(ii) Star Gas may sell, lease or otherwise dispose of all or
substantially all its assets to any corporation or limited partnership
into which Star Gas could be consolidated or merged in compliance with
subdivision (a)(iii) of this Section 10.7, provided that (A) each of
the conditions set forth in such subdivision (a)(iii) shall have been
fulfilled, and (B) no such disposition shall relieve Star Gas from its
obligations under this Agreement, the other Operative Agreements or
the Notes; or
(c) sell, lease abandon or otherwise dispose of any property to any
Person other than Star Gas or any Restricted Subsidiary (except in a
transaction permitted by
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subdivision (a)(iii) or (b)(ii) of this Section 10.7 or an abandonment or
other disposition of Inventory in the ordinary course of business) unless:
(i) at least 80% of the consideration therefor shall be in the
form of cash consideration,
(ii) immediately after giving effect to such proposed
disposition no condition or event shall exist which constitutes an
Event of Default or Potential Event of Default,
(iii) either
(A) the aggregate net proceeds of all property so
disposed of (whether or not leased back) by Star Gas and all
Restricted Subsidiaries during the current fiscal year (including
property disposed of through dispositions of shares pursuant to
Section 10.6 or sales of assets pursuant to Section 10.7(b) and
including all proceeds under title insurance policies with
respect to real property and all Net Insurance Proceeds (as
defined in the Mortgages), self-insurance amount and Net Awards
(as defined in the Mortgages) with respect to property lost as a
result of damage, destruction or a taking which have not been
applied to the cost of Restoration (as defined in the
Mortgages)), less the amount of all such net proceeds previously
applied in accordance with subdivision (iii)(B) of this Section
10.7(c) and the amount of such net proceeds equal to the purchase
price of any assets acquired to the extent that (1) such assets
were acquired within 180 days prior to the date of such disposal
of property, (2) the purchase price of such assets was not
previously applied to reduce the amount of net proceeds of
property disposed of under this Section 10.7(c), (3) such assets
were acquired for subsequent replacement of the property so
disposed of or may be productively used in the United States in
the conduct of the Business, (4) such assets are subject to the
Lien of the Security Documents, and (5) to the extent such assets
were acquired (in whole or in part) with borrowed money, such
borrowing has been repaid in full, (x) shall not exceed
$5,000,000 during such fiscal year and (y) when aggregated with
such net proceeds of all prior transactions under this Section
10.7(c), shall not exceed $15,000,000; or
(B) in the event that such net proceeds (less the amount
thereof previously applied in accordance with this subdivision
(iii)(B) and the amount thereof equal to the purchase price of
any assets acquired to the extent that (1) such assets were
acquired within 180 days prior to the date of such disposal of
property, (2) the purchase price of such assets was not
previously applied to reduce the amount of net proceeds of
property disposed of under this Section 10.7(c), (3) such assets
were acquired for subsequent replacement of the property so
disposed of or may be productively used in the United States in
the conduct of the Business,
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(4) such assets are subject to the Lien of the Security
Documents, and (5) to the extent such assets were acquired (in
whole or in part) with borrowed money, such borrowing has been
repaid in full) during the current fiscal year exceed $5,000,000
or, when aggregated with such net proceeds of all prior
transactions under this Section 10.7(c), exceed $15,000,000 (the
larger amount of such excess net proceeds actually realized being
herein called "Excess Proceeds"), Star Gas shall promptly pay
over to the Trustee under the Trust Agreement such Excess
Proceeds not at the time held by the Trustee for application by
the Trustee (x) within 180 days of the date of the disposal or
loss of property to the acquisition of assets in replacement of
the property so disposed of or lost or of assets which may be
productively used in the United States in the conduct of the
Business (and such newly acquired assets shall be subjected to
the Lien of the Security Documents) or to the cost of Restoration
(as defined in the Mortgages), or (y) to the extent of Excess
Proceeds not applied pursuant to the immediately preceding clause
(x), to the payment and/or prepayment of the Notes, the 1998
Notes, the 1995 Notes and Parity Debt, if any, pursuant to
Section 9.1 and/or 9.3, all as provided in Section 4(d) of the
Trust Agreement and such Section 9.1 and/or 9.3, and the Trustee
shall have received an Officers' Certificate from the general
partner of Star Gas certifying that the consideration received
for such property is at least equal to its fair value (as
determined in good faith by the general partner of Star Gas) and
that such consideration has been applied in accordance with the
terms of this Agreement, and
(iv) in the case of any sale, lease or other disposition of
Mortgaged Property which includes real property (or any interest
therein), or any sale, lease or other disposition of Mortgaged
Property resulting in the aggregate net proceeds of all such sales,
leases or other dispositions exceeding $10,000,000, the Trustee shall
have received an Officers' Certificate from the general partner of
Star Gas certifying that such sale, lease or other disposition is in
the best interest of Star Gas and will not have a Material Adverse
Effect.
Notwithstanding the foregoing, Star Gas and any Restricted Subsidiary may
sell or dispose of (i) real property assets sold or disposed of within 12 months
of the acquisition of such assets, and (ii) all other assets sold or disposed of
within 6 months of the acquisition of such assets, in each case constituting a
portion of an acquired business, if (y) such assets are specifically designated
to the holders of any Notes in writing prior to such acquisition as assets to be
disposed of, and (z) the Trustee shall have received an Officers' Certificate
from the general partner of Star Gas certifying that the consideration received
for such property is at least equal to its fair value (as determined in good
faith by the general partner of Star Gas). Such sales under this paragraph will
not be applied towards the annual or cumulative limitations in subdivision (c)
of this Section 10.7. The holders of Notes agree to take all actions necessary
to cause dispositions of Mortgaged Property made in compliance with this
Section 10.7 to be made free and clear of the Liens created by the Security
Documents.
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Section 10.8. Partnership or Corporate Existence, Etc.; Business.
(a) (i) Star Gas will at all times preserve and keep in full force and effect
its partnership existence and (subject to the provisions of subdivision (b) of
this Section 10.8) its status as a partnership not taxable as a corporation for
Federal income tax purposes; (ii) Star/Petro will at all times keep in full
force and effect its corporate existence; (iii) each Obligor will cause each
Restricted Subsidiary to keep in full force and effect its partnership or
corporate existence; and (iv) each Obligor will, and each Obligor will cause
each Restricted Subsidiary to, at all times preserve and keep in full force and
effect all of its material rights and franchises (in each case except as
otherwise specifically permitted in Sections 10.6 and 10.7 and except that the
partnership or corporate existence of any Restricted Subsidiary (other than
Star/Petro), and any right or franchise of Star Gas or any Restricted
Subsidiary, may be terminated if, in the good faith judgment of the general
partner of Star Gas, such termination is in the best interest of Star Gas, is
not disadvantageous to the holders of the Notes in any material respect and
would not have a Material Adverse Effect).
(b) Star Gas shall not be obligated to preserve its status as a
partnership not taxable as a corporation for Federal income tax purposes if
(i) Star Gas's failure to preserve such status shall be the result of an
amendment to the tax laws enacted by the Congress of the United States and
(ii) after giving effect to the loss of such status the ratio of Consolidated
Cash Flow to Maximum Consolidated Pro Forma Debt Service, determined as of the
date of the loss of such status, would be greater than 1.1 to 1.0, assuming, for
the purposes of the computation of Consolidated Cash Flow, that Consolidated
Cash Flow would be reduced by taxes at the applicable tax rate for Star Gas for
such period had Star Gas been taxable as a corporation.
(c) Neither Obligor will, nor will either Obligor permit any Restricted
Subsidiary to, engage in any lines of business other than the Business in which
the Obligors and their Restricted Subsidiaries are engaged in on the date of
this Agreement and described in the Public Partnership's SEC Form 10-K for the
fiscal year ended September 30, 1999 and other activities incidental or related
to the Business.
Section 10.9. Payment of Taxes and Claims. Each Obligor will, and
each Obligor will cause each Subsidiary to, pay all taxes, assessments and other
governmental charges or levies imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or profits when
the same become due and payable, but in any event before any penalty or interest
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums which have become due and
payable and which by law have or might become a Lien upon any of its properties
or assets, and promptly reimburse the holders of the Notes for any such taxes,
assessments, charges or claims paid by them; provided that no such tax,
assessment, charge or claim need be paid or reimbursed if being contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted and if such reserves or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor and be adequate in the good
faith judgment of the general partner of Star Gas.
Section 10.10. Compliance with ERISA. Neither Obligor will, nor
will either Obligor permit any Subsidiary or Related Person of either Obligor
to:
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(a) (i) engage in any transaction in connection with which either
Obligor or any Subsidiary could be subject to either a civil penalty
assessed pursuant to section 502(i) of ERISA or a tax imposed by section
4975 of the Code, (ii) terminate (within the meaning of Title IV of ERISA)
or withdraw from any Plan in a manner, or take, or fail to take, any other
action with respect to any Plan (including, without limitation, a
substantial cessation of operations within the meaning of section 4062(e)
of ERISA), (iii) establish, maintain, contribute to or become obligated to
contribute to any welfare benefit plan (as defined in section 3(1) of
ERISA) or other welfare benefit arrangement which provides post-employment
benefits, which cannot be unilaterally terminated by either Obligor,
(iv) fail to make full payment when due of all amounts which, under the
provisions of any Plan or applicable law, either Obligor or any Subsidiary
or Related Person of either Obligor is required to pay as contributions
thereto, result in the imposition of a Lien or permit to exist any material
accumulated funding deficiency, whether or not waived, with respect to any
Plan or (v) engage in any transaction in connection with which either
Obligor, any Subsidiary or any Related Person of either Obligor could be
subject to liability pursuant to section 4069(a) or 4212(c) of ERISA, if,
as a result of any such event, condition or transaction described in
clauses (i) through (v) above, either individually or together with any
other such event or condition, could result in (x) the imposition of a Lien
on any assets or property of either Obligor or (y) any liability to either
Obligor, any Subsidiary or any Related Person of either Obligor, which
liability could have a Material Adverse Effect; or
(b) as of any date of determination (i) permit the amount of
unfunded benefit liabilities under any Plan maintained at such time by
either Obligor or any Subsidiary or Related Persons of either Obligor to
exceed the current value of the assets of any such Plan or (ii) permit the
aggregate liability incurred by either Obligor and any Subsidiary and
Related Persons of either Obligor pursuant to Title IV of ERISA with
respect to one or more terminations of, or one or more complete or partial
withdrawals from, any Plan to exceed $1,000,000.
As used in this Section 10.10, the term "accumulated funding deficiency" has the
meaning specified in section 302 of ERISA and section 412 of the Code, the term
"current value" has the meaning specified in section 3 of ERISA and the terms
"benefit liabilities" and "amount of unfunded benefit liabilities" have the
meanings specified in section 4001 of ERISA.
Section 10.11. Maintenance of Properties; Insurance. To the
extent required by the Security Documents, each Obligor will maintain or cause
to be maintained in working order and condition, in accordance with normal
industry standards, all properties used or useful in the business of either
Obligor and the Restricted Subsidiaries and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof. To the
extent required by the Security Documents, each Obligor will maintain or cause
to be maintained, with Permitted Insurers, insurance with respect to its
properties and business and the properties and business of the Restricted
Subsidiaries of the types and in the amounts specified in the Security Documents
and the Trustee shall be named as an additional insured party on each insurance
policy obtained or maintained pursuant thereto.
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Section 10.12. Operative Agreements; Security Documents. Each
Obligor will, and each Obligor will cause each Restricted Subsidiary to, perform
and comply with all of its obligations under each of the Operative Agreements to
which it is a party, will enforce each such Operative Agreement against each
other party thereto and will not accept the termination of any such Operative
Agreement, unless the taking of or omitting to take any such action would not
have a Material Adverse Effect, and will not amend, modify or supplement any
Operative Agreement without the prior written consent of the Required Holders,
provided that (a) the MLP Agreement and the Partnership Agreement may be
amended, modified or supplemented without the prior written consent of the
Required Holders if such amendment, modification or supplement would not have a
Material Adverse Effect and Star Gas shall have delivered to each holder of a
Note a copy of such proposed amendment, modification or supplement together with
an Officers' Certificate describing such proposed amendment, modification or
supplement and confirming that such proposed amendment, modification or
supplement would not have a Material Adverse Effect and (b) the Bank Credit
Facilities may be amended, modified or supplemented without the prior written
consent of the Required Holders if such amendment, modification or supplement
may be made without the written consent of any holders of the Notes under the
Trust Agreement.
Section 10.13. Chief Executive Office. Neither Obligor will move
its chief executive office and the office at which it maintains its records
relating to the transactions contemplated by this Agreement and the Security
Documents unless (a) not less than 45 days' prior written notice of its
intention to do so, clearly describing the new location, shall have been given
to the Trustee and each holder of a Note and (b) such action, reasonably
satisfactory to the Trustee and each holder of a Note, to maintain any security
interest in the property subject to the Security Documents at all times fully
perfected and in full force and effect shall have been taken.
Section 10.14. Recordation. The Obligors will promptly, but in
any event within 30 days from the date of the Closing, cause to be duly
recorded, published, registered and filed all Security Documents (in each case,
not previously recorded, published, registered or filed in accordance with
Section 4.8), in such manner and in such places as is required by law to
establish, perfect, preserve and protect the rights and first priority security
interests of the parties thereto and their respective successors and assigns in
all of the Mortgaged Property. The Obligors will pay all taxes, fees and other
charges then due in connection with the execution, delivery, recording,
publishing, registration and filing of such documents or instruments in such
places.
Section 10.15. Information Required by Rule 144A. Each Obligor
covenants that it will, upon the prior written request of the holder of any
Note, provide such holder, and any qualified institutional buyer designated by
such holder, such financial and other information as such holder may reasonably
determine to be necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act of 1933, as amended, in
connection with the resale of Notes, except at such times as such Obligor is
subject to the reporting requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended. For the purpose of this Section 10.15, the
term "qualified institutional buyer" shall have the meaning specified in
Rule 144A under the Securities Act of 1933, as amended.
Section 10.16. Covenant to Secure Notes Equally. Each Obligor
covenants that, if it or any Restricted Subsidiary shall create or assume any
Lien upon any of its property or assets, whether
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now owned or hereafter acquired, other than Liens permitted by the provisions of
Section 10.2 (unless prior written consent to the creation or assumption thereof
shall have been obtained pursuant to Section 18), it will make or cause to be
made effective provision whereby the Notes will be secured by such Lien equally
and ratably with any and all other Indebtedness thereby secured so long as any
such other Indebtedness shall be so secured, it being understood that the
provision of such equal and ratable security shall not constitute a cure or
waiver of any related Event of Default.
Section 10.17. Compliance with Laws. Each Obligor will, and each
Obligor will cause each Subsidiary to, comply with all applicable statutes,
rules, regulations, and orders of, and all applicable restrictions imposed by,
the United States, foreign countries, states, provinces and municipalities, and
of or by any governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, and of or by any court,
arbitrator or grand jury, in respect of the conduct of their respective
businesses and the ownership of their respective properties or business
(including, without limitation, Environmental Laws), except such as are being
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor or the failure to so
comply would not be expected to have a Material Adverse Effect.
Section 10.18. Further Assurances. At any time and from to time
promptly, the Obligors shall, at their expense, execute and deliver to each
holder of a Note and to the Trustee such further instruments and documents, and
take such further action, as the holders of the Notes may from time to time
reasonably request, in order to further carry out the intent and purpose of this
Agreement and to establish and protect the rights, interests and remedies
created, or intended to be created, in favor of the holders of the Notes,
including, without limitation, the execution, delivery and recordation and
filing of security agreements and financing statements and continuation
statements under the Uniform Commercial Code of any applicable jurisdiction.
Section 10.19. Subsidiaries. (a) Star Gas may designate any
Restricted Subsidiary or newly acquired or formed Subsidiary as an Unrestricted
Subsidiary or any Unrestricted Subsidiary or newly acquired or formed Subsidiary
as a Restricted Subsidiary, in each case subject to satisfaction of the
following conditions:
(i) immediately before and after giving effect to such designation
no condition or event shall exist which constitutes an Event of Default or
Potential Event of Default;
(ii) immediately after giving effect to such designation, (1) (other
than in the case of a designation of an Unrestricted Subsidiary that does
not have any Indebtedness as a Restricted Subsidiary), Star Gas would be
permitted to incur at least $1 of additional Indebtedness in compliance
with subdivisions (i) and (ii) of Section 10.1(f), (2) Star Gas and the
Restricted Subsidiaries would not be liable with respect to Indebtedness or
any Guarantee, would not own any Investments and their property would not
be subject to any Lien which is not permitted by this Agreement and
(3) substantially all of Star Gas's assets will be located, and
substantially all of Star Gas's business will be conducted, in the United
States;
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(iii) in the case of a designation as an Unrestricted Subsidiary,
(A) if such designation (and all other prior designations of Restricted
Subsidiaries or newly acquired or formed Subsidiaries as Unrestricted
Subsidiaries during the current fiscal year) were deemed to constitute a
sale by Star Gas of all the assets of the Subsidiary so designated, such
sale would be in compliance with subdivision (iii)(A) of Section 10.7(c)
and (B) if such designation (and all other prior designations of Restricted
Subsidiaries or newly acquired or formed Subsidiaries as Unrestricted
Subsidiaries during the current fiscal year) were deemed to constitute an
Investment by Star Gas in respect of all the assets of the Subsidiary so
designated, such Investment would be in compliance with Section 10.3(c), in
each case with the net proceeds of such sale or the amount of such
Investment being deemed to equal the net book value of such assets in the
case of a Restricted Subsidiary or the cost of acquisition or formation in
the case of a newly acquired or formed Subsidiary, provided, that this
subdivision (iii) of this Section 10.19(a) shall not apply to an
acquisition or formation by Star Gas or a Restricted Subsidiary of a newly
acquired or formed Unrestricted Subsidiary to the extent such acquisition
or formation (1) is funded solely by the net cash proceeds received by Star
Gas from the general partner of Star Gas or from the Public Partnership as
a capital contribution or as consideration for the issuance by Star Gas of
additional partnership interests or (2) the assets involved in such
acquisition are acquired in exchange for additional partnership interests
of Star Gas or the Public Partnership;
(iv) in the case of a designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, such Restricted Subsidiary shall not have been an
Unrestricted Subsidiary prior to being designated a Restricted Subsidiary;
(v) in the case of a designation of an Unrestricted Subsidiary as a
Restricted Subsidiary, such Unrestricted Subsidiary at the time of such
designation has a positive Consolidated Net Worth;
(vi) Star Gas shall deliver to each holder of Notes, within 20
Business Days after any such designation, an Officers' Certificate stating
the effective date of such designation and confirming compliance with the
provisions of this Section 10.19;
(vii) On the date of the Closing, Star/Petro shall be designated as
a Restricted Subsidiary and, notwithstanding any other provision of this
Section 10.19(a), such designation shall not be changed without the consent
of the Required Holders; and
(viii) On the date of the Closing, Petro Holdings shall be
designated as an Unrestricted Subsidiary and, notwithstanding any other
provision of this Section 10.19(a), such designation shall not be changed
without the consent of the Required Holders.
In the case of the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, such new Restricted Subsidiary shall be deemed to have
(A) made or acquired all Investments owned by it, and (B) incurred all
Indebtedness owing by it and all Liens to which it or any of its properties are
subject, on the date of such designation.
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(b) Star Gas will cause each Restricted Subsidiary, at the time it is or
is deemed to be designated as a Restricted Subsidiary, to (i) become a party to
the Obligor Security Agreement and the Subsidiary Guarantee Agreement by
execution of a Supplemental Agreement and (ii) enter into such documents (in
form and substance satisfactory to the Required Holders) as may be necessary or
as any holder of Notes may request in order to secure such Restricted
Subsidiary's obligations under the Subsidiary Guarantee Agreement with all or
substantially all of the assets of such Restricted Subsidiary.
(c) Star Gas will not own any Subsidiaries other than Wholly-Owned
Subsidiaries satisfying the requirements in clauses (a), (b) and (c) of the
definition of Restricted Subsidiary.
Section 10.20. Rating. If (i) the General Partner of Star Gas
shall withdraw as general partner of Star Gas or (ii) if any person (as such
term is used in rule 13(d) or rule 14(d)(2) of the Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date of the Closing), or
related persons constituting a group (as such term is used in rule 13d-5 under
the Exchange Act, as in effect on the date of the Closing), or related persons
constituting a group (as such term is used in rule 13d-5 under the Exchange Act,
as in effect on the date of the Closing) shall acquire a majority of the Common
Units, then the Obligors at their expense shall promptly, but in any event
within 20 Business Days from the date of such event or condition, have the Notes
re-rated by an Approved Rating Agency.
Section 10.21. Accounting Changes. Neither Obligor will, nor will
either Obligor suffer or permit any Restricted Subsidiary to, make any
significant change in accounting treatment or reporting practices, except as
required by GAAP. Each Obligor will, and each Obligor will cause each
Restricted Subsidiary to, cause its fiscal year to end on September 30 in each
year.
Section 10.22. Certain Real Property. Without affecting the
obligations of either Obligor or any of the Restricted Subsidiaries under any of
the Security Documents, in the event that either Obligor or any Restricted
Subsidiary, at any time after the date of this Agreement, whether directly or
indirectly, acquires any interest in any real property, including any fee or
other ownership interest in one or more properties with an aggregate cost in
excess of $50,000, or any interest under one or more leases of real property for
a term in excess of three years and involving aggregate average payments in
excess of $100,000 per annum (each such interest, an "After Acquired Property"),
the Obligors will, or the Obligors will cause such Restricted Subsidiary to, as
soon as practical provide written notice thereof to each holder of a Note,
setting forth with specificity a description of such After Acquired Property,
the location of such After Acquired Property, any structures or improvements
thereon and an appraisal or its good-faith estimate of the current value of such
real property ("Current Value"). The Required Holders may require the
applicable Obligor or the applicable Restricted Subsidiary to grant and record a
mortgage in favor of the Trustee on such After Acquired Property, provided that
no new mortgage on such After Acquired Property shall be required if the costs
that would be incurred as a result thereof are excessive in relation to the
benefits that would be conferred thereby. In the event a mortgage is granted,
the applicable Obligor or the applicable Restricted Subsidiary shall execute and
deliver to the Trustee a mortgage, together with such documents or instruments
as the Required Holders shall require. In no event shall any title insurance
policy for any such After Acquired Property be in an amount which is less than
the Current Value of such After Acquired Property. If, at any
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time, the aggregate cost to the Obligors and the Restricted Subsidiaries of each
interest in real property (a) acquired by either Obligor or any Restricted
Subsidiary, whether directly or indirectly, at any time after the date of this
Agreement, at a cost equal to or less than $50,000, (b) at such time, owned
directly or indirectly by either Obligor or any Restricted Subsidiary and
(c) for which a mortgage in favor of the Trustee is not in effect (the
"Aggregate Cost of Unmortgaged Property"), exceeds $500,000, the Obligors will,
as soon as practical, and in any event within 10 Business Days, provide written
notice thereof to each holder of a Note, setting forth with specificity a
description of each such interest in real property, the location of such real
property and an appraisal or its good-faith estimate of the current value of
each such real property. The Required Holders may require the applicable Obligor
or the applicable Restricted Subsidiary to grant and record a mortgage in favor
of the Trustee on one or more of such real property so that the Aggregate Cost
of Unmortgaged Property does not exceed $500,000, provided that no new mortgage
on any such real property shall be required if the costs that would be incurred
as a result thereof are excessive in relation to the benefits that would be
conferred thereby. In the event a mortgage is required, the applicable Obligor
or the applicable Restricted Subsidiary shall execute and deliver to the Trustee
a mortgage, together with such documents or instruments as the Required Holders
shall require. Further, with regard to any interest in real property, including
any fee or other ownership interest in real property or any material lease of
real property, currently owned or held by either Obligor or any Restricted
Subsidiary and which is not being encumbered by a mortgage of even date herewith
(each such interest, an "Existing Unmortgaged Property"), upon the written
request of the Required Holders, the applicable Obligor will, or the Obligors
will cause any applicable Restricted Subsidiary to, execute and deliver to the
Trustee a mortgage, together with such documents or instruments as the Required
Holders shall require. In no event shall the title insurance policy for any such
Existing Unmortgaged Property be in an amount which is less than the Current
Value of such Existing Unmortgaged Property. The Obligors shall pay all fees and
expenses, including reasonable attorneys' fees and expenses and expenses of any
customary environmental due diligence, and title insurance charges and premiums,
in connection with the obligations of the Obligors and the Restricted
Subsidiaries under this Section 10.22.
Section 10.23. Sale and Lease-Back Transactions. Neither Obligor
will, nor will either Obligor cause or permit any of the Restricted Subsidiaries
to, enter into any arrangement, directly or indirectly, with any Person whereby
it shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which it intends to use for substantially the
same purpose or purposes as the property being sold or transferred.
Section 10.24. Acquisitions. Except as otherwise permitted by
Section 10.7, neither Obligor will, nor will either Obligor cause or permit any
of the Restricted Subsidiaries to, purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other Person, except that (a) either Obligor or any Restricted
Subsidiary may purchase inventory in the ordinary course of business and
(b) either Obligor or any Restricted Subsidiary may engage in any such
acquisition if no Event of Default or Potential Event of Default has occurred
and is continuing at the time of any such acquisition or would occur immediately
after giving effect thereto.
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Section 10.25. Impairment of Security Interests. Neither Obligor
will, nor will either Obligor permit any of the Subsidiaries to, take or omit to
take any action, which action or omission might or would have the result of
materially impairing the security interests in favor of the Trustee with respect
to the Mortgaged Property, and neither Obligor will, nor will either Obligor
permit any of the Subsidiaries to, grant to any Person (other than the Trustee)
any interest whatsoever in the Mortgaged Property.
Section 10.26. Limitation on Restrictions on Subsidiary Dividends,
Etc. Neither Obligor will, nor will either Obligor cause or permit any of
the Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any a encumbrance or
restriction on the ability of any Restricted Subsidiary to (a) pay dividends or
make any other distributions on or in respect of its capital stock, or pay any
indebtedness owed to Star Gas or any Restricted Subsidiary, (b) make loans or
advances to Star Gas or any Restricted Subsidiary or (c) transfer any of its
properties or assets to Star Gas or any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) customary non-
assignment provisions in any lease governing a leasehold interest or other
contract entered into in the ordinary course of business consistent with past
practices or (ii) this Agreement or any other Operative Agreement.
Section 10.27. No Other Negative Pledges. Neither Obligor will,
nor will either Obligor cause or permit any of the Restricted Subsidiaries to,
directly or indirectly, enter into any agreement prohibiting the creation or
assumption of any Lien upon the properties or assets of either Obligor or any
Restricted Subsidiary, whether now owned or hereafter acquired, or requiring an
obligation to be secured if some other obligation is secured, except for this
Agreement, the 1998 Note Agreement, the 1995 Note Agreements, the Bank Credit
Facilities and any Parity Debt Agreement (as defined in the Trust Agreement).
Section 10.28. Sales of Receivables. Neither Obligor will, nor
will either Obligor cause or permit any of the Restricted Subsidiaries to, sell
with recourse, discount or otherwise sell or dispose of its notes or accounts
receivable, except for accounts receivable consisting of assets of an operating
unit sold as a going concern in accordance with all other provisions of this
Agreement.
Section 10.29. Fixed Price Supply Contracts; Certain Policies.
(a) Neither Obligor will, nor will either Obligor permit any of the Restricted
Subsidiaries to, at any time be a party or subject to any contract for the
purchase or supply by such parties of propane or other product except where
(i) the purchase price is set with reference to a spot index or indices
substantially contemporaneously with the delivery of such product or
(ii) delivery of such propane or other product is to be made no more than one
year after the purchase price is agreed to.
(b) Star Gas will not amend, modify or waive the trading policy or supply
inventory position policy existing as of the date of the Closing except that
Star Gas may amend its supply inventory position policy such that such policy
provides that neither it nor any of the Restricted Subsidiaries will hold on
hand more than 90 days of commodities inventory. The Obligors will provide each
holder of a Note with prompt written notice of any such new commodity hedging
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agreement or any such change in such policy. Subject to the foregoing
exception, Star Gas and the Restricted Subsidiaries will comply in all material
respects with such policies at all times.
Section 10.30. Certain Operations. Neither Obligor shall permit
Petro or any of its Affiliates (other than the Star Gas and the Restricted
Subsidiaries) to acquire a business which derives any revenues from the sale of
propane if, after giving effect to such acquisition, Petro's Pro Forma Propane
Volumes would equal or exceed the lesser of (a) 15% of Star Gas's reported
propane volumes sold for the most recently completed four fiscal quarters which
ended at least 90 days prior to the date of such acquisition and (b) 15 million
gallons of propane (such lesser amount, the "maximum permitted amount"). If as
a result of an acquisition, Petro's Pro Forma Propane Volumes exceed the maximum
permitted amount, Petro shall not be in violation of this Section 10.30 if
within the period of 90 days following such acquisition it completes the
disposition of sufficient propane volume to reduce Petro's Pro Forma Propane
Volumes below the maximum permitted amount. For purposes of this Section 10.30,
"Petro's Pro Forma Propane Volumes" shall mean the actual propane volumes sold
by Petro and any of its Affiliates (other than Star Gas and the Restricted
Subsidiaries) for the most recently completed four fiscal quarters which ended
at least 90 days prior to the date of determination plus the propane volumes
sold of the propane business to be acquired for the most recently completed four
fiscal quarters which ended at least 90 days prior to the date of determination.
In addition, in the event Petro or any of its Affiliates (other than Star Gas
and the Restricted Subsidiaries) owns a propane business, Star Gas shall not
permit Petro or any such Affiliate to accept as a customer (except for de
minimis, unintentional and isolated acceptances) any Person who is (or was
during the last billing cycle of Star Gas and the Restricted Subsidiaries) a
customer of Star Gas and the Restricted Subsidiaries.
Section 10.31. Independent Organizational Existence. Except as
set forth on Schedule 10.31, (a) each Obligor shall maintain, and each Obligor
shall cause each of the Subsidiaries (other than Petro and its Subsidiaries) to
maintain, books, records and accounts that are separate from the books, records
and accounts of Petro or any of its Subsidiaries such that: (i) the revenues of
Star Gas and its Subsidiaries will be credited to the accounts of Star Gas and
its Subsidiaries only; (ii) all expenses incurred by Star Gas and its
Subsidiaries shall be paid only from the accounts of Star Gas and its
Subsidiaries (other than those paid by Petro and allocated to Star Gas in the
manner set forth in clause (c) of this Section); (iii) only officers and
employees of the general partner of Star Gas, Star Gas and its Subsidiaries in
their capacity as such shall have the authority to make disbursements with
respect to the accounts of Star Gas and its Subsidiaries; (iv) there shall occur
no sharing of accounts or funds between Star Gas and its Subsidiaries (other
than Petro and its Subsidiaries), on the one hand, and Petro or any of its
Subsidiaries, on the other hand, and (v) all cash and funds of Star Gas and its
Subsidiaries (other than Petro and its Subsidiaries) shall be managed separately
from the cash and funds of Petro or any of its Subsidiaries, and there shall not
occur any commingling including for investment purposes, of funds or assets of
Star Gas and its Subsidiaries (other than Petro and its Subsidiaries) with the
funds or assets of Petro or any of its Subsidiaries.
(b) All full-time employees, consultants and agents of Star Gas and its
Subsidiaries (other than Petro and its Subsidiaries) shall be compensated
directly from the bank accounts of the general partner of Star Gas, Star Gas and
such Subsidiaries for services provided by such employees, consultants and
agents and, to the extent any employee, consultant or agent is also an
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employee, consultant or agent of Petro or any of its Subsidiaries, the
compensation of such employee, consultant or agent shall be allocated in
accordance with clause (c) of this Section among Star Gas and its Subsidiaries
(other than Petro and its Subsidiaries), on the one hand, and Petro and any of
its Subsidiaries, on the other hand, on a basis which reasonably reflects the
services rendered to Star Gas and its Subsidiaries (other than Petro and its
Subsidiaries).
(c) All overhead expenses (including telephone and other utility charges)
for items shared by Star Gas and its Subsidiaries (other than Petro and its
Subsidiaries), on the one hand, and Petro or any of its Subsidiaries, on the
other hand, shall be allocated on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a basis
reasonably related to actual use.
(d) Star Gas shall not permit Petro or any of its Subsidiaries to be named
as a loss payee or additional insured on the insurance policy covering the
property of Star Gas or any of its Subsidiaries (other than Petro and its
Subsidiaries), or enter into an agreement with the holder of such policy whereby
in the event of a loss in connection with such property, proceeds are paid to
Petro and its Subsidiaries.
Section 10.32. Damage, Destruction, Taking, Etc. In the event of
any damage, destruction or a taking in respect of all or a portion of the
properties subject to any of the Security Documents or in the event there shall
be proceeds under title insurance policies with respect to any real property,
neither Obligor will apply any Net Insurance Proceeds (as defined in the
Mortgages), self-insurance amounts, Net Awards (as defined in the Mortgages) or
title insurance proceeds, if such proceeds (whether resulting from one or a
series of events or circumstances) exceed $25,000,000 in the aggregate, to the
cost of Restoration (as defined in the Mortgages) or to replacements or other
assets without the prior written consent of the Required Holders.
Section 10.33. Trust Agreement. On or prior to the scheduled
maturity date of the 1995 Notes or, if the Obligors shall have elected to prepay
the 1995 Notes, in whole but not in part, prior to such scheduled maturity date,
on or prior to the date scheduled for such prepayment, the Obligors shall cause
the Trust Agreement to be amended (to the extent not previously done so) (a) to
cause the definitions of "Event of Default" and "Potential Event of Default" to
include Events of Default and Potential Events of Default under this Agreement,
(b) to cause the definition of "Requisite Percentage" not to provide any greater
rights under the Trust Agreement to the Banks or any other Parity Lenders (as
defined in the Trust Agreement) than the rights provided to the holders of the
Notes and (c) in such other manner as may be reasonably requested by the
Required Holders.
Section 11. Events of Default; Acceleration.
If any of the following conditions or events ("Events of Default") shall
occur and be continuing
(a) the Obligors shall default in the payment of any principal of or
Make Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
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(b) the Obligors shall default in the payment of any interest on any
Note or any amount due and payable under any Operative Agreement for more
than 5 Business Days after the same becomes due and payable; or
(c) the Obligors shall default in the performance of or compliance
with any term contained in Section 7(h) or any of Sections 10.1 through
10.8, inclusive and Section 10.10(b); or
(d) either Obligor, the general partner of Star Gas, the Public
Partnership or any Restricted Subsidiary shall default in the performance
of or compliance with any other term contained in this Agreement or any
other Operative Agreement and such default shall not have been remedied
within 30 days after such default shall first have become known to any
officer of such Person or written notice thereof shall have been received
by either Obligor or the general partner of Star Gas; or
(e) any representation or warranty made in writing by or on behalf
of either Obligor or any of their Affiliates in this Agreement, any other
Operative Agreement or in any instrument furnished in connection with the
transactions contemplated by this Agreement shall prove to have been false
or incorrect in any material respect on the date as of which made or deemed
made; or
(f) either Obligor or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default in the payment of any amount of
principal of or premium or interest on the Bank Credit Facilities, or other
Indebtedness which is outstanding in a principal amount of at least
$2,000,000 in the aggregate (other than the Notes); or any event shall
occur or condition shall exist in respect of the Bank Credit Facilities, or
other Indebtedness which is outstanding in a principal amount of at least
$2,000,000 or under any evidence of any such Indebtedness or of any
mortgage, indenture or other agreement relating to the Bank Credit
Facilities or such other Indebtedness the effect of which is to cause (or
to permit one or more Persons to cause) such Bank Credit Facilities or
other Indebtedness to become due before its stated maturity or before its
regularly scheduled dates of payment or to permit the holders thereof to
cause either Obligor or any Restricted Subsidiary to repurchase or repay
such Bank Credit Facilities or other Indebtedness, and such default, event
or condition shall continue for more than the period of grace, if any,
specified therein and shall not have been waived pursuant thereto; or
(g) filing by or on the behalf of either Obligor or the general
partner of Star Gas of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any other
relief under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar act
or law, state or Federal, now or hereafter existing ("Bankruptcy Law"), or
any action by either Obligor or the general partner of Star Gas for, or
consent or acquiescence to, the appointment of receiver, trustee or other
custodian of either Obligor, or the general partner of Star Gas, or of all
or a substantial part of its property; or the making by either Obligor or
the general partner of Star Gas of any assignment for the benefit of
creditors,
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or the admission by either Obligor or the general partner of Star Gas in
writing of its inability to pay its debts as they become due; or
(h) filing of any involuntary petition against either Obligor or the
general partner of Star Gas in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts or for any other relief under any
Bankruptcy Law and an order for relief by a court having jurisdiction in
the premises shall have been issued or entered therein; or any other
similar relief shall be granted under any applicable Federal or state law;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other
officer having similar powers over either Obligor or the general partner of
Star Gas or over all or a part of its property shall have been entered; or
the involuntary appointment of an interim receiver, trustee or other
custodian of either Obligor or the general partner of Star Gas or of all or
a substantial part of its property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of
the property of either Obligor or the general partner of Star Gas; and
continuance of any such event for 60 consecutive days unless dismissed,
bonded to the satisfaction of the court having jurisdiction in the premises
or discharged; or
(i) filing by or on the behalf of any Restricted Subsidiary of a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy Law,
or any action by any Restricted Subsidiary for, or consent or acquiescence
to, the appointment of a receiver, trustee or other custodian of such
Restricted Subsidiary or of all or a substantial part of its property; or
the making by any Restricted Subsidiary of any assignment for the benefit
of creditors; or the admission by any Restricted Subsidiary in writing of
its inability to pay its debts as they become due; or
(j) filing of any involuntary petition against any Restricted
Subsidiary in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy Law
and an order for relief by a court having jurisdiction in the premises
shall have been issued or entered therein; or any other similar relief
shall be granted under any applicable Federal or state law; or a decree or
order of a court having jurisdiction in the premises for the appointment of
a receiver, liquidator, sequestrator, trustee or other officer having
similar powers over any Restricted Subsidiary or over all or a part of its
property shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of any Restricted Subsidiary
or of all or a substantial part of its property; or the issuance of a
warrant of attachment, execution or similar process against any substantial
part of the property of any Restricted Subsidiary; and continuance of any
such event for 60 consecutive days unless dismissed, bonded to the
satisfaction of the court having jurisdiction in the premises or
discharged, or
(k) a final judgment or judgments (which is or are non-appealable or
which has or have not been stayed pending appeal or as to which all rights
to appeal have expired or been exhausted) shall be rendered against either
Obligor or any Restricted Subsidiary for the payment of money in excess of
$1,000,000 in the aggregate and any one of such judgments shall not be
discharged or execution thereon stayed pending appeal within 45
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days after the date due, or, in the event of such a stay, such judgment
shall not be discharged within 30 days after such stay expires or any
action shall be legally taken by a creditor to levy upon the assets or
properties of either Obligor or any Restricted Subsidiary to enforce any
such judgment; or
(l) any of the Operative Agreements shall at any time, for any
reason, cease to be in full force and effect or shall be declared to be
null and void in whole or in any material part by the final judgment (which
is non-appealable or has not been stayed pending appeal or as to which all
rights to appeal have expired or been exhausted) of any court or other
governmental or regulatory authority having jurisdiction in respect
thereof, or if the validity or the enforceability of any of the Operative
Agreements shall be contested by or on behalf of either Obligor, the
General Partner, the general partner of Star Gas, the Public Partnership or
any Restricted Subsidiary, or either Obligor, the General Partner, the
general partner of Star Gas, the Public Partnership or any Restricted
Subsidiary shall renounce any of the Operative Agreements, or deny that it
is bound by the terms of any of the Operative Agreements; or
(m) any order, judgement or decree is entered in any proceedings
against an Obligor decreeing a split-up of such Obligor which requires the
divestiture of assets of such Obligor or the divestiture of the stock of a
Restricted Subsidiary which would not be permitted if such divestiture were
considered a partial disposition of assets pursuant to Section 10.7(c) and
such order, judgment or decree shall not be dismissed or execution thereon
stayed pending appeal within 30 days after entry thereof, or, in the event
of such a stay, such order, judgment or decree shall not be discharged
within 30 days after such stay expires; or
(n) there shall occur at any time a change in Legal Requirements
specifically applicable to either Obligor or to the Business or to the
business of the wholesale and retail sale, distribution and storage of
propane gas and related petroleum derivative products and the related
retail sale of supplies and equipment, including home appliances which
would have a Material Adverse Effect (other than on the prospects
(financial or otherwise) of the Obligors or the Business) and 60 days after
the earlier of (i) such occurrence shall first have become known to any
officer of either Obligor or the general partner of Star Gas or (ii)
written notice thereof shall have been received by either Obligor or the
general partner of Star Gas from any holder of any Note, such Material
Adverse Effect shall be continuing; or
(o) any Lien purported to be created by any Security Document shall
cease to be, or shall for any reason be asserted by either Obligor, the
general partner of Star Gas or any Restricted Subsidiary not to be, a
valid, perfected, first priority Lien on the securities, properties or
assets covered thereby, other than as a result of an act or omission of the
Trustee or any holder of a Note; or
(p) any governmental authority revokes or fails to renew any
material license, permit or franchise of either Obligor or any Restricted
Subsidiary, or either Obligor or any Restricted Subsidiary for any reason
loses any material license, permit or franchise, or
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either Obligor or any Restricted Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection
with any proceeding, (judicial or administrative) with respect to any
material license, permit or franchise;
then, (x) upon the occurrence of any Event of Default described in subdivision
(g) or (h) of this Section 11, the unpaid principal amount of and accrued
interest on the Notes shall automatically become due and payable, or, (y) upon
the occurrence and continuance of any other Event of Default, any holder or
holders of 50% or more in principal amount of the Notes at the time outstanding,
may at any time (unless all defaults shall theretofore have been remedied in
accordance with the terms hereof) at its or their option, by written notice or
notices to either Obligor, declare all the Notes to be due and payable,
whereupon the same shall forthwith mature and become due and payable, together
with interest accrued thereon and, to the extent permitted by applicable law,
the applicable Make Whole Amount, if any, with respect to such Notes, all
without presentment, demand, protest or further notice, which are hereby waived,
provided that during the existence of an Event of Default described in
subdivision (a) or (b) (insofar as it relates to interest on any Note) of this
Section 11, any holder of the Notes at the time outstanding may, at its option,
by notice in writing to either Obligor, declare the Notes then held by such
holder to be due and payable, whereupon the Notes then held by such holder shall
forthwith mature and become due and payable, together with interest accrued
thereon and, to the extent permitted by applicable law, the applicable Make
Whole Amount, if any, with respect to such Notes.
At any time after the principal of, and interest accrued on, all the Notes
are declared due and payable, the Required Holders, by written notice to the
Obligors, may rescind and annul any such declaration and its consequences (other
than in respect of any Note which has been individually accelerated pursuant to
the proviso contained in the immediately preceding paragraph) if (x) the
Obligors have paid all overdue interest on the Notes, the principal of and Make
Whole Amount, if any, on any such Notes which have become due otherwise than by
reason of such declaration, and interest on such overdue principal and the
applicable Make Whole Amount, if any, and (to the extent permitted by applicable
law) overdue interest, at a rate per annum equal to the rate of interest stated
on the face of such Notes plus 2.0%, (y) all Events of Default, other than
nonpayment of amounts which have become due solely by reason of such
declaration, and all conditions and events which constitute Events of Default or
Potential Events of Default have been cured or waived, and (z) no judgment or
decree has been entered for the payment of any monies due pursuant to the Notes
or this Agreement; but no such rescission and annulment shall extend to or
affect any subsequent Event of Default or Potential Event of Default or impair
any right consequent thereon.
Section 12. Remedies on Default; Recourse, Etc.
In case any one or more Events of Default or Potential Events of Default
shall occur and be continuing, (a) the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in such Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise, and (b) the Trustee and the holders of the Notes may exercise any
rights or remedies in their respective capacities under
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the Security Documents in accordance with the provisions thereof. In case of a
default in the payment or performance of any provision hereof or of the Notes or
of the Security Documents, the Obligors will pay to the holder of each Note such
further amount as shall be sufficient to cover the cost and expenses of
collection, including, without limitation, reasonable attorneys' fees, expenses
and disbursements, and any out-of-pocket costs and expenses of any such holder
incurred in connection with analyzing, evaluating, protecting, ascertaining,
defending or enforcing any of its rights as set forth herein or in any of the
Security Documents. No course of dealing and no delay on the part of any holder
of any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise.
Section 13. Definitions.
As used herein the following terms have the following respective meanings:
"Administrative Agent" shall mean Fleet National Bank f/k/a BankBoston,
N.A., in its capacity as administrative agent for the Banks under the Bank
Credit Facilities, and its successors in such capacity.
"Affiliate" shall mean as applied to any Person, any other Person directly
or indirectly controlling or controlled by or under common control with such
Person, provided that (a) for purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") as used with respect to any Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether as a general partner or through the ownership
of voting securities or by contract or otherwise, (b) as applied to either
Obligor, the term "Affiliate" shall include Petro, the general partner of Star
Gas and the Public Partnership, and (c) no Purchaser nor any other Person which
is an institution shall be deemed to be an Affiliate of either Obligor solely by
reason of ownership of the Notes or other securities issued in exchange for the
Notes or by reason of having the benefits of any agreements or covenants
contained in this Agreement or other Operative Agreements.
"After Acquired Property" shall have the meaning provided in Section 10.22.
"Aggregate Cost of Unmortgaged Property" shall have the meaning specified
in Section 10.22.
"All Star Gas Mortgages" shall mean those certain deeds of trust and/or
mortgages to be entered into between Star Gas and/or a Restricted Subsidiary and
the Trustee in respect of certain parcels of real property located in Indiana,
Michigan and Ohio acquired by Star Gas from All Star Gas Inc. of Indiana, All
Star Gas Inc. of Michigan and All Star Gas Inc. of Ohio pursuant to that certain
Purchase Agreement dated January 27, 2000.
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"Approved Rating Agency" shall mean Standard & Poor's Rating Group, ▇▇▇▇▇'▇
Investor Service, Inc., Duff and ▇▇▇▇▇▇ Credit Rating Co. or Fitch Investors
Service, Inc.
"Assets" shall mean the assets conveyed to Star Gas pursuant to the
Conveyance Agreements and/or the assets covered by the Security Documents, as
the context may require.
"Available Cash" shall mean with respect to any calendar quarter, (a) the
sum of (i) all cash of Star Gas and the Restricted Subsidiaries on hand at the
end of such quarter (other than Public Partnership Restricted Proceeds) and
(ii) all additional cash of Star Gas and the Restricted Subsidiaries on hand on
the date of determination of Available Cash with respect to such quarter
obtained through available borrowings under the Working Capital Facility made
after the end of such quarter (provided that such borrowings under the Working
Capital Facility shall in no event exceed available borrowings under the Working
Capital Facility as of the end of such quarter), less (b) any cash reserves in
such amounts as the general partner of Star Gas shall determine to be necessary
or appropriate in its reasonable discretion to (A) provide for the proper
conduct of the business of Star Gas and the Restricted Subsidiaries (including,
without limitation, cash reserves for future capital expenditures) or (B)
provide funds for distributions under sections 5.4(a)(i), (ii), and (iii) or
5.4(b)(i) of the MLP Agreement in respect of any one or more of the next four
quarters or (C) comply with applicable law or any loan agreement (including this
Agreement), mortgage, security agreement, debt instrument or other agreement or
obligation to which Star Gas or any Restricted Subsidiary is a party or its
assets are subject, (including the payment of principal, Make Whole Amount, if
applicable, and interest) of the Obligors in respect of the Notes; provided that
Available Cash shall exclude without duplication (x) in each calendar quarter a
reserve equal to at least 50% of the aggregate amount of all interest payments
in respect of all Indebtedness of Star Gas and the Restricted Subsidiaries upon
which interest is due semiannually or less frequently to be made in the next
quarter (assuming, in the case of Indebtedness incurred under the Bank Credit
Facilities and other Indebtedness bearing interest at fluctuating interest rates
which cannot be determined in advance, that the interest rate in effect on the
last Business Day of the immediately preceding calendar quarter will remain in
effect until such Indebtedness is due to be paid), (y) with respect to any
Indebtedness secured equally and ratably with the Notes of which principal is
payable annually, in the third calendar quarter immediately preceding each
calendar quarter in which any scheduled principal payment is due with respect to
such Notes and other Indebtedness (a "principal payment quarter"), a reserve
equal to at least 25% of the aggregate amount of all principal to be paid in
respect of such Notes and other such Indebtedness secured equally and ratably
with the Notes in such principal payment quarter; in the second calendar quarter
immediately preceding a principal payment quarter, a reserve equal to at least
50% of the aggregate amount of all principal to be paid in respect of such Notes
and other such Indebtedness in such principal payment quarter; and in the
calendar quarter immediately preceding a principal payment quarter, a reserve
equal to at least 75% of the aggregate amount of all principal to be paid in
respect of such Notes and other such Indebtedness in such principal payment
quarter, and (z) with respect to the Notes and any other Indebtedness secured
equally and ratably with the Notes of which principal is payable semiannually,
in each calendar quarter which immediately precedes a quarter in which principal
is payable in respect of such Notes and such Indebtedness a reserve equal to at
least 50% of the aggregate amount of all principal to be paid in respect of such
Notes and other such Indebtedness in the next quarter; provided further that the
amount of such reserve specified in clauses (x), (y) and (z) of this definition
for principal
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amounts to be paid shall be reduced by the aggregate principal amount of all
binding, irrevocable letters of credit established to refinance such principal
amounts.
"Bank Credit Facilites" shall mean that Credit Agreement, dated as of
December 13, 1995, among Star Gas, Fleet National Bank f/k/a BankBoston, N.A.,
as administrative agent, Bank of America, N.A. as successor to NationsBank,
N.A., as documentation agent and the lenders named therein as amended by the
First Amendment dated as of May 31, 1996, the Second Amendment dated as of
October 21, 1997, the Third Amendment dated as of April 15, 1998, the Fourth
Amendment dated as of November 3, 1998, the Fifth Amendment dated as of
January 22, 1999, the Sixth Amendment dated as of March 25, 1999, and the
Seventh Amendment dated as of June 18, 1999, and any extension, renewal,
refunding, or replacement thereof otherwise permitted to be incurred and
outstanding under Section 10.1, pursuant to which the Initial Acquisition
Facility and the Working Capital Facility will be made available to Star Gas.
Bankruptcy Law" shall have the meaning specified in Section 11(g).
"Banks" shall mean the financial institutions listed in the signature pages
of the Bank Credit Facilities, each assignee which becomes a lender under the
Bank Credit Facilities pursuant to the terms thereof and their respective
successors.
"Business" shall mean the operation by Star Gas and its Subsidiaries of the
wholesale and retail sale, distribution and storage of propane gas and related
petroleum derivative products and the related retail sale of supplies and
equipment, including home appliances.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized by law to
be closed.
"Called Principal" shall mean with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 9.2, 9.3 or 9.4 or becomes
or is declared to be immediately due and payable pursuant to Section 11, as the
context requires.
"Capital Lease" shall mean as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person (as lessee or
guarantor or other surety) which would, in accordance with GAAP, be required to
be classified and accounted for as a capital lease on a balance sheet of such
Person.
"Cash Collateral Agreement" shall mean the Cash Collateral Agreement dated
as of December 13, 1995, between Star Gas and the Administrative Agent, as
amended from time to time.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"Closing" shall have the meaning specified in Section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
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"Commodity Hedging Agreement(s)" shall mean any agreement or arrangement
designed solely to protect Star Gas against fluctuations in the price of propane
with respect to quantities of propane that Star Gas reasonably expects to
purchase from suppliers, sell to its customers or need for its inventory during
the period covered by such agreement or arrangement.
"Common Units" shall have the meaning provided for in the MLP Agreement.
"Confirmation of Parity Debt" shall mean the Confirmation of Parity Debt
among each Obligor, the General Partner, the Restricted Subsidiaries party to
the Obligor Security Agreement, the Public Partnership, the Banks, the
Administrative Agent under the Bank Credit Facilities, the Documentation Agent
under the Bank Credit Facilities, the holders of the 1998 Notes, the holders of
the 1995 Notes and the Trustee, in the form attached hereto as Exhibit D, as
amended from time to time.
"Consolidated Cash Flow" shall mean, at any date of determination, for the
period of four consecutive fiscal quarters most recently completed at least
45 days (except that in connection with any calculation required pursuant to
Section 10.4, for the period of four consecutive fiscal quarters most recently
completed) prior to such date of determination,
(a) the sum of, without duplication, the amounts for such period,
taken as a single accounting period, (i) Consolidated Net Income and
(ii) all amounts deducted in arriving at such Consolidated Net Income in
respect of (1) interest charges (including amortization of debt discount
and expense and imputed interest on Capital Lease obligations),
(2) provisions for all taxes and reserves (including, reserves for deferred
income taxes) and (3) non-cash items, less
(b) without duplication, any cash items added in the determination
of such Consolidated Net Income for such period.
Consolidated Cash Flow shall be calculated after giving effect, on a pro forma
basis for the four consecutive fiscal quarters most recently completed at least
45 days (except that in connection with any calculation required pursuant to
Section 10.4, for the period of four consecutive fiscal quarters most recently
completed) prior to such date of determination to, without duplication, any
asset sales or asset acquisitions (including, without limitation, any asset
acquisition giving rise to the need to make such calculation as a result of Star
Gas or any Restricted Subsidiary (including any Person who becomes a Restricted
Subsidiary as a result of such asset acquisition) incurring, assuming or
otherwise being liable for acquired Indebtedness) occurring during the period
commencing on the first day of such four fiscal quarter period to and including
the date of determination (the "Reference Period"), as if such asset sale or
asset acquisition occurred on the first day of the Reference Period; provided,
that Consolidated Cash Flow generated by an acquired business or asset shall be
determined for the four full fiscal quarters preceding the date of acquisition
of such business or asset, on the basis of, without duplication, (x) the
historical sales volume of the acquired asset less an estimated post-acquisition
loss of sales volume of three percent (3%) minus (y) the actual cost to Star Gas
of the goods sold as determined for the volume determined in clause (x) above
minus (z) the pro forma expenses that would have been incurred by Star Gas in
the operation of such acquired business or asset during such period
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computed on the basis of personnel expenses for employees retained or to be
retained by Star Gas in the operation of such acquired business or asset and
non-personnel costs and expenses incurred by Star Gas or the general partner of
Star Gas in the operation of Star Gas's business at similarly situated Star Gas
facilities or Restricted Subsidiary facilities.
"Consolidated Interest Expense" shall mean, as of any date of
determination, the total amount payable by Star Gas and the Restricted
Subsidiaries on a consolidated basis, during the period of four consecutive
fiscal quarters most recently completed at least 45 days (except that in
connection with any calculation required pursuant to Section 10.4, during the
period of four consecutive fiscal quarters most recently completed) prior to
such date of determination, in respect of all interest charges (including
amortization of debt discount and expense and imputed interest on actual
payments under Capital Lease obligations) with respect to Indebtedness of Star
Gas and the Restricted Subsidiaries outstanding during such period of four
consecutive fiscal quarters.
"Consolidated Net Income" shall mean, with reference to any period, the net
income (or deficit) of Star Gas and its Restricted Subsidiaries for such period
(taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance with GAAP
on a consolidated basis, after eliminating all intercompany transactions and
after deducting portions of income properly attributable to minority interests,
if any, in the stock and surplus of Restricted Subsidiaries, provided that there
shall be excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or consolidated with
Star Gas or a Restricted Subsidiary, (b) the income (or deficit) of any Person
(other than a Restricted Subsidiary) in which Star Gas or any Restricted
Subsidiary has an ownership interest, except to the extent that any such income
has been actually received by Star Gas or such Restricted Subsidiary in the form
of dividends (but subject to the limitations specified in the proviso below),
(c) the undistributed earnings of any Restricted Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary is not at the time permitted by the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary, (d) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of income accrued during such period,
(e) any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets (such
terms to include all fixed assets, whether tangible or intangible, all Inventory
sold in conjunction with the disposition of fixed assets, and all securities),
(f) any write-up of any asset, (g) any net gain from the collection of the
proceeds of life insurance policies, (h) any gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any Indebtedness, of
Star Gas or any Restricted Subsidiary, (i) any net income or gain (but not any
net loss) during such period from any change in accounting, from any
discontinued operations or the disposition thereof, from any extraordinary
events or from any prior period adjustments, (j) any deferred credit
representing the excess equity in any Restricted Subsidiary at the date of
acquisition over the cost of the investment in such Restricted Subsidiary, and
(k) in the case of a successor to Star Gas by consolidation or merger or as a
transferee of its assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets; provided, further, that
notwithstanding clause (b) above, there shall be excluded in any event the
income (or
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deficit) of Petro Holdings, whether or not any amounts are actually received by
Star Gas or any Restricted Subsidiary from or through Petro Holdings in the form
of dividends or otherwise.
"Consolidated Net Worth" shall mean, as to Star Gas, the amount by which
(a) the total assets of Star Gas and the Restricted Subsidiaries
appearing on a consolidated balance sheet of Star Gas and the Restricted
Subsidiaries prepared in accordance with GAAP as of the date of
determination (after eliminating all amounts properly attributable to
minority interests in the stock and surplus, if any, of the Restricted
Subsidiaries) exceeds
(b) total liabilities of Star Gas and the Restricted Subsidiaries
appearing on a consolidated balance sheet of Star Gas and the Restricted
Subsidiaries prepared in accordance with GAAP as of the date of
determination on a consolidated basis,
in each case after eliminating all intercompany transactions, and as to any
other Person, the amount by which
(") the total assets of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination (after
eliminating all amounts properly attributable to minority interests in the
stock and surplus, if any, of its Subsidiaries) exceeds
(ii) total liabilities of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination on a
consolidated basis,
in each case after eliminating all intercompany transactions.
"Consolidated Pro Forma Debt Service" shall mean as of any date of
determination, the total amount payable by Star Gas and the Restricted
Subsidiaries on a consolidated basis, during the four consecutive calendar
quarters next succeeding the date of determination, in respect of scheduled
principal payments and all interest charges (excluding amortization of debt
discount and expense) with respect to Indebtedness of Star Gas and the
Restricted Subsidiaries outstanding on such date of determination, after giving
effect to any Indebtedness proposed to be incurred on such date and to the
substantially concurrent repayment of any other Indebtedness, and (a) including
actual payments under Capital Lease obligations, (b) assuming, in the case of
Indebtedness (other than Indebtedness incurred under the Bank Credit Facilities)
bearing interest at fluctuating interest rates which cannot be determined in
advance, that the rate in effect on such date will remain in effect throughout
such period, (c) assuming in the case of Indebtedness incurred under the Bank
Credit Facilities, that (1) the interest payments payable during such four
consecutive calendar quarters next succeeding the date of determination will
equal the actual interest payments associated with the Bank Credit Facilities
during the most recent four fiscal quarters, (2) except for the twelve-month
period immediately prior to the termination or final maturity thereof (unless
extended, renewed or replaced), no principal payments will be made under the
Working Capital Facility and (3) principal payments relating to the Initial
Acquisition
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Facility will become due based on the assumption that the conversion to the
fixed amortization schedule pursuant to sections 2.01(c) and 2.02(g) of the Bank
Credit Facilities, (d) treating the principal amount of all Indebtedness
outstanding as of such date of determination under a revolving credit or similar
agreement (other than the Bank Credit Facilities as maturing and becoming due
and payable on the scheduled maturity date or dates thereof (including, the
maturity of any payment required by any commitment reduction or similar
amortization provision), without regard to any provision permitting such
maturity to be extended, (e) including any other designated debt repayments due
within twelve months from such date of determination and (f) excluding principal
and interest payments in connection with Star/Petro Intercompany Subordinated
Debt.
"Conveyance Agreements" shall mean (a) the Contribution, Conveyance and
Assumption Agreement, dated as of December 20, 1995, among Star Gas Corporation,
Star Gas, Star Gas Partners, L.P., Stellar Propane Services Corp., Star Gas
Silgas of Illinois, Inc. and Silgas Inc. and (b) each of the individual
conveyances, assignments and bills of sale delivered to Star Gas pursuant to the
Contribution, Conveyance and Assumption Agreement referred to in the foregoing
clause (a).
"Current Value" shall have the meaning provided for in Section 10.22.
"Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a semi-annual
basis) equal to the Reinvestment Yield plus 50 basis points with respect to such
Called Principal.
"Documentation Agent" shall mean Bank of America, N.A. as successor to
NationsBank, N.A., in its capacity as documentation agent for the Banks under
the Bank Credit Facilities, and its successors in such capacity.
"Dollar" and sign i$i shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean applicable Federal, state, local and
foreign laws, rules or regulations relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall have the meaning specified in Section 11.
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"Excess Proceeds" shall have the meaning specified in Section 10.7(c).
"Existing Unmortgaged Property" shave have the meaning specified in
Section 10.22.
"Funded Debt" shall mean, as applied to any Person, all Indebtedness of
such Person which by its terms or by the terms of any instrument or agreement
relating thereto matures more than one year from the date of the initial
creation thereof, provided that Funded Debt shall include any Indebtedness which
does not otherwise come within the foregoing definition but which is directly or
indirectly renewable or extendible at the option of the debtor to a date one
year or more (including an option of the debtor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of one year or more) from the date of the initial creation thereof,
provided further that, in the case of Star Gas, Funded Debt shall not include
any Indebtedness under the Working Capital Facility.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States from time to time.
"General Partner" shall mean Star Gas LLC, a Delaware limited liability
company.
"General Partner Guarantee Agreement" shall mean the General Partner
Guarantee Agreement between the General Partner and the Trustee, dated as of
March 25, 1999, as amended from time to time.
"General Partner of Star Gas" shall mean the General Partner, so long as it
holds a general partner interest in Star Gas, and any successor to such interest
or any part thereof, so long as such successor shall hold such interest or part
thereof.
"Guaranty" shall mean, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable or any other obligation under
any contract which, in economic effect, is substantially equivalent to a
guaranty, including, without limitation, any such obligation of a partnership in
which such Person is a general partner or of a joint venture in which such
Person is a joint venturer, and any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof.
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"Hazardous Materials" shall mean any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos or asbestos-containing materials,
pollutants, contaminants, radioactivity, and any other materials or substances
of any kind, whether or not any such substance is defined as hazardous under any
Environmental Law, that is regulated pursuant to any Environmental Law or that
could give rise to liability under any Environmental Law.
"Indebtedness" shall mean as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
(b) any indebtedness, whether or not for borrowed money, with
respect to which such Person has become directly or indirectly liable and
which represents the deferred purchase price (or a portion thereof) or has
been incurred to finance the purchase price (or a portion thereof) of any
property or service or business acquired by such Person, whether by
purchase, consolidation, merger or otherwise;
(c) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with
the acquisition or property, assets or businesses;
(d) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property);
(e) any obligations under Capital Leases to the extent such
obligations would, in accordance with GAAP, appear on a balance sheet of
such Person;
(f) any indebtedness, whether or not for borrowed money, secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien in respect of property
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such indebtedness, provided that the amount of
such Indebtedness if not so assumed shall in no event be deemed to be
greater than the fair market value from time to time (as determined in good
faith by such Person) of the property subject to such Lien;
(g) all redeemable capital stock of such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued dividends;
(h) any preferred stock of any Subsidiary of such Person valued at
the sum of the liquidation preference thereof or any mandatory redemption
payment obligations in respect thereof plus, in either case, accrued
dividends thereon;
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(i) any indebtedness of the character referred to in clause (a)
through (h) of this definition deemed to be extinguished under GAAP but for
which such Person remains legally liable; and
(j) any indebtedness of any other Person of the character referred
to in clause (a) through (i) of this definition with respect to which the
Person whose Indebtedness is being determined has become liable by way of a
Guaranty.
Notwithstanding the foregoing, in determining the Indebtedness of Star Gas and
the Restricted Subsidiaries, there shall be excluded all undrawn letters of
credit (not yet due and payable), trade accounts payable, accrued interest and
other accrued expenses and customer credit balances arising in the ordinary
course of business on ordinary terms.
"Initial Acquisition Facility" shall mean that Initial Acquisition Facility
under the Bank Credit Facilities which shall permit borrowings thereunder in an
aggregate amount of up to $30,000,000 and which shall be secured by the
Mortgaged Property pursuant to the Security Documents, and any extension,
renewal, refunding or replacement thereof otherwise permitted to be incurred and
outstanding under Section 10.1.
"Intercompany Notes" shall mean any and all promissory notes of a
Restricted Subsidiary issued to Star Gas or to another Restricted Subsidiary, in
the form attached as Exhibit C hereto or such other form as may be satisfactory
to the Required Holders, representing all Indebtedness of such Restricted
Subsidiary to Star Gas or such other Restricted Subsidiary, as the case may be.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed solely to protect Star Gas against
fluctuations in interest rates on Indebtedness outstanding under the Bank Credit
Facilities entered into with one or more of the banks party to the Bank Credit
Facilities.
"Inventory" shall mean goods held by a Person for sale or lease or to be
furnished under contracts of service or if such Person has so furnished them, or
if they are raw materials, work in process or materials used or consumed in the
Business (but not goods which are, or may become, fixed assets, or which have a
relatively long period of use).
"Investment" shall mean, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, and any other item which would be classified as
an "Investment" on a balance sheet of such Person prepared in accordance with
GAAP, including, without limitation, any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest. For the purposes of Section
10.3(b), the amount involved in Investments made during any period shall be the
aggregate cost to Star Gas of all such Investments made during such period,
determined in accordance with GAAP, but without regard to unrealized increases
or decreases in value, or write-ups, write-downs or write-offs, of such
investments and without regard to the existence of any undistributed earnings or
accrued interest
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with respect thereto accrued after the respective dates on which such
Investments were made, less any net return of capital realized during such
period upon the sale, repayment or other liquidation of such Investment
(determined in accordance with GAAP, but without regard to any amounts received
during such period as earnings (in the form of dividends not constituting a
return of capital, interest or otherwise) on such Investment) or as loans from
any Person in whom such Investments have been made.
"Investment Grade" shall mean, in any case, the lowest of (a) in the case
of a rating conducted by Standard & Poor's Ratings Group, a rating of at least
BBB- or PPR2-, (b) in the case of a rating conducted by Duff and ▇▇▇▇▇▇ Credit
Rating Co. or Fitch Investors Service, Inc., a rating of at least BBB- or (c) in
the case of a rating conducted by ▇▇▇▇▇'▇ Investor Service, Inc., a rating of at
least Baa3.
"Legal Requirement" shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule or regulation (or published official
interpretation by any governmental authority of any of the foregoing) of any
governmental authority.
"Lien" shall mean, as to any Person, any mortgage, lien (statutory or
otherwise), pledge, reservation, right of entry, encroachment, easement, right
of way, restrictive covenant, license, charge, security interest or other
encumbrance in or on, or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other
title retention agreement or Capital Lease with respect to, any property or
asset owned or held by such Person, or the signing or filing of a financing
statement with respect to any of the foregoing which names such Person as
debtor, or the signing of any security agreement with respect to any of the
foregoing authorizing any other party as the secured party thereunder to file
any financing statement or any other agreement to give or grant any of the
foregoing. For the purposes of this Agreement, a Person shall be deemed to be
the owner of any asset which it has placed in trust for the benefit of the
holders of Indebtedness of such Person and such trust shall be deemed to be a
Lien if such Person remains legally liable therefor, notwithstanding that such
Indebtedness is or may be deemed to be extinguished under GAAP.
"Lockbox Agreements" shall mean any and all agreements among any bank, in
its capacity as the depository bank, Star Gas or a Restricted Subsidiary and the
Trustee in substantially the form attached hereto as Exhibit Q to the 1995 Note
Agreements, as amended from time to time.
"Make Whole Amount" shall mean with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled Payments
of the Called Principal of such Note over such Called Principal. The Make Whole
Amount shall in no event be less than zero.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
(financial or otherwise) of the Obligors or the Business, (b) the ability of
either Obligor, the General Partner or any Restricted Subsidiary to perform its
obligations under this Agreement or any other Operative Agreement or (c) the
validity, enforceability, perfection or priority of this Agreement or any other
Operative Agreement or of the rights or remedies of the holder of any Notes or
the Trustee.
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"Maximum Consolidated Pro Forma Debt Service" shall mean, as of any date of
determination, the highest total amount payable by Star Gas and the Restricted
Subsidiaries on a consolidated basis, during any period of four consecutive
fiscal quarters, commencing with the fiscal quarter in which such date of
determination occurs and ending on the latest maturity date of the Notes, in
respect of scheduled principal payments and all interest charges with respect to
all Indebtedness of Star Gas and the Restricted Subsidiaries outstanding or to
be outstanding, after giving effect to any Indebtedness proposed to be incurred
on such date and to the substantially concurrent repayment of any other
Indebtedness, and (a) including actual payments under Capital Lease obligations,
(b) assuming, in the case of Indebtedness (other than Indebtedness incurred
under the Bank Credit Facilities) bearing interest at fluctuating interest rates
which cannot be determined in advance, that the rate in effect on such date will
remain in effect throughout such period, (c) assuming in the case of
Indebtedness incurred under the Bank Credit Facilities, that (1) the interest
payments payable during such four consecutive calendar quarters next succeeding
the date of determination will equal the actual interest payments associated
with the Bank Credit Facilities during the most recent four fiscal quarters, (2)
except for the twelve-month period immediately prior to the termination or final
maturity thereof (unless extended or renewed) no principal payments will be made
under the Working Capital Facility and (3) principal payments relating to the
Initial Acquisition Facility will become due based on the assumption that the
conversion to the fixed amortization schedule pursuant to section 2.01(c) and
2.02(g) of the Bank Credit Facilities, (d) treating the principal amount of all
Indebtedness outstanding as of such date of determination under a revolving
credit or similar agreement (other than the Bank Credit Facilities) as maturing
and becoming due and payable on the scheduled maturity date or dates thereof
(including the maturity of any payment required by any commitment reduction or
similar amortization provision), without regard to any provision permitting such
maturity date to be extended, (e) including any other designated debt repayments
due within twelve months from such date of determination and (f) excluding
principal and interest payments in connection with Star/Petro Intercompany
Subordinated Debt.
"maximum permitted amount" shall have the meaning specified in
Section 10.30.
"MLP Agreement" shall mean the Agreement of Limited Partnership of Star Gas
Partners, L.P., dated as of December 20, 1995, as amended from time to time.
"Mortgage(s)" shall mean the separate mortgage, security agreement and
fixture filings among Star Gas, Star Gas LLC as successor to Petroleum Heat and
Power Co., Inc. and Star Gas Corporation and the Trustee, substantially in the
form of Exhibit D1 to the 1995 Note Agreements, and the All Star Gas Mortgages,
each as amended from time to time.
"Mortgaged Property" shall mean collectively, the properties referred to as
the "Mortgaged Property" in the Mortgages or as the "Collateral" under the
Obligor Security Agreement and as the "Security" in the Trust Agreement.
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan"
within the meaning of section 4001(a)(3) of ERISA.
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"1995 Note Agreements' shall mean the separate Note Agreements, each dated
as of December 13, 1995, among Star Gas, Star Gas LLC as successor to Petroleum
Heat and Power Co., Inc. and Star Gas Corporation and the respective purchasers
listed in the Schedule of Purchasers attached thereto, as amended by the First
Amendment to Note Agreements dated as of May 31, 1996 and the Second Amendment
to Note Agreements dated as of March 25, 1999.
"1995 Notes" shall mean the 8.04% First Mortgage Notes due September 15,
2009 of the Obligors issued pursuant to the 1995 Note Agreements in an original
aggregate principal amount of $85,000,000.
"1998 Note Agreement" shall mean the Note Agreement, dated as of
January 22, 1998, between Star Gas and the purchaser listed in the Schedule of
Purchasers attached thereto, as amended by that certain First Amendment to Note
Agreement dated as of March 25, 1999.
"1998 Notes" shall mean the 7.17% First Mortgage Notes due September 15,
2010 of the Obligors issued pursuant to the 1998 Note Agreement in an original
aggregate principal amount of $11,000,000.
"Non-Related Subsidiaries" shall mean Subsidiaries of Petro other than any
such Subsidiary which is a Related Person.
"Notes" shall have the meaning specified in Section 1.
"Obligor Security Agreement" shall mean the Pledge and Security Agreement,
dated as of December 13, 1995, among Star Gas, Star Gas LLC as successor to
Petroleum Heat and Power Co., Inc. and Star Gas Corporation, the Restricted
Subsidiaries named therein and the Trustee, as amended from time to time.
"Obligors" shall have the meaning specified in the Introduction.
"Offering Materials" shall have the meaning specified in Section 5.4.
"Officers" Certificate" shall mean as to any corporation, a certificate
executed on its behalf by the Chairman of the Board of Directors (if an officer)
or its President or one of its Vice Presidents and its Treasurer, or Controller,
or one of its Assistant Treasurers or Assistant Controllers, and, as to any
partnership, a certificate executed on behalf of such partnership by its general
partner in a manner which would qualify such certificate as an Officers'
Certificate of such general partner hereunder.
"Operative Agreements" shall mean this Agreement, the Notes, the
Confirmation of Parity Debt, the 1998 Note Agreement, the 1995 Note Agreements,
the Bank Credit Facilities, the Security Documents, the Intercompany Notes, the
Conveyance Agreements, the MLP Agreement and the Partnership Agreement.
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"Parity Debt" shall mean Indebtedness of either Obligor incurred in
accordance with Section 10.1(b), 10.1(e), 10.1(f) or 10.1(i) and secured by the
Lien of the Security Documents in accordance with Section 10.2(h) or 10.2(i).
"Partnership Agreement" shall mean the Agreement of Limited Partnership of
Star Gas, as in effect on the date of the Closing, and as the same may from time
to time be amended, modified or supplemented in accordance with the terms
thereof and Section 10.12 hereof.
"Partners Security Agreement" shall mean the Amended and Restated Pledge
and Security Agreement among the Public Partnership, the General Partner and the
Trustee, dated as of March 25, 1999, as amended from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
"Perfection Certificate" shall mean a certificate from Star Gas in
substantially the form attached hereto as Exhibit S to the 1995 Note Agreements.
"Permitted Banks" shall have the meaning specified in Section 10.3(a)(4).
"Permitted Encumbrances" shall mean the encumbrances and exceptions to
title to the Assets described in the Security Documents.
"Permitted Exceptions" shall have the meaning specified in Section 5.8(a).
"Permitted Insurers" shall mean insurers with ratings of A or better
according to Best's Insurance Reports or a comparable rating agency for
insurance companies located outside of the United States and Canada and with
assets of no less than $500 million.
"Person" shall mean a corporation, a firm, a joint venture, an association,
a partnership, a limited liability company, an organization, a business, a trust
or other entity or enterprise, an individual, a government or political
subdivision thereof or a governmental agency, department or instrumentality.
"Petro" shall mean Petroleum Heat and Power Co., Inc., a Minnesota
corporation.
"Petro Holdings" shall mean Petro Holdings, Inc. and its Subsidiaries.
"Petro's Pro Forma Propane Volumes" shall have the meaning specified in
Section 10.30.
"Plan" shall mean an "employee benefit plan" (as defined in section 3(3) of
ERISA) subject to Title IV of ERISA which is or has been established or
maintained, or to which contributions are or have been made, by the General
Partner, either Obligor or any Related Person or to which the General Partner,
either Obligor or any Related Person is or has been obligated to contribute, or
an employee benefit plan as to which the General Partner, either Obligor or any
Related Person
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could be treated as a contributory sponsor under section 4069 or section 4212 of
ERISA if such plan were terminated.
"Potential Event of Default" shall mean any condition or event which, with
notice or lapse of time or both, would become an Event of Default.
"Public Partnership" shall mean Star Gas Partners, L.P., a Delaware limited
partnership.
"Public Partnership Restricted Proceeds" shall mean all proceeds of (a)
borrowings by Star/Petro from the Public Partnership and (b) capital
contributions or equity investments indirectly made by the Public Partnership in
Star/Petro, which proceeds, upon receipt thereof, are designated for investment
by Star/Petro in Petro Holdings.
"Purchase Money Lien" shall have the meaning specified in Section 10.2(j).
"Purchasers" shall have the meaning set forth in the Introduction.
"QPAM Exemption" shall have the meaning specified in Section 6.2(c).
"RCRA" shall mean the Federal Resource Conservation and Recovery Act, as
amended.
"Reinvestment Yield" shall mean with respect to the Called Principal of any
Note, the yield to maturity implied by (a) the yields reported, as of 10:00 a.m.
(New York City time) on the Business Day next preceding the Settlement Date with
respect to such Called Principal, on the display designated as "Page 678" on the
Telerate Service (or such other display as may replace Page 678 on the Telerate
Service) for actively traded U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date,
or if such yields shall not be reported as of such time or the yields reported
as of such time shall not be ascertainable, (b) the Treasury constant maturity
series yields reported, for the latest day for which such yields shall have been
so reported as of the Business Day next preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (i) converting U.S. Treasury ▇▇▇▇
quotations to bond-equivalent yields in accordance with accepted financial
practice and (ii) interpolating linearly between yields reported to various
maturities.
"Related Person" shall mean any trade or business, whether or not
incorporated, which, as of any date of determination, would be treated as a
single employer together with the General Partner or either Obligor under
section 414 of the Code.
"Remaining Average Life" shall mean with respect to the Called Principal of
any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (a) such Called Principal into (b) the sum of the products
obtained by multiplying (i) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (ii) the number of years (calculated
to the nearest one-twelfth year) which will elapse between the Settlement Date
with
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respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" shall mean with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Sections 9 or 11.
"Required Holders" shall mean the holders of at least 66-2/3% principal
amount of the Notes at the time outstanding.
"Responsible Officer" shall mean the President, any Vice President, the
Chief Financial Officer, the Treasurer and the Secretary of the general partner
of Star Gas or Star/Petro, as the case may be, and any other officer of the
general partner of Star Gas or Star/Petro, as the case may be, who is
responsible for compliance with or performance of any obligation under this
Agreement or the other Operative Agreements and any employee of Star Gas or
Star/Petro or any employee or officer of Petro performing any of the above
functions.
"Restricted Payment" shall mean as to any Person, (a) any payment, dividend
or other distribution, direct or indirect, in respect of any partnership
interest (general or limited) or membership interest in, or on account of any
shares of any class of stock of, such Person, except a distribution payable
solely in additional partnership interests or membership interests in, or shares
of stock of, such Person, and (b) any payment, direct or indirect, on account of
the redemption, retirement, purchase or other acquisition of any partnership
interest or membership interest in, or any shares of any class of stock of, such
Person now or hereafter outstanding or of any warrants, rights or options to
acquire any such shares, except to the extent that the consideration therefor
consists of shares of stock of such Person.
"Restricted Subsidiary" shall mean any Wholly-Owned Subsidiary of Star Gas
(a) organized under the laws of the United States or any state thereof or the
District of Columbia, (b) none of the capital stock or ownership interests of
which is owned by Unrestricted Subsidiaries, (c) substantially all of the
operating assets of which are located in, and substantially all of the business
of which is conducted within the United States and which business consists of
the wholesale and retail sale, distribution and storage of propane gas and
related petroleum derivative products and/or the related retail sale of supplies
and equipment, including home appliances, and (d) designated by Star Gas as a
Restricted Subsidiary in Schedule 13 or at a subsequent date; provided, however,
that (i) to the extent a newly formed or acquired Wholly-Owned Subsidiary
satisfying the requirements of the foregoing clauses (a), (b) and (c) is not
declared either a Restricted Subsidiary or an Unrestricted Subsidiary within 90
days of its formation or acquisition, such Wholly-Owned Subsidiary shall be
deemed a Restricted Subsidiary and (ii) a Restricted Subsidiary may be
designated as an Unrestricted Subsidiary in accordance with the provisions of
Section 10.19(a).
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"Security Documents" shall mean the Trust Agreement, the Mortgage(s), the
Obligor Security Agreement, the General Partner Guarantee Agreement, the
Subsidiary Guarantee Agreement, the Partners Security Agreement, the Perfection
Certificate, the Lockbox Agreements, the Cash Collateral Agreement, and all
other security agreements and documents and instruments executed and delivered
in order to secure the Indebtedness and/or perfect the Liens referred to in the
Trust Agreement.
"Series A Notes" shall have the meaning specified in Section 1.
"Series B Notes" shall have the meaning specified in Section 1.
"Settlement Date" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 9.2, 9.3 or 9.4 or is declared to be or becomes immediately due and
payable pursuant to Section 11, as the context requires.
"Star Gas" shall have the meaning specified in the Introduction.
"Star/Petro" shall have the meaning specified in the Introduction.
"Star/Petro Intercompany Subordinated Debt" shall mean the borrowing of
Star/Petro from the Public Partnership evidenced by the Star/Petro Intercompany
Subordinated Note.
"Star/Petro Intercompany Subordinated Note" shall mean the note evidencing
the Star/Petro Intercompany Subordinated Debt, which shall be fully subordinate
to the prior payment, in full, of the principal, interest and premium, if any,
on the Notes, with the terms as specified in the form of Intercompany Note
annexed as Exhibit C hereto, but modified (as set forth more fully in Section
10.4(c) hereof) to permit (i) investments indirectly made by the Public
Partnership, and (ii) interest payments in the event that the ratio of
Consolidated Cash Flow to Consolidated Interest Expense is greater than 2.0 to
1.0.
"Subsidiary" shall mean, as to any Person, any corporation, association,
partnership, joint venture or other business entity at least a majority (by
number of votes) of the stock of any class or classes (or equivalent interests)
of which is at the time owned by such Person or by one or more Subsidiaries of
such Person or by such Person and one or more of its Subsidiaries, if the
holders of the stock of such class or classes (or equivalent interests) (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or Persons performing similar functions) of such
business entity, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are at the time entitled, as such
holders, to vote for the election of the majority of the directors (or Persons
performing similar functions) of such business entity, whether or not the right
so to vote exists by reason of the happening of a contingency. Unless the
context otherwise requires, any reference to a Subsidiary shall mean a
Subsidiary of Star Gas.
"Subsidiary Guarantee Agreement" shall mean the Guarantee Agreement among
the Restricted Subsidiaries and the Trustee, dated as of December 13, 1995, as
amended from time to time.
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"Substantial Portion" shall have the meaning specified in Section 7(a).
"Supplemental Agreement" shall mean an agreement between a Restricted
Subsidiary and the Trustee in the form attached as Exhibit U to the 1995 Note
Agreements, as amended from time to time.
"Trust Agreement" shall mean the Intercreditor and Trust Agreement, dated
as of December 13, 1995, among Star Gas, Star Gas LLC as successor to Petroleum
Heat and Power Co., Inc. and Star Gas Corporation, the Public Partnership, the
Restricted Subsidiaries named therein, the Trustee, the purchasers of the 1995
Notes, the Administrative Agent, the Documentation Agent and the Banks, as
amended from time to time.
"Trustee" shall mean HSBC Bank USA f/k/a Marine Midland Bank, as Trustee
under the Trust Agreement and its successors and assigns thereunder.
"Uniform Commercial Code" shall mean the Uniform Commercial Code or similar
statute in effect from time to time in any jurisdiction.
"Unrestricted Subsidiary" shall mean any Wholly-Owned Subsidiary other than
a Restricted Subsidiary which is organized under the laws of the United States
or any state thereof or the District of Columbia and substantially all of the
operating assets of which are located in, and substantially all of the business
of which is conducted within the United States and which business consists of
the wholesale and retail sale, distribution and storage of propane gas and
related petroleum derivative products and the related retail sale of supplies
and equipment, including home appliances.
"Wholly-Owned" shall mean as applied to any Subsidiary, a Subsidiary all of
the outstanding shares (other than directors' qualifying shares, if required by
law) of every class of stock or other equity interests of which are at the time
owned by Star Gas or by one or more Wholly-Owned Subsidiaries or by Star Gas and
one or more Wholly-Owned Subsidiaries.
"Working Capital Facility" shall mean that Working Capital Facility under
the Bank Credit Facilities which shall permit borrowings thereunder in aggregate
amount outstanding at any time no greater than as permitted by Section 10.1(e)
and which shall be secured by the Mortgaged Property pursuant to the Security
Documents and any extension, renewal, refunding or replacement thereof otherwise
permitted to be incurred and outstanding under Section 10.1.
Section 14. Registration, Transfer and Substitution of Notes.
Section 14.1. Note Register; Ownership of Notes. Any Notes issued
in substantially the form of Exhibit A1 or A2 are in "registered form. The
Obligors will keep at the principal office of Star Gas a register in which the
Obligors will provide for the registration of Notes in registered form and the
registration of transfers of Notes in registered form. The Obligors may treat
the Person in whose name any Note is registered on such register as the owner
thereof for the purpose of receiving payment of the principal of and the Make
Whole Amount, if any, and interest on such Note and for all other purposes,
whether or not such Note shall be overdue, and the
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Obligors shall not be affected by any notice to the contrary. All references in
this Agreement or in a Note to a "holder" of any Note shall mean the Person in
whose name such Note is at the time registered on such register.
Section 14.2. Transfer and Exchange of Notes. Upon surrender of
any Note for registration of transfer or for exchange to the Obligors at the
principal office of Star Gas, the Obligors at their expense will execute and
deliver in exchange therefor a new Note or Notes of the same series in
denominations of at least $100,000 (except one Note may be issued in a lesser
principal amount if the unpaid principal amount of the surrendered Note is not
evenly divisible by, or is less than, $100,000), as requested by the holder or
transferee, which aggregate the unpaid principal amount of such surrendered
Note. Each such new Note shall be in registered form. Each such Note shall be
dated so that there will be no loss of interest on such surrendered Note and
otherwise of like tenor, and shall be registered in the name or names of such
Person as such holder or transferee may request. Any Note in lieu of which any
such new Note has been executed and delivered shall not be deemed to be an
outstanding Note for any purpose of this Agreement.
Section 14.3. Replacement of Notes. Upon receipt of evidence
reasonably satisfactory to the Obligors of the loss, theft, destruction or
mutilation of any Note and, in the case of any such loss, theft or destruction
of any Note, upon delivery of an indemnity bond in such reasonable amount as the
Obligors may determine (or, in the case of any Note held by a Purchaser or
another institutional holder or such Purchaser's or other institutional holder's
nominee, of an indemnity agreement from such Purchaser or such other
institutional holder), or, in the case of any such mutilation, upon the
surrender of such Note for cancellation to the Obligors at the principal office
of Star Gas, the Obligors at their expense will execute and deliver, in lieu
thereof, a new Note of the same series in the unpaid principal amount of such
lost, stolen, destroyed or mutilated Note, dated so that there will be no loss
of interest on such Note and otherwise of like tenor. Any Note in lieu of which
any such new Note has been so executed and delivered by the Obligors shall not
be deemed to be an outstanding Note for any purpose of this Agreement.
Section 14.4. Notes Held by Obligors Etc., Deemed Not Outstanding.
For the purposes of determining whether the holders of the Notes of the
requisite principal amount at the time outstanding have taken any action
authorized by this Agreement or any other Operative Agreement with respect to
the giving of consents or approvals or with respect to the acceleration upon an
Event of Default, any Notes directly or indirectly owned by either Obligor, the
general partner of Star Gas or any of their respective Affiliates shall be
disregarded and deemed not to be outstanding.
Section 15. Payments on Notes.
Section 15.1. Place of Payment. Payments of principal, Make Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
at the principal office of the Trustee, in the Borough of Manhattan, the City
and State of New York, unless the Obligors, by written notice to each holder of
any Notes, shall designate the principal office of another bank or trust company
in such Borough as such place of payment, in which case the principal office of
such other bank or trust company shall thereafter be such place of payment.
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Section 15.2. Home Office Payment. So long as a Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 15.1 or in such Note to the contrary, the Obligors will pay all sums
becoming due on such Note for principal, Make Whole Amount, if any, and interest
no later than 12:00 noon (New York City time) and by the method and at the
address specified for such Purchaser for such purpose in Schedule A, or by such
other reasonable method or at such other address as such Purchaser shall have
from time to time specified to the Obligors in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except than any Note paid or prepaid in full shall, after such payment
or prepayment in full, be surrendered to the Obligors at the principal office of
Star Gas or at the place of payment maintained by the Obligors pursuant to
Section 15.1 for cancellation. Prior to any sale or other disposition of any
Note held by a Purchaser or such Purchaser's nominee such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Obligors in exchange for a new Note or Notes pursuant to Section 14.2. The
Obligors will afford the benefits of this Section 15.2 to any institutional
investor which is the direct or indirect transferee of any Note purchased by a
Purchaser under this Agreement and which has made the same agreement relating to
such Note as such Purchaser has made in this Section 15.2.
Section 16. Expenses, Indemnification, Etc.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Obligors will pay all expenses in connection with such
transactions and in connection with any amendments or waivers (whether or not
the same become effective) under or in respect of this Agreement or the other
Operative Agreements, including, without limitation: (i) the costs and expenses
of preparing and reproducing this Agreement and the other Operative Agreements,
of furnishing all opinions by counsel for the Obligors or the general partner
of Star Gas (including any opinions requested by the Purchasers' special
counsel, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, as to any legal matter arising hereunder) and all
certificates on behalf of the Obligors or the general partner of Star Gas, and
of the Obligors' or the general partner of Star Gas's performance of and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with; (ii) the cost of delivering to each Purchaser's
principal office, insured to such Purchaser's satisfaction, the Notes sold to
such Purchaser hereunder and any Notes delivered to such Purchaser upon any
substitution thereof pursuant to Section 14 and of such Purchaser's delivering
any Notes, insured to such Purchaser's satisfaction, upon any such substitution;
(iii) the fees, expenses and disbursements of the Purchasers' special counsel,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, and the Purchasers' local counsel in connection with such
transactions and any such amendments or waivers; (iv) the costs and expenses,
including attorneys' fees, incurred by any Purchaser or any subsequent holder of
a Note in enforcing (or determining whether or how to enforce) any rights under
this Agreement or any other Operative Agreement including, without limitation,
the Notes or in responding to any subpoena or other legal process in connection
with this Agreement or the transactions contemplated hereby or by reason of any
Purchaser or any subsequent holder of Notes having acquired any Note, including
without limitation, costs and expenses incurred in any bankruptcy case; (v) the
cost and expenses of obtaining a Private Placement Number for each series of the
Notes; and (vi) the reasonable out-of-pocket expenses incurred by any Purchaser
in connection with such transactions and any such amendments or waivers. The
Obligors also will
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pay, and will save the Purchasers and each other holder of any Notes harmless
from, all claims in respect of the fees, if any, of brokers and finders (unless
engaged by the Purchasers) and any and all liabilities with respect to any taxes
(including interest and penalties) which may be payable in respect of the
execution and delivery hereof, the issue of the Notes hereunder and any
amendment or waiver under or in respect hereof or of the Notes. In furtherance
of the foregoing, on the date of the Closing, the Obligors will pay the fees and
disbursements of the Purchasers' special counsel which are reflected as unpaid
in the statement of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, their special counsel, delivered to Star
Gas prior to the date of the Closing; and thereafter the Obligors will pay,
promptly upon receipt of supplemental statements therefor from time to time,
additional fees, if any, and disbursements of the Purchasers' special counsel in
connection with the transactions hereby contemplated (including unposted
disbursements as of the date of the Closing).
(b) The Obligors will protect, indemnify and save harmless the Trustee and
each present, future and former holder of any Note and their respective
officers, directors, trustees, employees, agents and representatives
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") from and against all losses, liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, attorneys' fees and expenses) imposed upon or incurred by or
asserted against any Indemnified Party by reason of (i) ownership of the
Mortgaged Property, or any interest therein, or receipt of any rent or other sum
therefrom, (ii) any accident or injury to or death of persons or loss of or
damage to property occurring on or about the Mortgaged Property or any part
thereof, (iii) any use, non-use or condition of the Mortgaged Property or any
part thereof, (iv) any failure on the part of either Obligor, the General
Partner, the general partner of Star Gas or any of their respective Subsidiaries
or Affiliates to perform or comply with any of the terms of this Agreement or
any other Operative Agreement, (v) the performance of any labor or services or
the furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof, (vi) any negligence or tortious act on the part of
either Obligor, the General Partner, the general partner of Star Gas, any of
their respective Subsidiaries or Affiliates or any of their respective agents,
contractors, sublessees, licensees or invitees, (vii) any work in connection
with any alterations, changes or construction of the Mortgaged Property, (viii)
any other relationship that has arisen or may arise between either Obligor, the
General Partner, the general partner of Star Gas or any of their respective
Subsidiaries or Affiliates and the Indemnified Parties or the Mortgaged Property
as a result of the delivery or performance of this Agreement, any other
Operative Agreement or any action contemplated hereby or thereby or by any other
document executed in connection herewith or therewith, (ix) the presence or
removal, or the discharge, spillage, leakage, emission, release, threat of
release or disposal, of any Hazardous Substances on, under, about or from the
Mortgaged Property or the noncompliance with any Legal Requirement relating
thereto, whether arising prior to the issuance of the Notes or at any time
thereafter and whether or not either Obligor, the General Partner, the general
partner of Star Gas or any of their respective Subsidiaries or Affiliates is
responsible therefor or (x) the holding of, or any interest in, any sum
deposited or paid under this Agreement, the Notes or any other Operative
Agreement, provided that nothing contained herein shall be deemed to require the
Obligors to indemnify the Indemnified Parties for conditions (other than matters
covered by clause (vi) above) first occurring subsequent to the earlier of
(1) the taking of exclusive possession and control of the Mortgaged Property for
operational purposes pursuant to Section 21.10 of the Mortgages or
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Section 6.03 of the Obligor Security Agreement, or (2) the foreclosure of the
Lien under any Security Document and the transfer of title to the Trustee.
In case any action, claim, suit or proceeding is brought against an
Indemnified Party by reason of any such occurrence, the Obligors may, and upon
the request of such Indemnified Party will, at the Obligors' expense resist and
defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel for the insurer of the liability or by counsel designated by
the Obligors and reasonably satisfactory to the Indemnified Party, as the case
may be, provided that any Indemnified Party shall be entitled to participate in
any such action, suit or proceeding with counsel of its own choice but at its
own expense. In any event, if the Obligors fail to assume the defense within a
reasonable time after any such request, the Indemnified Party may assume such
defense or other indemnification obligations and the fees and expenses of its
attorney will be paid by the Obligors. The obligations of the Obligors under
this Section 16 shall survive any termination or satisfaction of this Agreement.
Any amounts payable to any Indemnified Party under this Section 16 which are not
paid within 15 days after written demand therefor by any Indemnified Party shall
bear interest at the rate of 10.72% per annum from the date of such demand. In
the event that the Obligors shall be required to pay any indemnity under this
Section 16, the Obligors shall pay the Indemnified Party an amount which, after
deduction of all taxes required to be paid by such Indemnified Party in respect
of the receipt or accrual thereof (after giving credit for any savings in
respect of any such taxes by reason of deductions, credit or allowances in
respect of the payment of the expense indemnified against, and of any other such
taxes), shall be equal to the amount of such indemnity.
(c) In connection with the Closing, the General Partner and the Obligors
are requesting that each Purchaser make available for funding an amount equal to
the principal amount specified opposite such Purchaser's name in Schedule A.
If, for any reason, on the date scheduled by the General Partner and the
Obligors as the date for the Closing, (i) the closing conditions are not
satisfied by 11:00 a.m. on such scheduled date, (ii) the General Partner and the
Obligors do not, by 11:00 a.m. on such scheduled date reschedule such Closing
for a subsequent date, and (iii) the Closing in fact does not occur on such
scheduled date, the General Partner and the Obligors will protect, indemnify and
hold each Purchaser harmless from and against any and all losses resulting from
such Purchaser's failure or inability to invest on the scheduled date for the
Closing the purchase price of the Notes to be purchased by such Purchaser, for
the period ending on the next following Business Day at a rate of interest equal
to or greater than the rate of interest on such Purchaser's Notes.
Section 17. Survival of Representations and Warranties.
All representations and warranties contained in this Agreement or the other
Operative Agreements, or made in writing by or on behalf of the General Partner,
either Obligor, the general partner of Star Gas or any of their Affiliates in
connection with the transactions contemplated by this Agreement or the other
Operative Agreements, shall survive the execution and delivery of this Agreement
and the other Operative Agreements, any investigation at any time made by any
Purchaser or on any Purchaser's behalf, the purchase of the Notes by the
Purchasers under this Agreement and any disposition or payment of the Notes.
All statements contained in any certificate or other instrument delivered by or
on behalf of either Obligor, the General Partner, any
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Restricted Subsidiary or the general partner of Star Gas pursuant to this
Agreement and/or the other Operative Agreements or in connection with any
amendment, waiver or modification of this Agreement, any of the other Operative
Agreements or the Notes shall be deemed representations and warranties of the
Obligors under this Agreement.
Section 18. Amendments and Waivers.
Any term of this Agreement or of the Notes may be amended and the
observance of any term of this Agreement or of the Notes may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Obligors and the Required Holders, provided
that, without the prior written consent of the holders of all the Notes at the
time outstanding, no such amendment or waiver shall (a) change the maturity or
the principal amount of, or change the rate of interest or the time of payment
of interest on, or change the amount or the time of payment of any principal or
Make Whole Amount payable on any prepayment of, any Note, (b) release any Lien
against the Mortgaged Property for the benefit of the holders of the Notes,
(c) reduce the aforesaid percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver or
change the rights of the holders with respect thereto, (d) change the percentage
of the principal amount of the Notes the holders of which may declare the Notes
to be due and payable as provided in Section 11 or change the rights of the
holders with respect thereto, (e) decrease the percentage of the principal
amount of the Notes the holders of which may rescind and annul any such
declaration as provided in Section 11 or (f) modify the provisions of
Section 9.8. Any amendment or waiver effected in accordance with this
Section 18 shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Obligors.
Section 19. Notices, Etc.
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by express courier service or by registered or certified mail, return
receipt requested, postage prepaid, addressed, (a) if to a Purchaser, at the
address for such Purchaser set forth in Schedule A or at such other address as
such Purchaser shall have furnished to the Obligors in writing, except as
otherwise provided in Section 15.2 with respect to payments on Notes held by
such Purchaser or such Purchaser's nominee, or (b) if to any other holder of any
Note, at such address as such other holder shall have furnished to the Obligors
in writing, or, until such other holder so furnishes to the Obligors an address,
then to and at the address of the last holder of such Note who has furnished an
address to the Obligors, or (c) if to either Obligor, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to the attention of Secretary, Star Gas Propane,
L.P., with a copy to Vice President-Finance, Star Gas LLC, at the address listed
immediately above, or at such other address, or to the attention of such other
officer, as the Obligors shall have furnished to each such Purchaser and each
such holder in writing. Any notice so addressed and mailed shall be deemed to
be given three Business Days after being so mailed.
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Section 20. Reproduction of Documents.
This Agreement, each other Operative Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and notifications
which may hereafter be executed, (b) documents received by the Purchasers at the
Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Purchasers or any other holder of any Note, may be reproduced by any such
Purchaser or holder by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and such Purchaser or holder may
destroy any original document so reproduced. Each of the Obligors and the
General Partner agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser or holder in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
Section 21. Adjustment of Interest Rate.
(a) Star Gas agrees to maintain a continuing rating relationship with an
Approved Rating Agency lasting as long as the Notes are outstanding, pursuant to
which the Notes shall be re-rated at least annually.
(b) After April 30, 2000, if the Notes shall cease to have a rating from
an Approved Rating Agency, the interest rate payable on the Notes shall be
increased by 150 basis points effective 20 Business Days from the date that the
Notes cease to have such rating until the date that the Notes are assigned a new
rating by an Approved Rating Agency.
(c) In the event that the Notes receive a rating below Investment Grade in
a rating of the Notes conducted by an Approved Rating Agency pursuant to
subdivision (ii)(D) or (iii)(E) of Section 10.7(a) or Section 10.20, the
interest rate payable by the Obligors on the Notes shall be increased by 150
basis points effective from the date of the event giving rise to the requirement
that such rating be obtained until such date an Approved Rating Agency gives the
Notes a rating equivalent to or higher than Investment Grade.
(d) If and when Petro ceases to be a Wholly-Owned Subsidiary, at the
expense of the Obligors, the Notes shall be promptly, but in any event within 20
days from the date of such occurrence, re-rated by an Approved Rating Agency.
In the event the Notes receive a rating below Investment Grade in a rating of
the Notes conducted by an Approved Rating Agency pursuant to the preceding
sentence, the interest rate payable by the Obligors on the Notes shall be
increased by 150 basis points effective from the date Petro ceases to be a
Wholly-Owned Subsidiary until such date an Approved Rating Agency gives the
Notes a rating equivalent to or higher than Investment Grade.
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Section 22. Miscellaneous.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the benefit of
and be enforceable by any holder or holders at the time of the Notes or any part
thereof. Except as stated in Section 17, this Agreement embodies the entire
agreement and understanding between the Purchasers and the Obligors and
supersedes all prior agreements and understandings relating to the subject
matter hereof. The headings in this Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.
Section 23. Submission to Jurisdiction.
For the purpose of assuring that any holder of Notes may enforce its rights
under this Agreement and the Notes, each of the Obligors and the General
Partner, for itself and its successors and assigns, hereby, to the fullest
extent permitted by applicable law, irrevocably (a) agrees that any legal or
equitable action, suit or proceeding brought against it arising out of or
relating to this Agreement or any transaction contemplated hereby or the subject
matter of any of the foregoing or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding may be instituted in any state
or Federal court sitting in the State of New York, (b) waives any objection
which it may now or hereafter have to the laying of venue of any such action,
suit or proceeding brought in any such court, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum, or any right to require the proceeding to be conducted in any other
jurisdiction by reason of its present or future domicile, (c) irrevocably
submits itself to the non-exclusive jurisdiction of any state or Federal court
of competent jurisdiction sitting in the State of New York for purposes of any
such action, suit or proceeding, and (d) irrevocably waives any immunity from
jurisdiction to which it might otherwise be entitled in any such action, suit or
proceeding which may be instituted in any state or Federal court sitting in the
State of New York, and irrevocably waives any immunity from, or objection to,
the maintaining of an action against it to enforce any judgment for money
obtained in any such action, suit or proceeding and any immunity from execution.
Section 24. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT
TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE FOREGOING.
Section 25. Governing Law.
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ OF AMERICA. THIS AGREEMENT AND (UNLESS
OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND
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WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
undersigned, whereupon this letter shall become a binding agreement between you
and the undersigned.
Very truly yours,
Star Gas Propane, L.P.
By: Star Gas LLC, General Partner
By:
--------------------------------------
Title
Star/Petro, Inc.
By
------------------------------------------
Title:
The foregoing Agreement is hereby accepted and agreed to as of the date
first above written.
Connecticut General Life Insurance Company
By: CIGNA Investments, Inc.
By:
----------------------------------------
Title
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First Unum Life Insurance Company
By: Provident Investment Management, LLC,
its Agent
By:
----------------------------------------
Title
The ▇▇▇▇ ▇▇▇▇▇▇ Protective Life Insurance
Company
By: Provident Investment Management, LLC,
its Agent
By:
----------------------------------------
Title
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Schedule A
(to Note Agreement)
Schedule of Purchasers
Name and Address Principal Series of
of Purchaser Amount of Notes Notes
Connecticut General Life Insurance Company $12,500,000
c/o CIGNA Investments, Inc. Denominations
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ $ 9,500,000 Series A
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ $ 3,000,000 Series A
Attention: Private Securities Division - S-307
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA #▇▇▇▇▇▇▇▇▇
OBI= Star Gas Propane, L.P., Star/Petro, Inc.; 8.67% First Mortgage Notes,
Series A, due March 30, 2012; PPN 85514@ AA 6; due date and application (as
among principal, premium and interest of the payment being made); contact
name and phone.
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S-307
Operations Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Schedule A
(to Note Agreement)
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CIGNA Private Placements
Fax: ▇▇▇-▇▇▇-▇▇▇▇/1005
Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Name of Nominee in which Notes are to be issued: CIG & Co.
Taxpayer I.D. Number for CIG & Co.: ▇▇-▇▇▇▇▇▇▇
A-2
Name and Address Principal Series of
of Purchaser Amount of Notes Notes
First Unum Life Insurance Company $7,500,000 Series B
c/o Provident Investment Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Private Placements
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:
▇▇▇▇ & CO.
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
ABA #021 000 021
SSG Private Income Processing
A/C #▇▇▇-▇-▇▇▇▇▇▇
Custodial Account Number G08289
Please reference: Issuer: Star Gas Propane, L.P., Star/Petro, Inc.
PPN: 85514@ AB 4
Coupon: 8.72%
Maturity: March 30, 2015
Principal=$__________
Interest=$___________
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: ▇▇▇▇ & CO.
Taxpayer I.D. Number for ▇▇▇▇ & CO.: ▇▇-▇▇▇▇▇▇▇
A-3
Name and Address Principal Series of
of Purchaser Amount of Notes Notes
The ▇▇▇▇ ▇▇▇▇▇▇ Protective Life Insurance Company $7,500,000 Series B
c/o Provident Investment Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Private Placements
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:
▇▇▇▇ & CO.
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
ABA #021 000 021
SSG Private Income Processing
A/C #▇▇▇-▇-▇▇▇▇▇▇
Custodial Account Number G06997
Please reference: Issuer: Star Gas Propane, L.P., Star/Petro, Inc.
PPN: 85514@ AB 4
Coupon: 8.72%
Maturity: March 30, 2015
Principal=$__________
Interest=$___________
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: ▇▇▇▇ & CO.
Taxpayer I.D. Number for ▇▇▇▇ & CO.: ▇▇-▇▇▇▇▇▇▇
A-4
Schedule of Partnership Interests,
Subsidiaries and Investments
1. Partnership Interests
. Star Gas LLC 0.848%
. Star Gas Partners, L.P. 99.152%
2. Subsidiaries
. Star/Petro, Inc.
. Stellar Propane Service Corp.
. Ohio Gas & Appliance Company
. Jark, Inc.
. Winico, Inc.
. Petro Holdings, Inc.
. Petroleum Heat and Power Co., Inc.
. Petro/Crystal Corp.
. Ortep of Pennsylvania, Inc.
. Ortep of New Jersey, Inc.
. Maxwhale Corp.
. CBW Realty Corp. of CT
. Star Gas Corporation
. Star Gas Holdings, Inc.
. Ortep of Connecticut, Inc.
. Petro, Inc.
. Marex Corporation
. ▇.▇. ▇▇▇▇▇▇▇ Co., Inc.
3. Investments
None
Schedule 5.2
(to Note Agreement)
Financial Statements
. Star Gas Propane, L.P. and Subsidiaries Audited Financial Statements
for the years ended September 30, 1998 and 1999
. Star Gas Partners, L.P. SEC Form 10-Q for the quarterly period ended
December 31, 1999
. Star Gas Partners, L.P. SEC Form 10-K for the fiscal year ended
September 30, 1999
. Star Gas Partners, L.P. 1999 Annual Report
. Star Gas Partners, L.P. 1998 Annual Report
. Star Gas Partners, L.P. 1997 Annual Report
. Star Gas Partners, L.P. 1996 Annual Report
. Petro Holdings, Inc. and Subsidiaries Financial Statements for the
quarterly period ending December 31, 1998 and 1999
. Petro Holdings, Inc. and Subsidiaries Audited Financial Statements for
the nine months ended September 30, 1998 and 1999
Schedule 5.4(b)
(to Note Agreement)
Indebtedness
As of March 28, 2000
8.04% First Mortgage Notes $ 85,000,000
7.17% First Mortgage Notes 11,000,000
Working Capital Facility 500,000
Acquisition Line 25,000,000
-------------
$121,500,000
=============
Schedule 5.7
(to Note Agreement)
Environmental Matters
None
Schedule 5.18
(to Note Agreement)
Liens
None
Schedule 10.2
(to Note Agreement)
Organizational Matters
None
Schedule 10.31
(to Note Agreement)
Restricted Subsidiaries
. Star/Petro, Inc.
. Stellar Propane Service Corp.
. Ohio Gas & Appliance Company
. Jark, Inc.
. Winico, Inc.
Schedule 13
(to Note Agreement)
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN THE TRUST AGREEMENT (AS HEREINAFTER
DEFINED), WHICH TRUST AGREEMENT, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY
FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF WITH
CERTAIN OTHER SECURED CREDITORS. COPIES OF SUCH TRUST
AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE
UPON REQUEST TO THE OBLIGORS (AS HEREINAFTER DEFINED).
Star Gas Propane, L.P.
Star/Petro, Inc.
8.67% First Mortgage Note, Series A, due March 30, 2012
Private Placement No.: 85514 AA 6
No. AR- March __, 2000
$ New York, New York
Star Gas Propane, L.P., a Delaware limited partnership ("Star Gas"), and
Star/Petro, Inc., a Minnesota company ("Star/Petro"; Star Gas together with
Star/Petro are each referred to herein as an "Obligor" and collectively as the
"Obligors"), for value received, hereby promises to pay to _________________, or
registered assigns, the principal amount of $_______________ on March 30, 2012,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid balance of such principal amount at a rate equal to 8.67% per
annum, from the date hereof through and including March 30, 2012, such interest
to be payable semiannually on each March 30 and September 30 after the date
hereof, commencing on September 30, 2000, until such unpaid balance shall become
due and payable (whether at maturity or at a date fixed for prepayment or by
declaration or otherwise), and with interest on any overdue principal (including
any overdue prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue interest, at a rate equal to 10.67%
per annum, until paid, payable semiannually as aforesaid or, at the option of
the holder hereof, on demand. Subject to Section 15.2 of the Note Agreement
referred to below, payments of principal, premium, if any, and interest on this
Note shall be made in lawful money of the United States of America at the
principal office of the Trustee (as defined below), in the Borough of Manhattan,
the City and State of New York, or at such other office or agency in such
Borough as the Obligors shall have designated by written notice to the holder of
this Note as provided in such Note Agreement.
This Note is one of the 8.67% First Mortgage Notes, Series A, due March 30,
2012 (the "Series A Notes") of the Obligors, in the aggregate principal amount
of $12,500,000, which together with the Obligors' $15,000,000 aggregate
principal amount of 8.72% First Mortgage Notes, Series B, due March 30 2015 (the
"Series B Notes"; said Series B Notes together with the
Exhibit A1
(to Note Agreement)
Series A Notes being hereafter collectively referred to as the "Notes") issued
pursuant to the Note Agreement, dated as of March 30, 2000, between the Obligors
and the Purchasers named therein (the "Note Agreement") is entitled to the
benefits of such Note Agreement and the holder of this Note may enforce the
agreements of the Obligors contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.
The Notes are entitled to the benefits of certain security held by HSBC
Bank USA f/k/a Marine Midland Bank or its successors acting as trustee (the
"Trustee") under the Intercreditor and Trust Agreement (the "Trust Agreement"),
dated as of December 13, 1995, among the Trustee, Star Gas, Star Gas LLC as
successor to Petroleum Heat and Power Co., Inc. and Star Gas Corporation, the
Public Partnership, the Restricted Subsidiaries named therein, the purchasers of
the 1995 Notes, the Administrative Agent, the Documentation Agent and the Banks
(as such terms are defined or referred to in the Note Agreement), as amended or
supplemented from time to time. Reference is made to the Trust Agreement for a
description of such security.
This Note is a Note in registered form and is transferable only upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or his attorney duly authorized in writing. The Obligors may
treat the person in whose name this Note is registered on the register kept by
the Obligors as provided in such Note Agreement as the owner of this Note for
the purpose of receiving payment and for all other purposes, and the Obligors
shall not be affected by any notice to the contrary.
The Notes are subject to required and optional prepayment, in whole or in
part, in certain cases with a premium and in other cases without a premium, all
as specified in such Note Agreement.
In case an Event of Default, as defined in such Note Agreement, shall occur
and be continuing, the unpaid balance of the principal of this Note may become
due and payable in the manner and with the effect provided in such Note
Agreement.
A1-2
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Star Gas Propane, L.P.
By: Star Gas LLC
By
-------------------------------------------
Name:
Title:
Star/Petro, Inc.
By
-------------------------------------------
Name:
Title:
A1-3
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN THE TRUST AGREEMENT (AS HEREINAFTER
DEFINED), WHICH TRUST AGREEMENT, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY
FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF WITH
CERTAIN OTHER SECURED CREDITORS. COPIES OF SUCH TRUST
AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE
UPON REQUEST TO THE OBLIGORS (AS HEREINAFTER DEFINED).
Star Gas Propane, L.P.
Star/Petro, Inc.
8.72% First Mortgage Note, Series B, due March 30, 2015
Private Placement No.: 85514 AB 4
No. BR- March __, 2000
$ New York, New York
Star Gas Propane, L.P., a Delaware limited partnership ("Star Gas"), and
Star/Petro, Inc., a Minnesota company ("Star/Petro"; Star Gas together with
Star/Petro are each referred to herein as an "Obligor" and collectively as the
"Obligors"), for value received, hereby promises to pay to _________________, or
registered assigns, the principal amount of $_______________ on March 30, 2015,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid balance of such principal amount at a rate equal to 8.72% per
annum, from the date hereof through and including March 30, 2015, such interest
to be payable semiannually on each March 30 and September 30 after the date
hereof, commencing on September 30, 2000, until such unpaid balance shall become
due and payable (whether at maturity or at a date fixed for prepayment or by
declaration or otherwise), and with interest on any overdue principal (including
any overdue prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue interest, at a rate equal to 10.72%
per annum, until paid, payable semiannually as aforesaid or, at the option of
the holder hereof, on demand. Subject to Section 15.2 of the Note Agreement
referred to below, payments of principal, premium, if any, and interest on this
Note shall be made in lawful money of the United States of America at the
principal office of the Trustee (as defined below), in the Borough of Manhattan,
the City and State of New York, or at such other office or agency in such
Borough as the Obligors shall have designated by written notice to the holder of
this Note as provided in such Note Agreement.
This Note is one of the 8.72% First Mortgage Notes, Series B, due March 30,
2015 (the "Series B Notes") of the Obligors, in the aggregate principal amount
of $15,000,000, which together with the Obligors' $12,500,000 aggregate
principal amount of 8.67% First Mortgage Notes, Series A, due March 30, 2012
(the "Series A Notes"; said Series A Notes together with the
Exhibit A2
(to Note Agreement)
Series B Notes being hereinafter referred to collectively as the "Notes")
issued pursuant to the Note Agreement, dated as of March 30, 2000, between the
Obligors and the Purchasers named therein (the "Note Agreement") is entitled to
the benefits of such Note Agreement and the holder of this Note may enforce the
agreements of the Obligors contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.
The Notes are entitled to the benefits of certain security held by HSBC
Bank USA f/k/a Marine Midland Bank or its successors acting as trustee (the
"Trustee") under the Intercreditor and Trust Agreement (the "Trust Agreement"),
dated as of December 13, 1995, among the Trustee, Star Gas, Star Gas LLC as
successor to Petroleum Heat and Power Co., Inc. and Star Gas Corporation, the
Public Partnership, the Restricted Subsidiaries named therein, the purchasers of
the 1995 Notes, the Administrative Agent, the Documentation Agent and the Banks
(as such terms are defined or referred to in the Note Agreement) as amended or
supplemented from time to time. Reference is made to the Trust Agreement for a
description of such security.
This Note is a Note in registered form and is transferable only upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or his attorney duly authorized in writing. The Obligors may
treat the person in whose name this Note is registered on the register kept by
the Obligors as provided in such Note Agreement as the owner of this Note for
the purpose of receiving payment and for all other purposes, and the Obligors
shall not be affected by any notice to the contrary.
The Notes are subject to required and optional prepayment, in whole or in
part, in certain cases with a premium and in other cases without a premium, all
as specified in such Note Agreement.
In case an Event of Default, as defined in such Note Agreement, shall occur
and be continuing, the unpaid balance of the principal of this Note may become
due and payable in the manner and with the effect provided in such Note
Agreement.
A2-2
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Star Gas Propane, L.P.
By: Star Gas LLC
By
-------------------------------------------
Name:
Title:
Star/Petro, Inc.
By
-------------------------------------------
Name:
Title:
A2-3
March __, 2000
To the Parties named on
Schedule I attached hereto
Ladies and Gentlemen:
We have acted as counsel to Star Gas Propane, L.P., a Delaware limited
partnership ("Star Gas"), Star Gas LLC, a Delaware limited liability company
(the "General Partner"), and Star/Petro, Inc., a Minnesota corporation
("Star/Petro"; and together with Star Gas, the "Obligors") (Star Gas, Star/Petro
and the General Partner being collectively referred to herein as the "Loan
Parties" and each being referred to as a "Loan Party"), in connection with the
negotiation, preparation and consummation of the issuance by the Obligors of
$27,500,000 aggregate principal amount of their First Mortgage Notes comprised
of $12,500,000 aggregate principal amount of the 8.67% First Mortgage Notes,
Series A, due March 30, 2012 and $15,000,000 aggregate principal amount of the
8.72% First Mortgage Notes, Series B, due March 30, 2015 (collectively, the
"Mortgage Notes") (the "Transaction"), pursuant to the Note Agreement dated as
of March 30, 2000 (the "Note Agreement") between the Obligors and the purchasers
named on Schedule A thereto (the "Purchasers"). Terms not defined herein shall
have the meanings assigned to them in the Note Agreement.
We have examined executed copies of the Operative Agreements, originals or
copies, certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or advisable for purposes of this
opinion. We have also relied upon and assumed the truth of the representations
and warranties as to factual matters contained in or made pursuant to the Note
Agreement and the other Operative Agreements and examined and relied upon the
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents, certificates, including a certificate of an officer of
the General Partner, and other instruments, and have made such other
investigations, as we have deemed necessary or advisable for purposes of this
opinion.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted as certified or photostatic copies
and the authenticity of the originals, and (iii) the due authorization,
execution and delivery of all documents by all parties and the validity and
binding effect thereof (other than the authorization, execution and delivery of
documents by the Loan Parties and the validity and binding effect thereof upon
such parties).
Exhibit B1
(to Note Agreement)
Based upon the foregoing, we are of the opinion that:
1. Each of Star Gas, Star/Petro and the General Partner (a) is a limited
partnership (in the case of Star Gas), a corporation (in the case of Star/Petro)
or a limited liability company (in the case of the General Partner) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted and (c) is duly qualified or registered to do business
and is in good standing as a foreign limited partnership (in the case of Star
Gas), corporation (in the case of Star/Petro) or limited liability company (in
the case of the General Partner) in all jurisdictions in which the nature of
their respective activities or the character of the properties they own, lease
or use makes such qualification or registration necessary and in which the
failure so to qualify or to be so registered would have a Material Adverse
Effect (and the only such jurisdictions are Connecticut, Indiana, Illinois,
Kentucky, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York,
Ohio, Pennsylvania, Rhode Island and West Virginia). Our opinion as to due
incorporation, good standing and foreign qualification is based in each instance
solely on certificates received from appropriate state officials.
2. The execution, delivery and performance by each of the Loan Parties of
each of the Operative Agreements to which it is a party and the consummation of
the Transaction (a) have been duly authorized by all requisite action and (b)
will not (i) violate (A) any provision of law, statute, rule or regulation, (B)
the agreements of limited partnership, articles of incorporation, certificate of
formation or other constitutive documents or by-laws of the Loan Parties, (C)
any order of any Governmental Authority or (D) any provision of the credit
agreement and note agreements set forth on Schedule 1 hereto and any other
material indenture, agreement or other instrument to which any of the Loan
Parties is a party or by which any of them or any of their property is bound and
known to us; however, we express no opinion as to compliance with financial
covenants, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default or give rise to increased,
additional, accelerated or guaranteed rights of any Person under any such
material indenture, agreement or other instrument or (iii) except for the Liens
of the Collateral Documents, result in the creation or imposition of any Lien
upon or with respect to any property or assets owned upon the consummation of
the Transaction by either of the Obligors.
3. (a) Each of the Operative Agreements has been duly executed and
delivered by each Loan Party that is a party thereto, and in each case each
Operative Agreement is a legal, valid and binding obligation of whichever of the
Loan Parties are parties thereto and is enforceable against each such Loan Party
in accordance with its terms.
4. No order, consent, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, (a) any Governmental
Authority, pursuant to any presently existing law or regulation of the United
States of America or the State of New York or pursuant to the Delaware Revised
Uniform Limited Partnership Act (6 Del. C. B7-101, et seq.), the Delaware
Limited Liability Company Act or the Minnesota Business Corporation Act, (b) to
B1-2
our knowledge, any creditor, (c) the holder of any equity interests of either
Obligor, any of the other Loan Parties or any Affiliate thereof or (d) to our
knowledge, any other Person, is or will be required in connection with the
Transaction or the performance by either Obligor or any of the other Loan
Parties of the Note Agreement or the Operative Agreements to which it is a
party, except those as to which the failure to obtain will not have a Material
Adverse Effect on the financial condition of the Loan Parties or the
Transaction.
5. To our knowledge, there are no actions, suits or proceedings pending
or threatened against any of the Loan Parties or involving the Assets.
6. Neither of the Obligors is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
7. Neither of the Obligors is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8. The issuance, sale and delivery of the Mortgage Notes and the payment
of interest and principal on the Mortgage Notes and the Make Whole Amount on the
Mortgage Notes do not give rise to any state taxes, assessments or other
charges, except that we express no opinion with respect to income taxes or
franchise taxes. No taxes or other impositions of the State of New York, or any
jurisdiction therein, will be imposed upon, or be payable by, the Trustee or any
Purchaser as a precondition to the enforcement of its rights and remedies under
any of the Collateral Documents.
9. The offer, issue, sale and delivery of the Mortgage Notes under the
circumstances contemplated by the Note Agreement constitute exempt transactions
under the registration provisions of the Securities Act of 1933, as amended, and
under the provisions of any applicable state securities law, and neither the
registration of the Mortgage Notes thereunder nor the qualification of an
indenture in respect of the Mortgage Notes under the Trust Indenture Act of
1939, as amended, is required in connection with such offer, issue, sale and
delivery.
10. The issue and sale of the Mortgage Notes do not violate Regulation T,
U or X of the Board of Governors of the Federal Reserve System.
11. The Mortgage Notes are Parity Debt entitled to the benefits of the
Security Documents and the Trust Agreement.
12. The Lien of the Security Documents has attached and is perfected with
respect to the assets acquired by Star Gas from Pearl Gas Co.
B1-3
Attached hereto is the opinion of our firm dated December 20, 1995; you are
entitled to rely on the opinions in paragraphs 3(b), 8 and 10 set forth therein,
subject to the assumptions and qualifications therein contained.
The opinions herein expressed are limited in all respects solely to the
matters governed by the internal laws of the State of New York, the General
Corporation Law of the State of Minnesota, the Delaware Limited Liability
Company Act, the Delaware Revised Uniform Limited Partnership Act and the
Federal laws of the United States of America.
The opinions herein expressed are subject to and affected by the following:
(a) Applicable bankruptcy, insolvency, reorganization, receivership,
moratorium, and assignment for the benefit of creditors' laws and other
laws affecting the rights and remedies of creditors generally, including
without limitation, laws regarding fraudulent transfers, fraudulent
conveyances, preferences, avoidance, marshalling of assets, automatic stay
and turn-over;
(b) General principles of equity, including without limitation those
governing the availability of equitable remedies, affording equitable
defenses, requiring good faith, fair dealing and reasonableness in the
performance and enforcement of a contract and affording defenses based upon
unconscionability, lack of notice, impracticability or impossibility of
performance;
(c) Matters relating to election of remedies, the limits of
severability, opportunity to cure, limitations on the enforceability of
indemnification, contribution or exculpation provisions under applicable
securities laws or which are in violation of public policy;
(d) Certain of the remedial provisions of each Mortgage and the
Security Agreements may be further limited or rendered unenforceable by
applicable law, but such law would not make the remedies provided
thereunder which are otherwise enforceable inadequate for the practical
realization of the benefits purported to be provided thereunder, taken as a
whole, except for the consequences of procedural or other delays;
(e) This Opinion Letter is predicated solely upon laws and
regulations in existence as of the present date and as they presently apply
and to the facts as they presently exist. We assume no obligation to
revise or supplement this opinion if the present laws are changed by
legislative action, juridical decision or otherwise;
(f) The qualification of any opinion herein by use of the words "to
our knowledge" or similar words means the actual knowledge of those
attorneys of the undersigned who have represented the Loan Parties
generally or in connection with the Transaction, without independent
investigation. We have relied solely upon the examination and inquiries
recited herein and have not undertaken any investigation to
B1-4
determine the existence or absence of such matters, documents or facts and
no inference as to our actual knowledge should be drawn from the fact of
our representation of the Loan Parties, or otherwise. ▇▇▇▇ ▇▇▇▇▇▇▇, a
partner of this law firm, is an Assistant Secretary of Star Gas
Corporation and of its corporate affiliates. Knowledge obtained by him in
his corporate capacity (other than actual knowledge) may not be imputed to
the Firm.
(g) This Opinion Letter is limited to the matters set forth herein
and no opinion is intended to be implied or inferred beyond those expressly
stated herein. We have not been asked, and we do not undertake, to render
any opinion with respect to any matters except as expressly set forth
herein or to advise you in any matters that may hereinafter be brought to
our attention.
This Opinion Letter is based upon the following assumptions:
(a) You have and will continue to satisfy those legal requirements
that are uniquely applicable to you to the extent necessary to make the
Operative Agreements enforceable.
(b) The parties have complied and will continue to comply with all
legal requirements pertaining to their status in New York, as such status
relates to their rights to enforce the Note Agreement and the other
Operative Agreements.
(c) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence.
(d) The conduct of the parties has complied with any requirement of
good faith, fair dealing and conscionability.
(e) The parties have acted in good faith and without notice of any
defense against the enforcement of any rights created under the Note
Agreement and the other Operative Agreements.
(f) Each party holds requisite title and rights to any property
which is the subject of the Note Agreement and the other Operative
Agreements.
(g) As to Operative Agreements which are not governed by New York
law, that such Operative Agreements would be valid and binding if they
would be valid and binding under the laws of the State of New York.
B1-5
We acknowledge that the Purchasers and the Trustee are relying on the
opinions expressed herein and hereby consent to reliance by the Purchasers and
the Trustee and their respective counsel and by subsequent holders of the
Mortgage Notes or successor trustees on the opinions expressed herein.
Very truly yours,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
By:
------------------------------------------
A Partner
B1-6
March __, 2000
To the Parties named in
Schedule I attached hereto
Re: $12,500,000 8.67% First Mortgage Notes, Series A, due March 30, 2012
$15,000,000 8.72% First Mortgage Notes, Series B, due March 30, 2015
of
Star Gas Propane, L.P. and Star/Petro, Inc.
--------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to you (the "Purchasers") in connection
with the execution and delivery of the Note Agreement, dated as of March 30,
2000 (the "Note Agreement"), between Star Gas Propane, L.P., a Delaware limited
partnership ("Star Gas"), Star/Petro, Inc., a Minnesota corporation
("Star/Petro"; and together with Star Gas, the "Obligors"), and you, and the
issuance and sale by the Obligors of $27,500,000 aggregate principal amount of
their First Mortgage Notes comprised of $12,500,000 aggregate principal amount
if the 8.67% First Mortgage Notes, Series A, due March 30, 2012 and $15,000,000
aggregate principal amount of the 8.72% First Mortgage Notes, Series B, due
March 30, 2015 (collectively, the "Notes"). Capitalized terms used in this
opinion without definition have the respective meanings specified in the Note
Agreement. Star Gas, Star Gas LLC, a Delaware limited liability company (the
"General Partner"), and Star/Petro, are collectively referred to as the "Loan
Parties."
In that connection, we have examined the following:
(a) The Note Agreement;
(b) A copy of the Certificate of Limited Partnership of Star Gas,
the Certificate of Formation of the General Partner, and the Articles of
Incorporation of Star/Petro and all amendments thereto certified by the
Secretary of State of the State of organization of such Loan Party and the
Certificate of the Secretary of State of the State of organization of such
Loan Party evidencing that such Loan Party is in good standing in such
state (each a "Good Standing Certificate");
(c) A copy of the Limited Partnership Agreement of Star Gas, the
limited liability company agreement of the General Partner and the By-laws
of Star/Petro, as amended to the date hereof, and a copy of the resolutions
adopted by each Loan Party with respect to the authorization of the Note
Agreement, the issuance, sale and delivery of the Notes and related
matters, each as certified by the Secretary of each Loan Party;
Exhibit B2
(to Note Agreement)
(d) The opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP,
special counsel to the Loan Parties, dated the date hereof and delivered
responsive to Section 4.4(a) of the Note Agreement;
(e) The Notes delivered on the date hereof;
(f) Such certificates of officers of each Loan Party and of public
officials as we have deemed necessary to give the opinions hereinafter
expressed; and
(g) Such other documents and matters of law as we have deemed
necessary to give the opinions hereinafter expressed.
We believe that the opinion referred to in clause (d) above is satisfactory
in scope and form and that you are justified in relying thereon. Our opinion as
to matters referred to in paragraph 1 below is based solely upon an examination
of the Certificate of Limited Partnership, Certificate of Formation or Articles
of Incorporation, as the case may be, the Limited Partnership Agreement, limited
liability company agreement or By-laws, as the case may be, and the Good
Standing Certificate of each Loan Party and the limited partnership law, limited
liability company law or general business law of the State of organization of
such Loan Party. We have also relied, as to certain factual matters, upon
appropriate certificates of public officials and officers of each Obligor and
upon representations of each Obligor and you delivered in connection with the
issuance and sale of the Notes.
Based upon the foregoing, we are of the opinion that:
1. Each of Star Gas, Star/Petro and the General Partner is a limited
partnership (in the case of Star Gas), a corporation (in the case of
Star/Petro) or a limited liability company (in the case of the General
Partner) validly existing and in good standing under the laws of the
jurisdiction of its organization and each Loan Party has the organizational
power and the organizational authority to execute and deliver the Note
Agreement and to issue the Notes.
2. The Note Agreement has been duly authorized by all necessary
organizational action on the part of each Obligor, has been duly executed
and delivered by each Obligor and constitutes the legal, valid and binding
contract of each Obligor enforceable against each Obligor in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
organizational action on the part of each Obligor, and the Notes being
delivered on the date hereof have been duly executed and delivered by each
Obligor and constitute the legal, valid and binding obligations of each
Obligor enforceable against each Obligor in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting
B-2-2
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a
proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreement do not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
Our opinion is limited to the laws of the State of New York, the General
Corporation Law of the State of Minnesota, the Delaware Limited Liability
Company Act, the Delaware Revised Uniform Limited Partnership Act and the
Federal laws of the United States of America and we express no opinion on the
laws of any other jurisdiction.
Respectfully submitted,
B-2-3
Form of Subordination Provisions
Set forth in the form of Intercompany Note attached hereto.
Exhibit C
(to Note Agreement)
[FORM OF]
INTERCOMPANY NOTE
$___________________
For Value Received, the undersigned, _______________________, a
____________ organized under the laws of the State of ________________________
(the "Debtor"), hereby promises to pay to the order of [General Partner/Public
Partnership/Borrower], a ____________ organized under the laws of the State of
__________________ (the "Subordinated Creditor"), at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (i) the principal amount of $__________, or, if less, the
aggregate unpaid principal amount of each loan or advance made by the
Subordinated Creditor to the Debtor at any time upon demand by the Subordinated
Creditor in lawful money of the United States of America in immediately
available funds and (ii) interest from the date hereof on the principal amount
hereof from time to time outstanding, in like funds, at a rate per annum equal
to the rate applicable at such time to ABR Tranche A Revolving Loans pursuant to
Section 2.06 of the Credit Agreement referred to below. Indebtedness of the
Debtor to the Subordinated Creditor is hereinafter referred to as "Subordinated
Debt." This Note may be prepaid in whole or in part at any time without premium
or penalty. Amounts prepaid on this Note may be reborrowed. Terms used herein
and not otherwise defined herein shall have the meanings assigned to them in
Annex A attached hereto.
The Debtor promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at
the rate per annum applicable pursuant to the preceding paragraph, plus 2.00%.
The Debtor and any and all sureties, guarantors and endorsers of this Note
and all other parties now or hereafter liable hereon, severally waive grace,
presentment for payment, protest, notice of any kind (including notice of
dishonor, notice of protest, notice of intent to accelerate and notice of
acceleration) and diligence in collecting and bringing suit against any party
hereto, and agree (a) to all extensions and partial payments, with or without
notice, before or after maturity, (b) to any substitution, exchange or release
of any security now or hereafter given for this Note, (c) to the release of any
party primarily or secondarily liable hereon and (d) that it will not be
necessary for the Subordinated Creditor or any of its successors or assigns, in
order to enforce payment of this Note, to first institute or exhaust their
remedies against the Debtor or any other party liable therefor or against any
security for this Note. The nonexercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
The outstanding principal balance of the loans and advances evidenced by
this Note shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
expressly waived by the Debtor, upon the occurrence of an Event of Default under
the Credit Agreement.
The Subordinated Creditor and the Debtor agree that the Subordinated Debt
is and shall be subordinate, to the extent and in the manner hereinafter set
forth, to the prior payment in full of
C-2
(a) the Borrower obligations in respect of the due and punctual payment of
principal of and interest on the Loans and all amounts drawn under the Letters
of Credit, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (b) all Fees, expenses, indemnities
and expense reimbursement obligations of the Borrower under the Credit
Agreement or any other Loan Document, (c) all other obligations, monetary or
otherwise, of the Borrower or any other Loan Party under any Loan Document to
which it is a party, in each case, whether now owing or hereafter existing, (d)
the principal of and premium, if any, and interest on the Mortgage Notes, (e)
all other Indebtedness and obligations of the Borrower under the Note
Agreements, the Mortgage Notes, the Trust Agreement and the Collateral
Documents and (f) all Indebtedness of the Borrower and the Restricted
Subsidiaries (i) permitted to be incurred under Sections 6.01(b), (f) and (i)
of the Credit Agreement and Sections 10.1(b), (f) and (i) of the Note
Agreements and (ii) permitted to be secured in accordance with Section 6.02(g)
or (h) of the Credit Agreement and Section 10.2(h) or (i) of the Note
Agreements (such obligations, being, collectively, the "Senior Debt"). The
Senior Debt shall not be deemed to have been paid in full until (a) all of the
Senior Debt shall have been indefeasibly paid in full in cash, (b) the
Commitments have been terminated and (c) all Letters of Credit have been
cancelled or have expired and all Letter of Credit Disbursements have been
indefeasibly reimbursed in full in cash ("Payment in Full").
In the event of any dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of the Debtor or
its debts, whether voluntary or involuntary, in any bankruptcy, insolvency,
arrangement, reorganization, receivership, relief or other similar case or
proceeding under any Federal or state bankruptcy or similar law or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Debtor or otherwise, the Secured Parties shall be
entitled to receive Payment in Full of the Senior Debt before the Subordinated
Creditor having any Subordinated Debt outstanding to the Debtor is entitled to
receive any payment of all or any of such Subordinated Debt, and any payment or
distribution of any kind (whether in cash, property or securities) that
otherwise would be payable or deliverable upon or with respect to such
Subordinated Debt in any such case, proceeding, assignment, marshalling or
otherwise (including any payment that may be payable by reason of any other
indebtedness of the Debtor being subordinated to payment of the Subordinated
Debt) shall be paid or delivered directly to the Trustee under the Trust
Agreement for the account of the Secured Parties for application (in the case of
cash) to, or as collateral (in the case of non-cash property or securities) for,
the payment or prepayment of the Senior Debt until the Senior Debt shall have
been indefeasibly paid in full in cash ("Paid in Full").
In the event that (i) any occurrence and continuation of a default in the
payment of any principal of, interest on or fees relating to any of the Senior
Debt or (ii) any judicial proceeding shall be pending with respect to any
default or event of default with respect to any of the Senior Debt, then no
payment (including any payment that may be payable by reason of any other
indebtedness of the Debtor being subordinated to payment of the Subordinated
Debt) shall be made by or on behalf of the Debtor for or on account of any
Subordinated Debt, and the Subordinated Creditor shall not take or receive from
the Debtor, directly or indirectly, in cash or other property or by set-off or
in any other manner, including, without limitation, from or by way of
collateral, payment of all or any of the Subordinated Debt.
C-3
In the event that any default or event of default (other than as referred
to in clauses (i) and (ii) of the preceding paragraph) with respect to any of
the Senior Debt shall have occurred and be continuing and the Trustee under the
Trust Agreement gives written notice thereof to the Subordinated Creditor, then
no payment (including any payment that may be payable by reason of any other
indebtedness of the Debtor being subordinated to payment of the Subordinated
Debt specified in such notice) shall be made by or on behalf of the Debtor for
or on account of the Subordinated Debt specified in such notice, and the
Subordinated Creditor shall not take or receive from the Debtor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
including, without limitation, from or by way of collateral, payment of all or
any of the Subordinated Debt specified in such notice, unless and until the
Senior Debt shall have been Paid in Full.
In the event that any Subordinated Debt is declared due and payable before
its stated maturity, the Secured Parties shall be entitled to receive Payment in
Full of all amounts due or to become due on or in respect of all the Senior Debt
before the Subordinated Creditor is entitled to receive any payment (including
any payment which may be payable by reason of the payment of any other
indebtedness of the Debtor being subordinated to the payment of the Subordinated
Debt) by the Debtor on account of the Subordinated Debt.
The Subordinated Creditor agrees as follows:
(a) If any proceeding referred to above is commenced by or against
the Debtor,
(i) the Trustee under the Trust Agreement is hereby
irrevocably authorized and empowered (in its own name or in the name
of the Subordinated Creditor having Subordinated Debt outstanding to
the Debtor or otherwise), but shall have no obligation, to demand, ▇▇▇
for, collect and receive every payment or distribution referred to
above and give acquittance therefor and to file claims and proofs of
claim and take such other action (including, without limitation,
voting such Subordinated Debt or enforcing any security interest or
other lien securing payment of such Subordinated Debt) as it may deem
necessary or advisable for the exercise or enforcement of any of the
rights or interests of the Secured Parties hereunder; and
(ii) the Subordinated Creditor having Subordinated Debt
outstanding to the Debtor shall duly and promptly take such action as
the Trustee may request (A) to collect such Subordinated Debt for the
account of the Secured Parties and to file appropriate claims or
proofs of claim in respect of such Subordinated Debt, (B) to execute
and deliver to the Trustee such powers of attorney, assignments, or
other instruments as the Trustee may request in order to enable the
Trustee to enforce any and all claims with respect to, and any
security interests and other liens securing payment of, such
Subordinated Debt and (C) to collect and receive any and all payments
or distributions which may be payable or deliverable upon or with
respect to such Subordinated Debt.
C-4
(b) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Subordinated Creditor contrary
to the provisions hereof shall be received in trust for the benefit of the
Secured Parties, shall be segregated from other funds and property held by
the Subordinated Creditor and shall be forthwith paid over to the Trustee
for the account of the Secured Parties in the same form as so received
(with any necessary indorsement) to be applied (in the case of cash) to, or
held as collateral (in the case of non-cash property or securities) for,
the payment or prepayment of the Senior Debt in accordance with the terms
of the Credit Agreement.
(c) The Trustee is hereby authorized to demand specific performance
of this Agreement, whether or not the Debtor shall have complied with any
of the provisions hereof applicable to them, at any time when the
Subordinated Creditor shall have failed to comply with any of the
provisions hereof applicable to it. The Subordinated Creditor hereby
irrevocably waives any defense based on the adequacy of a remedy at law,
which might be asserted as a bar to such remedy of specific performance.
The Subordinated Creditor agrees that, so long as the Senior Debt shall not
have been Paid in Full, the Subordinated Creditor will not ▇▇▇ for payment of
all or any of the Subordinated Debt, or commence, or join with any creditor
other than the Secured Parties in commencing, or directly or indirectly cause
the Debtor to commence, or assist the Debtor in commencing, any proceeding
referred to above.
The Subordinated Creditor agrees that no payment or distribution to the
Secured Parties pursuant to the provisions hereof shall entitle the Subordinated
Creditor to exercise any right of subrogation in respect thereof until the
Senior Debt shall have been Paid in Full.
The Subordinated Creditor will not:
(a) cancel or otherwise discharge any of the Subordinated Debt owing
to it (except upon Payment in Full thereof), convert or exchange any of
such Subordinated Debt into or for any other indebtedness or equity
interest or subordinate any of the Subordinated Debt to any indebtedness of
the Debtor other than the Senior Debt;
(b) sell, assign, pledge, encumber or otherwise dispose of any of
the Subordinated Debt owing to it; or
(c) permit the terms of any of the Subordinated Debt owing to it to
be changed in such a manner as to have, directly or indirectly, in the
reasonable judgment of the Trustee, an adverse effect upon the rights or
interests of the Secured Parties hereunder.
The Subordinated Creditor shall promptly notify the Trustee of the
occurrence of any default under the Subordinated Debt owing to it.
The Debtor agrees that it will not make any payment of any of the
Subordinated Debt, or take any other action, in contravention of the provisions
hereof.
C-5
All rights and interests of the Secured Parties hereunder, and all
agreements and obligations of the Subordinated Creditor and the Debtor
hereunder, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Loan Document or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Debt, or any other amendment or
waiver of or any consent to any departure from any Loan Document,
including, without limitation, any increase in the Senior Debt resulting
from the extension of additional credit to the Debtor or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Senior Debt;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Senior Debt, or any manner of sale or other disposition
of any collateral for all or any of the Senior Debt or any other assets of
the Debtor;
(e) any change, restructuring or termination of the corporate
structure or existence of the Debtor; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Debtor or the Subordinated
Creditor.
This Note shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Debt is rescinded or must
otherwise be returned by any Secured Party upon the insolvency, bankruptcy or
reorganization of the Debtor or otherwise, all as though such payment had not
been made.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of America.
C-6
In the event this Note is not paid when due at any stated or accelerated
maturity, the Debtor agrees to pay, in addition to the principal of and interest
on this Note, all costs of collection, including reasonable attorneys' fees.
The indebtedness evidenced by this Note is subordinated to the prior
payment in full of the Senior Debt, as defined herein, to the extent provided
herein.
[Borrower/Restricted Subsidiary], as Debtor
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
[General Partner/Public Partnership/Borrower],
as Subordinated Creditor
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
, as
------------------------------------------
Trustee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
C-7
ASSIGNMENT
For Value Received, [General Partner/Public Partnership/Borrower] hereby
assigns and transfers unto ________________________________ the Intercompany
Note dated as of _________________ and made by ______________________________.
Dated:
------------------
[General Partner/Public Partnership/Borrower]
By:
------------------------------------------
Title:
---------------------------------------
CONFIRMATION OF PARITY DEBT
This Confirmation, dated as of March 30, 2000, of Star Gas Propane, L.P.
("Star Gas"), Star Gas LLC (the "General Partner") as successor to Petroleum
Heat and Power Co., Inc. (the "First Successor General Partner") and Star Gas
Corporation (the "Initial General Partner"), Star/Petro, Inc. ("Star/Petro"; and
together with Star Gas, the "Obligors"), Star Gas Partners, L.P. (the "Public
Partnership"), the Restricted Subsidiaries (the "Restricted Subsidiaries")
parties hereto that are parties to the Company Security Agreement, the Banks
(the "Banks") parties hereto that are parties to the Bank Credit Facilities,
Fleet National Bank f/k/a BankBoston, N.A., as Administrative Agent (the
"Administrative Agent"), under the Bank Credit Facilities, Bank of America,
N.A., as successor to Nationsbank, N.A., as Documentation Agent (the
"Documentation Agent"), under the Bank Credit Facilities, the holders (the "1995
Noteholders") of the Obligors' 8.04% First Mortgage Notes due September 15, 2009
in the aggregate principal amount of $85,000,000 (the "1995 Notes"), the holders
(the "1998 Noteholders") of the Obligors' 7.17% First Mortgage Notes due
September 15, 2010 in the aggregate principal amount of $11,000,000 (the "1998
Notes") and HSBC Bank USA, f/k/a Marine Midland Bank, as Trustee (the "Trustee")
under the Intercreditor and Trust Agreement (as amended and supplemented, the
"Trust Agreement"), dated as of December 13, 1995, among Star Gas, the General
Partner as successor to the First Successor General Partner and the Initial
General Partner, the Public Partnership, the Restricted Subsidiaries named
therein, the Administrative Agent, the Documentation Agent, the Banks and the
purchasers of the 1995 Notes. Capitalized terms used herein without definition
have the meanings specified in the Trust Agreement, or, if not defined therein,
the meanings specified in the 1995 Note Agreements and/or the Bank Credit
Facilities (as such terms are hereinafter defined).
R E C I T A L S
- - - - - - - -
A. Star Gas has entered into the Bank Credit Facilities, dated as of
December 13, 1995, with the Banks, the Administrative Agent and the
Documentation Agent, as amended by the First Amendment dated as of May 31, 1996,
the Second Amendment dated as of October 21, 1997, the Third Amendment dated as
of April 15, 1998, the Fourth Amendment dated as of November 3, 1998, the Fifth
Amendment dated as of January 22, 1999, the Sixth Amendment dated as of March
25, 1999, and the Seventh Amendment dated as of June 18, 1999 (as amended, the
"Bank Credit Facilities").
B. Star Gas and the General Partner as successor to the First Successor
General Partner and the Initial General Partner have entered into the Note
Agreements, dated as of December 13, 1995, with the original purchasers of the
1995 Notes, as amended and supplemented by the First Amendment to Note
Agreements, dated as of May 31, 1996 and the Second Amendment to Note Agreements
dated as of March 25, 1999 (as supplemented and amended, the "1995 Note
Agreements').
C. Star Gas and the General Partner have entered into a Note Agreement,
dated as of January 22, 1998, with the original purchaser of the 1998 Notes, as
amended by the First
Exhibit D
(to Note Agreement)
Amendment to Note Agreement dated as of March 25, 1999 (as amended, the "1998
Note Agreement").
D. The Bank Credit Facilities, the 1995 Note Agreements, the 1998 Note
Agreement and the Trust Agreement contemplate the issuance by the Obligors of
Parity Debt pursuant to Parity Debt Agreements.
E. Star Gas, Star/Petro and the General Partner are concurrently herewith
entering into a Note Agreement (the "2000 Note Agreement"), dated as of
March 30, 2000, with the Purchasers named in Schedule A thereto (the
"Purchasers"; and together with any subsequent holder of all or any part of the
2000 Notes, the "2000 Noteholders") pursuant to which the Obligors are selling
and the Purchasers are purchasing $27,500,000 aggregate principal amount of the
First Mortgage Notes of the Obligors comprised of $12,500,000 8.67% First
Mortgage Notes, Series A, due March 30, 2012 and $15,000,000 8.72% First
Mortgage Notes, Series B, due March 30, 2015 (collectively, the "2000 Notes").
F. It is a condition to the obligation of the Purchasers to purchase the
2000 Notes that the parties hereto acknowledge and agree, among other things,
that the 2000 Notes constitute Parity Debt, that the 2000 Note Agreement
constitutes a Parity Debt Agreement and that the Purchasers are Parity Lenders.
Now Therefore, in consideration of the purchase by the Purchasers of the
2000 Notes and to induce the Purchasers to purchase the 2000 Notes, the parties
hereto hereby acknowledge and agree as follows:
1. For purposes of the 1995 Note Agreements, the 1998 Note
Agreement, the Bank Credit Facilities and the Trust Agreement, the 2000
Notes constitute Parity Debt, the 2000 Note Agreement constitutes a Parity
Debt Agreement and the 2000 Noteholders constitute Parity Lenders.
2. In furtherance of the foregoing (and not by way of limitation):
(a) the Indebtedness evidenced by the 2000 Notes and the 2000
Note Agreement constitutes Indebtedness of the type permitted under
Section 10.1(f) of the 1995 Note Agreements, Section 10.1(f) of the
1998 Note Agreement and Section 6.01(f) of the Bank Credit Facilities
and the Liens securing such Indebtedness constitute Liens of the type
permitted by Section 10.2(i) of the 1995 Note Agreements, Section
10.2(i) of the 1998 Note Agreement and Section 6.02(h) of the Bank
Credit Facilities;
(b) the obligations under the 2000 Notes and under the 2000
Note Agreement are included within the term Obligations under the
Trust Agreement and the 2000 Notes and the 2000 Noteholders have the
benefit of the Security and are secured under the Security Documents
as contemplated by the Trust Agreement;
D-2
(c) the 2000 Notes and the obligations under the 2000 Note
Agreement are "Guaranteed Obligations" as contemplated by and as
defined in the General Partner Guarantee Agreement and the
Subsidiaries Guarantee Agreement;
(d) the 2000 Notes and the obligations under the 2000 Note
Agreement are "Secured Obligations" and each 2000 Noteholder is a
"Secured Party" as contemplated by and as defined in the Company
Security Agreement and the Partners Security Agreement;
(e) the 2000 Notes constitute Parity Debt, the 2000 Note
Agreement constitutes a Parity Debt Agreement and the 2000 Noteholders
constitute a Parity Lender as contemplated by and as defined in the
Mortgages;
(f) the "Assets" as defined in the Conveyance and Contribution
Agreement, dated October 22, 1997, among Star Gas, the Initial General
Partner and the Public Partnership constitute "Collateral" as
contemplated by and as defined in the Company Security Agreement and
constitute "Mortgaged Property" as contemplated by and as defined in
the Mortgages;
(g) for purposes of any other Operative Agreement and Security
Document, the 2000 Notes are included within the defined term Parity
Debt (and any other capitalized term used therein which is intended to
mean or include Parity Debt) the 2000 Note Agreement is included
within the defined term a Parity Debt Agreement (and any other
capitalized term used therein which is intended to mean or include a
Parity Debt Agreement) and the 2000 Noteholders are included within
the defined term a Parity Lender (and any other capitalized term used
therein which is intended to mean or include a Parity Lender); and
(h) for purposes of the Operative Agreements, no new rights or
responsibilities with respect to a Note Holder (as defined in the
Trust Agreement) or a Bank Lender (as defined in the Trust Agreement)
are created by virtue of the issuance of the 2000 Notes as Parity
Debt.
3. To the extent effected hereby, each of the Bank Credit
Facilities, the 1995 Note Agreements, the 1998 Note Agreement, the Trust
Agreement and the other Operative Agreements and Security Documents are
hereby amended and modified.
4. The parties hereto (other than the Trustee) hereby consent to the
execution by the Trustee of, and instruct the Trustee to execute, this
Confirmation.
5. This Confirmation may be executed by the respective parties
hereto in one or more counterparts.
D-3
IN WITNESS WHEREOF, the parties hereto have executed this Confirmation as
of the date first above written.
Star Gas Propane, L.P.
By: Star Gas LLC,
General Partner
By:
---------------------------------------
Its Chief Financial Officer
Star/Petro, Inc.
By:
------------------------------------------
Its
Star Gas Partners, L.P.
By: Star Gas LLC,
General Partner
By:
---------------------------------------
Stellar Propane Service Corporation
By:
------------------------------------------
Ohio Gas and Appliance, Inc.
By:
------------------------------------------
Fleet National Bank, as Administrative Agent
and Bank
By:
------------------------------------------
D-4
Bank of America, N.A., as Documentation Agent
and Bank
By:
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ Life
Insurance Company
By:
------------------------------------------
The Northwestern Mutual Life Insurance Company
By:
------------------------------------------
Connecticut General Life
Insurance Company
(Notes registered in the name of CIG & CO.)
By: Cigna Investments, Inc.
By:
----------------------------------
Ace Property and Casualty
Insurance Company
(Notes registered in the name of CIG & CO.)
By: TimesSquare Capital Management, Inc.
By:
---------------------------------
INA Life Insurance Company of New York
(Notes registered in the name of CIG & CO.)
By: Cigna Investments, Inc.
By:
---------------------------------
D-5
Century Indemnity Company
(Notes registered in the name of CIG & CO.)
By: TimesSquare Capital Management, Inc.
By:
---------------------------------
Principal Life Insurance Company
By: Principal Capital Management, LLC,
a Delaware limited liability company,
its authorized signatory
By:
-------------------------------------
By:
-------------------------------------
The Lincoln National Life Insurance Company
By: Lincoln Investment Management, Inc.,
its Attorney-in-Fact
By:
-------------------------------------
Mellon Bank, N.A., as Trustee for AT&T Master
Pension Trust
By:
------------------------------------------
HSBC Bank USA, as Trustee
By:
------------------------------------------
D-6
