<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1996
REGISTRATION NO. 333-2768
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL PROPANE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 5984 42-1453040
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
------------------------
SUITE 1700, IES TOWER
200 1ST STREET, S.E.
CEDAR RAPIDS, IOWA 52401-1409
(319) 365-1550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
RONALD R. ROMINIECKI
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
NATIONAL PROPANE CORPORATION
SUITE 1700, IES TOWER
200 1ST STREET, S.E.
CEDAR RAPIDS, IOWA 52401
(319) 365-1550
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
PAUL, WEISS, RIFKIND, ANDREWS & KURTH L.L.P. LATHAM & WATKINS
WHARTON & GARRISON 425 LEXINGTON AVENUE 885 THIRD AVENUE
1285 AVENUE OF THE AMERICAS 10TH FLOOR NEW YORK, NY 10022
NEW YORK, NY 10019-6064 NEW YORK, NY 10017 (212) 906-1200
(212) 373-3000 (212) 850-2800 ATTN: BETH R. NECKMAN
ATTN: PAUL D. GINSBERG ATTN: MICHAEL ROSENWASSER
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING PROSPECTUS LOCATION
- -------------------------------------------------------------------------- ---------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside Front Cover Page
of Prospectus..................................................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus............. Inside Front and Outside Back Cover
Pages
3. Summary Information, Risk Factors and Ratio of Earnings to Fixed
Charges........................................................... Prospectus Summary; Risk Factors
4. Use of Proceeds..................................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price..................................... Underwriting
6. Dilution............................................................ Dilution
7. Selling Security Holders............................................ *
8. Plan of Distribution................................................ Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered.......................... Prospectus Summary; Risk Factors; Cash
Distribution Policy; Description of
the Common Units; The Partnership
Agreement; Tax Considerations
10. Interest of Named Experts and Counsel............................... Legal Matters
11. Information with Respect to the Registrant.......................... Outside Front Cover Page; Prospectus
Summary; Risk Factors; The
Transactions; Capitalization;
Selected Historical and Pro Forma
Consolidated Financial and Operating
Data; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business and
Properties; Management; Security
Ownership of Certain Beneficial
Owners and Management; Certain
Relationships and Related
Transactions; Financial Statements
12. Disclosure of Commission Position on Indemnification for Securities
Act Liabilities................................................... *
</TABLE>
- ------------
* Not applicable.
<PAGE>
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 25, 1996
PROSPECTUS
6,190,476 COMMON UNITS
NATIONAL PROPANE PARTNERS, L.P.
REPRESENTING LIMITED PARTNER INTERESTS
------------------------
The Common Units ('Common Units') offered hereby (the 'Offering') represent
limited partner interests in National Propane Partners, L.P., a Delaware limited
partnership (the 'Partnership'). The Partnership was recently formed to acquire,
own and operate the propane business and assets of its managing general partner,
National Propane Corporation ('National Propane' or the 'Managing General
Partner'), which the Partnership believes is the fifth largest retail marketer
of propane in the United States. National Propane is an indirect wholly-owned
subsidiary of Triarc Companies, Inc. ('Triarc').
The Partnership will distribute to its partners, on a quarterly basis, all
of its Available Cash, which is generally all cash on hand at the end of a
quarter, as adjusted for reserves. The Managing General Partner has broad
discretion in making cash disbursements and establishing reserves. The
Partnership intends, to the extent there is sufficient Available Cash, to
distribute to each holder of Common Units at least $0.525 per Common Unit per
quarter (the 'Minimum Quarterly Distribution') or $2.10 per Common Unit on an
annualized basis.
------------------------
LIMITED PARTNER INTERESTS ARE INHERENTLY DIFFERENT FROM CAPITAL STOCK OF A
CORPORATION. PURCHASERS OF COMMON UNITS SHOULD CONSIDER EACH OF THE FACTORS
DESCRIBED UNDER 'RISK FACTORS,' STARTING ON PAGE 35, IN EVALUATING AN INVESTMENT
IN THE PARTNERSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING:
CASH DISTRIBUTIONS ARE NOT GUARANTEED, WILL DEPEND ON FUTURE PARTNERSHIP
OPERATING PERFORMANCE AND WILL BE AFFECTED BY THE FUNDING OF RESERVES,
OPERATING AND CAPITAL EXPENDITURES AND OTHER MATTERS WITHIN THE DISCRETION OF
THE MANAGING GENERAL PARTNER, AS WELL AS REQUIRED INTEREST AND PRINCIPAL
PAYMENTS ON THE PARTNERSHIP'S DEBT. PRO FORMA AVAILABLE CASH FROM OPERATING
SURPLUS (AS DEFINED IN THE GLOSSARY) GENERATED DURING 1994 AND 1995 WOULD HAVE
BEEN SUFFICIENT TO COVER THE MINIMUM QUARTERLY DISTRIBUTION ON ALL OF THE
OUTSTANDING COMMON UNITS AND THE RELATED DISTRIBUTION ON THE GENERAL PARTNER
INTERESTS (AS DEFINED IN THE GLOSSARY), BUT WOULD HAVE BEEN INSUFFICIENT BY
APPROXIMATELY $0.8 MILLION AND $5.9 MILLION TO COVER THE MINIMUM QUARTERLY
DISTRIBUTION ON THE SUBORDINATED UNITS (AS DEFINED IN THE GLOSSARY) AND THE
RELATED DISTRIBUTION ON THE GENERAL PARTNER INTERESTS IN 1994 AND 1995,
RESPECTIVELY.
(cover continued on page 3)
------------------------
Prior to the Offering there has been no public market for the Common Units.
It is currently anticipated that the
initial public offering price per Common Unit will be between $20.50 and $21.50.
See 'Underwriting' for a discussion of the factors considered in determining the
initial public offering price.
The Common Units have been approved for listing on the New York Stock
Exchange under the symbol 'NPL' upon notice of issuance.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) PARTNERSHIP(2)
<S> <C> <C> <C>
Per Common Unit............................. $ $ $
Total(3).................................... $ $ $
</TABLE>
(1) The Partnership has agreed to indemnify the several Underwriters against
certain liabilities under the Securities Act of 1933. See 'Underwriting.'
(2) Before deducting expenses payable by the Partnership estimated at
$ .
(3) The Partnership has granted the several Underwriters a 30-day option to
purchase up to an additional 928,571 Common Units to cover over-allotments.
If all such Common Units are purchased, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Partnership will be
$ , $ and $ , respectively. See 'Underwriting.'
------------------------
The Common Units are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and
accepted by them, subject to approval of certain legal matters by counsel for
the Underwriters. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Common Units will be made in New York, New York on or about
, 1996.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
------------------------
The date of this Prospectus is , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
[ARTWORK TO COME]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON UNITS AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
<PAGE>
(cover continued from page 1)
APPROXIMATELY $5.5 MILLION OF THE PARTNERSHIP'S ANNUAL CASH RECEIPTS WILL BE
INTEREST PAYMENTS FROM TRIARC UNDER A $40.7 MILLION LOAN TO TRIARC (THE
'PARTNERSHIP LOAN'). ON A PRO FORMA BASIS, SUCH AMOUNT REPRESENTS APPROXIMATELY
31% OF THE PARTNERSHIP'S AVAILABLE CASH FROM OPERATING SURPLUS IN 1995.
CONSEQUENTLY, TRIARC'S FAILURE TO MAKE INTEREST OR PRINCIPAL PAYMENTS ON THE
PARTNERSHIP LOAN WOULD ADVERSELY AFFECT THE ABILITY OF THE PARTNERSHIP TO MAKE
THE MINIMUM QUARTERLY DISTRIBUTION TO ALL UNITHOLDERS. THE PARTNERSHIP LOAN IS
RECOURSE TO TRIARC AND IS SECURED BY A PLEDGE BY TRIARC OF ALL OF THE SHARES OF
CAPITAL STOCK OF THE MANAGING GENERAL PARTNER OWNED BY TRIARC (APPROXIMATELY
75.7% OF THE MANAGING GENERAL PARTNER'S OUTSTANDING CAPITAL STOCK AS OF THE
DATE OF THIS PROSPECTUS). SEE 'CASH DISTRIBUTION POLICY -- PARTNERSHIP LOAN'
AND 'CERTAIN INFORMATION REGARDING TRIARC.'
THE PARTNERSHIP'S PRO FORMA TOTAL INDEBTEDNESS AS A PERCENTAGE OF ITS TOTAL
CAPITALIZATION WOULD HAVE BEEN APPROXIMATELY 79.4% AT MARCH 31, 1996. AS A
RESULT, THE PARTNERSHIP WILL HAVE INDEBTEDNESS THAT IS SUBSTANTIAL IN RELATION
TO ITS PARTNERS' CAPITAL. FURTHERMORE, THE MANAGING GENERAL PARTNER MAY CAUSE
THE PARTNERSHIP TO INCUR ADDITIONAL INDEBTEDNESS, INCLUDING BORROWINGS THAT
HAVE THE PURPOSE OR EFFECT OF ENABLING THE MANAGING GENERAL PARTNER TO RECEIVE
DISTRIBUTIONS OR HASTENING THE CONVERSION OF SUBORDINATED UNITS INTO COMMON
UNITS.
THE $125 MILLION FIRST MORTGAGE NOTES (AS DEFINED BELOW) AND THE $55 MILLION
BANK CREDIT FACILITY (AS DEFINED BELOW) WILL BE SECURED BY A LIEN ON
SUBSTANTIALLY ALL OF THE ASSETS OF THE OPERATING PARTNERSHIP (AS DEFINED
BELOW). IN THE CASE OF A CONTINUING DEFAULT BY THE OPERATING PARTNERSHIP
THEREUNDER, THE LENDERS WOULD HAVE THE RIGHT TO FORECLOSE ON THE OPERATING
PARTNERSHIP'S ASSETS, WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE
PARTNERSHIP.
FUTURE PARTNERSHIP PERFORMANCE WILL DEPEND UPON THE SUCCESS OF THE PARTNERSHIP
IN MAXIMIZING PROFITS FROM PROPANE SALES. PROPANE SALES ARE AFFECTED BY, AMONG
OTHER THINGS, WEATHER PATTERNS, PRODUCT PRICES AND COMPETITION, INCLUDING
COMPETITION FROM OTHER ENERGY SOURCES.
HOLDERS OF COMMON UNITS WILL HAVE ONLY LIMITED VOTING RIGHTS AND THE MANAGING
GENERAL PARTNER WILL MANAGE AND CONTROL THE PARTNERSHIP. SUBJECT TO CERTAIN
CONDITIONS, THE MANAGING GENERAL PARTNER MAY BE REMOVED ONLY UPON THE APPROVAL
OF THE HOLDERS OF AT LEAST 66-2/3% OF THE OUTSTANDING UNITS (INCLUDING THOSE
UNITS HELD BY THE MANAGING GENERAL PARTNER AND ITS AFFILIATES). IF THE MANAGING
GENERAL PARTNER IS REMOVED OTHER THAN FOR CAUSE, THE SUBORDINATION PERIOD (AS
DEFINED IN THE GLOSSARY) WILL END, ALL ARREARAGES ON THE COMMON UNITS WILL
TERMINATE AND ANY OUTSTANDING SUBORDINATED UNITS WILL CONVERT INTO COMMON UNITS
AND THE GENERAL PARTNERS (AS DEFINED IN THE GLOSSARY) WILL HAVE THE RIGHT TO
CONVERT THE GENERAL PARTNER INTERESTS INTO COMMON UNITS OR TO RECEIVE IN
EXCHANGE FOR SUCH INTERESTS, A CASH PAYMENT EQUAL TO THE FAIR MARKET VALUE OF
SUCH INTERESTS.
THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PARTNERSHIP ARE COMPLEX. IT IS
ANTICIPATED THAT THROUGH 2000, A UNITHOLDER WILL RECEIVE SUBSTANTIAL
DISTRIBUTIONS THAT WILL REDUCE SUCH HOLDER'S TAX BASIS, WITH THE RESULT THAT
SUCH HOLDER MAY RECOGNIZE SUBSTANTIAL GAIN AND A RELATED INCOME TAX LIABILITY
UPON A SUBSEQUENT SALE OF SUCH HOLDER'S UNITS.
PURCHASERS OF COMMON UNITS IN THE OFFERING WILL EXPERIENCE IMMEDIATE AND
SUBSTANTIAL DILUTION IN NET TANGIBLE BOOK VALUE OF $19.83 PER COMMON UNIT FROM
THE INITIAL PUBLIC OFFERING PRICE, THE MANAGING GENERAL PARTNER WILL EXPERIENCE
AN INCREASE IN NET TANGIBLE BOOK VALUE OF $22.27 PER UNIT AND EACH COMMON UNIT
WILL HAVE A PRO FORMA NET TANGIBLE BOOK VALUE OF $1.17 (ASSUMING AN INITIAL
PUBLIC OFFERING PRICE OF $21.00 PER COMMON UNIT).
CONFLICTS OF INTEREST MAY ARISE BETWEEN THE MANAGING GENERAL PARTNER AND ITS
AFFILIATES, ON THE ONE HAND, AND THE PARTNERSHIP AND THE HOLDERS OF COMMON
UNITS, ON THE OTHER. THE PARTNERSHIP AGREEMENT CONTAINS PROVISIONS THAT ALLOW
THE MANAGING GENERAL PARTNER TO TAKE INTO ACCOUNT THE INTERESTS OF PARTIES IN
ADDITION TO THE PARTNERSHIP IN RESOLVING CONFLICTS OF INTEREST, THEREBY
LIMITING THE MANAGING GENERAL PARTNER'S FIDUCIARY DUTY TO THE UNITHOLDERS, AS
WELL AS PROVISIONS THAT MAY RESTRICT THE REMEDIES AVAILABLE TO UNITHOLDERS FOR
ACTIONS THAT MIGHT, WITHOUT SUCH LIMITATIONS, CONSTITUTE BREACHES OF FIDUCIARY
DUTY. HOLDERS OF COMMON UNITS ARE DEEMED TO HAVE CONSENTED TO CERTAIN ACTIONS
AND CONFLICTS OF INTEREST THAT MIGHT OTHERWISE BE DEEMED A BREACH OF FIDUCIARY
OR OTHER DUTIES UNDER APPLICABLE STATE LAW. THE VALIDITY AND ENFORCEABILITY OF
THESE TYPES OF PROVISIONS UNDER DELAWARE LAW ARE UNCERTAIN.
PRIOR TO MAKING ANY DISTRIBUTION ON THE COMMON UNITS, THE PARTNERSHIP WILL
REIMBURSE THE MANAGING GENERAL PARTNER AND ITS AFFILIATES (INCLUDING TRIARC) AT
COST FOR ALL EXPENSES INCURRED ON BEHALF OF THE PARTNERSHIP. ON A PRO FORMA
BASIS, APPROXIMATELY $56.8 MILLION OF EXPENSES WOULD HAVE BEEN REIMBURSED BY
THE PARTNERSHIP TO THE MANAGING GENERAL PARTNER IN 1995. AFFILIATES OF THE
MANAGING GENERAL PARTNER (INCLUDING TRIARC) MAY PROVIDE CERTAIN ADMINISTRATIVE
SERVICES FOR THE MANAGING GENERAL PARTNER ON BEHALF OF THE PARTNERSHIP AND WILL
BE REIMBURSED FOR ALL EXPENSES INCURRED IN CONNECTION THEREWITH. IN ADDITION,
THE MANAGING GENERAL PARTNER AND ITS AFFILIATES MAY PROVIDE ADDITIONAL SERVICES
TO THE PARTNERSHIP, FOR WHICH THE PARTNERSHIP WILL BE CHARGED REASONABLE FEES
AS DETERMINED BY THE MANAGING GENERAL PARTNER.
The Common Units offered in the Offering will represent an aggregate 55.4%
limited partner interest in the Partnership and National Propane, L.P., the
Partnership's subsidiary operating
3
<PAGE>
<PAGE>
partnership (the 'Operating Partnership'), on a combined basis (58.8% if the
Underwriters' over-allotment option is exercised in full). The General Partners
will own General Partner Interests representing an aggregate 4% unsubordinated
general partner interest in the Partnership and the Operating Partnership on a
combined basis. In addition, the Managing General Partner will own 4,533,638
Subordinated Units representing an aggregate 40.6% subordinated general partner
interest in the Partnership and the Operating Partnership on a combined basis
(37.5% if the Underwriters' over-allotment option is exercised in full). All
references in this Prospectus to the General Partner Interests or to
distributions of 4% of Available Cash constitute references to the amount of the
General Partners' combined percentage interest in the Partnership and the
Operating Partnership exclusive of any rights as holder of Common Units or
Subordinated Units or rights to receive Incentive Distributions (as defined in
the Glossary). Upon expiration of the Subordination Period, Subordinated Units
will convert automatically into Common Units on a one-for-one basis, and will
thereafter participate pro rata with the other Common Units in distributions of
Available Cash, thereby increasing the amount of Available Cash required to make
the Minimum Quarterly Distribution on the Common Units. Under certain
circumstances, up to 50% of the Subordinated Units may convert into Common Units
prior to the expiration of the Subordination Period. All 4,533,638 Subordinated
Units held by the Managing General Partner and its Affiliates (as defined in the
Glossary) are general partner interests in the Partnership (although the
Managing General Partner and its Affiliates may, at their election, convert such
Subordinated Units into limited partner interests at any time) and all Common
Units issued in the Offering or issued upon the conversion of the Subordinated
Units are limited partner interests. The Common Units and the Subordinated Units
are collectively referred to herein as the 'Units.' Holders of the Common Units
and the Subordinated Units are collectively referred to herein as 'Unitholders.'
To enhance the ability of the Partnership to distribute the Minimum
Quarterly Distribution on the Common Units during the Subordination Period,
which will generally extend at least through June 30, 2001, each holder of
Common Units will be entitled to receive the Minimum Quarterly Distribution plus
any arrearages thereon ('Common Unit Arrearages') before any distributions are
made on the outstanding Subordinated Units.
The sale of the Common Units offered in the Offering is subject to, among
other things, the concurrent completion of a private placement by the Managing
General Partner of $125 million aggregate principal amount of 8.54% First
Mortgage Notes due 2010 (the 'First Mortgage Notes'). The Operating Partnership
will assume the Managing General Partner's obligations under the First Mortgage
Notes in connection with the conveyance by the General Partners of substantially
all of their assets (which assets will not include an existing intercompany note
from Triarc, approximately $59.3 million of the net proceeds from the issuance
of the First Mortgage Notes and certain other assets of the General Partners) to
the Operating Partnership. The First Mortgage Notes will be secured by a
mortgage on substantially all of the assets of the Operating Partnership. See
'The Transactions' and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Description of Indebtedness.'
The Partnership will furnish or make available to record holders of Common
Units (i) within 120 days after the close of each fiscal year of the
Partnership, an annual report containing audited financial statements and a
report thereon by its independent public accountants, and (ii) within 90 days
after the close of each fiscal quarter (other than the fourth quarter), a
quarterly report containing unaudited summary financial information. The
Partnership will also furnish each Unitholder with tax information within 90
days after the close of each calendar year.
4
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY........................................ 6
National Propane Partners, L.P........................ 6
Summary Historical and Pro Forma Consolidated
Financial and Operating Data........................ 23
The Offering.......................................... 26
Summary of Tax Considerations......................... 32
RISK FACTORS.............................................. 35
Risks Inherent in the Partnership's Business.......... 35
Risks Inherent in an Investment in the Partnership.... 37
Conflicts of Interest and Fiduciary Responsibility.... 44
Tax Risks............................................. 46
THE TRANSACTIONS.......................................... 50
USE OF PROCEEDS........................................... 51
CAPITALIZATION............................................ 52
DILUTION.................................................. 53
CASH DISTRIBUTION POLICY.................................. 54
General............................................... 54
Quarterly Distributions of Available Cash............. 55
Distributions from Operating Surplus during
Subordination Period................................ 55
Distributions from Operating Surplus after
Subordination Period................................ 57
Incentive Distributions -- Hypothetical Annualized
Yield............................................... 57
Distributions from Capital Surplus.................... 58
Adjustment of Minimum Quarterly Distribution and
Target Distribution Levels.......................... 59
Distributions of Cash Upon Liquidation................ 59
Cash Available for Distribution....................... 61
Partnership Loan...................................... 63
CERTAIN INFORMATION REGARDING TRIARC...................... 66
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL
AND OPERATING DATA...................................... 73
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..................... 75
General............................................... 75
Results of Operations................................. 76
Liquidity and Capital Resources....................... 79
Initial Public Offering of Common Units and Other
Transactions........................................ 81
Contingencies......................................... 82
Description of Indebtedness........................... 83
Effects of Inflation.................................. 86
Recently Issued Accounting Pronouncements............. 86
BUSINESS AND PROPERTIES................................... 87
General............................................... 87
Operating Strategy.................................... 88
Strategies for Growth................................. 89
Industry Background................................... 90
Products, Services and Marketing...................... 91
Propane Supply and Storage............................ 93
Pricing Policy........................................ 94
Competition........................................... 95
Properties............................................ 95
Trademarks and Tradenames............................. 97
Government Regulation................................. 97
Employees............................................. 98
Litigation and Contingent Liabilities................. 98
Transfer of the Partnership Assets.................... 99
MANAGEMENT................................................ 101
Partnership Management................................ 101
Directors and Executive Officers of the Managing
General Partner..................................... 102
Reimbursement of Expenses of the Managing General
Partner............................................. 103
Executive Compensation................................ 103
Cash Incentive Plans.................................. 105
Triarc's 1993 Equity Participation Plan............... 106
Unit Option Plan...................................... 107
Compensation of Directors............................. 109
Employment Arrangements with Executive Officers....... 109
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.............................................. 111
Ownership of Triarc Common Stock by the Directors and
Executive Officers of the Managing General
Partner............................................. 111
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............ 112
Rights of the General Partners........................ 112
Transactions Involving Triarc and its Affiliates...... 112
Partnership Note...................................... 113
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY........ 113
Conflicts of Interest................................. 113
Fiduciary Duties of the General Partners.............. 117
DESCRIPTION OF THE COMMON UNITS........................... 119
The Units............................................. 119
Transfer Agent and Registrar.......................... 119
Transfer of Common Units.............................. 119
THE PARTNERSHIP AGREEMENT................................. 121
Organization.......................................... 121
Special General Partner............................... 121
Purpose............................................... 122
Capital Contributions................................. 122
Power of Attorney..................................... 122
Limited Liability..................................... 122
Issuance of Additional Securities..................... 123
Amendment of Partnership Agreement.................... 124
Merger, Sale or Other Disposition of Assets........... 126
Termination and Dissolution........................... 126
Liquidation and Distribution of Proceeds.............. 126
Withdrawal or Removal of the General Partners......... 126
Transfer of General Partners' Interests and Right to
Receive Incentive Distributions and Conversion of
Units held by the Managing General Partner into
Limited Partner Interests........................... 128
Limited Call Right.................................... 128
Meetings; Voting...................................... 129
Status as Limited Partner or Assignee................. 130
Non-citizen Assignees; Redemption..................... 130
Indemnification....................................... 130
Books and Reports..................................... 131
Right to Inspect Partnership Books and Records........ 131
Reimbursement for Services............................ 131
Change of Management Provisions....................... 132
Registration Rights................................... 132
UNITS ELIGIBLE FOR FUTURE SALE............................ 132
TAX CONSIDERATIONS........................................ 133
Legal Opinions and Advice............................. 134
Tax Rates and Changes in Federal Income Tax Laws...... 135
Partnership Status.................................... 135
Limited Partner Status................................ 137
Tax Consequences of Unit Ownership.................... 137
Allocation of Partnership Income, Gain, Loss, and
Deduction........................................... 139
Tax Treatment of Operations........................... 140
Disposition of Common Units........................... 143
Uniformity of Units................................... 145
Administrative Matters................................ 146
State, Local and Other Tax Considerations............. 149
INVESTMENT IN THE PARTNERSHIP BY EMPLOYEE BENEFIT PLANS... 150
UNDERWRITING.............................................. 151
LEGAL MATTERS............................................. 152
EXPERTS................................................... 152
ADDITIONAL INFORMATION.................................... 152
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS................ F-1
Appendix A -- Form of Amended and Restated Agreement of
Limited Partnership of National Propane Partners,
L.P..................................................... A-1
Appendix B -- Form of Application for Transfer of Common
Units................................................... B-1
Appendix C -- Glossary of Certain Terms................... C-1
</TABLE>
5
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and historical and pro forma financial data appearing elsewhere in
this Prospectus and should be read only in conjunction with the entire
Prospectus. Unless otherwise specified, the information in this Prospectus
assumes that the Underwriters' over-allotment option is not exercised. Except as
the context otherwise requires, references to or descriptions of operations of
the Partnership include the operations of the Operating Partnership and any
other subsidiary operating partnership or corporation and the operations of the
Partnership's predecessor, National Propane. For ease of reference, a glossary
of certain terms used in this Prospectus is included as Appendix C to this
Prospectus. Capitalized terms not otherwise defined herein have the meanings
given in the glossary.
NATIONAL PROPANE PARTNERS, L.P.
The Partnership, a Delaware limited partnership recently formed to acquire,
own and operate the business and assets of National Propane, is engaged
primarily in (i) the retail marketing of propane to residential, commercial and
industrial, and agricultural customers and to dealers (located primarily in the
Northeast) that resell propane to residential and commercial customers and (ii)
the retail marketing of propane-related supplies and equipment, including home
and commercial appliances. The Partnership believes it is the fifth largest
retail marketer of propane in terms of volume in the United States, supplying
approximately 250,000 active retail and wholesale customers in 24 states through
its 165 service centers located in 23 states. The Partnership's operations are
concentrated in the Midwest, Northeast, Southeast and Southwest regions of the
United States. The retail propane sales volume of the Partnership was
approximately 150 million gallons in 1995. In 1995, approximately 48.6% of the
Partnership's retail sales volume was to residential customers, 34.2% was to
commercial and industrial customers, 6.3% was to agricultural customers, and
10.9% was to dealers. Sales to residential customers in 1995 accounted for
approximately 64% of the Partnership's gross profit on propane sales, reflecting
the higher margin nature of this segment of the market. Approximately 90% of the
tanks used by the Partnership's retail customers are owned by the Partnership.
National Propane was incorporated in 1953 under the name Conservative Gas
Corporation. In April 1993, there was a change of control of the parent of the
Partnership (the 'Acquisition'). Since the Acquisition, the Partnership's new
management team, headed by Ronald D. Paliughi, who became President and Chief
Executive Officer of National Propane in April 1993, has implemented an
operating plan designed to make the Partnership more efficient, profitable and
competitive.
Since the Acquisition, the Partnership's management has: (i) consolidated
nine separately branded businesses into a single company with a new, national
brand and logo; (ii) consolidated eight regional offices into one national
headquarters; (iii) installed the Partnership's first system-wide data
processing system; (iv) implemented system-wide pricing, marketing and
purchasing strategies, thereby reducing the cost duplication and purchasing and
pricing inefficiencies associated with the Partnership's formerly decentralized
structure; and (v) centralized and standardized accounting, administrative and
other corporate services. As a result of these initiatives, the Partnership has
become more efficient and competitive, and believes it is now positioned to
capitalize on opportunities for business growth, both internally and through
acquisitions.
Although management has focused primarily on implementing the new operating
plan, the Partnership has acquired five propane businesses since November 1993,
resulting in an increase in volume sales of approximately 13.4 million gallons
annually. Four of these acquired businesses operate in the Midwest and one
operates in the Southwest.
The Partnership believes that its competitive strengths include: (i) gross
profit and operating margins that it believes to be among the highest of the
major retail propane companies whose financial statements are publicly
available; (ii) the concentration of its operations in colder regions (such as
the upper Midwest and Northeast), high margin regions (such as the Northeast and
Florida), and regions experiencing population growth (such as Florida and the
Southwest); (iii) an experienced management team; (iv) a well-trained and
motivated work force; and (v) an effective pricing management system. However,
the propane industry is highly competitive and includes a number of large
national firms that may have greater financial or other resources or lower
operating costs than the Partnership.
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BUSINESS STRATEGY
The Partnership's business strategy is to (i) increase its efficiency,
profitability and competitiveness by building on the efforts it has already
undertaken to improve pricing management, marketing and purchasing and to
further consolidate its operations and (ii) increase its market share through
strategic acquisitions and internal growth.
Key elements of this strategy include (i) continuing with the
implementation of centralized price monitoring, (ii) strengthening its image as
a reliable, full service, nationwide propane supplier, (iii) further improving
its propane purchasing and storage, thereby making more efficient use of its
system-wide storage capacity and (iv) further consolidating its operations,
where appropriate. In addition, because the retail propane industry is mature
and overall demand for propane is expected to involve little growth for the
foreseeable future, acquisitions are expected to be an important element of the
Partnership's business strategy. The Partnership intends to take two approaches
to acquisitions: (i) primarily to build on its broad geographic base by
acquiring smaller, independent competitors that operate within the Partnership's
existing geographic areas and incorporating them into the Partnership's
distribution network and (ii) to acquire propane businesses in areas in the
United States outside of its current geographic base where it believes there is
growth potential and where an attractive return on its investment can be
achieved. The Partnership recently entered into a letter of intent to acquire a
propane business for $0.8 million; however, consummation of this transaction is
subject to customary closing conditions and completion of definitive
documentation, and no assurance can be given that this acquisition will be
completed. Although the Partnership expects to continue to evaluate a number of
propane distribution companies, including regional and national firms, as part
of its ongoing acquisition program, except as described in the preceding
sentence, the Partnership does not have any present agreements or commitments
with respect to any acquisition. There can be no assurance that the Partnership
will identify attractive acquisition candidates in the future, will be able to
acquire such candidates on acceptable terms, or will be able to finance such
acquisitions. If the Partnership is able to make acquisitions, there can be no
assurance that such acquisitions will not dilute earnings and distributions or
that any additional debt incurred to finance such acquisitions will not
adversely affect the ability of the Partnership to make distributions to
Unitholders. In addition, to the extent that warm weather adversely affects the
Partnership's operating and financial results, the Partnership's access to
capital and its acquisition activities may be limited. The Managing General
Partner has broad discretion in making acquisitions and it is expected that the
Managing General Partner generally will not seek Unitholder approval of
acquisitions.
In order to facilitate the Partnership's acquisition strategy, concurrently
with the closing of the Offering, the Operating Partnership will enter into a
$55 million bank credit facility (the 'Bank Credit Facility'), including a $40
million facility to be used for acquisitions and improvements (the 'Acquisition
Facility'). See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Description of Indebtedness.' The Partnership will also
have the ability to fund acquisitions through the issuance of additional
partnership interests. See 'The Partnership Agreement -- Issuance of Additional
Securities.'
In addition to pursuing expansion through acquisitions, the Partnership
intends to pursue internal growth at its existing service centers and to expand
its business by opening new service centers. The Partnership believes that it
can attract new customers and expand its market base by providing superior
service, introducing innovative marketing programs and focusing on population
growth areas.
GENERAL
The Partnership is engaged primarily in the domestic retail marketing of
propane and propane-related supplies and equipment, including home and
commercial appliances.
Propane, a by-product of natural gas processing and petroleum refining is a
clean-burning energy source recognized for its transportability and ease of use
relative to alternative forms of stand-alone energy. The Partnership's retail
customers fall into four broad categories: residential customers, commercial and
industrial customers, agricultural customers and dealers (located primarily in
the Northeast) that resell propane to residential and commercial customers.
Residential customers use propane primarily for space heating, water heating,
cooking and clothes drying. Commercial and
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industrial customers use propane for commercial applications such as cooking and
clothes drying and industrial uses such as fueling over-the-road vehicles,
forklifts and stationary engines, firing furnaces, as a cutting gas and in other
process applications. Agricultural customers use propane for tobacco curing,
crop drying, poultry brooding and weed control.
Propane competes primarily with natural gas, electricity and fuel oil as an
energy source, principally on the basis of price, availability and portability.
Propane serves as an alternative to natural gas in rural and suburban areas
where natural gas is unavailable or portability of product is required. Propane
is generally more expensive than natural gas on an equivalent BTU basis in
locations served by natural gas, although propane is sold in such areas as a
standby fuel for use during peak demand periods and during interruptions in
natural gas service. Propane is generally less expensive to use than electricity
for space heating, water heating, clothes drying and cooking. Although propane
is similar to fuel oil in certain applications and market demand, propane and
fuel oil compete to a lesser extent primarily because of the cost of converting
from one to the other.
The Partnership distributes propane through a nationwide distribution
network integrating 165 service centers in 23 states. The Partnership's
operations are located primarily in the Midwest, Northeast, Southeast and
Southwest regions of the United States. No single customer accounted for 10% or
more of the Partnership's revenues in 1995. Historically, approximately 66% of
the Partnership's retail propane volume has been sold during the six-month
period from October through March, as many customers use propane for heating.
Consequently, sales, gross profits and cash flows from operations are
concentrated in the Partnership's first and fourth fiscal quarters. In 1995, on
a pro forma basis, the Partnership would have had net income of approximately
$10.9 million, and on an historical basis, had a net loss of approximately $0.6
million. For information regarding pro forma adjustments to the Partnership's
historical operating data, see 'Selected Historical and Pro Forma Consolidated
Financial and Operating Data' and the pro forma consolidated financial
statements and notes thereto included elsewhere in this Prospectus.
The Partnership also sells, leases and services equipment related to its
propane distribution business. In the residential market, the Partnership sells
household appliances such as cooking ranges, water heaters, space heaters,
central furnaces and clothes dryers, as well as less traditional products such
as barbecue equipment and gas logs.
In addition to its 165 service centers, the Partnership owns underground
storage facilities in Hutchinson, Kansas and Loco Hills, New Mexico, leases
above ground storage facilities in Crandon, Wisconsin and Orlando, Florida and
owns or leases smaller storage facilities in other locations throughout the
United States. As of May 31, 1996, the Partnership's total storage capacity was
approximately 33 million gallons (including approximately one million gallons of
storage capacity currently leased to third parties). As of May 31, 1996, the
Partnership had a fleet of 7 transport truck tractors and approximately 410 bulk
delivery trucks, 400 service and light trucks and 150 cylinder delivery
vehicles.
The principal executive office of the Partnership is located at Suite 1700,
IES Tower, 200 1st Street, S.E., Cedar Rapids, Iowa 52401-1409 and its telephone
number is (319) 365-1550.
RISK FACTORS
Limited partner interests are inherently different from the capital stock
of a corporation, although many of the business risks to which the Partnership
will be subject are similar to those that would be faced by a corporation
engaged in a similar business. Prospective purchasers of the Common Units should
consider the following risk factors in evaluating an investment in the Common
Units:
RISKS INHERENT IN THE PARTNERSHIP'S BUSINESS
Weather conditions, which can vary substantially from year to year, have a
significant impact on the demand for propane for both heating and
agricultural purposes. Many customers of the Partnership rely heavily on
propane as a heating fuel. Accordingly, the volume of propane sold is at
its highest during the six-month peak heating season of October through
March and is directly affected by the severity of the winter weather.
Historically, approximately 66% of the Partnership's retail propane volume
has been sold during this peak heating season. Actual
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weather conditions, therefore, may significantly affect the Partnership's
financial performance. Furthermore, despite the fact that overall weather
conditions may be normal, variations in weather in one or more regions in
which the Partnership operates can significantly affect the total volume
of propane sold by the Partnership and, consequently, the Partnership's
results of operations.
Propane is a commodity, the market price of which is often subject to
volatile changes in response to changes in supply or other market
conditions. Because rapid increases in the wholesale cost of propane may
not be immediately passed on to customers, such increases could reduce
gross profits. Except for occasional opportunistic buying and storage of
propane during periods of low demand, the Partnership has not engaged in
any significant hedging activities with respect to its propane supply
requirements, although it may do so in the future.
The domestic retail propane business is highly competitive, and some of
the Partnership's competitors may be larger or have greater financial and
other resources or lower operating costs than the Partnership. In
addition, propane is sold in competition with other sources of energy,
some of which are less costly for equivalent energy values.
The domestic retail propane industry is mature, and the Partnership
foresees only limited growth in total demand for the product. The
Partnership expects the overall demand for propane to remain relatively
constant over the next several years, with year-to-year industry volumes
being affected primarily by weather patterns. Therefore, the growth of the
Partnership's propane business depends in large part on its ability to
acquire other retail distributors. There can be no assurance that the
Partnership will identify attractive acquisition candidates in the future,
will be able to acquire such candidates on acceptable terms or will be
able to finance such acquisitions. If the Partnership is able to make
acquisitions, there can be no assurance that such acquisitions will not
dilute earnings and distributions or that any additional debt incurred to
finance such acquisitions will not adversely affect the ability of the
Partnership to make distributions to Unitholders.
The Partnership's operations are subject to the operating hazards and
risks normally associated with handling, storing and delivering
combustible liquids such as propane. As a result, the Partnership has
been, and will likely continue to be, a defendant in various legal
proceedings and litigation arising in the ordinary course of business. In
addition, the Partnership will assume certain contingent liabilities of
National Propane, including certain potential environmental remediation
costs at properties currently owned by National Propane. Although the
Partnership intends to self insure (as National Propane currently does)
and maintain such insurance policies as the Managing General Partner
believes are reasonable and prudent, future claims or environmental
liabilities not covered by insurance or indemnification, or a large number
of claims incurred by the Partnership in the future that are within the
Partnership's self insured retention, may have a material adverse effect
on the business, results of operations or financial position of the
Partnership, including the Partnership's ability to make the Minimum
Quarterly Distribution.
RISKS INHERENT IN AN INVESTMENT IN THE PARTNERSHIP
Cash distributions to Unitholders are not guaranteed and may fluctuate
based upon the Partnership's performance. Cash distributions are dependent
primarily on cash flow and not on profitability, which is affected by
non-cash items. Therefore, cash distributions may be made during periods
when the Partnership records losses and may not be made during periods
when the Partnership records profits. In addition, the Managing General
Partner may establish reserves that reduce the amount of Available Cash.
Due to the seasonal nature of the Partnership's business, the Managing
General Partner anticipates that it may make additions to reserves during
certain of the Partnership's fiscal quarters in order to fund operating
expenses, interest payments and cash distributions to partners with
respect to future fiscal quarters. As a result of these and other factors,
there can be no assurance regarding the actual levels of cash
distributions by the Partnership.
The amount of Available Cash from Operating Surplus needed to distribute
the Minimum Quarterly Distribution for four quarters on the Common Units
and Subordinated Units to be
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outstanding immediately after the Offering and the related distribution on
the General Partner Interests is approximately $23.5 million
(approximately $13.0 million for the Common Units, $9.5 million for the
Subordinated Units and $1.0 million for the General Partner Interests).
The amount of pro forma Available Cash from Operating Surplus generated
during 1995 was approximately $17.6 million. Such amount would have been
sufficient to cover the Minimum Quarterly Distribution for the four
quarters in such year on all of the outstanding Common Units and the
related distribution on the General Partner Interests, but would have been
insufficient by approximately $5.9 million to cover the Minimum Quarterly
Distribution on the Subordinated Units and the related distribution on the
General Partner Interests.
Approximately $5.5 million of the Partnership's annual cash receipts will
be interest payments from Triarc under the Partnership Loan, which will
bear interest at an annual rate of 13.5%. On a pro forma basis, such
amount represents approximately 31% of the Partnership's Available Cash
from Operating Surplus in 1995. Because Triarc is a holding company, its
ability to meet its cash requirements (including required interest and
principal payments on the Partnership Loan) is primarily dependent (in
addition to its cash on hand) upon cash flows from its subsidiaries,
including loans and cash dividends and reimbursement by subsidiaries to
Triarc in connection with its providing certain management services and
payments by subsidiaries under certain tax sharing agreements. Under the
terms of various indentures and credit arrangements, Triarc's principal
subsidiaries are currently unable to pay any dividends or make any loans
or advances to Triarc. In addition, the Partnership Loan does not restrict
Triarc's ability to sell, convey, transfer or encumber the stock or assets
of any of its subsidiaries (other than certain limitations with respect to
the Managing General Partner and Southeastern Public Service Company
('SEPSCO')) or its ability to dispose of its cash on hand or other assets.
Triarc's cash on hand as of May 31, 1996, after giving effect to the
closing of the Offering, is estimated to be approximately $210.0 million.
The Partnership believes that such amount of cash on hand, plus payments
or distributions from certain of Triarc's subsidiaries, will enable Triarc
to have adequate cash resources to meet its short term cash requirements,
including required interest payments on the Partnership Loan. See 'Cash
Distribution Policy -- Partnership Loan' and 'Certain Information
Regarding Triarc.' However, there can be no assurance that Triarc will
continue to have cash on hand or that it will in the future receive
sufficient payments or distributions from its subsidiaries in order to
enable it to satisfy its obligations under the Partnership Loan. Triarc's
failure to make interest or principal payments under the Partnership Loan
would adversely affect the ability of the Partnership to make the Minimum
Quarterly Distribution to all Unitholders. In addition, Triarc is
permitted to prepay the Partnership Loan under certain circumstances. The
prepayment by Triarc of all or a portion of the Partnership Loan and the
failure by the Partnership to reinvest such funds in a manner that
generates an equivalent amount of annual cash flow could have an adverse
effect on the Partnership's ability to make distributions to Unitholders.
The Partnership Loan is recourse to Triarc and is secured by a pledge by
Triarc of all of the shares of capital stock of the Managing General
Partner owned by Triarc (approximately 75.7% of the Managing General
Partner's outstanding capital stock as of the date of this Prospectus).
See 'Cash Distribution Policy -- Partnership Loan' and 'Certain
Information Regarding Triarc.'
On a pro forma basis as of March 31, 1996, assuming consummation of the
transactions contemplated by this Prospectus, the Partnership's total
indebtedness as a percentage of its total capitalization would have been
approximately 79.4%. As a result, the Partnership will be significantly
leveraged and will have indebtedness that is substantial in relation to
its partners' capital. The principal and interest payable on such
indebtedness and compliance with the requirements of such indebtedness
with respect to the maintenance of reserves will reduce the cash available
to make distributions on the Units. Although the Partnership does not
intend to draw on the Bank Credit Facility at the time of the closing of
the Offering, future borrowings could result in a significant increase in
the Partnership's leverage. Furthermore, the Managing General Partner may
cause the Partnership to incur additional indebtedness, including
borrowings that have the purpose or effect of enabling the Managing
General Partner to receive distributions or hastening the conversion of
Subordinated Units into Common Units.
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The First Mortgage Notes and the Bank Credit Facility will be secured by a
lien on substantially all of the assets of the Operating Partnership. In
the case of a continuing default by the Operating Partnership under such
indebtedness, the lenders would have the right to foreclose on the
Operating Partnership's assets, which would have a material adverse effect
on the Partnership. In addition, the First Mortgage Notes and the Bank
Credit Facility contain provisions relating to change of control. If such
provisions are triggered, such outstanding indebtedness may become
immediately due. In such event, there is no assurance that the Partnership
would be able to pay the indebtedness, in which case the lenders would
have the right to foreclose on the Operating Partnership's assets, which
would have a material adverse effect on the Partnership.
The Partnership's assumptions concerning future operations, including
assumptions that normal weather conditions will prevail in the
Partnership's operating areas, may not be realized. Although the
Partnership believes its assumptions are reasonable, whether such
assumptions are realized is not, in many cases, within the control of the
Partnership. Significant variances between the Partnership's assumptions
and actual conditions, particularly with respect to weather conditions,
could have a significant impact on the business of the Partnership.
The Managing General Partner will manage and operate the Partnership, and
holders of Common Units will have no right to participate in such
management and operation. Holders of Common Units will have no right to
elect the Managing General Partner on an annual or other continuing basis,
and will have only limited voting rights on matters affecting the
Partnership's business.
Purchasers of Common Units in the Offering will experience substantial and
immediate dilution in net tangible book value of $19.83 per Common Unit
from the initial public offering price, the Managing General Partner will
experience an increase in net tangible book value of $22.27 per Unit and
each Common Unit will have a pro forma net tangible book value of $1.17
(assuming an initial public offering price of $21.00 per Common Unit).
Prior to making any distribution on the Common Units, the Partnership will
reimburse the Managing General Partner and its Affiliates (including
Triarc) at cost for all expenses incurred on behalf of the Partnership. On
a pro forma basis, approximately $56.8 million of expenses would have been
reimbursed by the Partnership to the Managing General Partner in 1995.
Affiliates of the Managing General Partner (including Triarc) may provide
certain administrative services for the Managing General Partner on behalf
of the Partnership and will be reimbursed for all expenses incurred in
connection therewith. In addition, the Managing General Partner and its
Affiliates may provide additional services to the Partnership, for which
the Partnership will be charged reasonable fees as determined by the
Managing General Partner.
Subject to certain limitations, the Partnership may issue additional Units
or other interests in the Partnership, the effect of which may be to
dilute the interests of holders of Common Units in distributions by the
Partnership and to make it more difficult for a person or group to remove
the Managing General Partner as general partner or otherwise change the
management of the Partnership.
The Managing General Partner will have the right to acquire all, but not
less than all, of the outstanding Common Units at a price generally equal
to the then current market price of the Common Units in the event that not
more than 20% of the outstanding Common Units are held by persons other
than the Managing General Partner and its Affiliates. Consequently, a
Unitholder may have its Common Units purchased from him even though such
holder does not desire to sell them, and the price paid may be less than
the amount such Unitholder would desire to receive upon such sale.
The Partnership Agreement contains certain provisions that may discourage
a person or group from attempting to remove the Managing General Partner
as general partner or otherwise change the management of the Partnership.
The Partnership Agreement provides that if the Managing General Partner is
removed other than for Cause (as defined in the Glossary) and the Units
held by the General Partners and their Affiliates are not voted in favor
of such removal, the Subordination Period will end, all arrearages on the
Common Units will terminate and all
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outstanding Subordinated Units will convert into Common Units and the
General Partners will have the right to convert the General Partner
Interests into Common Units or to receive, in exchange for such interests,
cash payment equal to the fair market value of such interests. The
Managing General Partner's current ownership interest in the Partnership
precludes any vote to remove the Managing General Partner without its
consent. Further, the Partnership Agreement provides that if any person or
group other than the Managing General Partner and its Affiliates acquires
beneficial ownership of 20% or more of the outstanding Units of any class,
such person or group will lose voting rights with respect to all of its
Units. The effect of these provisions may be to diminish the price at
which the Common Units will trade under certain circumstances.
Prior to the Offering, there has been no public market for the Common
Units. The initial public offering price for the Common Units has been
determined through negotiations among Triarc, the Partnership, the
Managing General Partner and the representatives of the Underwriters. No
assurance can be given as to the market prices at which the Common Units
will trade.
Under certain circumstances, holders of Common Units could lose their
limited liability and could become liable for amounts improperly
distributed to them by the Partnership. See 'The Partnership
Agreement -- Limited Liability.'
The Partnership may be unable to obtain consents with respect to the
transfer of certain assets and property of National Propane to the
Partnership. The failure to obtain such consents could adversely affect
the business of the Partnership.
The holders of the Common Units have not been represented by counsel in
connection with the Offering, including the preparation of the Partnership
Agreement or the other agreements referred to herein.
The propane industry consists of a small number of national retail
marketers and a larger number of regional companies. From time to time,
these national and regional retail marketers, including the Partnership,
have in the past engaged and may in the future engage, in discussions
concerning acquisitions, dispositions and combinations of operations.
While the Partnership is not currently engaged in negotiations with any
national or regional marketer concerning any such acquisition, disposition
or combination, there can be no assurance that in the future the
Partnership will not engage in any such negotiations or pursue
opportunities to engage in any such transaction. In addition, although any
merger, consolidation or combination involving the Partnership, and any
sale, exchange or disposition of all or substantially all of its assets,
would require the approval of a Unit Majority under the terms of the
Partnership Agreement, the Partnership and the General Partners are not
restricted under the Partnership Agreement from engaging in other
transactions that may not require the prior consent or vote of the
Unitholders and that could result in a change of control of the
Partnership. If any of such transactions were deemed to be a change of
control under the First Mortgage Notes or the Bank Credit Facility, the
Partnership would be required to offer to redeem all of the outstanding
First Mortgage Notes at a premium and to repay all indebtedness under the
Bank Credit Facility. As a result, the occurrence of a change of control
could have a material adverse effect on the Partnership and its ability to
pay the Minimum Quarterly Distribution to the Unitholders.
The Partnership believes that its success has been and will continue to be
dependent to a significant extent upon the efforts and abilities of its
senior management team. The failure by the Managing General Partner to
retain members of its senior management team could adversely affect the
Partnership's ability to build on the efforts undertaken by its current
management to increase the efficiency and profitability of the
Partnership.
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY
The Managing General Partner and its Affiliates may have conflicts of
interest with the Partnership and the holders of Common Units. The
Partnership Agreement permits the Managing General Partner to consider, in
resolving conflicts of interest, the interests of parties (including the
General Partner and its Affiliates) other than the Unitholders, thereby
limiting the Managing General Partner's fiduciary duties to the
Partnership and the Unitholders. The discretion given in the Partnership
Agreement to the Managing General Partner in resolving
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conflicts of interest may significantly limit the ability of a Unitholder
to challenge what might otherwise be a breach of fiduciary duty under
Delaware law. In addition, holders of Common Units are deemed to have
consented to certain actions that might otherwise be deemed conflicts of
interest or a breach of fiduciary duty. The validity and enforceability of
these types of provisions under Delaware law are uncertain.
The Partnership Agreement provides that any borrowings by the Partnership
shall not constitute a breach of any duty owed by the Managing General
Partner, including borrowings that have the purpose or effect of enabling
the Managing General Partner to receive Incentive Distributions or
hastening the conversion of the Subordinated Units into Common Units.
The Partnership Agreement permits the Managing General Partner to merge
with and into Triarc (the 'Triarc Merger') without the prior approval of
any Unitholder. The Partnership Note will contain a covenant of Triarc
that, in the event of a Triarc Merger, Triarc will concurrently therewith
pledge as security for the Partnership Loan certain assets of the Managing
General Partner. See 'Cash Distribution Policy -- Partnership Loan.'
The Partnership Agreement does not prohibit the Partnership from engaging
in roll-up transactions. Although the Managing General Partner has no
present intention of causing the Partnership to engage in any such
transaction, it is possible it will do so in the future. There can be no
assurance that a roll-up transaction would not have a material adverse
effect on a Unitholder's investment in the Partnership.
The Managing General Partner (unless merged with and into Triarc) and the
Special General Partner (as defined in the Glossary) are prohibited from
conducting any business or having any operations other than those
incidental to serving as general partners of the Partnership and the
Operating Partnership so long as they are general partners of the
Partnership. The Partnership Agreement does not restrict the ability of
Affiliates of the Managing General Partner (other than the Special General
Partner) to engage in any activities, except for the retail sale of
propane to end users in the continental United States. The Managing
General Partner's Affiliates (other than the Special General Partner) may
compete with the Partnership in other propane related activities, such as
trading, transportation, storage and wholesale distribution of propane.
Further, in the event of the Triarc Merger the ability of the Managing
General Partner to engage in activities other than those incidental to
serving as a general partner of the Operating Partnership and the
Partnership and to compete in other propane related activities, such as
trading, transportation, storage and wholesale distribution, will not be
restricted. Furthermore, the Partnership Agreement provides that the
Managing General Partner and its Affiliates have no obligation to present
business opportunities to the Partnership.
TAX RISKS
The availability to a Common Unitholder of federal income tax benefits of
an investment in the Partnership depends, in large part, on the
classification of the Partnership as a partnership for federal income tax
purposes. Based on certain representations by the General Partners,
Andrews & Kurth L.L.P., special counsel to the General Partners and the
Partnership ('Counsel'), is of the opinion that, under current law, the
Partnership will be classified as a partnership for federal income tax
purposes.
No ruling has been requested from the Internal Revenue Service (the 'IRS')
with respect to classification of the Partnership as a partnership for
federal income tax purposes or any other matter affecting the Partnership.
A Unitholder will be required to pay income taxes on his allocable share
of the Partnership's income, whether or not he receives cash distributions
from the Partnership.
Investment in Units by certain tax-exempt entities, regulated investment
companies and foreign persons raises issues unique to such persons. For
example, virtually all of the taxable income derived by most organizations
exempt from federal income tax (including individual retirement accounts
and other retirement plans) from the ownership of a Unit will be unrelated
business taxable income and thus will be taxable to such a Unitholder.
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In the case of taxpayers subject to the passive loss rules (generally
individuals and closely held corporations), losses generated by the
Partnership, if any, will only be available to offset future income
generated by the Partnership and cannot be used to offset income from
other activities, including passive activities or investments. Passive
losses which are not deductible because they exceed the Unitholder's
income generated by the Partnership may be deducted in full when the
Unitholder disposes of his entire investment in the Partnership in a fully
taxable transaction to an unrelated party.
A Unitholder will be required to file state income tax returns and pay
state income taxes in some or all of the various jurisdictions in which
the Partnership does business or owns property.
The Partnership has been registered with the IRS as a 'tax shelter.' No
assurance can be given that the Partnership will not be audited by the IRS
or that tax adjustments will not be made. Any adjustments in the
Partnership's tax returns will lead to adjustments in the Unitholders' tax
returns and may lead to audits of the Unitholders' tax returns and
adjustments of items unrelated to the Partnership.
See 'Risk Factors,' 'Cash Distribution Policy,' 'Conflicts of Interest and
Fiduciary Responsibility,' 'Description of the Common Units,' 'The Partnership
Agreement' and 'Tax Considerations' for a more detailed description of these and
other risk factors and conflicts of interest that should be considered in
evaluating an investment in the Common Units.
TRANSACTIONS AT CLOSING
Concurrently with the closing of the Offering, both the Managing General
Partner and the Special General Partner will contribute substantially all of
their assets (which assets will not include an existing intercompany note from
Triarc, approximately $59.3 million of the net proceeds from the issuance of the
First Mortgage Notes and certain other assets of the Managing General Partner)
to the Operating Partnership (the 'Conveyance') as a capital contribution and
the Operating Partnership will assume substantially all of the liabilities of
the Managing General Partner and the Special General Partner (other than income
tax liabilities), including the First Mortgage Notes and all indebtedness of the
Managing General Partner outstanding under the Existing Credit Facility (as
defined below). Immediately thereafter, the Managing General Partner and the
Special General Partner will convey their limited partner interests in the
Operating Partnership to the Partnership. As a result of such contributions,
each of the Managing General Partner and the Special General Partner will have a
1.0% general partner interest in the Partnership and a 1.0101% general partner
interest in the Operating Partnership. In addition, the Managing General Partner
will receive in exchange for its contribution to the Partnership 4,533,638
Subordinated Units and the right to receive the Incentive Distributions.
Also concurrently with the closing of the Offering, the Managing General
Partner will issue $125 million aggregate principal amount of First Mortgage
Notes to certain institutional investors in a private placement. Approximately
$59.3 million of the net proceeds from the sale of the First Mortgage Notes (the
entire net proceeds of which are estimated to be $121.5 million) will be used by
the Managing General Partner to pay a dividend to Triarc. The remainder of the
net proceeds from the sale of the First Mortgage Notes (approximately $62.2
million) will be contributed by the Managing General Partner to the Operating
Partnership in connection with the Conveyance and will be used by the Operating
Partnership to repay (in the manner described below) a portion of the Managing
General Partner's indebtedness outstanding under the Revolving Credit and Term
Loan Agreement, dated as of October 7, 1994, as amended, among the Managing
General Partner, the Bank of New York, as Administrative Agent, certain
Co-Agents and the several lending institutions party thereto (the 'Existing
Credit Facility') and to repay other indebtedness of the Managing General
Partner and certain of its subsidiaries outstanding under equipment notes, notes
issued in connection with acquisitions ('Acquisition Notes') and capital leases
(collectively, 'Other Existing Indebtedness'). First, approximately $30 million
of such net proceeds will be used by the Operating Partnership to repay the
indebtedness outstanding under the Existing Credit Facility which is evidenced
by the Refunding Notes (as defined in the Existing Credit Facility), and then
the remainder of such net proceeds (approximately $32.2 million) will be used to
repay other indebtedness outstanding under the Existing Credit Facility and $4.9
million of Other Existing Indebtedness. The effective interest rates on the
14
<PAGE>
<PAGE>
Refunding Notes, the $27.3 million outstanding under the term loan facility, and
the $4.9 million of Other Existing Indebtedness were 7.69%, 8.28% and 8.34%,
respectively, as of May 31, 1996.
After the repayment of the Refunding Notes and such other indebtedness as
described above, the net proceeds of the sale of the Common Units issued in the
Offering (estimated to be approximately $118.2 million) will be contributed to
the Operating Partnership which will use such proceeds to repay all remaining
indebtedness under the Existing Credit Facility, to make the Partnership Loan
and to pay certain accrued management fees and tax sharing payments due to
Triarc from the Managing General Partner. The effective interest rate on the
remaining $9.2 million outstanding under the revolving credit facility and the
remaining $56.8 million outstanding under the term loan facility was 7.85% and
8.28%, respectively, as of May 31, 1996.
Concurrently with the closing of the Offering, the Operating Partnership
will also enter into the Bank Credit Facility, which will include a $15 million
revolving credit facility to be used for working capital and other general
partnership purposes (the 'Working Capital Facility') and the $40 million
Acquisition Facility. It is expected that these facilities will be undrawn at
the time of the consummation of the transactions referred to above
(collectively, the 'Transactions'). For additional information regarding the
terms of the First Mortgage Notes and the Bank Credit Facility, see
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Description of Indebtedness.' For additional information regarding
the terms of the Partnership Loan, see 'Cash Distribution Policy -- Partnership
Loan.'
The following table sets forth the estimated sources of funds to be
received by the Managing General Partner and the Partnership at the closing of
the Offering and the estimated related uses of funds (assuming an initial public
offering price of $21.00 per Common Unit) as of May 31, 1996.
15
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SOURCES OF FUNDS USES OF FUNDS -------------
- ------------------------------------------ AMOUNT ----------------------------------------- (IN MILLIONS)
-------------
(IN MILLIONS)
<S> <C> <C> <C>
Gross Proceeds from issuance of First
Mortgage Notes.......................... $ 125.0 Cash dividend from the Managing General $ 59.3
Partner to Triarc(1)
Repayment by the Operating Partnership of 62.2
indebtedness of the Managing General
Partner under Existing Credit Facility
(including indebtedness evidenced by
Refunding Notes) and Other Existing
Indebtedness(2)
Fees and expenses to unaffiliated third 3.5
parties incurred in connection with the
issuance of the First Mortgage Notes
(including Placement Agent fees)
-------------
Total................................ $ 125.0
-------------
-------------
Gross Proceeds from issuance of Common
Units................................... $ 130.0 Repayment by the Operating Partnership of $ 66.0
indebtedness of the Managing General
Partner under Existing Credit Facility
Partnership Loan to Triarc 40.7
Payment by the Operating Partnership of 11.5
certain accrued management fees and tax
sharing payments due from the Managing
General Partner to Triarc(2)
Fees and expenses to unaffiliated third 11.8
parties incurred in connection with the
issuance of the Common Units (including
Underwriters' discounts and
commissions)
-------------
Total................................ $ 130.0
-------------
-------------
</TABLE>
- ------------
(1) In addition to the cash dividend, the Managing General Partner will dividend
to Triarc a portion ($51.4 million) of the existing intercompany note from
Triarc. None of such dividends will be subject to tax to Triarc at the time
of their distribution.
(2) An additional $2.2 million (primarily representing accrued management fees
and tax sharing payments due Triarc) will be paid to Triarc out of
Partnership cash on hand at closing, and an additional $0.5 million of
Partnership cash on hand at closing will be used to repay Other Existing
Indebtedness.
------------------------
As set forth in the table above, out of the aggregate net proceeds of
$239.7 million from the issuance of the First Mortgage Notes and the Common
Units, (i) Triarc will receive a $59.3 million cash dividend, a $40.7 million
loan and $11.5 million of accrued management fees and tax-sharing payments due
Triarc (or an aggregate of $111.5 million) and (ii) $128.2 million of the
Managing General Partner's indebtedness under the Existing Credit Facility and
Other Existing Indebtedness will be repaid. In addition, Triarc will receive a
dividend of a portion ($51.4 million) of an existing intercompany note
16
<PAGE>
<PAGE>
issued to the Managing General Partner by Triarc, $2.2 million (primarily
representing accrued management fees and tax sharing payments due Triarc) will
be paid to Triarc out of the Partnership's cash on hand at closing and an
additional $0.5 million of Other Existing Indebtedness will be repaid out of the
Partnership's cash on hand at closing.
If the Underwriters' over-allotment option is exercised in full, the
estimated additional net proceeds to the Partnership will be approximately $18.1
million (assuming an initial public offering price of $21.00 per Common Unit).
All of the net proceeds from any such exercise will be retained by the
Partnership and used for general partnership purposes. See 'The Partnership
Agreement -- Issuance of Additional Securities.'
DISTRIBUTIONS AND PAYMENTS TO THE MANAGING GENERAL PARTNER AND ITS AFFILIATES
The following table summarizes the distributions and payments to be made by
the Partnership to the Managing General Partner and its Affiliates in connection
with the Transactions and the ongoing operations of the Partnership. Such
distributions and payments were determined by and among affiliated entities and,
consequently, were not the result of arm's length negotiations. See 'Conflicts
of Interest and Fiduciary Responsibility.'
<TABLE>
<S> <C>
FORMATION STAGE
The consideration paid to the Managing
General Partner, the Special General
Partner, Triarc and their Affiliates for
the transfer of the propane business and
related liabilities of National Propane
to the Partnership...................... 4,533,638 Subordinated Units, an aggregate 4% unsubordinated general
partner interest in the Partnership and the Operating Partnership
on a combined basis (and the right to receive Incentive
Distributions), and the assumption by the Operating Partnership of
substantially all of the liabilities of the Managing General
Partner and the Special General Partner, (other than income tax
liabilities), including the First Mortgage Notes and all
indebtedness of the Managing General Partner outstanding under the
Existing Credit Facility. The net proceeds of the Offering
(estimated to be approximately $118.2 million) will be contributed
to the Operating Partnership and used by the Operating Partnership
to make the $40.7 million Partnership Loan to Triarc, to repay
approximately $11.5 million in accrued management fees and tax
sharing payments due to Triarc (in addition to $2.2 million to be
paid to Triarc consisting primarily of such accrued fees and
payments and the payment of $0.5 million of Other Existing
Indebtedness out of Partnership cash on hand at the closing of the
Transactions) and to repay indebtedness of the Managing General
Partner assumed by the Operating Partnership in connection with the
Transactions. In addition, the Managing General Partner will
dividend to Triarc a portion (approximately $51.4 million) of an
existing intercompany note and will dividend approximately $59.3
million in cash from the net proceeds of the sale of the First
Mortgage Notes to Triarc. The remainder of the net proceeds from
the sale of the First Mortgage Notes will be used to repay
indebtedness of the Managing General Partner and its subsidiaries.
Accordingly, substantially all of the net proceeds of this offering
will be paid to, or otherwise benefit, the Managing General
Partner, the Special General Partner, Triarc and their Affiliates.
See 'The Transactions.'
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
<S> <C>
OPERATIONAL STAGE
Distributions of Available Cash to the
General Partners........................ Available Cash will generally be distributed 96% to the Unitholders
(including to the Managing General Partner as holder of the
Subordinated Units) and 4% to the General Partners, except that if
distributions of Available Cash from Operating Surplus exceed the
Target Distribution Levels (as defined below), the General Partners
will receive a percentage of such excess distributions that will
increase to up to approximately 50% of the excess distributions
above the highest Target Distribution Level. See 'Cash Distribution
Policy.'
Payments to the Managing General Partner
and its Affiliates...................... Following the Offering, in general, the management and employees of
National Propane who currently manage and operate the propane
business and assets to be owned by the Partnership will continue to
manage and operate the Partnership's business as officers and
employees of the Managing General Partner and its Affiliates. The
Managing General Partner will not receive any management fee or
other compensation in connection with its management of the
Partnership, but will be reimbursed at cost for all direct and
indirect expenses incurred on behalf of the Partnership, including
the costs of compensation and employee benefit plans described
herein properly allocable to the Partnership, and all other
expenses necessary or appropriate to the conduct of business of,
and allocable to, the Partnership. On a pro forma basis, an
aggregate of approximately $56.8 million of expenses would have
been reimbursed by the Partnership to the Managing General Partner
in 1995 (comprising approximately $33.0 million in salary, payroll
tax and other compensation paid to employees of the Managing
General Partner and approximately $23.8 million for all other
operating expenses).
Affiliates of the Managing General Partner (including Triarc) may
provide certain administrative services for the Managing General
Partner on behalf of the Partnership and will be reimbursed for all
direct and indirect expenses incurred in connection therewith. In
addition, the Managing General Partner and its Affiliates may
provide additional services to the Partnership, for which the
Partnership will be charged reasonable fees as determined by the
Managing General Partner.
See 'Certain Relationships and Related Transactions' for a
description of other ongoing arrangements between the Managing
General Partner and its Affiliates and the Partnership.
Withdrawal or removal of the General
Partners................................ If the General Partners withdraw in violation of the Partnership
Agreement or are removed by the Unitholders for Cause (as defined
in the Glossary), the successor general partner will have the
option to purchase the General Partner Interests (and the right to
receive Incentive Distributions) for a cash payment equal to the
fair market value thereof; if the Managing General Partner
withdraws or is removed without Cause it will have the option to
require the successor general partner to purchase the General
Partner Interests (and the right to receive Incentive
Distributions) from the departing General Partners for such price.
If the General Partner Interests (and the right to receive
Incentive Distributions) are not so purchased by the successor
general partner, the General Partners have the right to convert
such partner interests into a number of Common Units equal in
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
<S> <C>
value to the fair market value thereof as determined by an
independent investment banking firm or other independent experts or
to receive cash in exchange for such interests.
LIQUIDATION STAGE
Liquidation............................... In the event of any liquidation of the Partnership, the partners,
including the General Partners, will be entitled to receive
liquidating distributions in accordance with their respective
capital account balances. See 'Cash Distribution Policy --
Distributions of Cash Upon Liquidation.'
</TABLE>
CASH AVAILABLE FOR DISTRIBUTION
Available Cash will generally be distributed 96% to the Unitholders
(including the Managing General Partner as the holder of Subordinated Units) and
4% to the General Partners, pro rata, except that if distributions of Available
Cash exceed Target Distribution Levels (as defined in the Glossary) above the
Minimum Quarterly Distribution, the General Partners will receive an additional
percentage of such excess distributions that will increase to up to 50% of the
distributions above the highest Target Distribution Level. See 'Cash
Distribution Policy -- Incentive Distributions -- Hypothetical Annualized
Yield.'
Based on the amount of working capital that the Partnership is expected to
have at the time it commences operations in 1996 and the availability of the
Working Capital Facility, the Partnership believes that, if its assumptions
about operating conditions prove correct, the Partnership should have sufficient
Available Cash from Operating Surplus to enable it to distribute the Minimum
Quarterly Distribution on the outstanding Common Units and Subordinated Units
and the related distribution on the General Partner Interests with respect to
each of its quarters at least through the quarter ending December 31, 1997,
although no assurance can be given respecting such distributions or any
distribution after such date. The Partnership's belief is based on a number of
assumptions, including the assumptions that normal weather conditions will
prevail in the Partnership's operating areas, that the Partnership's operating
margins will remain constant, that all required interest payments on the
Partnership Loan will be made by Triarc, and that market and overall economic
conditions will not change substantially. Although the Partnership believes its
assumptions are reasonable, whether the assumptions are realized is not, in a
number of cases, within the control of the Partnership and cannot be predicted
with any degree of certainty. For example, in any particular year or even series
of years, weather may deviate substantially from normal. Therefore, certain of
the Partnership's assumptions may prove to be inaccurate. As a result, the
actual Available Cash from Operating Surplus generated by the Partnership could
deviate substantially from that currently expected. See 'Risk Factors.' In
addition, the terms of the Partnership's indebtedness under certain
circumstances will restrict the ability of the Partnership to distribute cash to
Unitholders. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Description of Indebtedness.' Accordingly, no
assurance can be given that distributions of the Minimum Quarterly Distribution
or any other amounts will be made. The Partnership does not intend to update the
expression of belief set forth above.
The amount of Available Cash from Operating Surplus needed to distribute
the Minimum Quarterly Distribution for four quarters on the Common Units and
Subordinated Units to be outstanding immediately after the Offering and on the
General Partner Interests is approximately $23.5 million (approximately $13.0
million for the Common Units, $9.5 million for the Subordinated Units and $1.0
million for the General Partner Interests). If the Underwriters' over-allotment
option is exercised in full, such amounts would be approximately $15.0 million
for the Common Units, $9.5 million for the Subordinated Units and $1.0 million
for the General Partner Interests, or an aggregate of approximately $25.5
million.
Pro forma Available Cash from Operating Surplus generated during 1994 and
1995 (approximately $22.7 million and $17.6 million, respectively) would have
been sufficient to cover the Minimum Quarterly Distribution on the Common Units
and the related distribution on the General Partner Interests, but would have
been insufficient by approximately $0.8 million and $5.9 million to cover the
Minimum Quarterly Distribution on the Subordinated Units and the related
distribution on the General Partner Interests in 1994 and 1995, respectively.
The decline in pro forma Available Cash from Operating Surplus generated during
1995 was primarily due to the fact that temperatures during the winter of
1994-95 across the markets served by the Partnership were substantially warmer
than the prior year. Pro forma Available Cash from Operating Surplus generated
during the twelve months ended March 31, 1996 (approximately $20.0 million)
would have been sufficient to cover the Minimum Quarterly Distribution on the
Common Units and the related distribution on the General Partner Interests, but
would have been insufficient by approximately $3.5 million to cover the Minimum
19
<PAGE>
<PAGE>
Quarterly Distribution on the Subordinated Units and the related distribution on
the General Partner Interests.
Pro forma Available Cash from Operating Surplus generated during the three
months ended March 31, 1996 would have been approximately $13.4 million;
however, because of the highly seasonal nature of the Partnership's business,
such amount is not indicative of the actual amounts of Available Cash from
Operating Surplus that will be generated in subsequent quarters. The
Partnership's revenues and cash flows have historically been highest in the
first quarter. Although such $13.4 million generated during the three months
ended March 31, 1996 would have been in excess of the approximately $5.9 million
required to cover the Minimum Quarterly Distribution on the Common Units, the
Subordinated Units and the related distributions on the General Partner
Interests during such quarter, the Partnership would have established
significant reserves for, among other things, payment of the Minimum Quarterly
Distribution on the Common Units in subsequent quarters and future debt
payments, thereby decreasing the amount of Available Cash from Operating Surplus
that would have been distributed for such quarter. For the calculation of
Available Cash from Operating Surplus, see 'Cash Distribution Policy -- Cash
Available for Distribution.'
Based on the Partnership's actual results of operations for the four months
ended April 30, 1996, limited data about operations in May 1996 and the
Partnership's estimated results of operations for the remainder of 1996, the
Partnership believes that it will generate during 1996 Available Cash from
Operating Surplus of approximately $23.5 million, although there can be no
assurance it will generate such amount. The Partnership's belief is based on the
assumptions about weather, margins and market and economic conditions described
above as they apply to the remainder of fiscal 1996. As a result, the actual
Available Cash from Operating Surplus generated by the Partnership for 1996
could deviate substantially from that currently expected.
The amounts of pro forma Available Cash from Operating Surplus for 1994 and
1995 and for the twelve months and three months ended March 31, 1996 set forth
above were derived in part from the pro forma financial statements of the
Partnership in the manner set forth in the table entitled 'Pro Forma Operating
Surplus' set forth in 'Cash Distribution Policy -- Cash Available for
Distribution.' The pro forma adjustments are based upon currently available
information and certain estimates and assumptions. The pro forma financial
statements do not purport to present the results of operations of the
Partnership had the Partnership actually commenced operations as of the date
indicated. Furthermore, the pro forma financial statements are based on accrual
accounting concepts while Available Cash and Operating Surplus are defined in
the Partnership Agreement on a cash accounting basis. As a consequence, the
amounts of pro forma Available Cash from Operating Surplus shown above should
only be viewed as a general indication of the amounts of Available Cash from
Operating Surplus that may in fact have been generated by the Partnership had it
been formed in earlier periods. Available Cash is defined in the Glossary and
generally means, with respect to any fiscal quarter of the Partnership, all cash
on hand at the end of such quarter less the amount of cash reserves that is
necessary or appropriate in the discretion of the Managing General Partner to
(i) provide for the proper conduct of the Partnership's business, (ii) comply
with applicable law or any Partnership debt instrument or other agreement, or
(iii) provide funds for distributions to Unitholders and the General Partners in
respect of any one or more of the next four quarters. Operating Surplus is
defined in the Glossary and refers generally to (i) the cash balance of the
Partnership on the date the Partnership commences operations, plus $15.4
million, plus all cash receipts of the Partnership from its operations, less
(ii) all Partnership operating expenses, debt service payments (including
reserves therefor but not including payments required in connection with the
sale of assets or any refinancing with the proceeds of new indebtedness or any
equity offering), maintenance capital expenditures and reserves established for
future Partnership operations. For a more complete definition of Available Cash
and Operating Surplus, see the Glossary.
In addition, certain provisions in the First Mortgage Notes and the Bank
Credit Facility will, under certain circumstances, restrict the Partnership's
ability to make distributions to its partners. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Description of
Indebtedness.'
Approximately $5.5 million of the Partnership's annual cash receipts will
be interest payments from Triarc under the Partnership Loan. On a pro forma
basis, such amount represents approximately 31% of the Partnership's Available
Cash from Operating Surplus in 1995. Consequently, the Partnership's ability to
make the Minimum Quarterly Distribution to all Unitholders will depend in part
on Triarc's
20
<PAGE>
<PAGE>
ability to make interest payments under the Partnership Loan. For a description
of the Partnership Loan and certain information regarding Triarc, see 'Cash
Distribution Policy -- Partnership Loan' and 'Certain Information Regarding
Triarc,' respectively.
PARTNERSHIP STRUCTURE AND MANAGEMENT
The Partnership's activities will be conducted through the Operating
Partnership and its corporate and partnership subsidiaries. The Managing General
Partner will serve as the managing general partner, and National Propane SGP,
Inc. (the 'Special General Partner'), a wholly owned subsidiary of the Managing
General Partner, will serve as the non-managing general partner, of the
Partnership and the Operating Partnership. The Managing General Partner and the
Special General Partner are together referred to herein as the 'General
Partners.' Each of the General Partners will own a 1.0% and 1.0101% general
partner interest in each of the Partnership and the Operating Partnership,
respectively. The Partnership will own a 97.9798% limited partner interest in
the Operating Partnership. Each of the Managing General Partner and the Special
General Partner will own a 2% General Partner Interest in the Partnership and
the Operating Partnership on a combined basis. Provided that the Managing
General Partner has not merged with and into Triarc, the Special General Partner
may convert all or a portion of its General Partner Interest into a number of
Units having rights to distributions of Available Cash from Operating Surplus
equal to the distribution rights with respect to Available Cash from Operating
Surplus of the General Partner Interest so converted. References herein to the
General Partner Interests or to distributions to the General Partners of 4% of
Available Cash are references to the amount of the General Partners' aggregate
unsubordinated percentage interest in the Partnership and the Operating
Partnership on a combined basis.
Following the Offering, the management and employees of National Propane
who currently manage and operate the propane business and assets to be owned by
the Partnership will generally continue to manage and operate the Partnership's
business as officers and employees of the Managing General Partner and its
Affiliates. The Partnership will not have any officers or employees of its own.
The Managing General Partner will not receive any management fee or other
compensation in connection with its management of the Partnership, but will be
reimbursed by the Partnership at cost for all direct and indirect expenses
incurred on behalf of the Partnership, including the costs of compensation and
employee benefit plans described herein properly allocable to the Partnership,
and all other expenses necessary or appropriate to the conduct of the business
of, and allocable to, the Partnership. The Partnership Agreement provides that
the Managing General Partner will determine the expenses that are allocable to
the Partnership in any reasonable manner determined by the Managing General
Partner in its sole discretion. Affiliates of the General Partners' (including
Triarc) may provide administrative services for the General Partners on behalf
of the Partnership and will be reimbursed for all expenses incurred in
connection therewith. In addition, the General Partners and their Affiliates
(including Triarc) may provide additional services to the Partnership, for which
the Partnership will be charged reasonable fees as determined by the Managing
General Partner.
UNIT OPTION PLAN
Effective upon the closing of the Offering, the Managing General Partner
will adopt the National Propane Corporation 1996 Unit Option Plan (the 'Option
Plan'), which permits the issuance of options to purchase Common Units and
Subordinated Units and the grant of Unit appreciation rights ('UARs') covering
up to an aggregate of 1,250,000 Common Units and Subordinated Units (subject to
adjustment in certain circumstances) plus an additional number of Units equal to
1% of the number of Units outstanding as of each December 31 following the
Option Plan's effective date which will be added to the total number of Units
that may be issued thereafter. It is not currently anticipated that any Options
or UARs will be granted at or prior to the closing of the Offering. See
'Management -- Unit Option Plan.'
21
<PAGE>
<PAGE>
The following chart depicts the organization and ownership of the
Partnership, the Operating Partnership and the Operating Partnership's corporate
subsidiary immediately after giving effect to the sale of the Common Units
offered in the Offering. The percentages reflected in the following chart
represent the approximate ownership interest in each of the Partnership and the
Operating Partnership, individually, and not on an aggregate basis. Except in
the following chart, the ownership percentages referred to in this Prospectus
(including those given below in the box entitled 'Effective Aggregate Ownership
of the Partnership and the Operating Partnership') reflect the aggregate
ownership of the Partnership and the Operating Partnership on a combined basis.
[GRAPHICAL REPRESENTATION of the ownership structure of the Partnership,
the Operating Partnership, the General Partners and relevant Affiliates. Triarc
owns the General Partner 75.7% directly and 24.3% through its wholly-owned
subsidiary SEPSCO. Each of the General Partner and the Special General Partner,
its wholly-owned subsidiary, own a 1.0% and 1.0101% unsubordinated general
partner interest in the Partnership and the Operating Partnership,
respectively. The General Partner owns 4,533,638 Subordinated Units representing
a 41.4% general partner interest in the Partnership and the Public Unitholders
own 6,190,476 Common Units representing a 56.6% limited partner interest in the
Partnership. The Partnership owns a 97.9798% limited partner interest in the
Operating Partnership. National Sales is a wholly-owned subsidiary of the
Operating Partnership.]
22
<PAGE>
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth for the periods and as of the dates
indicated summary historical consolidated financial and operating data for
National Propane and consolidated pro forma financial and operating data for the
Partnership after giving effect to the Transactions. The summary historical
consolidated financial data of National Propane presented below are derived from
the financial statements of National Propane and should be read in conjunction
with 'Selected Historical and Pro Forma Consolidated Financial and Operating
Data,' 'Management's Discussion and Analysis of Financial Condition and Results
of Operations' and the consolidated financial statements of National Propane
included elsewhere herein. The Partnership's summary consolidated pro forma
financial data are derived from the unaudited pro forma condensed consolidated
financial statements of the Partnership included elsewhere herein and should be
read in conjunction therewith. The data for all of the periods presented below
have been restated to reflect the effects of the June 1995 merger (the 'Merger')
of Public Gas Company ('Public Gas') with and into National Propane as if the
Merger had occurred on May 4, 1991. This transaction is described further in
Note 3 to the accompanying consolidated financial statements.
<TABLE>
<CAPTION>
PARTNERSHIP
PRO FORMA (B) THREE MONTHS
HISTORICAL -------------
--------------------------------------------------------------
FISCAL YEAR ENDED TEN MONTHS
APRIL 30, ENDED
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------- DECEMBER 31, ------------------------------------- --------------------
1992 1993 1993 (A) 1994 1995 1995 1996
-------- -------- ------------ -------- ----------------------- --------- ---------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues....... $144,667 $151,931 $119,249 $151,651 $148,983 $ 148,983 $ 50,299 $ 59,981
Gross profit............. 35,338 34,565 26,948 41,968 39,924 39,924 16,437 18,827
Selling, general and
administrative expenses
(other than management
fees charged by
parents)............... 16,776 19,578 16,501 18,657 22,423 23,923 5,174 5,853
Management fees charged
by parents(c).......... 3,271 2,328 3,485 4,561 3,000 -- 750 750
Facilities relocation and
corporate
restructuring.......... -- 7,647(d) 8,429(d) -- -- -- -- --
Operating profit
(loss)................. 15,291 5,012(d) (1,467)(d) 18,750 14,501 16,001 10,513 12,224
Interest expense......... (17,696) (16,770) (9,949) (9,726) (11,719) (11,340) (2,858 ) (3,138)
Interest income from
Triarc(e).............. 16,334 17,127 10,360 9,751 -- 5,500 -- --
Provision for income
taxes.................. 5,833 2,624 1,018 7,923 4,291 200 3,156 3,847
Extraordinary charge..... -- -- -- (2,116)(f) -- -- -- --
Cumulative effect of
change in accounting
principles............. -- 6,259(g) -- -- -- -- -- --
Net income (loss)........ 9,795 9,135 (347) 9,905 (605) 10,865 4,799 5,517
Net income per Unit(h)... 0.97
BALANCE SHEET DATA (AT PERIOD
END):
Working capital
(deficit).............. $(24,469)(i) $ 13,163 $ 5,479 $ (631) $ (4,357) $ 1,649
Due from Triarc(e)....... 92,804 65,999 71,172 -- -- --
Total assets............. 234,699 218,095 191,955 137,581 139,112 147,379
Long-term debt........... 78,556 67,511 51,851 98,711 124,266 123,570
Stockholders' equity
(deficit)(e)........... 81,666 88,063 88,971 (19,502) (48,600) (43,083)
Partners' capital........ -- -- -- -- -- --
OPERATING DATA:
EBITDA(j)................ $ 23,670 $ 13,087 $ 5,483 $ 28,774 $ 25,146 $ 26,646 $ 12,934 $ 14,825
Capital
expenditures(k)........ 7,039 8,290 11,260 12,593 11,013 11,013 1,820 1,457
Retail propane gallons
sold(l)................ 145,708 154,839 117,415 152,335 150,141 150,141 51,360 58,425
Operating Surplus
generated during the
period(m).............. 17,578
Reserves(n)..............
Available Cash(m)........
<CAPTION>
PARTNERSHIP
PRO FORMA (B)
-------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues....... $ 59,981
Gross profit............. 18,827
Selling, general and
administrative expenses
(other than management
fees charged by
parents)............... 6,228
Management fees charged
by parents(c).......... --
Facilities relocation and
corporate
restructuring.......... --
Operating profit
(loss)................. 12,599
Interest expense......... (2,810)
Interest income from
Triarc(e).............. 1,375
Provision for income
taxes.................. 50
Extraordinary charge..... --
Cumulative effect of
change in accounting
principles............. --
Net income (loss)........ 11,392
Net income per Unit(h)... 1.02
BALANCE SHEET DATA (AT PERIOD
END):
Working capital
(deficit).............. $ 17,436
Due from Triarc(e)....... 40,700
Total assets............. 178,362
Long-term debt........... 126,193
Stockholders' equity
(deficit)(e)........... --
Partners' capital........ 32,823
OPERATING DATA:
EBITDA(j)................ $ 15,200
Capital
expenditures(k)........ 1,457
Retail propane gallons
sold(l)................ 58,425
Operating Surplus
generated during the
period(m).............. 13,388
Reserves(n).............. 7,523
Available Cash(m)........ 5,865
</TABLE>
- ------------
(a) In October 1993 National Propane's fiscal year ended April 30 and Public
Gas' fiscal year ended February 28 were changed to a calendar year ended
December 31. In order to conform the reporting periods of the combined
entities and to select a period deemed to meet the Securities and Exchange
Commission requirement for filing financial statements for a period of one
year, the ten-month period ended December 31, 1993 ('Transition 1993') has
been presented above and in the accompanying consolidated financial
statements.
(footnotes continued on next page)
23
<PAGE>
<PAGE>
(footnotes continued from previous page)
The selected consolidated financial and operating data as of and for the
fiscal years ended April 30, 1992 and 1993 ('Fiscal 1993'), however,
reflect the former year-ends of both National Propane and Public Gas.
Accordingly, Fiscal 1993 and Transition 1993 each include the results of
National Propane for the two-month period ended April 30, 1993 as follows:
Operating revenues -- $28,266; Operating loss -- $(5,190); Net loss --
$(3,375) (see Note (d) below).
(b) For a description of the adjustments and assumptions used in preparing the
Unaudited Pro Forma Condensed Consolidated Financial and Operating Data,
see Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statement of Operations included elsewhere herein.
(c) Management fees charged by parents include costs charged to National
Propane by Triarc and to Public Gas by SEPSCO, its parent prior to the
Merger. (See Note 19 to the accompanying consolidated financial
statements).
(d) Includes certain significant pretax charges recorded in April 1993
affecting Fiscal 1993 and Transition 1993 operating profit consisting of
(i) $8.4 million of facilities relocation and corporate restructuring
charges ($7.6 million of which affected both Fiscal 1993 and Transition
1993 due to National Propane's April 1993 being included in both periods
and $0.8 million of which affected only Transition 1993) and (ii) $0.5
million of allocated costs of a payment to the Special Committee of
Triarc's Board of Directors ($0.4 million of which affected both Fiscal
1993 and Transition 1993). (See Note 20 to the accompanying consolidated
financial statements).
(e) In November 1994, National Propane reclassified its receivable from Triarc
as a reduction of stockholders' equity and began reserving all interest
accrued subsequent thereto. Receivables from SEPSCO are classified as a
component of stockholders' equity for all of the above periods. (See Note
13 to the accompanying consolidated financial statements). The pro forma
due from parent is classified as an asset because it will be evidenced by
an interest-bearing note with a fixed maturity.
(f) The extraordinary charge represents the write-off of unamortized deferred
financing costs and original issue discount, net of income taxes,
associated with the early extinguishment of debt.
(g) The cumulative effect of change in accounting principles resulted from
National Propane's adoption of Statement of Financial Accounting Standards
No. 109 ('SFAS No. 109'), 'Accounting for Income Taxes' effective May 1,
1992.
(h) See Note (f) of Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Operations included elsewhere herein for details relating to
the calculation of net income per Unit.
(i) Reflects the classification of $35.0 million of long-term debt, which was
repaid in Fiscal 1993, as a current liability.
(j) EBITDA is defined as operating profit (loss) plus depreciation and
amortization (excluding amortization of deferred financing costs). EBITDA
should not be considered as an alternative to net income (as an indicator
of operating performance) or as an alternative to cash flow (as a measure
of liquidity or ability to service debt obligations) and is not a measure
of performance or financial condition under generally accepted accounting
principles, but provides additional information for evaluating the
Partnership's ability to distribute the Minimum Quarterly Distribution.
Cash flows in accordance with generally accepted accouting principles
consist of cash flows from (i) operating, (ii) investing and (iii)
financing activities. Cash flows from operating activities reflect net
income (loss) (including charges for interest and income taxes not
reflected in EBITDA), adjusted for (i) all non-cash charges or income
(including, but not limited to, depreciation and amortization) and (ii)
changes in operating assets and liabilities (not reflected in EBITDA).
Further, cash flows from investing and financing activities are not
included in EBITDA. For a discussion of the Partnership's operating
performance and cash flows provided by (used in) operating, investing and
financing activities, see 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.'
(footnotes continued on next page)
24
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<PAGE>
(footnotes continued from previous page)
(k) The Partnership's capital expenditures, including capital leases, fall
generally into three categories: (i) maintenance capital expenditures,
which include expenditures for replacement of property, plant and
equipment, (ii) growth capital expenditures for the expansion of existing
operations and (iii) acquisition capital expenditures, which include
expenditures related to the acquisition of retail propane operations.
An analysis by category for the years ended December 31, 1994 and 1995 and
the three months ended March 31, 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------- -----------------
1994 1995 1995 1996
------- ------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Maintenance(1).............................................. $ 4,228 $ 4,030 $1,064 $ 649
Growth...................................................... 3,672 4,936 733 808
Acquisition................................................. 4,693 2,047(2) 23 --
------- ------- ------ ------
Total............................................. $12,593 $11,013 $1,820 $1,457
------- ------- ------ ------
------- ------- ------ ------
</TABLE>
--------------------
(1) Includes expenditures not expected to occur on an annual basis as
follows: 1994 -- $1,790 (primarily computer hardware and systems
installation); 1995 -- $590 (primarily the purchase of an airplane).
(2) Includes $1,864 of assets purchased and contributed by Triarc (see
Note 19 to the accompanying consolidated financial statements).
(l) Retail propane gallons sold includes sales to (i) residential customers,
(ii) commercial and industrial customers, (iii) agricultural customers, and
(iv) dealers (located primarily in the Northeast) that resell propane to
residential and commercial customers.
(m) For a more complete discussion of pro forma Available Cash and Operating
Surplus, see 'Cash Distribution Policy -- Cash Available for Distribution.'
(n) The Partnership will utilize reserves from time to time to facilitate
future funding of, among other things, maintenance capital expenditures,
operating expenditures, interest payments and distributions to partners.
For example, during the first and fourth fiscal quarters, the Partnership
may reserve for operating and capital expenditures to be made in the second
and third fiscal quarters. These reserves for operating and capital
expenditures may be at their highest at the end of the first quarter,
assuming normal weather and operating conditions, as well as the
Partnership's existing operations. By the end of the fourth quarter, these
reserves would typically be reduced. In addition, the Partnership generally
must reserve at the end of the first and third fiscal quarters 50% of the
semiannual interest on the First Mortgage Notes due at the end of the
second and fourth fiscal quarters. The approximate amount required to be
reserved for this purpose in such quarters is $2.7 million. The Partnership
may, however, choose to reserve a full interest payment or $5.4 million, at
its discretion. The Partnership is also required to make reserves for the
future payment of principal and interest on the Bank Credit Facility. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Description of Indebtedness.' Furthermore, the Partnership
Agreement allows the Managing General Partner, in its discretion, to
reserve for up to four quarters of future distributions of the Minimum
Quarterly Distribution to Unitholders. Except as required by the terms of
the Partnership's indebtedness, the extent and timing of these reserves, if
any, are determinable solely by the Managing General Partner and will
largely depend on the actual results of operations of the Partnership and
other factors beyond the control of the Managing General Partner. As a
result, the amount of such reserves may vary substantially from those
described above and no assurance can be given as to the actual level of
reserves that will be established with respect to any quarter.
25
<PAGE>
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................ 6,190,476 Common Units (7,119,047 Common Units if the Underwriters'
over-allotment option is exercised in full).
Units to be Outstanding After
the Offering............................ 6,190,476 Common Units representing a 55.4% limited partner interest
in the Partnership and 4,533,638 Subordinated Units representing a
40.6% subordinated general partner interest in the Partnership. If
the Underwriters' over-allotment option is exercised in full,
928,571 additional Common Units will be issued by the Partnership,
resulting in 7,119,047 Common Units and 4,533,638 Subordinated
Units outstanding representing a 58.8% limited partner interest and
a 37.5% subordinated general partner interest in the Partnership,
respectively. All 4,533,638 Subordinated Units held by the Managing
General Partner and its Affiliates are general partner interests
(unless the Managing General Partner or its Affiliates elect
otherwise) and all Common Units issued in the Offering are limited
partner interests. The Subordinated Units will automatically
convert into limited partner interests upon being converted into
Common Units, and may be converted into limited partner interests
earlier upon the election of the Managing General Partner and its
Affiliates or upon a transfer to a non-Affiliate.
Distributions of Available Cash........... The Partnership will distribute all of its Available Cash within
approximately 45 days after the end of each quarter to the
Unitholders (including the Managing General Partner as a holder of
Subordinated Units) of record on the applicable record date and to
the General Partners. 'Available Cash' for any quarter will consist
generally of all cash on hand at the end of such quarter, as
adjusted for reserves. The complete definition of Available Cash is
set forth in the Glossary. The Managing General Partner has broad
discretion in making cash disbursements and establishing reserves,
thereby affecting the amount of Available Cash that will be
distributed with respect to any quarter. In addition, the terms of
the agreements governing the Partnership's indebtedness are
expected to require that certain reserves be maintained for the
payment of principal and interest. See 'Risk Factors -- Risks
Inherent in an Investment in the Partnership' for a description of
the reserves on payment of principal and interest that the
Partnership will be required to maintain. Available Cash will
generally be distributed 96% to Unitholders and 4% to the General
Partners, pro rata, except that if distributions of Available Cash
from Operating Surplus within a quarter exceed specified target
levels in excess of the Minimum Quarterly Distribution the General
Partners (as holders of the General Partner Interests and the right
to receive Incentive Distributions), will receive a percentage of
such excess distributions that will increase to up to 50% of the
excess distributions above the highest Target Distribution Level.
On a pro forma basis, quarterly distributions of Available Cash
would not have exceeded such target levels and the Partnership
would not have distributed any such excess payments to the General
Partners in fiscal 1994 and 1995. See 'Cash Distribution
Policy -- Incentive Distributions -- Hypothetical Annualized
Yield.' The General Partners will not be required to make
additional capital contributions to the Partnership or the
Operating Partnership in connection with the exercise of the over-
</TABLE>
26
<PAGE>
<PAGE>
<TABLE>
<S> <C>
allotment option, but will nonetheless be entitled to receive 4% of
distributions of Available Cash.
Distributions to Common and
Subordinated Unitholders................ The Partnership intends, to the extent there is sufficient Available
Cash from Operating Surplus, to distribute to each holder of Common
Units at least the Minimum Quarterly Distribution of $0.525 per
Common Unit per quarter. The Minimum Quarterly Distribution is not
guaranteed and is subject to adjustment as described under 'Cash
Distribution Policy -- Adjustment of Minimum Quarterly Distribution
and Target Distribution Levels.' The Minimum Quarterly Distribution
for the period from the closing of the Offering through September
30, 1996 will be adjusted based on the actual length of such
period.
With respect to each quarter during the Subordination Period, which
will generally not end prior to June 30, 2001, the Common
Unitholders will generally have the right to receive the Minimum
Quarterly Distribution, plus Common Unit Arrearages, before any
distribution of Available Cash from Operating Surplus is made to
the Subordinated Unitholders. This subordination feature will
enhance the Partnership's ability to distribute the Minimum
Quarterly Distribution on the Common Units during the Subordination
Period. Subordinated Units will not accrue distribution arrearages.
Upon expiration of the Subordination Period, Common Units will no
longer accrue distribution arrearages. See 'Cash Distribution
Policy.'
Subordination Period...................... The Subordination Period will generally extend from the closing of
the Offering until the first day of any quarter beginning after
June 30, 2001 in respect of which (i) distributions of Available
Cash from Operating Surplus on the Common Units and the
Subordinated Units with respect to each of the three consecutive
four-quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of
the outstanding Common Units and Subordinated Units during such
periods, (ii) the Adjusted Operating Surplus (as defined in the
Glossary) generated during each of the three consecutive
four-quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of
the outstanding Common Units and Subordinated Units and the related
distribution on the General Partner Interests during such periods,
and (iii) there are no outstanding Common Unit Arrearages. Upon
expiration of the Subordination Period, all remaining Subordinated
Units will convert into Common Units on a one-for-one basis and
will thereafter participate pro rata with the other Common Units in
distributions of Available Cash. The Partnership Agreement also
provides that if the Managing General Partner is removed other than
for Cause (as defined in the Glossary), the Subordination Period
will end and all outstanding Subordinated Units will convert into
Common Units. See 'Cash Distribution Policy' and 'The Partnership
Agreement.'
Early Conversion of Subordinated Units.... A portion of the Subordinated Units will convert into Common Units on
the first day after the record date established for the
distribution in respect of any quarter ending on or after (a) June
30, 1999 (with respect to 1,133,410 of the Subordinated Units,
subject to adjustment) and (b) June 30, 2000 (with respect to
1,133,410 Subordinated Units, subject to adjustment), in respect of
</TABLE>
27
<PAGE>
<PAGE>
<TABLE>
<S> <C>
which (i) distributions of Available Cash from Operating Surplus on
the Common Units and the Subordinated Units with respect to each of
the three consecutive four-quarter periods immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the outstanding Common Units and
Subordinated Units during such periods, (ii) the Adjusted Operating
Surplus generated during each of the two consecutive four-quarter
periods immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the outstanding
Common Units and Subordinated Units and the related distribution on
the General Partner Interest during such periods, and (iii) there
are no outstanding Common Unit Arrearages; provided, however, that
the early conversion of the second tranche of Subordinated Units
may not occur until at least one year following the early
conversion of the first tranche of Subordinated Units. See 'Cash
Distribution Policy -- Quarterly Distributions from Operating
Surplus during Subordination Period.'
Incentive Distributions................... If quarterly distributions of Available Cash exceed the Target
Distribution Levels, the General Partners (as holders of the
General Partner Interests and the right to receive Incentive
Distributions and not as holders of Subordinated Units) will
receive additional distributions of Available Cash that exceed such
Target Distribution Levels as follows:
</TABLE>
<TABLE>
<CAPTION>
MARGINAL
PERCENTAGE
INTEREST IN
QUARTERLY DISTRIBUTIONS
DISTRIBUTION ----------------
TARGET UNIT- GENERAL
AMOUNT HOLDERS PARTNERS
------------ ------- -------
<S> <C> <C> <C>
Minimum Quarterly Distribution........ $0.525 96% 4%
First Target Distribution............. $0.577 96% 4%
Second Target Distribution............ $0.665 85% 15%
Third Target Distribution............. $0.863 75% 25%
Thereafter............................ above $0.863 50% 50%
</TABLE>
<TABLE>
<S> <C>
The Target Distribution Levels are based on the amounts of Available
Cash from Operating Surplus distributed that exceed distributions
made with respect to the Minimum Quarterly Distribution and Common
Unit Arrearages, if any. See 'Cash Distribution Policy -- Incentive
Distributions -- Hypothetical Annualized Yield.' The distributions
to the General Partners described above that are in excess of the
4% General Partner Interests (and not as a holder of Subordinated
Units) are referred to herein as the 'Incentive Distributions'
which are payable to the Managing General Partner. The Managing
General Partner may transfer its right to receive Incentive
Distributions to one or more Persons (as defined in the Glossary).
On a pro forma basis, quarterly distributions of Available Cash
would not have exceeded such target levels and the Partnership
would not have distributed any such excess payments to the Managing
General Partner in 1994 and 1995.
Adjustment of Minimum Quarterly
Distribution and Target Distribution
Levels.................................. The Minimum Quarterly Distribution and the Target Distribution Levels
are subject to downward adjustments in the event that the
Unitholders receive distributions of Available Cash from Capital
Surplus (as defined in the
</TABLE>
28
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Glossary) or legislation is enacted or existing law is modified or
interpreted by the relevant governmental authority in a manner that
causes the Partnership to be treated as an association taxable as a
corporation or otherwise taxable as an entity for federal, state or
local income tax purposes. If, as a result of distributions of
Available Cash from Capital Surplus, the Unitholders receive a full
return of the initial public offering price of the Common Units and
any unpaid Common Unit Arrearages, the additional distributions of
Available Cash payable to the General Partners will increase to 50%
of all amounts distributed thereafter. See 'Cash Distribution
Policy -- General' and ' -- Distributions from Capital Surplus.'
Partnership's Ability to Issue Additional
Units................................... The Partnership Agreement generally authorizes the Partnership to
issue an unlimited number of additional limited partner interests
and other equity securities of the Partnership for such
consideration and on such terms and conditions as shall be
established by the Managing General Partner in its sole discretion
without the approval of the Unitholders. During the Subordination
Period, however, the Partnership may not issue equity securities
ranking prior or senior to the Common Units or an aggregate of more
than 3,095,238 Common Units or an equivalent number of securities
ranking on parity with the Common Units (excluding Common Units
issued upon exercise of the Underwriters' over-allotment option,
upon conversion of Subordinated Units, upon conversion of the
Special General Partner's combined unsubordinated general partner
interest or in connection with certain acquisitions or capital
additions and improvements, the repayment of certain indebtedness,
or pursuant to employee benefit plans), in either case without the
approval of a Unit Majority (as defined in the Glossary). See 'The
Partnership Agreement -- Issuance of Additional Securities.'
Limited Call Right........................ If at any time less than 20% of the issued and outstanding Common
Units are held by persons other than the General Partners and their
Affiliates, the General Partners (or an Affiliate designated by the
General Partners) may purchase all of the remaining Common Units at
a price generally equal to the then current market price of the
Common Units. See 'The Partnership Agreement -- Limited Call
Right.'
Limited Voting Rights..................... Unitholders will have only limited voting rights on matters affecting
the Partnership's business as specified in the Partnership
Agreement. The approval of at least a majority (and in certain
cases a greater percentage) of the outstanding Units will be
required in such instances. The Managing General Partner will
manage and operate the Partnership. See 'The Partnership
Agreement.'
Removal and Withdrawal of the General
Partners................................ Subject to certain conditions, the Managing General Partner may be
removed upon the approval of the holders of at least 66 2/3% of the
outstanding Units (including Units held by the General Partners and
their Affiliates). A meeting of the holders of the Common Units may
be called only by the Managing General Partner or by the holders of
20% or more of the outstanding Common Units. The Managing General
Partner's current ownership interest in the Partnership precludes
any vote to remove the Managing General Partner or the Special
General Partner without the Managing General Partner's consent.
Generally, the Special
</TABLE>
29
<PAGE>
<PAGE>
<TABLE>
<S> <C>
General Partner shall be removed or withdraw as general partner of
the Partnership and the Operating Partnership upon the removal or
withdrawal of the Managing General Partner. However, upon certain
bankruptcy related withdrawal events of the Managing General
Partner, the Special General Partner will not withdraw but will
become the managing general partner of the Partnership. The
Managing General Partner has agreed not to voluntarily withdraw as
managing general partner of the Partnership and the Operating
Partnership prior to June 30, 2006, subject to limited exceptions,
without obtaining the approval of a Unit Majority (as defined in
the Glossary) and furnishing an Opinion of Counsel (as defined in
the Glossary). See 'The Partnership Agreement -- Withdrawal or
Removal of the General Partners' and ' -- Meetings; Voting.'
Change of Management Provisions........... Any person or group (other than the General Partners or their
Affiliates) that acquires beneficial ownership of 20% or more of
the outstanding Units of any class will lose its voting rights with
respect to all of its Units. In addition, if the Managing General
Partner is removed as the managing general partner of the
Partnership other than for Cause and the Units held by the General
Partners and their Affiliates are not voted in favor of such
removal, the Subordination Period will end, all Common Unit
Arrearages will terminate, all outstanding Subordinated Units will
immediately convert into Common Units on a one-for-one basis and
the General Partners will have the right to convert the General
Partner Interests into Common Units or to receive in exchange for
such interests, cash payments equal to the fair market value of
such interests. See 'The Partnership Agreement -- Withdrawal or
Removal of the General Partners,' ' -- Meetings; Voting' and
' -- Change of Management Provisions.'
Transfer Restrictions..................... All purchasers of Common Units in the Offering and purchasers of
Common Units in the open market who wish to become Unitholders of
record must deliver an executed transfer application (the 'Transfer
Application,' the form of which is included in this Prospectus as
Appendix B) before the issuance or transfer of such Common Units
will be registered and before cash distributions and federal income
tax allocations will be made to the transferee. See 'Description of
the Common Units -- Transfer of Common Units.'
Distributions Upon Liquidation............ In the event of any liquidation of the Partnership during the
Subordination Period, the outstanding Common Units will be entitled
to receive a distribution out of the net assets of the Partnership
in preference to liquidating distributions on the Subordinated
Units to the extent of their Unrecovered Capital (as defined in the
Glossary) and any unpaid Common Unit Arrearages. Under certain
circumstances, there may be insufficient gain for the holders of
Common Units to fully recover all such amounts, even though there
may be cash available for distribution to holders of Subordinated
Units. Following conversion of the Subordinated Units into Common
Units, all Units will be treated the same upon liquidation of the
Partnership. See 'Cash Distribution Policy -- Distributions of Cash
Upon Liquidation.'
Use of Proceeds........................... The net proceeds to the Partnership from the sale of Common Units
offered in the Offering (assuming an initial public offering price
of $21.00 per Common Unit) are estimated to
</TABLE>
30
<PAGE>
<PAGE>
<TABLE>
<S> <C>
be approximately $118.2 million, after deducting estimated
underwriting discounts and commissions and fees and expenses of the
Offering. As of May 31, 1996, approximately $66 million of such
proceeds will be used to repay indebtedness of National Propane
outstanding under the Existing Credit Facility, approximately $40.7
million will be used to make the Partnership Loan to Triarc and
approximately $11.5 million will be used to pay accrued management
fees and tax sharing payments due to Triarc. If the Underwriters'
over-allotment is exercised in full, the estimated additional net
proceeds will be approximately $18.1 million. All of the net
proceeds from the exercise, if any, of the Underwriters'
over-allotment option will be retained by the Partnership and used
for general partnership purposes.
Listing................................... The Common Units have been approved for listing on the New York Stock
Exchange, Inc. ('NYSE') upon notice of issuance.
NYSE Symbol............................... 'NPL'
</TABLE>
31
<PAGE>
<PAGE>
SUMMARY OF TAX CONSIDERATIONS
The tax consequences of an investment in the Partnership to a particular
investor will depend in part on the investor's own tax circumstances. Each
prospective investor should consult a tax advisor about the federal, state and
local tax consequences of an investment in Common Units. The following is a
brief summary of certain expected tax consequences of owning and disposing of
Common Units. The following discussion, insofar as it relates to federal income
tax laws, is based in part upon the opinion of Counsel described in 'Tax
Considerations.' This summary is qualified by the discussion in 'Tax
Considerations,' particularly the qualifications on the opinions of Counsel
described therein.
PARTNERSHIP STATUS
In the opinion of Counsel, the Partnership will be classified for federal
income tax purposes as a partnership, and the beneficial owners of Common Units
will generally be considered partners in the Partnership. Accordingly, the
Partnership will pay no federal income taxes, but the Partnership's income,
gains, losses and deductions will be includable in the federal income tax
returns of the Unitholders. In general, cash distributions to a Unitholder will
be taxable only if, and to the extent that, they exceed the tax basis in such
Unitholder's Common Units.
PARTNERSHIP ALLOCATIONS
In general, income and loss of the Partnership will be allocated to the
General Partners and the Unitholders for each taxable year in accordance with
their respective percentage interests in the Partnership, as determined annually
and prorated on a monthly basis and subsequently apportioned among the General
Partners and the Unitholders of record as of the opening of the first business
day of the month to which they relate, even though Unitholders may dispose of
their Units during the month in question. For purposes of determining federal
income tax liability, a Unitholder will be required to take into account income
generated by the Partnership allocable to such Unitholder for each taxable year
of the Partnership ending within or with the Unitholder's taxable year even if
cash distributions are not made to such Unitholder. As a consequence, a
Unitholder's share of taxable income of the Partnership (and possibly the income
tax payable by such Unitholder with respect to such income) may exceed the cash,
if any, actually distributed to such Unitholder.
RATIO OF TAXABLE INCOME TO DISTRIBUTIONS
The Partnership estimates that a purchaser of Common Units in the Offering
who holds such Common Units through December 31, 2000, will be allocated, on a
cumulative basis, an amount of federal taxable income for such period that will
be less than 30% of the cash distributed with respect to that period. The
Partnership further estimates that for taxable years after the taxable year
ending December 31, 2000, the taxable income allocable to the Unitholders will
represent a significantly higher percentage (and could in certain circumstances
exceed the amount) of cash distributed to them. These estimates are based upon
the assumption that the gross income from operations will approximate an amount
required to make the Minimum Quarterly Distribution with respect to all Units
and other assumptions with respect to capital expenditures, cash flow and
anticipated cash distributions. These estimates and assumptions are subject to,
among other things, numerous business, economic, regulatory, competitive and
political uncertainties which are beyond the control of the Partnership.
Further, the estimates are based on current tax law and certain tax reporting
positions that the Partnership intends to adopt and with which the IRS could
disagree. Accordingly, no assurance can be given that the estimates will prove
to be correct. The actual percentages could be higher or lower than as described
above and any differences could be material. See 'Tax Considerations -- Tax
Consequences of Unit Ownership -- Ratio of Taxable Income to Distributions.'
BASIS OF COMMON UNITS
A Unitholder's initial tax basis for a Common Unit purchased in the
Offering will generally be the amount paid for the Common Units. A Unitholder's
basis is generally increased by such Unitholder's
32
<PAGE>
<PAGE>
share of Partnership income and decreased by such Unitholder's share of
Partnership losses and distributions.
LIMITATIONS ON DEDUCTIBILITY OF PARTNERSHIP LOSSES
In the case of taxpayers subject to the passive loss rules (such as
individuals and closely held corporations), any Partnership losses will be
available only to offset future income generated by the Partnership and cannot
be used to offset income from other activities, including passive activities or
investments. Any losses unused by virtue of the passive loss rules may be
deducted when the Unitholder disposes of all of his Common Units in a fully
taxable transaction with an unrelated party. In addition, a Unitholder may
deduct such Unitholder's share of Partnership losses only to the extent the
losses do not exceed such Unitholder's basis in such Unitholder's Common Units
or, in the case of taxpayers subject to the 'at risk' rules (such as
individuals), the amount the Unitholder is at risk with respect to the
Partnership's activities, if less than such tax basis.
SECTION 754 ELECTION
The Partnership intends to make the election provided for by Section 754 of
the Internal Revenue Code of 1986, as amended (the 'Code'), which will generally
result in a Unitholder being allocated income and deductions calculated by
reference to the portion of that Unitholder's purchase price attributable to
each asset of the Partnership.
DISPOSITION OF COMMON UNITS
A Unitholder who sells Common Units will recognize gain or loss equal to
the difference between the amount realized and the adjusted tax basis in those
Common Units. Thus, distributions of cash from the Partnership to a Unitholder
in excess of the income allocated to such Unitholder will, in effect, become
taxable income if such Unitholder sells the Common Units at or above their
original cost. A portion of the amount realized (whether or not representing
gain) may be ordinary income.
STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, Unitholders will be subject to other
taxes, such as state and local income taxes, unincorporated business taxes and
estate, inheritance or intangible taxes that are imposed by the various
jurisdictions in which a Unitholder resides or in which the Partnership does
business or owns property. Although an analysis of those various taxes is not
presented here, each prospective Unitholder should consider their potential
impact on such Unitholder's investment in the Partnership. The Partnership will
initially own property and conduct business in New York, Florida, Michigan and
21 other states. A Unitholder will also be required to file state income tax
returns and to pay taxes in various states and may be subject to penalties for
failure to comply with such requirements. Based on 1995 revenues, the Managing
General Partner currently anticipates that substantially all of the
Partnership's income will be generated in Arkansas, Arizona, Colorado,
Connecticut, Florida, Iowa, Illinois, Massachusetts, Michigan, Minnesota,
Missouri, New Hampshire, New Mexico, New York, and Wisconsin. Each of the
states, other than Florida, in which the Managing General Partner currently
anticipates that a substantial portion of the Partnership's income will be
generated currently imposes a personal income tax. In certain states, tax losses
may not produce a tax benefit in the year incurred (if, for example, the
Partnership has no income from sources within that state) and also may not be
available to offset income in subsequent taxable years. Some of the states may
require the Partnership, or the Partnership may elect, to withhold a percentage
of income from amounts to be distributed to a Unitholder who is not a resident
of that state. Withholding, the amount of which may be more or less than a
particular Unitholder's income tax liability to the state, may not relieve the
nonresident Unitholder from the obligation to file an income tax return. Amounts
withheld may be treated as if distributed to Unitholders for purposes of
determining the amounts distributed by the Partnership. Based on current law and
its estimate of future Partnership operations, the Partnership anticipates that
any amounts required to be withheld will not be material.
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It is the responsibility of each prospective Unitholder to investigate the
legal and tax consequences, under the laws of pertinent states and localities,
of such Unitholder's investment in the Partnership. Accordingly, each
prospective Unitholder should consult, and must depend upon, that Unitholder's
own tax counsel or other advisor with regard to those matters. Further, it is
the responsibility of each Unitholder to file all federal, state and local tax
returns that may be required of such Unitholder. Counsel has not rendered an
opinion on the state or local tax consequences of an investment in the
Partnership.
OWNERSHIP OF COMMON UNITS BY TAX-EXEMPT ORGANIZATIONS AND CERTAIN OTHER
INVESTORS
An investment in Common Units by tax-exempt organizations (including
individual retirement accounts and other retirement plans), regulated investment
companies and foreign persons raises issues unique to such persons. Virtually
all of the Partnership income allocated to a Unitholder which is a tax-exempt
organization will be unrelated business taxable income, and thus will be taxable
to such Unitholder; no significant amount of the Partnership's gross income will
be qualifying income for purposes of determining whether a Unitholder will
qualify as a regulated investment company; and a Unitholder who is a nonresident
alien, foreign corporation or other foreign person will be regarded as being
engaged in a trade or business in the United States as a result of ownership of
a Common Unit and thus will be required to file federal income tax returns and
to pay tax on such Unitholder's share of Partnership taxable income. See 'Tax
Considerations -- Uniformity of Units -- Tax-Exempt Organizations and Certain
Other Investors.'
TAX SHELTER REGISTRATION
The Code generally requires that 'tax shelters' be registered with the
Secretary of the Treasury. It is arguable that the Partnership will not be
subject to this registration requirement. Nevertheless, the Partnership has
applied for registration as a tax shelter with the IRS. ISSUANCE OF THE
REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN THE PARTNERSHIP OR
THE CLAIMED TAX BENEFITS HAS BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS. See
'Tax Considerations -- Administrative Matters -- Registration as a Tax Shelter.'
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RISK FACTORS
A prospective investor should carefully consider the risk factors set forth
below as well as the other information set forth in this Prospectus before
purchasing the Common Units offered in the Offering.
RISKS INHERENT IN THE PARTNERSHIP'S BUSINESS
WEATHER CONDITIONS AFFECT THE DEMAND FOR PROPANE
Weather conditions, which can vary substantially from year to year, have a
significant impact on the demand for propane for both heating and agricultural
purposes. Many customers of the Partnership rely heavily on propane as a heating
fuel. Accordingly, the volume of propane sold is at its highest during the
six-month peak heating season of October through March and is directly affected
by the severity of the winter weather. Historically, approximately 66% of the
Partnership's retail propane volume has been sold during this peak heating
season. Actual weather conditions, therefore, may significantly affect the
Partnership's financial performance. For example, warm weather during the winter
of 1994-95 significantly decreased the overall demand for propane, and adversely
affected the Partnership's operating income. Furthermore, despite the fact that
overall weather conditions may be normal, variations in weather in one or more
regions in which the Partnership operates can significantly affect the total
volume of propane sold by the Partnership and, consequently, the Partnership's
results of operations. Variations in the weather in the Midwest, where the
majority of the Partnership's retail volume is sold, and in the Northeast, where
the Partnership has a greater concentration of higher margin residential
accounts, will generally have a greater impact on the Partnership's EBITDA and
operating income than variations in the weather in other markets. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
THE PARTNERSHIP WILL BE SUBJECT TO PRICING AND INVENTORY RISK
The retail propane business is a 'margin-based' business in which gross
profits depend on the excess of sales prices over propane supply costs.
Consequently, the Partnership's profitability will be sensitive to changes in
wholesale propane prices. Propane is a commodity, and as such, its unit price is
subject to volatile changes in response to changes in supply or other market
conditions. The Partnership will have no control over these market conditions.
Consequently, the unit price of propane purchased by the Partnership, as well as
other propane marketers, can change rapidly over a short period of time. In
general, product supply contracts permit suppliers to charge posted prices (plus
transportation costs) at the time of delivery or the current prices established
at major storage points such as Mont Belvieu, Texas, or Conway, Kansas. Since
rapid increases in the wholesale cost of propane may not be immediately passed
on to customers, such increases could reduce the Partnership's gross profits.
See ' -- The Retail Propane Business Is Highly Competitive.'
Propane is available from numerous sources, including integrated
international oil companies, independent refiners and independent wholesalers.
The Partnership purchases propane from a variety of suppliers pursuant to supply
contracts or on the spot market. In 1995, approximately 81% of the propane
purchased by the Partnership was produced domestically and approximately 19% was
produced in Canada. To the extent that the Partnership purchases propane from
foreign (including Canadian) sources, its propane business will be subject to
risks of disruption in foreign supply. The Partnership generally attempts to
minimize inventory risk by purchasing propane on a short-term basis. However,
the Partnership has on occasion purchased, and may in the future purchase, large
volumes of propane during periods of low demand, which generally occur during
the summer months, at the then current market price, for storage both at its
service centers and in the Partnership's major storage facilities for future
resale. As of May 31, 1996, the Partnership's total storage capacity was
approximately 33 million gallons (including approximately one million gallons of
storage capacity currently leased to third parties). See 'Business and
Properties -- Properties.' Because of the potential volatility of propane
prices, the market price for propane could fall below the price at which the
Partnership purchased propane held in inventory, thereby adversely affecting
gross margins or sales or rendering sales from such inventory unprofitable.
Except for the occasional opportunistic buying described above, the Partnership
has not engaged in any significant hedging activities with respect to its
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propane supply requirements, although it may do so in the future. See 'Business
and Properties -- Propane Supply and Storage.'
THE RETAIL PROPANE BUSINESS IS HIGHLY COMPETITIVE
The Partnership's business is highly competitive. Competition within the
propane distribution industry stems primarily from three types of participants:
larger multi-state marketers, local independent marketers and farm cooperatives.
Some of the Partnership's competitors may be larger or have greater financial
and other resources or lower operating costs than the Partnership. Generally,
warmer-than-normal weather further intensifies competition. In addition,
competitive conditions vary by region. Currently, competition is particularly
intense in the Midwest, while the Partnership faces relatively less competition
in the Northeast and Southeast.
Most of the Partnership's service centers compete with several other
marketers or distributors and certain service centers compete with a large
number of marketers or distributors. The principal factors influencing
competition with other retail marketers are price, reliability and quality of
service, responsiveness to customer needs and safety concerns. Each service
center operates in its own competitive environment, as retail marketers are
typically located in close proximity to customers to lower the cost of providing
service. Service centers located in the Midwest face particularly intense
competition in the retail market as retail customers in that region generally
use higher volumes of propane and are therefore more sensitive to price
fluctuations than customers located in other regions. Of the Partnership's 165
service centers, 73 are located in the Midwest where approximately 47.4% of the
Partnership's total retail propane volume was sold in 1995.
THE RETAIL PROPANE BUSINESS IS MATURE AND THE PARTNERSHIP'S ABILITY TO GROW
LARGELY DEPENDS UPON ACQUIRING OTHER RETAIL DISTRIBUTORS
The retail propane industry is mature, and the Partnership foresees only
limited growth in total retail demand for propane. The Partnership expects the
overall demand for propane to remain relatively constant over the next several
years, with year-to-year industry volumes being affected primarily by weather
patterns. Moreover, as a result of long-standing customer relationships that are
typical in the retail home propane industry, the inconvenience of switching
tanks and suppliers and propane's higher cost than certain other energy sources,
such as natural gas, the Partnership may experience difficulty in acquiring new
retail customers. Therefore, while the Partnership's business strategy includes
opening new locations, adding new retail customers and retaining existing
customers, the ability of the Partnership's propane business to grow will depend
in large part on its ability to acquire other retail distributors.
In making acquisitions of other retail distributors, the Partnership will
have to compete with other companies, some of which may be larger or have
greater financial or other resources than the Partnership. In addition, there
can be no assurance that the Partnership will identify attractive acquisition
candidates in the future, will be able to acquire such candidates on acceptable
terms, or will be able to finance such acquisitions. If the Partnership is able
to make acquisitions, there can be no assurance that such acquisitions will not
dilute earnings and distributions on the Units, or that any additional debt
incurred to finance acquisitions will not affect the ability of the Partnership
to make distributions on the Units. Moreover, the Partnership is subject to
certain debt incurrence covenants in certain agreements governing its
indebtedness that might restrict the Partnership's ability to incur indebtedness
to finance acquisitions. For additional information regarding such debt
incurrence covenants and the Partnership's availability under the Working
Capital Facility and the Acquisition Facility, see 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources' and ' -- Description of Indebtedness.' Also, to the extent
that warm weather adversely affects the Partnership's operating and financial
results, the Partnership's access to capital and its acquisition activities may
be limited.
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THE RETAIL PROPANE BUSINESS FACES COMPETITION FROM ALTERNATIVE ENERGY SOURCES
Propane is sold in competition with other sources of energy, some of which
are less costly for equivalent energy value. The Partnership competes for
customers against suppliers of electricity, natural gas and fuel oil.
Electricity is a major competitor of propane, but propane generally enjoys a
competitive price advantage over electricity. Propane is generally not
competitive with natural gas in those areas where natural gas is readily
available because natural gas is a significantly less expensive source of energy
than propane. The gradual expansion of the nation's natural gas distribution
systems has resulted in the availability of natural gas in areas that previously
depended upon propane. To a lesser extent, the Partnership also competes for
customers against suppliers of fuel oil. In addition, the development of
alternative energy sources may have an adverse effect on the operations of the
Partnership. See 'Business and Properties -- Competition.'
ENERGY EFFICIENCY AND TECHNOLOGY TRENDS MAY AFFECT DEMAND
The national trend toward increased conservation and technological
advances, including installation of improved insulation and the development of
more efficient furnaces and other heating devices, has adversely affected, and
may continue to adversely affect, demand for propane by retail customers. The
Partnership cannot predict the effect of future conservation measures or the
effect that any technological advances in heating, conservation, energy
generation or other devices might have on its operations.
THE PARTNERSHIP IS SUBJECT TO OPERATING AND LITIGATION RISKS WHICH MAY NOT BE
COVERED BY INSURANCE
The Partnership's operations are subject to the operating hazards and risks
normally associated with handling, storing and delivering combustible liquids
such as propane. As a result, the Partnership has been, and is likely to
continue to be, a defendant in various legal proceedings and litigation arising
in its ordinary course of business. The Partnership intends to self-insure (as
National Propane currently does) and maintain insurance policies with insurers
in such amounts and with such coverages and deductibles as the Managing General
Partner believes are reasonable and prudent. However, there can be no assurance
that such insurance will be adequate to protect the Partnership from all
material expenses related to potential future claims or that such levels of
insurance will be available in the future at economical prices. Moreover, there
can be no assurance that future claims within the Partnership's self-insured
retention will not, individually or in the aggregate, have a material adverse
effect on the business of the Partnership.
The Partnership will assume the liabilities of National Propane for certain
potential environmental remediation costs, primarily costs related to
remediation of coal tar contamination at the Partnership's Marshfield, Wisconsin
facility. The Partnership believes the contamination of such property occurred
during its use as a coal gasification plant by a previous owner. To the extent
that there are any environmental liabilities unknown to the Partnership or that
known environmental liabilities result in material costs in excess of amounts
accrued or any environmental laws are made more stringent, there can be no
assurance that the Partnership's results of operations or ability to make
distributions to Unitholders will not be materially and adversely affected. In
addition, future claims or environmental liabilities not covered by insurance or
indemnification, or a large number of claims incurred by the Partnership in the
future that are within the Partnership's self-insured retention, could have a
material adverse effect on the business, results of operations or financial
position of the Partnership and the ability of the Partnership to make the
Minimum Quarterly Distribution. See 'Business and Properties -- Government
Regulation' and ' -- Litigation and Contingent Liabilities.'
RISKS INHERENT IN AN INVESTMENT IN THE PARTNERSHIP
CASH DISTRIBUTIONS ARE NOT GUARANTEED AND MAY FLUCTUATE WITH PARTNERSHIP
PERFORMANCE
Although the Partnership will distribute all of its Available Cash, there
can be no assurance regarding the amounts of Available Cash that the Partnership
will generate. The actual amounts of
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Available Cash will depend upon numerous factors, including profitability of
operations, required principal and interest payments on the Partnership's debt,
interest payments from Triarc on the Partnership Loan, the cost of acquisitions
(including related debt service payments), restrictions contained in the
Partnership's debt instruments, the issuance of debt and equity securities by
the Partnership, fluctuations in working capital, capital expenditures,
adjustments in reserves, prevailing economic conditions and financial, business
and other factors, a number of which may be beyond the control of the
Partnership. Cash distributions are dependent primarily on cash flow and not on
profitability, which is affected by non-cash items. Therefore, cash
distributions may be made during periods when the Partnership records losses and
may not be made during periods when the Partnership records profits. The amount
of Available Cash from Operating Surplus needed to distribute the Minimum
Quarterly Distribution for four quarters on the Common Units and Subordinated
Units to be outstanding immediately after the Offering and on the General
Partner Interests is approximately $23.5 million (approximately $13.0 million
for the Common Units, $9.5 million for the Subordinated Units and $1.0 million
for the General Partner Interests). If the Underwriters' over-allotment option
is exercised in full, such amounts would be approximately $15.0 million for the
Common Units, $9.5 million for the Subordinated Units and $1.0 million for the
General Partner Interests, or an aggregate of approximately $25.5 million. Pro
forma Available Cash from Operating Surplus generated during 1994 and 1995
(approximately $22.7 million and $17.6 million, respectively) would have been
sufficient to cover the Minimum Quarterly Distribution for the four quarters in
each such year on all of the outstanding Common Units and the related
distribution on the General Partner Interests, but would have been insufficient
by approximately $0.8 million and $5.9 million to cover the Minimum Quarterly
Distribution on the Subordinated Units and the related distribution on the
General Partner Interests in 1994 and 1995, respectively. In addition, assuming
that no interest payments were made by Triarc on the Partnership Loan, the
amount of pro forma Available Cash from Operating Surplus generated during 1994
and 1995 would have been approximately $17.2 million and $12.1 million,
respectively. The $17.2 million generated in 1994 would have been sufficient to
cover the Minimum Quarterly Distribution for the four quarters in 1994 on all of
the outstanding Common Units and the related distribution on the General Partner
Interests, but the $12.1 million generated during 1995 would have been
insufficient by approximately $1.4 million to cover the Minimum Quarterly
Distribution for the four quarters in 1995 on all of the Common Units and the
related distribution on the General Partner Interests. See ' -- A Portion of the
Partnership's Cash Receipts will be Interest Payments from Triarc on the
Partnership Loan' and 'Cash Distribution Policy -- Partnership Loan.' In 1994
and 1995, on a pro forma basis, quarterly distributions of Available Cash would
not have exceeded any Target Distribution Level and the Partnership would not
have made any Incentive Distributions to the Managing General Partner.
The Partnership Agreement gives the Managing General Partner discretion in
establishing reserves for the proper conduct of the Partnership's business that
will affect the amount of Available Cash. Due to the seasonal nature of the
Partnership's business, the Managing General Partner expects that it will make
additions to reserves during certain quarters in order to fund operating
expenses and distributions to partners with respect to other quarters. In
addition, the Partnership will be required to make reserves for the future
payment of principal and interest on the First Mortgage Notes and in certain
instances for the future payment of principal and interest under the Bank Credit
Facility. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Description of Indebtedness.' The Partnership
anticipates that reserves for interest on the First Mortgage Notes will be
established at approximately $2.7 million at each March and September,
commencing September, 1996 and the reserves will be eliminated when interest
payments are made on the First Mortgage Notes in June and December. The $2.7
million reserved for interest would be approximately 11.5% (10.6% if the
Underwriters' over-allotment option is exercised in full) of the amount of
Available Cash needed to distribute the Minimum Quarterly Distribution for four
quarters on the Common Units and the Subordinated Units to be outstanding
immediately after the Offering and on the General Partner Interests. Reserves
for repayment of principal on the First Mortgage Notes are not required until
September 2002 and then will equal 25%, 50% and 75%, respectively, of the next
installment of principal at each September, December and March and the reserves
will be eliminated when principal payments are made on the First Mortgage Notes
in June. The $3.75 million reserved quarterly for principal payments would be
approximately 16.0% (14.7% if the Underwriters' over-allotment option is
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exercised in full) of the amount of Available Cash needed to distribute the
Minimum Quarterly Distribution for four quarters on the Common Units and the
Subordinated Units to be outstanding immediately after the Offering and on the
General Partner Interests. Furthermore, the First Mortgage Notes and the Bank
Credit Facility will limit the Operating Partnership's ability to distribute
cash to the Partnership. Distributions from the Operating Partnership will be
the Partnership's primary source of Available Cash. Subsequent refinancing of
the First Mortgage Notes or the Bank Credit Facility, as well as other
indebtedness incurred by the Partnership, may have similar or even more limiting
restrictions. As a result of these and other factors, there can be no assurance
regarding the actual levels of cash distributions by the Partnership, and the
Partnership's ability to distribute cash may be limited during the existence of
any events of default under any of the Partnership's debt instruments.
A PORTION OF THE PARTNERSHIP'S CASH RECEIPTS WILL BE INTEREST PAYMENTS FROM
TRIARC ON THE PARTNERSHIP LOAN
Approximately $5.5 million of the Partnership's annual cash receipts will
be interest payments from Triarc under the Partnership Loan, which bears
interest at an annual rate of 13.5%. On a pro forma basis such amount represents
approximately 31% of the Partnership's Available Cash from Operating Surplus in
1995. Consequently, Triarc's failure to make interest payments under the
Partnership Loan would adversely affect the ability of the Partnership to make
the Minimum Quarterly Distribution to all Unitholders. Assuming that no interest
payments were made by Triarc on the Partnership Loan, the amount of pro forma
Available Cash from Operating Surplus generated during 1995 would have been
insufficient by approximately $1.4 million to cover the Minimum Quarterly
Distribution on the Common Units and the related distribution on the General
Partner Interests.
Because Triarc is a holding company, its ability to meet its cash
requirements (including required interest and principal payments on the
Partnership Loan) is primarily dependent (in addition to its cash on hand) upon
cash flows from its subsidiaries, including loans and cash dividends and
reimbursement by subsidiaries to Triarc in connection with its providing certain
management services and payments by subsidiaries under certain tax sharing
agreements. Under the terms of various indentures and credit arrangements,
Triarc's principal subsidiaries are currently unable to pay any dividends or
make any loans or advances to Triarc. In addition, the Partnership Loan does not
restrict Triarc's ability to sell, convey, transfer or encumber the stock or
assets of any of its subsidiaries (other than the Managing General Partner and
SEPSCO), or its ability to dispose of its cash on hand or other assets. Triarc's
cash on hand as of May 31, 1996, after giving effect to the closing of the
Offering, will be approximately $210.0 million. The Partnership believes that
such amount of cash on hand, plus distributions from certain of Triarc's
subsidiaries, will enable Triarc to have adequate cash resources to meet its
short term cash requirements, including required interest payments on the
Partnership Loan. See 'Cash Distribution Policy -- Partnership Loan' and
'Certain Information Regarding Triarc.' However, there can be no assurance that
Triarc will continue to have cash on hand or that in the future it will receive
sufficient distributions from its subsidiaries in order to enable it to satisfy
its obligations under the Partnership Loan. Also, the Partnership Loan does not
limit Triarc's ability to, and there can be no assurances that Triarc will not
in the future, incur indebtedness and other obligations that will rank pari
passu with Triarc's obligations under the Partnership Loan or be secured by
assets of Triarc that do not secure the Partnership Loan. The failure of Triarc
to make payments of principal and interest on the Partnership Loan when due
would have an adverse effect on the ability of the Partnership to make
distributions to Unitholders. In addition, Triarc is permitted to prepay the
Partnership Loan under certain circumstances. The prepayment by Triarc of all or
a portion of the Partnership Loan and the failure by the Partnership to reinvest
such funds in a manner that generates an equivalent amount of cash flow could
have an adverse effect on the Partnership's ability to make distributions to
Unitholders. The Partnership Loan is recourse to Triarc and is secured by a
pledge by Triarc of all of the shares of capital stock of the Managing General
Partner owned by Triarc (approximately 75.7% of the Managing General Partner's
outstanding capital stock as of the date of this Prospectus). See 'Cash
Distribution Policy -- Partnership Loan' and 'Certain Information Regarding
Triarc.'
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THE PARTNERSHIP'S INDEBTEDNESS MAY LIMIT THE PARTNERSHIP'S ABILITY TO MAKE
DISTRIBUTIONS AND MAY AFFECT ITS OPERATIONS
On a pro forma basis as of March 31, 1996, assuming consummation of the
transactions contemplated by this Prospectus, the Partnership would have had
approximately $126.5 million in total consolidated indebtedness and the amount
of such indebtedness as a percentage of total capitalization would have been
approximately 79.4%. As a result, the Partnership will be significantly
leveraged and will have indebtedness that is substantial in relation to its
partners' capital. Although the Partnership does not intend to draw on the Bank
Credit Facility at the time of the closing of this Offering, future borrowings
could result in a significant increase in the Partnership's leverage.
Furthermore, the Managing General Partner may cause the Partnership to incur
additional indebtedness, including borrowings that have the purpose or effect of
enabling the Managing General Partner to receive distributions or hastening the
conversion of Subordinated Units into Common Units. The ability of the
Partnership to make principal and interest payments will depend on future
performance, which is subject to many factors, some of which will be outside the
Partnership's control. Certain of the Partnership's indebtedness contain
provisions relating to change of control. If such provisions are triggered, such
outstanding indebtedness may become immediately due. In such event, there is no
assurance that the Partnership would be able to pay such indebtedness. In
addition, the First Mortgage Notes and the Bank Credit Facility will be secured
by substantially all of the assets of the Operating Partnership and will contain
restrictive covenants that limit the ability of the Operating Partnership to
distribute cash and to incur additional indebtedness. In the case of a
continuing default by the Operating Partnership under such indebtedness, the
lenders would have the right to foreclose on the Operating Partnership's assets,
which would have a material adverse effect on the Partnership. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Description of Indebtedness.' Payment of principal and interest on such
indebtedness, as well as compliance with the requirements and covenants of such
indebtedness, may limit the Partnership's ability to make distributions to
Unitholders. The Partnership's leverage may also adversely affect the ability of
the Partnership to finance its future operations and capital needs, may limit
its ability to pursue other business opportunities and may make its results of
operations more susceptible to adverse economic conditions. See 'Management's
Discussion and Analysis of Financial Conditions and Results of
Operations -- Description of Indebtedness.'
PARTNERSHIP ASSUMPTIONS CONCERNING FUTURE OPERATIONS AND WEATHER MAY NOT BE
REALIZED
In establishing the terms of the Offering, including the number and initial
offering price of Common Units, the number of Subordinated Units and the amount
of the Minimum Quarterly Distribution, the Partnership relied on certain
assumptions concerning its operations through the quarter ending December 31,
1997, including the assumptions that normal weather conditions will prevail in
the Partnership's operating areas, that the Partnership's operating margins will
remain constant, that all required interest payments on the Partnership Loan
will be made by Triarc, and that market and overall economic conditions will not
change substantially. Although the Partnership believes its assumptions are
reasonable, whether the assumptions are realized is not, in a number of cases,
within the control of the Partnership and cannot be predicted with any degree of
certainty. See 'Cash Distribution Policy -- Cash Available for Distribution.'
Because a substantial portion of the Partnership's propane is used in the
heating-sensitive residential and commercial markets, weather conditions have a
particularly significant effect on the financial performance of the Partnership.
See ' -- Risks Inherent in the Partnership's Business -- Weather Conditions
Affect the Demand for Propane.' In preparing its forecasts of future operations,
management of the Partnership requested each regional and service center manager
to provide a forecast of propane sales volumes based upon the assumption that
normal weather conditions will prevail in such region or locality. Accordingly,
the Partnership's assumptions concerning its future operations are based in
significant part on an aggregate of forecasted regional propane volumes which,
in turn, are based on the assumption that normal weather conditions will prevail
in the Partnership's operating areas.
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There is a substantial risk that the Partnership's assumptions concerning
the weather will not prove to be correct in any year or series of years. Actual
weather conditions can vary substantially from historical averages, and there
can be no assurance that weather conditions in the future will not be warmer
than weather conditions in the past. For example, the Partnership believes that
during the 10 years and the five years ended June 30, 1995, nationwide weather
averaged 3.0% and 3.3% warmer than normal, respectively, compared to the number
of average Degree Days (as defined in the Glossary) on a nationwide basis during
the 30-year period ended June 30, 1991, as determined by the U.S. Department of
Commerce's National Climatic Data Center. During such 10-year period, eight of
such years were warmer than normal (by as much as 10.3% for the year ended June
30, 1991), while two were colder than normal (by as much as 3.6% for the year
ended June 30, 1994).
The Partnership believes that the information from the National Climatic
Data Center shown above regarding nationwide weather is useful in evaluating the
general extent of weather variations in the Partnership's areas of operations.
However, weather conditions in the Partnership's areas of operation may vary
from normal on a year-to-year basis to a greater extent than weather conditions
on a nationwide basis. Should weather conditions in the Partnership's operating
areas be warmer than normal, particularly during the October through March peak
heating season, the Partnership's results of operations would be adversely
affected.
THE MANAGING GENERAL PARTNER WILL MANAGE AND OPERATE THE PARTNERSHIP; HOLDERS OF
COMMON UNITS HAVE LIMITED VOTING RIGHTS
The Managing General Partner will manage and operate the Partnership.
Unlike the holders of common stock in a corporation, holders of outstanding
Common Units will have only limited voting rights on matters affecting the
Partnership's business. Holders of Common Units will have no right to elect the
Managing General Partner on an annual or other continuing basis, and the
Managing General Partner generally may not be removed except pursuant to the
vote of the holders of not less than 66 2/3% of the outstanding Units (including
Units owned by the General Partners and their Affiliates). The Managing General
Partner's current ownership interest in the Partnership precludes any vote to
remove the Managing General Partner without its consent. In addition, if at any
time any person or group other than the General Partners and their Affiliates
beneficially owns more than 20% of the Units of any class then outstanding, such
person or group will lose voting rights with respect to all of its Units. As a
result, holders of Common Units will have limited influence on matters affecting
the operation of the Partnership, and third parties may find it difficult to
attempt to gain control or influence the activities of the Partnership. See 'The
Partnership Agreement.'
PURCHASERS OF COMMON UNITS WILL EXPERIENCE DILUTION
Purchasers of Common Units in the Offering will experience substantial and
immediate dilution in net tangible book value of $19.83 per Common Unit from the
initial public offering price, the Managing General Partner will experience an
increase in net tangible book value of $22.27 per Unit and each Common Unit will
have a pro forma net tangible book value of $1.17 per Common Unit (assuming an
initial public offering price of $21.00 per Common Unit). See 'Dilution.'
COST REIMBURSEMENTS AND FEES DUE TO THE MANAGING GENERAL PARTNER MAY BE
SUBSTANTIAL AND COULD ADVERSELY AFFECT THE PARTNERSHIP'S ABILITY TO MAKE
DISTRIBUTIONS.
Prior to making any distribution on the Common Units, the Partnership will
reimburse the Managing General Partner and its Affiliates (including Triarc) at
cost for all expenses incurred on behalf of the Partnership. On a pro forma
basis, approximately $56.8 million of expenses would have been reimbursed by the
Partnership to the Managing General Partner in 1995 (comprising approximately
$33.0 million in salary, payroll tax and other compensation paid to employees of
the Managing General Partner and approximately $23.8 million for all other
operating expenses). Affiliates of the Managing General Partner (including
Triarc) may perform certain administrative services for the Managing General
Partner on behalf of the Partnership and will be reimbursed for all expenses
incurred in connection therewith. In addition, the Managing General Partner and
its Affiliates may provide
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additional services to the Partnership, for which the Partnership will be
charged reasonable fees as determined by the Managing General Partner. Such cost
reimbursements and fees may be substantial and could adversely affect the
ability of the Partnership to make distributions to Unitholders.
THE PARTNERSHIP MAY ISSUE ADDITIONAL UNITS THEREBY DILUTING EXISTING
UNITHOLDERS' INTERESTS
After the end of the Subordination Period, the Partnership has the
authority to issue an unlimited number of additional Common Units or other
equity securities of the Partnership for such consideration and on such terms as
shall be established by the Managing General Partner in its sole discretion
without the approval of the Unitholders. During the Subordination Period,
however, the Partnership may not issue equity securities ranking senior to the
Common Units or an aggregate of more than 3,095,238 additional Common Units or
an equivalent number of securities ranking on a parity with the Common Units
(excluding Common Units or in some instances, equity securities ranking on
parity with Common Units issued upon exercise of the Underwriters'
over-allotment option, upon conversion of Subordinated Units, upon conversion of
the Special General Partner's combined unsubordinated general partner interest
or in connection with Acquisitions (as defined in the Glossary) or Capital
Improvements (as defined in the Glossary) or the repayment of certain
indebtedness or pursuant to employee benefit plans) without the approval of a
Unit Majority. The Partnership Agreement does not give the holders of Common
Units the right to approve the issuance by the Partnership of equity securities
ranking junior to the Common Units at any time. See 'The Partnership
Agreement -- Issuance of Additional Securities.' The effect of any such issuance
may be to dilute the interests of the then existing holders of Units in the
Partnership. In addition, the conversion of Subordinated Units into Common Units
during the Subordination Period will increase the Partnership's Minimum
Quarterly Distribution obligation with respect to the Common Units while
simultaneously reducing the Minimum Quarterly Distribution with respect to the
Subordinated Units. Further, the exercise of the Underwriters' over-allotment
option will increase the Partnership's Minimum Quarterly Distribution obligation
with respect to the Common Units.
THE MANAGING GENERAL PARTNER WILL HAVE A LIMITED CALL RIGHT WITH RESPECT TO THE
PARTNER INTERESTS
If at any time not more than 20% of the issued and outstanding partner
interests of any class are held by persons other than the General Partners and
their Affiliates, the Managing General Partner will have the right, which it may
assign to any of its Affiliates or the Partnership, to acquire all, but not less
than all, of the remaining partner interests of such class held by such
unaffiliated Persons at a price generally equal to the then current market price
of such partner interests. As a consequence of the Managing General Partner's
right to purchase outstanding partner interests, a holder of partner interests
may have its partner interests purchased from it even though such holder may not
desire to sell them, and the price paid may be less than the amount such holder
would desire to receive upon the sale of such partner interests. See 'The
Partnership Agreement -- Limited Call Right.'
CHANGE OF MANAGEMENT PROVISIONS
Following the Offering, the Managing General Partner will own approximately
42% of the outstanding Units (approximately 39% if the Underwriters'
over-allotment option is exercised in full), and as a result the Unitholders
will not have the required 66 2/3% of the Units necessary to remove the Managing
General Partner. Even if the percentage of outstanding Units held by the
Managing General Partner and its Affiliates were significantly reduced, the
Partnership Agreement contains certain provisions that may have the effect of
discouraging a person or group from attempting to remove the Managing General
Partner. If the Managing General Partner is removed as a general partner of the
Partnership other than for Cause and the Units held by the General Partners and
their Affiliates are not voted in favor of such removal (i) the Subordination
Period will end and all outstanding Subordinated Units will immediately convert
into Common Units on a one-for-one basis, (ii) any existing Common Unit
Arrearages will be extinguished, and (iii) the General Partners will have the
right to convert their General Partner Interests (and the right to receive
Incentive Distributions) into Common Units or to receive in exchange for such
interests a cash payment equal to the fair market value of such interests.
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Also, the Special General Partner will withdraw as a general partner of the
Partnership and the Operating Partnership upon the removal of the Managing
General Partner. Further, if any person or group other than the General Partners
and their Affiliates acquires beneficial ownership of 20% or more of the Units
of any class then outstanding, such person or group will lose voting rights with
respect to all of its Units. In addition, the Partnership has substantial
latitude in issuing equity securities without Unitholder approval. The
Partnership Agreement also contains provisions limiting the ability of
Unitholders to call meetings of Unitholders or to acquire information about the
Partnership, the disclosure of which the Partnership believes is not in the best
interests of the Partnership or which the Partnership is required by law or by
agreements with third parties to keep confidential. Further, the Bank Credit
Facility and the First Mortgage Notes contain provisions that could result in
acceleration of the repayment of such indebtedness upon a change in control of
the Partnership. The effect of these provisions may be to diminish the price at
which the Common Units will trade under certain circumstances. See 'The
Partnership Agreement -- Withdrawal or Removal of the General Partners,'
' -- Meetings; Voting,' ' -- Right to Inspect Partnership Books and Records' and
' -- Change of Management Provisions.'
NO PRIOR PUBLIC MARKET FOR COMMON UNITS
Prior to the Offering, there has been no public market for the Common
Units. The initial public offering price of the Common Units will be determined
through negotiations among Triarc, the Partnership, the Managing General Partner
and the representatives of the several Underwriters. For a description of the
factors to be considered in determining the initial public offering price, see
'Underwriting.' No assurance can be given as to the market prices at which the
Common Units will trade. The Common Units have been approved for listing on the
NYSE upon notice of issuance.
UNITHOLDERS MAY NOT HAVE LIMITED LIABILITY IN CERTAIN CIRCUMSTANCES; LIABILITY
FOR THE RETURN OF CERTAIN DISTRIBUTIONS
The limitations on the liability of holders of Common Units for the
obligations of a limited partnership have not been clearly established in some
states. If it were determined that the Partnership had been conducting business
in any state without compliance with the applicable limited partnership statute,
or that the right or the exercise of the right by the holders of Common Units as
a group to remove or replace the Managing General Partner, to make certain
amendments to the Partnership Agreement or to take other action pursuant to the
Partnership Agreement constituted participation in the 'control' of the
Partnership's business, then a holder of Common Units could be held liable under
certain circumstances for the Partnership's obligations to the same extent as a
general partner. In addition, under certain circumstances a Unitholder may be
liable to the Partnership for the amount of a distribution for a period of three
years from the date of the distribution. See 'The Partnership
Agreement -- Limited Liability' for a discussion of the limitations on liability
and the implications thereof to a holder of Common Units.
POSSIBLE INABILITY TO OBTAIN CONSENTS TO ASSET TRANSFERS
Concurrent with the closing of the Offering, National Propane will convey
substantially all of its assets (which assets will not include an existing
intercompany note from Triarc, approximately $59.3 million of the net proceeds
from the issuance of the First Mortgage Notes and certain other assets of the
Managing General Partner) to the Operating Partnership, including leasehold
interests in real and personal property, permits, licenses and other similar
rights. Many of such leases and many of such permits, licenses and other rights
are transferable to the Operating Partnership only with the consent of the
lessor or other third party. The failure by the Operating Partnership to obtain
any such consents and its resulting inability to obtain any such leasehold
rights, permits, licenses or other rights could have a material adverse effect
on the Partnership. However, the Managing General Partner believes that the
Operating Partnership will have the licenses, permits and rights which will
enable the Operating Partnership to conduct its propane business in a manner
which is similar in all material respects to that which was conducted by the
General Partner prior to the closing of the Offering and that any failure to
obtain such licenses, permits or rights will not have a material adverse impact
on the business of the
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Operating Partnership or the Partnership as described in this Prospectus. See
'Business and Properties -- Transfer of the Partnership Assets.'
COMMON UNITHOLDERS HAVE NOT BEEN REPRESENTED BY COUNSEL
The holders of the Common Units have not been represented by counsel in
connection with the Offering, including the preparation of the Partnership
Agreement or the other agreements referred to herein.
THE PARTNERSHIP MAY ENGAGE IN ACQUISITIONS, DISPOSITIONS AND COMBINATIONS WITH
OTHER RETAIL MARKETERS
The propane industry consists of a small number of national retail
marketers and a larger number of regional companies. From time to time, these
national and regional retail marketers, including the Partnership, have in the
past engaged, and may in the future engage, in discussions concerning
acquisitions, dispositions and combinations of operations. While the Partnership
is not currently engaged in negotiations with any national or regional marketer
concerning any such acquisition, disposition or combination, there can be no
assurance that in the future the Partnership will not engage in any such
negotiations or pursue opportunities to engage in any such transaction. In
addition, although any merger, consolidation or combination involving the
Partnership, and any sale, exchange or disposition of all or substantially all
of its assets, would require the approval of a Unit Majority under the terms of
the Partnership Agreement, the Partnership and the General Partners are not
restricted under the Partnership Agreement from engaging in other transactions
that may not require the prior consent or vote of the Unitholders and that could
result in a change of control of the Partnership. If any of such transactions
were deemed to be a change of control under the First Mortgage Notes or the Bank
Credit Facility, the Partnership would be required to offer to redeem all of the
outstanding First Mortgage Notes at a premium and to repay all indebtedness
under the Bank Credit Facility. As a result, the occurrence of a change of
control could have a material adverse effect on the Partnership and its ability
to pay the Minimum Quarterly Distribution to the Unitholders.
DEPENDENCE ON KEY PERSONNEL
The Partnership believes that its success has been and will continue to be
dependent to a significant extent upon the efforts and abilities of its senior
management team. The failure by the Managing General Partner to retain members
of its senior management team could adversely affect the Partnership's ability
to build on the efforts undertaken by its current management to increase the
efficiency and profitability of the Partnership. Mr. Paliughi, the President and
Chief Executive Officer of the Managing General Partner, is employed pursuant to
an employment contract that expires on January 2, 1998. See
'Management -- Employment Arrangements with Executive Officers.' The loss of Mr.
Paliughi or other members of senior management could adversely affect the
Partnership.
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY
Conflicts of interest could arise as a result of the relationships between
the Partnership, on the one hand, and the Managing General Partner and its
Affiliates, on the other. The directors and officers of the Managing General
Partner have fiduciary duties to manage the Managing General Partner in a manner
beneficial to its stockholders. At the same time, the Managing General Partner,
as general partner, has fiduciary duties to manage the Partnership in a manner
beneficial to the Partnership and the Unitholders. The duties of the Managing
General Partner, as general partner, to the Partnership and the Unitholders,
therefore, may come into conflict with the duties of the directors and officers
of the Managing General Partner to its stockholders.
Such conflicts of interest might arise in the following situations, among
others:
(i) Decisions of the Managing General Partner with respect to the
amount and timing of cash expenditures, borrowings, issuances of additional
Units and reserves in any quarter will affect whether or the extent to
which there is sufficient Available Cash from Operating Surplus to meet
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the Minimum Quarterly Distribution and Target Distribution Levels on all
Units in a given quarter. In addition, actions by the Managing General
Partner may have the effect of enabling the Managing General Partner to
receive Incentive Distributions or accelerating the expiration of the
Subordination Period or the conversion of Subordinated Units into Common
Units.
(ii) The Partnership will not have any employees and will rely solely
on employees of its subsidiaries, the Managing General Partner and other
Affiliates.
(iii) Under the terms of the Partnership Agreement, the Partnership
will reimburse the Managing General Partner and its Affiliates (including
Triarc) at cost for all expenses incurred on behalf of the Partnership,
including costs incurred in rendering corporate staff and support services
to the Partnership. On a pro forma basis, approximately $56.8 million of
expenses would have been reimbursed by the Partnership to the Managing
General Partner in 1995 (comprising approximately $33.0 million in salary,
payroll tax and other compensation paid to employees of the Managing
General Partner and approximately $23.8 million for all other operating
expenses). In addition, Affiliates of the Managing General Partner
(including Triarc) may provide certain administrative services for the
Managing General Partner on behalf of the Partnership and will be
reimbursed for all expenses incurred in connection therewith. Furthermore,
the Managing General Partner and its Affiliates may provide additional
services to the Partnership for which the Partnership will be charged
reasonable fees as determined by the Managing General Partner.
(iv) Whenever possible, the Managing General Partner intends to limit
the Partnership's liability under contractual arrangements to all or
particular assets of the Partnership, with the other party thereto to have
no recourse against the Managing General Partner, the Special General
Partner, or their respective assets.
(v) Any agreements between the Partnership and the Managing General
Partner and its Affiliates will not grant to the holders of Common Units,
separate and apart from the Partnership, the right to enforce the
obligations of the Managing General Partner and such Affiliates in favor of
the Partnership. Therefore, the Managing General Partner, in its capacity
as a general partner of the Partnership, will be primarily responsible for
enforcing such obligations.
(vi) Under the terms of the Partnership Agreement, the Managing
General Partner is not restricted from causing the Partnership to pay
itself or its Affiliates for any services rendered on terms that are fair
and reasonable to the Partnership or entering into additional contractual
arrangements with any of such entities on behalf of the Partnership.
Neither the Partnership Agreement nor any of the other agreements,
contracts and arrangements between the Partnership, on the one hand, and
the Managing General Partner and its Affiliates, on the other, are or will
be the result of arms'-length negotiations.
(vii) The Managing General Partner may exercise its right to call for
and purchase Units as provided in the Partnership Agreement or assign such
right to one of its Affiliates or to the Partnership.
(viii) The Partnership Agreement does not prohibit the Partnership
from engaging in roll-up transactions. Although the Managing General
Partner has no present intention of causing the Partnership to engage in
any such transaction, it is possible it will do so in the future. There can
be no assurance that a roll-up transaction would not have a material
adverse effect on a Unitholder's investment in the Partnership.
(ix) The Managing General Partner (unless the Triarc Merger occurs)
and the Special General Partner are prohibited from conducting any business
or having any operations other than those incidental to serving as general
partners of the Partnership and the Operating Partnership so long as they
are general partners of the Partnership. The Partnership Agreement provides
that it will not constitute a breach of the Managing General Partner's
fiduciary duties to the Partnership or the Unitholders for Affiliates of
the General Partners (other than the Special General Partner) to engage in
certain activities of the type conducted by the Partnership, other than
retail propane sales to end users in the continental United States, even if
in direct competition with the Partnership. However, in the event of the
Triarc Merger, the ability of the Managing General Partner to engage in
activities other than those incidental to serving as a general partner of
the Operating Partnership
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and the Partnership and to compete with the Partnership in certain propane
related activities, such as trading, transportation, storage and wholesale
distribution, will not be restricted. Furthermore, the General Partners and
their Affiliates have no obligation to present business opportunities to
the Partnership.
Unless provided for otherwise in the partnership agreement, Delaware law
generally requires a general partner of a Delaware limited partnership to adhere
to fiduciary duty standards under which it owes its limited partners duties of
good faith, fairness and loyalty and which generally prohibit such general
partner from taking any action or engaging in any transaction as to which it has
a conflict of interest. The Partnership Agreement expressly permits the Managing
General Partner to resolve conflicts of interest between itself or its
Affiliates, on the one hand, and the Partnership or the Unitholders, on the
other, and to consider, in resolving such conflicts of interest, the interests
of other parties in addition to the interests of the Unitholders. In addition,
the Partnership Agreement provides that a purchaser of Common Units is deemed to
have consented to certain conflicts of interest and actions of the General
Partners and their Affiliates that might otherwise be prohibited, including
those described in paragraphs (i)-(ix) above, and to have agreed that such
conflicts of interest and actions do not constitute a breach by the General
Partners of any duty stated or implied by law or equity. The General Partners
will not be in breach of their obligations under the Partnership Agreement or
their duties to the Partnership or the Unitholders if the resolution of such
conflict is fair and reasonable to the Partnership. The latitude given in the
Partnership Agreement to the Managing General Partner in resolving conflicts of
interest may significantly limit the ability of a Unitholder to challenge what
might otherwise be a breach of fiduciary duty. The Managing General Partner
believes however, that such latitude is necessary and appropriate to enable it
and the Special General Partner to serve as general partners of the Partnership
without undue risk of liability.
The Partnership Agreement expressly limits the liability of the General
Partners by providing that the General Partners, their Affiliates and their
respective officers and directors will not be liable for monetary damages to the
Partnership, the limited partners or assignees for errors of judgment or for any
actual omissions if such General Partner and other persons acted in good faith.
In addition, the Partnership is required to indemnify the General Partners,
their Affiliates and their respective officers, directors, employees and agents
to the fullest extent permitted by law, against liabilities, costs and expenses
incurred by such General Partner or such other persons, if the General Partners
or such persons acted in good faith and in a manner they reasonably believed to
be in, or not opposed to, the best interests of the Partnership and, with
respect to any criminal proceedings, had no reasonable cause to believe the
conduct was unlawful.
The provisions of Delaware law that allow the common law fiduciary duties
of a general partner to be waived or modified by a partnership agreement have
not been resolved in a court of law, and the Managing General Partner has not
obtained an opinion of counsel covering the provisions set forth in the
Partnership Agreement that purport to waive or restrict the fiduciary duties of
the General Partners that would be in effect under common law were it not for
the Partnership Agreement. See 'Conflicts of Interest and Fiduciary
Responsibility -- Fiduciary Duties of the General Partners.'
TAX RISKS
For a general discussion of the expected federal income tax consequences of
owning and disposing of Common Units, see 'Tax Considerations.'
TAX TREATMENT IS DEPENDENT ON PARTNERSHIP STATUS
The availability to a holder of Common Units of the federal income tax
benefits of an investment in the Partnership depends, in large part, on the
classification of the Partnership as a partnership for federal income tax
purposes. Moreover, in order for the Partnership to continue to be classified as
a partnership for federal income tax purposes, at least 90% of the Partnership's
gross income for each taxable year must consist of 'qualifying income.' Based on
certain representations made by the General Partners and the Partnership,
Counsel is of the opinion that, under current law, the Partnership will be
classified as a partnership for federal income tax purposes. However, no ruling
from the IRS as to such
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issues has been or will be requested, and the opinion of Counsel is not binding
on the IRS. See 'Tax Considerations -- Partnership Status.'
If the Partnership were classified as an association taxable as a
corporation for federal or state income tax purposes, the Partnership would pay
tax on its income at corporate rates (currently at a 35% federal rate),
distributions would generally be taxed again to the Unitholders as corporate
distributions, and no income, gains, losses or deductions would flow through to
the Unitholders. Because a tax would be imposed upon the Partnership as an
entity, the cash available for distribution to the holders of Common Units would
be substantially reduced. Treatment of the Partnership as an association taxable
as a corporation or otherwise as a taxable entity would result in a material
reduction in the anticipated cash flow and after-tax return to the holders of
Common Units and, thus, would likely result in a substantial reduction in the
value of the Common Units. See 'Tax Considerations -- Partnership Status.'
There can be no assurance that the law will not be changed so as to cause
the Partnership to be treated as an association taxable as a corporation for
federal income tax purposes or otherwise to be subject to entity-level taxation.
The Partnership Agreement provides that, if a law is enacted or existing law is
modified or interpreted in a manner that subjects the Partnership to taxation as
a corporation or otherwise subjects the Partnership to entity level taxation for
federal, state or local income tax purposes, certain provisions of the
Partnership Agreement relating to the subordination of distributions on
Subordinated Units will be subject to change, including a decrease in the
Minimum Quarterly Distribution and the Target Distribution Levels to reflect the
impact of such law on the Partnership. See 'Cash Distribution
Policy -- Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels.'
NO IRS RULING WITH RESPECT TO TAX CONSEQUENCES
No ruling has been requested from the IRS with respect to classification of
the Partnership as a partnership for federal income tax purposes, whether the
Partnership's propane operations generate 'qualifying income' under SS7704 of
the Code or any other matter affecting the Partnership. Accordingly, the IRS may
adopt positions that differ from Counsel's conclusions expressed herein. It may
be necessary to resort to administrative or court proceedings in an effort to
sustain some or all of Counsel's conclusions, and some or all of such
conclusions ultimately may not be sustained. Any such contest with the IRS may
materially and adversely impact the market for the Common Units and the prices
at which Common Units trade. In addition, the costs of any contest with the IRS
will be borne directly or indirectly by some or all of the Unitholders and the
General Partners.
TAX LIABILITY EXCEEDING CASH DISTRIBUTIONS
A holder of Common Units will be required to pay federal income taxes and,
in certain cases, state and local income taxes on his allocable share of the
Partnership's income, even if he does not receive cash distributions from the
Partnership. There is no assurance that a Unitholder will receive cash
distributions equal to his allocable share of taxable income from the
Partnership or even the tax liability to him resulting from that income.
Further, a holder of Common Units may incur a tax liability, in excess of the
amount of cash received, upon the sale of his Common Units. See 'Tax
Considerations -- State, Local and Other Tax Considerations' for a discussion of
certain state and local tax considerations that may be relevant to prospective
Unitholders.
OWNERSHIP OF COMMON UNITS BY TAX-EXEMPT ORGANIZATIONS AND CERTAIN OTHER
INVESTORS
Investment in Common Units by certain tax-exempt entities, regulated
investment companies and foreign persons raises issues unique to such persons.
For example, virtually all of the taxable income derived by most organizations
exempt from federal income tax (including individual retirement accounts and
other retirement plans) from the ownership of a Unit will be unrelated business
taxable income and thus will be taxable to such a Unitholder. See 'Tax
Considerations -- Uniformity of Units -- Tax-Exempt Organizations and Certain
Other Investors.'
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DEDUCTIBILITY OF LOSSES
In the case of taxpayers subject to the passive loss rules (generally
individuals and closely held corporations), any losses generated by the
Partnership will only be available to offset future income generated by the
Partnership and cannot be used to offset income from other activities, including
passive activities or investments. Unused passive losses may be deducted when
the Unitholder disposes of all of his Units in a fully taxable transaction with
an unrelated party. Net passive income from the Partnership may be offset by
unused Partnership losses carried over from prior years, but not by losses from
other passive activities, including losses from other publicly traded
partnerships. See 'Tax Considerations -- Tax Consequences of Unit
Ownership -- Limitations on Deductibility of Partnership Losses.'
TAX SHELTER REGISTRATION; POTENTIAL IRS AUDIT
The Partnership has applied for registration with the IRS as a 'tax
shelter.' There is no assurance that the Partnership will not be audited by the
IRS or that tax adjustments will not be made. The rights of a Unitholder owning
less than a 1% profits interest in the Partnership to participate in the income
tax audit process are very limited. Further, any adjustments in the
Partnership's returns will lead to adjustments in the Unitholders' returns and
may lead to audits of Unitholders' returns and adjustments of items unrelated to
the Partnership. Each Unitholder would bear the cost of any expenses incurred in
connection with an examination of such Unitholder's personal tax return.
PROPOSED CHANGES IN FEDERAL INCOME TAX LAWS
Legislation passed by Congress in November 1995 (the '1995 Proposed
Legislation') would alter the tax reporting procedures and the deficiency
collection procedures applicable to large partnerships such as the Partnership
(generally defined as electing partnerships with more than 100 partners) and
would make certain additional changes to the treatment of large partnerships.
That legislation was generally intended to simplify the administration of the
tax reporting and deficiency collection rules governing large partnerships.
On March 19, 1996, President Clinton introduced tax legislation, known as
the Revenue Reconciliation Act of 1996, that would impact the taxation of
certain financial products, including partnership interests. One proposal would
treat a taxpayer as having sold an 'appreciated' partnership interest (one in
which gain would be recognized if such interest were sold) if the taxpayer or
related persons enters into one or more positions with respect to the same or
substantially identical property which, for some period, substantially
eliminates both the risk of loss and opportunity for gain on the appreciated
financial position (including selling 'short against the box' transactions).
Certain of these proposed changes are also discussed later in this section under
'Disposition of Common Units.'
The 1995 Proposed Legislation was vetoed by President Clinton on December
6, 1995. As of the date of this Prospectus, it is not possible to predict
whether any of the changes which were set forth in the 1995 Proposed
Legislation, the Revenue Reconciliation Act of 1996 or any other changes in the
federal income tax laws that would impact the Partnership and the holders of
Common Units will ultimately be enacted or, if enacted, what form they will
take, what the effective dates will be and what, if any, transition rules will
be provided.
UNIFORMITY OF COMMON UNITS AND NONCONFORMING DEPRECIATION CONVENTIONS
Because the Partnership cannot match transferors and transferees of Common
Units, uniformity of the economic and tax characteristics of the Common Units to
a purchaser of Common Units must be maintained. To maintain uniformity and for
other reasons, the Partnership will adopt certain depreciation and amortization
conventions that do not conform with all aspects of certain proposed and final
Treasury Regulations which may, or may not, be applicable. The IRS may challenge
those conventions and, if such a challenge were sustained, the uniformity of
Common Units could be affected. Non-uniformity could adversely affect the amount
of tax depreciation available to a purchaser of Common Units and could have a
negative impact on the value of the Common Units. See 'Tax
Considerations -- Uniformity of Units.'
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STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, Unitholders will be subject to other
taxes, such as state and local taxes, unincorporated business taxes, and estate,
inheritance or intangible taxes that may be imposed by the various jurisdictions
in which the Partnership does business or owns property. A Unitholder will be
required to file state income tax returns and to pay state income taxes in some
or perhaps all of such states and may be subject to penalties for failure to
comply with those requirements. It is the responsibility of each Unitholder to
file all state and local, as well as federal, tax returns that may be required
of such Unitholder. Counsel has not rendered an opinion on the state or local
tax consequences of an investment in the Partnership. See 'Tax
Considerations -- State, Local and Other Tax Considerations.'
PARTNERSHIP TAX INFORMATION AND AUDITS
The Partnership will furnish each holder of Common Units with a Schedule
K-1 that sets forth such holder's allocable share of income, gains, losses and
deductions. In preparing these schedules, the Partnership will use various
accounting and reporting conventions and adopt various depreciation and
amortization methods. There is no assurance that these schedules will yield a
result that conforms to statutory or regulatory requirements or to
administrative pronouncements of the IRS. Further, the Partnership's tax return
may be audited, and any such audit could result in an audit of a partner's
individual tax return as well as increased liabilities for taxes because of
adjustments resulting from the audit.
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THE TRANSACTIONS
Concurrently with the closing of the Offering, the Managing General Partner
and the Special General Partner will contribute substantially all of their
assets (which assets will not include an existing intercompany note from Triarc,
approximately $59.3 million of the net proceeds from the issuance of the First
Mortgage Notes and certain other assets of the Managing General Partner) to the
Operating Partnership as a capital contribution and the Operating Partnership
will assume substantially all of the liabilities of the Managing General Partner
and the Special General Partner (other than income tax liabilities), including
the First Mortgage Notes and all indebtedness of the Managing General Partner
outstanding under the Existing Credit Facility and the Other Existing
Indebtedness. Immediately thereafter, the Managing General Partner and the
Special General Partner will convey their limited partner interests in the
Operating Partnership to the Partnership. As a result of such contributions,
each of the Managing General Partner and the Special General Partner will have a
1.0% general partner interest in the Partnership and a 1.0101% general partner
interest in the Operating Partnership. In addition, the Managing General Partner
will receive in exchange for its contribution to the Partnership 4,533,638
Subordinated Units and the right to receive the Incentive Distributions.
Also concurrently with the closing of the Offering, the Managing General
Partner will issue $125 million aggregate principal amount of First Mortgage
Notes to certain institutional investors in a private placement. Approximately
$59.3 million of the net proceeds from the sale of the First Mortgage Notes (the
entire net proceeds of which are estimated to be $121.5 million) will be used by
the Managing General Partner to pay a dividend to Triarc. The remainder of the
net proceeds from the sale of the First Mortgage Notes (approximately $62.2
million) will be contributed by the Managing General Partner to the Operating
Partnership in connection with the Conveyance and will be used by the Operating
Partnership to repay (in the manner described below) a portion of the Managing
General Partner's indebtedness outstanding under the Existing Credit Facility
and the Other Existing Indebtedness, all of which indebtedness will be assumed
by the Operating Partnership in connection with the Conveyance. First,
approximately $30 million of such net proceeds will be used by the Operating
Partnership to repay indebtedness evidenced by the Refunding Notes, and then the
remainder of such net proceeds (approximately $32.2 million) will be used to
repay other indebtedness outstanding under the Existing Credit Facility and to
repay $4.9 million of Other Existing Indebtedness. The effective interest rates
on the Refunding Notes, the $27.3 million outstanding under the term loan
facility and the $4.9 million of Other Existing Indebtedness were 7.69%, 8.28%
and 8.34%, respectively, as of May 31, 1996.
After the repayment of the Refunding Notes and such other indebtedness as
described above, the net proceeds of the sale of the Common Units issued in the
Offering (estimated to be approximately $118.2 million) will be contributed to
the Operating Partnership which will use such proceeds to repay all remaining
indebtedness under the Existing Credit Facility, to make the Partnership Loan to
Triarc and to pay certain accrued management fees and tax sharing payments due
to Triarc from the Managing General Partner. The effective interest rate on the
remaining $9.2 million outstanding under the revolving credit facility and the
remaining $56.8 million outstanding under the term loan facility was 7.85% and
8.28%, respectively, as of May 31, 1996.
Concurrently with the closing of the Offering, the Operating Partnership
will also enter into the Bank Credit Facility, which will consist of the $15
million Working Capital Facility and the $40 million Acquisition Facility. It is
expected that these facilities will be undrawn at the time of the consummation
of the Transactions.
The Partnership believes that, if its assumptions about operating
conditions are correct, the Partnership will not borrow any funds under the
Working Capital Facility until the fourth quarter of 1996. To the extent that
Available Cash from Operating Surplus is insufficient to make the Minimum
Quarterly Distribution on the Common Units and the related distribution on the
General Partner Interests, the Partnership expects that it would have the
ability to borrow under the Working Capital Facility to make such distributions,
although any decision to do so would be based on circumstances at the time of
such distribution, and cannot be determined at the present time.
In addition, the Managing General Partner will dividend to Triarc a portion
(approximately $51.4 million aggregate principal amount) of an existing
intercompany note of Triarc.
50
<PAGE>
<PAGE>
For additional information regarding the terms of the First Mortgage Notes
and the Bank Credit Facility, see 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Description of Indebtedness.'
For additional information regarding the terms of the Partnership Loan, see
'Cash Distribution Policy -- Partnership Loan.'
USE OF PROCEEDS
The net proceeds to the Partnership from the sale of the Common Units
offered in the Offering are estimated to be approximately $118.2 million,
assuming an initial public offering price of $21.00 per Common Unit and after
deducting the underwriting discounts and commissions and the expenses of the
Offering. As of May 31, 1996, approximately $66.0 million of the net proceeds of
the Offering would have been used by the Operating Partnership to repay
indebtedness outstanding under the Existing Credit Facility. See 'The
Transactions.' As of May 31, 1996, approximately $123.3 million of principal was
outstanding under the Existing Credit Facility, of which approximately $84.1
million was outstanding under a term loan facility (the 'Existing Term Loan')
and approximately 39.2 million was outstanding under a revolving credit facility
(the 'Existing Revolving Loan'), including $30.0 million evidenced by the
Refunding Notes. The effective interest rates on the Existing Term Loan, the
Refunding Notes and the remaining $9.2 million outstanding under the Existing
Revolving Loan were 8.28%, 7.69% and 7.85%, respectively, as of May 31, 1996.
Indebtedness under Tranche A, Tranche B and Tranche C of the Existing Term Loan
is scheduled to amortize in semi-annual installments through March 31, 2000,
March 31, 2002 and March 31, 2003, respectively. Indebtedness under the Existing
Revolving Loan matures in March 31, 2000. The balance of the net proceeds of the
Offering, approximately $52.2 million, will be used by the Operating Partnership
to make the approximately $40.7 million Partnership Loan and to pay
approximately $11.5 million of accrued management fees and tax sharing payments
due to Triarc.
If the Underwriters' over-allotment option is exercised in full, the
estimated additional net proceeds to the Partnership will be approximately $18.1
million. All of the net proceeds from the exercise, if any, of the Underwriters'
over-allotment option, will be retained by the Partnership and used for general
partnership purposes.
51
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of National
Propane as of March 31, 1996, (ii) the pro forma adjustments required to give
effect to the Transactions, including the sale of Common Units offered hereby at
an assumed initial public offering price of $21.00 per Common Unit and the
application of the net proceeds therefrom as described in 'Use of Proceeds', and
(iii) the pro forma capitalization of the Partnership as of March 31, 1996 after
giving effect to such adjustments. This table should be read in conjunction with
the historical consolidated financial statements and related notes and the
unaudited pro forma condensed consolidated financial statements and related
notes appearing elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------------------------
PRO FORMA PARTNERSHIP
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term debt:
Existing Credit Facility....................................... $ 8,125 $ (8,125) $ -- (b)
Other Existing Indebtedness.................................... 2,904 (2,597) 307
---------- -------------- ------------
Total current maturities of long-term debt................ 11,029 (10,722) 307
---------- -------------- ------------
Long-term debt:
Existing Credit Facility....................................... 119,187 (119,187) -- (b)
Other Existing Indebtedness.................................... 4,383 (3,190) 1,193
First Mortgage Notes(b)........................................ -- 125,000 125,000
---------- -------------- ------------
Total long-term debt...................................... 123,570 2,623 126,193
---------- -------------- ------------
Stockholders' equity (deficit)...................................... (43,083) 43,083 --
---------- -------------- ------------
Partners' capital:
Limited partners............................................... -- 18,184 18,184
General partners............................................... -- 14,639 14,639
---------- -------------- ------------
Total partners' capital................................... -- 32,823 32,823
---------- -------------- ------------
Total capitalization................................................ $ 91,516 $ 67,807 $159,323
---------- -------------- ------------
---------- -------------- ------------
</TABLE>
- ------------
(a) For a description of the adjustments and assumptions used in preparing the
Unaudited Pro Forma Condensed Consolidated Financial and Operating Data,
see Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statements of Operations included elsewhere herein.
(b) The Partnership expects to enter into the Bank Credit Facility concurrent
with the closing of the Offering and anticipates that there will be no
outstanding borrowings thereunder at closing. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Description of Indebtedness' for a description of the Bank Credit Facility
and the First Mortgage Notes.
52
<PAGE>
<PAGE>
DILUTION
On a pro forma basis as of March 31, 1996, after giving effect to the
Transactions contemplated by this Prospectus, the net tangible book value per
Common Unit was $1.17. Purchasers of Common Units in the Offering will
experience substantial and immediate dilution in net tangible book value per
Common Unit for financial accounting purposes, as illustrated in the following
table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per Common Unit.............................. $21.00
------
Net negative tangible book value per Unit before the Offering(1)(2)................ ($21.10)
Increase in book value per Unit attributable to new investors...................... 22.27
------
Less: Pro forma net tangible book value per Unit after the Offering(2)(3).......... 1.17
------
Immediate dilution in net tangible book value per Common Unit to new investors..... $19.83
------
------
</TABLE>
- ------------
(1) Determined by dividing the number of Units (4,533,638 Subordinated Units and
the General Partner Interests having a dilutive effect equivalent to 446,838
Units) to be issued to the General Partners for the contribution of assets
and liabilities of the General Partners to the Partnership into the net
tangible book value of the contributed assets and liabilities (which
reflects the issuance and assumption of the First Mortgage Notes) and the
$59.3 million distribution to Triarc.
(2) The net negative tangible book value does not include intangible assets
contributed to the Partnership having a book value of $19.7 million.
(3) Determined by dividing the total number of Units (6,190,476 Common Units,
4,533,638 Subordinated Units and the General Partner Interests having a
dilutive effect equivalent to 446,838 Units) to be outstanding after this
Offering, into the pro forma net tangible book value of the Partnership,
after giving effect to the application of the net proceeds of the Offering.
------------------------
The following table sets forth the number of Units that will be issued by
the Partnership and the total consideration provided by the General Partners in
respect of their Units and the cash consideration contributed by the Common
Unitholders in the Offering upon the consummation of the Transactions
contemplated by this Prospectus:
<TABLE>
<CAPTION>
UNITS ACQUIRED
-----------------------
NUMBER PERCENT
---------- ------- TOTAL
CONSIDERATION
----------------
(IN THOUSANDS)
<S> <C> <C> <C>
General Partners........................................ 4,980,476(a) 44.6% $(85,377)(b)
New Investors........................................... 6,190,476 55.4 118,200
---------- ------- ----------------
Total.............................................. 11,170,952 100.0% $ 32,823
---------- ------- ----------------
---------- ------- ----------------
</TABLE>
- ------------
(a) Upon the consummation of the Transactions contemplated by this Prospectus,
the General Partners will own 4,533,638 Subordinated Units and the 4%
General Partner Interests having a dilutive effect equivalent to 446,838
Units.
(b) Total consideration for the General Partners represents the negative book
value of the net assets and liabilities contributed by the General Partners
to the Partnership at March 31, 1996. The total negative book value of the
consideration provided by the General Partners is as follows (dollars in
thousands):
<TABLE>
<S> <C>
Negative book value of assets and liabilities transferred by
the General Partners to the Operating Partnership at
March 31, 1996................................................................ $(26,077)
Add: Distribution to Triarc of a portion of the net proceeds from the issuance
of the First Mortgage Notes.................................................. (59,300)
--------
$(85,377)
--------
--------
</TABLE>
53
<PAGE>
<PAGE>
CASH DISTRIBUTION POLICY
GENERAL
The Partnership will distribute to its partners, on a quarterly basis, all
of its Available Cash in the manner described herein. Available Cash is defined
in the Glossary and generally means, with respect to any fiscal quarter of the
Partnership, all cash on hand at the end of such quarter less the amount of cash
reserves that is necessary or appropriate in the discretion of the Managing
General Partner to (i) provide for the proper conduct of the Partnership's
business, (ii) comply with applicable law or any Partnership debt instrument or
other agreement, or (iii) provide funds for distributions to Unitholders and the
General Partners in respect of any one or more of the next four quarters.
Cash distributions will be characterized as distributions from either
Operating Surplus or Capital Surplus. This distinction affects the amounts
distributed to Unitholders relative to the General Partners, and under certain
circumstances it determines whether holders of Subordinated Units receive any
distributions. See ' -- Quarterly Distributions of Available Cash.'
Operating Surplus is defined in the Glossary and refers generally to (i)
the cash balance of the Partnership on the date the Partnership commences
operations, plus $15.4 million, plus all cash receipts of the Partnership from
its operations, less (ii) all Partnership operating expenses, debt service
payments (including reserves therefor but not including payments required in
connection with the sale of assets or any refinancing with the proceeds of new
indebtedness or any equity offering), maintenance capital expenditures and
reserves established for future Partnership operations.
Capital Surplus is also defined in the Glossary and generally will be
generated only by borrowings (other than for working capital purposes), sales of
debt and equity securities and sales or other dispositions of assets for cash
(other than inventory, accounts receivable and other current assets and assets
disposed of in the ordinary course of business).
To avoid the difficulty of trying to determine whether Available Cash
distributed by the Partnership is from Operating Surplus or from Capital
Surplus, all Available Cash distributed by the Partnership from any source will
be treated as distributed from Operating Surplus until the sum of all Available
Cash distributed since the commencement of the Partnership equals the Operating
Surplus as of the end of the quarter prior to such distribution. Any Available
Cash in excess of such amount (irrespective of its source) will be deemed to be
from Capital Surplus and distributed accordingly.
If Available Cash from Capital Surplus is distributed in respect of each
Common Unit in an aggregate amount per Common Unit equal to the initial public
offering price of the Common Units (the 'Initial Unit Price'), plus any Common
Unit Arrearages, the distinction between Operating Surplus and Capital Surplus
will cease, and all distributions of Available Cash will be treated as if they
were from Operating Surplus. The Partnership does not anticipate that there will
be significant distributions from Capital Surplus.
The Subordinated Units are a separate class of interests in the
Partnership, and the rights of holders of such interests to participate in
distributions to partners differ from the rights of the holders of Common Units.
For any given quarter, any Available Cash will be distributed to the General
Partners (as holders of the General Partner Interests) and to the holders of
Common Units, and may also be distributed to the holders of Subordinated Units
depending upon the amount of Available Cash for the quarter, the amount of
Common Unit Arrearages, if any, whether the Subordination Period has ended and
other factors discussed below.
The Incentive Distributions are a separate class of interests in the
Partnership that represent the right to receive an increasing percentage of
quarterly distributions of Available Cash from Operating Surplus and of
liquidating distributions after the Target Distribution Levels have been
achieved. The Target Distribution Levels are based on the amounts of Available
Cash from Operating Surplus or liquidating distributions distributed in excess
of payments made with respect to the Minimum Quarterly Distributions and Common
Unit Arrearages.
Subject to the limitations described under 'The Partnership
Agreement -- Issuance of Additional Securities,' the Partnership has the
authority to issue additional Common Units or other equity securities of the
Partnership for such consideration and on such terms and conditions as are
established by the Managing General Partner, in its discretion without the
approval of the Unitholders. It is possible
54
<PAGE>
<PAGE>
that the Partnership will fund acquisitions of other propane businesses through
the issuance of additional Common Units or other equity securities of the
Partnership. Holders of any additional Common Units issued by the Partnership
will be entitled to share equally with the then-existing holders of Common Units
in distributions of Available Cash by the Partnership. In addition, the issuance
of additional partnership interests may dilute the value of the interests of the
then-existing holders of Common Units in the net assets of the Partnership.
Neither the Managing General Partner nor the Special General Partner will
be required to make an additional capital contribution to the Partnership or the
Operating Partnership in connection with the exercise of the over-allotment
option, but each will nonetheless be entitled to receive 2% of distributions of
Available Cash (except upon liquidation).
The discussion below indicates the percentages of cash distributions
required to be made to the General Partners and the holders of Common Units and
the circumstances under which holders of Subordinated Units are entitled to cash
distributions and the amounts thereof. For a discussion of Available Cash from
Operating Surplus available for distributions with respect to the Common Units
on a pro forma basis, see ' -- Cash Available for Distribution.'
QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH
The Partnership will make distributions to its partners with respect to
each quarter of the Partnership prior to its liquidation in an amount equal to
100% of its Available Cash for such quarter. The Partnership expects to make
distributions of all Available Cash within approximately 45 days after the end
of each fiscal quarter, commencing with the quarter ending September 30, 1996,
to holders of record on the applicable record date. The Minimum Quarterly
Distribution and the Target Distribution Levels for the period from the closing
of the Offering through September 30, 1996 will be adjusted based on the actual
length of such period. The Minimum Quarterly Distribution and the Target
Distribution Levels are also subject to certain other adjustments as described
below under ' -- Distributions from Capital Surplus' and ' -- Adjustment of
Minimum Quarterly Distribution and Target Distribution Levels.'
With respect to each quarter during the Subordination Period, to the extent
there is sufficient Available Cash, the holders of Common Units will have the
right to receive the Minimum Quarterly Distribution, plus any Common Unit
Arrearages, prior to any distribution of Available Cash to the holders of
Subordinated Units. This subordination feature will enhance the Partnership's
ability to distribute the Minimum Quarterly Distribution on the Common Units
during the Subordination Period. There is no guarantee, however, that the
Minimum Quarterly Distribution will be made on the Common Units. Upon expiration
of the Subordination Period, all Subordinated Units will convert on a
one-for-one basis into Common Units and will participate pro rata with all other
Common Units in future distributions of Available Cash. Under certain
circumstances, up to 2,266,820 of the Subordinated Units issued to the Managing
General Partner may convert into Common Units prior to the expiration of the
Subordination Period. Such number of Subordinated Units eligible for early
conversion may be increased by up to 223,419 Subordinated Units (or 242,765
Subordinated Units if the Underwriters' over-allotment option is exercised in
full) issued upon conversion of all or a portion of the Special General
Partner's 2% General Partner Interest. Further, additional capital contributions
by the Special General Partner upon other issuances of additional Partnership
securities will increase the number of Units into which such combined interest
may be exchanged. Common Units will not accrue arrearages with respect to
distributions for any quarter after the Subordination Period and Subordinated
Units will not accrue any arrearages with respect to distributions for any
quarter.
DISTRIBUTIONS FROM OPERATING SURPLUS DURING SUBORDINATION PERIOD
The Subordination Period will generally extend from the closing of the
Offering until the first day of any quarter beginning after June 30, 2001 in
respect of which (i) distributions of Available Cash from Operating Surplus on
the Common Units and the Subordinated Units with respect to each of the three
consecutive four-quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of the outstanding
Common Units and Subordinated Units during such periods, (ii) the Adjusted
Operating Surplus generated during each of the three consecutive four-quarter
periods immediately preceding such date equaled or exceeded the sum of the
Minimum
55
<PAGE>
<PAGE>
Quarterly Distribution on all of the outstanding Common Units and Subordinated
Units and the related distribution on the General Partner Interests during such
periods and (iii) there are no outstanding Common Unit Arrearages.
Prior to the end of the Subordination Period, a portion of the Subordinated
Units will convert into Common Units on a one-for-one basis on the first day
after the record date established for the distribution in respect of any quarter
ending on or after (a) June 30, 1999 (with respect to 1,133,410 Subordinated
Units, subject to adjustment as discussed below) and (b) June 30, 2000 (with
respect to 1,133,410 Subordinated Units, subject to adjustment as discussed
below) in respect of which (i) distributions of Available Cash from Operating
Surplus on the Common Units and the Subordinated Units with respect to each of
the three consecutive four-quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the
outstanding Common Units and Subordinated Units during such periods, (ii) the
Adjusted Operating Surplus generated during each of the two consecutive
four-quarter periods immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the outstanding Common Units and
Subordinated Units and the related distribution on the General Partner Interests
during such periods, and (iii) there are no outstanding Common Unit Arrearages;
provided, however, that the early conversion of the second tranche of
Subordinated Units may not occur until at least one year following the early
conversion of the first tranche of Subordinated Units. Such number of units
eligible for early conversion on June 30, 1999 and June 30, 2000 shall be
subject to increase in each case by a number of Subordinated Units equal to 25%
of the total Units issued upon conversion of the Special General Partner's 2%
General Partner Interest.
Upon expiration of the Subordination Period, all remaining Subordinated
Units will convert into Common Units on a one-for-one basis and will thereafter
participate, pro rata, with the other Common Units in distributions of Available
Cash. In addition, if the Managing General Partner is removed as a general
partner of the Partnership other than for Cause (i) the Subordination Period
will end and all outstanding Subordinated Units will immediately convert into
Common Units on a one-for-one basis, (ii) any existing Common Unit Arrearages
will be extinguished and (iii) the General Partners will have the right to
convert their remaining General Partner Interests (and the right to receive
Incentive Distributions) into Common Units or to receive cash in exchange for
such interests.
'Adjusted Operating Surplus' is defined in the Glossary and, for any
period, generally means Operating Surplus generated during such period, less (a)
any net increase in working capital borrowings during such period and (b) any
net reduction in cash reserves for Operating Expenditures that otherwise
increased the Operating Surplus generated during such period, plus (x) any net
decrease in working capital borrowings during such period and (y) any net
increase in cash reserves for Operating Expenditures during such period required
by any debt instrument for the repayment of principal, interest or premium.
Distributions by the Partnership of Available Cash from Operating Surplus
with respect to any quarter during the Subordination Period will be made in the
following manner:
first, 96% to the Common Unitholders, pro rata, and 4% to the General
Partners, pro rata, until there has been distributed in respect of each
outstanding Common Unit an amount equal to the Minimum Quarterly
Distribution for such quarter;
second, 96% to the Common Unitholders, pro rata, and 4% to the General
Partners, pro rata, until there has been distributed in respect of each
outstanding Common Unit an amount equal to any Common Unit Arrearages
accrued and unpaid with respect to any prior quarters during the
Subordination Period;
third, 96% to the Subordinated Unitholders, pro rata, and 4% to the
General Partners, pro rata, until there has been distributed in respect of
each outstanding Subordinated Unit an amount equal to the Minimum Quarterly
Distribution for such quarter;
thereafter, in the manner described in ' -- Incentive
Distributions -- Hypothetical Annualized Yield' below.
The above references to the 4% of Available Cash from Operating Surplus
distributed to the General Partners constitute references to the amount of the
Managing General Partner's and Special General Partner's aggregate percentage
interest in distributions from the Partnership and the Operating
56
<PAGE>
<PAGE>
Partnership on a combined basis, exclusive of their rights as holder of
Subordinated Units, Common Units or rights to receive Incentive Distributions.
Each of the Managing General Partner and the Special General Partner will own a
1.0% unsubordinated general partner interest in the Partnership and a 1.0101%
unsubordinated general partner interest in the Operating Partnership. Other
references in this Prospectus to the General Partner Interests or to
distributions of 4% of Available Cash also constitute references to the amount
of the General Partners' aggregate percentage interest in the Partnership and
the Operating Partnership on a combined basis exclusive of their rights as
holder of the Subordinated Units, Common Units or rights to receive Incentive
Distributions. In the event all or a portion of the Special General Partner's 2%
General Partner Interest is converted into Units, the Managing General Partner
will be required to amend the Partnership Agreement and the Operating
Partnership Agreement to decrease the percentage of profits, losses and
distributions previously allocated to the Special General Partner in respect of
its General Partner Interest to reflect such conversion and increase the
percentage of profits, losses and distributions that are allocated to the
Unitholders by the same amount. With respect to any Common Unit, the term
'Common Unit Arrearages' refers to the amount by which the Minimum Quarterly
Distribution in any quarter during the Subordination Period exceeds the
distribution of Available Cash from Operating Surplus actually made for such
quarter on a Common Unit issued in the Offering, cumulative for such quarter and
all prior quarters during the Subordination Period. Common Unit Arrearages will
not accrue interest.
DISTRIBUTIONS FROM OPERATING SURPLUS AFTER SUBORDINATION PERIOD
Distributions by the Partnership of Available Cash from Operating Surplus
with respect to any quarter after the Subordination Period will be made in the
following manner:
first, 96% to all Unitholders, pro rata, and 4% to the General
Partners, pro rata until there has been distributed in respect of each Unit
an amount equal to the Minimum Quarterly Distribution for such quarter;
thereafter, in the manner described in ' -- Incentive
Distributions -- Hypothetical Annualized Yield' below.
INCENTIVE DISTRIBUTIONS -- HYPOTHETICAL ANNUALIZED YIELD
For any quarter for which Available Cash from Operating Surplus is
distributed to the Common and Subordinated Unitholders in an amount equal to the
Minimum Quarterly Distribution on all Units and to the Common Unitholders in an
amount equal to any unpaid Common Unit Arrearages, then any additional Available
Cash from Operating Surplus in respect of such quarter will be distributed among
the Unitholders and the General Partners in the following manner:
first, 96% to all Unitholders, pro rata, and 4% to the General
Partners, pro rata, until the Unitholders have received (in addition to any
distributions to Common Unitholders to eliminate Common Unit Arrearages) a
total of $0.577 for such quarter in respect of each outstanding Unit (the
'First Target Distribution');
second, 85% to all Unitholders, pro rata, and 15% to the General
Partners, until the Unitholders have received (in addition to any
distributions to Common Unitholders to eliminate Common Unit Arrearages) a
total of $0.665 for such quarter in respect of each outstanding Unit (the
'Second Target Distribution');
third, 75% to all Unitholders, pro rata, and 25% to the General
Partners, until the Unitholders have received (in addition to any
distributions to Common Unitholders to eliminate Common Unit Arrearages) a
total of $0.863 for such quarter in respect of each outstanding Unit (the
'Third Target Distribution'); and
thereafter, 50% to all Unitholders, pro rata, and 50% to the General
Partners.
The distributions to the General Partners set forth above (other than in
the Managing General Partner's capacity as a holder of Subordinated Units) that
are in excess of the General Partner Interests represent the Incentive
Distributions which are paid to the Managing General Partner. The Managing
General Partner may transfer its right to receive Incentive Distributions to one
or more Persons.
The following table illustrates the percentage allocation of the additional
Available Cash from Operating Surplus between the Unitholders and the General
Partners up to the various Target Distribution Levels and a hypothetical
annualized percentage yield to be realized by a Unitholder at
57
<PAGE>
<PAGE>
each different level of allocation among the Unitholders and the General
Partners. For purposes of the following table, the annualized percentage yield
is calculated on a pretax basis assuming that (i) the Common Unit was purchased
at an amount equal to the assumed initial public offering price of $21.00 per
Common Unit and (ii) the Partnership distributed each quarter during the first
year following the investment the amount set forth under the column 'Quarterly
Distribution Target Amount.' The calculations are also based on the assumption
that the quarterly distribution amounts shown do not include any Common Unit
Arrearages. The amounts set forth under 'Marginal Percentage Interest in
Distributions' are the percentage interests of the General Partners and the
Unitholders in any Available Cash from Operating Surplus distributed up to and
including the corresponding amount in the column 'Quarterly Distribution Target
Amount,' until Available Cash distributed reaches the next Target Distribution
Level, if any. The percentage interests shown for the Unitholders and the
General Partners for the Minimum Quarterly Distribution are also applicable to
quarterly distribution amounts that are less than the Minimum Quarterly
Distribution. The table is presented for illustrative purposes only; there can
be no assurance that the Partnership will have Available Cash from Operating
Surplus in order to make such distributions.
<TABLE>
<CAPTION>
MARGINAL PERCENTAGE
INTEREST IN
QUARTERLY DISTRIBUTIONS
DISTRIBUTION HYPOTHETICAL -----------------------
TARGET ANNUALIZED GENERAL
AMOUNT YIELD UNITHOLDERS PARTNERS
------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Minimum Quarterly Distribution.................. $0.525 10.000% 96% 4%
First Target Distribution....................... $0.577 10.990% 96% 4%
Second Target Distribution...................... $0.665 12.667% 85% 15%
Third Target Distribution....................... $0.863 16.438% 75% 25%
Thereafter...................................... above $0.863 above 16.438% 50% 50%
</TABLE>
DISTRIBUTIONS FROM CAPITAL SURPLUS
Distributions by the Partnership of Available Cash from Capital Surplus
will be made in the following manner:
first, 96% to all Unitholders, pro rata, and 4% to the General
Partners, pro rata, until the Partnership has distributed, in respect of
each outstanding Unit issued in the Offering, Available Cash from Capital
Surplus in an aggregate amount per Unit equal to the Initial Unit Price;
second, 96% to the Common Unitholders, pro rata, and 4% to the General
Partners, pro rata, until the Partnership has distributed, in respect of
each outstanding Common Unit, Available Cash from Capital Surplus in an
aggregate amount equal to any unpaid Common Unit Arrearages with respect to
such Common Unit; and
thereafter, all distributions of Available Cash from Capital Surplus
will be distributed as if they were from Operating Surplus.
As a distribution of Available Cash from Capital Surplus is made, it is
treated as if it were a repayment of the Initial Unit Price. To reflect such
repayment, the Minimum Quarterly Distribution and the Target Distribution Levels
will be adjusted downward by multiplying each such amount by a fraction, the
numerator of which is the Unrecovered Capital of the Common Units (as defined in
the Glossary) immediately after giving effect to such repayment and the
denominator of which is the Unrecovered Capital of the Common Units immediately
prior to such repayment. This adjustment to the Minimum Quarterly Distribution
may accelerate the termination of the Subordination Period, thereby increasing
the likelihood of the conversion of Subordinated Units into Common Units.
When 'payback' of the Initial Unit Price has occurred, i.e., when the
Unrecovered Capital of the Common Units is zero (and any accrued Common Unit
Arrearages have been paid), then in effect the Minimum Quarterly Distribution
and each of the Target Distribution Levels will have been reduced to zero for
subsequent quarters. Thereafter, all distributions of Available Cash from all
sources will be treated as if they were from Operating Surplus. Because the
Minimum Quarterly Distribution and the Target Distribution Levels will have been
reduced to zero, the General Partners will be entitled thereafter to receive 50%
of all distributions of Available Cash.
Distributions of Available Cash from Capital Surplus will not reduce the
Minimum Quarterly Distribution or Target Distribution Levels for the quarter
with respect to which they are distributed.
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ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION LEVELS
In addition to reductions of the Minimum Quarterly Distribution and Target
Distribution Levels made upon a distribution of Available Cash from Capital
Surplus, the Minimum Quarterly Distribution, the Target Distribution Levels, the
Unrecovered Capital, the number of additional Common Units issuable during the
Subordination Period without a Unitholder vote, the number of Common Units
issuable upon conversion of the Subordinated Units and other amounts calculated
on a per Unit basis will be proportionately adjusted upward or downward, as
appropriate, in the event of any combination or subdivision of Common Units
(whether effected by a distribution payable in Common Units or otherwise), but
not by reason of the issuance of additional Common Units for cash or property.
For example, in the event of a two-for-one split of the Common Units (assuming
no prior adjustments), the Minimum Quarterly Distribution, each of the Target
Distribution Levels and the Unrecovered Capital of the Common Units would each
be reduced to 50% of its initial level.
The Minimum Quarterly Distribution and the Target Distribution Levels may
also be adjusted if legislation is enacted or if existing law is modified or
interpreted by the relevant governmental authority in a manner that causes the
Partnership to become taxable as a corporation or otherwise subjects the
Partnership to taxation as an entity for federal, state or local income tax
purposes. In such event, the Minimum Quarterly Distribution and the Target
Distribution Levels would be reduced to an amount equal to the product of (i)
the Minimum Quarterly Distribution and each of the Target Distribution Levels,
respectively, multiplied by (ii) one minus the sum of (x) the maximum effective
federal income tax rate to which the Partnership is then subject as an entity
plus (y) any increase that results from such legislation in the effective
overall state and local income tax rate to which the Partnership is subject as
an entity for the taxable year in which such event occurs (after taking into
account the benefit of any deduction allowable for federal income tax purposes
with respect to the payment of state and local income taxes). For example,
assuming the Partnership was not previously subject to state and local income
tax, if the Partnership were to become taxable as an entity for federal income
tax purposes and the Partnership became subject to a maximum marginal federal,
and effective state and local, income tax rate of 38%, then the Minimum
Quarterly Distribution and the Target Distribution Levels would each be reduced
to 62% of the amount thereof immediately prior to such adjustment.
DISTRIBUTIONS OF CASH UPON LIQUIDATION
Following the commencement of the dissolution and liquidation of the
Partnership, assets will be sold or otherwise disposed of from time to time and
the partners' capital account balances will be adjusted to reflect any resulting
gain or loss. The proceeds of such liquidation will, first, be applied to the
payment of creditors of the Partnership in the order of priority provided in the
Partnership Agreement and by law and, thereafter, be distributed to the
Unitholders and the General Partners in accordance with their respective capital
account balances as so adjusted. Partners are entitled to liquidating
distributions in accordance with capital account balances. Although operating
losses are allocated to all Unitholders, the allocations of gains and losses
upon liquidation are intended, to the extent possible, to entitle the holders of
outstanding Common Units to a preference over the holders of outstanding
Subordinated Units upon the liquidation of the Partnership, to the extent
required to permit Common Unitholders to receive their Unrecovered Capital plus
any unpaid Common Unit Arrearages. Thus net losses recognized upon liquidation
of the Partnership will be allocated to the Subordinated Units to the extent of
their capital account balances before any loss is allocated to the Common Units,
and net gains recognized upon liquidation will be allocated first to restore
negative balances in the capital accounts of the General Partners and other
Unitholders and then to the Common Unitholders until their capital account
balances equal their Unrecovered Capital plus unpaid Common Unit Arrearages.
However, no assurance can be given that there will be sufficient gain upon
liquidation of the Partnership to enable the Common Unitholders to fully recover
all of such amounts, even though there may be cash available for distribution to
the Subordinated Unitholders.
The manner of such adjustment is as provided in the Partnership Agreement,
the form of which is included as Appendix A to this Prospectus. If the
liquidation of the Partnership occurs before the end
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of the Subordination Period, any net gain (or unrealized gain attributable to
assets distributed in kind) will be allocated to the partners as follows:
first, to the General Partners and the Unitholders having negative
balances in their capital accounts to the extent of and in proportion to
such negative balances;
second, 96% to the Common Unitholders, pro rata, and 4% to the General
Partners, pro rata, until the capital account for each Common Unit is equal
to the sum of (i) the Unrecovered Capital in respect of such Common Unit,
(ii) the amount of the Minimum Quarterly Distribution for the fiscal
quarter during which liquidation of the Partnership occurs and (iii) any
unpaid Common Unit Arrearages in respect of such Common Unit;
third, 96% to the Subordinated Unitholders, pro rata, and 4% to the
General Partners, pro rata, until the capital account for each Subordinated
Unit is equal to the sum of (i) the Unrecovered Capital in respect of such
Subordinated Unit and (ii) the amount of the Minimum Quarterly Distribution
for the fiscal quarter during which the liquidation of the Partnership
occurs;
fourth, 96% to all Unitholders, pro rata, and 4% to the General
Partners, pro rata, until there has been allocated under this clause fourth
an amount per Common Unit equal to (a) the sum of the excess of the First
Target Distribution per Unit over the Minimum Quarterly Distribution per
Unit for each quarter of the Partnership's existence, less (b) the
cumulative amount per Unit of any distributions of Available Cash from
Operating Surplus in excess of the Minimum Quarterly Distribution per Unit
that were distributed 96% to the Unitholders, pro rata, and 4% to the
General Partners, pro rata for each quarter of the Partnership's existence;
fifth, 85% to all Unitholders, pro rata, and 15% to the General
Partners, until there has been allocated under this clause fifth an amount
per Unit equal to (a) the sum of the excess of the Second Target
Distribution per Unit over the First Target Distribution per Unit for each
quarter of the Partnership's existence, less (b) the cumulative amount per
Unit of any distributions of Available Cash from Operating Surplus in
excess of the First Target Distribution per Unit that were distributed 85%
to the Unitholders, pro rata, and 15% to the General Partners for each
quarter of the Partnership's existence;
sixth, 75% to all Unitholders, pro rata, and 25% to the General
Partners, until there has been allocated under this clause sixth an amount
per Common Unit equal to (a) the sum of the excess of the Third Target
Distribution per Unit over the Second Target Distribution per Unit for each
quarter of the Partnership's existence, less (b) the cumulative amount per
Unit of any distributions of Available Cash from Operating Surplus in
excess of the Second Target Distribution per Unit that were distributed 75%
to the Unitholders, pro rata, and 25% to the General Partners for each
quarter of the Partnership's existence; and
thereafter, 50% to all Unitholders, pro rata, and 50% to the General
Partners.
If the liquidation occurs after the Subordination Period, the distinction
between Common Units and Subordinated Units will disappear, so that clauses (ii)
and (iii) of paragraph second above and all of paragraph third above will no
longer be applicable.
Upon liquidation of the Partnership, any loss will generally be allocated
to the General Partners and the Unitholders as follows:
first, 96% to the Subordinated Unitholders in proportion to the
positive balances in their respective capital accounts and 4% to the
General Partners, pro rata, until the capital accounts of the holders of
the Subordinated Units have been reduced to zero;
second, 96% to the Common Unitholders, in proportion to the positive
balances in their respective capital accounts and 4% to the General
Partners, pro rata, until the capital accounts of the Common Unitholders
have been reduced to zero; and
thereafter, to the General Partners, pro rata.
If the liquidation occurs after the Subordination Period, the distinction
between Common Units and Subordinated Units will disappear, so that all of
paragraph first above will no longer be applicable.
Interim adjustments to capital accounts will be made at the time the
Partnership issues additional interests in the Partnership or makes
distributions of property. Such adjustments will be based on the fair market
value of the interests or the property distributed and any gain or loss
resulting therefrom
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will be allocated to the Unitholders and the General Partners in the same manner
as gain or loss is allocated upon liquidation. In the event that positive
interim adjustments are made to the capital accounts, any subsequent negative
adjustments to the capital accounts resulting from the issuance of additional
interests in the Partnership, distributions of property by the Partnership, or
upon liquidation of the Partnership, will be allocated in a manner which
results, to the extent possible, in the capital account balances of the General
Partners equaling the amount which would have been the General Partners' capital
accounts if no prior positive adjustments to the capital accounts had been made.
CASH AVAILABLE FOR DISTRIBUTION
Based on the amount of working capital that the Partnership is expected to
have at the time it commences operations in 1996 and the availability of the
Working Capital Facility, the Partnership believes that, if its assumptions
about operating and other conditions prove correct, the Partnership should have
sufficient Available Cash from Operating Surplus to enable the Partnership to
distribute the Minimum Quarterly Distribution on the outstanding Common Units
and Subordinated Units and the related distribution on the General Partner
Interests with respect to each of its quarters at least through the quarter
ending December 31, 1997, although no assurance can be given respecting such
distributions or any distribution after such date. The Partnership's belief is
based on a number of assumptions, including the assumptions that normal weather
conditions will prevail in the Partnership's operating areas, that the
Partnership's operating margins will remain constant, that all required interest
payments on the Partnership Loan will be made by Triarc and that market and
overall economic conditions will not change substantially. Although the
Partnership believes its assumptions are reasonable, whether the assumptions are
realized is not, in a number of cases, within the control of the Partnership and
cannot be predicted with any degree of certainty. For example, in any particular
year or even series of years, weather may deviate substantially from normal.
Therefore, certain of the Partnership's assumptions may prove to be inaccurate.
As a result, the actual Available Cash from Operating Surplus generated by the
Partnership could deviate substantially from that currently expected. See 'Risk
Factors.' In addition, the terms of the Partnership's indebtedness under certain
circumstances will restrict the ability of the Partnership to distribute cash to
Unitholders. See ' -- Partnership Loan' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Description of
Indebtedness.' Accordingly, no assurance can be given that distributions of the
Minimum Quarterly Distribution or any other amounts will be made. The
Partnership does not intend to update the expression of belief set forth above.
The amount of Available Cash from Operating Surplus needed to distribute
the Minimum Quarterly Distribution for four quarters on the Common Units and
Subordinated Units to be outstanding immediately after the Offering and on the
General Partner Interests is approximately $23.5 million (approximately $13.0
million for the Common Units, $9.5 million for the Subordinated Units and $1.0
million for the General Partner Interests). If the Underwriters' over-allotment
option is exercised in full, such amounts would be approximately $15.0 million
for the Common Units, $9.5 million for the Subordinated Units and $1.0 million
for the General Partner Interests, or an aggregate of approximately $25.5
million.
Pro forma Available Cash from Operating Surplus generated during 1994 and
1995 (approximately $22.7 million and $17.6 million, respectively) would have
been sufficient to cover the Minimum Quarterly Distribution on the Common Units
and the related distribution on the General Partner Interests, but would have
been insufficient by approximately $0.8 million and $5.9 million to cover the
Minimum Quarterly Distribution on the Subordinated Units and the related
distribution on the General Partner Interests in 1994 and 1995, respectively.
The decline in pro forma Available Cash from Operating Surplus generated during
1995 was primarily due to the fact that temperatures during the winter of
1994-95 across the markets served by the Partnership were substantially warmer
than the prior year. Pro forma Available Cash from Operating Surplus generated
during the twelve months ended March 31, 1996 (approximately $20.0 million),
would have been sufficient to cover the Minimum Quarterly Distribution on the
Common Units and the related distribution on the General Partner Interests, but
would have been insufficient by approximately $3.5 million to cover the Minimum
Quarterly Distribution on the Subordinated Units and the related distribution on
the General Partner Interests.
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Pro forma Available Cash from Operating Surplus generated during the three
months ended March 31, 1996 would have been approximately $13.4 million;
however, because of the highly seasonal nature of the Partnership's business,
such amount is not indicative of the actual amounts of Available Cash from
Operating Surplus that will be generated in subsequent quarters. The
Partnership's revenues and cash flows have historically been highest in the
first quarter. Although such $13.4 million generated during the three months
ended March 31, 1996 would have been in excess of the approximately $5.9 million
required to cover the Minimum Quarterly Distribution on the Common Units, the
Subordinated Units and the related distributions on the General Partner
Interests during such quarter, the Partnership would have established
significant reserves for, among other things, payment of the Minimum Quarterly
Distribution on the Common Units in subsequent quarters and future debt
payments, thereby decreasing the amount of Available Cash from Operating Surplus
that would have been distributed for such quarter. For the calculation of Pro
Forma Operating Surplus, see the table below.
PRO FORMA OPERATING SURPLUS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED TWELVE MONTHS THREE MONTHS
DECEMBER 31, ENDED ENDED
------------------ MARCH 31, MARCH 31,
1994 1995 1996 1996
------- ------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Operating profit as reported................................ $18,750 $14,501 $16,212 $ 12,224
Add management fees......................................... 4,561 3,000 3,000 750
Less standalone costs....................................... (1,500) (1,500) (1,500) (375)
------- ------- ------------- ------------
Pro forma operating profit.................................. 21,811 16,001 17,712 12,599
Add pro forma depreciation and amortization................. 10,024 10,645 10,825 2,601
------- ------- ------------- ------------
Pro forma EBITDA(a)......................................... 31,835 26,646 28,537 15,200
Add: Interest on $40.7 million Partnership Loan............. 5,500 5,500 5,500 1,375
Other income(b)....................................... 697 652 717 234
Less: Pro forma interest expense(c)......................... (10,905) (10,990) (10,960) (2,722)
Pro forma capital expenditures -- maintenance(d)...... (4,228) (4,030) (3,616) (649)
Pro forma provision for income taxes.................. (200) (200) (200) (50)
------- ------- ------------- ------------
Pro forma operating surplus................................. $22,699 $17,578 $19,978 $ 13,388
------- ------- ------------- ------------
------- ------- ------------- ------------
</TABLE>
- ------------
(a) EBITDA is defined as operating income plus depreciation and amortization
(excluding amortization of deferred financing costs). EBITDA should not be
considered as an alternative to net income (as an indicator of operating
performance) or as an alternative to cash flow (as a measure of liquidity
or ability to service debt obligations) and is not a measure of performance
or financial condition under generally accepted accounting principles, but
provides additional information for evaluating the Partnership's ability to
distribute the Minimum Quarterly Distribution. Cash flows in accordance
with generally accepted accounting principles consist of cash flows from
(i) operating, (ii) investing and (iii) financing activities. Cash flows
from operating activities reflect net income (loss) (including charges for
interest and income taxes not reflected in EBITDA), adjusted for (i) all
non-cash charges or income (including, but not limited to, depreciation and
amortization) and (ii) changes in operating assets and liabilities (not
reflected in EBITDA). Further, cash flows from investing and financing
activities are not included in EBITDA. For a discussion of the
Partnership's operating performance and cash flows provided by (used in)
operating, investing and financing activities, see 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
(b) Other income consists of finance fees and rental income.
(c) Excludes non-cash amortization of deferred financing costs of $350 per
annum and $88 for the three months ended March 31, 1996.
(d) Includes expenditures not expected to occur on an annual basis as follows:
1994 -- $1,790 (primarily computer hardware and systems installation);
1995 -- $590 (primarily the purchase of an airplane).
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Based on the Partnership's actual results of operations for the four months
ended April 30, 1996, limited data about operations in May 1996 and the
Partnership's estimated results of operations for the remainder of 1996, the
Partnership believes that it will generate Available Cash from Operating Surplus
of approximately $23.5 million during 1996, although there can be no assurance
it will generate such amount. The Partnership's belief is based on the
assumptions about weather, margins and market and economic conditions described
above as they apply to the remainder of fiscal 1996. As a result, the actual
Available Cash from Operating Surplus generated by the Partnership for 1996
could deviate substantially from that currently expected.
The amounts of pro forma Available Cash from Operating Surplus for 1994 and
1995 and for the three months and twelve months ended March 31, 1996 set forth
above were derived in part from the pro forma financial statements of the
Partnership. The pro forma adjustments are based upon currently available
information and certain estimates and assumptions. The pro forma financial
statements do not purport to present the results of operations of the
Partnership had the Partnership actually commenced operations as of the date
indicated. Furthermore, the pro forma financial statements are based on accrual
accounting concepts while Available Cash and Operating Surplus are defined in
the Partnership Agreement on a cash accounting basis. As a consequence, the
amounts of pro forma Available Cash from Operating Surplus shown above should
only be viewed as a general indication of the amounts of Available Cash from
Operating Surplus that may in fact have been generated by the Partnership had it
been formed in earlier periods. Available Cash is defined in the Glossary and
generally means, with respect to any fiscal quarter of the Partnership, all cash
on hand at the end of such quarter less the amount of cash reserves that is
necessary or appropriate in the discretion of the Managing General Partner to
(i) provide for the proper conduct of the Partnership's business, (ii) comply
with applicable law or any Partnership debt instrument or other agreement, or
(iii) provide funds for distributions to Unitholders and the General Partners in
respect of any one or more of the next four quarters. Operating Surplus is
defined in the Glossary and refers generally to (i) the cash balance of the
Partnership on the date the Partnership commences operations, plus $15.4
million, plus all cash receipts of the Partnership from its operations, less
(ii) all Partnership operating expenses, debt service payments (including
reserves therefor but not including payments required in connection with the
sale of assets or any refinancing with the proceeds of new indebtedness or any
equity offering), maintenance capital expenditures and reserves established for
future Partnership operations. For a more complete definition of Available Cash
and Operating Surplus, see the Glossary.
In addition, there are provisions in the First Mortgage Notes and the Bank
Credit Facility which will, under certain circumstances, restrict the
Partnership's ability to make distributions to its partners. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Description of Indebtedness.'
PARTNERSHIP LOAN
A portion of the Partnership's annual cash receipts will be interest
payments from Triarc under the Partnership Loan. On a pro forma basis, $5.5
million of the Partnership's Available Cash from Operating Surplus in 1995 of
approximately $17.6 million would have been derived from interest payments on
the Partnership Loan. Consequently, the Partnership's ability to make
distributions to Unitholders will depend in part on Triarc's ability to make
interest payments under the Partnership Loan.
The Partnership Loan will be a senior obligation of Triarc evidenced by a
note issued by Triarc to the Operating Partnership (the 'Partnership Note') and
secured by a pledge by Triarc of all of the shares of capital stock (the
'Pledged Stock') of the Managing General Partner that are owned by Triarc
(approximately 75.7% of the Managing General Partner's outstanding capital stock
as of the date of this Prospectus). The following is a summary of the material
terms of the Partnership Note, the form of which will be filed as an exhibit to
the Registration Statement of which this Prospectus is part. This summary is
qualified in its entirety by reference to the Partnership Note.
The Partnership Note will bear interest at a rate of 13.5% per annum,
payable semi-annually in arrears on each June 30 and December 30. The
Partnership Note will have a 14-year maturity, with required semi-annual
prepayments, without premium, of one-eighth the principal thereof beginning
seven years from the date of issuance. The Partnership Note generally may not be
prepaid in whole or
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in part prior to the fifth anniversary of the date of issuance; provided that
Triarc shall have the right, but not the obligation, to prepay the Partnership
Note without penalty or premium (i) by an amount equal to all or a portion of
the sum of (x) the total amount of any indebtedness (including refinancing
indebtedness) incurred by the Operating Partnership or the Partnership in
connection with an acquisition consummated by either that is repaid using the
proceeds of such prepayment and (y) the total amount of other cash (not
resulting from proceeds of the indebtedness referred to in clause (x)) paid by
the Operating Partnership or the Partnership in connection with such
acquisition; or (ii) in whole, but not in part, in connection with a transaction
(x) that results in either (A) the Managing General Partner no longer being an
Affiliate of Triarc or (B) the Managing General Partner no longer being an
Affiliate of the Operating Partnership and (y) where the total consideration
received in connection therewith indicates a value for each Subordinated Unit
(or Common Unit issued upon conversion thereof) of not less than the Initial
Unit Price, as adjusted for splits, reclassifications, distributions of Capital
Surplus and the like. During the sixth and seventh years after the date of
issuance, the Partnership Note may be prepaid in whole or in part at redemption
prices equal to 103.0% and 101.5%, respectively, of the principal amount
prepaid, together with accrued interest on the portion prepaid. At any time on
and after the seventh anniversary of the date of issuance, the Partnership Note
may be prepaid in whole or in part without premium or penalty. The Partnership
Note will be pari passu to Triarc's obligations to its other senior creditors,
if any (whose debt may be secured with other assets of Triarc) and structurally
subordinated to all creditors of Triarc's subsidiaries.
The Partnership Note will contain various affirmative covenants applicable
to Triarc, including a requirement that Triarc (i) use its best efforts to
prevent the Managing General Partner from issuing any additional shares of
capital stock to any Person other than Triarc, a permitted assignee of the
Partnership Note from Triarc or any other Person that pledges such shares to
secure the Partnership Note; (ii) use its best efforts to prevent SEPSCO, an
indirect wholly owned subsidiary of Triarc and, at the closing of the Offering,
the sole other shareholder of the Managing General Partner, from transferring
any of its shares in the Managing General Partner to any Person other than to
Triarc, any of its wholly owned subsidiaries, a permitted assignee of the
Partnership Note from Triarc, any other Person that pledges such shares to
secure the Partnership Note or in connection with a Permitted Third Party Sale
(as defined in the Partnership Note) that results in the Pledged Stock no longer
constituting security for the Partnership Note; (iii) use its best efforts to
prevent any shares of the capital stock of SEPSCO from being acquired by any
Person other than Triarc, any of its wholly owned subsidiaries, or a permitted
assignee of the Partnership Note from Triarc, at any time when SEPSCO owns any
shares of capital stock of the General Partner; (iv) comply in all material
respects with all applicable laws; (v) pay its material obligations when due;
(vi) provide the Operating Partnership with certain audited and unaudited
financial statements, proxy statements and other reports and (vii) notify the
Operating Partnership of any Event of Default (as defined in the Partnership
Note) or event which with notice or lapse of time would become an Event of
Default.
In addition, Triarc will covenant in the Partnership Note to prevent the
Managing General Partner from (a) incurring any indebtedness for borrowed money
at any time that the Operating Partnership does not have a security interest in
Retained Assets and/or cash or Cash Equivalents (each as defined in the
Partnership Note) having an aggregate 'Value' (as defined below) equal to the
then outstanding principal amount on the Partnership Note or (b) selling,
assigning, transferring, hypothecating or pledging any of its Retained Assets
unless immediately after giving effect thereto the Managing General Partner will
hold Units and/or cash or Cash Equivalents or Qualified Marketable Securities or
Qualified Public Company Securities (each as defined in the Partnership Note)
received on the sale thereof plus any other cash or Cash Equivalents designated
as Retained Assets (collectively, the 'Retained Assets') with a Value equal to
or greater than the then outstanding principal amount of the Partnership Note;
provided that, the Managing General Partner will be permitted to (i) sell,
assign, transfer, hypothecate or pledge Retained Assets in one or more
transactions in exchange for aggregate net after tax proceeds of not more than
$5 million and (ii) consummate the Triarc Merger (as defined below) without
complying with the foregoing restriction. For purposes of the foregoing, the
'Value' of the Common Units and the Qualified Public Company Securities shall be
deemed to be equal to one-half of the Current Trading Price (as defined in the
Partnership Note) therefor, the 'Value' of any Subordinated Units shall be
deemed to be equal to one-half of the value of the consideration received by the
Managing General Partner in connection with the most recent sale, assignment or
transfer of a Subordinated Unit, or if the Managing General Partner has not so
sold, assigned or transferred any
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Subordinated Units, one-half of the Current Trading Price of the Common Units,
the 'Value' of any cash or Cash Equivalents shall be 100% of the face value
therefor and the 'Value' of any Qualified Marketable Security shall be 100% of
the Current Trading Price therefor, as determined immediately after each
transaction or each repayment of the principal amount of the Partnership Note.
If at any time of determination the Value of such Retained Assets pledged or so
subject to restriction exceeds the outstanding principal amount of the
Partnership Note, such excess Retained Assets shall be released from the
foregoing restriction. The Managing General Partner may select which of such
assets will be released. Assets other than Retained Assets may be distributed or
sold by the Managing General Partner at any time. The Pledged Stock may be sold
by Triarc at any time in an arms-length transaction to an unrelated independent
third party provided that (i) the consideration received therefor is at least
equal to the fair market value of the interest so transferred, is in the form of
Permitted Consideration (as defined in the Partnership Note) and is pledged to
secure the Partnership Note (to the extent the Value of such consideration does
not exceed the then principal amount of the Partnership Note), (ii) if such sale
is of less than all of the Pledged Stock, the remaining Pledged Stock
constitutes at least a majority of the voting common stock of the Managing
General Partner then outstanding or the Operating Partnership then has a
security interest in any combination of cash or Cash Equivalents with a Value
equal to or greater than the then outstanding principal amount of the
Partnership Note and (iii) if an Event of Default shall have occurred and be
continuing, the Value of the net after tax proceeds received upon such sale is
at least equal to the outstanding principal amount of the Partnership Note. The
Partnership Note will contain a covenant of Triarc that, in the event of the
merger or consolidation of the Managing General Partner with and into Triarc
(the 'Triarc Merger'), Triarc will concurrently therewith pledge as security for
the Partnership Loan a similar amount of Retained Assets.
If an Event of Default exists with respect to the Partnership Note, the
Partnership may accelerate the maturity of the Partnership Note and exercise
other rights and remedies. In the case of an Event of Default referred to in (k)
below, the acceleration of the maturity of the Partnership Note will occur
automatically. Events of Default include (a) failure to pay any principal or
premium when due, or interest within five business days of when due, on the
Partnership Note; (b) payment default under (after giving effect to any
applicable grace periods or any extension of any maturity date), or the
acceleration of the maturity of, any indebtedness of Triarc or any guarantee by
Triarc of any indebtedness of any subsidiary, if the principal amount of such
indebtedness or guarantee, together with the principal amount of all other such
indebtedness and guarantees with respect to which a payment default (after the
expiration of any applicable grace period or any extension of the maturity date)
has occurred, or the maturity of which has been so accelerated, exceeds $20
million in the aggregate; (c) failure by Triarc to comply in any material
respect with any of its covenants or agreements contained in the Note for a
period of 30 days after notice thereof; (d) certain unsatisfied final judgments
in excess of $5 million; (e) the failure of the pledge by Triarc of its shares
in the Managing General Partner to be in full force and effect; (f) the issuance
by the Managing General Partner of any shares of its capital stock except as
permitted above; (g) the transfer by SEPSCO of any of its shares in the Managing
General Partner except as permitted above; (h) the incurrence by the Managing
General Partner of any indebtedness for borrowed money at any time that the
Partnership does not have a security interest in the requisite Retained Assets;
(i) the sale by the Managing General Partner of any of its Subordinated Units
(or Common Units issued upon conversion thereof) unless immediately after giving
effect thereto the Managing General Partner will hold the requisite amount of
Retained Assets; (j) the failure of Triarc to pledge concurrently with the
Triarc Merger as security for the Partnership Note the requisite amount of the
Retained Assets, except as permitted above; and (k) various bankruptcy or
insolvency events involving Triarc. If an Event of Default were to occur under
the Partnership Note and the Partnership accelerated the maturity of the
Partnership Note (or such acceleration occurred automatically in the case of an
Event of Default referred to in clause (k) above), all amounts outstanding
thereunder would become due. In such event, there could be no assurance that
Triarc would be able to satisfy its obligations under the Partnership Note or
that the Operating Partnership would be able to recover any amounts owed by
Triarc by foreclosing on, or otherwise exercising its remedies with respect to,
the capital stock of the Managing General Partner or any other assets of Triarc
securing the Partnership Loan. The Operating Partnership is prohibited from
foreclosing on and owning the capital stock of the Managing General Partner at
any time that the Managing General Partner continues to own its General Partner
Interest but its permitted assignee may do so. Triarc shall, if requested by the
Operating Partnership, use its best efforts to cause the Managing General
Partner to
65
<PAGE>
<PAGE>
transfer its General Partner Interest to a third party immediately prior to any
foreclosure by the Operating Partnership. The failure by Triarc to repay the
Partnership Loan would have a material adverse effect on the financial condition
of the Partnership and on the ability the Partnership to make any distributions
to Unitholders.
Triarc's obligations under the Partnership Note may, under certain
circumstances, be assigned to and assumed by any Qualified Transferee (as
defined in the Partnership Note) that has a consolidated net worth at least
equal to Triarc's consolidated net worth at such time and that acquires the
Managing General Partner, the Partnership or the Operating Partnership (whether
by merger, consolidation, acquisition of stock or assets or otherwise). The
Partnership Note may not be assigned by the Operating Partnership without
Triarc's consent, except that the Partnership Note will be assigned by the
Operating Partnership as security for its obligations under the First Mortgage
Notes and the Bank Credit Facility. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Description of Indebtedness.'
CERTAIN INFORMATION REGARDING TRIARC
Triarc is a holding company which, through its subsidiaries, is engaged in
four businesses: beverages, restaurants, specialty chemicals and dyes and
propane distribution. The beverage operations are conducted through Royal Crown
Company, Inc. ('Royal Crown') and Mistic Brands, Inc. ('Mistic'); the restaurant
operations are conducted through Arby's, Inc. ('Arby's'); the specialty
chemicals and dyes business is conducted through C.H. Patrick & Co., Inc. ('C.H.
Patrick'); and the propane distribution operations are conducted through
National Propane. On April 29, 1996, Triarc sold (the 'Graniteville Sale') the
textile business (the 'Textile Business') of its subsidiary, Graniteville
Company ('Graniteville') (other than, among other things, the stock of C.H.
Patrick), to Avondale Mills, Inc. for approximately $255 million in cash,
subject to certain post-closing adjustments. Through May 31, 1996 Triarc has
advanced $5 million in respect of such post-closing adjustments. Approximately
$189 million of such proceeds were used by Graniteville to repay its outstanding
principal amount of revolving loans and term loans under its credit facility
(which are not reflected on the parent company only pro forma condensed balance
sheet) with financial institutions at the closing of the Graniteville Sale.
The following is the unaudited parent company only pro forma condensed
balance sheet of Triarc as of March 31, 1996, which reflects only the assets and
liabilities of Triarc and does not reflect the individual assets and liabilities
of its subsidiaries which are shown on the net equity method, and which gives
effect to (i) the Graniteville Sale including the related payment of all of the
debt of the Textile Business, the cancellation of intercompany balances with
Graniteville and a $35 million distribution to Triarc from the proceeds of a new
bank financing of C.H. Patrick (collectively, the 'Completed Transactions') and
(ii) the Transactions as if they had all occurred on March 31, 1996. The pro
forma adjustments to the pro forma condensed balance sheet are described in the
accompanying notes to the pro forma condensed balance sheet which should be read
in conjunction with such statement. The pro forma condensed balance sheet does
not purport to be indicative of the actual financial position of Triarc had such
transactions actually been consummated on March 31, 1996 or of the future
financial position of Triarc. Also presented below are historical condensed
statements of operations and cash flows of Triarc for the three years ended
April 30, 1991, 1992 and 1993, the eight months ended December 31, 1993, the
years ended December 31, 1994 and 1995 and the three months ended March 31,
1996.
66
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. (PARENT COMPANY ONLY)
PRO FORMA CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------------------------------------------------
PRO
COMPLETED FORMA FOR
TRANSACTIONS COMPLETED TRANSACTIONS PRO
HISTORICAL ADJUSTMENTS TRANSACTIONS ADJUSTMENTS FORMA
---------- ----------- ----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents..................... $ 16,724 $ 38,646(c) $ 90,370 $ 40,700(i) $203,467
35,000(h) 59,300(j)
13,097(k)
Due from subsidiaries......................... 29,135 (2,503)(g) 26,632 (5,944)(k) 20,688
Other current assets.......................... 7,779 -- 7,779 -- 7,779
---------- ----------- ----------- ----------- --------
Total current assets...................... 53,638 71,143 124,781 107,153 231,934
Investment in consolidated subsidiaries, at
equity(a)................................... 209,624 (17,748)(c) 25,331 (59,300)(j) --
(7,790)(d) 67,145(l)
(7,326)(e) 2,500(m)
(116,429)(g) (2,646)(n)
(35,000)(h) (33,030)(o)
Notes receivable from subsidiaries............ 26,300 -- 26,300 -- 26,300
Deferred income tax benefit................... 15,964 (15,964)(f) -- -- --
Investments and other assets.................. 9,010 -- 9,010 -- 9,010
---------- ----------- ----------- ----------- --------
$ 314,536 $(129,114) $ 185,422 $ 81,822 $267,244
---------- ----------- ----------- ----------- --------
---------- ----------- ----------- ----------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of 9 1/2% promissory note
payable(b).................................. $ 5,274 $ -- $ 5,274 $ -- $ 5,274
Due to subsidiaries........................... 13,868 (6,531)(g) 7,337 -- 7,337
Accounts payable and accrued expenses......... 20,589 20,898(c) 23,215 7,153(k) 30,368
(18,272)(f)
---------- ----------- ----------- ----------- --------
Total current liabilities................. 39,731 (3,905) 35,826 7,153 42,979
---------- ----------- ----------- ----------- --------
Triarc note................................... -- -- -- 30,000(o) 30,000
Intercompany Note payable to Managing General
Partner..................................... 81,392 -- 81,392 (81,392)(o) --
Other Notes and loans payable to subsidiaries,
net of discount............................. 138,458 (112,401)(g) 26,057 40,700(i) 66,757
9 1/2% promissory note payable(b)............. 32,423 -- 32,423 -- 32,423
Deferred income taxes......................... -- 2,308(f) 2,308 26,858(l) 31,666
2,500(m)
Accumulated reductions in stockholders' equity
of consolidated subsidiaries in excess of
investment(a)............................... -- -- -- 18,362(o) 18,362
Other non-current liabilities................. 1,734 -- 1,734 -- 1,734
Stockholders' equity.......................... 20,798 (7,790)(d) 5,682 40,287(l) 43,323
(7,326)(e) (2,646)(n)
---------- ----------- ----------- ----------- --------
$ 314,536 $(129,114) $ 185,422 $ 81,822 $267,244
---------- ----------- ----------- ----------- --------
---------- ----------- ----------- ----------- --------
</TABLE>
(footnotes on next page)
67
<PAGE>
<PAGE>
(footnotes from previous page)
(a) The 'Investment in consolidated subsidiaries, at equity' includes all of
Triarc's direct and indirect owned subsidiaries. As such, it includes
investments in numerous holding companies, inactive companies and smaller
operating companies, as well as its principal operating subsidiaries, Royal
Crown, Mistic, Arby's, National Propane and Graniteville (including C.H.
Patrick) as detailed above. The investment in consolidated subsidiaries, as
adjusted on a pro forma basis for the Completed Transactions and the
Transactions, has a negative balance as a result of aggregate distributions
from consolidated subsidiaries and forgiveness of Triarc debt to
consolidated subsidiaries in excess of the investment in the consolidated
subsidiaries. Such excess has been reported in the accompanying pro forma
consolidated balance sheet as 'Accumulated Reductions in Stockholders'
Equity of Consolidated Subsidiaries in Excess of Investment.'
(b) Matures in 1996 ($5,274), 1997 ($3,880), 1998 ($2,546), 1999 ($1,712), 2000
($702) and thereafter ($23,583).
(c) To reflect the receipt by Triarc of the proceeds from the sale of the
Textile Business which, as of March 31, 1996, would have amounted to
$38,646 representing net proceeds from the sale of the Textile Business of
$251,379 ($257,629 cash proceeds less the payment of estimated expenses
related to the transaction of $6,250) less debt of the Textile Business
repaid ($207,110 as of March 31, 1996) and related prepayment penalties
($5,623). Such cash was transferred to Triarc as a tax sharing payment for
the income tax liability related to the sale of the Textile Business
($20,898) and an intercompany advance ($17,748) which was then cancelled,
thereby reducing the 'Investment in consolidated subsidiaries, at equity.'
(d) To reflect the equity in the loss on the sale of the Textile Business which
as of March 31, 1996 would have amounted to $7,790. Due to changes in the
balances of assets and liabilities sold or assumed through the April 29,
1996 closing date, the actual impact of the sale will differ from the
$38,646 net proceeds and the $7,790 loss above. Based on current estimates
and subject to post-closing adjustments, the impact of the sale as of the
April 29, 1996 closing date is expected to range from breakeven to a loss
of less than the $7,790.
(e) To reflect the equity in an extraordinary charge for the early
extinguishment of the debt of the Textile Business which as of March 31,
1996 would have amounted to $7,326.
(f) To reclassify the deferred income tax benefit as a result of the
utilization of a portion of the net operating loss carryforwards of Triarc
($18,272), the benefit of which had been previously recorded in 'Deferred
income tax benefit.'
(g) To reflect the cancellation of the intercompany notes payable by Triarc to
Graniteville ($112,401 as of March 31, 1996) and intercompany amounts due
to and from Graniteville ($6,531 and $2,503, respectively, as of March 31,
1996) in connection with the sale of the Textile Business.
(h) To reflect the receipt of a $35,000 advance from Graniteville which
occurred on May 16, 1996 from a portion of the proceeds of borrowings under
a new $50,000 C.H. Patrick bank credit facility entered into on such date
which were in turn dividended to Graniteville. The advance to Triarc was
then cancelled, thereby reducing the 'Investment in consolidated
subsidiaries, at equity.'
(i) To reflect a loan of $40,700 from the Partnership to Triarc.
(j) To reflect a cash dividend of $59,300 from National Propane to Triarc.
(k) To reflect the receipt of receivables from the Partnership representing
management fees of $5,944 and a tax sharing payment of $7,153 due as of
March 31, 1996.
(l) To reflect the estimated gain of $40,287 to be realized on the sale of the
Units consisting of the excess of the net proceeds from the sale of the
Units in excess of the interest sold ($67,145) less income taxes on the
gain ($26,858).
(m) To reflect as a contribution the transfer from National Propane to Triarc of
certain income tax liabilities.
(n) To reflect the equity in an extraordinary charge for the early
extinguishment of the majority of the debt of National Propane which as of
March 31, 1996 would have amounted to $2,646.
(o) To reflect a $51,392 dividend from National Propane to Triarc resulting in
'Accumulated reductions in stockholders' equity of consolidated
subsidiaries in excess of investment.' Such dividend represents a portion
of Triarc's $81,392 payable to National Propane with the remaining portion
of $30,000 becoming the 'Triarc note.'
68
<PAGE>
<PAGE>
TRIARC COMPANES, INC. (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER
YEAR ENDED APRIL 30, EIGHT MONTHS 31,
-------------------------------- ENDED DECEMBER --------
1991 1992 1993 31, 1993 1994
-------- -------- -------- --------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income and (expenses):
Equity in (losses) income from continuing operations
of subsidiaries..................................... $ (129) $ 12,196 $(15,634) $ 465 $ 29,610
Interest expense...................................... (22,973) (22,751) (24,858) (18,992) (28,807)
Unallocated general and administrative expenses....... (2,540) (2,961) (4,050) (8,622) (6,660)
Facilities relocation and corporate restructuring..... -- -- (7,200) -- (8,800)
Recovery of (provision for) doubtful accounts from
affiliates and former affiliates.................... (9,554) (9,221) (3,311) -- --
Cost of a proposed acquisition not consummated........ -- -- -- -- (5,480)
Shareholder litigation and other expenses............. 2,165 (2,004) (7,025) (6,424) (500)
Settlements with former affiliates.................... 2,871 -- 8,900 -- --
Other income (expense)................................ 1,248 813 517 (650) 508
-------- -------- -------- --------------- --------
Income (loss) from continuing operations before
income taxes.................................... (28,912) (23,928) (52,661) (34,223) (20,129)
Benefit from income taxes................................. 11,411 13,721 8,112 3,784 18,036
-------- -------- -------- --------------- --------
Income (loss) from continuing operations.......... (17,501) (10,207) (44,549) (30,439) (2,093)
Equity in losses of discontinued operations of
subsidiaries............................................ (55) 2,705 (2,430) (8,591) (3,900)
Equity in extraordinary charges of subsidiaries........... 703 -- (6,611) (448) (2,116)
Cumulative effect of changes in accounting principles
from:
Triarc Companies, Inc................................. -- -- (3,488) -- --
Equity in subsidiaries................................ -- -- (2,900) -- --
-------- -------- -------- --------------- --------
-- -- (6,338) -- --
-------- -------- -------- --------------- --------
Net income (loss)................................. (16,853) (7,502) (59,978) (39,478) (8,109)
Preferred stock dividend requirements..................... (11) (11) (121) (3,889) (5,833)
-------- -------- -------- --------------- --------
Net income (loss) applicable to common
stockholders.................................... $(16,864) $ (7,513) $(60,099) $ (43,367) $(13,942)
-------- -------- -------- --------------- --------
-------- -------- -------- --------------- --------
Income (loss) per share:
Continuing operations................................. $ (.68) $ (.39) $ (1.73) $ (1.62) $ (.34)
Discontinued operations............................... -- .10 (.09) (.40) (.17)
Extraordinary charges................................. .03 -- (.26) (.02) (.09)
Cumulative effect of changes in accounting
principles.......................................... -- -- (.25) -- --
-------- -------- -------- --------------- --------
Net income (loss)................................. $ (.65) $ (.29) $ (2.33) $ (2.04) $ (.60)
-------- -------- -------- --------------- --------
-------- -------- -------- --------------- --------
<CAPTION>
THREE MONTHS
ENDED MARCH
1995 31, 1996
-------- ------------
<S> <C> <C>
Income and (expenses):
Equity in (losses) income from continuing operations
of subsidiaries..................................... $(26,078) $ 2,997
Interest expense...................................... (15,794) (2,131)
Unallocated general and administrative expenses....... (2,072) --
Facilities relocation and corporate restructuring..... (2,700) --
Recovery of (provision for) doubtful accounts from
affiliates and former affiliates.................... 3,049 --
Cost of a proposed acquisition not consummated........ -- --
Shareholder litigation and other expenses............. (24) --
Settlements with former affiliates.................... -- --
Other income (expense)................................ 3,102 362
-------- ------------
Income (loss) from continuing operations before
income taxes.................................... (40,517) 1,228
Benefit from income taxes................................. 3,523 557
-------- ------------
Income (loss) from continuing operations.......... (36,994) 1,785
Equity in losses of discontinued operations of
subsidiaries............................................ -- --
Equity in extraordinary charges of subsidiaries........... -- (1,387)
Cumulative effect of changes in accounting principles
from:
Triarc Companies, Inc................................. -- --
Equity in subsidiaries................................ -- --
-------- ------------
-- --
-------- ------------
Net income (loss)................................. (36,994) 398
Preferred stock dividend requirements..................... -- --
-------- ------------
Net income (loss) applicable to common
stockholders.................................... $(36,994) $ 398
-------- ------------
-------- ------------
Income (loss) per share:
Continuing operations................................. $ (1.24) $ .06
Discontinued operations............................... -- --
Extraordinary charges................................. -- (.05)
Cumulative effect of changes in accounting
principles.......................................... -- --
-------- ------------
Net income (loss)................................. $ (1.24) $ .01
-------- ------------
-------- ------------
</TABLE>
69
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER
YEAR ENDED APRIL 30, EIGHT MONTHS 31,
-------------------------------- ENDED DECEMBER --------
1991 1992 1993 31, 1993 1994
-------- -------- -------- --------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)..................................... $(16,853) $ (7,502) $(59,978) $ (39,478) $ (8,109)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Equity in net losses (income) of subsidiaries..... (519) (14,901) 27,575 8,574 (23,594)
Dividends from subsidiaries....................... 4,763 1,080 3,127 -- 40,000
Depreciation and amortization..................... 1,246 1,248 1,248 1,371 2,573
Provision for facilities relocation and corporate
restructuring................................... -- -- 7,200 -- 8,800
Payments of facilities relocation and corporate
restructuring................................... -- -- (258) (2,970) (5,136)
Provision for cost of a proposed acquisition not
consummated in excess of payments............... -- -- -- -- 1,475
Interest capitalized and not paid................. -- -- -- -- 3,247
Reduction in commuted insurance liabilities
credited against notes payable.................. -- -- -- -- --
Change in due from/to subsidiaries and other
affiliates including capitalized interest
($21,017 in 1994 and $9,569 in 1995)............ 4,157 3,674 (15,214) 18,121 33,034
Deferred income tax provision (benefit)........... 603 (5,130) (2,199) 5,591 (2,899)
Provision for doubtful accounts from former
affiliates...................................... 9,554 9,221 3,311 -- --
Cumulative effect of change in accounting
principle....................................... -- -- 3,488 -- --
Other, net........................................ 737 424 6,848 449 (1,968)
Increase in receivables........................... -- -- -- -- (649)
Increase in restricted cash....................... -- -- -- (2,422) (498)
Decrease (increase) in prepaid expenses and other
current assets.................................. (1,288) 9,197 (1,156) 598 2,399
Increase (decrease) in accounts payable and
accrued expenses................................ (1,909) 2,182 5,824 (376) (18,249)
-------- -------- -------- --------------- --------
Net cash provided by (used in) operating
activities.................................. 491 (507) (20,184) (10,542) 30,426
-------- -------- -------- --------------- --------
Cash flows from investing activities:
Business acquisitions................................. -- -- -- -- --
Loans to subsidiaries................................. -- -- -- -- --
Investment in an affiliate............................ -- -- -- -- --
Capital contributed to a subsidiary................... -- -- -- -- --
Purchase of minority interests........................ -- -- (21,100) -- --
Other................................................. (18) (4) 2,079 (3,047) (83)
-------- -------- -------- --------------- --------
Net cash used in investing activities......... (18) (4) (19,021) (3,047) (83)
-------- -------- -------- --------------- --------
Cash flows from financing activities:
Issuance (repurchase) of Class A common stock......... -- -- 9,650 -- (344)
Payment of preferred dividends........................ (11) (11) (9) (2,557) (5,833)
Repayment of long-term debt........................... -- (52) (20,907) -- --
Borrowings from subsidiaries.......................... -- -- 141,600 -- --
Repayment of notes and loans payable to
subsidiaries........................................ -- -- (57,115) -- --
Other................................................. -- -- (4,620) (1,056) --
-------- -------- -------- --------------- --------
Net cash provided by (used in) financing
activities.................................. (11) (63) 68,599 (3,613) (6,177)
-------- -------- -------- --------------- --------
Net increase (decrease) in cash and cash equivalents...... 462 (574) 29,394 (17,202) 24,166
Cash and cash equivalents at beginning of period.......... 238 700 126 29,520 12,318
-------- -------- -------- --------------- --------
Cash and cash equivalents at end of period................ $ 700 $ 126 $ 29,520 $ 12,318 $ 36,484
-------- -------- -------- --------------- --------
-------- -------- -------- --------------- --------
<CAPTION>
THREE MONTHS
ENDED MARCH
1995 31, 1996
-------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..................................... $(36,994) $ 398
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Equity in net losses (income) of subsidiaries..... 26,078 (1,610)
Dividends from subsidiaries....................... 22,721 --
Depreciation and amortization..................... 3,626 --
Provision for facilities relocation and corporate
restructuring................................... 2,700 --
Payments of facilities relocation and corporate
restructuring................................... (3,278) (673)
Provision for cost of a proposed acquisition not
consummated in excess of payments............... -- --
Interest capitalized and not paid................. 3,271 --
Reduction in commuted insurance liabilities
credited against notes payable.................. (3,000) --
Change in due from/to subsidiaries and other
affiliates including capitalized interest
($21,017 in 1994 and $9,569 in 1995)............ 1,332 (130)
Deferred income tax provision (benefit)........... (382) --
Provision for doubtful accounts from former
affiliates...................................... -- --
Cumulative effect of change in accounting
principle....................................... -- --
Other, net........................................ 489 1,222
Increase in receivables........................... (4,715) 1,928
Increase in restricted cash....................... (22,887) 22,760
Decrease (increase) in prepaid expenses and other
current assets.................................. (214) 65
Increase (decrease) in accounts payable and
accrued expenses................................ 4,522 (2,399)
-------- ------------
Net cash provided by (used in) operating
activities.................................. (6,731) 21,561
-------- ------------
Cash flows from investing activities:
Business acquisitions................................. (29,240) --
Loans to subsidiaries................................. (18,375) (7,925)
Investment in an affiliate............................ (5,340) --
Capital contributed to a subsidiary................... (8,865) --
Purchase of minority interests........................ -- --
Other................................................. (57) (12)
-------- ------------
Net cash used in investing activities......... (61,877) (7,937)
-------- ------------
Cash flows from financing activities:
Issuance (repurchase) of Class A common stock......... (1,170) --
Payment of preferred dividends........................ -- --
Repayment of long-term debt........................... -- --
Borrowings from subsidiaries.......................... 45,900 --
Repayment of notes and loans payable to
subsidiaries........................................ -- (9,450)
Other................................................. (56) --
-------- ------------
Net cash provided by (used in) financing
activities.................................. 44,674 (9,450)
-------- ------------
Net increase (decrease) in cash and cash equivalents...... (23,934) 4,174
Cash and cash equivalents at beginning of period.......... 36,484 12,550
-------- ------------
Cash and cash equivalents at end of period................ $ 12,550 $ 16,724
-------- ------------
-------- ------------
</TABLE>
70
<PAGE>
<PAGE>
Because Triarc is a holding company, its ability to meet its cash
requirements (including required interest and principal payments on the
Partnership Loan) is primarily dependent upon cash flows from its subsidiaries
including loans and cash dividends and reimbursement by subsidiaries to Triarc
in connection with its providing certain management services and payments by
subsidiaries under certain tax sharing agreements.
Under the terms of various indentures and credit arrangements, Triarc's
principal subsidiaries are currently unable to pay any dividends or make any
loans or advances to Triarc. The stock of Triarc's principal subsidiaries and
substantially all of the assets of such subsidiaries are pledged as security for
indebtedness under the various debt agreements of Triarc's subsidiaries. As of
March 31, 1996, Triarc had outstanding external indebtedness consisting of a
$37.7 million 9 1/2% note (the '9 1/2% Note') and guarantees of external
indebtedness of its subsidiaries in the aggregate principal amount of $412.7
million ($125.5 million after giving effect to the Completed Transactions and
the Transactions. In addition, at March 31, 1996, Triarc owed intercompany
indebtedness of $219.9 million ($96.8 million after giving effect to the
Completed Transactions and the Transactions). Such intercompany indebtedness at
March 31, 1996 consisted of a 9 1/2% note in the principal amount of $112.4
million to Graniteville (which note was canceled in connection with the
Graniteville Sale), notes in the principal amounts of $23.8 million and $2.3
million to SEPSCO and a subsidiary of RC/Arby's Corporation ('RCAC'),
respectively (which bear interest at rates ranging from 9 1/2% to 13%), and an
$81.4 million non-interest bearing advance owed to National Propane (which is
being reduced to $30.0 million in connection with the Transactions). In
connection with all of such debt, the only scheduled principal payments required
during the remainder of 1996 are $5.3 million on the 9 1/2% Note.
As of March 31, 1996 Triarc had notes receivable from RCAC and its
subsidiaries in the aggregate amount of $26.3 million of which $19.6 million is
due on demand and $6.7 million is due in 1998 and which bear interest at a rate
of 11 7/8%.
Triarc's significant cash requirements for the remainder of 1996, in
addition to interest payments on the Partnership Note, are expected to be
limited to (i) general corporate expenses including cash used in operations,
(ii) $5.3 million and $3.6 million of principal and interest payments,
respectively, on the 9 1/2% Note, (iii) cash requirements for its facilities
relocation and corporate restructuring accruals of $2.2 million, and (iv) up to
$3.9 million of advances to affiliates under loan agreements and loans to RCAC
as necessary. There can be no assurances, however, that Triarc will not have
significant additional cash requirements in the future that could have a
material adverse effect on its ability to make required payments of principal
and interest on the Partnership Loan.
Triarc anticipates meeting its significant cash requirements through its
cash on hand (approximately $16.7 million as of March 31, 1996), dividends or
advances from the Managing General Partner and the Special General Partner,
reimbursement of general corporate expenses from subsidiaries in connection with
management services agreements to the extent such subsidiaries are able to pay
and net payments received under tax sharing agreements with certain subsidiaries
(which Triarc may not have to remit to the IRS due to the availability of
operating loss depletion and tax carryforwards). However, there can be no
assurances that Triarc's sources of cash will be sufficient to enable Triarc to
meet its cash requirements, including its obligations to make payments of
principal and interest on the Partnership Loan.
Upon consummation of the Transactions, payments received under tax sharing
agreements and the reimbursement of general corporate expenses by National
Propane will be limited. See 'The Partnership Agreement -- Reimbursement for
Services.' As a result of the Graniteville Sale, the textile division will no
longer make any payments under the tax sharing agreement with Triarc or
reimburse Triarc for general corporate expenses. Triarc expects to compensate
for such lower cash availability from its subsidiaries through additional cash
on hand of approximately $170 million from the cash received from the Completed
Transactions and the Transactions.
The Federal income tax returns of Triarc and its subsidiaries have been
examined by the Internal Revenue Service ('IRS') for the tax years 1985 through
1988. Triarc and its subsidiaries have resolved all issues related to such
audit. The amount which Triarc and its subsidiaries expect to pay in 1996 with
respect to such audit will not exceed $5.0 million. The IRS is currently
finalizing its examination of the Federal income tax returns of Triarc and its
subsidiaries for the tax years from 1989 through 1992 and has issued notices of
proposed adjustments increasing taxable income by approximately $145.0 million,
the tax effect of which has not yet been determined. Triarc is contesting the
majority of the proposed
71
<PAGE>
<PAGE>
adjustments and, accordingly, the amount and timing of any payments required as
a result thereof cannot presently be determined. However, it is not expected
that the resolution of the 1989 through 1992 examination will be finalized in
1996 and, accordingly, no tax payments with respect to such years are expected
to be required in 1996.
On a pro forma basis for the Transactions and the Completed Transactions,
Triarc's liquidity has improved significantly since November 1994, when National
Propane reclassified an existing intercompany note from Triarc as a component of
stockholders' equity because it determined, based upon circumstances at such
time, that Triarc's liquidity position was insufficient to enable Triarc to
repay the note. The factors present that resulted in that determination included
(i) the reduction of Triarc's consolidated cash to $49.0 million at September
30, 1994 from $119.0 million at December 31, 1993 and (ii) a pending acquisition
transaction which, if completed, would have required the utilization of a
significant amount of Triarc's available cash.
There can be no assurance that Triarc will continue to have cash on hand or
will in the future receive sufficient distributions from its subsidiaries in
order to enable it to satisfy its obligations under the Partnership Loan. The
failure of Triarc to make payments of principal and interest on the Partnership
Loan when due would have an adverse effect on the ability of the Partnership to
make any distributions to Unitholders. Furthermore, as a result of the holding
company structure of Triarc, creditors of Triarc, including the Partnership as
the holder of the Partnership Note, will effectively rank junior to all
creditors of Triarc's subsidiaries. In the event of the dissolution, bankruptcy,
liquidation or reorganization of such subsidiaries, the Partnership as the
holder of the Partnership Note would not receive any amounts in respect thereof
until after the payment in full of the creditors of such subsidiaries. As of
March 31, 1996 on a pro forma basis after giving effect to the Transactions and
the Completed Transactions and the use of proceeds therefrom, the aggregate
amount of indebtedness of Triarc and its subsidiaries to which the Partnership
as the holder of the Partnership Note would be effectively subordinated would
have been approximately $591.0 million. The failure by Triarc to repay the
Partnership Loan would have a material adverse effect on the financial condition
of the Partnership.
Triarc is a public company and its Class A Common Stock is listed on the
New York Stock Exchange under the symbol 'TRY.' Triarc's principal executive
offices are located at 900 Third Avenue, New York, New York 10022 and its
telephone number is (212) 230-3000. Certain reports, proxy statements and other
information filed by Triarc with the Commission can be obtained from Triarc upon
request at no cost and can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the Commission's regional offices at 7
World Trade Center, Suite 1300, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such documents can also be
inspected at the office of the NYSE, 20 Broad Street, New York, New York 10005.
72
<PAGE>
<PAGE>
SELECTED HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents selected consolidated financial data of
National Propane for each of the years in the two-year period ended April 30,
1993, the ten-month transition period ended December 31, 1993, each of the years
in the two-year period ended December 31, 1995 and each of the three-month
periods ended March 31, 1995 and 1996. The selected consolidated statement of
operations data for the ten-month transition period ended December 31, 1993 and
for the two years ended December 31, 1994 and 1995 and the selected consolidated
balance sheet data as of December 31, 1994 and 1995 have been derived from the
financial statements included elsewhere herein, which financial statements have
been audited by Deloitte & Touche LLP, independent auditors (whose report makes
reference to the report of other auditors), contained elsewhere herein. The
selected consolidated statement of operations data for each of the years in the
two-year period ended April 30, 1993 and each of the three-month periods ended
March 31, 1995 and 1996 and the selected consolidated balance sheet data as of
April 30, 1992 and 1993, December 31, 1993 and March 31, 1996 have been derived
from National Propane's unaudited consolidated financial statements which
reflect, in the opinion of National Propane's management, all adjustments
necessary to present fairly the data for such periods. Due to the seasonal
nature of the National Propane's business, the interim results of operations are
not indicative of results to be expected for full years. The following table
also presents unaudited selected pro forma consolidated financial data of the
Partnership for the year ended December 31, 1995 and as of and for the three
months ended March 31, 1996 reflecting the Offering and related Transactions as
if they had been consummated as of January 1, 1995 with respect to statement of
operations data and as of March 31, 1996 with respect to balance sheet data. The
unaudited selected pro forma consolidated financial data is not necessarily
indicative of the financial position or the results of operations of the
Partnership had the Offering and related Transactions been consummated on the
dates indicated or of the future results of operations of the Partnership. The
data for all of the periods presented below have been restated to reflect the
effects of the June 1995 merger of Public Gas with and into National Propane
which is further described in Note 3 to the accompanying consolidated financial
statements. National Propane's selected historical and pro forma consolidated
financial and operating data should be read in conjunction with the consolidated
financial statements and notes thereto, the pro forma consolidated financial
statements and notes thereto and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' included elsewhere herein.
<TABLE>
<CAPTION>
PARTNERSHIP
PRO FORMA(B)
HISTORICAL ------------
-------------------------------------------------------------
FISCAL YEAR ENDED TEN MONTHS
APRIL 30, ENDED YEAR ENDED DECEMBER 31,
--------------------- DECEMBER 31, -------------------------------------
1992 1993 1993(A) 1994 1995
-------- -------- ------------ -------- -----------------------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues......................... $144,667 $151,931 $119,249 $151,651 $148,983 $148,983
Cost of sales.............................. 109,329 117,366 92,301 109,683 109,059 109,059
-------- -------- ------------ -------- -------- ------------
Gross profit............................... 35,338 34,565 26,948 41,968 39,924 39,924
Selling, general and administrative
expenses (other than management fees
charged by parents)...................... 16,776 19,578 16,501 18,657 22,423 23,923
Management fees charged by parents(c)...... 3,271 2,328 3,485 4,561 3,000 --
Facilities relocation and corporate
restructuring............................ -- 7,647(d) 8,429(d) -- -- --
-------- -------- ------------ -------- -------- ------------
129,376 146,919 120,716 132,901 134,482 132,982
-------- -------- ------------ -------- -------- ------------
Operating profit (loss).................... 15,291 5,012(d) (1,467)(d) 18,750 14,501 16,001
-------- -------- ------------ -------- -------- ------------
Interest expense........................... (17,696) (16,770) (9,949) (9,726) (11,719) (11,340)
Interest income from Triarc(e)............. 16,334 17,127 10,360 9,751 -- 5,500
Other income, net.......................... 1,699 131 1,727 1,169 904 904
-------- -------- ------------ -------- -------- ------------
337 488 2,138 1,194 (10,815) (4,936)
-------- -------- ------------ -------- -------- ------------
Income before income taxes, extraordinary
charge and cumulative effect of change in
accounting principles.................... 15,628 5,500 671 19,944 3,686 11,065
Provision for income taxes................. 5,833 2,624 1,018 7,923 4,291 200
-------- -------- ------------ -------- -------- ------------
Income (loss) before extraordinary charge
and cumulative effect of change in
accounting principles.................... 9,795 2,876 (347) 12,021 (605) 10,865
Extraordinary charge....................... -- -- -- (2,116)(f) -- --
Cumulative effect of change in accounting
principles............................... -- 6,259(g) -- -- -- --
-------- -------- ------------ -------- -------- ------------
Net income (loss).......................... $ 9,795 $ 9,135 $ (347) $ 9,905 $ (605) $ 10,865
-------- -------- ------------ -------- -------- ------------
-------- -------- ------------ -------- -------- ------------
Net income per Unit(h)..................... $0.97
------------
------------
BALANCE SHEET DATA (AT PERIOD END):
Working capital (deficit).................. $(24,469)(i) $ 13,163 $ 5,479 $ (631) $ (4,357)
Due from Triarc(e)......................... 92,804 65,999 71,172 -- --
Total assets............................... 234,699 218,095 191,955 137,581 139,112
Long-term debt............................. 78,556 67,511 51,851 98,711 124,266
Stockholders' equity (deficit)(e).......... 81,666 88,063 88,971 (19,502) (48,600)
Partners' capital.......................... -- -- -- -- --
OPERATING DATA:
EBITDA(j).................................. $ 23,670 $ 13,087 $ 5,483 $ 28,774 $ 25,146 $ 26,646
Capital expenditures(k).................... 7,039 8,290 11,260 12,593 11,013 11,013
Retail propane gallons sold(l)............. 145,708 154,839 117,415 152,335 150,141 150,141
<CAPTION>
PARTNERSHIP
PRO FORMA(B)
------------
THREE MONTHS
ENDED MARCH 31,
------------------------------------
1995 1996
--------- ------------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues......................... $ 50,299 $ 59,981 $ 59,981
Cost of sales.............................. 33,862 41,154 41,154
--------- --------- ------------
Gross profit............................... 16,437 18,827 18,827
Selling, general and administrative
expenses (other than management fees
charged by parents)...................... 5,174 5,853 6,228
Management fees charged by parents(c)...... 750 750 --
Facilities relocation and corporate
restructuring............................ -- -- --
--------- --------- ------------
39,786 47,757 47,382
--------- --------- ------------
Operating profit (loss).................... 10,513 12,224 12,599
--------- --------- ------------
Interest expense........................... (2,858 ) (3,138 ) (2,810)
Interest income from Triarc(e)............. -- -- 1,375
Other income, net.......................... 300 278 278
--------- --------- ------------
(2,558 ) (2,860 ) (1,157)
--------- --------- ------------
Income before income taxes, extraordinary
charge and cumulative effect of change in
accounting principles.................... 7,955 9,364 11,442
Provision for income taxes................. 3,156 3,847 50
--------- --------- ------------
Income (loss) before extraordinary charge
and cumulative effect of change in
accounting principles.................... 4,799 5,517 11,392
Extraordinary charge....................... -- -- --
Cumulative effect of change in accounting
principles............................... -- -- --
--------- --------- ------------
Net income (loss).......................... $ 4,799 $ 5,517 $ 11,392
--------- --------- ------------
--------- --------- ------------
Net income per Unit(h)..................... $1.02
------------
------------
BALANCE SHEET DATA (AT PERIOD END):
Working capital (deficit).................. $ 1,649 $ 17,436
Due from Triarc(e)......................... -- 40,700
Total assets............................... 147,379 178,362
Long-term debt............................. 123,570 126,193
Stockholders' equity (deficit)(e).......... (43,083 ) --
Partners' capital.......................... -- 32,823
OPERATING DATA:
EBITDA(j).................................. $ 12,934 14,825 $ 15,200
Capital expenditures(k).................... 1,820 1,457 1,457
Retail propane gallons sold(l)............. 51,360 58,425 58,425
</TABLE>
(see footnotes on next page)
73
<PAGE>
<PAGE>
(footnotes from preceding page)
(a) In October 1993 National Propane's fiscal year ended April 30 and Public
Gas' fiscal year ended February 28 were changed to a calendar year ended
December 31. In order to conform the reporting periods of the combined
entities and to select a period deemed to meet the Securities and Exchange
Commission requirement for filing financial statements for a period of one
year, the ten-month period ended December 31, 1993 ('Transition 1993') has
been presented above and in the accompanying consolidated financial
statements. The selected consolidated financial and operating data as of
and for the fiscal years ended April 30, 1992 and 1993 ('Fiscal 1993'),
however, reflect the former year-ends of both National Propane and Public
Gas. Accordingly, Fiscal 1993 and Transition 1993 each include the results
of National Propane for the two-month period ended April 30, 1993 as
follows: Operating revenues -- $28,266; Operating loss -- $(5,190); Net
loss -- $(3,375) (see Note (d) below).
(b) For a description of the adjustments and assumptions used in preparing the
Unaudited Pro Forma Condensed Consolidated Financial and Operating Data,
see Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statement of Operations included elsewhere herein.
(c) Management fees charged by parents include costs charged to National
Propane by Triarc and to Public Gas by SEPSCO, its parent prior to the
Merger. (See Note 19 to the accompanying consolidated financial statements
for further discussion).
(d) Includes certain significant pretax charges recorded in April 1993
affecting Fiscal 1993 and Transition 1993 operating profit consisting of
(i) $8.4 million of facilities relocation and corporate restructuring
charges ($7.6 million of which affected both Fiscal 1993 and Transition
1993 due to National Propane's April 1993 being included in both periods
and $0.8 million of which affected only Transition 1993) and (ii) $0.5
million of allocated costs of a payment to the Special Committee of
Triarc's Board of Directors ($0.4 million of which affected both Fiscal
1993 and Transition 1993). (See Note 20 to the accompanying consolidated
financial statements).
(e) In November, 1994, National Propane reclassified its receivable from Triarc
as a component of stockholders' equity and began reserving all interest
accrued subsequent thereto. Receivables from SEPSCO are classified as a
component of stockholders' equity for all of the above periods. (See Note
13 to the accompanying consolidated financial statements). The pro forma
due from parent is classified as an asset because it will be evidenced by
an interest-bearing note with a fixed maturity.
(f) The extraordinary charge represents the write-off of unamortized deferred
financing costs and original issue discount, net of income taxes,
associated with the early extinguishment of debt.
(g) The cumulative effect of change in accounting principles resulted from
National Propane's adoption of SFAS No. 109 effective May 1, 1992.
(h) See Note (f) of Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Operations included elsewhere herein for details relating to
the calculation of net income per Unit.
(i) Reflects the classification of $35.0 million of long-term debt, which was
repaid in Fiscal 1993, as a current liability.
(j) EBITDA is defined as operating profit (loss) plus depreciation and
amortization (excluding amortization of deferred financing costs). EBITDA
should not be considered as an alternative to net income (as an indicator
of operating performance) or as an alternative to cash flow (as a measure
of liquidity or ability to service debt obligations) and is not a measure
of performance or financial condition under generally accepted accounting
principles, but provides additional information for evaluating the
Partnership's ability to distribute the Minimum Quarterly Distribution.
Cash flows in accordance with generally accepted accounting principles
consist of cash flows from (i) operating, (ii) investing and (iii)
financing activities. Cash flows from operating activities reflect net
income (loss) (including charges for interest and income taxes not
reflected in EBITDA), adjusted for (i) all non-cash charges or income
(including, but not limited to, depreciation and amortization) and (ii)
changes in operating assets and liabilities (not reflected in EBITDA).
Further, cash flows from investing and financing activities are not
included in EBITDA. For a discussion of the Partnership's operating
performance and cash flows provided by (used in) operating, investing and
financing activities, see 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.'
(k) The Partnership's capital expenditures, including capital leases, fall
generally into three categories: (i) maintenance capital expenditures,
which include expenditures for replacement of property, plant and
equipment, (ii) growth capital expenditures for the expansion of existing
operations, and (iii) acquisition capital expenditures, which include
expenditures related to the acquisition of retail propane operations.
An analysis by category for the years ended December 31, 1994 and 1995 and
the three months ended March 31, 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------ ----------------
1994 1995 1995 1996
------- ------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Maintenance(1)................................................................. $ 4,228 $ 4,030 $1,064 $ 649
Growth......................................................................... 3,672 4,936 733 808
Acquisition.................................................................... 4,693 2,047(2) 23 --
------- ------- ------ ------
Total...................................................................... $12,593 $11,013 $1,820 $1,457
------- ------- ------ ------
------- ------- ------ ------
</TABLE>
--------------------
(1) Includes expenditures not expected to occur on an annual basis as
follows: 1994 -- $1,790 (primarily computer hardware and systems
installation); 1995 -- $590 (primarily the purchase of an airplane).
(2) Includes $1,864 of assets purchased and contributed by Triarc (see
Note 19 to the accompanying consolidated financial statements).
(l) Retail propane gallons sold includes sales to (i) residential customers,
(ii) commercial and industrial customers, (iii) agricultural customers, and
(iv) dealers (located primarily in the Northeast) that resell propane to
residential and commercial customers.
74
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
National Propane (referred to as the 'Company' in the audited consolidated
financial statements set forth elsewhere herein) is primarily engaged in (i) the
retail marketing of propane to residential customers, commercial and industrial
customers, agricultural customers and to dealers (located primarily in the
Northeast) that resell propane to residential and commercial customers, and (ii)
the retail marketing of propane-related supplies and equipment, including home
and commercial appliances. National Propane believes it is the fifth largest
retail marketer of propane in terms of retail volume in the United States,
supplying approximately 250,000 active retail and wholesale customers in 24
states through its 165 service centers. National Propane's operations are
concentrated in the Midwest, Northeast, Southeast and Southwest regions of the
United States.
National Propane's residential and commercial customers use propane
primarily for space heating, water heating, clothes drying and cooking. In the
industrial market propane is used as a motor fuel for over-the-road vehicles,
forklifts and stationary engines, to fire furnaces, as a cutting gas and in
other process applications. Agricultural customers use propane for tobacco
curing, crop drying, poultry brooding and weed control. Dealers re-market
propane in small quantities, primarily in cylinders, for residential and
commercial uses.
The retail propane sales volumes are very dependent on weather conditions.
National Propane sells approximately 66% of its retail volume during the first
and fourth quarters, which are the winter heating season. As a result, cash flow
is greatest during the first and fourth quarters as customers pay for their
purchases. Propane sales are also dependent on climatic conditions which may
affect agricultural regions. National Propane believes that its exposure to
regional weather patterns is lessened because of the geographic diversity of its
areas of operations and through sales to commercial and industrial markets,
which are not as sensitive to variations in weather conditions.
Gross profit margins are not only affected by weather patterns but also by
changes in customer mix. In addition, gross profit margins vary by geographical
region. Accordingly, profit margins could vary significantly from year to year
in a period of identical sales volumes.
It should be noted that since National Propane reports on a calendar year
basis its results are affected by two different winter heating seasons: the end
of the first year's heating season, National Propane's first fiscal quarter, and
the beginning of the second heating season, National Propane's fourth fiscal
quarter.
Profitability is also affected by the price and availability of propane.
Worldwide availability of both gas liquids and oil affects the supply of propane
in domestic markets. National Propane does not believe it is overly dependent on
any one supplier. National Propane primarily buys propane on both one year
contracts and the spot market and generally does not enter into any fixed price
take-or-pay contracts. Furthermore, National Propane purchases propane from a
wide variety of sources. In 1995, no provider supplied over 15% of National
Propane's propane needs.
Based on demand and weather conditions the price of propane can change
quickly over a short period of time; in most cases the increased cost of propane
is passed on to the customer. However, in cases where increases cannot be passed
on or when the price of propane escalates faster than National Propane's ability
to raise customer prices, margins will be negatively affected.
The propane industry is very competitive. National Propane competes against
other major propane companies as well as local marketers in most of its markets,
with the most competition in the Midwest United States. Propane also competes
against other energy sources, primarily natural gas, oil and electricity.
The following discussion compares the three months ended March 31, 1996
with the three months ended March 31, 1995, the year ended December 31, 1995
with the year ended December 31, 1994 and the year ended December 31, 1994 with
the twelve months ended December 31, 1993. All of such periods reflect the
effects of the June 1995 merger (the 'Merger') of Public Gas Company with and
into National Propane. Because the Merger was a transfer of assets and
liabilities in exchange for shares
75
<PAGE>
<PAGE>
among a controlled group of companies, it has been accounted for in a manner
similar to a pooling of interests and, accordingly, all prior periods have been
restated to reflect the Merger.
RESULTS OF OPERATIONS
In connection with National Propane's change in fiscal year end during
1993, as described in Note 4 to National Propane's consolidated financial
statements appearing elsewhere herein, National Propane's audited financial
statements include the ten-month transition period ended December 31, 1993.
Solely for purposes of comparing the results of operations of National Propane
for 1994 with those of the comparable twelve-month period, the statement of
operations for the ten-month transition period ended December 31, 1993 has been
combined with the results of operations for the two-month period ended February
28, 1993 to form the combined unaudited twelve months ended December 31, 1993
which is presented below along with the comparable amounts for the years ended
December 31, 1994 and 1995 and the three months ended March 31, 1995 and 1996:
<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED THREE MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
DECEMBER 31, -------------------- --------------------
1993 1994 1995 1995 1996
------------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 154,841 $151,651 $148,983 $ 50,299 $ 59,981
Costs and expenses:
Cost of sales.............................. 117,950 109,683 109,059 33,862 41,154
Selling, general and administrative
expenses................................. 18,881 18,657 22,423 5,174 5,853
Management fees charged by parents......... 4,242 4,561 3,000 750 750
Facilities relocation and corporate
restructuring............................ 8,429 -- -- -- --
------------- -------- -------- -------- --------
149,502 132,901 134,482 39,786 47,757
------------- -------- -------- -------- --------
Operating profit...................... 5,339 18,750 14,501 10,513 12,224
Other income (expense):
Interest expense........................... (12,737) (9,726) (11,719) (2,858) (3,138)
Interest income from Triarc................ 13,342 9,751 -- -- --
Other income, net.......................... 1,408 1,169 904 300 278
------------- -------- -------- -------- --------
2,013 1,194 (10,815) (2,558) (2,860)
------------- -------- -------- -------- --------
Income before income taxes................. 7,352 19,944 3,686 7,955 9,364
Provision for income taxes................. 3,671 7,923 4,291 3,156 3,847
------------- -------- -------- -------- --------
Income (loss) before extraordinary
charge................................... 3,681 12,021 (605) 4,799 5,517
Extraordinary charge....................... -- (2,116) -- -- --
------------- -------- -------- -------- --------
Net income (loss)..................... $ 3,681 $ 9,905 $ (605) $ 4,799 $ 5,517
------------- -------- -------- -------- --------
------------- -------- -------- -------- --------
</TABLE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Revenues. Revenues increased $9.7 million, or 19.2%, to $60.0 million in
the first quarter 1996 compared with $50.3 million in the first quarter 1995
with propane revenues increasing $10.1 million, or 21.4% to $57.2 million in
1996 (compared with $47.1 million in 1995). This increase is principally due to
increased propane sales volume as retail gallons sold for 1996 increased 7.1
million, or 13.8%, to 58.4 million in 1996 compared to 51.3 million in 1995.
Based on Degree Days data (the 'Degree Days Data'), published by the National
Climatic Data Center, as applied to the geographical regions of National
Propane's operations, the first quarter 1996 was 12.3% colder than the first
quarter of 1995. The $10.1 million increase in propane revenue is due to volume
increases as a result of colder weather during the first quarter 1996 compared
to the first quarter 1995 ($5.6 million), increased selling price due to
increased costs ($3.5 million) and the impact of acquisitions which were made in
the second half of 1995 ($1.0 million). The increase in propane revenue was
partially offset by a decrease in National Propane's other lines of revenue,
primarily tank and equipment rental income.
76
<PAGE>
<PAGE>
Gross Profit. Gross profit increased $2.4 million, or 14.5%, to $18.8
million in 1996 compared with $16.4 million in 1995 due principally to higher
propane volumes in 1996 compared with 1995 slightly offset by (i) increased
product costs which could not be fully passed on to certain customers and (ii)
decreased revenue in tank and equipment rental income.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $0.7 million, or 13.1%, to $5.9 million in
1996 compared to $5.2 million in 1995. This increase reflects higher costs for
(i) medical benefits, (ii) business taxes due to higher volumes and (iii)
increased amortization of costs in excess of net assets of acquired companies
('Goodwill') and other intangibles. The increased amortization of Goodwill and
other intangibles reflects the effect of acquisitions in 1995.
Operating Profit. Operating profit increased $1.7 million, or 16.3% to
$12.2 million in 1996 compared with $10.5 million in 1995 due to the factors
noted above.
Interest Expense. Interest expense increased $0.3 million, or 9.8%, to $3.1
million in 1996 compared to $2.8 million in 1995. This increase was due to
higher borrowings under National Propane's revolving credit and term loan
agreement.
Other Income, Net. Other income remained constant in 1996 and 1995.
Provision for Income Taxes. The provision for income taxes in 1996 and 1995
has been provided at the estimated effective rates of 41% and 40%, respectively.
The slight increase in the proposed effective rate resulted from a change in the
mix of state income tax rates.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues. Revenues declined $2.7 million, or 1.8%, to $149.0 million in
1995 compared with $151.7 million in 1994 with propane revenues decreasing $2.3
million, or 1.6%, to $136.3 million in 1995 (compared with $138.6 million in
1994). This decrease is principally due to reduced propane sales volume as
retail gallons sold for 1995 decreased 2.2 million, or 1.4%, to 150.1 million in
1995 compared with 152.3 million in 1994. This decrease in propane sales volume
is primarily the net effect of an unusually warm winter season in the first
quarter of 1995 partially offset by (i) the impact of acquisitions which were
made in the second half of 1994 and the second half of 1995, and (ii) a slightly
colder fourth quarter in 1995. Based on Degree Days Data, as applied to the
geographical regions of National Propane's operations, the first quarter of 1995
was 14.4% warmer than the first quarter of 1994. During the first quarter of
1995, excluding the positive impact of increased volumes due to acquisitions,
National Propane sold 8.6 million fewer gallons than during the same quarter in
1994. Partially offsetting the impact of the warmer temperatures was (i) an
increase of 5.9 million gallons from businesses acquired during the second half
of 1994 and the first quarter of 1995, and (ii) higher volume resulting from
slightly colder temperatures in the fourth quarter of 1995. A slight decrease in
National Propane's other lines of revenue, primarily appliance sales, accounted
for the remainder of the decrease in revenues.
Gross Profit. Gross profit declined $2.0 million, or 4.8%, to $39.9 million
in 1995 compared with $41.9 million in 1994 due principally to (i) the lower
propane sales volume in 1995 compared with 1994, and (ii) lower profit margins
(26.8% in 1995 compared with 27.7% in 1994) reflecting higher product costs.
These higher product costs could be passed along only in part to customers in
the form of higher selling prices and were partially offset by lower overhead
costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $3.8 million, or 20.2%, to $22.4 million in
1995 compared with $18.6 million in 1994. This increase reflects higher costs
for (i) medical benefits, (ii) costs relating to new marketing programs
initiated in 1995 and (iii) increased amortization of Goodwill and other
intangibles. The increased amortization of Goodwill and other intangibles
reflects (i) the full year effects of acquisitions in 1994 as well as Goodwill
'pushed down' to Public Gas in April 1994 in connection with the SEPSCO Merger
discussed in Note 14 to the consolidated financial statements included elsewhere
herein and (ii) the effect of acquisitions in 1995.
Management Fees Charged by Parents. Management fees decreased $1.6 million
to $3.0 million in 1995 compared with $4.6 million in 1994. This decrease
resulted from $1.6 million of management fees charged in 1994 by SEPSCO for
services provided to Public Gas Company ('Public Gas'). No such fees
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were charged in 1995 since the management services to Public Gas were provided
by the management of National Propane.
Operating Profit. Operating profit declined by $4.2 million, or 22.7%, to
$14.5 million in 1995 compared with $18.7 million in 1994 due to the factors
noted above.
Interest Expense. Interest expense increased $2.0 million, or 20.5%, to
$11.7 million in 1995 compared with $9.7 million in 1994. This increase was due
to higher borrowings under National Propane's revolving credit and term loan
agreement, including the full year 1995 effect of borrowings in October 1994 to
finance a $40.0 million dividend to Triarc, and was only partially offset by
lower interest rates.
Interest Income from Triarc. The interest income from Triarc of $9.8
million in 1994 did not recur in 1995 due to National Propane's reclassification
of its receivable from Triarc as a component of stockholders' equity in November
1994. This reclassification occurred because Triarc's liquidity position was no
longer sufficient to enable it to repay the receivable and, therefore, the
receivable was no longer expected to be repaid except through an equity
transaction. Concurrent with the reclassification, National Propane ceased
accruing interest on the receivable.
Other Income, Net. Other income, net decreased $0.3 million to $0.9 million
in 1995 compared with $1.2 million in 1994 principally due to lower interest
income from finance charges on appliance sales.
Provision for Income Taxes. The provision for income taxes in 1995 and 1994
reflect effective rates of 116% and 40%, respectively. The higher 1995 rate
reflects a $2.5 million provision for income tax contingencies in 1995 relating
to proposed adjustments raised by the Internal Revenue Service for the tax years
1989 through 1992 (see Note 11 of notes to consolidated financial statements).
Extraordinary Charge. In 1994 National Propane recognized an extraordinary
charge of $2.1 million in connection with the early extinguishment of its 13
1/8% senior subordinated debentures due 1999 (the '13 1/8% Debentures')
consisting of the write-off of previously unamortized deferred financing costs
of $0.9 million and previously unamortized original issue discount of $2.6
million, net of income tax benefit of $1.4 million.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO TWELVE MONTHS ENDED DECEMBER 31, 1993
(UNAUDITED)
Revenues. Revenues decreased $3.1 million, or 2.1%, to $151.7 million in
1994 compared with $154.8 million in 1993 with propane revenues decreasing $1.2
million, or 0.8%, to $138.5 million in 1994 compared with $139.7 million in
1993. The decrease is principally due to reduced propane sales volume as gallons
sold for 1994 decreased 1.3 million, or 0.8%, to 152.3 million in 1994 compared
with 153.6 million in 1993. Based on Degree Days Data applicable to the
geographic regions in which National Propane operates, 1994 was 6.2% warmer than
1993. During the fourth quarter of 1994, reflecting the warm winter season and
excluding the positive impact of increased volumes from acquisitions, National
Propane sold 8.3 million fewer gallons than in the same quarter in 1993. Also,
reflecting the warmer 1994 weather, National Propane sold 2.5 million fewer
gallons during the second and third quarters of 1994 compared to the year ago
period, exclusive of the effect of acquisitions. During the first quarter of
1994, which was colder than in the same quarter in 1993, National Propane sold
3.4 million more gallons than during the same quarter in 1993, excluding the
positive impact of acquisitions. Partially offsetting the impact of the warm
temperatures was an increase in 1994 over 1993 of 6.1 million gallons from
businesses acquired in 1994. Revenues from leasing vehicles and other equipment
to affiliates and former affiliates of National Propane decreased to $0.1
million in 1994 from $2.4 million in 1993. Such leasing business was
significantly curtailed after SEPSCO disposed of certain operations which were
the principal customers of the leasing operations.
Gross Profit. Gross profit increased $5.1 million, or 13.8%, to $42.0
million in 1994 despite the decrease in sales volume and leasing activity
revenues noted above. This improvement resulted from (i) lower costs of propane
reflecting economies gained through centralized purchasing (only a small
percentage of which was passed on to customers in the form of lower selling
prices), (ii) lower delivery costs associated with efficiency initiatives
commenced in August 1993 and (iii) increased tank and cylinder rental income
with no significant related costs.
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Selling, General and Administrative Expenses. Selling, general and
administrative expenses were relatively unchanged amounting to $18.7 million for
1994 compared with $18.9 million in 1993.
Management Fees Charged by Parents. Management fees increased $0.3 million
to $4.6 million in 1994 compared with $4.3 million in 1993. This increase
reflects a slightly higher relative allocation of costs to National Propane for
management services compared with Triarc's other affiliates.
Facilities Relocation and Corporate Restructuring. The $8.4 million of
facilities relocation and corporate restructuring costs in 1993 relate to the
change in control of National Propane and Triarc that occurred in April 1993.
Included in this charge are (a) National Propane's allocated share of the
estimated costs of (i) terminating the lease on Triarc's then existing corporate
facility and (ii) entering into a consulting agreement with the former Vice
Chairman of Triarc for which no substantial services are required and for which
Triarc has not received and does not expect to receive any services that will
have substantial value to Triarc and its subsidiaries and (b) the estimated
costs of (i) conforming subsidiary identifications to National Propane, (ii)
training employees to use the new management information system necessitated by
National Propane's new centralized operating strategy, (iii) terminating
employees and related severance payments and (iv) relocating and reorganizing
National Propane's corporate headquarters. Such costs are further described in
Note 20 to National Propane's financial statements appearing elsewhere herein.
No similar charges were incurred in 1994.
Operating Profit. Operating profit increased by $13.4 million to $18.7
million in 1994 compared with $5.3 million in 1993 due to the factors noted
above.
Interest Expense. Interest expense decreased by $3.0 million to $9.7
million in 1994 compared with $12.7 million in 1993. This decrease reflects
lower average borrowing levels and, to a lesser extent, the lower interest rates
of a new revolving credit and term loan agreement entered into by National
Propane in 1994.
Interest Income from Triarc. Interest income from Triarc decreased $3.5
million to $9.8 million in 1994 compared with $13.3 million in 1993 principally
reflecting the $40.0 million collection on the receivable from Triarc in April
1993 and, to a lesser extent, lower interest income in 1994 due to the
aforementioned November 1994 reclassification of the receivable from Triarc as a
component of stockholders' equity compared with a full year of such income in
1993.
Provision for Income Taxes. The provision for income taxes in 1994 and 1993
reflects effective rates of 40% and 50%, respectively. The decrease is
principally due to the effects in 1993 of (i) the nondeductible costs allocated
to National Propane of a consulting agreement between Triarc and its former Vice
Chairman referred to above and (ii) the effect on net deferred income tax
liabilities of the 1% increase in the Federal income statutory tax rate to 35%
effective in 1993.
Extraordinary Charge. In 1994 National Propane recognized the previously
discussed extraordinary charge in connection with the early extinguishment of
the 13 1/8% Debentures.
LIQUIDITY AND CAPITAL RESOURCES
National Propane's cash balances increased $5.3 million during the
three-month period ended March 31, 1996 to $8.1 million and decreased $1.2
million during the full year 1995 to $2.8 million as of December 31, 1995 from
$4.0 million as of December 31, 1994. The increase during the 1996 quarter
reflected cash provided by operating activities of $3.6 million and by investing
activities of $2.8 million, both partially offset by cash used in financing
activities of $1.2 million. The decrease in 1995 resulted from cash provided by
operating activities of $15.9 million more than offset by cash used in investing
and financing activities of $9.5 million and $7.6 million, respectively.
The cash flows from operating activities of $3.6 million in the 1996 period
consisted of $5.5 million of net income plus noncash charges of $2.6 million,
principally depreciation and amortization, both partially offset by a $4.5
million increase in working capital (excluding cash and current portion of long-
term debt) principally due to an increase in accounts receivable of $6.2
million. The increase in accounts receivable principally reflects seasonally
higher propane sales in the 1996 first quarter compared with the last quarter of
1995. The cash provided by operating activities during the full year 1995 of
$15.9
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million resulted from a net loss of $0.6 million more than offset by noncash
charges of $14.8 million and a $1.7 million reduction in working capital.
Cash used in investing activities during the three-month period ended March
31, 1996 and the year ended December 31, 1995 included capital expenditures,
excluding capital leases and, in 1995, acquisitions, amounting to $1.2 million
and $8.1 million, respectively. Of the amount for the three-month period ended
March 31, 1996, $0.4 million was for recurring maintenance and $0.8 million was
to support growth of operations. Of the 1995 amount, $2.6 million was for
recurring maintenance needed to sustain National Propane's operations at current
levels, $0.6 million was for projects of a non-recurring nature and $4.9 million
was to support growth of operations. Recurring maintenance expenditures
consisted primarily of expenditures for maintenance of equipment to support
current business levels. National Propane has budgeted maintenance capital
expenditures for the remainder of 1996 of approximately $3.1 million, subject to
the availability of cash and other financing sources, and has outstanding
commitments amounting to $0.5 million for such capital expenditures as of March
31, 1996.
Cash paid for business acquisitions in 1995 amounted to $0.4 million for
three acquisitions. In addition, Triarc acquired a propane distribution business
for approximately $4.2 million in 1995 which it contributed to National Propane.
During the first quarter of 1996, National Propane entered into a letter of
intent to acquire an additional propane distribution business for cash of $0.8
million; such acquisition is expected to close in the third quarter of 1996.
National Propane will consider additional selective acquisitions to the extent
it has availability under its credit facilities.
In December 1995, National Propane borrowed $30.0 million under the
Existing Credit Facility, and dividended such amount to subsidiaries of Triarc
($22.7 million) and SEPSCO ($7.3 million) in proportion to their respective
percentage ownership in National Propane. On February 22, 1996, the 11 7/8%
senior subordinated debentures of SEPSCO were redeemed. The cash for such
redemption came from the proceeds of the $30.0 million of borrowings (which were
restricted, under the Existing Credit Facility, to the redemption of the 11 7/8%
Debentures), liquidation of marketable securities and existing cash balances.
The indebtedness incurred in part to finance such redemption is being assumed by
the Operating Partnership and repaid in connection with the Transactions.
Cash used in financing activities during the three-month period ended March
31, 1996 of $1.2 million reflected repayments of long-term debt. Cash used in
financing activities during 1995 of $7.6 million reflected the aggregate $30.0
million dividend paid to subsidiaries of Triarc and SEPSCO and $0.8 million of
deferred financing costs partially offset by net borrowings of long-term debt of
$23.2 million. Such net borrowings principally result from the $30.0 million
borrowing under the Existing Credit Facility in December 1995 discussed above,
less $9.5 million of repayments of Existing Credit Facility term loans.
Total stockholders' deficit decreased $5.5 million during the three-month
period ended March 31, 1996 to a deficit of $43.1 million at March 31, 1996 from
a deficit of $48.6 million at December 31, 1995 reflecting the net income for
such quarter. Total stockholders' deficit increased $29.1 million during 1995
from a deficit of $19.5 million at December 31, 1994, principally reflecting the
$30.0 million dividend to subsidiaries of Triarc and SEPSCO discussed above. In
addition, the increase of $2.6 million in the receivable from SEPSCO, which is
classified as a component of stockholders' equity, and the net loss of $0.6
million incurred during 1995 contributed to the deficit increase but were more
than offset by the capital contribution from Triarc of two propane gas
businesses it had acquired in 1995 amounting to $4.2 million.
National Propane's Existing Credit Facility, as amended, consists of a
revolving credit facility with a maximum availability as of March 31, 1996 of
$57.2 million and three tranches of term loans with an aggregate original
availability of $90.0 million and outstanding amounts aggregating $84.1 million
(net of repayments through March 31, 1996 of $5.9 million) as of March 31, 1996.
The aggregate availability of revolving credit loans (assuming full availability
under the Acquisition Sublimit) reduces $3.0 million during the remaining three
quarters of 1996, $15.9 million in 1997 and $4.0 million in each of 1998 and
1999 with the remaining availability of $30.3 million maturing in March 2000. As
of March 31, 1996 National Propane's only availability under the Existing Credit
Facility was approximately $14.0 million under the acquisition sublimit (the
'Acquisition Sublimit') component of the Existing Credit Facility
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which is restricted to acquisitions. The $84.1 million of term loans outstanding
at March 31, 1996 amortize $6.3 million during the remaining three quarters of
1996, $6.4 million in 1997, $8.2 million in 1998, $8.3 million in 1999, $10.3
million in 2000 and $44.6 million thereafter through 2003. Any outstanding
borrowings under the Acquisition Sublimit (none outstanding at March 31, 1996)
convert to term loans in October 1997; such term loans would be due in equal
installments from December 1997 through December 2000.
The Existing Credit Facility contains various covenants which (a) require
meeting certain financial amount and ratio tests; (b) limit, among other items,
(i) the incurrence of indebtedness, (ii) the retirement of certain debt prior to
maturity, (iii) investments, (iv) asset dispositions, (v) capital expenditures
and (vi) affiliate transactions other than in the normal course of business; and
(c) restrict the payment of dividends to Triarc. As of March 31, 1996 National
Propane had $5.0 million available for the payment of dividends under the
Existing Credit Facility; however, National Propane is effectively prevented
from paying dividends due to the restrictions of the financial amount and ratio
tests noted above. National Propane's debt under the Existing Credit Facility is
guaranteed by Triarc.
The Operating Partnership will also enter into a $55 million Bank Credit
Facility, which will include a $15 million Working Capital Facility to be used
for working capital and other general partnership purposes and a $40 million
Acquisition Facility. The Partnership expects that these facilities will be
undrawn at the closing of the Offering. The Partnership expects to meet its
requirements for its capital expenditures, acquisition programs and debt service
through a combination of cash flow from operations, the availability of the Bank
Credit Facility and the interest on the Partnership Loan. On a pro forma basis,
assuming that the transactions had occurred on March 31, 1996, the Operating
Partnership would have approximately $15.0 million and $40.0 million available
under the Working Capital Facility and the Acquisition Facility, respectively.
The Partnership's principal cash requirements, assuming the closing of the
Offering, are maintenance capital expenditures (currently budgeted at $3.5
million for the twelve-month period ending June 30, 1997), and funds for growth
and business acquisitions, if any. Pro forma interest expense for the
twelve-month period ending June 30, 1997 is estimated to be approximately $11.3
million. There are no scheduled principal repayments in 1996 under the Bank
Credit Facility or the First Mortgage Notes.
INITIAL PUBLIC OFFERING OF COMMON UNITS AND OTHER TRANSACTIONS
The Partnership was organized on March 13, 1996 and was formed to acquire,
own and operate National Propane's propane business and substantially all of the
related assets of National Propane. The Partnership's activities will be
conducted through the Operating Partnership (including a wholly-owned corporate
subsidiary of the Operating Partnership). National Propane intends to convey
substantially all of its propane-related assets and liabilities (other than
amounts due from a parent, deferred financing costs and income tax liabilities)
to the Operating Partnership.
The Partnership intends to issue 6,190,476 Common Units at an assumed
offering price of $21.00 per Common Unit, representing limited partner interests
in the Partnership, pursuant to a public offering and to concurrently issue
4,533,638 Subordinated Units, representing subordinated general partner
interests in the Partnership, as well as an aggregate 4% general partner
interest in the Partnership and the Operating Partnership, on a combined basis,
to National Propane and the Special General Partner. The Partnership also
intends to issue $125.0 million of First Mortgage Notes and repay all of the
then existing borrowings under the Existing Credit Facility and certain Other
Existing Indebtedness.
Assuming consummation of (i) the Offering, (ii) the issuance of the First
Mortgage Notes, (iii) the repayment of all borrowings under the Existing Credit
Facility, (iv) the Partnership Loan of $40.7 million and dividend to Triarc of
$59.3 million, respectively and (v) certain other related transactions as of
March 31, 1996, the Operating Partnership would have had aggregate partners'
capital of $32.8 million representing an increase of $75.9 million over the
stockholders' deficit of National Propane of $43.1 million as of March 31, 1996
before the effects of such transactions. The Operating Partnership would also
have a cash interest-bearing receivable from Triarc of $40.7 million and
long-term debt
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(including current portion thereof) equal to that of National Propane, less $7.3
million. The Partnership's operating cash flows would also reflect (i) interest
income on the receivable from Triarc ($5.5 million annually assuming a 13.5%
interest rate), (ii) reduced interest expense reflecting lower debt levels and
(iii) significantly reduced Federal income taxes since the Partnership will not
be subject to future income taxes on its propane-related income (such taxes will
be borne by its partners).
CONTINGENCIES
In May 1994 National Propane was informed of coal tar contamination which
was discovered at one of its properties in Wisconsin. National Propane purchased
the property from a company which had purchased the assets of a utility which
had previously owned the property. National Propane believes that the
contamination occurred during the use of the property as a coal gasification
plant by such utility. In order to assess the extent of the problem, National
Propane engaged environmental consultants who began work in August 1994. In
December 1994 the environmental consultants provided a report to National
Propane which indicated the estimated range of potential remediation costs to be
between approximately $0.4 million and $0.9 million depending upon the actual
extent of impacted soils, the presence and extent, if any, of impacted
groundwater and the remediation method actually required to be implemented. In
February 1996, based upon new information, National Propane's environmental
consultants provided a second report which presented the two most likely
remediation methods and revised the estimates of the costs of such methods. The
range of estimated costs for the first method, which involves treatment of
groundwater and excavation, treatment and disposal of contaminated soil, is from
$1.6 million to $3.3 million. The range for the second method, which involves
only treatment of groundwater and the building of a soil containment wall, is
from $0.4 million to $0.8 million. Based on discussions with National Propane's
environmental consultants, both methods are acceptable remediation plans.
National Propane, however, will have to agree on a final plan with the State of
Wisconsin. Since receiving notice of the contamination, National Propane has
engaged in discussions of a general nature concerning remediation with the State
of Wisconsin. These discussions are ongoing and there is no indication as yet of
the time frame for a decision by the State of Wisconsin on the method of
remediation. Accordingly, it is unknown which remediation method will be used.
National Propane is also engaged in ongoing discussions of a general nature with
the successor to the utility that operated a coal gasification plant on the
property. There is as yet no indication that the successor will share the costs
of remediation. National Propane, if found liable for any of such costs, would
attempt to recover such costs from the successor owner. National Propane has
notified its insurance carriers of the contamination and the likely incurrence
of costs to undertake remediation. As of December 31, 1995 and March 31, 1996
National Propane had a remaining accrual of $0.4 million for this contingency.
Pursuant to a lease relating to the Marshfield facility, the ownership of which
will not be transferred to the Operating Partnership at the closing of the
Offering, the Partnership has agreed to be liable for any costs of remediation
in excess of any amounts recovered from such successor or from insurance. See
'Business and Properties -- Transfer of the Partnership Assets.' The ultimate
outcome of this matter cannot presently be determined and, depending upon the
cost of remediation required, may have a material adverse effect on the
Partnership's consolidated financial position, results of operations or ability
to make the Minimum Quarterly Distribution to all Unitholders.
The Internal Revenue Service (the 'IRS') is currently examining Triarc's
Federal income tax returns for the tax years 1989 through 1992 and has issued to
date notices of proposed adjustments relating to National Propane. Such notices
propose increasing National Propane's taxable income by approximately $19.0
million, the tax effect of which has not yet been determined. During 1995
National Propane provided $2.5 million relating to the proposed adjustments. The
amount and timing of any payments required as a result of such proposed
adjustments cannot presently be determined. However, National Propane does not
believe the resolution of the proposed adjustments will be finalized in 1996
and, accordingly, no tax payments will be required in 1996. (See Note 11 to the
Consolidated Financial Statements included elsewhere herein.)
National Propane is involved in ordinary claims, litigation and
administrative proceedings and investigations of various types in several
jurisdictions incidental to its business. In the opinion of management of
National Propane, the outcome of any such matter, or all of them combined, will
not
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have a material adverse effect on National Propane's consolidated financial
condition or results of operations.
DESCRIPTION OF INDEBTEDNESS
DESCRIPTION OF FIRST MORTGAGE NOTES
Concurrently with the Offering, the Managing General Partner will issue
$125 million aggregate principal amount of First Mortgage Notes in a private
placement, which First Mortgage Notes will be assumed by the Operating
Partnership in connection with the Conveyance. The following is a summary of the
anticipated material terms of the First Mortgage Notes, all of which will be
issued pursuant to Note Agreements to be entered into among the Managing General
Partner, the Operating Partnership and each purchaser of the First Mortgage
Notes (collectively, the 'Note Agreements'), a form of which will be filed as an
exhibit to the Registration Statement of which this Prospectus is a part. THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NOTE AGREEMENTS.
The Operating Partnership's obligations under the Note Agreements and the
First Mortgage Notes will be secured, on an equal and ratable basis with the
Operating Partnership's obligations under the Bank Credit Facility, by a
mortgage on substantially all of the real property and liens on substantially
all of the operating assets, equipment and other assets of the Operating
Partnership (including all of its right under and the collateral securing the
Partnership Note), including the capital stock but not the operating assets and
equipment of National Sales and Service, Inc. ('NSSI'), a wholly-owned corporate
subsidiary of the Operating Partnership, a pledge by the Partnership of its
limited partner interest in the Operating Partnership and a pledge by the
Managing General Partner of its general partner interest in the Operating
Partnership and all of the capital stock of the Special General Partner
(collectively, the 'Mortgaged Property'). The First Mortgage Notes will mature
June 30, 2010 and will require eight equal annual prepayments of $15,625,000,
without premium, of the principal thereof beginning June 30, 2003. Pursuant to
the Note Agreements and subject to the provisions of the Bank Credit Facility,
the Operating Partnership may prepay the First Mortgage Notes in whole or in
part at a premium provided in the Note Agreements. Under certain circumstances
following the disposition of assets, the Operating Partnership is required to
prepay at a premium the First Mortgage Notes with certain of the proceeds of
such asset dispositions. In addition, pursuant to the Note Agreements, within 90
days after any 'Change of Control' (as defined in the Note Agreements), the
Operating Partnership is required to make an offer to each holder of the First
Mortgage Notes to prepay all, but not less than all, of such holder's First
Mortgage Notes at a premium provided in the Note Agreements. Interest will
accrue on the First Mortgage Notes at the rate of 8.54% per annum, payable
semi-annually in arrears.
The Note Agreements are expected to contain various restrictive and
affirmative covenants applicable to the Operating Partnership and its Restricted
Subsidiaries (as defined in the Note Agreement), including (i) restrictions on
the incurrence of additional indebtedness other than (a) borrowings permitted
under the Bank Credit Facility provided that the principal amount outstanding
under the Acquisition Facility, together with all outstanding indebtedness
incurred pursuant to clauses (g)(z)(A) and (h)(y) below, does not exceed $40
million, (b) certain specified pre-existing indebtedness, (c) certain
indebtedness incurred in connection with additions (including by way of
acquisitions of businesses), repairs or improvements to the Operating
Partnership's assets, not to exceed the net proceeds of any partnership
interests sold by the Operating Partnership or capital contributions to the
Operating Partnership to finance such additions, repairs or improvements, (d)
additional indebtedness, if after giving effect to the incurrence thereof and
the repayment of any debt being refinanced or repaid (x) the pro forma ratio of
Consolidated Cash Flow to Consolidated Pro Forma Debt Service (each as defined
in the Note Agreements) is greater than 2.50 for the period of four fiscal
quarters next succeeding the date of incurrence of such debt, and (y) the pro
forma ratio of Consolidated Cash Flow to Maximum Consolidated Pro Forma Debt
Service (each as defined in the Note Agreements) is greater than 1.25 for the
period of four fiscal quarters immediately next succeeding the date of
incurrence of such debt, (e) unsecured debt owed to either of the General
Partners or an Affiliate of either of the General Partners, provided that such
debt is expressly subordinated to the First Mortgage Notes and does not exceed a
total of $20 million in the aggregate at any time outstanding, (f) certain
intercompany subordinated indebtedness, (g) certain pre-existing indebtedness of
acquired Persons or assets, provided
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that (x) such indebtedness was not incurred in anticipation of such acquisition,
(y) no Default or Event of Default (each as defined in the Note Agreement) shall
have occurred and be continuing and (z) either (A) such indebtedness, together
with the principal amount outstanding under the Acquisition Facility, does not
exceed $40 million or (B) after giving effect to such acquisition, the Operating
Partnership could incur at least $1 of additional indebtedness pursuant to
clause (d) above and (h) certain indebtedness issued to a seller of assets or
stock purchased by the Partnership provided that (x) the financial terms of such
indebtedness are the same as (or more favorable than) that set forth in the
Acquisition Facility and (y) such indebtedness, together with the principal
amount outstanding under the Acquisition Facility and indebtedness incurred
pursuant to (g)(2)(A) does not exceed $40,000, (ii) restrictions on certain
liens, investments, guarantees, loans, advances, subsidiary dividends, fixed
price supply contracts, lines of business, mergers, consolidations, sales of
assets, and transactions with affiliates and (iii) restrictions on the payment
of dividends or other distributions in respect of any partnership interest if
the pro forma ratio of Consolidated Cash Flow to Consolidated Interest Expense
(as defined in the Note Agreements) is less than 1.75 to 1.0.
The Partnership believes that upon the closing of the Offering, after
giving effect to the Transactions contemplated by this Prospectus, the Operating
Partnership would be in compliance with all of the restrictive and affirmative
covenants applicable under the First Mortgage Notes.
Under the Note Agreements, as long as no default exists or would result,
the Operating Partnership will be permitted to make cash distributions to the
Partnership not more frequently than quarterly in an amount not to exceed
Available Cash (as defined in the Note Agreements) for the immediately preceding
quarter. The Note Agreements will require that Available Cash be reduced to
reflect reserves for various items, including, without duplication, the
following: (i) in each calendar quarter a reserve equal to at least 50% of the
aggregate amount of all interest payments in respect of all indebtedness upon
which interest is due semiannually or less frequently to be made in the next
quarter, (ii) with respect to any indebtedness secured equally and ratably with
the First Mortgage Notes of which principal is payable annually, in the third,
second and first calendar quarters immediately preceding each calendar quarter
in which any scheduled principal payment is due with respect to the First
Mortgage Notes and other Indebtedness, a reserve equal to at least 25%, 50% and
75%, respectively, of the aggregate principal amount to be repaid on the First
Mortgage Notes and such other indebtedness on such payment date and (iii) with
respect to the First Mortgage Notes and any other indebtedness secured equally
and ratably with the First Mortgage Notes of which principal is payable
semiannually, in each calendar quarter which immediately precedes a quarter in
which principal is payable in respect of the First Mortgage Notes and such other
indebtedness, a reserve equal to at least 50% of the aggregate amount of all
principal to be paid in respect of the Mortgage Notes and such other
indebtedness in the next quarter; provided that the amount of such reserve
specified in clauses (ii) and (iii) above for principal 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.
Except as described below, if an Event of Default exists on the First
Mortgage Notes, the holders of a majority in principal amount of the First
Mortgage Notes may accelerate the maturity of the First Mortgage Notes and
exercise other rights and remedies. In the case of an Event of Default referred
to in (a) below, any holder of the First Mortgage Notes may accelerate the
maturity of the First Mortgage Notes such holder owns. In the case of an Event
of Default referred to in (g) below, the acceleration of the maturity of the
Notes will occur automatically. Events of Default include (a) failure to pay any
principal or premium when due, or interest within five business days of the date
due, on the First Mortgage Notes, (b) a material misrepresentation in the Note
Agreements, (c) failure to perform or otherwise comply with covenants contained
in the Note Agreements and related documents, (d) a payment default under the
Bank Credit Facility and any other default under the Bank Credit Facility or any
other indebtedness the aggregate principal amount of which exceeds $5 million
which results in such indebtedness becoming due before its stated maturity or
scheduled due date, (e) a material failure of any of the security documents
relating to the Mortgaged Property to be in full force and effect, (f) certain
unsatisfied final judgments in excess of $5 million or requiring a split-up or
divestiture of the Operating Partnership, and (g) various events of bankruptcy
or insolvency involving the Operating Partnership, Managing General Partner or
any Restricted Subsidiary.
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DESCRIPTION OF THE BANK CREDIT FACILITY
Concurrently with the Offering, the Operating Partnership will enter into
the Bank Credit Facility with a group of commercial banks, for which The First
National Bank of Boston will act as administrative agent. The following is a
summary of the anticipated material terms of the Bank Credit Facility, the form
of which will be filed as an exhibit to the Registration Statement of which this
Prospectus is a part. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE BANK CREDIT FACILITY.
The Bank Credit Facility consists of a $40 million Acquisition Facility and
a $15 million Working Capital Facility. The Operating Partnership's obligations
under the Bank Credit Facility will be secured, on an equal and ratable basis
with the Operating Partnership's obligations under the Note Agreement and the
First Mortgage Notes, by a security interest or pledge of the Mortgaged
Property. The Bank Credit Facility will bear interest at a rate based upon, at
the Operating Partnership's option, either (i) the London Interbank Offered Rate
plus a margin generally ranging from 1.00% to 1.75% or (ii) the higher of (x)
the Prime Rate (as defined in the Bank Credit Facility) and (y) the Federal
Funds Effective Rate (as defined in the Bank Credit Facility) plus 1/2 of 1%, in
either case, plus a margin generally ranging from 0.0% to 0.25%, plus, in the
case of clauses (i) and (ii) above, with respect to any period in which the
First Mortgage Notes have received a Sub-investment Grade Rating (as defined in
the Bank Credit Facility), a premium generally ranging from 0.125% to 0.750%. A
quarterly commitment fee on the unused portion of the Bank Credit Facility based
on the Leverage Ratio (as defined in the Bank Credit Facility) and the current
rating of the First Mortgage Notes is payable on the Bank Credit Facility.
The Working Capital Facility will mature three years from the closing of
the Offering. For a period of at least 30 consecutive days in each year between
March 1 and August 31 of such year, the Operating Partnership must reduce the
aggregate principal amount outstanding under the Working Capital Facility to
zero. Loans under the Working Capital Facility will be used for working capital
and other general partnership purposes.
The Acquisition Facility will revolve for two years, after which time any
loans outstanding will amortize in equal quarterly installments over the next
three years, which installments will be adjusted to apply mandatory prepayments
or reductions in commitments under the Acquisition Facility to the amortization
schedule. Loans under the Acquisition Facility will be used solely to finance
(i) acquisitions by the Operating Partnership and (ii) capital expenditures by
the Operating Partnership to improve its existing capital assets, to increase
its customer base or to construct new capital assets.
Borrowings under the Bank Credit Facilities will be subject to satisfaction
of customary conditions and, in addition, in the case of each borrowing under
the Acquisition Facility, pro forma compliance with certain financial covenants.
The Bank Credit Facility is expected to contain various restrictive and
affirmative covenants applicable to the Operating Partnership and its Restricted
Subsidiaries (as defined in the Bank Credit Facility) including (i) restrictions
on indebtedness other than (a) the First Mortgage Notes, (b) certain permitted
indebtedness incurred to finance the making of expenditures for the improvement
or repair of or addition to the Assets (as defined in the Bank Credit Facility),
(c) certain indebtedness incurred by any Restricted Subsidiary owing to the
Operating Partnership or another Restricted Subsidiary not exceeding specified
amounts, (d) certain additional unsecured indebtedness owed to the General
Partners or the Partnership, provided that such indebtedness does not exceed
specified amounts and is subordinated to obligations under the Bank Credit
Facility on terms satisfactory to the banks under such facility, (e) additional
indebtedness, if on the date such indebtedness is incurred and after giving
effect thereto, certain financial tests are met, (f) certain pre-existing
indebtedness of acquired persons and indebtedness incurred to acquire any
person, business or assets, provided that, among other things, such indebtedness
was not incurred in anticipation of such acquisition and that all such
indebtedness does not exceed specified amounts, (g) certain pre-existing
indebtedness not exceeding $1.5 million, (h) so long as no Event of Default or
Default (each as defined in the Bank Credit Facility) has occurred and is
continuing, certain additional indebtedness secured under the Collateral
Documents (as defined in the Bank Credit Facility) which is incurred for any
extension, renewal, refunding or replacement of the First Mortgage Notes, and
(i) so long as no Event of Default or Default has occurred and is continuing,
certain indebtedness incurred for any extension, renewal, refunding or
replacement of
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indebtedness, and (ii) restrictions on certain liens, investments, guarantees,
loans, advances, lines of business, acquisitions, mergers, consolidations, sales
of assets, sale and leaseback transactions, entering into transactions with
affiliates, sales of receivables, and sales of equity interests in subsidiaries.
In addition, the Bank Credit Facility will prohibit Triarc or any of its
subsidiaries, DWG Acquisition Group, L.P. or Messrs. Peltz or May from acquiring
any propane business while they are an Affiliate of the Partnership.
The Bank Credit Facility is expected to require Available Cash (as defined
in the Bank Credit Facility) to reflect reserves for various items, including
without duplication the following: (i) in each calendar quarter a reserve equal
to at least 50% of the aggregate amount of all interest payments in respect of
all indebtedness upon which interest is due semiannually or less frequently to
be made in the next quarter, (ii) with respect to any indebtedness secured
equally and ratably with the First Mortgage Notes of which principal is payable
annually, in the third, second and first calendar quarters immediately preceding
each calendar quarter in which any scheduled principal payment is due with
respect to the First Mortgage Notes and other indebtedness, a reserve equal to
at least 25%, 50% and 75%, respectively, of the aggregate principal amount to be
repaid on the First Mortgage Notes and such other indebtedness on such payment
date and (iii) with respect to the First Mortgage Notes and any other
indebtedness secured equally and ratably with the First Mortgage 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 First
Mortgage Notes and such other indebtedness a reserve equal to at least 50% of
the aggregate amount of all principal to be paid in respect of the First
Mortgage Notes and other such indebtedness in the next quarter; provided that
the amount of such reserve specified in clauses (ii) and (iii) above for
principal 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. Under the Bank Credit Facility, so long as no Default or
Event of Default exists or would result and the ratio of Consolidated Cash Flow
to Consolidated Interest Expense (as defined in the Bank Credit Facility) is
greater than 1.75 to 1.00, the Operating Partnership will be permitted to make
cash distributions to the Partnership not more frequently than quarterly in an
amount not to exceed Available Cash for the immediately preceding quarter.
In addition, the Bank Credit Facility will require that (i) the ratio of
Total Funded Debt to Consolidated Cash Flow (each as defined in the Bank Credit
Facility) be no greater than 4.50 to 1 through June 30, 1997 and 4.25 to 1
thereafter and (ii) Net Working Capital (as defined in the Bank Credit Facility)
exceed certain minimums.
Events of Default include (a) failure to pay any principal or any
reimbursement obligation under any letter of credit when due, or interest or
fees or other amounts within five business days of the due date, (b) failure to
perform or otherwise comply with covenants contained in the Bank Credit
Facility, (c) a material misrepresentation in the Bank Credit Facility or
related loan documents or certain documents related to the Transactions, (d)
certain payment cross-defaults with respect to any indebtedness the aggregate
principal amount of which exceeds $3 million and certain other cross-defaults
with respect to indebtedness the aggregate principal amount of which exceeds $5
million, (e) the invalidity of the Bank Credit Facility, any of the related loan
documents or certain documents relating to the Transactions, (f) certain
unsatisfied judgments in excess of $2.5 million or requiring a split-up or
divestiture of the Operating Partnership, (g) certain events resulting in a
Material Adverse Effect (as defined in the Bank Credit Facility) and (h) various
events of bankruptcy or insolvency involving the Managing General Partner or any
Restricted Subsidiary. In addition a 'Change in Control' (as defined in the Bank
Credit Facility) will result in the Operating Partnership being required to
repay all indebtedness under the Bank Credit Facility.
EFFECTS OF INFLATION
In general, inflation has not had any significant impact on National
Propane in recent years and changes in propane prices, in particular, have been
dependent on factors generally more significant than inflation, such as weather
and availability of supply. However, to the extent inflation affects the amounts
National Propane pays for propane as well as operating and administrative
expenses, National Propane attempts to limit the effects of inflation through
passing on propane cost increases to customers in the
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form of higher selling prices to the extent it can do so as well as cost
controls and productivity improvements. As such, inflation has not had a
material adverse effect on National Propane's profitability and National Propane
does not believe normal inflationary pressures will have a material adverse
effect on future results of operations of National Propane or the Partnership.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective October 1, 1995 National Propane adopted Statement of Financial
Accounting Standards ('SFAS') No. 121, 'Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of.' This standard requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
adoption of this standard had no effect on National Propane's consolidated
results of operations or financial position.
In October 1995 the Financial Accounting Standards Board issued SFAS No.
123 'Accounting for Stock-Based Compensation' ('SFAS 123') which will be adopted
by National Propane in the year ended December 31, 1996. SFAS 123 defines a fair
value based method of accounting for employee stock-based compensation
(including Units) and encourages adoption of that method of accounting. Such
method would initially apply generally only to awards granted in the year SFAS
123 is adopted. However, SFAS 123 allows entities to continue to measure
compensation cost under the intrinsic value method prescribed by existing
accounting pronouncements. Such entities, however, must make certain pro forma
disclosures as if the fair value method had been applied. Through March 31, 1996
National Propane has not granted any stock options; however, Triarc has granted
stock options to purchase Triarc common stock to certain key employees of
National Propane. Assuming consummation of the Common Unit Offering, the
Managing General Partner will adopt the National Propane Corporation 1996 Unit
Option Plan pursuant to which the Managing General Partner may grant to certain
officers, employees and consultants options to purchase Common Units and
Subordinated Units and UARs covering up to an aggregate of 1,250,000 Common
Units and Subordinate Units (subject to adjustment), plus an additional number
of Units equal to 1% of the number of Units outstanding as of each December 31
following the Option Plan's effective date. The adoption of SFAS 123 will not
have any effect on National Propane's results of operations or financial
position since (i) SFAS 123 generally does not apply to stock-based compensation
granted prior to the year of adoption, (ii) National Propane currently intends
to elect to account for stock-based compensation using the intrinsic value
method if its employees are granted any stock-based compensation and (iii)
National Propane understands that Triarc would also elect to account for
stock-based compensation using the intrinsic value method for any further stock
options granted to employees of National Propane.
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BUSINESS AND PROPERTIES
GENERAL
The Partnership, a Delaware limited partnership recently formed to acquire,
own and operate the business and assets of National Propane, is engaged
primarily in (i) the retail marketing of propane to residential, commercial and
industrial, and agricultural customers and to dealers (located primarily in the
Northeast) that resell propane to residential and commercial customers and (ii)
the retail marketing of propane-related supplies and equipment, including home
and commercial appliances. The Partnership believes it is the fifth largest
retail marketer of propane in terms of volume in the United States, supplying
approximately 250,000 active retail and wholesale customers in 24 states through
its 165 service centers located in 23 states. The Partnership's operations are
concentrated in the Midwest, Northeast, Southeast and Southwest regions of the
United States. The retail propane sales volume of the Partnership was
approximately 150 million gallons in 1995. In 1995, approximately 48.6% of the
Partnership's retail sales volume was to residential customers, 34.2% was to
commercial and industrial customers, 6.3% was to agricultural customers, and
10.9% was to dealers. Sales to residential customers in 1995 accounted for
approximately 64% of the Partnership's gross profit on propane sales, reflecting
the higher-margin nature of this segment of the market. Approximately 90% of the
tanks used by the Partnership's retail customers are owned by the Partnership.
National Propane was incorporated in 1953 under the name Conservative Gas
Corporation. During the period the Partnership was controlled by DWG
Corporation, Triarc's predecessor, the Partnership's business was conducted
through nine regionally branded companies without central management or
coordinated pricing or distribution strategies. In April 1993, a partnership,
the sole general partners of which are Nelson Peltz and Peter W. May, completed
the Acquisition, in which it acquired approximately 28.6% of the then
outstanding shares of Triarc's common stock. Since the Acquisition, the
Partnership's new management team, headed by Ronald D. Paliughi, who became
President and Chief Executive Officer of National Propane in April 1993, has
implemented an operating plan designed to make the Partnership more efficient,
profitable and competitive.
Since the Acquisition, the Partnership's management has: (i) consolidated
nine separately branded businesses into a single company with a new, national
brand and logo; (ii) consolidated eight regional offices into one national
headquarters; (iii) installed the Partnership's first system-wide data
processing system; (iv) implemented system-wide pricing, marketing and
purchasing strategies, thereby reducing the cost duplication and purchasing and
pricing inefficiencies associated with the Partnership's formerly decentralized
structure; and (v) centralized and standardized accounting, administrative and
other corporate services. As a result of these initiatives, the Partnership has
become more efficient and competitive, and believes it is now positioned to
capitalize on opportunities for business growth, both internally and through
acquisitions.
Although management has focused primarily on implementing the new operating
plan, the Partnership has acquired five propane businesses since November 1993
resulting in an increase in volume sales of approximately 13.4 million gallons
annually. Four of these acquired businesses operate in the Midwest and one
operates in the Southwest. Generally, National Propane has financed acquisitions
either with cash on hand or through the issuance of debt securities. The
Partnership recently entered into a letter of intent to acquire an additional
propane business for $0.8 million; however, consummation of this transaction is
subject to customary closing conditions and completion of definitive
documentation, and no assurance can be given that this acquisition will be
completed.
The Partnership believes that its competitive strengths include: (i) gross
profit and operating margins that it believes to be among the highest of the
major retail propane companies whose financial statements are publicly
available; (ii) the concentration of its operations in colder regions (such as
the upper Midwest and Northeast), high margin regions (such as the Northeast and
Florida), and regions experiencing population growth (such as Florida and the
Southwest); (iii) an experienced management team; (iv) a well-trained and
motivated work force; and (v) an effective pricing management system. However,
the propane industry is highly competitive and includes a number of large
national firms that may have greater financial or other resources or lower
operating costs than the Partnership.
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Prior to June 1995, the propane business of the Partnership was conducted
through two separate subsidiaries of Triarc, Public Gas Company and National
Propane Corporation (collectively, the 'Propane Companies'). To further
centralize the Partnership's businesses, on June 29, 1995, the operations of the
Propane Companies were formally consolidated by merging Public Gas Company with
and into National Propane.
Concurrently with the closing of the Offering, pursuant to the Conveyance,
National Propane will contribute substantially all of its assets (which assets
will not include an existing intercompany note from Triarc, approximately $59.3
million of the net proceeds from the issuance of the First Mortgage Notes and
certain other assets) and related liabilities (other than income tax
liabilities) to the Operating Partnership. In general, current management of
National Propane will continue to manage and operate the Partnership's business
as officers of the Managing General Partner and its affiliates. The Partnership
will not directly employ any of the persons responsible for managing or
operating the Partnership. See 'The Transactions' and 'Management -- Partnership
Management.' The following discussion of and references to the Partnership
include the business, operations and assets of its predecessor, National
Propane.
OPERATING STRATEGY
The Partnership's operating strategy is to increase its efficiency,
profitability and competitiveness, while better serving its customers, by
building on the efforts it has already undertaken to improve pricing management,
marketing and purchasing and to consolidate its operations.
Improved Pricing Management: The $1.4 million pricing system recently
installed in substantially all of the Partnership's service centers
provides central management with current, system-wide supply, demand and
competitive pricing information. Based on that information, pricing
managers located in Cedar Rapids, Iowa, determine the prices to be charged
to the Partnership's existing residential customers. With respect to
commercial and industrial customers, agricultural customers and new
residential customers, management makes daily pricing recommendations to
local managers who determine prices based on such recommendations as well
as local conditions. The Partnership believes that this combination of
central and local decision making enables it to more effectively manage
prices. In addition, to further enhance its pricing management, the
Partnership intends to equip its delivery personnel with hand-held
computer terminals that simplify customer billing and the collection of
price and volume information.
Improved Marketing: The Partnership intends to differentiate itself from
smaller, local competitors by strengthening its image as a reliable, full
service, nationwide propane supplier. To that end, (i) all of the
Partnership's service centers operate under the National Propane brand
(other than certain service centers obtained by the Partnership in recent
acquisitions) and offer 24 hour/7 day-a-week service for emergency repairs
and deliveries, (ii) the Partnership conducts coordinated advertising and
marketing campaigns, (iii) the Partnership's employees attend training
courses at its new training center or at service centers where they are
employed and (iv) the Partnership is in the process of establishing
appliance showrooms at several service centers in an effort to increase
sales and rental income.
Efficient Purchasing: The Partnership intends to further improve its
propane purchasing and storage strategies, thereby making more efficient
use of its system-wide storage capacity. When conditions are appropriate,
the Partnership intends to purchase and store propane during the summer
months when prices are generally lower and sell these supplies during
periods of higher propane prices. In addition, the Partnership intends to
use its existing storage facilities or acquire additional facilities to
minimize transportation costs by storing propane near large concentrations
of its customers.
Consolidating Operations: The Partnership will continue to look for
opportunities to consolidate its operations. Since July 1993, the
Partnership has reduced its workforce by approximately 18%, from 1,228 to
1,007 full-time employees as of May 30, 1996.
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STRATEGIES FOR GROWTH
The Partnership's strategies for growth involve expanding its operations
and increasing its market share through strategic acquisitions and internal
growth, including the opening of new service centers.
STRATEGIC ACQUISITIONS
The Partnership expects the overall demand for propane to remain relatively
constant over the next several years, with year-to-year industry volumes being
affected primarily by weather patterns. Accordingly, while the Partnership's
business strategy includes opening new locations, adding new retail customers
and retaining existing customers, the ability of the Partnership's business to
grow will depend in large part on its ability to acquire other retail
distributors. In recent years the Partnership's ability to acquire other propane
companies has been constrained primarily due to (i) management's focus on
implementing the new operating plan, (ii) the need to make significant
maintenance capital expenditures not made in prior years and (iii) limitations
under the Existing Credit Facility. Having successfully implemented much of the
operating plan and significantly improved its capital structure through the
October 1994 refinancing of relatively high cost indebtedness, the Partnership
is now in a better position to pursue acquisition opportunities, although the
Partnership's significant leverage may adversely affect its ability to
consummate such acquisitions. In addition, following the closing of the
Offering, the Partnership will have the flexibility to fund acquisitions by
either drawing on the $40 million Acquisition Facility or issuing additional
Common Units. The Partnership believes there are numerous potential acquisition
candidates because the propane industry is highly fragmented, with approximately
8,000 retailers (according to the National Propane Gas Association (the 'NPGA'))
and with the 10 largest retailers constituting approximately 32% of industry
sales (according to LP-GAS magazine). Moreover, no retailer has more than 10% of
industry sales.
The Partnership intends to take two approaches to acquisitions: (i)
primarily to build on its broad geographic base by acquiring smaller,
independent competitors that operate within the Partnership's existing
geographic areas and incorporating them into the Partnership's distribution
network and (ii) to acquire propane businesses in areas in the United States
outside of its current geographic base where it believes there is growth
potential and where an attractive return on its investment can be achieved. The
Partnership recently entered into a letter of intent to acquire a propane
business for $0.8 million; however, consummation of this transaction is subject
to customary closing conditions and completion of definitive documentation, and
no assurance can be given that this acquisition will be completed. Although the
Partnership expects to continue to evaluate a number of propane distribution
companies, including regional and national firms, as part of its ongoing
acquisition program, except as described in the preceding sentence, the
Partnership does not have any present agreements or commitments with respect to
any acquisition. There can be no assurance, however, that the Partnership will
identify attractive acquisition candidates in the future, that the Partnership
will be able to acquire such candidates on acceptable terms, or will be able to
finance such acquisitions. If the Partnership is able to make acquisitions,
there can be no assurance that such acquisitions will not dilute earnings and
distributions or that any additional debt incurred to finance such acquisitions
will not adversely affect the ability of the Partnership to make distributions
to Unitholders. In addition, to the extent that warm weather adversely affects
the Partnership's operating and financial results, the Partnership's access to
capital and its acquisition activities may be limited. The Managing General
Partner has broad discretion in making acquisitions, and it is expected that the
Managing General Partner generally will not seek Unitholder approval of
acquisitions.
INTERNAL GROWTH
In addition to pursuing expansion through acquisitions, the Partnership
intends to pursue internal growth at its existing service centers and to expand
its business by opening new service centers. The Partnership believes that it
can attract new customers and expand its market base by (i) providing superior
service, (ii) introducing innovative marketing programs and (iii) focusing on
population growth areas.
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The Partnership intends to leverage its position as a reliable, full
service propane company to attract new customers, particularly in those
locations where the Partnership competes against smaller, independent
distributors. For example, many propane customers rely on their suppliers for
technical services and advice because of the increasing complexity of the
equipment such customers use. The Partnership believes that in some areas it is
the only propane company that can fully provide such services and advice. To
enable them to provide such services and advice, the Partnership's employees
attend a training course at the Partnership's new training facility in Cedar
Rapids, Iowa or at the service centers where they are employed. Since the third
quarter of 1995, over 220 employees have attended these eight-hour courses. In
the fourth quarter of 1996, the Partnership expects to establish a second
training center near Great Barrington, Massachusetts for its employees located
in the Northeast.
In addition, the Partnership's marketing programs, in particular, its Water
Heater Program, are designed to attract new customers. In the Water Heater
Program, the Partnership offers to users of electric or fuel oil water heaters a
free propane water heater (excluding installation) in return for signing a
five-year propane purchase agreement. Approximately 2,500 customers have
participated in the Water Heater Program since it was introduced in the first
quarter of 1995.
Furthermore, the Partnership operates in several growth areas of the United
States. The Partnership believes that it is one of the leading propane retailers
in western Colorado, a rapidly growing market. The Partnership also operates in
central Arizona, an area that has experienced a significant rate of population
growth in recent years. In addition, the Partnership is one of the leading
propane retailers in Florida, the population of which has increased by
approximately 9.5% since 1990.
The Partnership also intends to expand its business by opening new service
centers, known as 'scratch-starts,' in areas where there is relatively little
competition. Scratch starts are newly opened service centers generally staffed
with a single employee, which typically involve minimal start up costs because
the infrastructure of the new service center is developed as the customer base
expands and the Partnership can, in many circumstances, transfer existing
assets, such as storage tanks, to the new service center. Under its
'scratch-start' program, the Partnership intends to open new service centers in
specific types of markets, such as resorts and new residential developments,
which have been targeted because of the unavailability of natural gas, the
limited number of competitors and the potential number of relatively high margin
residential accounts. Under this program, the Partnership has recently opened
three new service centers in California and one in each of Idaho, Georgia and
South Carolina.
INDUSTRY BACKGROUND
Propane, a by-product of natural gas processing and petroleum refining, is
a clean-burning energy source recognized for its transportability and ease of
use relative to alternative stand-alone energy sources. Propane is extracted
from natural gas or oil wellhead gas at processing plants or separated from
crude oil during the refining process. Propane is normally transported and
stored in a liquid state under moderate pressure or refrigeration for economy
and ease of handling in shipping and distribution. When the pressure is released
or the temperature is increased, it is useable as a flammable gas. Propane is
colorless and odorless; an odorant is added to allow its detection. Propane is
clean-burning, producing negligible amounts of pollutants when consumed.
The Partnership's retail customers fall into four broad categories:
residential customers, commercial and industrial customers, agricultural
customers and dealers (located primarily in the Northeast) that resell propane
to residential and commercial customers. Residential customers use propane
primarily for space heating, water heating, cooking and clothes drying.
Commercial and industrial customers use propane for commercial applications such
as cooking and clothes drying and industrial uses such as fueling over-the-road
vehicles, forklifts and stationary engines, firing furnaces, as a cutting gas
and in other process applications. Agricultural customers use propane for
tobacco curing, crop drying, poultry brooding and weed control.
Based upon information provided by the NPGA, propane accounts for
approximately 3.0% to 4.0% of total energy consumption in the United States, an
average level that has remained relatively constant for the past ten years. In
addition, propane is now the world's most widely used alternative fuel for
automobiles with approximately 350,000 and 3.5 million vehicles running on
propane in the United States and worldwide, respectively (according to the
NPGA). The Partnership believes, based on
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industry publications, that the domestic retail market for propane is
approximately 9.4 billion gallons annually.
PRODUCTS, SERVICES AND MARKETING
The Partnership distributes its propane through a nationwide distribution
network integrating 165 service centers in 23 states. The Partnership's
operations are located primarily in the Midwest, Northeast, Southeast and
Southwest regions of the United States. The chart below sets forth information
regarding the Partnership's retail volume sales and service centers for each
region:
<TABLE>
<CAPTION>
MIDWEST(1) NORTHEAST SOUTHEAST SOUTHWEST(2) TOTAL
---------- --------- --------- -------------- -------
<S> <C> <C> <C> <C> <C>
Volume (in thousands of gallons)(3)....... 71,235 33,193 26,561 19,152 150,141
% of Total Volume......................... 47.4% 22.1% 17.7% 12.8% 100.0%
Number of Service Centers(4).............. 73 35 31 26 165
</TABLE>
- ------------
(1) Includes one service center in Texas.
(2) Includes California and Idaho.
(3) For the year ended December 31, 1995.
(4) As of May 31, 1996.
------------------------
Typically, service centers are found in suburban and rural areas where
natural gas is not readily available. Generally, such locations consist of an
office and a warehouse and service facility, with one or more 18,000 to 30,000
gallon storage tanks on the premises. Each service center is managed by a
district manager and also typically employs a customer service representative, a
service technician and one or two bulk truck drivers. However, new service
centers established under the Partnership's 'scratch start' program generally do
not have offices, warehouses or service facilities and are typically staffed by
a single employee.
In 1995 the Partnership served approximately 250,000 active customers. No
single customer accounted for 10% or more of the Partnership's revenues in 1995.
Generally, the number of customers increases during the fall and winter and
decreases during the spring and summer. Historically, approximately 66% of the
Partnership's retail propane volume has been sold during the six-month season
from October through March, as many customers use propane for heating purposes.
Consequently, sales, gross profits and cash flows from operations are
concentrated in the Partnership's first and fourth fiscal quarters. To the
extent necessary, the Partnership may reserve cash from the first and fourth
fiscal quarters for distribution to Unitholders in the second and third fiscal
quarters.
As noted above, year-to-year demand for propane is affected by the relative
severity of the winter and other climatic conditions. For example, while the
frigid temperatures that were experienced by the United States in January and
February of 1994 significantly increased the overall demand for propane, the
warm weather during the winter of 1994-1995 significantly reduced such demand.
The Partnership believes, however, that the geographic diversity of its areas of
operations helps to reduce its exposure to regional weather patterns. In
addition, retail sales to the commercial and industrial markets, while affected
by economic patterns, are not as sensitive to variations in weather conditions
as sales to residential and agricultural markets. For information on the impact
of annual variations in weather on the operations of the Partnership, see
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General.'
Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks. Propane is pumped from the bobtail truck, which
generally holds 2,800 gallons of propane, into a stationary storage tank on the
customer's premises. The capacity of these tanks usually ranges from
approximately 50 to approximately 1,000 gallons, with a typical tank having a
capacity of 250 to 500 gallons. Typically, service centers deliver propane to
most of their residential customers at regular intervals, based on estimates of
such customers' usage, thereby eliminating the customers' need to make
affirmative purchase decisions. The Partnership also delivers propane to retail
customers in portable cylinders, which typically have a capacity of 23.5
gallons. When these cylinders are delivered to
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customers, empty cylinders are picked up for replenishment at the Partnership's
distribution locations or are refilled in place. The Partnership also delivers
propane to certain other retail customers, primarily dealers and large
commercial accounts, in larger trucks known as transports, which have an average
capacity of approximately 9,000 gallons. Propane is generally transported from
refineries, pipeline terminals and storage facilities (including the
Partnership's underground storage facilities in Hutchinson, Kansas and Loco
Hills, New Mexico) to the Partnership's bulk plants by a combination of common
carriers, owner-operators, railroad tank cars and, in certain circumstances, the
Partnership's own highway transport fleet. See ' -- Properties.'
Although overall demand for propane is affected by climate, availability
and cost of alternative energy sources, changes in price and other factors, the
Partnership believes that residential demand for its propane is relatively
stable for the following reasons. First, residential demand for propane has been
relatively unaffected by general economic conditions due to the largely
non-discretionary nature of most propane purchases by the Partnership's
customers. Second, when the Partnership's customers have switched to natural gas
and other competing energy sources, the Partnership has generally been able to
redeploy its tanks and attract new customers in other areas. Third, while
significant price increases can result in a loss of customers, many of the
Partnership's residential customers, particularly in the Northeast and
Southeast, are relatively less price sensitive because they tend to purchase
significantly less propane on an individual basis than customers in the Midwest.
Finally, the Partnership's residential customers tend to remain with the
Partnership because of the inconvenience of switching tanks and suppliers. In
many states certain fire safety regulations restrict the refilling of a leased
tank solely to the propane supplier that owns the tank and, therefore, customers
who do not own their own tanks are less likely to switch suppliers.
Approximately 90% of the tanks used by the Partnership's retail customers are
leased to them by the Partnership. Despite these factors, no assurance can be
given that demand for the Partnership's propane will not decline, and any
significant decline could have a material adverse affect on the Partnership.
The Partnership also sells, leases and services equipment related to its
propane distribution business. In the residential market, the Partnership sells
household appliances such as cooking ranges, water heaters, space heaters,
central furnaces and clothes dryers, as well as less traditional products such
as barbecue equipment and gas logs. In the industrial market, the Partnership
sells or leases specialized equipment for the use of propane as fork lift truck
fuel, in metal cutting and atmospheric furnaces and for portable heating for
construction. In the agricultural market, specialized equipment is leased or
sold for the use of propane as engine fuel and for chicken brooding and crop
drying. The sale of specialized equipment, service income and rental income
represented less than 10% of the Partnership's operating revenues during fiscal
1995. In an effort to increase sales and rental income, the Partnership has
recently established model appliance showrooms at its service centers in Cedar
Rapids, Iowa, New Smyrna Beach, Florida and West Palm Beach, Florida, where a
broad range of propane-related equipment and appliances are displayed. The
Partnership is in the process of establishing additional appliance showrooms at
a number of other service centers, and expects that between five and ten
showrooms will be fully operational by the end of 1996. Parts and appliance
sales, installation and service activities will be conducted through a
wholly-owned corporate subsidiary of the Operating Partnership.
PROPANE SUPPLY AND STORAGE
The profitability of the Partnership is dependent upon the price and
availability of propane as well as seasonal and climatic factors. Contracts for
propane are typically made on a year-to-year basis, but the price of the propane
to be delivered depends upon market conditions at the time of delivery.
Worldwide availability of both gas liquids and oil affects the supply of propane
in domestic markets, and from time to time the ability to obtain propane at
attractive prices may be limited as a result of market conditions, thus
affecting price levels to all distributors of propane. Should the wholesale cost
of propane decline in the future, the Partnership believes that its margins on
its retail propane distribution business would increase in the short-term
because retail prices tend to change less rapidly than wholesale prices. Should
the wholesale cost of propane increase, for similar reasons, retail marketing
profitability would likely be reduced at least for the short-term until retail
prices can be increased. Since 1993, the Partnership has generally been
successful in maintaining retail gross margins on an annual basis despite
changes in the wholesale cost of propane. There may be times, however, when the
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Partnership will be unable to pass on fully price increases to its customers.
Consequently, the Partnership's profitability will be sensitive to changes in
wholesale propane prices, and a substantial increase in the wholesale cost of
propane could adversely affect the Partnership's margins and profitability.
Except for occasional opportunistic buying and storage of propane, the
Partnership has not engaged in any significant hedging activities with respect
to its propane supply requirements, although it may do so from time to time in
the future. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- General.'
The Partnership purchased propane from over 35 domestic and Canadian
suppliers during 1995, primarily major oil companies and independent producers
of both gas liquids and oil, and it also purchased propane on the spot market.
In 1995, the Partnership purchased approximately 81% and 19% of its propane
supplies from domestic and Canadian suppliers, respectively. Approximately 87%
of propane purchases by the Partnership in 1995 were on a contractual basis
(generally, under one year agreements subject to annual renewal), but the
percentage of contract purchases may vary from year to year as determined by the
Managing General Partner. Supply contracts generally do not lock in prices but
rather provide for pricing in accordance with posted prices at the time of
delivery or the current prices established at major storage points, such as Mont
Belvieu, Texas and Conway, Kansas. Some contracts include a pricing formula that
typically is based on such market prices.The Partnership is not currently a
party to any supply contracts containing 'take or pay' provisions.
Warren Petroleum Company ('Warren'), a division of Chevron U.S.A., and
Conoco Gas Products ('Conoco') supplied 13.9% and 10.2%, respectively, of the
Partnership's propane in 1995. The Partnership believes that if supplies from
either Warren or Conoco were interrupted, it would be able to secure adequate
propane supplies from other sources without a material disruption of its
operations; however, the Partnership believes that the cost of procuring
replacement supplies might be materially higher, at least on a short-term basis,
which could adversely affect the Partnership's margins. No other single supplier
provided more than 10% of the Partnership's total propane supply during 1995.
Although the Partnership has long-standing relations with a number of its
important suppliers and has generally been able to secure sufficient propane to
meet its customers' needs, no assurance can be given that supplies of propane
will be readily available in the future. The Partnership expects a sufficient
supply to continue to be available during 1996. However, increased demand for
propane in periods of severe cold weather, or otherwise, could cause future
propane supply interruptions or significant volatility in the price of propane.
The following table shows the average monthly prices of propane in the spot
market during the last five years at Mont Belvieu, Texas and Conway, Kansas, two
major storage areas:
[GRAPHICAL REPRESENTATION of the average monthly propane prices in the
Spot-Market at Mont Belvieu, TX and Conway, KS from January 1991 to May
1996. Prices range from a low of approximately $0.25 per gallon to approximately
$0.45 per gallon.]
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The Partnership owns underground storage facilities in Hutchinson, Kansas
and Loco Hills, New Mexico, leases above ground storage facilities in Crandon,
Wisconsin and Orlando, Florida, and owns or leases smaller storage facilities in
other locations throughout the United States. As of May 31, 1996, the
Partnership's total storage capacity was approximately 33 million gallons
(including approximately one million gallons of storage capacity currently
leased to third parties). For a further description of these facilities, see
' -- Properties.' By utilizing its ability to store propane, the Partnership
believes that it should be able to lower its annual cost of goods sold by
maximizing supplies purchased during periods of seasonably low prices and
minimizing purchases during periods of seasonally high prices. However, because
of the potential volatility of propane prices, the market price of propane could
fall below the price at which the Partnership purchased propane held in
inventory, thereby adversely affecting gross margins or sales or rendering sales
from such inventory unprofitable.
PRICING POLICY
The Partnership believes that its pricing policy is an essential element in
the marketing of propane. The $1.4 million pricing system recently installed in
substantially all of the Partnership's service centers provides central
management with current, system-wide supply, demand and competitive pricing
information. Based on that information, pricing managers located in Cedar
Rapids, Iowa, determine the prices to be charged to the Partnership's existing
residential customers. With respect to commercial and industrial customers,
agricultural customers and new residential customers, management makes daily
pricing recommendations to local managers who determine prices based on such
recommendations as well as local conditions. The Partnership believes that this
flexible, joint pricing management system enables the Partnership to react more
effectively to cost increases, and will permit it, in most situations, to
respond to changes in supply costs in a manner that protects its gross margins,
to the extent possible.
To further enhance its price management, the Partnership intends to equip
its delivery personnel with hand-held computer terminals ('HHTs') that simplify
customer billing and the collection of customer data, including price and volume
information. The HHTs are also able to print accurate customer delivery
statements that can be provided to the customer by the Partnership's delivery
personnel. The Partnership began testing the HHTs in a limited number of service
centers in the Midwest in March 1996. The results of these tests have been
successful to date, and the Partnership expects to begin deploying the HHTs at
approximately 20 additional locations during 1996.
COMPETITION
Propane competes primarily with natural gas, electricity and fuel oil as an
energy source, principally on the basis of price, availability and portability.
Propane serves as an alternative to natural gas in rural and suburban areas
where natural gas is unavailable or portability of product is required. Propane
is generally more expensive than natural gas on an equivalent BTU basis in
locations served by natural gas, although propane is sold in such areas as a
standby fuel for use during peak demand periods and during interruptions in
natural gas service. The expansion of natural gas into traditional propane
markets has historically been inhibited by the capital costs required to expand
distribution and pipeline systems. Although the extension of natural gas
pipelines tends to displace propane distribution in the areas affected, the
Partnership believes that new opportunities for propane sales arise as more
geographically remote neighborhoods are developed.
Propane is generally less expensive to use than electricity for space
heating, water heating, clothes drying and cooking. Although propane is similar
to fuel oil in certain applications, as well as in market demand and price,
propane and fuel oil have generally developed their own distinct geographic
markets, reducing competition between such fuels. Because furnaces and
appliances that burn propane will not operate on fuel oil and vice versa, a
conversion from one fuel to the other requires the installation of new
equipment.
In addition to competing with alternative energy sources, the Partnership
competes with other companies engaged in the retail propane distribution
business. Competition in the propane industry is highly fragmented and generally
occurs on a local basis with other large full-service multi-state propane
marketers, thousands of smaller local independent marketers and farm
cooperatives. Based on industry
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publications, the Partnership believes that the domestic retail market for
propane is approximately 9.4 billion gallons annually, that the 10 largest
retailers, including the Partnership, account for approximately 32% of the total
retail sales of propane in the United States, and that no single marketer has a
greater than 10% share of the total retail market in the United States. Most of
the Partnership's service centers compete with several marketers or distributors
and certain service centers compete with a large number of marketers or
distributors. Each service center operates in its own competitive environment
because retail marketers tend to locate in close proximity to customers in order
to lower the cost of providing service. The Partnership's typical service center
has an effective marketing radius of approximately 50 miles.
The ability to compete effectively further depends on the reliability of
service, responsiveness to customers and the ability to maintain competitive
prices. The Partnership believes that its reliability and service capabilities
differentiate it from many of its competitors. The Partnership's service centers
offer 24-hour/7-day-a-week service for emergency repairs and deliveries. The
Partnership also believes that its safety procedures are more stringent than
many of its small, independent competitors and that the perceived benefits of
such safety procedures give the Partnership a competitive advantage. In
addition, if legislation is enacted that mandates compliance with similar safety
procedures, the Partnership would not be required to invest as heavily to comply
as would many of its smaller, independent competitors.
PROPERTIES
The Partnership maintains a large number of diverse properties, including
appliance showrooms, maintenance facilities, bulk plants, warehousing space,
garages, storage depots or large gas tanks and related distribution equipment
and underground space for gas storage. The Partnership believes that these
properties, taken as a whole, are generally well-maintained and adequate for
current and foreseeable business needs. The majority of these properties are
owned by the Partnership.
Certain information about the major properties of the Partnership as of May
31, 1996, is set forth in the following table.
<TABLE>
<CAPTION>
DESCRIPTION OF FACILITIES NUMBER OF FACILITIES
- ------------------------------------------------------------------------ --------------------------------------------
<S> <C> <C>
Service Centers located throughout the United States(1) 127 owned
38 leased
---
165
Remote Storage Facilities 57 owned
23 leased
---
80
Above Ground Storage Facilities:
Crandon, Wisconsin(2).............................................. 1 leased
Orlando, Florida(3)................................................ 1 leased
---
2
Underground Storage Facilities:
Hutchinson, Kansas(4).............................................. 1 owned
Loco Hills, New Mexico............................................. 1 owned
---
2
Total.........................................................
<CAPTION>
DESCRIPTION OF FACILITIES
- ------------------------------------------------------------------------
<S> <C>
Service Centers located throughout the United States(1)
7,678
Remote Storage Facilities
2,201
Above Ground Storage Facilities:
Crandon, Wisconsin(2).............................................. 241
Orlando, Florida(3)................................................ 1,020
-------
1,261
Underground Storage Facilities:
Hutchinson, Kansas(4).............................................. 12,000
Loco Hills, New Mexico............................................. 10,000
-------
22,000
-------
Total......................................................... 33,140
-------
-------
</TABLE>
- ------------
(1) Includes six service centers recently established under the Partnership's
'scratch start' program.
(2) The facility is leased on a year-to-year basis, and the lease is terminable
by either party upon 30 days' notice.
(footnotes continued on next page)
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(footnotes continued from previous page)
(3) The Partnership leases the real property from a third party pursuant to a
ground lease that terminates on October 31, 1996. The Partnership owns the
storage facility located at such property and leases it to Warren Petroleum
pursuant to an agreement that terminates October 31, 1999 and may be
cancelled by National Propane upon 60 days' notice under certain
circumstances.
(4) The Partnership owns the underground storage facility, which, pursuant to an
operating agreement, is operated by a third party that owns the equipment
necessary to use the facility for propane storage. Such operating agreement
may be terminated by either party at the end of any calendar year upon
thirty days' notice.
The transportation of propane requires specialized equipment. The trucks
utilized for this purpose carry specialized steel tanks that maintain the
propane in a liquefied state. As of May 31, 1996, the Partnership had a fleet of
7 transport truck tractors, all of which are owned by the Partnership and
approximately 400 bulk delivery trucks and 400 service and light trucks, of
which approximately 61% are owned by the Partnership and the balance of which
are leased. In addition, as of May 31, 1996, the Partnership had approximately
150 cylinder delivery vehicles (of which approximately 49% are owned and the
balance of which are leased) and 55 automobiles (of which approximately 84% are
owned and the balance of which are leased). As of May 31, 1996, the Partnership
owned approximately 210,000 customer storage tanks with typical capacities of
250 to 500 gallons.
The Partnership believes that it has satisfactory title to or valid rights
to use all of its material properties. Substantially all of the Partnership's
assets (other than the assets of NSSI) will be pledged to secure the First
Mortgage Notes and indebtedness under the Bank Credit Facility. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Description of Indebtedness.' In addition, some of the
Partnership's properties are subject to liabilities and leases and immaterial
encumbrances, easements and restrictions, although the Partnership does not
believe that any such burdens will materially interfere with the continued use
by the Partnership of its properties, taken as a whole. The Partnership believes
that it has, or in the ordinary course of business will obtain, all required
material approvals, authorizations, orders, licenses, permits, franchises and
consents of, and has obtained or made all required material registrations,
qualifications and filings with, the various state and local governmental and
regulatory authorities which relate to ownership of the Partnership's properties
or the operations of its business.
TRADEMARKS AND TRADENAMES
The Partnership utilizes a number of trademarks and tradenames which it
owns (including 'National PropaneTM'), some of which have a significant value in
the marketing of its products.
GOVERNMENT REGULATION
The Partnership is subject to various federal, state and local
environmental, health and safety laws and regulations. Generally, these laws
impose limitations on the discharge of pollutants and establish standards for
the handling of solid and hazardous wastes. These laws include the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act ('CERCLA'), the Clean Air Act, the Occupational
Safety and Health Act, the Emergency Planning and Community Right to Know Act,
the Clean Water Act and comparable state statutes. CERCLA, also known as the
'Superfund' law, imposes joint and several liability without regard to fault or
the legality of the original conduct on certain classes of persons that are
considered to have contributed to the release or threatened release of a
'hazardous substance' into the environment. Propane is not a hazardous substance
within the meaning of CERCLA. However, automotive waste products, such as waste
oil, generated by the Partnership's truck fleet, as well as 'hazardous
substances' disposed of during past operations by third parties on the
Partnership's properties, could subject the Partnership to CERCLA. Such laws and
regulations could result in civil or criminal penalties in cases of
non-compliance or impose liability for remediation costs. Also, third parties
may make claims against
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owners or operators of properties for personal injuries and property damage
associated with releases of hazardous or toxic substances.
National Fire Protection Association Pamphlets No. 54 and No. 58, which
establish rules and procedures governing the safe handling of propane, or
comparable regulations, have been adopted as the industry standard in all of the
states in which the Partnership operates. In some states these laws are
administered by state agencies, and in others they are administered on a
municipal level. With respect to the transportation of propane by truck, the
Partnership is subject to regulations promulgated under the Federal Motor
Carrier Safety Act. These regulations cover the transportation of hazardous
materials and are administered by the United States Department of
Transportation. The Partnership conducts ongoing training programs to help
ensure that its operations are in compliance with applicable regulations. The
Partnership maintains various permits that are necessary to operate some of its
facilities, some of which may be material to its operations. The Partnership
believes that the procedures currently in effect at all of its facilities for
the handling, storage and distribution of propane are consistent with industry
standards and are in compliance in all material respects with applicable laws
and regulations.
In May 1994, National Propane was informed of coal tar contamination which
was discovered at one of its properties in Marshfield, Wisconsin. National
Propane purchased the property from a company which had purchased the assets of
a utility that had previously owned the property. National Propane believes that
the contamination occurred during the use of the property as a coal gasification
plant by such utility. In order to assess the extent of the problem, National
Propane engaged environmental consultants who began work in August 1994. In
December 1994, the environmental consultants issued a report to National Propane
which estimated the range of potential remediation costs to be between
approximately $0.4 million and $0.9 million depending upon the actual extent of
impacted soils, the presence and extent, if any, of impacted ground water and
the remediation method actually required to be implemented. In February 1996,
based upon new information National Propane's environmental consultants issued a
second report which presented the two most likely remediation methods and
revised estimates of the costs of such methods. The range of estimated costs for
the first method, which involves treatment of groundwater and excavation,
treatment and disposal of contaminated soil, is from $1.6 million to $3.3
million. The range for the second method, which involves treatment of ground
water and building a containment wall, is from $0.4 million to $0.8 million.
Based on discussions with National Propane environmental consultants, both
methods are acceptable remediation plans. The Partnership will have to agree
upon the final plan with the State of Wisconsin. Since receiving notice of the
contamination, National Propane has engaged in discussions of a general nature
concerning remediation with the State of Wisconsin. These discussions are
ongoing and there is no indication as yet of the time frame for a decision by
the State of Wisconsin on the method of remediation. Accordingly, it is unknown
which remediation method will be used. National Propane is also engaged in
ongoing discussions of a general nature with the successor to the utility that
operated a coal gasification plant on the property. There is as yet no
indication that the successor will share the costs of remediation. If National
Propane is found liable for any of such costs, it will attempt to recover them
from the successor owner. National Propane has notified its insurance carriers
of the contamination and the likely incurrence of costs to undertake
remediation. As of December 31, 1995 and March 31, 1996, National Propane had a
remaining accrual of $0.4 million for this contingency. Pursuant to a lease
relating to the Marshfield facility, the ownership of which will not be
transferred to the Operating Partnership at the closing of the Offering, the
Partnership has agreed to be liable for any costs of remediation in excess of
amounts recovered from such successor or from insurance. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Contingencies.' The ultimate outcome of this matter cannot presently be
determined and, depending upon the cost of remediation required, may have a
material adverse effect on the Partnership's financial position, results of
operations or ability to make the Minimum Quarterly Distribution to all
Unitholders.
In connection with all acquisitions of retail propane businesses that
involve the purchase of real estate, the Partnership conducts an environmental
review in an attempt to determine whether any substance other than propane has
been sold from, or stored on, any such real estate prior to its purchase. Such
review may include questioning the seller, obtaining representations and
warranties
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concerning the seller's compliance with environmental laws and visual
inspections of the properties, whereby the General Partner's employees, and in
certain cases, independent environmental consulting firms hired by the
Partnership, look for evidence of hazardous substances or the existence of
underground storage tanks.
Future developments, such as stricter environmental, health or safety laws
and regulations thereunder, could affect Partnership operations. It is not
anticipated that the Partnership's compliance with or liabilities under
environmental, health and safety laws and regulations, including CERCLA, will
have a material adverse effect on the Partnership. To the extent that there are
any environmental liabilities unknown to the Partnership or environmental,
health or safety laws or regulations are made more stringent, there can be no
assurance that the Partnership's results of operations will not be materially
and adversely affected.
EMPLOYEES
As of May 31, 1996, the Managing General Partner had 1,007 full time
employees, of whom 79 were general and administrative (including fleet
maintenance personnel), 15 were sales, 428 were transportation and product
supply and 494 were district employees. In addition, at May 31, 1996, the
Managing General Partner had 25 temporary and part-time employees. Approximately
171 of such full-time employees are covered by collective bargaining agreements
that expire on various dates in 1996, 1997 and 1998. The Managing General
Partner believes that its relations with both its union and non-union employees
are satisfactory.
The Partnership has no employees; however, for certain purposes, such as
workers' compensation claims, employees of the Managing General Partner who are
providing services for the benefit of the Partnership may also be considered to
be employees of the Partnership under applicable state law.
LITIGATION AND CONTINGENT LIABILITIES
There are a number of lawsuits pending or threatened against the
Partnership. In general, these lawsuits have arisen in the ordinary course of
the Partnership's business and involve claims for actual damages, and in some
cases punitive damages, arising from the alleged negligence of the Partnership
or as a result of product defects or similar matters. Of the pending or
threatened matters, a number involve property damage, and several involve
serious personal injuries or deaths and the claims made are for relatively large
amounts. Although any litigation is inherently uncertain, based on past
experience, the information currently available to it and the availability of
insurance coverage in certain matters, the Partnership does not believe that the
pending or threatened litigation of which the Partnership is aware will have a
material adverse effect on its results of operations or its financial condition.
However, any one or all of these matters taken together may adversely affect the
Partnership's quarterly or annual results of operations and may limit the
Partnership's ability to make distributions to Unitholders.
In addition, certain contingent liabilities related to National Propane's
operations are being assumed by the Partnership in connection with the
Transactions. These contingent liabilities include potential environmental
remediation costs (primarily costs related to the remediation of coal tar
contamination at the Managing General Partner's Marshfield, Wisconsin facility).
As of March 31, 1996 the Partnership has accrued a liability of approximately
$0.4 million for contingent liabilities associated with the Marshfield facility.
There can be no assurance that the ultimate liability relating to this matter
will not exceed the $0.4 million reserved or that such matter will not have a
material adverse effect on the Partnership's results of operations, financial
condition or its ability to make the Minimum Quarterly Distribution to all
Unitholders.
TRANSFER OF THE PARTNERSHIP ASSETS
Immediately prior to the closing of the Offering, the General Partners will
convey substantially all of their assets (which assets will not include an
existing intercompany note from Triarc, approximately $59.3 million of the net
proceeds from the issuance of the First Mortgage Notes and certain other assets
of the Managing General Partner) and related liabilities (other than income tax
liabilities) to the
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Operating Partnership. These assets include real estate and fixtures located in
25 states, motor vehicles, tanks, cylinders, machinery and office furniture,
intangible property such as contracts, and various licenses, permits and other
similar rights required in connection with the ownership and operation of the
General Partners' business, and leasehold interests in real and personal
property, including automobiles, light trucks and service centers. See
' -- Properties.' Parts and appliance sales, installation and service activities
will be conducted through NSSI, a wholly-owned corporate subsidiary of the
Operating Partnership.
Pending the completion of any remediation required by the State of
Wisconsin and the prosecution of insurance claims and third-party contribution
claims related to the coal tar contamination at the Managing General Partner's
Marshfield, Wisconsin facility, ownership of such facility will be retained by
the Managing General Partner and such property will be leased to the Operating
Partnership. The lease will provide for a nominal annual rental and will also
grant to the Operating Partnership an option to purchase the Marshfield property
at a nominal purchase price upon completion of any required remediation. Under
the lease, the Operating Partnership will be responsible for all expenses and
liabilities relating to the property from and after the date of the closing of
the Offering and will be liable for costs related to such remediation in excess
of any insurance recovery and third-party contributions obtained by the Managing
General Partner. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Contingencies.'
Many of the leases for the General Partners' real and personal property are
transferable to the Operating Partnership only with the consent of the lessor.
The General Partners expect to obtain, prior to the closing of the Offering,
third party consents which are sufficient to enable them to transfer to the
Operating Partnership the assets necessary to enable the Partnership to conduct
the General Partners' propane business in all material respects as described in
this Prospectus. In addition, certain of the General Partners' licenses, permits
and other similar rights relating to the assets to be assigned to the Operating
Partnership are not transferable or are transferable only with the consent of
third parties. Such transferable rights will not be transferred to the Operating
Partnership at the closing of the Offering unless applicable consents have been
obtained. In the case of non-transferable rights or rights where no consent has
been obtained by the closing of the Offering, the General Partners will seek to
obtain such consents in the normal course of business after the closing or seek
to have comparable rights granted to the Operating Partnership. Numerous
licenses, permits and rights will be required for the operation of the Operating
Partnership's business, and no assurance can be given that the Operating
Partnership will obtain all licenses, permits and rights which are required in
connection with the ownership and operation of its business. If consent to the
assignment or reissuance of any lease, license, permit or other similar right
being transferred is not obtained, the General Partners and the Operating
Partnership will develop alternative approaches so that, to the maximum extent
possible, the Operating Partnership will receive the benefits of such lease,
license, permit or right and will discharge the duties and bear the costs and
risks thereunder. The Operating Partnership will bear the risk that such
alternative arrangements will not provide the Operating Partnership with the
full benefits of such lease, license, permit or right. Although failure by the
Operating Partnership to obtain licenses, permits or rights could have a
material adverse effect on the Partnership, the Managing General Partner
believes that the Operating Partnership will have the licenses, permits and
rights which will enable it to conduct its propane business in a manner which is
similar in all material respects to that which was conducted by the General
Partners prior to the closing of the Offering and that any failure to obtain
such licenses, permits or rights will not have a material adverse impact on the
business of the Partnership or the Operating Partnership as described in this
Prospectus. The Operating Partnership will be responsible for the payment of any
transfer taxes and fees owing as a result of the transfer of the General
Partners' assets.
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<PAGE>
MANAGEMENT
PARTNERSHIP MANAGEMENT
The Managing General Partner will manage and operate the activities of the
Partnership. Unitholders will not directly or indirectly participate in the
management or operation of the Partnership and will not have actual or apparent
authority to enter into contracts on behalf of, or to otherwise bind, the
Partnership. The Managing General Partner will owe a fiduciary duty to the
Unitholders. See 'Conflicts of Interest and Fiduciary Responsibility.'
Notwithstanding any limitation on obligations or duties, the Managing General
Partner and the Special General Partner will be liable, as the general partners
of the Partnership, for all debts of the Partnership (to the extent not paid by
the Partnership), except to the extent that indebtedness or other obligations
incurred by the Partnership are made specifically non-recourse to either or both
of the General Partners. Whenever possible, the Managing General Partner intends
to make any such indebtedness or other obligations non-recourse to it and the
Special General Partner. However, if the Operating Partnership defaults under
the First Mortgage Notes or the Bank Credit Facility, the Managing General
Partner will be liable for any deficiency remaining after foreclosure on the
Operating Partnership's assets.
The Managing General Partner will appoint two persons who are neither
officers nor employees of the General Partners or any Affiliate of the General
Partners to its Board of Directors within three months after the date of this
Prospectus. Such directors will serve on the Audit Committee with the authority
to review, at the request of the Managing General Partner, specific matters as
to which the Managing General Partner believes there may be a conflict of
interest in order to determine if the resolution of such conflict proposed by
the Managing General Partner is fair and reasonable to the Partnership. Absent
specific delegation from the Board of Directors of the Managing General Partner,
determinations of the Audit Committee are advisory and do not bind the Managing
General Partner. Any matters approved by the Audit Committee will be
conclusively deemed to be fair and reasonable to the Partnership, approved by
all partners of the Partnership and not a breach by the Managing General Partner
of any duties it may owe the Partnership or the Unitholders. In addition, the
Audit Committee will review external financial reporting of the Partnership,
will recommend engagement of the Partnership's independent accountants and will
review the Partnership's procedures for internal auditing and the adequacy of
the Partnership's internal accounting controls. With respect to such additional
matters, the Audit Committee may act on its own initiative to question the
Managing General Partner and, absent the delegation of specific authority by the
entire Board of Directors, its recommendations will be advisory.
The Special General Partner, a wholly owned subsidiary of the Managing
General Partner, is a non-managing general partner of the Partnership and the
Operating Partnership with no operations or business other than acting as a
general partner of the Partnership and the Operating Partnership. In the event
that the Managing General Partner is merged with and into Triarc, the Audit
Committee of the Special General Partner will perform the functions described
above previously performed by the Audit Committee of the Managing General
Partner. The Audit Committee of the Special General Partner will be composed of
the same directors that serve on the Audit Committee of the Managing General
Partner. In addition, if following a merger of the Managing General Partner with
and into Triarc, a bankruptcy event involving Triarc occurs, the Special General
Partner will become the managing general partner of the Partnership, continue
the business of the Partnership and have all the rights, authority and powers of
the Managing General Partner described in this Prospectus.
As is commonly the case with publicly traded limited partnerships, the
Partnership will not directly employ any of the persons responsible for managing
or operating the Partnership. In general, the current management of National
Propane will continue to manage and operate the Partnership's business as
officers and employees of the Managing General Partner and its Affiliates. See
'Business and Properties -- Employees.'
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DIRECTORS AND EXECUTIVE OFFICERS OF THE MANAGING GENERAL PARTNER
The following table sets forth certain information with respect to the
current directors and executive officers of the Managing General Partner.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE MANAGING GENERAL PARTNER
- ----------------------------------- --- ----------------------------------------------------------------------
<S> <C> <C>
Nelson Peltz....................... 53 Director
Peter W. May....................... 53 Director
Ronald D. Paliughi................. 52 President, Chief Executive Officer and Director
Ronald R. Rominiecki............... 42 Senior Vice President and Chief Financial Officer
Laurie B. Crawford................. 45 Senior Vice President, Administration, General Counsel and Assistant
Secretary
</TABLE>
Nelson Peltz has been a director of the Managing General Partner and a
director and Chairman of the Board and Chief Executive Officer of Triarc since
April 23, 1993. Since then, he has also been a director and Chairman of the
Board and Chief Executive Officer of certain of Triarc's other subsidiaries,
including RC/Arby's Corporation formerly known as Royal Crown Corporation
('RCAC'). He is also a general partner of DWG Acquisition Group, L.P. ('DWG
Acquisition'), whose principal business is ownership of securities of Triarc.
From its formation in January 1989 until April 23, 1993, Mr. Peltz was Chairman
and Chief Executive Officer of Trian Group, Limited Partnership ('Trian'), which
provided investment banking and management services for entities controlled by
Mr. Peltz and Mr. May. From 1983 to December 1988, he was Chairman and Chief
Executive Officer and a director of Triangle Industries, Inc. ('Triangle'),
which, through wholly-owned subsidiaries, was, at that time, a manufacturer of
packaging products, copper electrical wire and cable and steel conduit and
currency and coin handling products. From November 1989 through May 1992, Mr.
Peltz was director of Mountleigh Group plc, a British property trading and
retailing company ('Mountleigh'). He served in various executive capacities,
including Executive Chairman, of Mountleigh from November 1989 until October
1991.
Peter W. May has been a director of the Managing General Partner and a
director and President and Chief Operating Officer of Triarc since April 23,
1993. Since then, he has also been a director and President and Chief Operating
Officer of certain of Triarc's other subsidiaries, including RCAC. He is also a
general partner of DWG Acquisition. From its formation in January 1989 until
April 23, 1993, Mr. May was President and Chief Operating Officer of Trian. He
was President and Chief Operating Officer and a director of Triangle from 1983
until December 1988. From November 1989 through May 1992, Mr. May was a director
of Mountleigh and served as Joint Managing Director of Mountleigh from November
1989 until October 1991. Mr. May was also named a director on April 29, 1993 of
The Leslie Fay Companies, Inc. following its filing on April 5, 1993 for
protection under Chapter 11 of the United States Bankruptcy Code.
Ronald D. Paliughi has been President and Chief Executive Officer of the
Managing General Partner since April 29, 1993. From May 1992 through April 1993,
Mr. Paliughi was a temporary, full time officer in the U.S. Army National Guard,
serving as an Army Aviator. During 1991, he served on active duty as an Army
Aviator and commissioned officer in Operation Desert Shield/Storm. From 1987 to
1990, Mr. Paliughi was Senior Vice President -- Western Operations of AmeriGas
Propane, Inc. (then a subsidiary of UGI Corporation), the largest propane
company in the U.S. During 1986, Mr. Paliughi was Director of Retail Operations
of CalGas Corporation. For more than 14 years prior, he held various positions
with VanGas, Inc. ('VanGas'), the western subsidiary of Suburban Propane Gas
(then a division of Quantum Chemical Corporation), the third largest U.S.
propane company. He last served as Senior Vice President/General Manager, the
top executive officer at VanGas.
Ronald R. Rominiecki joined the Managing General Partner on December 1,
1995 as Senior Vice President and Chief Financial Officer. From April 1994 to
November 1995, he served as Vice President and Chief Financial Officer of
O'Brien Environmental Energy, Inc. ('O'Brien'), a publicly-owned company engaged
in cogeneration and other energy related businesses. In September 1994 O'Brien
filed a petition in bankruptcy under Chapter 11 of the United States Code. From
June 1988 to March 1994, Mr. Rominiecki was Corporate Controller at Westmoreland
Coal Company, a NYSE listed company.
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<PAGE>
Laurie B. Crawford has been Senior Vice President, Administration, General
Counsel and Assistant Secretary of the Managing General Partner since December
1, 1995. From December 1, 1993 to December 1, 1995 she was Vice President,
Administration, responsible for human resources, legal matters, real estate,
fleet management, plant engineering, safety, risk management, insurance and
public relations. Prior to her employment with the Managing General Partner, she
was employed by Rockwell International as Succession Planning Manager from
November 1991 through November 1993. From August 1986 until November 1991, she
was Director of Human Resources for MCI Communication Corp.
Each director has been elected to serve until the Managing General
Partner's next annual meeting of stockholders and until such director's
successor is duly elected and qualified or until his death, resignation or
removal. The term of office of each executive officer is until the next annual
meeting of the Board of Directors of the Managing General Partner and until his
successor is elected and qualified or until his death, resignation or removal.
REIMBURSEMENT OF EXPENSES OF THE MANAGING GENERAL PARTNER
Following the Offering, in general, the management and employees of
National Propane who currently manage and operate the propane business and
assets to be owned by the Partnership will continue to manage and operate the
Partnership's business as officers and employees of the Managing General Partner
and its Affiliates. The Partnership will not have any officers or employees of
its own. The Operating Partnership's corporate subsidiary will, however, have
its own employees to manage and operate its business. The Managing General
Partner will not receive any management fee or other compensation in connection
with its management of the Partnership, but will be reimbursed at cost for all
direct and indirect expenses incurred on behalf of the Partnership, including
the costs of compensation and employee benefit plans described herein properly
allocable to the Partnership, and all other expenses necessary or appropriate to
the conduct of the business of, and allocable to, the Partnership. The
Partnership Agreement provides that the Managing General Partner shall determine
the expenses that are allocable to the Partnership in any reasonable manner
determined by the Managing General Partner in its sole discretion. Affiliates of
the Managing General Partner (including Triarc) may perform certain
administrative services for the Managing General Partner on behalf of the
Partnership. Such Affiliates will not receive a fee for such services performed
for or on behalf of the Partnership, but will be reimbursed for all direct and
indirect expenses incurred in connection therewith. In addition, the General
Partners and their Affiliates may provide additional services to the
Partnership, for which the Partnership will be charged reasonable fees as
determined by the Managing General Partner.
In addition, the Managing General Partner will receive an aggregate 2%
unsubordinated General Partner Interest and a 40.6% interest as holder of the
Subordinated Units as consideration for its contribution to the Partnership of
its limited partner interest in the Operating Partnership, which will be
received as consideration for its contribution to the Operating Partnership of
the propane business of National Propane. The Managing General Partner will be
entitled to distributions on such Units, and the Managing General Partner will
be entitled to incentive distributions as holder of the Incentive Distribution
rights, as described under 'Cash Distribution Policy.'
EXECUTIVE COMPENSATION
The following table sets forth the annual salaries, bonuses and all other
compensation awards and payouts earned by the President and Chief Executive
Officer and by certain named executive officers of the Managing General Partner
(collectively, the 'Named Officers') for services rendered to the Managing
General Partner and its subsidiaries during the fiscal years ended December 31,
1995 and December 31, 1994 and the ten months ended December 31, 1993.
103
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
AWARDS
------------------------------------
ANNUAL NUMBER OF
COMPENSATION OTHER SECURITIES
---------------------- ANNUAL RESTRICTED STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) COMPENSATION AWARD(S)(#)(2) OPTIONS/SARS(#)(3)
- ------------------------------------- --------- --------- -------- ------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald D. Paliughi .................. 1995 250,000 -- -- -- 30,000(5)
President and Chief Executive 1994 250,000 300,000 -- 5,000 51,000(6)
Officer 1993 137,180 100,000 (8) -- 5,000 40,000(9)
Ronald R. Rominiecki ................ 1995 13,750(11) -- -- 20,000(5)
Senior Vice President and Chief 1994 -- -- -- --
Financial Officer 1993 -- -- -- --
Laurie B. Crawford .................. 1995 88,333 -- -- -- 7,500(5)
Senior Vice President, 1994 78,472 20,000 -- -- 10,000(13)
Administration, General Counsel and 1993 5,833(14) -- -- -- --
Assistant Secretary
Terry D. Weikel, .................... 1995 125,000 -- -- -- --
former Senior Vice President and 1994 112,755 50,000 -- -- 7,500(15)
Chief Financial Officer 1993 50,000 15,000 24,950(16) -- 5,000(15)
<CAPTION>
LTIP
PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION ($) COMPENSATION(4)($)
- ------------------------------------- ------- ------------------
<S> <C> <C>
Ronald D. Paliughi .................. -- 2,592
President and Chief Executive -- 96,178(7)
Officer 40,000 --
Ronald R. Rominiecki ................ 63,000(12)
Senior Vice President and Chief --
Financial Officer --
Laurie B. Crawford .................. -- 1,579
Senior Vice President, -- 1,117
Administration, General Counsel and -- --
Assistant Secretary
Terry D. Weikel, .................... -- --
former Senior Vice President and -- 696
Chief Financial Officer -- 16,972(17)
</TABLE>
- ------------
(1) Information set forth opposite 1993 relates to Fiscal 1993 (i.e., the ten
month period ended December 31, 1993), while information set forth opposite
1995 and 1994 relates to Fiscal 1995 (the year ended December 31, 1995) and
Fiscal 1994 (the year ended December 31, 1994), respectively.
(2) All restricted stock awards were made pursuant to Triarc's 1993 Equity
Participation Plan (described below). Based upon the closing price of
Triarc's Class A Common Stock, par value $.10 per share (the 'Class A
Common Stock'), on the NYSE on December 31, 1995 of $11.00, the value of
Mr. Paliughi's restricted stock holdings as of such date is $110,000. On
January 16, 1996 the restrictions on all of these shares lapsed.
(3) All stock option grants were made pursuant to Triarc's 1993 Equity
Participation Plan. The option grants are described below under 'Option/SAR
Grants in Last Fiscal Year, Individual Grants.'
(4) Except as otherwise noted, consists only of life insurance premiums and
401(k) contributions paid by National Propane.
(5) One-third of the options granted will vest on each of the first, second and
third anniversaries of the date of grant and the options will be
exercisable at any time between the date of vesting and the tenth
anniversary of the date of grant.
(6) With respect to 26,000 of the options granted, one-third of such options
will vest on each of the first, second and third anniversary of the date of
grant. With respect to the remaining 25,000 options, one-third of such
options will vest on each of the third, fourth and fifth anniversary of the
date of grant. All of such options will be exercisable at any time between
the date of vesting and the tenth anniversary of the date of grant.
(7) Includes $33,333 for certain salary allowances and $60,829 of reimbursed
moving expenses in connection with Mr. Paliughi's relocation to Cedar
Rapids, Iowa.
(8) Represents a bonus of $100,000 pursuant to an employment agreement entered
into effective April 24, 1993 (see ' -- Employment Arrangements with
Executive Officers' below).
(9) One third of the options granted will vest on each of the third, fourth and
fifth anniversaries of the date of grant and the options will be
exercisable at any time between the date of vesting and the tenth
anniversary of the date of grant.
(10) $40,000 was accrued under the Mid-Term Incentive Plan.
(11) Mr. Rominiecki began his employment with the Managing General Partner on
December 1, 1995. The amount reported is based on an annual salary of
$165,000.
(footnotes continued on next page)
104
<PAGE>
<PAGE>
(footnotes continued from previous page)
(12) Represents a one-time bonus payable in connection with Mr. Rominiecki's
employment by the Managing General Partner.
(13) With respect to 5,000 of the options granted, one-third of such options
will vest on each of the first, second and third anniversary of the date of
grant. With respect to the remaining 5,000 options, one-third of such
options will vest on each of the third, fourth and fifth anniversary of the
date of grant. All of such options will be exercisable at any time between
the date of vesting and the tenth anniversary of the date of grant.
(14) Ms. Crawford began her employment with the Managing General Partner on
December 1, 1993. The amount reported is based on an annual salary of
$70,000.
(15) Pursuant to Mr. Weikel's consulting agreement, on January 1, 1996 such
options were converted into the right, exercisable until December 31, 1996,
to receive cash equal to the positive difference, if any, between the fair
market value of Triarc's Class A Common Stock at the time of such exercise
and, with respect to options granted in 1994, $10.75, and with respect to
options granted in 1993, $20.00.
(16) Represents payments for consulting services provided by Mr. Weikel in 1993
prior to his being employed by the Managing General Partner.
(17) Includes $16,666 for certain salary allowances in connection with Mr.
Weikel's relocation to Cedar Rapids, Iowa.
CASH INCENTIVE PLANS
Triarc has implemented an annual cash incentive plan (the 'Annual Incentive
Plan') for executive officers and key employees of National Propane and is
presently developing a mid-term cash incentive plan (the 'Mid-Term Incentive
Plan') for executive officers and key employees of National Propane.
The Annual Incentive Plan is designed to provide annual incentive awards to
participants, 50% of which are based on whether National Propane has met certain
pre-determined goals and 50% of which is based on the performance of the
participant during the preceding year. Under the Annual Incentive Plan,
participants may receive awards of a specified percentage of their then current
base salaries, which percentage varies depending upon the level of seniority and
responsibility of the participant. Such percentage is set by National Propane's
management in consultation with management of Triarc. The Board of Directors of
National Propane, in consultation with management of Triarc and the Compensation
Committee of the Triarc Board of Directors (the 'Compensation Committee'), may
elect to adjust awards on a discretionary basis to reflect the relative
individual contribution of the executive or key employee, to evaluate the
'quality' of National Propane's earnings or to take into account external
factors that affect performance results. The Board of Directors of National
Propane also may decide that multiple performance objectives related to National
Propane's and/or the individual's performance may be appropriate and, in such
event, such factors would be weighted in order to determine the amount of the
annual incentive awards. The Annual Incentive Plan is administered by National
Propane's Board of Directors and Triarc's management and may be amended or
terminated by such Board of Directors and Triarc's management at any time.
Under the Mid-Term Incentive Plan, incentive awards will be granted to
participants if National Propane achieves an agreed upon profit over a three
year performance cycle. During each plan year, an amount will be accrued for
each participant based upon the amount by which National Propane's profit for
such year exceeds a minimum return to be determined. A new three-year
performance cycle will begin each year, such that after the third year the
annual cash amount paid to participants pursuant to the Mid-Term Incentive Plan
should equal the target award if National Propane's profit goals have been
achieved for the full three-year cycle. The Board of Directors of National
Propane, together with Triarc's management and the Compensation Committee of
Triarc's Board of Directors, may adjust, upward or downward, an individual's
award based upon an assessment of the individual's relative contribution to
National Propane's longer-term profit performance. The Board of Directors of
Triarc and Triarc's management may amend or terminate the Mid-Term Incentive
Plan at any time. Pursuant
105
<PAGE>
<PAGE>
to the terms of his employment agreement, under the Mid-Term Incentive Plan Mr.
Paliughi was entitled to have accrued for 1993 a minimum of $40,000.
From time to time, the Compensation Committee of the Triarc Board may, at
the request of Triarc's or National Propane's management, award discretionary
bonuses based on performance to certain executive officers. The amounts of such
bonuses will be based on the Compensation Committee's evaluation of each such
individual's contribution.
TRIARC'S 1993 EQUITY PARTICIPATION PLAN
Certain executive officers of the Managing General Partner have
participated in the Triarc Companies, Inc. 1993 Equity Participation Plan which
was adopted on April 24, 1993, and expires by its terms on April 24, 1998. The
plan provides for, among other things, the grant of options to purchase Triarc's
Class A Common Stock, Stock Appreciation Rights ('SARs') and restricted shares
of Class A Common Stock. Directors, selected officers and key employees of, and
key consultants to, Triarc and its subsidiaries, including the Managing General
Partner, are eligible to participate in the plan. The plan is being administered
by the Compensation Committee of the Triarc Board of Directors, which may
determine from time to time to grant options, SARs and restricted stock.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS
The following table sets forth certain information with respect to options
to purchase shares of Triarc Class A Common Stock and SARs granted to the Named
Officers in respect of 1995.
<TABLE>
<CAPTION>
GRANT DATE
NUMBER OF PERCENT OF TOTAL VALUE
SECURITIES OPTIONS/SARS -----------
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1)(2) FISCAL YEAR(3) ($/SH) DATE VALUE($)(4)
- ---------------------------------------------- ------------ ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Ronald D. Paliughi............................ 30,000 26.8% $10.125 12/07/2005 194,100
Ronald R. Rominiecki.......................... 20,000 17.9% $10.125 12/07/2005 129,400
Laurie B. Crawford............................ 7,500 6.7% $10.125 12/07/2005 48,525
Terry D. Weikel............................... -- -- -- -- --
</TABLE>
- ------------
(1) These options were granted on December 7, 1995 and have an exercise price
equal to the closing price of Triarc Class A Common Stock on the NYSE on the
date of such grant.
(2) One-third of the options granted will vest on each of the first, second and
third anniversaries of the date of grant and the options will be exercisable
at any time between the date of vesting and the tenth anniversary of the
date of grant.
(3) These percentages are based on the total number of Options granted under the
Triarc 1993 Equity Participation Plan to employees of the General Partner
only.
(4) These values were calculated using the Black-Scholes option pricing model.
The actual value, if any, that an executive may realize will depend on the
excess, if any, of the stock price over the exercise price on the date the
options are exercised, and no assurance exists that the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The following assumptions were used in the calculations:
(a) assumed option term of 7.5 years;
(b) stock price volatility factor of 0.4844;
(c) 7.6% annual discount rate;
(d) no dividend payment; and
(e) 3% discount to Black-Scholes values for each year an option remains
unvested.
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<PAGE>
<PAGE>
OPTION/SAR EXERCISES IN 1995 AND YEAR-END OPTION/SAR VALUES
The following table sets forth certain information concerning options to
purchase shares of Triarc Class A Common Stock, and the values at the end of
1995 of unexercised in-the-money options to purchase shares of Triarc Class A
Common Stock granted to the Named Officers outstanding as of the end of 1995. No
Named Officer exercised any options to purchase Triarc Class A Common Stock in
1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT
FISCAL 1995 AT FISCAL 1995
YEAR-END YEAR-END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ronald D. Paliughi....................................... 8,667 112,333 $ 2,167 $30,583
Ronald R. Rominiecki..................................... -- 20,000 -- 17,500
Laurie B. Crawford....................................... 1,667 15,833 417 7,396
Terry D. Weikel.......................................... 2,500 10,000 625 1,250
</TABLE>
- ------------
(1) On December 31, 1995, the last day of Fiscal 1995, the closing price of the
Triarc Class A Common Stock was $11.00.
UNIT OPTION PLAN
Effective upon the closing of the Offering, the Managing General Partner
will adopt the National Propane Corporation 1996 Unit Option Plan (the 'Option
Plan'), which permits the issuance of options (the 'Options') and Unit
appreciation rights ('UARs') to eligible persons. An aggregate of 1,250,000
Common Units and Subordinated Units are initially reserved for issuance as of
the Option Plan's effective date. Pursuant to the terms of the Option Plan, an
additional number of Units equal to 1% of the number of Units outstanding as of
each December 31 following the Option Plan's effective date will be added to the
total number of Units that may be issued thereafter. The number of Units
available for issuance shall be increased by the number of Units received by the
Company as payment of the exercise price of Options and by the number of Units
purchased by the Company from an amount equal to the cash proceeds received by
the Company on the exercise of Options. The number of Units available for
issuance pursuant to the Option Plan is subject to adjustment in certain
circumstances. The following is a summary of the material terms of the Option
Plan and is qualified in its entirety by reference to the Option Plan, which
will be filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
The Option Plan has been designed to furnish additional incentive
compensation to selected directors, officers, employees and consultants of the
Managing General Partner and its Affiliates and to increase their personal and
proprietary interest in the future performance of the Partnership. Approximately
1,000 directors, officers, employees, and consultants will be eligible to
participate in the Option Plan. In addition, in the event that the provision
relating to disinterested administration in Rule 16b-3 under the 1934 Act (as in
effect on the Option Plan's effective date) becomes inapplicable to the Managing
General Partner and the Partnership, directors who are not employees or officers
of the Managing General Partner will be eligible to receive Options and UARs.
The Option Plan will be administered by the Managing General Partner's
compensation committee (the 'Committee'). The Committee, in its sole discretion
and authority, but subject to the terms of the Option Plan, will determine the
directors, officers, employees and consultants who are eligible to receive
Options and UARs and the date of grant, number of Units, exercise price, vesting
schedule, duration (not to exceed ten years) and other terms and conditions
applicable to each Option and UAR granted under the Option Plan. The Committee
may accelerate the exercisability of Options and UARs. No Option or UAR with
respect to Subordinated Units will become exercisable before the end of the
Subordination Period.
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<PAGE>
<PAGE>
On a change of control (as defined in the Option Plan), the Committee will
have discretion to accelerate the exercisability (and duration) of outstanding
Options and UARs or cancel outstanding Options and UARs in exchange for cash.
The exercise price of each Option may be paid in the form of cash, check
acceptable to the Managing General Partner, Units held by the participant for
such period as may be required to avoid a charge to earnings for financial
reporting purposes, or such other form of consideration permitted by the
Committee, including by assignment of a portion of the proceeds on sale of Units
deliverable upon exercise or any combination of the foregoing.
Units delivered by the Managing General Partner on exercise of an Option or
UAR may consist of Units acquired in the open market or from any person
(including Units newly issued by the Partnership), Units already owned by the
Managing General Partner, or any combination of the foregoing. Options and UARs
are generally nontransferable.
With respect to each Unit delivered upon the exercise of an Option (unless
newly issued by the Partnership), the Managing General Partner shall be entitled
to reimbursement by the Partnership for the excess, if any, of (i) the fair
market value of each such Unit (as of the date of exercise of such Option) or,
in the case of Units purchased in the open market, the price actually paid by
the Managing General Partner therefor over (ii) the exercise price of the Option
relating to such Unit. With respect to the settlement of a UAR, the Managing
General Partner shall be entitled to reimbursement by the Partnership for (i)
the amount of cash, if any, paid in connection with such settlement or (ii) the
fair market value of each such Unit delivered in connection with such settlement
(unless such Unit is newly issued by the Partnership). Thus, the cost of the
Options and UARs will be borne by the Partnership.
The Committee may grant UARs in such amounts and subject to such terms and
conditions as the Committee may determine. UARs may be granted in connection
with all or any part of, or independently of, any Option granted under the
Option Plan. The grantee of a UAR has the right to receive from the Managing
General Partner an amount equal to (a) the excess of (i) the fair market value
of a Unit on the date of exercise of the UAR over (ii) the fair market value of
a Unit on the date of grant (or over the Option exercise price if the UAR is
granted in connection with an Option), multiplied by (b) the number of Units
with respect to which the UAR is exercised. Payment to the grantee upon exercise
of a UAR will be in cash or in Units (valued at their fair market value on the
date of exercise of the UAR) or both, all as the Committee shall determine in
its sole discretion. Upon the exercise of a UAR granted in connection with an
Option, the number of Units subject to the related Option shall be reduced by
the number of Units with respect to which the UAR is exercised. Upon the
exercise of an Option in connection with which a UAR has been granted, the
number of Units subject to the related UAR shall be reduced by the number of
Units with respect to which the Option is exercised.
The Board of Directors of the Managing General Partner in its discretion
may terminate the Option Plan at any time with respect to any Units for which a
grant has not theretofore been made. The Board of Directors will also have the
right to alter or amend the Option Plan, any award made thereunder or any part
thereof from time to time; provided, that no change in any previously granted
Option or UAR may be made which would impair the rights of the grantee without
the consent of such grantee; and provided further, that to the extent necessary
to comply with Rule 16b-3 under the 1934 Act, no such amendment or alteration
will, without the requisite consent under such Rule 16b-3: (i) materially
increase the total number of Units available for Options and UARs under the
Option Plan, subject to certain exceptions; (ii) materially modify the
requirements as to eligibility for participation in the Option Plan; (iii)
extend the maximum period during which Options and UARs may be granted under the
Option Plan; or (iv) materially increase the benefits accruing to participants
under the Option Plan.
Generally, no tax is imposed on the grantee upon the grant of an Option or
UAR under the Plan and neither the Partnership nor the Managing General Partner
will be entitled to a tax deduction by reason of such a grant. Generally, upon
the exercise of an Option, the optionee will be taxable on ordinary income in
the year of exercise in an amount equal to the excess of the fair market value
of the Units on the date of exercise over the Option exercise price and the
employer will be entitled to a deduction in an equivalent amount. In general,
upon exercising a UAR, the amount of any cash
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received and the fair market value on the exercise date of any Units or other
property received are taxable to the recipient as ordinary income and deductible
by the employer. Insofar as the Partnership will reimburse the Managing General
Partner for the difference between the cost incurred by the Managing General
Partner in acquiring Units to deliver to the optionee or holder of UARs upon
exercise and the proceeds received by the Managing General Partner from the
optionee in connection with such exercise, the Managing General Partner will
generally be treated as receiving income in the amount of such reimbursement and
the Partnership may claim a deduction for such payment. Upon a subsequent
disposition of the Units received upon exercise of an Option or UAR, any
appreciation after the date of exercise will generally qualify as capital gain.
If the Units received upon the exercise of an Option or UAR are transferred to
the optionee subject to certain restrictions, then the taxable income realized
by the optionee, unless the optionee elects otherwise, and the corresponding tax
deduction (assuming any federal income tax withholding requirements are
satisfied) should be deferred and should be measured at the fair market value of
the Units at the time the restrictions lapse. The restrictions imposed on
certain individuals by Section 16(b) of the 1934 Act may constitute such a
transfer restriction during the period prescribed thereby with respect to
Options or UARs exercised within six months of the grant date thereof.
It is not anticipated that any Options or UARs will be granted at or prior
to the closing of the Offering.
COMPENSATION OF DIRECTORS
The Managing General Partner pays no additional remuneration to its
employees (or employees of any of its Affiliates) for serving as directors or to
directors who are not employees of the Managing General Partner or any of its
Affiliates. The Managing General Partner may in the future pay remuneration to
its directors. In addition, the Partnership anticipates that directors who are
not employees of the Managing General Partner or its Affiliates will be
compensated for serving as such, will be reimbursed for out-of-pocket expenses
and will be eligible to participate in the Partnership's or Managing General
Partner's Unit purchase or option plans, if any.
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
Mr. Paliughi has an employment contract with the Managing General Partner,
effective as of April 24, 1993, as amended, pursuant to which (i) the Managing
General Partner agrees to employ Mr. Paliughi as President and Chief Executive
Officer through January 2, 1998, (ii) Mr. Paliughi receives a base salary of
$300,000 per annum (effective June 15, 1996) during his employment (subject to
increase at the discretion of the Board of Directors), (iii) Mr. Paliughi is
eligible to participate in the Annual Incentive Plan, enabling him to receive an
annual cash bonus of up to 75% of his base salary based upon the achievement of
certain individual and Partnership performance objectives, (iv) Mr. Paliughi is
eligible to participate in the Mid-Term Incentive Plan, enabling him to receive
an annual bonus award at least equal to 75% of his base salary based upon the
achievement by the Partnership of certain financial performance objectives over
a three-year performance cycle, (v) Mr. Paliughi is entitled to severance
benefits generally equal to two years base salary and bonuses (approximately
$1,050,000 if such termination occurred on June 15, 1996) and certain relocation
payments in the event he is terminated other than for cause (as defined), or if
his existing employment agreement is not renewed or extended on substantially
similar terms and (vi) Mr. Paliughi is entitled to participate in other
generally available compensation plans and receives various other benefits
including reimbursement of certain expenses. The agreement also restricts Mr.
Paliughi from competing with the General Partner for 24 months after the
termination of the agreement if such termination results from Mr. Paliughi's
voluntary resignation or the Managing General Partner's termination of Mr.
Paliughi's employment for cause (as defined in the agreement).
Ms. Crawford has an employment agreement (effective as of April 9, 1996)
and a severance agreement (effective as of March 27, 1995) with the Managing
General Partner pursuant to which (i) the Managing General Partner agrees to
employ Ms. Crawford as Senior Vice President -- Administration, General Counsel
and Assistant Secretary through April 15, 1998, (ii) Ms. Crawford receives a
one-time signing bonus of $124,500 in cash and a base salary of $125,000 per
annum until
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January 1, 1997 and $137,500 thereafter, (iii) Ms. Crawford is eligible to
participate in the Annual Incentive Plan, enabling her to receive an annual cash
bonus of up to 50% of her base salary based upon the achievement of certain
individual and Partnership performance objectives, (iv) Ms. Crawford is eligible
to participate in the Mid-Term Incentive Plan, enabling her to receive an annual
bonus award equal to 40% of her base salary based upon the achievement by the
Partnership of certain financial performance objectives over a three-year
performance cycle, (v) Ms. Crawford is entitled to severance benefits generally
equal to two years base salary and bonuses (approximately $312,500 if such
termination occurred on June 15, 1996) in the event she is terminated other than
for cause (as defined) during the term of her employment agreement, (vi) if,
after the term of her employment agreement has expired, Ms. Crawford is still
employed by the Managing General Partner, and is terminated other than for cause
(as defined) and within one year of a change of control (as defined) of the
Managing General Partner, Ms. Crawford is entitled to severance benefits
generally equal to her annual compensation plus an amount not to exceed Ms.
Crawford's prior year's bonus and (vii) Ms. Crawford is entitled to participate
in other generally available compensation plans and receive various other
benefits including reimbursement of certain expenses.
Mr. Rominiecki has a severance agreement with the Managing General Partner
which provides that in the event he is terminated by the Managing General
Partner other than for cause (as defined in the agreement), he is entitled to
severance benefits generally equal to his annual compensation (approximately
$165,000 if such termination occurred on June 15, 1996) if such termination
occurs prior to December 1, 1996 or within one year of a change of control (as
defined in the agreement) of the Managing General Partner or six month's
compensation if such termination occurs thereafter.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF TRIARC COMMON STOCK BY THE DIRECTORS
AND EXECUTIVE OFFICERS OF THE MANAGING GENERAL PARTNER
All of the issued and outstanding shares of common stock of the General
Partner are indirectly owned by Triarc. The table below sets forth the
beneficial ownership as of May 31, 1996, by each person known by the Managing
General Partner to be the beneficial owner of more than 5% of the outstanding
shares of Triarc Class A Common Stock (constituting the only class of voting
capital stock of Triarc), each director and each Named Officer of the Managing
General Partner and the executive officers and directors of the Managing General
Partner as a group. Triarc's Class A Common Stock is traded on the NYSE.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER OF OWNERSHIP(1) PERCENT OF CLASS
- ----------------------------------------------------------------------- --------------------- ----------------
<S> <C> <C>
Nelson Peltz .......................................................... 6,819,967(2)(3)(4)(5) 27.6%
900 Third Avenue
New York, NY 10022
Peter W. May .......................................................... 6,549,667(2)(4)(6) 26.8%
900 Third Avenue
New York, NY 10022
DWG Acquisition Group, L.P. ........................................... 5,982,867(4) 25.0%
1201 North Market Street
Wilmington, DE 19801
Ronald D. Paliughi..................................................... 32,000(7) *
Ronald R. Rominiecki................................................... -- *
Laurie B. Crawford..................................................... 1,667(8) *
All executive officers and directors as a group (5 persons)............ 7,420,434 29.3%
</TABLE>
- ------------
* Less than 1%.
(1) Except as otherwise indicated, each person has sole voting and dispositive
power with respect to such shares.
(2) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and
Mr. May are the sole general partners.
(3) Includes 200 shares owned by a family trust of which Mr. Peltz is a general
partner. Mr. Peltz disclaims beneficial ownership of such 200 shares.
(4) The Partnership is informed that DWG Acquisition has pledged such shares to
a financial institution on behalf of Messrs. Peltz and May to secure loans
made to them.
(5) Includes options to purchase 810,000 shares of Class A Common Stock which
have vested or will vest within 60 days of May 31, 1996.
(6) Includes options to purchase 540,000 shares of Class A Common Stock which
have vested or will vest within 60 days of May 31, 1996.
(7) Includes options to purchase 22,000 shares of Class A Common Stock which
have vested or will vest within 60 days of May 31, 1996.
(8) Represents options to purchase 1,667 shares of Class A Common Stock which
have vested or will vest within 60 days of May 31, 1996.
------------------------
The foregoing table does not include 5,997,622 shares of Triarc's
non-voting Class B Common Stock owned by Victor Posner or entities related to
Victor Posner as a result of a certain Settlement Agreement dated on January 9,
1995. The shares of Class B Common Stock can be converted without restriction
into an equal number of shares of Class A Common Stock following a transfer to a
non-affiliate of Victor Posner. Triarc has certain rights of first refusal if
such shares are proposed to be sold to an unaffiliated party. If the 5,997,622
currently outstanding shares of the Class B Common Stock were converted into
shares of Class A Common Stock, such shares would constitute approximately 20.0%
of the then outstanding shares of Class A Common Stock as of May 31, 1996.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RIGHTS OF THE GENERAL PARTNERS
The Partnership and the Managing General Partner will have extensive
ongoing relationships with Triarc and its Affiliates. Affiliates of the Managing
General Partner, including Triarc, will perform certain administrative services
for the Managing General Partner on behalf of the Partnership. Such Affiliates
will not receive a fee for such services, but will be reimbursed for all direct
and indirect expenses incurred in connection therewith. See
'Management -- Reimbursement of Expenses of the Managing General Partner.' In
addition, after the Offering, the Managing General Partner will own all of the
Subordinated Units, representing 42% of the outstanding Units. Triarc will
indirectly own 100% of the General Partners. Through the Managing General
Partner's ability to control the management of the Partnership and its right to
vote the Subordinated Units (effectively giving the Managing General Partner the
ability to veto certain actions of the Partnership), the Managing General
Partner and its Affiliates will have the ability to exercise substantial control
over the Partnership. See 'Conflicts of Interest and Fiduciary Responsibility.'
TRANSACTIONS INVOLVING TRIARC AND ITS AFFILIATES
In January 1996, the Partnership entered into a five-year lease, as lessee,
with Graniteville, then a wholly owned subsidiary of Triarc, as lessor, with
respect to certain storage facilities located in Graniteville, South Carolina.
As consideration for the use of the leased premises, the Partnership is required
to provide all of Graniteville's annual propane requirements (up to 700,000
gallons annually) at cost plus delivery expenses. Pursuant to the Graniteville
Sale, such lease was assigned to Avondale and amended to provide that it may be
terminated by either party thereto upon six months' notice.
In August 1995 Triarc, through a wholly owned subsidiary, acquired all of
the outstanding stock of two related propane distribution businesses. The
aggregate purchase price was approximately $4.2 million (including the
assumption of certain existing indebtedness). In September 1995 the stock of the
subsidiary which acquired the two companies was contributed by Triarc to NPC
Holdings, Inc. ('NPC Holdings') which, in turn, contributed such stock to the
Managing General Partner. In consideration for such contribution, NPC Holdings
received an additional 30 shares of the Managing General Partner's common stock,
increasing its ownership of the Managing General Partner to 75.7% from 75.2%.
In December 1995, National Propane borrowed $30 million under the Existing
Credit Facility and dividended such amount to subsidiaries of Triarc ($22.7
millon) and SEPSCO ($7.3 million) in proportion to their respective percentage
ownership in National Propane. On February 22, 1996, the 11 7/8% senior
subordinated debentures of SEPSCO were redeemed. The cash for such redemption
came from the proceeds of the $30 million of borrowings (which, under the
Existing Credit Facility, were restricted to the redemption of the 11 7/8%
Debentures), liquidation of marketable securities and existing cash balances.
The indebtedness incurred in part to finance such redemption is being assumed by
the Operating Partnership and repaid in connection with the Transactions.
In the fourth quarter of 1995, the Managing General Partner sold
approximately $3.9 million face amount of its accounts receivable to Triarc for
approximately $3.8 million. As collections on such accounts receivable are
received by the Managing General Partner they are remitted to Triarc on a
periodic basis. As of May 31, 1996, such remittances aggregated approximately
$3.5 million. Under the agreement pursuant to which the receivables were sold,
the Managing General Partner is obligated to repurchase any receivables which
are determined to be uncollectible, up to a maximum of 10% of the face amount
originally sold. The Manager General Partner believes that its allowance for
doubtful accounts is adequate to allow for any repurchases that may be required.
The Managing General Partner receives from Triarc certain management
services including legal, accounting, tax, insurance, financial and other
management services. Effective April 23, 1993 the Managing General Partner (and
certain of Triarc's other subsidiaries) entered into a management services
agreement (the 'Management Services Agreement') with Triarc pursuant to which
the allocation method for those costs that cannot be directly allocated, are
allocated based upon the greater of (i) the sum of earnings before income taxes,
depreciation and amortization and (ii) 10% of revenues,
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as a percentage of Triarc's corresponding consolidated amount. Prior to April
23, 1993, the costs of management services were allocated by Triarc to its
subsidiaries under a former management services agreement (the 'Former
Management Services Agreement') based first directly on the cost of the services
provided and then, for those costs which could not be directly allocated, based
upon the relative revenues and tangible assets as a percentage of Triarc's
corresponding consolidated amounts. Additionally, in Transition 1993 the
Managing General Partner was allocated certain costs representing uncollectible
amounts owed to Triarc for similar management services by certain affiliates or
former affiliates. For additional information regarding the Management Services
Agreement and the Former Management Services Agreement, see note 19 to the
consolidated financial statements of National Propane.
Chesapeake Insurance Company Limited ('Chesapeake Insurance'), an indirect
subsidiary of Triarc, provided certain insurance coverage and reinsurance of
certain risks to the Managing General Partner until October 1993 at which time
Chesapeake Insurance ceased writing all insurance and reinsurance. The net
premium expense incurred was approximately $4 million in Transition 1993. In
addition, on April 1, 1995 the Managing General Partner issued a promissory note
to Chesapeake Insurance for $900,000. $125,000 of the principal of such note was
repaid on December 31, 1995 and the remaining $775,000 was repaid on June 7,
1996.
The Managing General Partner's wholly owned leasing subsidiary, NPC Leasing
Corp. ('NPC Leasing'), leases vehicles and other equipment to companies that are
or were affiliates of the Managing General Partner under long-term lease
obligations. Lease billings by NPC Leasing to current and former affiliates,
other than the Managing General Partner, which included interest and principal,
during Transition 1993, 1994 and 1995 were $8,213,000, $168,000 and $47,000,
respectively. NPC Leasing also had minor billings with current or former
affiliates during the three-month period ended March 31, 1996.
The Managing General Partner holds an intercompany note of Triarc's in the
aggregate principal amount of approximately $81.4 million as of May 31, 1996.
Concurrent with the closing of the Offering, the Managing General Partner will
dividend a portion (approximately $51.4 million aggregate principal amount) of
such intercompany note to Triarc. See 'The Transactions.' For additional
information regarding the intercompany note, see note 13 to the consolidated
financial statements of National Propane.
PARTNERSHIP NOTE
Concurrent with the closing of the Offering, the Operating Partnership will
make the Partnership Loan to Triarc. Management believes that, based on the
terms of the Partnership Note, taken as a whole, the Partnership Note, when
issued, will have a fair market value of not less than 100% of its principal
amount. For information regarding the Partnership Loan and Triarc, see 'Cash
Distribution Policy -- Partnership Loan' and 'Certain Information Regarding
Triarc.'
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY
CONFLICTS OF INTEREST
Certain conflicts of interest could arise as a result of the General
Partners' relationships with their stockholders, on the one hand, and the
Partnership, on the other hand. The directors and officers of the Managing
General Partner and the Special General Partner have fiduciary duties to manage
such Managing General Partner, including its investments in its subsidiaries and
Affiliates, in a manner beneficial to their stockholders. In general, the
Managing General Partner has a fiduciary duty to manage the Partnership in a
manner beneficial to the Partnership and the Unitholders. The Partnership
Agreement contains provisions that allow the Managing General Partner to take
into account the interests of parties in addition to the Partnership in
resolving conflicts of interest, thereby limiting its fiduciary duty to the
Unitholders as well as provisions that may restrict the remedies available to
Unitholders for actions taken that might, without such limitations, constitute
breaches of fiduciary duty. The duty of the directors and officers of the
Managing General Partner to the stockholders of the Managing General Partner
may, therefore, come into conflict with the duties of the Managing General
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Partner to the Partnership and the Unitholders. The Audit Committee of the Board
of Directors of the Managing General Partner will, at the request of the
Managing General Partner, review conflicts of interest that may arise between
the Managing General Partner or its Affiliates, on the one hand, and the
Partnership, on the other. See 'Management -- Partnership Management' and
' -- Fiduciary Duties of the General Partners.'
Conflicts of interest could arise in the situations described below, among
others:
CERTAIN ACTIONS TAKEN BY THE MANAGING GENERAL PARTNER MAY AFFECT THE AMOUNT OF
CASH AVAILABLE FOR DISTRIBUTION TO UNITHOLDERS OR ACCELERATE THE RIGHT TO
CONVERT SUBORDINATED UNITS
Decisions of the Managing General Partner with respect to the amount and
timing of cash expenditures, participation in capital expansions and
acquisitions, borrowings, issuance of additional Units and reserves in any
quarter may affect whether, or the extent to which, there is sufficient
Available Cash from Operating Surplus to meet the Minimum Quarterly Distribution
and Target Distribution Levels on all Units in such quarter or subsequent
quarters. The Partnership Agreement provides that any borrowings by the
Partnership or the approval thereof by the Managing General Partner shall not
constitute a breach of any duty owed by the Managing General Partner to the
Partnership or the Unitholders including borrowings that have the purpose or
effect, directly or indirectly, of enabling the the Managing General Partner to
receive Incentive Distributions or hasten the expiration of the Subordination
Period or the conversion of the Subordinated Units into Common Units. The
Partnership Agreement provides that the Partnership may make loans to and borrow
funds from the General Partners and their Affiliates. Further, any actions taken
by the Managing General Partner consistent with the standards of reasonable
discretion set forth in the definitions of Available Cash, Operating Surplus and
Capital Surplus will be deemed not to breach any duty of the Managing General
Partner to the Partnership or the Unitholders. The Managing General Partner
intends to submit any question regarding amendments to the Partnership
Agreement, the enforcement of Triarc's obligations under the Partnership Note
and other matters that could have, in each case, a material adverse affect on
the limited partners to the Audit Committee of the Board of Directors of the
Managing General Partner. See 'Risk Factors -- Conflicts of Interest and
Fiduciary Responsibility' and 'Cash Distribution Policy.'
BORROWINGS BY THE PARTNERSHIP MAY ENABLE THE MANAGING GENERAL PARTNER TO PERMIT
PAYMENTS OF DISTRIBUTIONS ON THE SUBORDINATED UNITS
The Managing General Partner generally must act as a fiduciary to the
Partnership and the Unitholders, and therefore must generally consider the best
interests of the Partnership when deciding whether to make capital or operating
expenditures or take other steps with respect to the business of the
Partnership. However, the Partnership Agreement provides that it will not
constitute a breach of the General Partner's fiduciary duty if Partnership
borrowings are effected that, directly or indirectly, enable the Managing
General Partner to permit the payment of distributions on the Subordinated
Units.
THE GENERAL PARTNER MAY MERGE WITH AND INTO TRIARC
The Partnership Agreement provides that the Managing General Partner may
merge with and into Triarc (the 'Triarc Merger') without the prior approval of
any Unitholder; provided, however, that immediately prior to such merger (a) the
Partnership has received an Opinion of Counsel, (b) the Special General Partner
has not converted or transferred any portion of its General Partner Interest and
(c) the Special General Partner has a net worth equal to at least $15 million
independent of its interest in the Partnership Group (as defined in the
Glossary). The Partnership Note will contain a covenant of Triarc that, in the
event of the merger or consolidation of the Managing General Partner with and
into Triarc, Triarc will concurrently therewith pledge as security for the
Partnership Loan certain assets of the Managing General Partner. See 'Cash
Distribution Policy -- Partnership Loan.' The Partnership Agreement also
provides that after a merger of the General Partner into Triarc, Triarc may
conduct businesses and activities of its own in which the Partnership will have
no economic interest.
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CERTAIN PARTNERSHIP ACTIONS REQUIRE THE APPROVAL OF THE UNITHOLDERS
The Partnership and the Unitholders may not take certain actions without
the affirmative vote of the holders of 66 2/3% of the outstanding Units or, in
certain cases, a Unit Majority (which, during the Subordination Period, requires
the affirmative vote of the holders of a majority of the Common Units and the
Subordinated Units each voting as a separate class). The affirmative vote of
66 2/3% of the outstanding Units (including Units held by the General Partners
and their Affiliates) is required to remove the Managing General Partner (with
or without Cause). Certain amendments to the Partnership Agreement, a sale,
merger or other disposition of substantially all of the assets of the
Partnership and certain issuances of Partnership Securities during the
Subordination Period require the approval of a Unit Majority. Immediately
following the completion of the Offering, the Managing General Partner will own
a sufficient percentage of the outstanding Units to require the Managing General
Partner's affirmative vote to take such actions. The Managing General Partner
may give or withhold its approval of any such action or vote its Subordinated
Units for or against any such action, as the case may be, in its sole discretion
without considering any interest of, or factors affecting, the Partnership or
any Unitholder. See 'The Partnership Agreement.'
EMPLOYEES OF THE MANAGING GENERAL PARTNER AND ITS AFFILIATES WHO PROVIDE
SERVICES TO THE PARTNERSHIP WILL ALSO PROVIDE SERVICES TO OTHER BUSINESSES
The Partnership will not have any employees and will rely on employees of
its subsidiaries, the Managing General Partner and its Affiliates, including
Triarc. Prior to any merger of the Managing General Partner into Triarc, the
Managing General Partner will not conduct any other business as long as it is a
general partner of the Partnership. After any such merger, Triarc, as the
Managing General Partner, may conduct businesses and activities of its own in
which the Partnership will have no economic interest. In addition, Triarc and
other Affiliates of the Managing General Partner, principally direct and
indirect wholly owned subsidiaries of Triarc, will conduct business and
activities of their own in which the Partnership will have no economic interest.
Accordingly, there may be competition between the Partnership and Affiliates of
the Managing General Partner, including Triarc, for the time and effort of
employees who provide services to both. Certain officers of Affiliates of the
Managing General Partner will divide their time between the business of the
Partnership and the business of the Affiliates and will not be required to spend
any specified percentage or amount of their time on the business of the
Partnership.
THE PARTNERSHIP WILL REIMBURSE THE MANAGING GENERAL PARTNER AND ITS AFFILIATES
FOR CERTAIN EXPENSES
Under the terms of the Partnership Agreement, the Managing General Partner
and its Affiliates will be reimbursed by the Partnership for certain expenses
incurred on behalf of the Partnership, including costs incurred in providing
corporate staff and support services to the Partnership (including compensation
costs incurred under employee benefit plans). The Partnership Agreement provides
that the Managing General Partner shall determine the expenses that are
allocable to the Partnership in any reasonable manner determined by the Managing
General Partner in its sole discretion. See 'Management -- Reimbursement of
Expenses of the Managing General Partner' and 'Certain Relationships and Related
Transactions.'
THE MANAGING GENERAL PARTNER INTENDS TO LIMIT ITS LIABILITY WITH RESPECT TO THE
PARTNERSHIP'S OBLIGATIONS
Whenever possible, the Managing General Partner intends to limit the
Partnership's liability under contractual arrangements to all or particular
assets of the Partnership, with the other party thereto to have no recourse
against the Managing General Partner, the Special General Partner or their
respective assets. The Partnership Agreement provides that any action by the
Managing General Partner in so limiting the liability of the General Partners or
that of the Partnership will not be deemed to be a breach of the General
Partners' fiduciary duties, even if the Partnership could have obtained more
favorable terms without such limitation on liability.
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COMMON UNITHOLDERS WILL HAVE NO RIGHT TO ENFORCE OBLIGATIONS OF THE MANAGING
GENERAL PARTNER AND ITS AFFILIATES UNDER AGREEMENTS WITH THE PARTNERSHIP
The Partnership will acquire or provide many services from or to the
Managing General Partner and its Affiliates (including Triarc) on an ongoing
basis, including those described above. The agreements relating thereto do not
grant to the holders of the Common Units, separate and apart from the
Partnership, the right to enforce the obligations of the Managing General
Partner and its Affiliates in favor of the Partnership. Therefore, the Managing
General Partner will be primarily responsible for enforcing such obligations.
CONTRACTS BETWEEN THE PARTNERSHIP, ON THE ONE HAND, AND THE MANAGING GENERAL
PARTNER AND ITS AFFILIATES, ON THE OTHER, WILL NOT BE THE RESULT OF ARMS'-LENGTH
NEGOTIATIONS
Under the terms of the Partnership Agreement, the Managing General Partner
is not restricted from paying the Managing General Partner or its Affiliates for
any services rendered (provided such services are rendered on terms fair and
reasonable to the Partnership) or entering into additional contractual
arrangements with any of them on behalf of the Partnership. Neither the
Partnership Agreement nor any of the other agreements, contracts and
arrangements between the Partnership, on the one hand, and the Managing General
Partner and its Affiliates, on the other, are or will be the result of
arm's-length negotiations. All of such transactions entered into after the sale
of the Common Units offered in the Offering are to be on terms which are fair
and reasonable to the Partnership, provided that any transaction shall be deemed
fair and reasonable if (i) such transaction is approved by the Audit Committee,
(ii) its terms are no less favorable to the Partnership than those generally
being provided to or available from unrelated third parties or (iii) taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), the transaction is fair to the Partnership. The Managing
General Partner and its Affiliates will have no obligation to permit the
Partnership to use any facilities or assets of the Managing General Partner and
such Affiliates, except as may be provided in contracts entered into from time
to time specifically dealing with such use, nor shall there be any obligation of
the Managing General Partner and its Affiliates to enter into any such
contracts.
POTENTIAL ROLL-UP TRANSACTIONS
The Partnership Agreement does not prohibit the Partnership from engaging
in roll-up transactions. Although the Managing General Partner has no present
intention of causing the Partnership to engage in any such transaction, it is
possible it will do so in the future. There can be no assurance that a roll-up
transaction would not have a material adverse effect on a Unitholder's
investment in the Partnership.
COMMON UNITHOLDERS HAVE NOT BEEN REPRESENTED BY COUNSEL
The Common Unitholders have not been represented by counsel in connection
with the preparation of the Partnership Agreement or other agreements referred
to herein or in establishing the terms of the Offering. The attorneys,
accountants and others who have performed services for the Partnership in
connection with the Offering have been employed by the Managing General Partner
and its Affiliates and may continue to represent the Managing General Partner
and its Affiliates. Attorneys, accountants and others who will perform services
for the Partnership in the future will be selected by the Managing General
Partner or the Audit Committee and may also perform services for the Managing
General Partner and its Affiliates. The Managing General Partner may retain
separate counsel for the Partnership or the Unitholders after the sale of the
Common Units offered in the Offering, depending on the nature of the conflict
that arises, but it does not intend to do so in most cases.
PARTNERSHIP INTERESTS ARE SUBJECT TO THE MANAGING GENERAL PARTNER'S LIMITED CALL
RIGHT
The Partnership Agreement provides that it will not constitute a breach of
the Managing General Partner's fiduciary duties if the Managing General Partner
exercises its right to call for and purchase partnership interests as provided
in the Partnership Agreement or assign this right to its Affiliates or to the
Partnership. The Managing General Partner thus may use its own discretion, free
of fiduciary duty
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restrictions, in determining whether to exercise such right. As a consequence, a
holder of partnership interests may have his partnership interests purchased
from him even though he may not desire to sell them, and the price paid may be
less than the amount the holder would desire to receive upon sale of his
partnership interests. For a description of such right, see 'The Partnership
Agreement -- Limited Call Right.'
THE GENERAL PARTNERS' AFFILIATES MAY COMPETE WITH THE PARTNERSHIP
Following the sale of the Common Units offered in the Offering, Affiliates
of the General Partners will not be restricted from engaging in any business
activities other than the retail sales of propane to end users in the
continental United States, even if they are in competition with the Partnership.
As a result, conflicts of interest may arise between Affiliates of the General
Partners, on the one hand, and the Partnership, on the other. The Partnership
Agreement expressly provides that, subject to certain limited exceptions, it
shall not constitute a breach of the General Partners' fiduciary duties to the
Partnership or the Unitholders for Affiliates of the General Partners to engage
in direct competition with the Partnership, other than with respect to the
retail sale of propane to end users within the continental United States. Such
competition may include the trading, transportation, storage and wholesale
distribution of propane. The Partnership Agreement also provides that the
General Partners and their Affiliates have no obligation to present business
opportunities to the Partnership.
FIDUCIARY DUTIES OF THE GENERAL PARTNERS
The General Partners will be accountable to the Partnership and the
Unitholders as fiduciaries. Consequently, the General Partners must exercise
good faith and integrity in handling the assets and affairs of the Partnership.
In contrast to the relatively well-developed law concerning fiduciary duties
owed by officers and directors to the shareholders of a corporation, the law
concerning the duties owed by general partners to other partners and to
partnerships is relatively undeveloped. Neither the Delaware Revised Uniform
Limited Partnership Act (the 'Delaware Act') nor case law defines with
particularity the fiduciary duties owed by general partners to limited partners
or a limited partnership, but the Delaware Act provides that Delaware limited
partnerships may, in their partnership agreements, restrict or expand the
fiduciary duties that might otherwise be applied by a court in analyzing the
standard of duty owed by general partners to limited partners and the
partnership. The provisions of the Delaware Act that allow the fiduciary duties
of a general partner to be waived or restricted by a partnership agreement have
not been resolved in a court of law, and the General Partners have not obtained
an opinion of counsel covering the provisions set forth in the Partnership
Agreement that purport to waive or restrict fiduciary duties of the General
Partners. Unitholders should consult their own legal counsel concerning the
fiduciary responsibilities of the General Partners and their officers and
directors and the remedies available to the Unitholders.
Fiduciary duties are generally considered to include an obligation to act
with good faith, fairness and loyalty. Such duty of loyalty, in the absence of a
provision in a partnership agreement providing otherwise, would generally
prohibit a general partner of a Delaware limited partnership from taking any
action or engaging in any transaction as to which it has a conflict of interest.
In order to induce the Managing General Partner to manage the business of the
Partnership, the Partnership Agreement, as permitted by the Delaware Act,
contains various provisions intended to have the effect of limiting the
fiduciary duties that might otherwise be owed by the Managing General Partner to
the Partnership and its partners and waiving or consenting to conduct by the
Managing General Partner and its Affiliates that might otherwise raise issues as
to compliance with fiduciary duties or applicable law.
The Partnership Agreement provides that in order to become a limited
partner of the Partnership, a holder of Common Units is required to agree to be
bound by the provisions thereof, including the provisions discussed above. This
is in accordance with the policy of the Delaware Act favoring the principle of
freedom of contract and enforceability of partnership agreements. The Delaware
Act also provides that a partnership agreement is not unenforceable by reason of
its not having been signed by a person being admitted as a limited partner or
becoming an assignee in accordance with the terms thereof.
The Partnership Agreement provides that whenever a conflict of interest
arises between the General Partners or their Affiliates, on the one hand, and
the Partnership or any other partner, on the
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other, the Managing General Partner shall resolve such conflict. The General
Partners shall not be in breach of their obligations under the Partnership
Agreement or their duties to the Partnership or the Unitholders if the
resolution of such conflict is fair and reasonable to the Partnership, and any
resolution shall conclusively be deemed to be fair and reasonable to the
Partnership if such resolution is (i) approved by the Audit Committee (although
no party is obligated to seek such approval and the Managing General Partner may
adopt a resolution or course of action that has not received such approval),
(ii) on terms no less favorable to the Partnership than those generally being
provided to or available from unrelated third parties or (iii) fair to the
Partnership, taking into account the totality of the relationships between the
parties involved (including other transactions that may be particularly
favorable or advantageous to the Partnership). In resolving such conflict, the
Managing General Partner may (unless the resolution is specifically provided for
in the Partnership Agreement) consider the relative interests of the parties
involved in such conflict or affected by such action, any customary or accepted
industry practices or historical dealings with a particular person or entity
and, if applicable, generally accepted accounting or engineering practices or
principles and such other factors as it deems relevant. Thus, unlike the strict
duty of a fiduciary who must act solely in the best interests of his
beneficiary, the Partnership Agreement permits the Managing General Partner to
consider the interests of all parties to a conflict of interests, including the
interests of the General Partners and their stockholders. In connection with the
resolution of any conflict that arises, unless the Managing General Partner has
acted in bad faith, the action taken by the Managing General Partner shall not
constitute a breach of the Partnership Agreement, any other agreement or any
standard of care or duty imposed by the Delaware Act or other applicable law.
The Partnership Agreement also provides that in certain circumstances the
Managing General Partner may act in its sole discretion, in good faith or
pursuant to other appropriate standards.
The Delaware Act provides that a limited partner may institute legal action
on behalf of the partnership (a partnership derivative action) to recover
damages from a third party where the general partner has refused to institute
the action or where an effort to cause the general partner to do so is not
likely to succeed. In addition, the statutory or case law of certain
jurisdictions may permit a limited partner to institute legal action on behalf
of himself or all other similarly situated limited partners (a class action) to
recover damages from a general partner for violations of its fiduciary duties to
the limited partners.
The Partnership Agreement also provides that any standard of care and duty
imposed thereby or under the Delaware Act or any applicable law, rule or
regulation will be modified, waived or limited, to the extent permitted by law,
as required to permit the Managing General Partner and its officers and
directors to act under the Partnership Agreement or any other agreement
contemplated therein and to make any decision pursuant to the authority
prescribed in the Partnership Agreement so long as such action is reasonably
believed by the Managing General Partner to be in, or not inconsistent with, the
best interests of the Partnership. Further, the Partnership Agreement provides
that the Managing General Partner and its officers and directors will not be
liable for monetary damages to the Partnership, the limited partners or
assignees for errors of judgment or for any acts or omissions if the Managing
General Partner and such other persons acted in good faith.
In addition, under the terms of the Partnership Agreement, the Partnership
is required to indemnify the General Partners and their officers, directors,
employees, Affiliates, partners, agents and trustees, to the fullest extent
permitted by law, against liabilities, costs and expenses incurred by the
General Partners or other such persons, if the General Partners or such persons
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the Partnership and, with respect to any
criminal proceedings, had no reasonable cause to believe the conduct was
unlawful. See 'The Partnership Agreement -- Indemnification.' Thus, the General
Partners could be indemnified for their negligent acts if they meet such
requirements concerning good faith and the best interests of the Partnership.
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DESCRIPTION OF THE COMMON UNITS
Upon consummation of the Offering, the Common Units will be registered
under the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and
the rules and regulations promulgated thereunder, and the Partnership will be
subject to the reporting and certain other requirements of the Exchange Act. The
Partnership will be required to file periodic reports containing financial and
other information with the Commission. Purchasers of Common Units in the
Offering and subsequent transferees of Common Units (or their brokers, agents or
nominees on their behalf) will be required to execute Transfer Applications, the
form of which is included as Appendix B to this Prospectus. Purchasers in the
Offering may hold Common Units in nominee accounts, provided that the broker (or
other nominee) executes and delivers a Transfer Application and becomes a
limited partner. The Partnership will be entitled to treat the nominee holder of
a Common Unit as the absolute owner thereof, and the beneficial owner's rights
will be limited solely to those that it has against the nominee holder as a
result of or by reason of any understanding or agreement between such beneficial
owner and nominee holder.
THE UNITS
The Common Units issued in the Offering and Common Units issued upon
conversion of Subordinated Units represent limited partner interests in the
Partnership. The Subordinated Units held by the Managing General Partner or its
Affiliates are (unless such Persons elect otherwise) general partner interests
in the Partnership. The holders of Common Units and Subordinated Units are
entitled to participate in Partnership distributions and exercise the rights or
privileges available to Common Unitholders and Subordinated Unitholders,
respectively, under the Partnership Agreement. For a description of the relative
rights and preferences of Common Units and Subordinated Units in and to
Partnership distributions, together with a description of the circumstances
under which Subordinated Units may convert into Common Units, see 'Cash
Distribution Policy.' For a description of the rights and privileges of limited
partners under the Partnership Agreement, see 'The Partnership Agreement.'
TRANSFER AGENT AND REGISTRAR
DUTIES
American Stock Transfer & Trust Company will act as a registrar and
transfer agent (the 'Transfer Agent') for the Common Units and will receive a
fee from the Partnership for serving in such capacities. All fees charged by the
Transfer Agent for transfers of Common Units will be borne by the Partnership
and not by the holders of Common Units, except that fees similar to those
customarily paid by stockholders for surety bond premiums to replace lost or
stolen certificates, taxes and other governmental charges, special charges for
services requested by a holder of a Common Unit and other similar fees or
charges will be borne by the affected holder. There will be no charge to holders
for disbursements of the Partnership's cash distributions. The Partnership will
indemnify the Transfer Agent, its agents and each of their respective
shareholders, directors, officers and employees against all claims and losses
that may arise out of acts performed or omitted in respect of its activities as
such, except for any liability due to any negligence, gross negligence, bad
faith or intentional misconduct of the indemnified person or entity.
RESIGNATION OR REMOVAL
The Transfer Agent may at any time resign, by notice to the Partnership, or
be removed by the Partnership, such resignation or removal to become effective
upon the appointment by the Partnership of a successor transfer agent and
registrar and its acceptance of such appointment. If no successor has been
appointed and accepted such appointment within 30 days after notice of such
resignation or removal, the Managing General Partner is authorized to act as the
transfer agent and registrar until a successor is appointed.
TRANSFER OF COMMON UNITS
Until a Common Unit has been transferred on the books of the Partnership,
the Partnership and the Transfer Agent, notwithstanding any notice to the
contrary, may treat the record holder thereof as the absolute owner for all
purposes, except as otherwise required by law or stock exchange regulations. The
transfer of the Common Units to persons that purchase directly from the
Underwriters will be
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accomplished through the completion, execution and delivery of a Transfer
Application by such investor in connection with such Common Units. Any
subsequent transfers of a Common Unit will not be recorded by the Transfer Agent
or recognized by the Partnership unless the transferee executes and delivers a
Transfer Application. By executing and delivering a Transfer Application (the
form of which is set forth as Appendix B to this Prospectus and which is also
set forth on the reverse side of the certificates representing the Common
Units), the transferee of Common Units (i) becomes the record holder of such
Common Units and shall constitute an assignee until admitted into the
Partnership as a substitute limited partner, (ii) automatically requests
admission as a substituted limited partner in the Partnership, (iii) agrees to
be bound by the terms and conditions of, and executes, the Partnership
Agreement, (iv) represents that such transferee has the capacity, power and
authority to enter into the Partnership Agreement, (v) grants powers of attorney
to the Partnership and any liquidator of the Partnership as specified in the
Partnership Agreement, and (vi) makes the consents and waivers contained in the
Partnership Agreement. An assignee will become a substituted limited partner of
the Partnership in respect of the transferred Common Units upon the consent of
the Partnership and the recordation of the name of the assignee on the books and
records of the Partnership. Such consent may be withheld in the sole discretion
of the Managing General Partner.
Common Units are securities and are transferable according to the laws
governing transfer of securities. In addition to other rights acquired upon
transfer, the transferor gives the transferee the right to request admission as
a substituted limited partner in the Partnership in respect of the transferred
Common Units. A purchaser or transferee of Common Units who does not execute and
deliver a Transfer Application obtains only (a) the right to assign the Common
Units to a purchaser or other transferee and (b) the right to transfer the right
to seek admission as a substituted limited partner in the Partnership with
respect to the transferred Common Units. Thus, a purchaser or transferee of
Common Units who does not execute and deliver a Transfer Application will not
receive cash distributions unless the Common Units are held in a nominee or
'street name' account and the nominee or broker has executed and delivered a
Transfer Application with respect to such Common Units, and may not receive
certain federal income tax information or reports furnished to record holders of
Common Units. The transferor of Common Units will have a duty to provide such
transferee with all information that may be necessary to obtain registration of
the transfer of the Common Units, but a transferee agrees, by acceptance of the
certificate representing Common Units, that the transferor will not have a duty
to insure the execution of the Transfer Application by the transferee and will
have no liability or responsibility if such transferee neglects or chooses not
to execute and forward the Transfer Application to the Transfer Agent. See 'The
Partnership Agreement -- Status as Limited Partner or Assignee.'
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THE PARTNERSHIP AGREEMENT
The following paragraphs are a summary of certain provisions of the
Partnership Agreement. The form of the Partnership Agreement for the Partnership
is included in this Prospectus as Appendix A. The form of Partnership Agreement
for the Operating Partnership (the 'Operating Partnership Agreement') will be
included as an exhibit to the Registration Statement of which this Prospectus
constitutes a part. The Partnership will provide prospective investors with a
copy of the form of the Operating Partnership Agreement upon request at no
charge. The following summary of material provisions of the Partnership
Agreement is qualified in its entirety by reference to the Partnership
Agreements for the Partnership and for the Operating Partnership. The
Partnership will be the sole limited partner of the Operating Partnership, which
will own, manage and operate the Partnership's business. The Managing General
Partner and the Special General Partner will serve as the general partners of
the Partnership and of the Operating Partnership. Unless specifically described
otherwise, references herein to the 'Partnership Agreement' constitute
references to the Partnership Agreement and the Operating Partnership Agreement,
collectively.
Certain material provisions of the Partnership Agreement are summarized
elsewhere in this Prospectus under various headings. With regard to various
transactions and relationships of the Partnership with the General Partners and
their Affiliates, see 'Risk Factors -- Conflicts of Interest and Fiduciary
Responsibility,' 'Certain Relationships and Related Transactions,' and
'Conflicts of Interest and Fiduciary Responsibility.' With regard to the
management of the Partnership, see 'Management.' With regard to the transfer of
Common Units, see 'Description of the Common Units -- Transfer of Common Units.'
With regard to distributions of Available Cash, see 'Cash Distribution Policy.'
With regard to allocations of taxable income and taxable loss, see 'Tax
Considerations.' Prospective investors are urged to review these sections of
this Prospectus and the Partnership Agreement carefully.
ORGANIZATION
The Partnership and the Operating Partnership were organized on March 13,
1996 and March 15, 1996, respectively, as Delaware limited partnerships. The
Managing General Partner and the Special General Partner are the general
partners of the Partnership and the Operating Partnership. Following the
issuance of the Common Units offered in the Offering, the General Partners will
own an effective combined 4% unsubordinated General Partner Interest, the
Managing General Partner will own a 40.6% subordinated general partner interest
(as holder of the Subordinated Units) and the Common Unitholders will own a
55.4% limited partner interest, in the Partnership and the Operating Partnership
on a combined basis.
SPECIAL GENERAL PARTNER
The Special General Partner, a wholly owned subsidiary of the Managing
General Partner, is a non-managing general partner of the Partnership and the
Operating Partnership. Pursuant to the Partnership Agreement, the Special
General Partner is prohibited from conducting any business or having any
operations other than those incidental to serving as a general partner of the
Partnership and the Operating Partnership. The Partnership Agreement also
provides that the Board of Directors of the Special General Partner shall be at
all times composed of the same individuals who compose the Board of Directors of
the Managing General Partner. In the event the Managing General Partner is
merged with and into Triarc, the Audit Committee of the Special General Partner
will perform the functions previously performed by the Audit Committee of the
Managing General Partner. In addition, the Partnership Agreement provides that
if, following a merger of the Managing General Partner with and into Triarc,
Triarc involuntarily withdraws as general partner of the Partnership pursuant to
bankruptcy or certain related events, the Special General Partner shall become
the managing general partner of the Partnership and shall continue the business
of the Partnership, without any Unitholder approval.
Provided that the Triarc Merger has not occurred, the Special General
Partner may convert all or a portion of its combined unsubordinated general
partner interest into Units having rights to distributions of Available Cash
from Operating Surplus equal to the distribution rights with respect to
Available Cash from Operating Surplus of the combined unsubordinated general
partner interest so converted.
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For example, as of the Closing Date, the Special General Partner's combined
effective 2% interest in the Partnership and the Operating Partnership would be
exchanged into 223,419 Units (or 242,765 Units if the over-allotment option is
exercised, notwithstanding the fact that the Special General Partner is not
required to make any additional capital contributions upon the exercise of the
over-allotment option). Additional capital contributions by the Special General
Partner upon other issuances of additional Partnership securities will increase
the number of Units into which such combined interest is exchanged. Such Units
shall be issued as Subordinated Units and/or Common Units in the same proportion
as Subordinated Units initially issued to the General Partner are at such time
constituted.
PURPOSE
The purpose of the Partnership under the Partnership Agreement is limited
to serving as the limited partner of the Operating Partnership and engaging in
any business activity that may be engaged in by the Operating Partnership or
that is approved by the Managing General Partner. The Operating Partnership
Agreement provides that the Operating Partnership may engage in any activity
engaged in by National Propane and its subsidiaries immediately prior to the
Offering, and any other activity approved by the Managing General Partner.
Although the Managing General Partner has the ability under the Partnership
Agreement to cause the Partnership and the Operating Partnership to engage in
activities other than propane marketing and related businesses, the Managing
General Partner has no current intention of doing so. The Managing General
Partner is authorized in general to perform all acts deemed necessary to carry
out such purposes and to conduct the business of the Partnership. See
' -- Certain Required Approvals of the Managing General Partner.'
CAPITAL CONTRIBUTIONS
For a description of the initial capital contributions to be made to the
Partnership, see 'The Transactions.' The Unitholders are not obligated to make
additional capital contributions to the Partnership, except as described below
under ' -- Limited Liability.'
POWER OF ATTORNEY
Each Limited Partner (as defined in the Glossary), and each person who
acquires a Unit from a Unitholder and executes and delivers a Transfer
Application with respect thereto, grants to the Managing General Partner and, if
a liquidator of the Partnership has been appointed, such liquidator, a power of
attorney to, among other things, execute and file certain documents required in
connection with the qualification, continuance or dissolution of the
Partnership, or the amendment of the Partnership Agreement in accordance with
the terms thereof and to make consents and waivers contained in the Partnership
Agreement.
LIMITED LIABILITY
Assuming that a Limited Partner does not participate in the control of the
business of the Partnership within the meaning of the Delaware Act and that such
Limited Partner otherwise acts in conformity with the provisions of the
Partnership Agreement, his liability under the Delaware Act will be limited,
subject to certain possible exceptions, to the amount of capital that such
Limited Partner is obligated to contribute to the Partnership in respect of his
Common Units plus such Limited Partner's share of any undistributed profits and
assets of the Partnership. If it were determined, however, that the right or
exercise of the right by the Limited Partners as a group, to remove or replace
the General Partners, to approve certain amendments to the Partnership Agreement
or to take other action pursuant to the Partnership Agreement constituted
'participation in the control' of the Partnership's business for the purposes of
the Delaware Act, then the Limited Partners could be held personally liable for
the Partnership's obligations under the laws of the State of Delaware to the
same extent as the General Partners with respect to persons who transact
business with the Partnership reasonably believing, based on the Limited
Partner's conduct, that the Limited Partner is a general partner.
Under the Delaware Act, a limited partnership may not make a distribution
to a partner to the extent that at the time of the distribution, after giving
effect to the distribution, all liabilities of the
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partnership, other than liabilities to partners on account of their partnership
interests and liabilities for which the recourse of creditors is limited to
specific property of the Partnership, exceed the fair value of the assets of the
limited partnership. For the purpose of determining the fair value of the assets
of a limited partnership, the Delaware Act provides that the fair value of
property subject to liability for which recourse of creditors is limited shall
be included in the assets of the limited partnership only to the extent that the
fair value of that property exceeds that nonrecourse liability. The Delaware Act
provides that a limited partner who receives such a distribution and knew at the
time of the distribution that the distribution was in violation of the Delaware
Act shall be liable to the limited partnership for the amount of the
distribution for three years from the date of the distribution. Under the
Delaware Act, an assignee who becomes a substituted limited partner of a limited
partnership is liable for the obligations of his assignor to make contributions
to the partnership, except the assignee is not obligated for liabilities unknown
to him at the time he became a limited partner and which could not be
ascertained from the partnership agreement.
The Partnership expects that the Operating Partnership will initially
conduct business in at least 24 states. Maintenance of limited liability may
require compliance with legal requirements in such jurisdictions in which the
Operating Partnership conducts business, including qualifying the Operating
Partnership to do business there. Limitations on the liability of limited
partners for the obligations of a limited partnership have not been clearly
established in many jurisdictions. If it were determined that the Partnership
was, by virtue of its limited partner interest in the Operating Partnership or
otherwise, conducting business in any state without compliance with the
applicable limited partnership statute, or that the right or exercise of the
right by the Limited Partners as a group, to remove or replace the General
Partners, to approve certain amendments to the Partnership Agreement, or to take
other action pursuant to the Partnership Agreement constituted 'participation in
the control' of the Partnership's business for the purposes of the statutes of
any relevant jurisdiction, then the Limited Partners could be held personally
liable for the Partnership's obligations under the law of such jurisdiction to
the same extent as the General Partners under certain circumstances. The
Partnership will operate in such manner as the Managing General Partner deems
reasonable and necessary or appropriate to preserve the limited liability of the
Limited Partners.
ISSUANCE OF ADDITIONAL SECURITIES
The Partnership Agreement authorizes the Managing General Partner to cause
the Partnership to issue an unlimited number of additional limited and/or
general partner interests and other equity securities of the Partnership for
such consideration and on such terms and conditions as are established by the
Managing General Partner in its sole discretion without the approval of any
Limited Partners; provided that, during the Subordination Period, except as
provided in clauses (i) and (ii) of the following sentence, the Partnership may
not issue equity securities of the Partnership ranking prior or senior to the
Common Units or an aggregate of more than 3,095,238 additional Common Units or
an equivalent number of securities ('parity securities') ranking on a parity
with the Common Units (excluding Common Units issued upon exercise of the
Underwriters' over-allotment option, pursuant to employee benefit plans, upon
conversion of the Special General Partner's combined unsubordinated general
partner interest, upon conversion of Subordinated Units and subject to
adjustment in the event of a combination or subdivision of Common Units) without
the approval of the holders of at least a Unit Majority. During the
Subordination Period the Partnership may also issue (i) an unlimited number of
additional Common Units or parity securities without the approval of the
Unitholders if such issuance occurs (A) in connection with an Acquisition or a
Capital Improvement or (B) within 365 days of, and the net proceeds from such
issuance are used to repay debt incurred in connection with, an Acquisition or a
Capital Improvement, in each case where such Acquisition or Capital Improvement
involves assets that would have, if acquired by the Partnership as of the date
that is one year prior to the first day of the quarter in which such transaction
is to be effected, resulted in an increase in (1) the amount of Adjusted
Operating Surplus generated by the Partnership on a per-Unit basis for all
outstanding Units with respect to each of the four most recently completed
quarters (on a pro forma basis) over (2) the actual amount of Adjusted Operating
Surplus generated by the Partnership on a per-Unit basis for all outstanding
Units with respect to each of such four quarters (or, if the issuance of Units
with respect to an Acquisition or Capital Improvement occurs within the first
four full quarters
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from the Closing Date, then based on the Partnership's pro forma Adjusted
Operating Surplus for any full quarter for which there was no actual
performance); and (ii) an unlimited number of Units or parity securities prior
to the end of the Subordination Period and without the approval of the
Unitholders if the use of proceeds from such issuance is exclusively to repay up
to $50 million in indebtedness of a member of the Partnership Group (as defined
in the Glossary), in each case only where the aggregate amount of distributions
that would have been paid with respect to such newly issued Units and the
related additional distributions that would have been made to the General
Partners in respect of the four-quarter period ending prior to the first day of
the quarter in which the issuance is to be consummated (assuming such additional
Units had been outstanding throughout such period and that distributions equal
to the distributions that were actually paid on the outstanding Units during the
period were paid on such additional Units) did not exceed the interest costs
actually incurred during such period on the indebtedness that is to be repaid
(or, if such indebtedness was not outstanding throughout the entire period,
would have been incurred had such indebtedness been outstanding for the entire
period). Following the closing of the Offering, the Partnership may file a
registration statement on Form S-1 with respect to Common Units to be issued
from time to time in connection with Acquisitions or Capital Improvements. In
addition, following the closing of the Offering, the Partnership may file a
Registration Statement on Form S-8 with respect to Units that may be issued
pursuant to the Unit Option Plan. In accordance with Delaware law and the
provisions of the Partnership Agreement, the Partnership may also issue
additional partnership interests that, in the discretion of the Managing General
Partner, may have special voting rights to which the Common Units are not
entitled.
The General Partners will have the right, which they may from time to time
assign in whole or in part to any of their Affiliates, to purchase Common Units,
Subordinated Units or other equity securities of the Partnership from the
Partnership whenever, and on the same terms that, the Partnership issues such
securities or rights to Persons other than the General Partners and their
Affiliates, to the extent necessary to maintain the percentage interest of the
General Partners and their Affiliates in the Partnership that existed
immediately prior to each such issuance. Moreover, upon the issuance of
additional Partnership Securities (other than pursuant to the Underwriters'
over-allotment option, which will not require the General Partners to make an
additional capital contribution) the General Partners will be required to make
contributions to the Partnership which, when added to the additional amount
contributed in exchange for such Partnership Securities, will equal 4% of such
additional capital contributions. The holders of Common Units or Subordinated
Units (other than the General Partners and their Affiliates) will not have
preemptive rights to acquire additional Common Units, Subordinated Units or
other partnership interests that may be issued by the Partnership. Furthermore,
the General Partners and any of their Affiliates may acquire Units or other
Partnership Securities in addition to those acquired in the Offering and, except
as otherwise provided in the Partnership Agreement, shall be entitled to
exercise all rights of a holder or assignee of such Units or Partnership
Securities, as the case may be. Additional issuances of Units, including
Subordinated Units or other equity securities of the Partnership ranking junior
to the Common Units, may reduce the likelihood of, and the amount of, any
distributions above the Minimum Quarterly Distribution.
AMENDMENT OF PARTNERSHIP AGREEMENT
Amendments to the Partnership Agreement may be proposed only by or with the
consent of the Managing General Partner. In order to adopt a proposed amendment,
the Partnership is required to seek written approval of the holders of the
number of Units required to approve such amendment or call a meeting of the
Unitholders to consider and vote upon the proposed amendment, except as
described below. Proposed amendments (unless otherwise specified) must be
approved by holders of a majority of the outstanding Units (including Units held
by the General Partners and their Affiliates), except that no amendment may be
made which would (i) enlarge the obligations of any Limited Partner, without its
consent, (ii) enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable, reimbursable or
otherwise payable by the Partnership to, the General Partners or any of their
Affiliates without the Managing General Partner's consent, which may be given or
withheld in its sole discretion, (iii) change the term of the Partnership, (iv)
provide that the Partnership is not dissolved upon the expiration of its term or
(v) give any Person
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the right to dissolve the Partnership other than the Managing General Partner's
right to dissolve the Partnership with the approval of holders of a Unit
Majority.
The Managing General Partner may generally make amendments to the
Partnership Agreement without the approval of any Limited Partner or assignee to
reflect (i) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent or the
registered office of the Partnership, (ii) admission, substitution, withdrawal
or removal of partners in accordance with the Partnership Agreement, (iii) a
change that, in the sole discretion of the Managing General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability or to ensure that neither the Partnership nor
the Operating Partnership will be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes
(except approval of holders of a Unit Majority will be required if such
amendment would result in a delisting or a suspension of trading of any class of
Units on the principal national securities exchange or over the counter market
where such class of Units is then traded), (iv) an amendment that is necessary,
in the opinion of counsel to the Partnership, to prevent the Partnership, or the
General Partners or their directors, officers, agents or trustees from in any
manner being subjected to the provisions of the Investment Company Act of 1940,
as amended, the Investment Advisors Act of 1940, as amended, or 'plan asset'
regulations adopted under the Employee Retirement Income Security Act of 1974,
as amended, whether or not substantially similar to plan asset regulations
currently applied or proposed, (v) subject to the limitations on the issuance of
additional Common Units or other limited or general partner interests described
above, an amendment that in the sole discretion of the Managing General Partner
is necessary or advisable in connection with the authorization of additional
limited or general partner interests, (vi) any amendment expressly permitted in
the Partnership Agreement to be made by the Managing General Partner acting
alone, (vii) an amendment effected, necessitated or contemplated by a merger
agreement that has been approved pursuant to the terms of the Partnership
Agreement, (viii) any amendment that, in the sole discretion of the Managing
General Partner, is necessary or advisable in connection with the formation by
the Partnership of, or its investment in, any corporation, partnership or other
entity (other than the Operating Partnership) as otherwise permitted by the
Partnership Agreement, (ix) a change in the fiscal year and/or taxable year of
the Partnership and changes related thereto, (x) a conversion of Units held by
the Managing General Partner or its Affiliates at the election of the Managing
General Partner or its Affiliates from general partner interests into limited
partner interests, and (xi) any other amendments substantially similar to any of
the foregoing.
In addition to the Managing General Partner's right to amend the
Partnership Agreement as described above, the Managing General Partner may make
amendments to the Partnership Agreement without the approval of any Unitholder
or assignee if such amendments (i) do not adversely affect the Limited Partners
in any material respect, (ii) are necessary or advisable (in the sole discretion
of the Managing General Partner) to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, ruling or regulation of any
federal or state agency or judicial authority or contained in any federal or
state statute, (iii) are necessary or advisable (in the sole discretion of the
Managing General Partner) to facilitate the trading of the Common Units or to
comply with any rule, regulation, guideline or requirement of any securities
exchange on which the Common Units are or will be listed for trading, compliance
with any of which the Managing General Partner deems to be in the best interests
of the Partnership and the Unitholders, (iv) are necessary or advisable in
connection with any action taken by the Managing General Partner relating to
splits or combinations of Units pursuant to the provisions of the Partnership
Agreement or (v) are required to effect the intent expressed in this Prospectus
or contemplated by the Partnership Agreement. The Managing General Partner will
not be required to obtain an Opinion of Counsel (as defined in the Glossary) in
the event of the amendments described in the two immediately preceding
paragraphs. No other amendments to the Partnership Agreement will become
effective without the approval of holders of at least 90% of the Units
(including Units held by the General Partners and their Affiliates) unless the
Partnership has obtained an Opinion of Counsel to the effect that such amendment
will not affect the limited liability under applicable law of any limited
partner in the Partnership or the limited partner of the Operating Partnership.
Any amendment that materially and adversely affects the rights or preferences of
any type or class of
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outstanding Units in relation to other classes of Units will require the
approval of at least a majority of the type or class of Units so affected.
MERGER, SALE OR OTHER DISPOSITION OF ASSETS
The Managing General Partner is prohibited, without the prior approval of
holders of a Unit Majority, from causing the Partnership to, among other things,
sell, exchange or otherwise dispose of all or substantially all of its assets in
a single transaction or a series of related transactions (including by way of
merger, consolidation or other combination) or approving on behalf of the
Partnership the sale, exchange or other disposition of all or substantially all
of the assets of the Operating Partnership; provided that the Partnership may
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the Partnership's assets without such approval. The
Partnership may also sell all or substantially all of its assets pursuant to a
foreclosure or other realization upon the foregoing encumbrances without such
approval. The Unitholders are not entitled to dissenters' rights of appraisal
under the Partnership Agreement or applicable Delaware law in the event of a
merger or consolidation of the Partnership, a sale of substantially all of the
Partnership's assets or any other transaction or event.
TERMINATION AND DISSOLUTION
The Partnership will continue until December 31, 2086, unless sooner
terminated pursuant to the Partnership Agreement. The Partnership will be
dissolved upon (i) the election of the Managing General Partner to dissolve the
Partnership, if approved by the holders of a Unit Majority, (ii) the sale,
exchange or other disposition of all or substantially all of the assets and
properties of the Partnership and the Operating Partnership, (iii) the entry of
a decree of judicial dissolution of the Partnership or (iv) the withdrawal or
removal of the Managing General Partner or the occurrence of any other event
that results in its ceasing to be the Managing General Partner (other than (x)
by reason of a transfer of its unsubordinated general partner interest in
accordance with the Partnership Agreement, (y) withdrawal or removal following
approval and admission of a successor or (z) certain bankruptcy-related events
of the Managing General Partner but only if at such time Triarc is the Managing
General Partner and the Special General Partner is not bankrupt at such time).
Upon a dissolution pursuant to (x) or (y) of clause (iv) above, the holders of a
Unit Majority may also elect, within certain time limitations, to reconstitute
the Partnership and continue its business on the same terms and conditions set
forth in the Partnership Agreement by forming a new limited partnership on terms
identical to those set forth in the Partnership Agreement and having as general
partner an entity approved by the holders of at least a Unit Majority subject to
receipt by the Partnership of an Opinion of Counsel. Upon a dissolution pursuant
to (z) of clause (iv) above, the Special General Partner shall automatically
become the Managing General Partner and the Partnership shall continue without
any Unitholder action.
LIQUIDATION AND DISTRIBUTION OF PROCEEDS
Upon dissolution of the Partnership, unless the Partnership is
reconstituted and continued as a new limited partnership, the Person authorized
to wind up the affairs of the Partnership (the 'Liquidator') will, acting with
all of the powers of the Managing General Partner that such Liquidator deems
necessary or desirable in its good faith judgment in connection therewith,
liquidate the Partnership's assets and apply the proceeds of the liquidation as
provided in 'Cash Distribution Policy -- Distributions of Cash Upon
Liquidation.' Under certain circumstances and subject to certain limitations,
the Liquidator may defer liquidation or distribution of the Partnership's assets
for a reasonable period of time or distribute assets to partners in kind if it
determines that a sale would be impractical or would cause undue loss to the
partners.
WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNERS
The Managing General Partner has agreed not to withdraw voluntarily as the
managing general partner of the Partnership and the Operating Partnership prior
to June 30, 2006 (with limited exceptions described below), without obtaining
the approval of the holders of a Unit Majority and furnishing an Opinion of
Counsel. On or after June 30, 2006, the Managing General Partner may withdraw as
the
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Managing General Partner (without first obtaining approval from any Unitholder)
by giving 90 days' written notice, and such withdrawal will not constitute a
violation of the Partnership Agreement. Notwithstanding the foregoing, the
Managing General Partner may withdraw without Unitholder approval upon 90 days'
notice to the Limited Partners if more than 50% of the outstanding Common Units
are held or controlled by one Person and its Affiliates (other than the General
Partners and their Affiliates). In addition, the Partnership Agreement permits
the Managing General Partner (in certain limited instances) to sell or otherwise
transfer all of its General Partner Interest, without the approval of the
Unitholders. See ' -- Transfer of General Partners' Interests and Right to
Receive Incentive Distributions and Conversion of Units Held by Managing General
Partner into Limited Partner Interests.'
Upon the withdrawal of the Managing General Partner under any circumstances
(other than as a result of (x) a transfer by the Managing General Partner of all
or a part of its General Partner Interest or (y) certain bankruptcy-related
events of the Managing General Partner but only if the Managing General Partner
is Triarc and the Special General Partner is not bankrupt at such time), the
holders of a Unit Majority may select a successor to such withdrawing Managing
General Partner. If such a successor is not elected, or is elected but an
Opinion of Counsel cannot be obtained, the Partnership will be dissolved, wound
up and liquidated, unless within 180 days after such withdrawal the holders of a
Unit Majority agree in writing to continue the business of the Partnership and
to the appointment of a successor Managing General Partner. See ' -- Termination
and Dissolution.'
The Managing General Partner may not be removed unless such removal is
approved by the vote of the holders of not less than 66 2/3% of the outstanding
Units (including Units held by the General Partners and their Affiliates) and
the Partnership receives an Opinion of Counsel. Any such removal is also subject
to the approval of a successor general partner by the vote of the holders of not
less than a Unit Majority. Units held by the General Partners and their
Affiliates shall be deemed to be outstanding for purposes of any such vote. The
Partnership Agreement also provides that if the Managing General Partner is
removed as general partner of the Partnership other than for Cause and Units
held by the General Partners and their Affiliates are not voted in favor of such
removal (i) the Special General Partner shall withdraw as general partner of the
Partnership and the Operating Partnership, (ii) the Subordination Period will
end and all outstanding Subordinated Units will immediately convert into Common
Units on a one-for-one basis, (iii) any existing Common Unit Arrearages will be
extinguished and (iv) the General Partners will have the right to convert their
General Partner Interests and the right to receive Incentive Distributions into
Common Units or to receive in exchange for such interests a cash payment equal
to the fair market value (as determined below) of such interests.
Withdrawal or removal of the Managing General Partner as a general partner
of the Partnership also constitutes withdrawal or removal, as the case may be,
of the Managing General Partner as a general partner of the Operating
Partnership. The withdrawal or removal of the Managing General Partner, as a
general partner of the Partnership, will also constitute a withdrawal or
removal, as the case may be, of the Special General Partner as a general partner
of the Partnership and the Operating Partnership unless such withdrawal of the
Managing General Partner is caused by certain bankruptcy related events of the
Managing General Partner but only if the Managing General Partner is Triarc and
the Special General Partner is not bankrupt at such time (in which case the
Special General Partner will automatically become the managing general partner
and the Partnership will continue without any action by Unitholders).
In the event of withdrawal of the General Partners where such withdrawal
violates the Partnership Agreement, a successor general partner will have the
option to purchase the unsubordinated general partner interests of the departing
General Partners (the 'Departing Partners') in the Partnership and the Operating
Partnership and the right to receive Incentive Distributions for a cash payment
equal to the fair market value of such interests. Under all other circumstances
where the General Partners withdraw or are removed by the Unitholders, the
Departing Partners will have the option to require the successor general partner
to purchase such unsubordinated general partner interests of the Departing
Partners and the right to receive Incentive Distributions for such amount. In
each case, such fair market value will be determined by agreement between the
Departing Partners and the successor general partner, or if no agreement is
reached, by an independent investment banking firm or other independent
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experts selected by the Departing Partners and the successor general partner (or
if no expert can be agreed upon, by an expert chosen by agreement of the experts
selected by each of them). In addition, the Partnership will be required to
reimburse the Departing Partners for all amounts due the Departing Partners,
including, without limitation, all employee-related liabilities, including
severance liabilities, incurred in connection with the termination of any
employees employed by the Departing Partners for the benefit of the Partnership.
If neither of the above-described options are exercised by either the
Departing Partners or the successor general partner, as applicable, the
Departing General Partners will have the right to convert their unsubordinated
general partner interests and their right to receive Incentive Distributions
into Common Units equal to the fair market value of such interests as determined
by an investment banking firm or other independent expert selected in the manner
described in the preceding paragraph or to receive cash from the Partnership in
exchange for such interests.
TRANSFER OF GENERAL PARTNERS' INTERESTS AND RIGHT TO RECEIVE INCENTIVE
DISTRIBUTIONS
AND CONVERSION OF UNITS HELD BY THE MANAGING GENERAL PARTNER INTO LIMITED
PARTNER INTERESTS
Except for (x) a transfer by either of the General Partners of all, but not
less than all, of their General Partner Interests in the Partnership and the
Operating Partnership to (a) an Affiliate (including Triarc) or (b) another
Person in connection with the merger or consolidation of either of the Managing
General Partner with or into another Person, (y) the transfer by either of the
General Partners of all or substantially all of its assets to another Person, or
(z) the transfer by operation of law upon the merger or liquidation of the
Managing General Partner with and into Triarc but only if, (i) the Partnership
has received an Opinion of Counsel, (ii) the Special General Partner has not
converted or transferred any portion of its 1.0% general partner interest in the
Partnership or 1.0101% general partner interest in the Operating Partnership and
(iii) the Special General Partner has a net worth equal to at least $15 million
independent of its interest in the Partnership Group, neither of the General
Partners may transfer all or any part of its General Partner Interest in the
Partnership to another Person prior to June 30, 2006, without the approval of
the holders of a Unit Majority; provided that, in each case, such transferee
assumes the rights and duties of the Managing General Partner to whose interest
such transferee has succeeded, agrees to be bound by the provisions of the
Partnership Agreement, furnishes an Opinion of Counsel and agrees to acquire all
(or the appropriate portion thereof, as applicable) of the transferring Managing
General Partner's interests in the Operating Partnership and agrees to be bound
by the provisions of the Operating Partnership Agreement. The Partnership
Agreement permits the Managing General Partner to transfer its Subordinated
Units and Common Units to one or more Persons. The Partnership Note, however,
contains certain agreements by Triarc that could restrict the Managing General
Partner's ability to transfer or sell Subordinated Units. See 'Cash Distribution
Policy -- Partnership Loan.' The Managing General Partner and its Affiliates may
each at their election convert any portion of the Units from general partner
interests into limited partner interests. In addition, the Subordinated Units
held by the Managing General Partner will convert into limited partner interests
upon (i) the conversion into Common Units or (ii) immediately prior to the
transfer of the Subordinated Units to transferees who are unaffiliated with the
Managing General Partner. Furthermore, the Special General Partner can convert
its General Partner Interest into Units. See ' -- Special General Partner.'
Furthermore, the Managing General Partner shall have the right at any time to
transfer its right to receive Incentive Distributions to one or more Persons (as
an assignment of such rights or as a special limited partner interest in the
Partnership) subject only to any reasonable restrictions on transfer and
requirements for registering the transfer of such right as may be adopted by the
Managing General Partner without Unitholder approval. At any time, the
Affiliates of the General Partners (including Triarc) may sell or transfer all
or part of their respective direct or indirect interest in the General Partners
to an Affiliate or an unaffiliated third party without the approval of the
Unitholders.
LIMITED CALL RIGHT
If at any time less than 20% of the then-issued and outstanding partnership
interests of any class are held by Persons other than the General Partners and
their Affiliates, the Managing General Partner
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will have the right, which it may assign in whole or in part to any of its
Affiliates or to the Partnership, to acquire all, but not less than all, of the
remaining partnership interests of such class held by such unaffiliated Persons
as of a record date to be selected by the Managing General Partner, on at least
10 but not more than 60 days' notice. The purchase price in the event of such a
purchase shall be the greater of (i) the highest price paid by the General
Partners or any of their Affiliates for partnership interests purchased within
the 90 days preceding the date on which the Managing General Partner first mails
notice of its election to purchase such partnership interests, and (ii) the
Current Market Price (as defined in the Glossary) of such partnership interests
as of the date three days prior to the date such notice is mailed. As a
consequence of the Managing General Partner's right to purchase outstanding
partnership interests, a holder of partnership interests may have such
partnership interests purchased even though he may not desire to sell them, or
the price paid may be less than the amount the holder would desire to receive
upon the sale of his partnership interests. The tax consequences to a Unitholder
of the exercise of this call right are the same as a sale by such Unitholder of
his Common Units in the market. See 'Tax Considerations -- Disposition of Common
Units.'
MEETINGS; VOTING
Except as described below with respect to a Person or group owning 20% or
more of all Units, Unitholders or assignees who are record holders of Units on
the record date set pursuant to the Partnership Agreement will be entitled to
notice of, and to vote at, meetings of Unitholders and to act with respect to
matters as to which approvals may be solicited. With respect to voting rights
attributable to Common Units that are owned by an assignee who is a record
holder but who has not yet been admitted as a Limited Partner, the Managing
General Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Common Units on
any matter, vote such Common Units at the written direction of such record
holder. Absent such direction, such Common Units will not be voted (except that,
in the case of Common Units held by the Managing General Partner on behalf of
Non-citizen Assignees (as defined below), the Managing General Partner shall
distribute the votes in respect of such Common Units in the same ratios as the
votes of Limited Partners in respect of other Common Units are cast).
The Managing General Partner does not anticipate that any meeting of
Unitholders will be called in the foreseeable future. Any action that is
required or permitted to be taken by the Unitholders may be taken either at a
meeting of the Unitholders or without a meeting if consents in writing setting
forth the action so taken are signed by holders of such number of Units as would
be necessary to authorize or take such action at a meeting of all of the
Unitholders. Meetings of the Unitholders may be called by the Managing General
Partner or by Unitholders owning in the aggregate at least 20% of the
outstanding Common Units of the class for which a meeting is proposed.
Unitholders may vote either in person or by proxy at meetings. The holders of a
majority of the outstanding Units of the class for which a meeting has been
called represented in person or by proxy will constitute a quorum at a meeting
of Unitholders of such class or classes, unless any such action by the
Unitholders requires approval by holders of a greater percentage of such Units,
in which case the quorum shall be such greater percentage.
Each record holder of a Unit has a vote according to his percentage
interest in the Partnership, although additional limited and/or general partner
interests having special voting rights could be issued by the Managing General
Partner. See ' -- Issuance of Additional Securities.' However, if any Person or
group (other than the General Partners and their Affiliates) acquires, in the
aggregate, beneficial ownership of 20% or more of the total Units then
outstanding, such Person or group loses voting rights with respect to all of its
Units and such Units may not be voted on any matter and will not be considered
to be outstanding when sending notices of a meeting of limited partners,
calculating required votes, determining the presence of a quorum or for other
similar Partnership purposes. The Partnership Agreement provides that Common
Units held in nominee or street name account will be voted by the broker (or
other nominee) pursuant to the instruction of the beneficial owner unless the
arrangement between the beneficial owner and his nominee provides otherwise.
Except as otherwise provided in the Partnership Agreement, Subordinated Units
will vote together with the Common Units as a single class.
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Any notice, demand, request, report or proxy material required or permitted
to be given or made to record holders of Common Units (whether or not such
record holder has been admitted as a partner) under the terms of the Partnership
Agreement will be delivered to the record holder by the Partnership or by the
Transfer Agent at the request of the Partnership.
STATUS AS LIMITED PARTNER OR ASSIGNEE
Except as described above under ' -- Limited Liability,' the Common Units
will be fully paid, and Unitholders will not be required to make additional
contributions to the Partnership.
An assignee of a Common Unit or Subordinated Unit subsequent to executing
and delivering a Transfer Application, but pending its admission as a
substituted Limited Partner in the Partnership, is entitled to an interest in
the Partnership equivalent to that of a Limited Partner with respect to the
right to share in allocations and distributions from the Partnership, including
liquidating distributions. The Managing General Partner will vote and exercise
other powers attributable to Common Units or Subordinated Units, as the case may
be, owned by an assignee who has not become a substitute Limited Partner at the
written direction of such assignee. See ' -- Meetings; Voting.' Transferees who
do not execute and deliver a Transfer Application will be treated neither as
assignees nor as record holders of Common Units, and will not receive cash
distributions, federal income tax allocations or reports furnished to record
holders of Common Units. See 'Description of the Common Units -- Transfer of
Common Units.'
NON-CITIZEN ASSIGNEES; REDEMPTION
If the Partnership is or becomes subject to federal, state or local laws or
regulations that, in the reasonable determination of the Partnership, create a
substantial risk of cancellation or forfeiture of any property in which the
Partnership has an interest because of the nationality, citizenship, residency
or other related status of any Partner or assignee, the Partnership may redeem
the Common Units held by such Partner or assignee at their Current Market Price.
In order to avoid any such cancellation or forfeiture, the Partnership may
require each Partner or assignee to furnish information about his nationality,
citizenship, residency or related status. If a Partner or assignee fails to
furnish information about such nationality, citizenship, residency or other
related status within 30 days after a request for such information, such Limited
Partner or assignee may be treated as a non-citizen assignee ('Non-citizen
Assignee'). In addition to other limitations on the rights of an assignee who is
not a substituted Partner, a Non-citizen Assignee does not have the right to
direct the voting of his Common Units and may not receive distributions in kind
upon liquidation of the Partnership.
INDEMNIFICATION
The Partnership Agreement provides that the Partnership will indemnify each
General Partner, any Departing Partner, any Person who is or was an Affiliate of
either of the General Partners or any Departing Partner, any Person who is or
was an officer, director, partner or trustee of a General Partner or any
Departing Partner or any affiliate of either of the General Partners or any
Departing Partner, or any Person who is or was serving at the request of a
General Partner or any Departing Partner or any Affiliate of either of the
General Partners or any Departing Partner as an officer, director, employee,
partner, agent or trustee of another Person ('Indemnitees'), to the fullest
extent permitted by law, from and against any and all losses, claims, damages,
liabilities (joint or several), expenses (including, without limitation, legal
fees and expenses), judgments, fines, penalties, interest, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as any of the foregoing; provided that in
each case the Indemnitee acted in good faith and in a manner that such
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful. Any indemnification under these
provisions will be only out of the assets of the Partnership, and the General
Partners shall not be personally liable for, or have any obligation to
contribute or loan funds or assets to the Partnership to enable it to
effectuate, such indemnification. The Partnership is authorized to purchase (or
to reimburse the General Partners or their Affiliates for the cost of) insurance
against liabilities asserted against and
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expenses incurred by such persons in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such person against such liabilities under the provisions described
above. National Propane Corporation (and, after the Triarc Merger, Triarc) has
generally indemnified National Propane SGP, Inc. for all liabilities arising as
a result of National Propane SGP, Inc.'s status as general partner of the
Partnership and the Partnership Group.
BOOKS AND REPORTS
The Partnership is required to keep appropriate books of the business of
the Partnership at the principal offices of the Partnership. The books will be
maintained for both tax and financial reporting purposes on an accrual basis.
For financial reporting and tax purposes, the fiscal year of the Partnership is
the calendar year.
As soon as practicable, but in no event later than 120 days after the close
of each fiscal year, the Managing General Partner will furnish or make available
to each record holder of Units (as of a record date selected by the Managing
General Partner) an annual report containing audited financial statements of the
Partnership for the past fiscal year, prepared in accordance with generally
accepted accounting principles. As soon as practicable, but in no event later
than 90 days after the close of each quarter (except the last quarter of each
fiscal year), the Managing General Partner will furnish or make available to
each record holder of Units (as of a record date selected by the Managing
General Partner) a report containing unaudited financial statements of the
Partnership with respect to such quarter and such other information as may be
required by law.
The Partnership will use all reasonable efforts to furnish each record
holder of a Unit information reasonably required for tax reporting purposes
within 90 days after the close of each calendar year. Such information is
expected to be furnished in summary form so that certain complex calculations
normally required of partners can be avoided. The Partnership's ability to
furnish such summary information to Unitholders will depend on the cooperation
of such Unitholders in supplying certain information to the Partnership. Every
Unitholder (without regard to whether he supplies such information to the
Partnership) will receive information to assist him in determining his federal
and state tax liability and filing his federal and state income tax returns.
RIGHT TO INSPECT PARTNERSHIP BOOKS AND RECORDS
The Partnership Agreement provides that a Limited Partner can, for a
purpose reasonably related to such Limited Partner's interest as a limited
partner, upon reasonable demand and at his own expense, have furnished to him
(i) a current list of the name and last known address of each partner, (ii) a
copy of the Partnership's tax returns, (iii) information as to the amount of
cash, and a description and statement of the agreed value of any other property
or services, contributed or to be contributed by each partner and the date on
which each became a partner, (iv) copies of the Partnership Agreement, the
certificate of limited partnership of the Partnership, amendments thereto and
powers of attorney pursuant to which the same have been executed, (v)
information regarding the status of the Partnership's business and financial
condition and (vi) such other information regarding the affairs of the
Partnership as is just and reasonable. The Partnership may, and intends to, keep
confidential from the Limited Partners trade secrets or other information the
disclosure of which the Partnership believes in good faith is not in the best
interests of the Partnership or which the Partnership is required by law or by
agreements with third parties to keep confidential.
REIMBURSEMENT FOR SERVICES
The Partnership Agreement provides that the General Partners are not
entitled to receive any compensation for their services as general partners of
the Partnership; the General Partners are, however, entitled to be reimbursed on
a monthly basis (or such other basis as the Managing General Partner may
reasonably determine) for all direct and indirect expenses such General Partner
incurs or payments it makes on behalf of or for the benefit of the Partnership
(including payments made or expenses incurred under employee benefit plans), and
all other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partners in connection
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with the operation of the Partnership's business (including expenses allocated
to the General Partners by their Affiliates). The Partnership Agreement provides
that the Managing General Partner shall determine the expenses that are
allocable to the Partnership in any reasonable manner determined by the Managing
General Partner in its sole discretion. In addition, Affiliates of the General
Partners (including Triarc) may perform administrative services for the General
Partners on behalf of the Partnership. Such Affiliates will be reimbursed for
all direct and indirect expenses incurred in connection therewith. Furthermore,
the General Partners and their Affiliates may provide additional services to the
Partnership, for which the Partnership will be charged reasonable fees as
determined by the Managing General Partner.
CHANGE OF MANAGEMENT PROVISIONS
The Partnership Agreement contains certain provisions that are intended to
discourage a Person or group from attempting to remove the Managing General
Partner as general partner of the Partnership or otherwise change management of
the Partnership. If any Person or group (other than the General Partners and
their Affiliates) acquires, in the aggregate, beneficial ownership of 20% or
more of the Units of any class then outstanding, such Person or group loses
voting rights with respect to all of its Units. In addition, if the Managing
General Partner is removed as Managing General Partner other than for Cause, (i)
the Subordination Period will end and all outstanding Subordinated Units will
immediately convert into Common Units on a one-for-one basis, (ii) any existing
Common Units Arrearages will be extinguished and (iii) the General Partners will
have the right to convert their General Partner Interests and the right to
receive Incentive Distributions into Common Units or to receive in exchange for
such interests a cash payment equal to the fair market value of such interests.
See ' -- Withdrawal or Removal of the General Partners.'
REGISTRATION RIGHTS
Pursuant to the terms of the Partnership Agreement and subject to certain
limitations described therein, the Partnership has agreed to register for resale
under the Securities Act and applicable state securities laws any Common Units
or other securities of the Partnership (including Subordinated Units and
Incentive Rights) proposed to be sold by the Managing General Partner or any of
its Affiliates. The Partnership is obligated to pay all expenses incidental to
such registration, excluding underwriting discounts and commissions. See 'Units
Eligible for Future Sale.'
UNITS ELIGIBLE FOR FUTURE SALE
After the sale of the Common Units offered in the Offering, the Managing
General Partner will hold 4,533,638 Subordinated Units, all of which will
convert into Common Units at the end of the Subordination Period and some of
which may convert earlier. In addition, the Special General Partner may convert
all or a portion of its General Partner Interest into a number of Subordinated
Units (or Common Units after the end of the Subordination Period) having rights
to distributions of Available Cash from Operating Surplus equal to the
distribution rights with respect to Available Cash from Operating Surplus of the
General Partner Interest so converted, provided that the Triarc Merger has not
occurred. See 'Cash Distribution Policy -- Distributions from Operating Surplus
during Subordination Period.' The sale of these Units could have an adverse
impact on the price of the Common Units or on any trading market that may
develop. For a discussion of the transactions whereby the General Partner
acquired the Subordinated Units in connection with the organization of the
Partnership, see 'The Transactions.'
The Common Units sold in the Offering will generally be transferable
without restriction or further registration under the Securities Act, except
that any Common Units owned by 'an affiliate' of the Partnership (as that term
is defined in the rules and regulations under the Securities Act) may not be
resold publicly except in compliance with the registration requirements of the
Securities Act or pursuant to an exemption therefrom under Rule 144 thereunder
('Rule 144') or otherwise. Rule 144 permits securities acquired by an affiliate
of the issuer in an offering to be sold into the market in an amount that does
not exceed, during any three-month period, the greater of (i) 1% of the total
number of such
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securities outstanding or (ii) the average weekly reported trading volume of the
Common Units for the four calendar weeks prior to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about the Partnership.
A person who is not deemed to have been an affiliate of the Partnership at any
time during the three months preceding a sale, and who has beneficially owned
his Common Units for at least three years, would be entitled to sell such Common
Units under Rule 144 without regard to the public information requirements,
volume limitations, manner of sale provisions or notice requirements of Rule
144.
Prior to the end of the Subordination Period, the Partnership may not issue
equity securities of the Partnership ranking prior or senior to the Common Units
or an aggregate of more than 3,095,238 additional Common Units or an equivalent
amount of securities ranking on a parity with the Common Units (excluding Common
Units issued upon exercise of the Underwriters' over-allotment option, upon
conversion of Subordinated Units or in connection with Acquisitions or Capital
Improvements or the repayment of certain indebtedness or pursuant to employee
benefit plans) in either case without the approval of the holders of at least a
Unit Majority, except under certain circumstances. After the Subordination
Period, the Partnership, without a vote of the Unitholders, may issue an
unlimited number of additional Common Units or other equity securities of the
Partnership on a parity with or senior to the Common Units. The Partnership
Agreement does not impose any restriction on the Partnership's ability to issue
equity securities ranking junior to the Common Units at any time. Any issuance
of additional Common Units or certain other equity securities would result in a
corresponding decrease in the proportionate ownership interest in the
Partnership represented by, and could adversely affect the cash distributions to
and market price of, Common Units then outstanding. See 'The Partnership
Agreement -- Issuance of Additional Securities.'
Pursuant to the Partnership Agreement, the Managing General Partner and its
Affiliates will have the right, upon the terms and subject to the conditions
therein, to cause the Partnership to register under the Securities Act and state
securities laws the offer and sale of any Units or other Partnership Securities
that it holds. Subject to the terms and conditions of the Partnership Agreement,
such registration rights allow the Managing General Partner and its affiliates
or their assigns, holding any Units to require registration of any such Units
and to include any such Units in a registration by the partnership of other
Units, including Units offered by the Partnership or by any Unitholder. Such
registration rights will continue in effect for two years following any
withdrawal or removal of the Managing General Partner as the general partner of
the Partnership. In connection with any such registration, the Partnership will
indemnify each Unitholder participating in such registration and its officers,
directors and controlling Persons from and against any liabilities under the
Securities Act or any state securities laws arising from the registration
statement or prospectus. The Partnership will bear the reasonable costs of any
such registration, excluding underwriting discounts and commissions. In
addition, the Managing General Partner and its Affiliates may sell their Units
in private transactions at any time, subject to compliance with applicable laws.
The Partnership, the Operating Partnership, the Managing General Partner
and Triarc have agreed not to (i) offer, sell, contract to sell or otherwise
dispose of any Common Units or Subordinated Units (other than the issuance of
Common Units in connection with Acquisitions or Capital Improvements) or (ii)
grant any options or warrants to purchase Common Units or Subordinated Units
(other than the grant of options to purchase Common Units pursuant to employee
benefit plans that are not exercisable for at least 180 days), for a period of
180 days after the date of this Prospectus without the prior written consent of
Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch'), provided
that the Subordinated Units may be transferred without such consent to an
Affiliate of the Managing General Partner who agrees to be bound by the transfer
restrictions contained in this paragraph.
TAX CONSIDERATIONS
This section is a summary of material tax considerations that may be
relevant to prospective Unitholders and, to the extent set forth below under
' -- Legal Opinions and Advice,' represents the opinion of Andrews & Kurth
L.L.P., special counsel to the General Partners and the Partnership ('Counsel'),
insofar as it relates to matters of law and legal conclusions. A copy of such
opinion has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. This section is
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based upon current provisions of the Internal Revenue Code of 1986, as amended
('Code'), existing and proposed regulations thereunder and current
administrative rulings and court decisions, all of which are subject to change.
Subsequent changes in such authorities may cause the tax consequences to vary
substantially from the consequences described below. Unless the context
otherwise requires, references in this section to Partnership are references to
both the Partnership and the Operating Partnership.
No attempt has been made in the following discussion to comment on all
federal income tax matters affecting the Partnership or the Unitholders.
Moreover, the discussion focuses on Unitholders who are individual citizens or
residents of the United States and has only limited application to corporations,
estates, trusts, non-resident aliens or other Unitholders subject to specialized
tax treatment (such as tax-exempt institutions, individual retirement accounts,
REITs or mutual funds). Accordingly, each prospective Unitholder should consult,
and should depend on, his own tax advisor in analyzing the federal, state, local
and foreign tax consequences to him of the ownership or disposition of Common
Units.
LEGAL OPINIONS AND ADVICE
Counsel has expressed its opinion that, based on the representations and
subject to the qualifications set forth in the detailed discussion that follows,
for federal income tax purposes (i) the Partnership and the Operating
Partnership will each be treated as a partnership and (ii) owners of Common
Units (with certain exceptions, as described in 'Limited Partner Status' below)
will be treated as partners of the Partnership (but not the Operating
Partnership). In addition, all statements as to matters of law and legal
conclusions contained in this section, unless otherwise noted, reflect the
opinion of Counsel.
Although no attempt has been made in the following discussion to comment on
all federal income tax matters affecting the Partnership or prospective
Unitholders, Counsel has advised the Partnership that, based on current law, the
following is a general description of the principal federal income tax
consequences that should arise from the ownership and disposition of Common
Units and, insofar as it relates to matters of law and legal conclusions,
addresses the material tax consequences to Unitholders who are individual
citizens or residents of the United States.
No ruling has been or will be requested from the Internal Revenue Service
(the 'IRS') with respect to classification of the Partnership as a partnership
for federal income tax purposes, whether the Partnership's propane operations
generate 'qualifying income' under SS7704 of the Code or any other matter
affecting the Partnership or prospective Unitholders. An opinion of counsel
represents only that counsel's best legal judgment and does not bind the IRS or
the courts. Thus, no assurance is given that the opinions set forth herein would
be sustained by a court if contested by the IRS. Any such contest with the IRS
may materially and adversely impact the market for the Common Units and the
prices at which Common Units trade. In addition, the costs of any contest with
the IRS will be borne directly or indirectly by the Unitholders and the General
Partners. Furthermore, no assurance is given that the treatment of the
Partnership or an investment therein will not be significantly modified by
future legislative or administrative changes or court decisions. Any such
modification may or may not be retroactively applied.
For the reasons hereinafter described, Counsel has not rendered an opinion
with respect to the following specific federal income tax issues: (i) the
treatment of a Unitholder whose Common Units are loaned to a short seller to
cover a short sale of Common Units (see ' -- Tax Treatment of Operations --
Treatment of Short Sales'), (ii) whether a Unitholder acquiring Common Units in
separate transactions must maintain a single aggregate adjusted tax basis in his
Common Units (see ' -- Disposition of Common Units -- Recognition of Gain or
Loss'), (iii) whether the Partnership's monthly convention for allocating
taxable income and losses is permitted by existing Treasury Regulations (see
' -- Disposition of Common Units -- Allocations Between Transferors and
Transferees'), and (iv) whether the Partnership's method for depreciating
Section 743 adjustments, utilized to maintain the uniformity of the economic and
tax characteristics of the Common Units, is sustainable (see ' -- Uniformity of
Units').
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TAX RATES AND CHANGES IN FEDERAL INCOME TAX LAWS
The top marginal income tax rate for individuals is 36% subject to a 10%
surtax on individuals with taxable income in excess of $263,750 per year. The
surtax is computed by applying a 39.6% rate to taxable income in excess of the
threshold. The net capital gain of an individual is subject to a maximum 28% tax
rate.
The 1995 Proposed Legislation that was passed by Congress on November 17,
1995, as part of the Revenue Reconciliation Act of 1995, would alter the tax
reporting system and the deficiency collection system applicable to large
partnerships (generally defined as electing partnerships with more than 100
partners) and would make certain additional changes to the treatment of large
partnerships, such as the Partnership. Certain of the proposed changes are
discussed later in this section. The 1995 Proposed Legislation is generally
intended to simplify the administration of the tax rules governing large
partnerships such as the Partnership. In addition, the 1995 Proposed Legislation
contained provisions which would have reduced the maximum tax rate applicable to
the net capital gains of an individual to 19.8%.
On March 19, 1996, President Clinton introduced tax legislation, known as
the Revenue Reconciliation Act of 1996, that would impact the taxation of
certain financial products, including partnership interests. One proposal would
treat a taxpayer as having sold an 'appreciated' partnership interest (one in
which gain would be recognized if such interest were sold) if the taxpayer or
related persons enters into one or more positions with respect to the same or
substantially identical property which, for some period, substantially
eliminates both the risk of loss and opportunity for gain on the appreciated
financial position (including selling 'short against the box' transactions).
Certain of these proposed changes are also discussed later in this section under
'Disposition of Common Units.'
President Clinton vetoed the 1995 Proposed Legislation on December 6, 1995.
As of the date of this Prospectus, it is not possible to predict whether any of
the changes set forth in the 1995 Proposed Legislation, the Revenue
Reconciliation Act of 1996 or any other changes in the federal income tax laws
that would impact the Partnership and the Unitholders will ultimately be enacted
or, if enacted, what form they will take, what the effective dates will be, and
what, if any, transition rules will be provided.
PARTNERSHIP STATUS
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account his allocable
share of items of income, gain, loss and deduction of the Partnership in
computing his federal income tax liability, regardless of whether cash
distributions are made. Distributions by a partnership to a partner are
generally not taxable unless the amount of any cash distributed is in excess of
the partner's adjusted basis in his partnership interest.
No ruling has been or will be sought from the IRS as to the status of the
Partnership or the Operating Partnership as a partnership for federal income tax
purposes. Instead the Partnership has relied on the opinion of Counsel that,
based upon the Code, the regulations thereunder, published revenue rulings and
court decisions, the Partnership and the Operating Partnership will each be
classified as a partnership for federal income tax purposes.
In rendering its opinion, Counsel has relied on the accuracy of the
following factual representations made by the Partnership and the General
Partners:
(a) With respect to the Partnership and the Operating Partnership, the
General Partners, at all times while acting as general partners of the
Partnership and the Operating Partnership, will have a combined net worth,
computed on a fair market value basis, excluding interests in the
Partnership and in the Operating Partnership and any amounts due from the
Partnership or the Operating Partnership and deferred taxes, of not less
than $15 million;
(b) The Partnership will be operated in accordance with (i) all
applicable partnership statutes, (ii) the Partnership Agreement, and (iii)
this Prospectus;
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(c) The Operating Partnership will be operated in accordance with (i)
all applicable partnership statutes, (ii) the limited partnership agreement
for the Operating Partnership, and (iii) the description thereof in this
Prospectus;
(d) The General Partners will, at all times, act independently of the
limited partners (other than any limited partner interest held by the
General Partners); and
(e) For each taxable year, more than 90% of the gross income of the
Partnership will be derived from (i) marketing of propane, (ii) interest
(from other than a financial business) and dividends, and (iii) other items
of income which, in the opinion of Counsel, constitute 'qualifying income'
within the meaning of Section 7704(d) of the Code.
Counsel's opinion as to the partnership classification of the Partnership
in the event of a change in the general partner is based upon the assumption
that the new general partner will satisfy the foregoing representations.
Section 7704 of the Code provides that publicly-traded partnerships will,
as a general rule, be taxed as corporations. However, an exception (the
'Qualifying Income Exception') exists with respect to publicly-traded
partnerships of which 90% or more of the gross income for every taxable year
consists of 'qualifying income.' Counsel is of the opinion that qualifying
income includes interest from the Partnership Loan to Triarc, interest on the
Partnership's customer account balances and other interest (from other than a
financial business), dividends (including dividends from the corporate
subsidiary of the Operating Partnership) and income and gains from the
transportation and marketing of crude oil, natural gas, and products thereof,
including the retail and wholesale marketing of propane and the transportation
of propane and natural gas liquids. The Managing General Partner, based on
advice of Counsel, estimates, that at least 90% of the Partnership's gross
income will constitute qualifying income. The Partnership estimates, based on
advice of Counsel, that less than 6% of its gross income for its taxable year
ending December 31, 1996 will not constitute qualifying income. The Partnership
further estimates that less than 6% of its gross income for each subsequent
taxable year will not constitute qualifying income.
If the Partnership fails to meet the Qualifying Income Exception (other
than a failure which is determined by the IRS to be inadvertent and which is
cured within a reasonable time after discovery), the Partnership will be treated
as if it had transferred all of its assets (subject to liabilities) to a newly
formed corporation (on the first day of the year in which it fails to meet the
Qualifying Income Exception) in return for stock in that corporation, and then
distributed that stock to the partners in liquidation of their interests in the
Partnership. This contribution and liquidation should be tax-free to Unitholders
and the Partnership, so long as the Partnership, at that time, does not have
liabilities in excess of the basis of its assets. Thereafter, the Partnership
would be treated as a corporation for federal income tax purposes.
If the Partnership or the Operating Partnership were treated as an
association taxable as a corporation in any taxable year, either as a result of
a failure to meet the Qualifying Income Exception or otherwise, its items of
income, gain, loss and deduction would be reflected only on its tax return
rather than being passed through to the Unitholders, and its net income would be
taxed to the Partnership or the Operating Partnership at corporate rates. In
addition, any distribution made to a Unitholder would be treated as either
taxable dividend income (to the extent of the Partnership's current or
accumulated earnings and profits) or (in the absence of earnings and profits or
to the extent any distribution exceeds current and accumulated earnings and
profits) a nontaxable return of capital (to the extent of the Unitholder's tax
basis in his Common Units) or taxable capital gain (after the Unitholder's tax
basis in the Common Units is reduced to zero). Accordingly, treatment of either
the Partnership or the Operating Partnership as an association taxable as a
corporation would result in a material reduction in a Unitholder's cash flow and
after-tax return and thus would likely result in a substantial reduction of the
value of the Units.
The discussion below is based on the assumption that the Partnership will
be classified as a partnership for federal income tax purposes.
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LIMITED PARTNER STATUS
Unitholders who have become limited partners of the Partnership will be
treated as partners of the Partnership for federal income tax purposes.
Moreover, the IRS has ruled that assignees of partnership interests who have not
been admitted to a partnership as partners, but who have the capacity to
exercise substantial dominion and control over the assigned partnership
interests, will be treated as partners for federal income tax purposes. On the
basis of this ruling, except as otherwise described herein, Counsel is of the
opinion that (a) assignees who have executed and delivered Transfer
Applications, and are awaiting admission as limited partners, and (b)
Unitholders whose Common Units are held in street name or by a nominee and who
have the right to direct the nominee in the exercise of all substantive rights
attendant to the ownership of their Common Units will be treated as partners of
the Partnership for federal income tax purposes. As this ruling does not extend,
on its facts, to assignees of Common Units who are entitled to execute and
deliver Transfer Applications and thereby become entitled to direct the exercise
of attendant rights, but who fail to execute and deliver Transfer Applications,
Counsel's opinion does not extend to these persons. Income, gain, deductions or
losses would not appear to be reportable by a Unitholder who is not a partner
for federal income tax purposes, and any cash distributions received by such a
Unitholder would therefore be fully taxable as ordinary income. These holders
should consult their own tax advisors with respect to their status as partners
in the Partnership for federal income tax purposes. A purchaser or other
transferee of Common Units who does not execute and deliver a Transfer
Application may not receive certain federal income tax information or reports
furnished to record holders of Common Units unless the Common Units are held in
a nominee or street name account and the nominee or broker has executed and
delivered a Transfer Application with respect to such Common Units.
A beneficial owner of Common Units whose Common Units have been transferred
to a short seller to complete a short sale would appear to lose his status as a
partner with respect to such Common Units for federal income tax purposes. See
' -- Tax Treatment of Operations -- Treatment of Short Sales.'
TAX CONSEQUENCES OF UNIT OWNERSHIP
FLOW-THROUGH OF TAXABLE INCOME
No federal income tax will be paid by the Partnership. Instead, each
Unitholder will be required to report on his income tax return his allocable
share of the income, gains, losses and deductions of the Partnership without
regard to whether corresponding cash distributions are received by such
Unitholder. Consequently, a Unitholder may be allocated income from the
Partnership even if he has not received a cash distribution. Each Unitholder
will be required to include in income his allocable share of Partnership income,
gain, loss and deduction for the taxable year of the Partnership ending with or
within the taxable year of the Unitholder.
TREATMENT OF PARTNERSHIP DISTRIBUTIONS
Distributions by the Partnership to a Unitholder generally will not be
taxable to the Unitholder for federal income tax purposes to the extent of his
basis in his Common Units immediately before the distribution. Cash
distributions in excess of a Unitholder's basis generally will be considered to
be gain from the sale or exchange of the Common Units, taxable in accordance
with the rules described under ' -- Disposition of Common Units' below. Any
reduction in a Unitholder's share of the Partnership's liabilities for which no
partner, including the General Partners, bears the economic risk of loss
('nonrecourse liabilities') will be treated as a distribution of cash to that
Unitholder. To the extent that Partnership distributions cause a Unitholder's
'at risk' amount to be less than zero at the end of any taxable year, he must
recapture any losses deducted in previous years. See ' -- Limitations on
Deductibility of Partnership Losses.'
A decrease in a Unitholder's Percentage Interest in the Partnership because
of the issuance by the Partnership of additional Common Units will decrease such
Unitholder's share of nonrecourse liabilities of the Partnership, and thus will
result in a corresponding deemed distribution of cash. A non-pro rata
distribution of money or property may result in ordinary income to a Unitholder,
regardless of his basis in his Common Units, if such distribution reduces the
Unitholder's share of the Partnership's
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'unrealized receivables' (including depreciation recapture) and/or substantially
appreciated 'inventory items' (both as defined in Section 751 of the Code)
(collectively, 'Section 751 Assets'). To that extent, the Unitholder will be
treated as having been distributed his proportionate share of the Section 751
Assets and having exchanged such assets with the Partnership in return for the
non-pro rata portion of the actual distribution made to him. This latter deemed
exchange will generally result in the Unitholder's realization of ordinary
income under Section 751(b) of the Code. Such income will equal the excess of
(1) the non-pro rata portion of such distribution over (2) the Unitholder's
basis for the share of such Section 751 Assets deemed relinquished in the
exchange.
RATIO OF TAXABLE INCOME TO DISTRIBUTIONS
The Partnership estimates that a purchaser of Common Units in the Offering
who owns them from the date of the closing of the Offering through December 31,
2000, will be allocated, on a cumulative basis, an amount of federal taxable
income for such period that will be less than 30% of the cash distributed with
respect to that period. The Partnership further estimates that for taxable years
after the taxable year ending December 31, 2000, the taxable income allocable to
the Unitholders will represent a significantly higher percentage (and may in
certain circumstances exceed the amount) of cash distributed to them. These
estimates are based upon the assumption that gross income from operations will
approximate an amount required to make the Minimum Quarterly Distribution with
respect to all Units and other assumptions with respect to capital expenditures,
cash flow and anticipated cash distributions. These estimates and assumptions
are subject to, among other things, numerous business, economic, regulatory,
competitive and political uncertainties beyond the control of the Partnership.
Further, the estimates are based on current tax law and certain tax reporting
positions that the Partnership intends to adopt and with which the IRS could
disagree. Accordingly, no assurance is given that the estimates will prove to be
correct. The actual percentage could be higher or lower and any such differences
could be material.
BASIS OF COMMON UNITS
A Unitholder's initial tax basis for his Common Units will be the amount he
paid for the Common Units plus his share of the Partnership's nonrecourse
liabilities. That basis will be increased by his share of Partnership income and
by any increases in his share of Partnership nonrecourse liabilities. That basis
will be decreased (but not below zero) by distributions from the Partnership, by
the Unitholder's share of Partnership losses, by any decrease in his share of
Partnership nonrecourse liabilities and by his share of expenditures of the
Partnership that are not deductible in computing its taxable income and are not
required to be capitalized. A limited partner will have no share of Partnership
debt which is recourse to a partner, but will have a share, generally based on
his share of profits, of Partnership debt which is not recourse to any partner.
The Partnership does not anticipate having nonrecourse liabilities, however. See
' -- Disposition of Common Units -- Recognition of Gain or Loss.'
LIMITATIONS ON DEDUCTIBILITY OF PARTNERSHIP LOSSES
The deduction by a Unitholder of his share of Partnership losses will be
limited to the tax basis in his Units and, in the case of an individual
Unitholder or a corporate Unitholder (if more than 50% in the value of its stock
is owned directly or indirectly by five or fewer individuals or certain
tax-exempt organizations), to the amount which the Unitholder is considered to
be 'at risk' with respect to the Partnership's activities, if that is less than
the Unitholder's basis. A Unitholder must recapture losses deducted in previous
years to the extent that Partnership distributions cause the Unitholder's at
risk amount to be less than zero at the end of any taxable year. Losses
disallowed to a Unitholder or recaptured as a result of these limitations will
carry forward and will be allowable to the extent that the Unitholder's basis or
at risk amount (whichever is the limiting factor) is subsequently increased.
Upon the taxable disposition of a Unit, any gain recognized by a Unitholder can
be offset by losses that were previously suspended by the at risk limitation but
may not be offset by losses suspended by the basis limitation. Any excess loss
(above such gain) previously suspended by the at risk or basis limitations is no
longer utilizable.
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In general, a Unitholder will be at risk to the extent of the tax basis of
his Units, excluding any portion of that basis attributable to his share of
Partnership nonrecourse liabilities, reduced by any amount of money the
Unitholder borrows to acquire or hold his Units if the lender of such borrowed
funds owns an interest in the Partnership, is related to such a person or can
look only to Units for repayment. A Unitholder's at risk amount will increase or
decrease as the basis of the Unitholder's Units increases or decreases (other
than basic increases or decreases attributable to increases or decreases in his
share of Partnership nonrecourse liabilities).
The passive loss limitations generally provide that individuals, estates,
trusts and certain closely-held corporations and personal service corporations
can deduct losses from passive activities (generally, activities in which the
taxpayer does not materially participate) only to the extent of the taxpayer's
income from those passive activities. The passive loss limitations are applied
separately with respect to each publicly-traded partnership. Consequently, any
passive losses generated by the Partnership will only be available to offset
future income generated by the Partnership and will not be available to offset
income from other passive activities or investments (including other
publicly-traded partnerships) or salary or active business income. Passive
losses which are not deductible because they exceed a Unitholder's income
generated by the Partnership may be deducted in full when he disposes of his
entire investment in the Partnership in a fully taxable transaction to an
unrelated party. The passive activity loss rules are applied after other
applicable limitations on deductions such as the at risk rules and the basis
limitation.
A Unitholder's share of net income from the Partnership may be offset by
any suspended passive losses from the Partnership, but it may not be offset by
any other current or carryover losses from other passive activities, including
those attributable to other publicly-traded partnerships. The IRS has announced
that Treasury Regulations will be issued which characterize net passive income
from a publicly-traded Partnership as investment income for purposes of the
limitations on the deductibility of investment interest.
LIMITATIONS ON INTEREST DEDUCTIONS
The deductibility of a non-corporate taxpayer's 'investment interest
expense' is generally limited to the amount of such taxpayer's 'net investment
income.' As noted, a Unitholder's net passive income from the Partnership will
be treated as investment income for this purpose. In addition, the Unitholder's
share of the Partnership's portfolio income will be treated as investment
income. Investment interest expense includes (i) interest on indebtedness
properly allocable to property held for investment, (ii) the Partnership's
interest expense attributed to portfolio income, and (iii) the portion of
interest expense incurred to purchase or carry an interest in a passive activity
to the extent attributable to portfolio income. The computation of a
Unitholder's investment interest expense will take into account interest on any
margin account borrowing or other loan incurred to purchase or own a Unit. Net
investment income includes gross income from property held for investment and
amounts treated as portfolio income pursuant to the passive loss rules less
deductible expenses (other than interest) directly connected with the production
of investment income, but generally does not include gains attributable to the
disposition of property held for investment.
ALLOCATION OF PARTNERSHIP INCOME, GAIN, LOSS AND DEDUCTION
In general, if the Partnership has a net profit, items of income, gain,
loss and deduction will be allocated among the General Partners and the
Unitholders in accordance with their respective percentage interests in the
Partnership. With respect to any taxable year, a class of Unitholders (such as
Common Units) that receives more cash than another class (such as Subordinated
Units), on a per Unit basis, will be allocated additional income equal to that
excess. If the Partnership has a net loss, items of income, gain, loss and
deduction will generally be allocated, first, to the General Partners and the
Unitholders in accordance with their respective Percentage Interests to the
extent of their positive capital accounts (as maintained under the Partnership
Agreement), and, second, to the General Partners.
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Certain items of Partnership income, deduction, gain and loss will be
allocated to account for the difference between the tax basis and fair market
value of certain property held by the Partnership ('Contributed Property'). The
effect of these allocations to a Unitholder will be essentially the same as if
the tax basis of the Contributed Property were equal to its fair market value at
the time of contribution. In addition, certain items of recapture income will be
allocated to the extent possible to the partner allocated the deduction giving
rise to the treatment of such gain as recapture income in order to minimize the
recognition of ordinary income by some Unitholders, but these allocations may
not be respected. If these allocations of recapture income are not respected,
the amount of the income or gain allocated to a Unitholder will not change but
instead a change in the character of the income allocated to a Unitholder would
result. Finally, although the Partnership does not expect that its operations
will result in the creation of negative capital accounts, if negative capital
accounts nevertheless result, items of Partnership income and gain will be
allocated in an amount and manner sufficient to eliminate the negative balance
as quickly as possible.
Regulations provide that an allocation of items of partnership income,
gain, loss or deduction, other than an allocation to eliminate the difference
between a partner's 'book' capital account (credited with the fair market value
of Contributed Property) and 'tax' capital account (credited with the tax basis
of Contributed Property) (the 'Book-Tax Disparity'), will generally be given
effect for federal income tax purposes in determining a partner's distributive
share of an item of income, gain, loss or deduction only if the allocation has
substantial economic effect. In any other case, a partner's distributive share
of an item will be determined on the basis of the partner's interest in the
partnership, which will be determined by taking into account all the facts and
circumstances, including the partner's relative contributions to the
partnership, the interests of the partners in economic profits and losses, the
interest of the partners in cash flow and other nonliquidating distributions and
rights of the partners to distributions of capital upon liquidation. Counsel is
of the opinion that, with the exception of the allocation of recapture income
discussed above, allocations under the Partnership Agreement will be given
effect for federal income tax purposes in determining a partner's distributive
share of an item of income, gain, loss or deduction. There are, however,
uncertainties in the Treasury Regulations relating to allocations of Partnership
income, and investors should be aware that the allocations of recapture income
in the Partnership Agreement may be successfully challenged by the IRS.
TAX TREATMENT OF OPERATIONS
ACCOUNTING METHOD AND TAXABLE YEAR
The Partnership will use the fiscal year ending December 31 as its taxable
year and will adopt the accrual method of accounting for federal income tax
purposes. Each Unitholder will be required to include in income his allocable
share of Partnership income, gain, loss and deduction for the fiscal year of the
Partnership ending within or with the taxable year of the Unitholder. In
addition, a Unitholder who has a taxable year ending on a date other than
December 31 and who disposes of all of his Units following the close of the
Partnership's taxable year but before the close of his taxable year must include
his allocable share of Partnership income, gain, loss and deduction in income
for his taxable year with the result that he will be required to report in
income for his taxable year his distributive share of more than one year of
Partnership income, gain, loss and deduction. See ' -- Disposition of Common
Units -- Allocations Between Transferors and Transferees.'
INITIAL TAX BASIS, DEPRECIATION AND AMORTIZATION
The tax basis of the assets of the Partnership will be used for purposes of
computing depreciation and cost recovery deductions and, ultimately, gain or
loss on the disposition of such assets. The Partnership assets will initially
have an aggregate tax basis equal to the tax basis of the assets in the hands of
the Managing General Partner immediately prior to the formation of the
Partnership plus the amount of gain recognized by the Managing General Partner
as a result of the formation of the Partnership. The federal income tax burden
associated with the difference between the fair market value of property
contributed by the Managing General Partners and the tax basis established for
such property will be borne by the General Partners. See ' -- Allocation of
Partnership Income, Gain, Loss and Deduction.'
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The Partnership may elect to use allowable depreciation and cost recovery
methods that will result in the largest depreciation deductions in the early
years of the Partnership. The Partnership will not be entitled to any
amortization deductions with respect to goodwill conveyed to the Partnership on
formation, other than with respect to goodwill that was amortizable by the
General Partners. Property subsequently acquired or constructed by the
Partnership may be depreciated using accelerated methods permitted by the Code.
If the Partnership disposes of depreciable property by sale, foreclosure,
or otherwise, all or a portion of any gain (determined by reference to the
amount of depreciation previously deducted and the nature of the property) may
be subject to the recapture rules and taxed as ordinary income rather than
capital gain. Similarly, a partner who has taken cost recovery or depreciation
deductions with respect to property owned by the Partnership may be required to
recapture such deductions as ordinary income upon a sale of his interest in the
Partnership. See ' -- Allocation of Partnership Income, Gain, Loss and
Deduction' and ' -- Disposition of Common Units -- Recognition of Gain or Loss.'
Costs incurred in organizing the Partnership may be amortized over any
period selected by the Partnership not shorter than 60 months. The costs
incurred in promoting the issuance of Units must be capitalized and cannot be
deducted currently, ratably or upon termination of the Partnership. There are
uncertainties regarding the classification of costs as organization expenses,
which may be amortized, and as syndication expenses, which may not be amortized.
For example, under recently proposed regulations, the Underwriter's spread would
be treated as a syndication cost.
SECTION 754 ELECTION
The Partnership will make the election permitted by Section 754 of the
Code. That election is irrevocable without the consent of the IRS. The election
will generally permit the Partnership to adjust a Common Unit purchaser's basis
in the Partnership's assets ('inside basis') pursuant to Section 743(b) of the
Code to reflect his purchase price. The Section 743(b) adjustment belongs to the
purchaser and not to other partners. (For purposes of this discussion, a
partner's inside basis in the Partnership's assets will be considered to have
two components: (1) his share of the Partnership's basis in such assets ('Common
Basis') and (2) his Section 743(b) adjustment to that basis.)
Proposed Treasury Regulation Section 1.168-2(n) generally requires the
Section 743(b) adjustment attributable to recovery property to be depreciated as
if the total amount of such adjustment were attributable to newly-acquired
recovery property placed in service when the purchaser acquires the Unit.
Similarly, the legislative history of Section 197 indicates that the Section
743(b) adjustment attributable to an amortizable Section 197 intangible (such as
goodwill) should be treated as a newly-acquired asset placed in service in the
month when the purchaser acquires the Unit. Under Treasury Regulation Section
1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property subject
to depreciation under Section 167 of the Code rather than cost recovery
deductions under Section 168 is generally required to be depreciated using
either the straight-line method or the 150% declining balance method. The
depreciation and amortization methods and useful lives associated with the
Section 743(b) adjustment, therefore, may differ from the methods and useful
lives generally used to depreciate the Common Basis in such properties. Pursuant
to the Partnership Agreement, the Partnership is authorized to adopt a
convention to preserve the uniformity of Units even if such convention is not
consistent with Treasury Regulation Section 1.167(c)-1(a)(6), Proposed Treasury
Regulation Section 1.168-2(n) or the legislative history of Section 197 of the
Code. See ' -- Uniformity of Units.'
Although Counsel is unable to opine as to the validity of such an approach,
the Partnership intends to depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of Contributed Property
including goodwill (to the extent of any unamortized Book-Tax Disparity) using a
rate of depreciation or amortization derived from the depreciation or
amortization method and useful life applied to the Common Basis of such
property, despite its inconsistency with Proposed Treasury Regulation Section
1.168-2(n), Treasury Regulation Section 1.167(c)-l(a)(6) (neither of which is
expected to directly apply to a material portion of the Partnership's assets) or
the legislative history of Section 197 of the Code. To the extent such Section
743(b) adjustment is attributable to appreciation in excess of the unamortized
book-tax disparity, the Partnership will apply the rules described in the
Regulations and legislative history. As a consequence, it is not expected that a
subsequent holder will be entitled to any significant amortization deductions
with respect to goodwill. If
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the Partnership determines that such position cannot reasonably be taken, the
Partnership may adopt a depreciation or amortization convention under which all
purchasers acquiring Units in the same month would receive depreciation or
amortization, whether attributable to Common Basis or Section 743(b) adjustment,
based upon the same applicable rate as if they had purchased a direct interest
in the Partnership's assets. Such an aggregate approach may result in lower
annual depreciation or amortization deductions than would otherwise be allowable
to certain Unitholders. See ' -- Uniformity of Units.'
The allocation of the Section 743(b) adjustment must be made in accordance
with the Code. The IRS may seek to reallocate some or all of any Section 743(b)
adjustment not so allocated by the Partnership to goodwill, which, as an
intangible asset, would be amortizable over a longer period of time than the
Partnership's tangible assets.
A Section 754 election is advantageous if the transferee's basis in his
Units is higher than such Units' share of the aggregate basis to the Partnership
of the Partnership's assets immediately prior to the transfer. In such a case,
as a result of the election, the transferee would have a higher basis in his
share of the Partnership's assets for purposes of calculating, among other
items, his depreciation and depletion deductions and his share of any gain or
loss on a sale of the Partnership's assets. Conversely, a Section 754 election
is disadvantageous if the transferee's basis in such Units is lower than such
Unit's share of the aggregate basis of the Partnership's assets immediately
prior to the transfer. Thus, the fair market value of the Units may be affected
either favorably or adversely by the election.
The calculations involved in the Section 754 election are complex and will
be made by the Partnership on the basis of certain assumptions as to the value
of Partnership assets and other matters. There is no assurance that the
determinations made by the Partnership will not be successfully challenged by
the IRS and that the deductions resulting from them will not be reduced or
disallowed altogether. Should the IRS require a different basis adjustment to be
made, and should, in the Partnership's opinion, the expense of compliance exceed
the benefit of the election, the Partnership may seek permission from the IRS to
revoke the Section 754 election for the Partnership. If such permission is
granted, a subsequent purchaser of Units may be allocated more income than he
would have been allocated had the election not been revoked.
ALTERNATIVE MINIMUM TAX
Each Unitholder will be required to take into account his distributive
share of any items of Partnership income, gain, deduction, or loss for purposes
of the alternative minimum tax.
A Unitholder's alternative minimum taxable income derived from the
Partnership may be higher than his share of Partnership net income because the
Partnership may use accelerated methods of depreciation for purposes of
computing federal taxable income or loss. The minimum tax rate for noncorporate
taxpayers is 26% on the first $175,000 of alternative minimum taxable income in
excess of the exemption amount and 28% on any additional alternative minimum
taxable income. Prospective Unitholders should consult with their tax advisors
as to the impact of an investment in Units on their liability for the
alternative minimum tax.
VALUATION OF PARTNERSHIP PROPERTY AND BASIS OF PROPERTIES
The federal income tax consequences of the ownership and disposition of
Units will depend in part on estimates by the Partnership of the relative fair
market values, and determinations of the initial tax basis, of the assets of the
Partnership. Although the Partnership may from time to time consult with
professional appraisers with respect to valuation matters, many of the relative
fair market value estimates will be made by the Partnership. These estimates and
determinations of basis are subject to challenge and will not be binding on the
IRS or the courts. If the estimates of fair market value or determinations of
basis are subsequently found to be incorrect, the character and amount of items
of income, gain, loss or deductions previously reported by Unitholders might
change, and Unitholders might be required to adjust their tax liability for
prior years.
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TREATMENT OF SHORT SALES
A Unitholder whose Units are loaned to a 'short seller' to cover a short
sale of Units may be considered as having disposed of ownership of those Units.
If so, he would no longer be a partner with respect to those Units during the
period of the loan and may recognize gain or loss from the disposition. As a
result, during this period, any Partnership income, gain, deduction or loss with
respect to those Units would not be reportable by the Unitholder, any cash
distributions received by the Unitholder with respect to those Units would be
fully taxable and all of such distributions would appear to be treated as
ordinary income. Unitholders desiring to assure their status as partners and
avoid the risk of gain recognition should modify any applicable brokerage
account agreements to prohibit their brokers from borrowing their Units. The IRS
has announced that it is actively studying issues relating to the tax treatment
of short sales of partnership interests. (See ' -- Tax Rates and Changes in
Federal Income Tax Laws').
DISPOSITION OF COMMON UNITS
RECOGNITION OF GAIN OR LOSS
Gain or loss will be recognized on a sale of Units equal to the difference
between the amount realized and the Unitholder's tax basis for the Units sold. A
Unitholder's amount realized will be measured by the sum of the cash or the fair
market value of other property received plus his share of Partnership
nonrecourse liabilities. Because the amount realized includes a Unitholder's
share of Partnership nonrecourse liabilities, the gain recognized on the sale of
Units could result in a tax liability in excess of any cash received from such
sale.
Prior Partnership distributions in excess of cumulative net taxable income
in respect of a Common Unit which decreased a Unitholder's tax basis in such
Common Unit will, in effect, become taxable income if the Common Unit is sold at
or above original cost (and may partially become taxable income even if the
Common Unit is sold below original cost).
Gain or loss recognized by a Unitholder (other than a 'dealer' in Units) on
the sale or exchange of a Unit held for more than one year will generally be
taxable as long-term capital gain or loss. A portion of this gain or loss (which
could be substantial), however, will be separately computed and taxed as
ordinary income or loss under Section 751 of the Code to the extent attributable
to assets giving rise to depreciation recapture or other 'unrealized
receivables' or to 'substantially appreciated inventory' owned by the
Partnership. The term 'unrealized receivables' includes potential recapture
items, including depreciation recapture. Inventory is considered to be
'substantially appreciated' if its value exceeds 120% of its adjusted basis to
the Partnership. Ordinary income attributable to unrealized receivables,
substantially appreciated inventory and depreciation recapture may exceed net
taxable gain realized upon the sale of the Unit and may be recognized even if
there is a net taxable loss realized on the sale of the Unit. Thus, a Unitholder
may recognize both ordinary income and a capital loss upon a disposition of
Units. Net capital loss may offset no more than $3,000 of ordinary income in the
case of individuals and may only be used to offset capital gain in the case of
corporations.
The IRS has ruled that a partner who acquires interests in a Partnership in
separate transactions must combine those interests and maintain a single
adjusted tax basis. Upon a sale or other disposition of less than all of such
interests, a portion of that tax basis must be allocated to the interests sold
using an 'equitable apportionment' method. The ruling is unclear as to how the
holding period of these interests is determined once they are combined. If this
ruling is applicable to the holders of Common Units, a Common Unitholder will be
unable to select high or low basis Common Units to sell as would be the case
with corporate stock. It is not clear whether the ruling applies to the
Partnership, because, similar to corporate stock, interests in the Partnership
are evidenced by separate certificates. Accordingly Counsel is unable to opine
as to the effect such ruling will have on the Unitholders. In addition, under
the financial product provisions of the Revenue Reconciliation Act of 1996, in
the case of partnership interests in publicly traded partnerships which are
substantially identical, the basis of such interests and any adjustments to
basis, would be determined on an average basis, and a taxpayer would be treated
as selling such interests on a first-in, first-out basis. A Unitholder
considering the purchase of additional Common Units or a sale of Common Units
purchased in separate transactions should consult his tax advisor as to the
possible consequences of such ruling and subsequent legislation.
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ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES
In general, the Partnership's taxable income and losses will be determined
annually, will be prorated on a monthly basis and subsequently apportioned among
the Unitholders in proportion to the number of Units owned by each of them as of
the opening of the NYSE on the first business day of the month (the 'Allocation
Date'). However, gain or loss realized on a sale or other disposition of
Partnership assets other than in the ordinary course of business will be
allocated among the Unitholders on the Allocation Date in the month in which
that gain or loss is recognized. As a result, a Unitholder transferring Common
Units in the open market may be allocated income, gain, loss and deduction
accrued after the date of transfer.
The use of this method may not be permitted under existing Treasury
Regulations. Accordingly, Counsel is unable to opine on the validity of this
method of allocating income and deductions between the transferors and the
transferees of Units. If this method is not allowed under the Treasury
Regulations (or only applies to transfers of less than all of the Unitholder's
interest), taxable income or losses of the Partnership might be reallocated
among the Unitholders. The Partnership is authorized to revise its method of
allocation between transferors and transferees (as well as among partners whose
interests otherwise vary during a taxable period) to conform to a method
permitted under future Treasury Regulations.
A Unitholder who owns Units at any time during a quarter and who disposes
of such Units prior to the record date set for a cash distribution with respect
to such quarter will be allocated items of Partnership income, gain, loss and
deductions attributable to such quarter but will not be entitled to receive that
cash distribution.
NOTIFICATION REQUIREMENTS
A Unitholder who sells or exchanges Units is required to notify the
Partnership in writing of that sale or exchange within 30 days after the sale or
exchange and in any event by no later than January 15 of the year following the
calendar year in which the sale or exchange occurred. The Partnership is
required to notify the IRS of that transaction and to furnish certain
information to the transferor and transferee. However, these reporting
requirements do not apply with respect to a sale by an individual who is a
citizen of the United States and who effects the sale or exchange through a
broker. Additionally, a transferor and a transferee of a Unit will be required
to furnish statements to the IRS, filed with their income tax returns for the
taxable year in which the sale or exchange occurred, that set forth the amount
of the consideration received for the Unit that is allocated to goodwill or
going concern value of the Partnership. Failure to satisfy these reporting
obligations may lead to the imposition of substantial penalties.
CONSTRUCTIVE TERMINATION
The Partnership and the Operating Partnership will be considered to have
been terminated if there is a sale or exchange of 50% or more of the total
interests in Partnership capital and profits within a 12-month period. A
termination results in the closing of a Partnership's taxable year for all
partners and the Partnership's assets are regarded as having been distributed to
the partners and reconveyed to the Partnership, which is then treated as a new
partnership. A termination of the Partnership will cause a termination of the
Operating Partnership and any Subsidiary Partnership. Such a termination could
also result in penalties or loss of basis adjustments under Section 754 of the
Code if the Partnership were unable to determine that the termination had
occurred. (Under the 1995 Proposed Legislation, termination of a large
partnership, such as the Partnership would not occur by reason of the sale or
exchange of interests in the partnership.)
In the case of a Unitholder reporting on a taxable year other than a fiscal
year ending December 31, the closing of the tax year of the Partnership may
result in more than 12 months' taxable income or loss of the Partnership being
includable in his taxable income for the year of termination. In addition, each
Unitholder will realize taxable gain to the extent that any money deemed as a
result of the termination to have been distributed to him exceeds the adjusted
basis of his Units. New tax elections required to be made by the Partnership,
including a new election under Section 754 of the Code, must be made subsequent
to a constructive termination. A termination could also result in a deferral of
Partnership deductions for depreciation. Finally, a termination might either
accelerate the application of or subject the Partnership to any tax legislation
enacted prior to the termination.
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ENTITY-LEVEL COLLECTIONS
If the Partnership is required or elects under applicable law to pay any
federal, state or local income tax on behalf of any Unitholder or any General
Partners or any former Unitholder, the Partnership is authorized to pay those
taxes from Partnership funds. Such payment, if made, will be treated as a
distribution of cash to the partner on whose behalf the payment was made. If the
payment is made on behalf of a person whose identity cannot be determined, the
Partnership is authorized to treat the payment as a distribution to current
Unitholders. Alternatively, the Partnership may elect to treat an amount paid on
behalf of the General Partners and Unitholders as an expenditure of the
Partnership if the amount paid on behalf of the General Partners is not
substantially greater than 4% of the total amount paid. The Partnership is
authorized to amend the Partnership Agreement in the manner necessary to
maintain uniformity of intrinsic tax characteristics of Units and to adjust
subsequent distributions, so that after giving effect to such distributions, the
priority and characterization of distributions otherwise applicable under the
Partnership Agreement is maintained as nearly as is practicable. Payments by the
Partnership as described above could give rise to an overpayment of tax on
behalf of an individual partner in which event the partner could file a claim
for credit or refund.
UNIFORMITY OF UNITS
Because the Partnership cannot match transferors and transferees of Units,
uniformity of the economic and tax characteristics of the Units to a purchaser
of such Units must be maintained. In the absence of uniformity, compliance with
a number of federal income tax requirements, both statutory and regulatory,
could be substantially diminished. A lack of uniformity can result from a
literal application of Proposed Treasury Regulation Section 1.168-2(n) and
Treasury Regulation Section 1.167(c)-1(a)(6) or the legislative history of
Section 197 and from the application of the 'ceiling limitation' on the
Partnership's ability to make allocations to eliminate book-tax disparities
attributable to Contributed Properties and Partnership property that has been
revalued and reflected in the partners capital accounts ('Adjusted Properties').
Any non-uniformity could have a negative impact on the value of the Units. See
' -- Tax Treatment of Operations -- Section 754 Election.'
The Partnership intends to depreciate the portion of a Section 743(b)
adjustment attributable to unrealized appreciation in the value of Contributed
Property or Adjusted Property (to the extent of any unamortized Book-Tax
Disparity) using a rate of depreciation or amortization derived from the
depreciation or amortization method and useful life applied to the Common Basis
of such property, despite its inconsistency with Proposed Treasury Regulation
Section 1.168-2(n) and Treasury Regulation Section 1.167(c)-l(a)(6) (neither of
which is expected to directly apply to a material portion of the Partnership's
assets) or the legislative history of Section 197. See ' -- Tax Treatment of
Operations Section 754 Election.' To the extent such Section 743(b) adjustment
is attributable to appreciation in excess of the unamortized Book-Tax Disparity,
the Partnership will apply the rules described in the Regulations and
legislative history. If the Partnership determines that such a position cannot
reasonably be taken, the Partnership may adopt a depreciation and amortization
convention under which all purchasers acquiring Units in the same month would
receive depreciation and amortization deductions, whether attributable to common
basis or Section 743(b) basis, based upon the same applicable rate as if they
had purchased a direct interest in the Partnership's property. If such an
aggregate approach is adopted, it may result in lower annual depreciation and
amortization deductions than would otherwise be allowable to certain Unitholders
and risk the loss of depreciation and amortization deductions not taken in the
year that such deductions are otherwise allowable. This convention will not be
adopted if the Partnership determines that the loss of depreciation and
amortization deductions will have a material adverse effect on the Unitholders.
If the Partnership chooses not to utilize this aggregate method, the Partnership
may use any other reasonable depreciation and amortization convention to
preserve the uniformity of the intrinsic tax characteristics of any Units that
would not have a material adverse effect on the Unitholders. The IRS may
challenge any method of depreciating the Section 743(b) adjustment described in
this paragraph. If such a challenge were sustained, the uniformity of Units
might be affected.
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TAX-EXEMPT ORGANIZATIONS AND CERTAIN OTHER INVESTORS
Ownership of Units by employee benefit plans, other tax-exempt
organizations, nonresident aliens, foreign corporations, other foreign persons
and regulated investment companies raises issues unique to such persons and, as
described below, may have substantially adverse tax consequences.
Employee benefit plans and most other organizations exempt from federal
income tax (including individual retirement accounts and other retirement plans)
are subject to federal income tax on unrelated business taxable income.
Virtually all of the taxable income derived by such an organization from the
ownership of a Unit will be unrelated business taxable income and thus will be
taxable to such a Unitholder.
A regulated investment company or 'mutual fund' is required to derive 90%
or more of its gross income from interest, dividends, gains from the sale of
stocks or securities or foreign currency or certain related sources. It is not
anticipated that any significant amount of the Partnership's gross income will
include that type of income.
Non-resident aliens and foreign corporations, trusts or estates which hold
Units will be considered to be engaged in business in the United States on
account of ownership of Units. As a consequence they will be required to file
federal tax returns in respect of their share of Partnership income, gain, loss
or deduction and pay federal income tax at regular rates on any net income or
gain. Generally, a Partnership is required to pay a withholding tax on the
portion of the Partnership's income which is effectively connected with the
conduct of a United States trade or business and which is allocable to the
foreign partners, regardless of whether any actual distributions have been made
to such partners. However, under rules applicable to publicly-traded
partnerships, the Partnership will withhold (currently at the rate of 39.6%) on
actual cash distributions made quarterly to foreign Unitholders. Each foreign
Unitholder must obtain a taxpayer identification number from the IRS and submit
that number to the Transfer Agent of the Partnership on a Form W-8 in order to
obtain credit for the taxes withheld. A change in applicable law may require the
Partnership to change these procedures.
Because a foreign corporation which owns Units will be treated as engaged
in a United States trade or business, such a corporation may be subject to
United States branch profits tax at a rate of 30%, in addition to regular
federal income tax, on its allocable share of the Partnership's income and gain
(as adjusted for changes in the foreign corporation's 'U.S. net equity') which
are effectively connected with the conduct of a United States trade or business.
That tax may be reduced or eliminated by an income tax treaty between the United
States and the country with respect to which the foreign corporate Unitholder is
a 'qualified resident.' In addition, such a Unitholder is subject to special
information reporting requirements under Section 6038C of the Code.
Under a ruling of the IRS, a foreign Unitholder who sells or otherwise
disposes of a Unit will be subject to federal income tax on gain realized on the
disposition of such Unit to the extent that such gain is effectively connected
with a United States trade or business of the foreign Unitholder. Apart from the
ruling, a foreign Unitholder will not be taxed upon the disposition of a Unit if
that foreign Unitholder has held less than 5% in value of the Units during the
five-year period ending on the date of the disposition and if the Units are
regularly traded on an established securities market at the time of the
disposition.
ADMINISTRATIVE MATTERS
PARTNERSHIP INFORMATION RETURNS AND AUDIT PROCEDURES
The Partnership intends to furnish to each Unitholder, within 90 days after
the close of each calendar year, certain tax information, including a Schedule
K-1, which sets forth each Unitholder's allocable share of the Partnership's
income, gain, loss and deduction for the preceding Partnership taxable year. In
preparing this information, which will generally not be reviewed by counsel, the
Partnership will use various accounting and reporting conventions, some of which
have been mentioned in the previous discussion, to determine the Unitholder's
allocable share of income, gain, loss and deduction. There is no assurance that
any of those conventions will yield a result which conforms to the requirements
of the Code, regulations or administrative interpretations of the IRS. The
Partnership cannot assure prospective Unitholders that the IRS will not
successfully contend in court that such accounting and reporting conventions are
impermissible. Any such challenge by the IRS could
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negatively affect the value of the Units. The federal income tax information
returns filed by the Partnership may be audited by the IRS. Adjustments
resulting from any such audit may require each Unitholder to adjust a prior
year's tax liability, and possibly may result in an audit of the Unitholder's
own return. Any audit of a Unitholder's return could result in adjustments of
non-Partnership as well as Partnership items.
Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership proceeding rather than
in separate proceedings with the partners. The Code provides for one partner to
be designated as the 'Tax Matters Partner' for these purposes. The Partnership
Agreement appoints the Managing General Partner as the Tax Matters Partner of
the Partnership.
The Tax Matters Partner will make certain elections on behalf of the
Partnership and Unitholders and can extend the statute of limitations for
assessment of tax deficiencies against Unitholders with respect to Partnership
items. The Tax Matters Partner may bind a Unitholder with less than a 1% profits
interest in the Partnership to a settlement with the IRS unless that Unitholder
elects, by filing a statement with the IRS, not to give such authority to the
Tax Matters Partner. The Tax Matters Partner may seek judicial review (by which
all the Unitholders are bound) of a final partnership administrative adjustment
and, if the Tax Matters Partner fails to seek judicial review, such review may
be sought by any Unitholder having at least a 1% interest in the profits of the
Partnership and by the Unitholders having in the aggregate at least a 5% profits
interest. However, only one action for judicial review will go forward, and each
Unitholder with an interest in the outcome may participate.
A Unitholder must file a statement with the IRS identifying the treatment
of any item on his federal income tax return that is not consistent with the
treatment of the item on the Partnership's return. Intentional or negligent
disregard of the consistency requirement may subject a Unitholder to substantial
penalties. Under the 1995 Proposed Legislation, partners in electing large
partnerships would be required to treat all Partnership items in a manner
consistent with the Partnership return.
Under the reporting provisions of the 1995 Proposed Legislation, each
partner of an electing large partnership would take into account separately his
share of the following items, determined at the partnership level: (1) taxable
income or loss from passive loss limitation activities; (2) taxable income or
loss from other activities (such as portfolio income or loss); (3) net capital
gains to the extent allocable to passive loss limitation activities and other
activities; (4) tax exempt interest; (5) a net alternative minimum tax
adjustment separately computed for passive loss limitation activities and other
activities; (6) general credits; (7) low-income housing credit; (8)
rehabilitation credit; (9) foreign income taxes; (10) credit for producing fuel
from a nonconventional source; and (11) any other items the Secretary of
Treasury deems appropriate. The House version of the 1995 Proposed Legislation
would also make a number of changes to the tax compliance and administrative
rules relating to partnerships. One provision would require that each partner in
a large partnership, such as the Partnership, take into account his share of any
adjustments to partnership items in the year such adjustments are made. Under
current law, adjustments relating to partnership items for a previous taxable
year are taken into account by those persons who were partners in the previous
taxable year. Alternatively, under the 1995 Proposed Legislation, a partnership
could elect to or, in some circumstances, could be required to, directly pay the
tax resulting from any such adjustments. In either case, therefore, Unitholders
could bear significant economic burdens associated with tax adjustments relating
to periods predating their acquisition of Units.
It cannot be predicted whether or in what form the 1995 Proposed
Legislation, or other tax legislation that might affect Unitholders, will be
enacted. However, if tax legislation is enacted which includes provisions
similar to those discussed above, a Unitholder might experience a reduction in
cash distributions.
NOMINEE REPORTING
Persons who hold an interest in the Partnership as a nominee for another
person are required to furnish to the Partnership (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
whether the beneficial owner is (i) a person that is not a United States person,
(ii) a foreign government, an international organization or any wholly-owned
agency or
147
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<PAGE>
instrumentality of either of the foregoing, or (iii) a tax-exempt entity; (c)
the amount and description of Units held, acquired or transferred for the
beneficial owner; and (d) certain information including the dates of
acquisitions and transfers, means of acquisitions and transfers, and acquisition
cost for purchases, as well as the amount of net proceeds from sales. Brokers
and financial institutions are required to furnish additional information,
including whether they are United States persons and certain information on
Units they acquire, hold or transfer for their own account. A penalty of $50 per
failure (up to a maximum of $100,000 per calendar year) is imposed by the Code
for failure to report such information to the Partnership. The nominee is
required to supply the beneficial owner of the Units with the information
furnished to the Partnership.
REGISTRATION AS A TAX SHELTER
The Code requires that 'tax shelters' be registered with the Secretary of
the Treasury. The temporary Treasury Regulations interpreting the tax shelter
registration provisions of the Code are extremely broad. It is arguable that the
Partnership will not be subject to the registration requirement on the basis
that it will not constitute a tax shelter. However, the Managing General
Partner, as a principal organizer of the Partnership, has applied to register
the Partnership as a tax shelter with the IRS in the absence of assurance that
the Partnership will not be subject to tax shelter registration and in light of
the substantial penalties which might be imposed if registration is required and
not undertaken. The Partnership has applied for a tax shelter registration
number with the IRS. ISSUANCE OF THE REGISTRATION NUMBER DOES NOT INDICATE THAT
AN INVESTMENT IN THE PARTNERSHIP OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED,
EXAMINED OR APPROVED BY THE IRS. The Partnership must furnish the registration
number to the Unitholders, and a Unitholder who sells or otherwise transfers a
Unit in a subsequent transaction must furnish the registration number to the
transferee. The penalty for failure of the transferor of a Unit to furnish the
registration number to the transferee is $100 for each such failure. The
Unitholders must disclose the tax shelter registration number of the Partnership
on Form 8271 to be attached to the tax return on which any deduction, loss or
other benefit generated by the Partnership is claimed or income of the
Partnership is included. A Unitholder who fails to disclose the tax shelter
registration number on his return, without reasonable cause for that failure,
will be subject to a $250 penalty for each failure. Any penalties discussed
herein are not deductible for federal income tax purposes.
ACCURACY-RELATED PENALTIES
An additional tax equal to 20% of the amount of any portion of an
underpayment of tax which is attributable to one or more of certain listed
causes, including negligence or disregard of rules or regulations, substantial
understatements of income tax and substantial valuation misstatements, is
imposed by the Code. No penalty will be imposed, however, with respect to any
portion of an underpayment if it is shown that there was a reasonable cause for
that portion and that the taxpayer acted in good faith with respect to that
portion.
A substantial understatement of income tax in any taxable year exists if
the amount of the understatement exceeds the greater of 10% of the tax required
to be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty generally is
reduced if any portion is attributable to a position adopted on the return (i)
with respect to which there is, or was, 'substantial authority' or (ii) as to
which there is a reasonable basis and the pertinent facts of such position are
disclosed on the return. Certain more stringent rules apply to 'tax shelters,' a
term that in this context does not appear to include the Partnership. If any
Partnership item of income, gain, loss or deduction included in the distributive
shares of Unitholders might result in such an 'understatement' of income for
which no 'substantial authority' exists, the Partnership intends to disclose the
pertinent facts on its return. In addition, the Partnership will make a
reasonable effort to furnish sufficient information for Unitholders to make
adequate disclosure on their returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any property
(or the adjusted basis of any property) claimed on a tax return is 200% or more
of the amount determined to be the correct amount of such valuation or adjusted
basis. No penalty is imposed unless the portion of the underpayment attributable
to a substantial valuation misstatement exceeds $5,000 ($10,000 for most
148
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<PAGE>
corporations). If the valuation claimed on a return is 400% or more of the
correct valuation, the penalty imposed increases to 40%.
STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, Unitholders will be subject to other
taxes, such as state and local income taxes, unincorporated business taxes, and
estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which the Partnership does business or owns property, Although
an analysis of those various taxes is not presented here, each prospective
Unitholder should consider their potential impact on his investment in the
Partnership. The Partnership will initially own property and conduct business in
New York, Florida, Michigan and 21 other states. A Unitholder will be required
to file state income tax returns and to pay state income taxes in some or all of
these states and may be subject to penalties for failure to comply with those
requirements. Based on 1995 revenues, the Managing General Partner currently
anticipates that substantially all of the Partnership's income will be generated
in Arkansas, Arizona, Colorado, Connecticut, Florida, Iowa, Illinois,
Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Mexico, New
York and Wisconsin. Each of the states, other than Florida, in which the
Managing General Partner currently anticipates that a substantial portion of the
Partnership's income will be generated currently imposes a personal income tax.
In certain states, tax losses may not produce a tax benefit in the year incurred
(if, for example, the Partnership has no income from sources within that state)
and also may not be available to offset income in subsequent taxable years. Some
of the states may require the Partnership, or the Partnership may elect, to
withhold a percentage of income from amounts to be distributed to a Unitholder
who is not a resident of the state. Withholding, the amount of which may be
greater or less than a particular Unitholder's income tax liability to the
state, generally does not relieve the non-resident Unitholder from the
obligation to file an income tax return. Amounts withheld may be treated as if
distributed to Unitholders for purposes of determining the amounts distributed
by the Partnership. See ' -- Disposition of Common Units -- Entity-Level
Collections.' Based on current law and its estimate of future Partnership
operations, the Managing General Partner anticipates that any amounts required
to be withheld will not be material.
It is the responsibility of each Unitholder to investigate the legal and
tax consequences, under the laws of pertinent states and localities, of his
investment in the Partnership. Accordingly, each prospective Unitholder should
consult, and must depend upon, his own tax counsel or other advisor with regard
to those matters. Further, it is the responsibility of each Unitholder to file
all state and local, as well as federal, tax returns that may be required of
such Unitholder. Counsel has not rendered an opinion on the state or local tax
consequences of an investment in the Partnership.
149
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<PAGE>
INVESTMENT IN THE PARTNERSHIP BY EMPLOYEE BENEFIT PLANS
An investment in the Partnership by an employee benefit plan is subject to
certain additional considerations because the investments of such plans are
subject to the fiduciary responsibility and prohibited transaction provisions of
the Employee Retirement Income Security Act of 1974 as amended ('ERISA'), and
restrictions imposed by Section 4975 of the Code. As used herein, the term
'employee benefit plan' includes, but is not limited to, qualified pension,
profit-sharing and stock bonus plans, Keogh plans, simplified employee pension
plans and tax deferred annuities or Individual Retirement Accounts established
or maintained by an employer or employee organization: Among other things,
consideration should be given to (a) whether such investment is prudent under
Section 404(a)(i)(B) of ERISA; (b) whether in making such investment, such plan
will satisfy the diversification requirement of Section 404(a)(1)(C) of ERISA;
and (c) whether such investment will result in recognition of unrelated business
taxable income by such plan and, if so, the potential after-tax investment
return. See 'Tax Considerations -- Uniformity of Units -- Tax-Exempt
Organizations and Certain Other Investors.' The person with investment
discretion with respect to the assets of an employee benefit plan (a
'fiduciary') should determine whether an investment in the Partnership is
authorized by the appropriate governing instrument and is a proper investment
for such plan.
Section 406 of ERISA and Section 4975 of the Code (which also applies to
Individual Retirement Accounts that are not considered part of an employee
benefit plan) prohibit an employee benefit plan from engaging in certain
transactions involving 'plan assets' with parties that are 'parties in interest'
under ERISA or 'disqualified persons' under the Code with respect to the plan.
In addition to considering whether the purchase of Common Units is a
prohibited transaction, a fiduciary of an employee benefit plan should consider
whether such plan will, by investing in the Partnership, be deemed to own an
undivided interest in the assets of the Partnership, with the result that the
General Partners also would be fiduciaries of such plan and the operations of
the Partnership would be subject to the regulatory restrictions of ERISA,
including its prohibited transaction rules, as well as the prohibited
transaction rules of the Code.
The Department of Labor regulations provide guidance with respect to
whether the assets of an entity in which employee benefit plans acquire equity
interests would be deemed 'plan assets' under certain circumstances. Pursuant to
these regulations, an entity's assets would not be considered to be 'plan
assets' if, among other things, (a) the equity interest acquired by employee
benefit plans are publicly offered securities -- i.e., the equity interests are
widely held by 100 or more investors independent of the issuer and each other,
freely transferable and registered pursuant to certain provisions of the federal
securities laws, (b) the entity is an 'operating company' -- i.e., it is
primarily engaged in the production or sale of a product or service other than
the investment of capital either directly or through a majority owned subsidiary
or subsidiaries, or (c) there is no significant investment by benefit plan
investors, which is defined to mean that less than 25% of the value of each
class of equity interest (disregarding certain interests held by the General
Partner, its affiliates, and certain other persons) is held by the employee
benefit plans referred to above, Individual Retirement Accounts and other
employee benefit plans not subject to ERISA (such as governmental plans). The
Partnership's assets should not be considered 'plan assets' under these
regulations because it is expected that the investment will satisfy the
requirements in (a) and (b) above and may also satisfy the requirements in (c).
Plan fiduciaries contemplating a purchase of Common Units should consult
with their own counsel regarding the consequences under ERISA and the Code in
light of the serious penalties imposed on persons who engage in prohibited
transactions or other violations.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement
(the 'Purchase Agreement') among the Partnership, certain related parties and
each of the underwriters named below (the 'Underwriters'), the Partnership has
agreed to sell to each of the Underwriters, and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation ('DLJ'), Janney Montgomery Scott Inc., Rauscher
Pierce Refsnes, Inc. and The Robinson-Humphrey Company, Inc. are acting as
representatives (the 'Representatives'), has severally agreed to purchase, the
number of Common Units set forth below opposite their respective names. The
Underwriters are committed to purchase all of such Common Units if any are
purchased. Under certain circumstances, the commitments of non-defaulting
Underwriters may be increased as set forth in the Purchase Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER COMMON UNITS
------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................
Donaldson, Lufkin & Jenrette Securities Corporation...........................
Janney Montgomery Scott Inc...................................................
Rauscher Pierce Refsnes, Inc..................................................
The Robinson-Humphrey Company, Inc............................................
------------
Total........................................................... 6,190,476
------------
------------
</TABLE>
The Representatives of the Underwriters have advised the Partnership that
they propose initially to offer the Common Units to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of $ per Common Unit.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per Common Unit on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Partnership has granted the Underwriters an option exercisable for 30
days after the date hereof to purchase up to 928,571 additional Common Units to
cover over-allotments, if any, at the initial public offering price, less the
underwriting discount. If the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof which the number of Common
Units to be purchased by it shown in the foregoing table is of the 6,190,476
Common Units initially offered hereby.
The Partnership, the Operating Partnership, the Managing General Partner
and Triarc have agreed not to (i) offer, sell, contract to sell or otherwise
dispose of any Common Units or Subordinated Units (other than the issuance of
Common Units in connection with Acquisitions or Capital Improvements) or (ii)
grant any options or warrants to purchase Common Units or Subordinated Units
(other than the grant of options to purchase Common Units pursuant to employee
benefit plans that are not exercisable for at least 180 days), for a period of
180 days after the date of this Prospectus without the prior written consent of
Merrill Lynch; provided that the Subordinated Units may be transferred without
such consent to an Affiliate of the Managing General Partner who agrees to be
bound by the transfer restrictions contained in this paragraph.
As the National Association of Securities Dealers, Inc. ('NASD') is
expected to view the Common Units offered in the Offering as interests in a
direct participation program, the Offering is being made in compliance with
Article III, Section 34 of the NASD's Rules of Fair Practice. Investor
suitability with respect to the Common Units should be judged similarly to the
suitability of other securities that are listed for trading on a national
securities exchange. The Underwriters do not intend to confirm sales to any
accounts over which they exercise discretionary authority without the prior
written approval of the transaction by the customer.
151
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<PAGE>
Prior to the Offering, there has been no public market for the Common Units
of the Partnership. The initial public offering price has been determined
through negotiations among the Partnership, the Managing General Partner, Triarc
and the Representatives. Among the factors described in determining the initial
public offering price, in addition to prevailing market conditions, are
price-earnings ratios of publicly traded companies that the Representatives
believe to be comparable to the Partnership, certain financial information of
the Partnership, the proposed capital structure, assets and liabilities of the
Partnership, the Partnership's management, its past and present operations, the
prospects for, and timing of, future revenues of the Partnership, the present
state of the Partnership's development, and the above factors in relation to
market values and various valuation measures of other companies engaged in
activities similar to the Partnership. There can be no assurance that an active
trading market will develop for the Common Units or that the Common Units will
trade in the public market subsequent to the Offering at or above the initial
public offering price.
The Common Units have been approved for listing on the NYSE upon notice of
issuance. In order to meet one of the requirements for listing the Common Units
on the NYSE, the Underwriters have undertaken to sell lots of 100 or more Common
Units to a minimum of 2,000 beneficial holders.
DLJ and Merrill Lynch are acting as co-placement agents in connection with
the private placement of the First Mortgage Notes for which they expect to
receive customary compensation. In addition Merrill Lynch and DLJ have provided
investment banking and related services to Triarc and its Affiliates in the past
for which they received customary compensation. In 1995, Triarc engaged Merrill
Lynch to provide investment banking advisory services relating to general
corporate finance issues for which services Merrill Lynch received no
compensation other than reimbursement of costs incurred. In June 1996, National
Propane engaged Merrill Lynch to provide investment banking advisory services
relating to the Transactions for which services Merrill Lynch will receive a fee
in an amount equal to one-half of one percent of the gross proceeds from the
sale of the Common Units in the Offering. An affiliate of Merrill Lynch and an
affiliate of DLJ each own less than 2% of Triarc's outstanding Class A Common
Stock.
The Partnership has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Common Units offered hereby will be passed upon for the
Partnership by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
Certain legal matters in connection with the Offering will be passed upon for
the Underwriters by Latham & Watkins, New York, New York. Certain other matters
will be passed upon for the Partnership by Andrews & Kurth L.L.P., New York, New
York. Members of Paul, Weiss, Rifkind, Wharton & Garrison own an aggregate of
1,100 shares of Triarc's Class A Common Stock.
EXPERTS
The financial statements of National Propane Corporation and its
consolidated subsidiaries as of December 31, 1994 and 1995 and for the ten
months ended December 31, 1993 and for the years ended December 31, 1994 and
1995 (except Public Gas Company for the ten months ended December 31, 1993) and
the balance sheet of National Propane Partners, L.P. as of March 13, 1996
included in this prospectus have been audited by Deloitte & Touche LLP as stated
in their reports appearing herein. The financial statements of Public Gas
Company for the ten months ended December 31, 1993 (consolidated with those of
National Propane and not separately included herein) have been audited by Arthur
Andersen LLP, as stated in their report included herein. Such financial
statements are included herein in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing. Both of
the foregoing firms are independent auditors.
ADDITIONAL INFORMATION
The Partnership has filed with the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, a Form S-1 Registration Statement under the Securities
Act, for the registration of the securities to be offered by this Prospectus.
Certain of the information contained in the Registration Statement is
152
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<PAGE>
omitted from this Prospectus, and reference is hereby made to the Registration
Statement and exhibits relating thereto for further information concerning the
Partnership and the General Partner and the securities to which this Prospectus
relates. Statements contained herein concerning the provisions of any document
are not necessarily complete and in each instance reference is made to the copy
of the document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by this reference.
The Registration Statement and the exhibits thereto are available for
inspection in the principal office of the Commission in Washington, D.C. and
photostatic copies of such material may be obtained from the Commission upon
payment of the fees prescribed by the Commission.
153
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Pro Forma Financial Statements:
National Propane Corporation, Managing General Partner Unaudited Pro Forma Condensed Balance Sheet:
Unaudited Pro Forma Condensed Balance Sheet -- March 31, 1996.................................... F-2
Notes to Unaudited Pro Forma Condensed Balance Sheet............................................. F-4
National Propane Partners, L.P. Unaudited Pro Forma Condensed Consolidated Financial Statements:
Unaudited Pro Forma Condensed Consolidated Balance Sheet -- March 31, 1996....................... F-5
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet................................ F-7
Unaudited Pro Forma Condensed Consolidated Statement of Operations --
Year Ended December 31, 1995................................................................... F-8
Three Months Ended March 31, 1996.............................................................. F-9
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations..................... F-10
Historical Financial Statements:
National Propane Partners, L.P.
Independent Auditors' Report..................................................................... F-11
Balance Sheet -- March 13, 1996.................................................................. F-12
Note to Balance Sheet............................................................................ F-13
National Propane Corporation:
Independent Auditors' Reports.................................................................... F-14
Consolidated Balance Sheets -- December 31, 1994 and 1995 and March 31, 1996..................... F-16
Consolidated Statements of Operations -- Ten months ended December 31, 1993, years ended December
31, 1994 and 1995 and three months ended March 31, 1995 and 1996................................. F-17
Consolidated Statements of Additional Capital -- Ten months ended December 31, 1993, years ended
December 31, 1994 and 1995 and three months ended March 31, 1996................................. F-18
Consolidated Statements of Cash Flows -- Ten months ended December 31, 1993, years ended December
31, 1994 and 1995 and three months ended March 31, 1995 and 1996................................. F-19
Notes to Consolidated Financial Statements....................................................... F-22
</TABLE>
F-1
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION, MANAGING GENERAL PARTNER
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1996
The unaudited pro forma condensed balance sheet of National Propane
Corporation, Managing General Partner has been prepared by adjusting the
consolidated balance sheet of National Propane as of March 31, 1996 appearing on
page F-16 herein, to give effect to the issuance of the First Mortgage Notes,
the conveyance of certain assets and liabilities to the Partnership (the
'Partnership Conveyance') and certain other related transactions as described on
page F-4 as if they had occurred on March 31, 1996. Such unaudited pro forma
balance sheet should also be read in conjunction with National Propane's
consolidated financial statements and notes thereto included elsewhere herein.
The following unaudited pro forma condensed consolidated balance sheet does not
purport to be indicative of the actual financial position that would have
resulted had the transactions noted above actually been consummated on March 31,
1996 or of the future financial position of National Propane Corporation,
Managing General Partner which will result from the consummation of such
transactions.
In addition to presenting the pro forma effects of the transactions noted
above, the unaudited pro forma condensed balance sheet of National Propane
Corporation, Managing General Partner has been included in order to detail the
Partnership Conveyance, which represents the first column of the unaudited pro
forma condensed balance sheet of National Propane Partners, L.P. set forth on
page F-6 herein.
F-2
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION, MANAGING GENERAL PARTNER
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONAL NATIONAL
PROPANE PRO FORMA PARTNERSHIP PROPANE
HISTORICAL ADJUSTMENTS CONVEYANCE(F) PRO FORMA
---------- -------------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 8,081 $125,000(a) $ (70,281) $ --
(62,800)(b)
Receivables, net................................. 22,196 -- (22,196) --
Inventories...................................... 8,787 -- (8,787) --
Other current assets............................. 4,423 1,764(c) (2,887) 3,300
---------- -------------- ------------- ---------
Total current assets........................ 43,487 63,964 (104,151) 3,300
Due from Triarc....................................... -- 30,000(d) -- 30,000
Properties, net....................................... 82,211 -- (82,211) --
Unamortized costs in excess of net assets of acquired
companies........................................... 15,002 -- (15,002) --
Other assets.......................................... 6,679 (4,410)(c) (5,769) --
3,500(b)
Investment in partnership............................. -- -- 14,639 14,639
---------- -------------- ------------- ---------
$ 147,379 $ 93,054 $(192,494) $47,939
---------- -------------- ------------- ---------
---------- -------------- ------------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt................ $ 11,029 $-- $ (11,029) $ --
Accounts payable................................. 6,876 -- (6,876) --
Due to Triarc and an affiliate................... 13,872 -- (13,872) --
Accrued expenses................................. 10,061 -- (10,061) --
---------- -------------- ------------- ---------
Total current liabilities................... 41,838 -- (41,838) --
---------- -------------- ------------- ---------
Long-term debt........................................ 123,570 125,000(a) (248,570) --
---------- -------------- ------------- ---------
Deferred income taxes................................. 22,952 (2,500)(e) -- 20,452
---------- -------------- ------------- ---------
Other liabilities..................................... 2,102 -- (2,102) --
---------- -------------- ------------- ---------
Commitments and contingencies
Stockholders' equity (deficit):
Common stock..................................... 1 -- -- 1
Additional paid-in capital....................... 36,270 2,500(e) -- 38,770
Retained earnings (accumulated deficit).......... 2,038 (2,646)(c) 100,016 (11,284)
(51,392)(d)
(59,300)(b)
Due from Triarc.................................. (81,392) 81,392(d) -- --
---------- -------------- ------------- ---------
Total stockholders' equity (deficit)........ (43,083) (29,446) 100,016 27,487
---------- -------------- ------------- ---------
$ 147,379 $ 93,054 $(192,494) $47,939
---------- -------------- ------------- ---------
---------- -------------- ------------- ---------
</TABLE>
See notes to unaudited pro forma condensed balance sheet.
F-3
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION, MANAGING GENERAL PARTNER
NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(IN THOUSANDS)
(a) To reflect the issuance of the First Mortgage Notes of $125,000.
(b) To reflect the use of proceeds from the issuance of the First Mortgage
Notes for the payment of estimated deferred financing costs associated with
the issuance of the First Mortgage Notes of $3,500, payment of a $59,300
cash dividend to Triarc and the balance of $62,200 which will be
contributed to the Operating Partnership in connection with the Partnership
Conveyance.
(c) To reflect the write-off of deferred financing costs of $4,410, net of a
related tax benefit of $1,764, on the early extinguishment of the existing
indebtedness.
(d) To reflect a dividend to Triarc of $51,392 of National Propane's $81,392
receivable from Triarc and the reclassification of the remainder of the
receivable of $30,000 as an asset due to Triarc's improved liquidity
position as a result of the Offering and related transactions.
(e) To reflect the transfer to Triarc of certain income tax liabilities as a
contribution.
(f) To reflect the conveyance of certain assets and liabilities to the
Partnership in exchange for general partnership interests.
F-4
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
The following unaudited pro forma condensed consolidated balance sheet of
the Partnership has been prepared by adjusting the assets and liabilities of the
Partnership resulting from the Partnership Conveyance set forth on page F-3
herein to give effect to the Offering, the issuance of the Partnership Loan to
Triarc and the use of proceeds as described on page 50 of this Prospectus (the
'Transactions') as if they had occurred on March 31, 1996. The pro forma
adjustments are described in the accompanying notes to the pro forma condensed
consolidated balance sheet which should be read in conjunction with such
unaudited pro forma condensed consolidated balance sheet. Such unaudited pro
forma condensed consolidated balance sheet should also be read in conjunction
with National Propane's consolidated financial statements and notes thereto
included elsewhere herein. The following unaudited pro forma condensed
consolidated balance sheet does not purport to be indicative of the actual
financial position that would have resulted had the Transactions actually been
consummated on March 31, or of the future financial position of the Partnership
which will result from the consummation of the Transactions.
F-5
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
PARTNERSHIP -------------- PARTNERSHIP
CONVEYANCE PRO FORMA
---------- (IN THOUSANDS) -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash........................................................... $ 70,281 $ 118,200(a) $ 810
(70,012)(b)
(40,700)(c)
(13,872)(d)
(63,087)(e)
Receivables, net............................................... 22,196 -- 22,196
Inventories.................................................... 8,787 -- 8,787
Other current assets........................................... 2,887 -- 2,887
---------- -------------- -----------
Total current assets...................................... 104,151 (69,471) 34,680
Due from Triarc..................................................... -- 40,700(c) 40,700
Properties, net..................................................... 82,211 -- 82,211
Unamortized costs in excess of net assets of acquired companies..... 15,002 -- 15,002
Other assets........................................................ 5,769 -- 5,769
---------- -------------- -----------
$207,133 $ (28,771) $ 178,362
---------- -------------- -----------
---------- -------------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of long-term debt.............................. $ 11,029 $ (2,597)(e) $ 307
(8,125)(b)
Accounts payable............................................... 6,876 -- 6,876
Due to Triarc and an affiliate................................. 13,872 (13,872)(d) --
Accrued expenses............................................... 10,061 -- 10,061
---------- -------------- -----------
Total current liabilities................................. 41,838 (24,594) 17,244
Long-term debt...................................................... 248,570 (61,887)(b) 126,193
(60,490)(e)
Other liabilities................................................... 2,102 -- 2,102
Commitments and contingencies
Partners' capital
Limited partners' capital...................................... -- 118,200(a) 18,184
(100,016)(f)
General partners' capital...................................... (85,377) 100,016(f) 14,639
---------- -------------- -----------
Total partners' capital................................... (85,377) 118,200 32,823
---------- -------------- -----------
$207,133 $ (28,771) $ 178,362
---------- -------------- -----------
---------- -------------- -----------
</TABLE>
See notes to unaudited pro forma condensed consolidated balance sheet.
F-6
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS)
(a) To reflect the estimated net proceeds to the Partnership of $118,200 from
the issuance of 6,190,476 Common Units at an assumed offering price of
$21.00 per Common Unit net of $11,800 for underwriting discount and other
expenses relating to the Offering.
(b) To reflect the repayment of $70,012 of existing indebtedness utilizing a
portion of the proceeds from the sale of Common Units. National Propane
will recognize an extraordinary loss of approximately $2.6 million, net of
tax, on the early extinguishment of the existing indebtedness.
(c) To reflect the issuance of the $40,700 Partnership Loan to Triarc.
(d) To record the payment of liabilities due to Triarc and another affiliate
primarily representing accrued management fees and tax sharing payments.
(e) To reflect the repayment of $63,087 of existing indebtedness utilizing a
portion of the proceeds from the issuance of the First Mortgage Notes.
(f) To record the allocation of partners' capital resulting from the completion
of the Offering.
F-7
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
The following unaudited pro forma condensed consolidated statements of
operations of the Partnership have been prepared by adjusting the consolidated
statements of operations of National Propane for the year ended December 31,
1995 and the three months ended March 31, 1996 appearing on page F-17 herein, to
give effect to the Transactions as if they had occurred on January 1, 1995. The
pro forma adjustments are described in the accompanying notes to the pro forma
condensed consolidated statements of operations which should be read in
conjunction with such unaudited pro forma condensed consolidated statements of
operations. Such pro forma statements should also be read in conjunction with
National Propane's consolidated financial statements and notes thereto included
elsewhere herein. The following unaudited pro forma condensed consolidated
statements of operations do not purport to be indicative of the actual results
of the Partnership that would have occurred had the Transactions actually been
consummated on January 1, 1995 or of future results of operations which will be
obtained as a result of the consummation of the Transactions.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------
NATIONAL
PROPANE PRO FORMA PARTNERSHIP
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<S> <C> <C> <C>
Operating revenues.................................................. $ 148,983 $-- $ 148,983
---------- ----------- -----------
Operating costs and expenses:
Cost of sales.................................................. 109,059 -- 109,059
Selling, general and administrative expenses (other than
management fees charged by parent)........................... 22,423 1,500(a) 23,923
Management fees charged by parent.............................. 3,000 (3,000)(b) --
---------- ----------- -----------
134,482 (1,500) 132,982
---------- ----------- -----------
Operating profit............................................... 14,501 1,500 16,001
---------- ----------- -----------
Other income (expense):
Interest expense............................................... (11,719) 379(c) (11,340)
Interest income from Triarc.................................... -- 5,500(d) 5,500
Other income, net.............................................. 904 -- 904
---------- ----------- -----------
(10,815) 5,879 (4,936)
---------- ----------- -----------
Income before income taxes.......................................... 3,686 7,379 11,065
Provision for income taxes.......................................... 4,291 (4,091)(e) 200
---------- ----------- -----------
Net income (loss)................................................... $ (605) $11,470 $ 10,865
---------- ----------- -----------
---------- ----------- -----------
General partners' interest in net income(f)......................... $ 435
-----------
-----------
Unitholders' interest in net income(f).............................. $ 10,430
-----------
-----------
Net income per Unit(f).............................................. $ 0.97
-----------
-----------
Weighted average number of Units outstanding(f)..................... 10,724,114
-----------
-----------
</TABLE>
See notes to unaudited pro forma condensed consolidated statements of
operations.
F-8
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
-------------------------------------------
NATIONAL
PROPANE PRO FORMA PARTNERSHIP
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<S> <C> <C> <C>
Operating revenues.................................................. $ 59,981 $-- $ 59,981
---------- ----------- -----------
Operating costs and expenses:
Cost of sales.................................................. 41,154 -- 41,154
Selling, general and administrative expenses (other than
management fees charged by parent)........................... 5,853 375(a) 6,228
Management fees charged by parent.............................. 750 (750)(b) --
---------- ----------- -----------
47,757 (375) 47,382
---------- ----------- -----------
Operating profit............................................... 12,224 375 12,599
---------- ----------- -----------
Other income (expense):
Interest expense............................................... (3,138) 328(c) (2,810)
Interest income from Triarc.................................... -- 1,375(d) 1,375
Other income, net.............................................. 278 -- 278
---------- ----------- -----------
(2,860) 1,703 (1,157)
---------- ----------- -----------
Income before income taxes.......................................... 9,364 2,078 11,442
Provision for income taxes.......................................... 3,847 (3,797)(e) 50
---------- ----------- -----------
Net income.......................................................... $ 5,517 $ 5,875 $ 11,392
---------- ----------- -----------
---------- ----------- -----------
General partners' interest in net income(f)......................... $ 456
-----------
-----------
Unitholders' interest in net income(f).............................. $ 10,936
-----------
-----------
Net income per Unit(f).............................................. $ 1.02
-----------
-----------
Weighted average number of Units outstanding(f)..................... 10,724,114
-----------
-----------
</TABLE>
See notes to unaudited pro forma condensed consolidated statements of
operations.
F-9
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) To reflect the estimated stand-alone general and administrative costs
associated with the Partnership. The following are primarily based on actual
quotes for third party services and salary levels commensurate with the
market:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ -------------------
<S> <C> <C>
Cost of tax return preparation and recordkeeping....................... $ 250 $ 63
Investor relations..................................................... 200 50
Insurance.............................................................. 200 50
Audit and legal services............................................... 250 62
Registrar and stock exchange fees...................................... 125 31
Direct charges from Triarc............................................. 175 44
Other.................................................................. 300 75
------------ ------
$1,500 $ 375
------------ ------
------------ ------
</TABLE>
(b) To reflect the elimination of the management services fee allocated by
Triarc.
(c) Represents adjustments to interest expense as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ -------------------
<S> <C> <C>
Interest expense on the Existing Credit Facility.................. $ 9,641 $ 2,650
Interest expense on Other Existing Indebtedness................... 458 146
Amortization of deferred financing costs associated with the
Existing Credit Facility........................................ 1,305 289
Interest expense on the First Mortgage Notes (interest rate of
8.54%).......................................................... (10,675) (2,669)
Amortization of deferred financing costs associated with the First
Mortgage Notes.................................................. (350) (88)
------------ --------
$ 379 $ 328
------------ --------
------------ --------
</TABLE>
(d) To reflect interest income at 13.5% on the $40,700 Partnership Loan.
(e) To reflect the reduction of the provision for income taxes as income taxes
will be borne by the partners and not the Partnership, except for corporate
income taxes relative to the Partnership's wholly owned subsidiary which
will conduct certain of the Partnership's operations.
(f) The General Partners' allocation of net income is based on their combined
General Partner 4% interest in the Partnership (excluding the Subordinated
Units). The General Partners' 4% allocation of net income has been deducted
before calculating the net income per unit. The allocation of net income for
Common Units and Subordinated Units is based on the terms of the Partnership
Agreement and assumes that 6,190,476 Common Units and 4,533,638 Subordinated
Units were outstanding at all times during the periods indicated.
F-10
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
NATIONAL PROPANE PARTNERS, L.P.
We have audited the accompanying balance sheet of National Propane
Partners, L.P. at March 13, 1996. This balance sheet is the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of the Partnership at March 13, 1996 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cedar Rapids, Iowa
March 13, 1996
F-11
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
BALANCE SHEET
MARCH 13, 1996
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash................................................................................................ $1,000
------
Total assets................................................................................... $1,000
------
------
Partners' Capital........................................................................................ $1,000
------
------
</TABLE>
The accompanying note is an integral part of this balance sheet
F-12
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
NOTE TO BALANCE SHEET
NOTE 1 -- ORGANIZATION
National Propane Partners, L.P. (the 'Partnership') was formed on March 13,
1996 as a Delaware limited partnership. The Partnership was formed to acquire,
own and operate the propane business and substantially all of the assets and
liabilities (other than amounts due from a parent, deferred financing costs, and
net deferred income tax liabilities) of National Propane Corporation ('National
Propane'), an indirect wholly-owned subsidiary of Triarc Companies, Inc.
('Triarc'). In order to simplify the Partnership's obligations under the laws of
selected jurisdictions in which the Partnership will conduct business, the
Partnership's activities will be conducted through a subsidiary operating
partnership, National Propane, L.P. (the 'Operating Partnership'). Certain of
the assets and liabilities of National Propane will be conveyed to and assumed
by the Operating Partnership. In addition, the Operating Partnership will form a
wholly-owned subsidiary which will conduct certain operations.
The Partnership intends to offer 6,190,476 Common Units, representing
limited partner interests in the Partnership, pursuant to a public offering and
to concurrently issue to the Managing General Partner 4,533,638 Subordinated
Units, representing subordinated general partner interests in the Partnership,
as well as an aggregate 4% general partner interest in the Partnership and the
Operating Partnership, on a combined basis.
National Propane, as Managing General Partner, contributed $10 and Triarc,
as the organizational limited partner, contributed $990 to the Partnership on
March 13, 1996. There have been no other transactions involving the Partnership
as of March 13, 1996.
F-13
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
NATIONAL PROPANE CORPORATION:
We have audited the accompanying consolidated balance sheets of National
Propane Corporation (the 'Company') (75.7% owned by NPC Holdings, Inc. and 24.3%
owned by PGC Holdings, Inc., both of which are wholly-owned by Triarc Companies,
Inc.) and subsidiaries as of December 31, 1994 and 1995, and the related
consolidated statements of operations, additional capital and cash flows for the
ten months ended December 31, 1993 and the years ended December 31, 1994 and
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements give
retroactive effect to the merger of the Company and Public Gas Company, which
has been accounted for as a combination of entities under common control in a
manner similar to a pooling of interests as described in Notes 1 and 3 to the
consolidated financial statements. We did not audit the financial statements of
Public Gas Company for the ten months ended December 31, 1993, which statements
(not shown separately herein) reflect total revenues of $23,394,000. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for Public Gas
Company for the ten months ended December 31, 1993, is based solely on the
report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Company and subsidiaries at
December 31, 1994 and 1995, and the results of their operations and their cash
flows for the ten months ended December 31, 1993 and the years ended December
31, 1994 and 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cedar Rapids, Iowa
March 13, 1996
F-14
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To PUBLIC GAS COMPANY:
We have audited the statements of income and retained earnings and cash
flows for the ten months ended December 31, 1993 of Public Gas Company. These
financial statements (not presented herein) are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above (not presented
herein) present fairly, in all material respects, the results of operations and
cash flows of Public Gas Company for the ten months ended December 31, 1993 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Miami, Florida,
April 14, 1994.
F-15
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------- -----------
1994 1995 1996
--------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................................. $ 3,983 $ 2,825 $ 8,081
Receivables, net (Notes 5 and 19)..................................... 17,065 16,391 22,196
Inventories........................................................... 10,182 10,543 8,787
Other current assets (Note 11)........................................ 3,556 4,340 4,423
--------- -------- -----------
Total current assets (Note 10)................................... 34,786 34,099 43,487
Properties, net (Notes 7, 10 and 14)....................................... 82,176 83,214 82,211
Unamortized costs in excess of net assets of acquired companies (Notes 8,
12, 14, 18 and 19)....................................................... 13,481 15,161 15,002
Other assets (Note 9)...................................................... 7,138 6,638 6,679
--------- -------- -----------
$ 137,581 $139,112 $ 147,379
--------- -------- -----------
--------- -------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt (Note 10)........................... $ 12,298 $ 11,278 $ 11,029
Accounts payable...................................................... 6,759 7,836 6,876
Due to a parent and another affiliate (Note 11)....................... 8,736 9,972 13,872
Accrued interest...................................................... 1,657 2,233 2,077
Accrued insurance..................................................... 1,010 2,961 3,513
Other accrued expenses................................................ 4,957 4,176 4,471
--------- -------- -----------
Total current liabilities........................................ 35,417 38,456 41,838
--------- -------- -----------
Long-term debt (Note 10)................................................... 98,711 124,266 123,570
Deferred income taxes (Notes 11 and 14).................................... 20,761 22,878 22,952
Customer deposits.......................................................... 2,194 2,112 2,102
Commitments and contingencies (Notes 2, 11, 16 and 17)
Stockholders' equity (deficit) (Note 10):
Preferred stock, 221,900 shares authorized, no shares issued or
outstanding (Note 12)............................................... -- -- --
Common stock, $1 par value; 1,000, 3,000 and 3,000 shares authorized,
1,000, 1,360 and 1,360 shares issued and outstanding in 1994, 1995
and 1996, respectively (Notes 3 and 19)............................. 1 1 1
Additional paid-in capital............................................ 32,164 36,270 36,270
Retained earnings (accumulated deficit)............................... 61,663 (3,479) 2,038
Due from parents (Note 13)............................................ (113,330) (81,392) (81,392)
--------- -------- -----------
Total stockholders' deficit...................................... (19,502) (48,600) (43,083)
--------- -------- -----------
$ 137,581 $139,112 $ 147,379
--------- -------- -----------
--------- -------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED DECEMBER THREE MONTHS ENDED
ENDED 31, MARCH 31,
DECEMBER 31, -------------------- ------------------
1993 1994 1995 1995 1996
------------ -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................................ $119,249 $151,651 $148,983 $50,299 $59,981
------------ -------- -------- ------- -------
Costs and expenses:
Cost of sales (including charges from related
parties of $4,020 in the ten months ended
December 31, 1993 -- Note 19)................ 92,301 109,683 109,059 33,862 41,154
Selling, general and administrative expenses
(including charges from related parties of
$884 in the ten months ended December 31,
1993) (Notes 17, 18 and 20).................. 16,501 18,657 22,423 5,174 5,853
Management fees charged by parents (Note 19)... 3,485 4,561 3,000 750 750
Facilities relocation and corporate
restructuring (including charges from related
parties of $2,821) (Note 20)................. 8,429 -- -- -- --
------------ -------- -------- ------- -------
120,716 132,901 134,482 39,786 47,757
------------ -------- -------- ------- -------
Operating profit (loss)................... (1,467) 18,750 14,501 10,513 12,224
------------ -------- -------- ------- -------
Other income (expense):
Interest expense............................... (9,949) (9,726) (11,719) (2,858) (3,138)
Interest income from Triarc Companies, Inc.
(Note 13).................................... 10,360 9,751 -- -- --
Other income, net (Notes 6 and 20)............. 1,727 1,169 904 300 278
------------ -------- -------- ------- -------
2,138 1,194 (10,815) (2,558) (2,860)
------------ -------- -------- ------- -------
Income before income taxes and
extraordinary charge.................... 671 19,944 3,686 7,955 9,364
Provision for income taxes (Note 11)................ 1,018 7,923 4,291 3,156 3,847
------------ -------- -------- ------- -------
Income (loss) before extraordinary charge...... (347) 12,021 (605) 4,799 5,517
Extraordinary charge (Note 15)...................... -- (2,116) -- -- --
------------ -------- -------- ------- -------
Net income (loss).............................. $ (347) $ 9,905 $ (605) $ 4,799 $ 5,517
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
F-17
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ADDITIONAL CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS
PAID-IN (ACCUMULATED DUE FROM TREASURY
CAPITAL DEFICIT) PARENTS STOCK
---------- ------------ --------- --------
<S> <C> <C> <C> <C>
Balance at February 28, 1993................................... $ 21,505 $ 95,866 $ (27,430) $ (638)
Net loss.................................................. -- (347) -- --
Dividends paid............................................ -- (1,886) -- --
Capital contribution from deferred gain on sale of
interests in Southeastern Public Service Company
('SEPSCO') and CFC Holdings Corp. to Triarc Companies,
Inc. ('Triarc') (Note 6)................................ 2,255 -- -- --
Increase in due from SEPSCO classified in equity (Note
13)..................................................... -- -- (1,605) --
---------- ------------ --------- --------
Balance at December 31, 1993................................... 23,760 93,633 (29,035) (638)
Net income................................................ -- 9,905 -- --
Dividends paid (including $40,030 in cash) (Note 10)...... -- (41,875) -- --
Repurchases of preferred stock (Note 12).................. (62) -- -- (234)
Cancellation of preferred stock (Note 12)................. 378 -- -- 872
Reclassification of due from Triarc to equity (Note 13)... -- -- (81,392) --
Increase in SEPSCO's basis in Public Gas Company ('Public
Gas') resulting from the repurchase of the 28.9%
minority interest in SEPSCO (Note 14)................... 8,088 -- -- --
Increase in due from SEPSCO classified in equity.......... -- -- (2,903) --
---------- ------------ --------- --------
Balance at December 31, 1994................................... 32,164 61,663 (113,330) --
Net loss.................................................. -- (605) -- --
Dividends paid (Note 10).................................. -- (30,000) -- --
Increase in due from SEPSCO classified in equity (Note
13)..................................................... -- -- (2,599) --
Dividend of due from SEPSCO (Note 13)..................... -- (34,537) 34,537 --
Capital contribution (Note 19)............................ 4,240 -- -- --
Repurchase of the 0.3% minority interest in Public Gas
(Note 3)................................................ (134) -- -- --
---------- ------------ --------- --------
Balance at December 31, 1995................................... $ 36,270 $ (3,479) $ (81,392) $--
Net income (unaudited).................................... -- 5,517 -- --
---------- ------------ --------- --------
Balance at March 31, 1996 (unaudited).......................... $ 36,270 $ 2,038 $ (81,392) $--
---------- ------------ --------- --------
---------- ------------ --------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED DECEMBER THREE MONTHS ENDED
ENDED 31, MARCH 31,
DECEMBER 31, ---------------------- ----------------------
1993 1994 1995 1995 1996
------------ --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................... $ (347) $ 9,905 $ (605) $ 4,799 $ 5,517
Adjustments to reconcile net income (loss)
to net cash and equivalents provided by
(used in) operating activities:
Depreciation and amortization of
properties........................... 6,917 9,427 9,546 2,151 2,417
Amortization of original issue discount
and deferred financing costs......... 1,046 1,077 1,305 354 289
Amortization of costs in excess of net
assets of acquired companies......... 33 261 617 131 159
Other amortization..................... -- 336 482 139 25
Write-off of deferred financing costs
and original issue discount.......... -- 3,498 -- -- --
Interest income from Triarc accrued and
not collected........................ (10,360) (9,751 ) -- -- --
Provision for (benefit from) deferred
income taxes......................... (880) 1,773 1,995 (246) (146)
Provision for doubtful accounts........ 661 685 848 284 346
Provision for facilities relocation and
corporate restructuring.............. 8,429 -- -- -- --
Payments on facilities relocation and
corporate restructuring.............. (1,678) (4,115 ) -- -- --
Equity in net loss of affiliate........ 430 -- -- -- --
Other, net............................. (639) 2,061 (79) (262) (464)
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable...................... 1,801 (1,305 ) (56) (270) (6,151)
Decrease (increase) in
inventories..................... (2,248) (1,229 ) (286) 2,257 1,756
Decrease (increase) in other
current assets.................. (237) (1,278 ) (662) (59) 137
Increase (decrease) in accounts
payable and accrued expenses.... (6,163) (624 ) 2,823 (3,290) (269)
------------ --------- --------- --------- ---------
Net cash provided by (used
in) operating activities... (3,235) 10,721 15,928 5,988 3,616
------------ --------- --------- --------- ---------
Cash flows from investing activities:
Business acquisitions....................... (693) (5,203 ) (373) (23) --
Capital expenditures........................ (7,457) (6,436 ) (8,082) (1,797) (1,216)
Proceeds from sales of properties........... 1,452 1,375 599 242 70
Proceeds from sale of investments, net of
tax....................................... 2,424 -- -- -- --
Decrease in finance-type lease receivables
from affiliates........................... 25,670 1,458 32 15 --
</TABLE>
(table continued on next page)
F-19
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)
(table continued from previous page)
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED DECEMBER THREE MONTHS ENDED
ENDED 31, MARCH 31,
DECEMBER 31, ---------------------- ----------------------
1993 1994 1995 1995 1996
------------ --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Decrease in due from affiliates............. $ 982 $ 7,754 $ -- $ -- $ --
Decrease (increase) in due from parents..... 46,909 (6,007 ) (1,643) (1,891) 3,974
------------ --------- --------- --------- ---------
Net cash provided by (used in)
investing activities............ 69,287 (7,059 ) (9,467) (3,454) 2,828
------------ --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt................ 6,234 100,781 32,729 3,500 --
Repayments of long-term debt................ (76,997) (60,678 ) (9,532) (7,203) (1,186)
Dividends................................... (41) (40,030 ) (30,000) -- --
Repurchase of National Propane Corporation
preferred stock........................... -- (234 ) -- -- --
Repurchase of Public Gas Company preferred
stock..................................... -- (704 ) -- -- --
Payment of deferred financing costs......... -- (5,390 ) (816) (679) (2)
------------ --------- --------- --------- ---------
Net cash used in financing
activities...................... (70,804) (6,255 ) (7,619) (4,382) (1,188)
------------ --------- --------- --------- ---------
Net increase (decrease) in cash.................. (4,752) (2,593 ) (1,158) (1,848) 5,256
Cash at beginning of period...................... 11,328 6,576 3,983 3,983 2,825
------------ --------- --------- --------- ---------
Cash at end of period............................ $ 6,576 $ 3,983 $ 2,825 $ 2,135 $ 8,081
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest............................... $ 10,771 $ 11,110 $11,158 $ 2,713 $ 3,005
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
Income taxes (net of refunds).......... $ 1,309 $ 1,163 $ 1,261 $ 455 $ (281)
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
Supplemental schedule of noncash investing and
financing activities:
Capital expenditures:
Total capital expenditures............. $ 10,588 $ 7,900 $ 8,966 $ 1,797 $ 1,457
Amounts representing capitalized
leases............................... (3,131) (1,464 ) (884) -- (241)
------------ --------- --------- --------- ---------
Capital expenditures paid in cash...... $ 7,457 $ 6,436 $ 8,082 $ 1,797 $ 1,216
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
</TABLE>
Due to their non-cash nature, the following are also not reflected in the
respective consolidated statements of cash flows:
During the ten months ended December 31, 1993 and the year ended
December 31, 1994, the Company offset 'Due from Triarc Companies, Inc.'
('Triarc') with amounts otherwise payable for (i) $1,845,000 and
$1,845,000, respectively, in dividends payable to Triarc and (ii)
$1,622,000 and $790,000, respectively, in amounts due to Triarc under a
management services agreement.
In April 1994 Triarc acquired the 28.9% minority interest in its
subsidiary, Southeastern Public Service Company ('SEPSCO'), that it did not
already own through the issuance of its common stock. SEPSCO's increased
basis in Public Gas Company ('Public Gas') (its then wholly-owned
subsidiary) resulting from this transaction was 'pushed down' to Public Gas
resulting in increases to 'Unamortized costs in excess of net assets of
acquired companies' of $5,483,000, 'Properties' of
F-20
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)
$4,255,000, 'Deferred income taxes' of $1,650,000 with an offsetting
increase to 'Additional paid-in capital' of $8,088,000. See Note 14 to the
consolidated financial statements for further discussion.
In connection with Public Gas' repurchase of its convertible preferred
stock, SEPSCO's increased basis in Public Gas resulting from this
transaction was 'pushed down' to Public Gas resulting in an increase of
$642,000 in 'Unamortized costs in excess of net assets of acquired
companies' and a charge to 'Additional paid-in capital' of $62,000 with an
offsetting increase in receivables from SEPSCO.
In June 1995 aggregate receivables from SEPSCO of $34,537,000 were
dividended to SEPSCO prior to a merger of Public Gas with and into National
Propane Corporation (see Notes 3 and 13).
In August 1995 the stock of a subsidiary of Triarc which held the
stock of two related entities engaged in the liquefied petroleum gas
distribution business was contributed to National Propane Corporation by
Triarc in September, 1995 resulting in an increase to 'Additional paid-in
capital' of $4,240,000. See Note 19 to the consolidated financial
statements for further discussion.
See accompanying notes to consolidated financial statements.
F-21
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of National
Propane Corporation (referred to herein alone or with its wholly-owned
subsidiaries as the 'Company') and its wholly-owned subsidiaries. The Company is
75.7% owned by NPC Holdings, Inc. ('NPC Holdings') and 24.3% owned by PGC
Holdings, Inc., ('PGC Holdings'), a wholly-owned subsidiary of Southeastern
Public Service Company ('SEPSCO'). NPC Holdings and SEPSCO are wholly-owned
subsidiaries of Triarc Companies, Inc. ('Triarc'). All significant intercompany
balances and transactions have been eliminated in consolidation. In June 1995
Public Gas Company ('Public Gas') was merged (the 'Merger') with and into the
Company as more fully described in Note 3 below. Since the Merger was a transfer
of assets and liabilities in exchange for shares among a controlled group of
companies, it has been accounted for in a manner similar to a pooling of
interests and, accordingly, all prior periods have been restated to reflect the
Merger. 'National Propane' is used herein to refer to National Propane
Corporation, excluding the accounts of Public Gas, prior to the Merger.
INVENTORIES
Inventories, all of which are classified as finished goods, are stated at
the lower of cost (first-in, first-out basis) or market.
PROPERTIES AND DEPRECIATION
Properties are carried at cost less accumulated depreciation. Depreciation
of properties is computed on the straight-line method over their estimated
useful lives of 20 to 45 years for buildings and improvements, 4 to 30 years for
equipment and customer installation costs, 3 to 10 years for office furniture
and fixtures and 3 to 8 years for automotive and transportation equipment.
Leased assets capitalized are amortized over the shorter of their estimated
useful lives or the terms of the respective leases. Gains and losses arising
from disposals are included in current operations.
UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
Costs in excess of net assets of acquired companies ('Goodwill') arising
after November 1, 1970 are being amortized on the straight-line basis
principally over 15 to 30 years; Goodwill of $3,560,000 arising prior to that
date is not being amortized. The amount of impairment, if any, in unamortized
Goodwill is measured based on projected future results of operations. To the
extent future results of operations of those acquired companies to which the
Goodwill relates through the period such Goodwill is being amortized are
sufficient to absorb the related amortization, the Company has deemed there to
be no impairment of Goodwill.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective October 1, 1995 the Company adopted Statement of Financial
Accounting Standards No. 121, 'Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of.' This standard requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
adoption of this standard had no effect on the Company's consolidated results of
operations or financial position.
F-22
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
AMORTIZATION OF DEFERRED FINANCING COSTS AND DEBT DISCOUNT
Deferred financing costs and original issue debt discount are being
amortized as interest expense over the lives of the respective debt using the
interest rate method.
ACCRUED INSURANCE
Accrued insurance includes reserves for incurred but not reported claims.
Such reserves are based on actuarial studies using historical loss experience.
Adjustments to estimates recorded resulting from subsequent actuarial
evaluations or ultimate payments are reflected in the operations of the periods
in which such adjustments become known.
INCOME TAXES
The Company is included in the consolidated Federal income tax return filed
by Triarc except that, prior to April 14, 1994, Public Gas was included in the
consolidated Federal income tax return of SEPSCO. Under a tax sharing agreement
with Triarc, the Company provides for Federal income taxes on the same basis as
if it filed a separate consolidated return. All Federal income tax payments or
refunds are made through Triarc. Deferred income taxes are provided to recognize
the tax effect of temporary differences between the bases of assets and
liabilities for tax and financial statement purposes.
REVENUE RECOGNITION
The Company records sales of liquefied petroleum gas ('propane') when
inventory is delivered to the customer.
INTERIM FINANCIAL STATEMENTS
The interim financial statements and related notes are unaudited; however,
in the opinion of management, the interim data include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position, results of operations, and cash flows
for the interim periods. Interim results are not necessarily indicative of
results for a full year.
(2) SIGNIFICANT RISKS AND UNCERTAINTIES
NATURE OF OPERATIONS
The Company is engaged primarily in the retail marketing of propane to
residential customers, commercial and industrial customers, agricultural
customers and resellers. The Company also markets propane related supplies and
equipment including home and commercial appliances. The Company's operations are
concentrated in the midwest, northeast, southeast and southwest regions of the
United States.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-23
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
SIGNIFICANT ESTIMATES
The Company's significant estimates are for costs related to (i) insurance
loss reserves (see Note 1), (ii) income tax examinations (see Note 11) and (iii)
an environmental contingency (see Note 17).
CERTAIN RISK CONCENTRATIONS
The Company's significant risk concentration arises from propane being its
principal product. Both sales levels and costs of propane are extremely
sensitive to weather conditions, particularly in the residential home heating
market. The Company's profitability depends on the spread between its cost for
propane and the selling price. The Company generally is able to pass on cost
increases to the customer in the form of higher selling prices. However, where
increases cannot be passed on, margins can be adversely affected. The Company is
also impacted by the competitive nature of the propane industry, as well as by
competition from alternative energy sources such as natural gas, oil and
electricity.
(3) PUBLIC GAS MERGER
Effective June 29, 1995, Public Gas, previously a wholly-owned subsidiary
of SEPSCO engaged in the LP gas business, was merged with and into National
Propane, with National Propane continuing as the surviving corporation. In
consideration for their investments in Public Gas and National Propane, PGC
Holdings received 330 shares of the merged corporation representing 24.8% of its
issued and outstanding common stock and NPC Holdings continued to hold 1,000
shares representing 75.2% of the stock of the merged corporation (see Note 19
for discussion of subsequent issuance of 30 shares of the Company). Such
percentages were based upon the relative fair values of Public Gas and National
Propane prior to the Merger. In June 1995 prior to the Merger, Public Gas
acquired the 0.3% of its common stock that SEPSCO did not own for approximately
$134,000.
The following sets forth summary operating results of the combined
entities:
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------------------------------
1993 1994 1995
------------ ----------------------- -----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating revenues:
National Propane...................................... $ 95,911 $ 123,588 $ 133,456(a)
Public Gas............................................ 23,394 28,110 15,542(b)
Eliminations.......................................... (56) (47) (15)
------------ ----------- -----------
$119,249 $ 151,651 $ 148,983
------------ ----------- -----------
------------ ----------- -----------
Income (loss) before extraordinary charge:
National Propane...................................... $ (1,433) $ 10,072 $ (2,287)(a)
Public Gas............................................ 1,086 1,949 1,682(b)
------------ ----------- -----------
$ (347) $ 12,021 $ (605)
------------ ----------- -----------
------------ ----------- -----------
Net income (loss):
National Propane...................................... $ (1,433) $ 7,956 $ (2,287)(a)
Public Gas............................................ 1,086 1,949 1,682(b)
------------ ----------- -----------
$ (347) $ 9,905 $ (605)
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
- ------------
(a) Reflects the results of National Propane prior to the Merger and the
combined Company after the Merger.
(b) Reflects the results of Public Gas prior to the Merger.
F-24
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
(4) CHANGE IN FISCAL YEAR
In October 1993 National Propane's fiscal year ended April 30 and Public
Gas' fiscal year ended February 28 were changed to a calendar year ended
December 31. In order to conform the reporting periods of the combining entities
and to select a period deemed to meet the Securities and Exchange Commission
requirement for filing financial statements for a period of one year, the
ten-month period ended December 31, 1993 ('Transition 1993') has been presented
in the accompanying consolidated financial statements. As used herein, '1994'
and '1995' refer to the years ended December 31, 1994 and 1995, respectively.
(5) RECEIVABLES
The following is a summary of the components of receivables:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Receivables:
Trade............................................................ $17,896 $16,939 $23,155
Other............................................................ 241 432 289
------- ------- ---------
18,137 17,371 23,444
Less allowance for doubtful accounts (trade).......................... 1,072 980 1,248
------- ------- ---------
$17,065 $16,391 $22,196
------- ------- ---------
------- ------- ---------
</TABLE>
The following is an analysis of the allowance for doubtful accounts for the
periods ended December 31, 1993, 1994 and 1995 and the three months ended March
31, 1996:
<TABLE>
<CAPTION>
THREE
MONTHS ENDED
TRANSITION MARCH 31,
1993 1994 1995 1996
---------- ------ ------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period........................... $1,552 $1,343 $1,072 $ 980
Provision for doubtful accounts.......................... 661 685 848 346
Uncollectible accounts written off....................... (870) (956) (940) (78)
---------- ------ ------ ------------
Balance at end of period................................. $1,343 $1,072 $ 980 $1,248
---------- ------ ------ ------------
---------- ------ ------ ------------
</TABLE>
(6) INVESTMENTS IN AFFILIATES
On April 23, 1993 the Company sold to Triarc all of its ownership in the
common stock of CFC Holdings and in SEPSCO for an aggregate of $3,900,000, or
$3,731,000 in excess of the net book value of the investments of $169,000 at
that date. The $3,731,000 excess less related income taxes of $1,476,000 was
accounted for as a deferred gain and reported as a capital contribution in the
accompanying consolidated financial statements for Transition 1993 since it
resulted from a transaction among a controlled group of companies. The Company's
equity in net loss of affiliates of $430,000 is included in 'Other income, net'
in the accompanying consolidated statement of operations for Transition 1993.
F-25
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
(7) PROPERTIES
The following is a summary of the components of properties:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH
-------------------- 31,
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................................... $ 5,357 $ 5,303 $ 5,303
Buildings and improvements......................................... 11,498 11,760 11,777
Equipment and customer installation costs.......................... 112,576 119,614 120,382
Office furniture and fixtures...................................... 4,596 4,947 4,963
Automotive and transportation equipment............................ 19,199 21,937 22,501
Leased assets capitalized.......................................... 1,584 1,655 1,655
-------- -------- --------
154,810 165,216 166,581
Less accumulated depreciation and amortization..................... 72,634 82,002 84,370
-------- -------- --------
$ 82,176 $ 83,214 $ 82,211
-------- -------- --------
-------- -------- --------
</TABLE>
(8) UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
The following is a summary of the components of unamortized costs in excess
of net assets of acquired companies:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Costs in excess of net assets of acquired companies................... $14,745 $16,712 $16,712
Less accumulated amortization......................................... 1,264 1,551 1,710
------- ------- ---------
$13,481 $15,161 $15,002
------- ------- ---------
------- ------- ---------
</TABLE>
(9) OTHER ASSETS
The following is a summary of the components of other assets:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1994 1995 1996
------ ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred financing costs................................................. $5,390 $6,206 $ 6,208
Non-compete agreements................................................... 1,429 1,929 1,929
Long-term receivables, net of unearned interest income................... 645 300 276
Other.................................................................... 355 544 994
------ ------ ---------
7,819 8,979 9,407
------ ------ ---------
Less accumulated amortization:
Deferred financing costs............................................ 204 1,509 1,798
Non-compete agreements.............................................. 459 761 837
Other............................................................... 18 71 93
------ ------ ---------
681 2,341 2,728
------ ------ ---------
$7,138 $6,638 $ 6,679
------ ------ ---------
------ ------ ---------
</TABLE>
The Company's wholly-owned leasing subsidiary, NPC Leasing Corp. ('NPC
Leasing'), leases vehicles and other equipment to companies that are or were
affiliates of the Company under long-term lease obligations which are accounted
for as finance-type leases and are included in long-term
F-26
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
receivables above. Lease billings by NPC Leasing to current and former
affiliates, other than the Company, which included interest and principal,
during Transition 1993, 1994 and 1995 were $8,213,000, $168,000 and $47,000,
respectively. Such amounts include interest of $1,676,000, $25,000 and $3,000 in
Transition 1993, 1994 and 1995, respectively, which are included in 'Revenues'
in the accompanying consolidated statements of operations. NPC Leasing also had
minor lease billings with current or former affiliates during the three-month
period ended March 31, 1996.
(10) LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1994 1995 1996
------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Bank Facility:
Term notes, Tranche A, weighted average interest rate of 8.53%
and 8.30% at December 31, 1995 and March 31, 1996,
respectively, due through March 31, 2000...................... $60,000 $ 34,333 $ 34,333
Term notes, Tranche B, weighted average interest rate of 8.72%
and 8.48% at December 31, 1995 and March 31, 1996,
respectively, due through March 31, 2002...................... 30,000 29,750 29,750
Term note, Tranche C, bearing interest at 9.44% and 9.21% at
December 31, 1995 and March 31, 1996, respectively, due
through March 31, 2003........................................ -- 20,000 20,000
Revolving loans, weighted average interest rate of 8.09% and
8.02% at December 31, 1995 and March 31, 1996, respectively,
due March 31, 2000............................................ 10,500 43,229 43,229
------- -------- ---------
Total Bank Facility........................................ 100,500 127,312 127,312
Equipment notes, bearing interest at rates of 7% to 12%, due through
2002............................................................... 4,239 2,917 2,546
Acquisition notes, bearing interest at rates of 6% to 10%, due
through 2004....................................................... 5,090 4,060 3,414
Capital lease obligations............................................ 1,180 1,255 1,327
------- -------- ---------
Total debt................................................. 111,009 135,544 134,599
Less current portion of long-term debt............................... 12,298 11,278 11,029
------- -------- ---------
$98,711 $124,266 $ 123,570
------- -------- ---------
------- -------- ---------
</TABLE>
The aggregate annual maturities of long-term debt are as follows as of
December 31, 1995 and March 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, (IN THOUSANDS)
- ----------------------------------------------------------------------------------------
<S> <C>
1996................................................................................. $ 11,278
1997................................................................................. 10,591
1998................................................................................. 13,375
1999................................................................................. 13,494
2000................................................................................. 37,489
Thereafter........................................................................... 49,317
--------------
$135,544
--------------
--------------
</TABLE>
F-27
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDING
MARCH 31, (IN THOUSANDS)
- ----------------------------------------------------------------------------------------
<S> <C>
1997.................................................................................. $ 10,909
1998.................................................................................. 10,790
1999.................................................................................. 13,292
2000.................................................................................. 12,802
2001.................................................................................. 41,724
Thereafter............................................................................ 45,082
--------------
$134,599
--------------
--------------
</TABLE>
Bank Facility -- In October 1994 the Company entered into a revolving
credit and term loan agreement with a group of banks (the 'Bank Facility'). The
$150,000,000 Bank Facility, as amended, consists of a revolving credit facility
with a current maximum availability as of December 31, 1995 and March 31, 1996
of $57,167,000 and three tranches of term loans with an original availability of
$90,000,000 and outstanding amounts aggregating $84,083,000 (net of repayments
through December 31, 1995 and March 31, 1996 of $5,917,000) as of December 31,
1995 and March 31, 1996. As of March 31, 1996 the Company's only availability
under the Bank Facility was approximately $13,900,000 under the acquisition
sublimit (the 'Acquisition Sublimit') component of the Bank Facility which is
restricted for acquisitions by the Company. As of December 31, 1995 the Company
was not able to borrow under the Acquisition Sublimit due to debt covenant
limitations and accordingly, had no availability under the Bank Facility as of
that date. Any outstanding borrowings under the Acquisition Sublimit convert to
term loans in October 1997; such term loans would be due in equal installments
from December 1997 through December 2000. Borrowings under the Bank Facility
bear interest, at the Company's option, at rates based either on 30, 60, 90 or
180-day LIBOR (ranging from 5.53% to 5.72% at December 31, 1995 and 5.5% to
5.75% at March 31, 1996) or an alternate base rate (the 'ABR'). The ABR
represents the higher of the prime rate (8 1/2% at December 31, 1995 and 8 1/4%
at March 31, 1996) or 1/2% over the Federal funds rate (6% at December 31, 1995
and 5 1/4% at March 31, 1996). Revolving loans bear interest at 2 1/4% over
LIBOR or 1% over ABR. The aggregate availability of revolving loans (assuming
full availability under the Acquisition Sublimit) reduces by $3,000,000 in 1996,
$15,896,000 in 1997, $3,958,000 in 1998, $4,042,000 in 1999 with the remaining
availability of $30,271,000 maturing in March 2000. The term loans bear interest
at rates ranging from 2 1/2% to 3 1/2% over LIBOR or 1 1/4% to 2 1/4% over ABR,
respectively, and the $84,083,000 outstanding amount of such loans at December
31, 1995 amortizes $6,250,000 in 1996, $6,417,000 in 1997, $8,167,000 in 1998,
$8,333,000 in 1999, $10,291,000 in 2000 and $44,625,000 thereafter through 2003.
In connection with the closing of the Bank Facility, the Company paid a cash
dividend to Triarc of $40,000,000 in October 1994.
The Bank Facility contains various covenants which (a) require meeting
certain financial amount and ratio tests; (b) limit, among other items, (i) the
incurrence of indebtedness, (ii) the retirement of certain debt prior to
maturity, (iii) investments, (iv) asset dispositions, (v) capital expenditures
and (vi) affiliate transactions other than in the normal course of business; and
(c) restrict the payment of dividends to Triarc. As of December 31, 1995 and
March 31, 1996 the Company had $5,000,000 available for the payment of
dividends; however, the Company is effectively prevented from paying dividends
due to the restrictions of the financial amount and ratio tests noted above. The
Company's debt under the Bank Facility is guaranteed by Triarc.
On December 27, 1995 the Company borrowed $30,000,000 under the revolving
credit facility, and dividended such amount to Triarc ($22,721,000) and SEPSCO
($7,279,000) in proportion to their respective percentage ownership of the
Company. The use of the proceeds of the $30,000,000 borrowing was restricted to
the redemption of the $45,000,000 outstanding principal amount of SEPSCO's
11 7/8% senior subordinated debentures due February 1, 1998; such redemption
occurred on February 22, 1996.
F-28
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
Equipment Notes -- Certain of the equipment notes are issued by the
Company's wholly-owned leasing subsidiary, NPC Leasing, and are collateralized
by vehicles and other equipment which NPC Leasing leases to current and former
affiliates. The equipment notes bear interest at rates which range from 1% to 2%
above the prime rate in effect at the time the obligations are incurred
(combined weighted average rate of 9.1%, 8.6% and 7.8% at December 31, 1994 and
1995 and March 31, 1996, respectively), and are payable in both equal monthly
and quarterly installments over varying terms of up to 60 months. Payments under
certain of the notes are guaranteed by the Company and/or Triarc.
Under the Company's various debt agreements, substantially all of the
Company's assets and the Company's outstanding common stock are pledged as
collateral.
The fair values of the revolving loans and the term loans under the Bank
Facility at December 31, 1994 and 1995 approximated their carrying values due to
their floating interest rates. The fair values of all other long-term debt were
assumed to reasonably approximate their carrying amounts since the interest
rates approximate current levels.
(11) INCOME TAXES
The provision for income taxes before extraordinary charge for the ten
months ended December 31, 1993 and the years ended December 31, 1994 and 1995
consists of the following components:
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED DECEMBER 31,
ENDED DECEMBER 31, --------------------------------------------------
1993 1994 1995
------------------ ----------------------- -----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................ $1,562 $ 5,099 $ 1,890
State.......................................... 336 1,051 406
------- ------- -------
1,898 6,150 2,296
------- ------- -------
Deferred:
Federal........................................ (724) 1,456 2,114
State.......................................... (156) 317 (119)
------- ------- -------
(880) 1,773 1,995
------- ------- -------
$1,018 $ 7,923 $ 4,291
------- ------- -------
------- ------- -------
</TABLE>
The provision for income taxes for the three-month periods ended March 31,
1995 and 1996 have been provided at the estimated effective tax rates of 40% and
41%, respectively.
The difference between the reported tax provision and a computed tax
provision based on income before income taxes and extraordinary charge at the
statutory Federal income tax rate of 35% is reconciled as follows:
F-29
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED DECEMBER 31,
ENDED DECEMBER 31, --------------------------------------------------
1993 1994 1995
------------------ ----------------------- -----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes computed at Federal statutory tax
rate.............................................. $ 235 $ 6,980 $ 1,290
Increase (decrease) in taxes resulting from:
Provision for income tax contingencies......... -- -- 2,500
State income taxes, net of Federal income tax
benefit...................................... 117 889 187
Change in the statutory Federal income tax
rate......................................... 301 -- --
Nondeductible consulting agreement (Note 20)... 352 -- --
Amortization of non-deductible goodwill........ 12 29 126
Other, net..................................... 1 25 188
------- ------- -------
$1,018 $ 7,923 $ 4,291
------- ------- -------
------- ------- -------
</TABLE>
The net current deferred income tax asset (included in 'Other current
assets') and the net noncurrent deferred income tax liability are comprised of
the following components:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Allowance for doubtful accounts................................................... $ 424 $ 384
Accrued employee benefit costs.................................................... 300 224
Accrued interest for income tax matters........................................... 198 198
Accrued environmental costs....................................................... 158 171
Casualty insurance loss reserves.................................................. -- 213
Other, net........................................................................ 114 126
------- -------
Net current deferred income tax asset............................................. $ 1,194 $ 1,316
------- -------
------- -------
Accelerated depreciation and other properties basis differences................... $20,922 $20,546
Reserve for income tax contingencies.............................................. -- 2,500
Other, net........................................................................ (161) (168)
------- -------
Net noncurrent deferred income tax liability...................................... $20,761 $22,878
------- -------
------- -------
</TABLE>
As of December 31, 1994 and 1995 and March 31, 1996, accrued income taxes
payable to Triarc are included in 'Due to a parent and another affiliate' in the
accompanying consolidated balance sheets and amounted to $2,657,000, $3,815,000
and $7,153,000, respectively.
The Internal Revenue Service (the 'IRS') is currently examining Triarc's
Federal income tax returns for the tax years 1989 through 1992 and has issued to
date notices of proposed adjustments relating to the Company. Such notices
propose increasing the Company's taxable income by approximately $19,000,000, of
which $6,600,000 represent temporary differences and $12,000,000 represent
permanent differences, which will be contested by Triarc, the tax effect of
which has not yet been determined. The temporary items, if settled as proposed,
will result in deductions from taxable income in periods subsequent to the year
to which the adjustment relates, and therefore would not result in additional
tax expense. During 1995 the Company provided $2,500,000 included in 'Provision
for income taxes' relating to the Company's estimate of the tax effect upon
settlement of the $7,400,000 of permanent differences and interest, net of tax
benefit, relative to the settlement of both the permanent and temporary
differences. Such provision was based on the Company's experience with settling
prior audits, discussions with the IRS regarding these adjustments, as well as
evaluating the
F-30
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
current issues with outside counsel. The amount and timing of any payments
required as a result of such proposed adjustments cannot presently be
determined. However, the Company believes that adequate provisions have been
made for any income tax liabilities that may result from the resolution of such
proposed adjustments. As such the Company does not believe it is reasonably
possible that the tax contingency will result in a settlement at an amount
substantially in excess of the $2,500,000 provided.
(12) PREFERRED STOCK
COMPANY
On June 20, 1994 the Company repurchased for treasury stock 9,206 shares of
its $21 par value preferred stock (the 'Preferred Stock') and 1,637 shares of
its $25 par value Second Preferred Stock (the 'Second Preferred Stock') at par
value aggregating $234,000 representing all of the remaining issued and
outstanding preferred shares. Such preferred shares, were subsequently cancelled
resulting in an increase to 'Additional paid-in capital' of $378,000.
A summary of the changes in the aggregate number of shares of Preferred
Stock and Second Preferred Stock held in treasury for Transition 1993 and 1994
is as follows:
<TABLE>
<CAPTION>
TRANSITION
1993 1994
---------- -------
(IN THOUSANDS)
<S> <C> <C>
Number of shares at beginning of period........................................... 47,780 47,780
Repurchase of preferred stock..................................................... -- 10,843
Cancellation of preferred stock................................................... -- (58,623)
---------- -------
Number of shares at end of period................................................. 47,780 --
---------- -------
---------- -------
</TABLE>
A summary of the changes in the aggregate number of issued shares of
Preferred Stock and Second Preferred Stock for Transition 1993 and 1994 is as
follows:
<TABLE>
<CAPTION>
TRANSITION
1993 1994
---------- -------
(IN THOUSANDS)
<S> <C> <C>
Number of shares at beginning of period........................................... 58,623 58,623
Cancellation of preferred stock................................................... -- (58,623)
---------- -------
Number of shares at end of period................................................. 58,623 --
---------- -------
---------- -------
</TABLE>
PUBLIC GAS
On June 21, 1994 Public Gas repurchased 70,369 shares of its $1.00 par
value convertible preferred stock (the 'Public Gas Preferred Stock'),
representing all of the then issued and outstanding preferred shares of Public
Gas for $704,000. The carrying value of the Public Gas Preferred Stock of
$62,000 was charged to 'Additional paid-in capital' and the $642,000 excess of
the purchase price over the carrying value represented the reacquisition of a
minority interest in Public Gas at SEPSCO and, as such, was 'pushed down' to
Public Gas and recorded as 'Unamortized costs in excess of net assets of
acquired companies' in the accompanying consolidated balance sheets.
(13) DUE FROM PARENTS
Due from Parents, which has been reflected as a component of stockholders'
equity (deficit) consisted of the following:
F-31
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1994 1995 1996
-------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest-bearing advances to Triarc............................................ $ 81,392 $81,392 $81,392
Noninterest-bearing advances to SEPSCO......................................... 31,938 -- --
-------- ------- ---------
$113,330 $81,392 $81,392
-------- ------- ---------
-------- ------- ---------
</TABLE>
The receivables from Triarc and SEPSCO have been classified as a component
of stockholders' equity because they were not expected to be repaid except
through equity transactions and with respect to Triarc, its liquidity position
is not sufficient to enable it to repay the advances. The receivable from SEPSCO
(including additional advances during 1995 of $2,599,000) was dividended to
SEPSCO prior to the Merger (see Note 3). The receivable from Triarc was
reclassified to a component of stockholders' equity at November 30, 1994 at
which time it was determined Triarc's liquidity position may not enable it to
repay the advances. Concurrent with the reclassification, the Company ceased
accruing interest on the receivable. Prior thereto interest income was recorded
on the advances at 8.9% subsequent to October 6, 1994 and at 16.5% prior thereto
except that prior to April 23, 1993 the first $30,000,000 of the receivable bore
interest at 11.75%. Such interest rates represented the Company's cost of debt
capital. Interest income on such advances aggregated $10,360,000 and $9,751,000
during Transition 1993 and 1994, respectively.
(14) SEPSCO MERGER
On April 14, 1994, SEPSCO's shareholders other than Triarc approved an
agreement and plan of merger between Triarc and SEPSCO (the 'SEPSCO Merger')
pursuant to which on that date a subsidiary of Triarc was merged into SEPSCO
whereby each holder of shares of SEPSCO's common stock (the 'SEPSCO Common
Stock') other than Triarc, aggregating a 28.9% minority interest in SEPSCO,
received in exchange for each share of SEPSCO common stock, 0.8 shares of
Triarc's class A common stock or an aggregate of 2,691,824 shares. Following the
SEPSCO Merger, SEPSCO became a wholly-owned subsidiary of Triarc and its
subsidiaries.
The fair value as of April 14, 1994 of the 2,691,824 shares of Triarc's
class A common stock issued in the SEPSCO Merger, net of certain related costs,
aggregated $52,105,000 (the 'Merger Consideration'). Triarc had an excess of
$23,888,000 of Merger Consideration over Triarc's minority interest in SEPSCO.
The SEPSCO Merger has been accounted for by Triarc and SEPSCO in accordance with
the 'pushdown' method of accounting and in accordance therewith, $17,004,000 of
such $23,888,000 excess was 'pushed down' to SEPSCO (the remaining $6,884,000
was 'pushed down' to an affiliated subsidiary) reflecting Triarc's increased
basis in SEPSCO. SEPSCO, in turn, 'pushed down' $8,088,000 to Public Gas as an
increase in SEPSCO's basis in Public Gas. Such amount increased the 'Additional
paid-in capital' of the Company reflecting Triarc's and SEPSCO's increased bases
in Public Gas and was assigned as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Goodwill................................................................................ $ 5,483
Properties.............................................................................. 4,255
Deferred income taxes................................................................... (1,650)
--------------
Additional paid-in capital.............................................................. $ 8,088
--------------
--------------
</TABLE>
(15) EXTRAORDINARY CHARGE
In connection with the early extinguishment of the Company's 13 1/8%
Debentures in October 1994, the Company recognized an extraordinary charge of
$2,116,000 consisting of the write-off of previously
F-32
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
unamortized deferred financing costs of $875,000 and previously unamortized
original issue discount of $2,623,000, net of income tax benefit of $1,382,000.
(16) RETIREMENT AND INCENTIVE COMPENSATION PLANS
The Company maintains a 401(k) defined contribution plan (the 'Plan') which
covers all employees meeting certain eligibility requirements including active
eligible employees of Public Gas (whose account balances were transferred into
the Plan) subsequent to the Merger discussed in Note 3. Prior to becoming
participants in the Plan, such Public Gas employees participated in a mirror
plan maintained by SEPSCO (the 'SEPSCO Plan'). The Plan allows eligible
employees to contribute up to 15% of their compensation and the Company makes
matching contributions of 25% of employee contributions up to the first 5% of an
employee's contribution. The Company also makes an annual contribution equal to
1/4 of 1% of employee's compensation. In connection with these employer
contributions, the Company provided $147,000, $157,000, $142,000 and $36,000 in
Transition 1993, 1994 and 1995 and the three-month period ended March 31, 1996,
respectively.
Under certain union contracts, the Company is required to make payments to
the unions' pension funds based upon hours worked by the eligible employees. In
connection with these union plans, the Company provided $1,079,000, $726,000,
$669,000 and $169,000 in Transition 1993, 1994 and 1995 and the three-month
period ended March 31, 1996, respectively. Information from the administrators
of the union plans is not available to permit the Company to determine its
proportionate share of unfunded vested benefits, if any.
(17) LEGAL MATTERS
In May 1994 the Company was informed of coal tar contamination which was
discovered at one of its properties in Wisconsin. The Company purchased the
property from a company which had purchased the assets of a utility which had
previously owned the property. The Company believes that the contamination
occurred during the use of the property as a coal gasification plant by such
utility. In order to assess the extent of the problem the Company engaged
environmental consultants who began work in August 1994. In December 1994 the
environmental consultants provided a report to the Company which indicated the
estimated range of potential remediation costs to be between approximately
$415,000 and $925,000 depending upon the actual extent of impacted soils, the
presence and extent, if any, of impacted groundwater and the remediation method
actually required to be implemented. Since no amount within this range was
determined to be a better estimate, the Company provided a charge in the fourth
quarter of 1994 of $415,000, the minimum gross amount (with no expected
recovery) within the range, which amount was included in 'Selling, general and
administrative expenses' in the accompanying 1994 consolidated statement of
operations. In February 1996, based upon new information, the Company's
environmental consultants provided a second report which presented the two most
likely remediation methods and revised estimates of the costs of such methods.
The range of estimated costs for the first method, which involves treatment of
groundwater and excavation, treatment and disposal of contaminated soil, is from
$1,600,000 to $3,300,000. The range for the second method, which involves only
treatment of groundwater and the building of a soil containment wall, is from
$432,000 to $750,000. Based on discussion with the Company's environmental
consultants both methods are acceptable remediation plans. The Company, however,
will have to agree on a final plan with the State of Wisconsin. Since receiving
notice of the contamination, the Company has engaged in discussions of a general
nature concerning remediation with the State of Wisconsin. The discussions are
ongoing and there is no indication as yet of the time frame for a decision by
the State of Wisconsin on the method of remediation. Accordingly, it is unknown
which remediation method will be used. Since no amount within the ranges can be
determined to be a better estimate, the Company accrued an additional $41,000 in
December 1995 in order to provide for the minimum costs estimated
F-33
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
for the second remediation method and legal fees and other professional costs.
The provisions through March 31, 1996 aggregate $466,000 and payments through
March 31, 1996 amounted to $34,000 resulting in a remaining accrual of $432,000
at that date. The Company is also engaged in ongoing discussions of a general
nature with a successor to the utility that operated a coal gasification plant
on the property. There is as yet no indication that a successor owner will share
the costs of remediation. The Company, if found liable for any of such costs,
would attempt to recover such costs from the successor owner. The ultimate
outcome of this matter cannot presently be determined and, depending upon the
cost of remediation required, may have a material adverse effect on the
Company's consolidated financial position or results of operations.
The Company is involved in ordinary claims, litigation and administrative
proceedings and investigations of various types in several jurisdictions
incidental to its business. In the opinion of management of the Company, the
outcome of any such matter, or all of them combined, will not have a material
adverse effect on the Company's consolidated financial condition or results of
operations.
(18) ACQUISITIONS
During Transition 1993, 1994 and 1995 the Company acquired several
companies engaged in the sale of propane and related merchandise. The Company
made no acquisitions in the three-month period ended March 31, 1996. The
purchase prices (including debt issued and assumed) aggregated $1,382,000,
$8,967,000 and $373,000, and resulted in increases in Goodwill of $475,000,
$3,096,000 and $116,000 in Transition 1993, 1994 and 1995, respectively. (See
Note 19 for discussion of Triarc's 1995 acquisition on behalf of the Company).
(19) TRANSACTIONS WITH AFFILIATES
In August 1995 Triarc, through a wholly owned subsidiary, acquired all of
the outstanding stock of two companies engaged in the propane distribution
business. The aggregate purchase price was $4,240,000 (including the assumption
of certain existing indebtedness). In September 1995 the stock of the subsidiary
which acquired the two companies was contributed by Triarc to NPC Holdings
which, in turn, contributed such stock to the Company. Such contribution
resulted in increases in the Company's 'Additional paid-in capital' of
$4,240,000 and Goodwill of $2,181,000. In consideration for such contribution,
NPC Holdings received an additional 30 shares of the Company's common stock,
increasing its ownership of the Company to 75.7% from 75.2%.
In the fourth quarter of 1995 the Company sold certain of its accounts
receivable to Triarc for cash of $3,809,000. As collections on such accounts
receivable are received by the Company they are remitted to Triarc on a periodic
basis. As of December 31, 1995, such remittances aggregated $1,412,000
($3,284,000 as of March 31, 1996). Under the agreement pursuant to which the
receivables were sold, the Company is obligated to repurchase any receivables
which are determined to be uncollectible, up to a maximum of 10% of the face
amount originally sold. The Company believes that its allowance for doubtful
accounts is adequate to allow for any repurchases that may be required.
The Company receives from Triarc certain management services including
legal, accounting, tax, insurance, financial and other management services.
Effective April 23, 1993 National Propane (and Triarc's other principal
subsidiaries, including SEPSCO) entered into a new management services agreement
(the 'New Management Services Agreement') with Triarc which revised the
allocation method for those costs which cannot be directly allocated. As
revised, such costs are allocated based upon the greater of (i) the sum of
earnings before income taxes, depreciation and amortization and (ii) 10% of
revenues, as a percentage of Triarc's corresponding consolidated amount. Prior
to the Merger, a portion of the costs allocated to SEPSCO under the New
Management Services Agreement were allocated to Public Gas based on the relative
portion of Public Gas' revenues to SEPSCO's consolidated revenues (the 'SEPSCO
Allocation Method'). Prior to the Merger, Public Gas also
F-34
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
received from SEPSCO operating management services the costs of which were
charged to Public Gas also in accordance with the SEPSCO Allocation Method.
Prior to April 23, 1993, the costs of management services were allocated by
Triarc to its subsidiaries under a former management services agreement (the
'Former Management Services Agreement') based first directly on the cost of the
services provided and then, for those costs which could not be directly
allocated, based upon the relative revenues and tangible assets as a percentage
of Triarc's corresponding consolidated amounts. Management of the Company
believes that all allocation methods referred to above are reasonable. The
Company understands Triarc is a holding company with no independent operations
of its own and substantially all of the expenses it incurs are for services on
behalf of its affiliated companies and, accordingly, are chargeable to such
companies in accordance with management services agreements including the Former
and New Management Services Agreements. However, the Company believes that the
allocated costs discussed above exceed those which would have been, and are
expected to be, incurred by the Company on a standalone basis. Such costs for
services provided by Triarc (including a portion of the charges allocated by
Triarc to SEPSCO and, in turn, from SEPSCO to the Company) would have
approximated amounts not in excess of $1,250,000, $1,500,000, $1,500,000 and
$375,000 for Transition 1993, 1994, 1995 and the three-month period ended March
31, 1996, respectively. It is not practicable, however, to estimate the costs
that Public Gas would have incurred on a standalone basis for services provided
by SEPSCO in Transition 1993 and 1994. Additionally, in Transition 1993 the
Company was allocated certain costs representing uncollectible amounts owed to
Triarc for similar management services by certain affiliates or former
affiliates. The Company's portion of such allocation under the Former Management
Services Agreement amounted to $98,000 for Transition 1993. These costs were
allocated principally on the same basis as the costs of management services, an
allocation method management of the Company believes was reasonable. Such costs
to the Company would have been lower if the Company had operated as an
unaffiliated entity of Triarc to the extent the cost of such services would not
have been incurred had services not been provided to the entities unable to pay.
A summary of the costs charged to the Company for management services is as
follows:
<TABLE>
<CAPTION>
TEN MONTHS THREE MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, -------------------------- MARCH 31,
1993 1994 1995 1996
------------ ---------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Costs allocated by Triarc to the Company
under the New Management Services
Agreement................................ $1,827 $3,000 $3,000 $ 750
Costs related to the New Management
Services Agreement allocated by SEPSCO to
Public Gas............................... 447 -- -- --
Costs of management services provided by
SEPSCO to Public Gas..................... 783 1,561 -- --
Costs allocated to National Propane and
Public Gas under the Former Management
Services Agreement....................... 428 -- -- --
------------ ---------- ------------ ------
$3,485 $4,561 $3,000 $ 750
------------ ---------- ------------ ------
------------ ---------- ------------ ------
</TABLE>
Until January 31, 1994 the Company, through Triarc and SEPSCO, leased
office space from a trust for the benefit of Victor Posner and his children (the
'Posner Lease'). Rent allocated by Triarc to the Company (including Public Gas
through SEPSCO) amounted to $277,000 for Transition 1993 and is included in
'Selling, general and administrative expenses' in the accompanying consolidated
statement of operations. During Transition 1993, the Company also recorded a
provision of $1,814,000 included in 'Facilities relocation and corporate
restructuring' in the accompanying consolidated statement of operations for its
allocated share of the remaining payments on the Posner Lease due to its
cancellation
F-35
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
effective January 31, 1994 (see Note 20). Prior to April 23, 1993 the rent was
allocated based on direct square footage utilized and the allocation methods
previously described under the Former Management Services Agreement. Subsequent
to April 23, 1993 the rent allocation method was changed and was based on direct
square footage utilized and the allocation methods of the New Management
Services Agreement. Management of the Company believes such methods are
reasonable and the rent charged for direct usage approximated the rent the
Company would have incurred on a stand-alone basis.
Chesapeake Insurance Company Limited ('Chesapeake Insurance'), an indirect
subsidiary of Triarc, provided certain insurance coverage and reinsurance of
certain risks to the Company until October 1993 at which time Chesapeake
Insurance ceased writing all insurance and reinsurance. The net premium expense
incurred was $4,064,000 in Transition 1993. Such amount is included in 'Cost of
sales' ($3,971,000) and 'Selling, general and administrative expenses' ($93,000)
in the accompanying consolidated statement of operations. Such costs have been
allocated based upon the relative loss experience after consultation with the
Company's insurance broker. Management of the Company believes such allocation
method was reasonable and resulted in insurance charges to the Company which
approximated those the Company would have received directly in the open market.
Insurance and Risk Management, Inc. ('IRM'), which was an affiliate of the
Company until April 23, 1993, acted as agent or broker in connection with
insurance coverage obtained by the Company and provided claims processing
services to the Company. The commissions and payments incurred for such services
were approximately $49,000 in Transition 1993. Such amount is included in 'Cost
of sales' in the accompanying consolidated statement of operations. The
arrangement with IRM was terminated in connection with the change in control
discussed in Note 20.
Also, see Note 9 relative to certain transactions of NPC Leasing and Note
20 relative to certain charges, primarily related to facilities relocation and
corporation restructuring, allocated to the Company by Triarc.
(20) SIGNIFICANT TRANSITION 1993 CHARGES
The results of operations for Transition 1993 included certain significant
charges summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Estimated costs allocated to the Company by Triarc to terminate the lease on its
existing corporate facilities (Note 19)............................................... $ 1,814
Estimated costs associated with conforming subsidiaries' identifications to 'National
Propane'.............................................................................. 2,000
Estimated costs associated with systems installation necessitated by National Propane's
new operating strategy................................................................ 1,500
Estimated costs associated with certain employee terminations and related severance
payments.............................................................................. 1,050
Estimated costs to relocate and reorganize the Company's corporate headquarters......... 1,058
Total costs allocated to the Company by Triarc related to a five-year consulting
agreement between Triarc and the former Vice Chairman of Triarc....................... 1,007
--------------
Total facilities relocation and corporate restructuring charges.................... 8,429(a)
Estimated costs allocated to the Company by Triarc for compensation paid to the Special
Committee of the Board of Directors of Triarc......................................... 514(b)
Income tax benefit relating to the above charges........................................ (3,489)
Equity in significant charges of affiliate, net of taxes................................ 281(c)
--------------
$ 5,735
--------------
--------------
</TABLE>
(footnotes on next page)
F-36
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
(footnotes from previous page)
(a) Included in 'Facilities relocation and corporate restructuring.'
(b) Included in 'Selling, general and administrative expenses.'
(c) Included in 'Other income, net.'
------------------------
These charges relate to the change in control (the 'Change in Control') of
the Company and Triarc that resulted from the closing on April 23, 1993 of
transactions contemplated by a stock purchase agreement between DWG Acquisition
Group, L.P. ('DWG Acquisition'), the sole general partners of which are Nelson
Peltz and Peter W. May, the Chairman of the Board and Chief Executive Officer
and the President and Chief Operating Officer, respectively, of Triarc and
directors of the Company, and Victor Posner, the then Chairman and Chief
Executive Officer of the Company and certain entities controlled by him, whereby
DWG Acquisition acquired control of Triarc from Victor Posner.
As part of the Change in Control, the Board of Directors of Triarc was
reconstituted. At the April 24, 1993 meeting of the reconstituted Triarc Board
of Directors, based on a report and recommendations from a management consulting
firm that had conducted an extensive review of Triarc's operations and
management structure, the Triarc Board of Directors approved a plan of
decentralization and restructuring which entailed, among other matters, the
following features: (i) the strategic decision to manage Triarc in the future on
a decentralized, rather than on a centralized, basis; (ii) the hiring of new
executive officers for Triarc and the hiring of new chief executive officers and
new senior management teams for certain subsidiaries of Triarc, including the
Company; (iii) the termination of a significant number of employees as a result
of both the new management philosophy and the hiring of an almost entirely new
management team; and (iv) the relocation of the corporate headquarters of Triarc
and of all of its subsidiaries whose headquarters were located in South Florida,
including NPC Leasing and SEPSCO. Accordingly, the Company's allocable share of
the cost to relocate its corporate headquarters and terminate the lease on its
existing corporate facilities, which extended through April 1997, of $1,814,000,
and estimated corporate restructuring charges of $5,608,000 including personnel
relocation costs and employee severance costs, all stemmed from the
decentralization and restructuring plan formally adopted at the April 24, 1993
meeting of Triarc's reconstituted Board of Directors.
Prior to the Change in Control, the Company's business was operated under
various names in different locations throughout the United States. As a part of
the strategy of centralizing the Company's operations, new management ('New
Management') which began with the Change in Control made the decision at the
time of the Change in Control to refocus National Propane's identity by
operating substantially all of its entities and marketing its product under the
name 'National Propane'. Since this decision was made at the time of the Change
in Control, National Propane accrued the estimated costs of implementing the
decision of $2,000,000 in the accompanying Transition 1993 statement of
operations. Such costs consist principally of repainting and replacing decals on
the Company's vehicles and equipment with the 'National Propane' colors and
logo.
New Management also identified various new operating strategies in order to
refocus the Company's direction and manage the Company on a centralized basis.
New Management determined that the management information systems which were in
place at the time of the Change in Control were inadequate to support the
implementation of the new strategies including the centralization of the
Company's operations from six regional centers and two corporate facilities to
one new corporate headquarters. Since the decision to change such systems was
made at the time of the Change in Control, the estimated costs of implementation
of $1,500,000, primarily related to retraining personnel, were accrued in the
accompanying Transition 1993 consolidated statement of operations.
In connection with the Change in Control, Victor Posner and Steven Posner,
the then Vice Chairman of the Company, resigned as officers and directors of
Triarc and its subsidiaries. In order to induce Steven Posner to resign, Triarc
entered into a consulting agreement with him extending through
F-37
<PAGE>
<PAGE>
NATIONAL PROPANE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INSOFAR AS THESE NOTES REFER TO THE PERIOD SUBSEQUENT TO DECEMBER 31, 1995,
THEY ARE UNAUDITED)
April 1998. The Company's allocable share of costs of $1,007,000 related to the
consulting agreement was recorded as a charge in Transition 1993 because the
consulting agreement does not require any substantial services and Triarc has
not received nor did it expect to receive any services that will have
substantial value to Triarc and its subsidiaries.
The Company's equity in net loss of affiliates included similar significant
charges which were allocated by Triarc to CFC Holdings amounting to $281,000 and
is included in 'Other income, net' in the accompanying Transition 1993
consolidated statement of operations.
(21) INITIAL PUBLIC OFFERING OF COMMON UNITS AND OTHER TRANSACTIONS
On March 13, 1996 National Propane Partners, L.P. (the 'Partnership') was
formed to acquire, own and operate the Company's propane business and
substantially all of the related assets of the Company. The Partnership's
activities will be conducted through an operating partnership, National Propane
L.P. (the 'Operating Partnership'), the limited partner in which will be the
Partnership. The Company and National Propane SGP, Inc., a wholly owned
subsidiary of the Company (the 'Special General Partner') intend to convey
substantially all of their propane-related assets and liabilities other than
amounts due from parent ($81,392,000 as of December 31, 1995 and March 31,
1996), deferred financing costs ($4,697,000 and $4,410,000 as of December 31,
1995 and March 31, 1996, respectively) and net deferred income tax liabilities
($21,562,000 and $21,416,000 as of December 31, 1995 and March 31, 1996,
respectively) to the Operating Partnership.
The Partnership intends to issue 6,190,476 Common Units, representing
limited partner interests in the Partnership, pursuant to a public offering and
to concurrently issue 4,533,638 Subordinated Units, representing subordinated
general partner interests in the Partnership, to the Company. In addition, the
Company and the Special General Partner will each receive a 2% general partner
interest in the Partnership and the Operating Partnership, on a combined basis.
In connection therewith the Partnership will issue $125,000,000 of first
mortgage notes to institutional investors and repay all of its outstanding
borrowings under the Bank Facility ($127,312,000 as of December 31, 1995 and
March 31, 1996) and $5,787,000 (as of March 31, 1996) of other debt. The early
redemption of the Bank Facility will result in an extraordinary charge for the
writeoff of unamortized deferred financing costs, net of income tax benefit,
which as of December 31, 1995 would have approximated $2,800,000 ($2,600,000 as
of March 31, 1996). Concurrently with the Offering, the Company will also pay a
cash dividend to Triarc of $59,300,000 and the Operating Partnership will
provide a loan to Triarc of $40,700,000. There can be no assurance, however,
that the Company will be able to consummate these transactions.
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APPENDIX A
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE PARTNERS, L.P.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
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1.1 Definitions..................................................................................... A-1
1.2 Construction.................................................................................... A-14
ARTICLE II
ORGANIZATION
2.1 Formation....................................................................................... A-14
2.2 Name............................................................................................ A-14
2.3 Registered Office; Registered Agent; Principal Office; Other Offices............................ A-15
2.4 Purpose and Business............................................................................ A-15
2.5 Powers.......................................................................................... A-15
2.6 Power of Attorney............................................................................... A-15
2.7 Term............................................................................................ A-17
2.8 Title to Partnership Assets..................................................................... A-17
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability......................................................................... A-17
3.2 Management of Business.......................................................................... A-17
3.3 Outside Activities of the Limited Partners...................................................... A-18
3.4 Rights of Limited Partners...................................................................... A-18
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS
4.1 Certificates.................................................................................... A-18
4.2 Mutilated, Destroyed, Lost or Stolen Certificates............................................... A-19
4.3 Record Holders.................................................................................. A-19
4.4 Transfer Generally.............................................................................. A-20
4.5 Registration and Transfer of Units.............................................................. A-20
4.6 Transfer of a General Partner's Unsubordinated General Partner Interest......................... A-21
4.7 Merger or Liquidation of the Managing General Partner into Triarc............................... A-21
4.8 Transfer of Incentive Distribution Rights....................................................... A-22
4.9 Restrictions on Transfers....................................................................... A-22
4.10 Citizenship Certificates; Non-citizen Assignees................................................. A-22
4.11 Redemption of Partnership Interests of Non-citizen Assignees.................................... A-23
4.12 Exchange by Special General Partner of its Unsubordinated General Partner Interest and its
Interest in the Operating Partnership........................................................... A-24
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF
PARTNERSHIP INTERESTS
5.1 Organizational Contributions.................................................................... A-24
5.2 Contributions by General Partners............................................................... A-24
5.3 Contributions by Initial Limited Partners....................................................... A-25
5.4 Interest and Withdrawal......................................................................... A-25
5.5 Capital Accounts................................................................................ A-25
5.6 Issuances of Additional Partnership Securities.................................................. A-28
5.7 Limitations on Issuance of Additional Partnership Securities.................................... A-28
5.8 Conversion of Subordinated Units................................................................ A-30
5.9 Limited Preemptive Right........................................................................ A-31
5.10 Splits and Combination.......................................................................... A-31
5.11 Fully Paid and Non-Assessable Nature of Limited Partner Partnership Interests................... A-32
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ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purpose......................................................... A-33
6.2 Allocations for Tax Purpose..................................................................... A-38
6.3 Requirement and Characterization of Distributions; Distributions to Record Holders.............. A-40
6.4 Distributions of Available Cash from Operating Surplus.......................................... A-40
6.5 Distributions of Available Cash from Capital Surplus............................................ A-41
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels..................... A-42
6.7 Special Provisions Relating to the Holders of Subordinated Units................................ A-42
6.8 Entity-Level Taxation........................................................................... A-42
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management...................................................................................... A-43
7.2 Certificate of Limited Partnership.............................................................. A-44
7.3 Restrictions on Managing General Partner's Authority............................................ A-45
7.4 Reimbursement of the General Partners........................................................... A-45
7.5 Outside Activities.............................................................................. A-46
7.6 Loans from the General Partners; Loans or Contributions from the Partnership; Contracts with
Affiliates; Certain Restrictions on the General Partners........................................ A-47
7.7 Indemnification................................................................................. A-48
7.8 Liability of Indemnitees........................................................................ A-49
7.9 Resolution of Conflicts of Interest............................................................. A-50
7.10 Other Matters Concerning the Managing General Partner........................................... A-51
7.11 Indemnification of National Propane SGP by National Propane Corporation......................... A-51
7.12 Purchase or Sale of Units....................................................................... A-52
7.13 Registration Rights of the General Partners and their Affiliates................................ A-52
7.14 Reliance by Third Parties....................................................................... A-53
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting.......................................................................... A-54
8.2 Fiscal Year..................................................................................... A-54
8.3 Reports......................................................................................... A-54
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information..................................................................... A-54
9.2 Tax Elections................................................................................... A-55
9.3 Tax Controversies............................................................................... A-55
9.4 Withholding..................................................................................... A-55
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of Initial Limited Partners........................................................... A-55
10.2 Admission of Substituted Unitholder............................................................. A-56
10.3 Admission of Successor or Transferee General Partners........................................... A-56
10.4 Admission of Additional Limited Partners........................................................ A-56
10.5 Admission of Substituted Holder of Incentive Distribution Rights................................ A-57
10.6 Amendment of Agreement and Certificate of Limited Partnership................................... A-57
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partners.............................................................. A-57
11.2 Removal of the Managing General Partner......................................................... A-59
11.3 Interest of Departing Partner and Successor General Partner..................................... A-59
11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of
Cumulative Common Unit Arrearages............................................................... A-61
11.5 Withdrawal of Limited Partners.................................................................. A-61
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution..................................................................................... A-61
12.2 Continuation of the Business of the Partnership After Dissolution............................... A-61
12.3 Liquidator...................................................................................... A-62
12.4 Liquidation..................................................................................... A-62
12.5 Cancellation of Certificate of Limited Partnership.............................................. A-63
12.6 Return of Contributions......................................................................... A-63
12.7 Waiver of Partition............................................................................. A-63
12.8 Capital Account Restoration..................................................................... A-63
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by the Managing General Partner.................................. A-63
13.2 Amendment Procedures............................................................................ A-65
13.3 Amendment Requirements.......................................................................... A-65
13.4 Special Meetings................................................................................ A-65
13.5 Notice of a Meeting............................................................................. A-66
13.6 Record Date..................................................................................... A-66
13.7 Adjournment..................................................................................... A-66
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes...................................... A-66
13.9 Quorum.......................................................................................... A-67
13.10 Conduct of a Meeting............................................................................ A-67
13.11 Action Without a Meeting........................................................................ A-67
13.12 Voting and Other Rights......................................................................... A-68
ARTICLE XIV
MERGER
14.1 Authority....................................................................................... A-68
14.2 Procedure for Merger or Consolidation........................................................... A-68
14.3 Approval by Unitholders of Merger or Consolidation.............................................. A-69
14.4 Certificate of Merger........................................................................... A-69
14.5 Effect of Merger................................................................................ A-69
ARTICLE XV
RIGHT TO ACQUIRE UNITS
15.1 Right to Acquire Units.......................................................................... A-70
ARTICLE XVI
GENERAL PROVISIONS
16.1 Addresses and Notices........................................................................... A-71
16.2 Further Action.................................................................................. A-72
16.3 Binding Effect.................................................................................. A-72
16.4 Integration..................................................................................... A-72
16.5 Creditors....................................................................................... A-72
16.6 Waiver.......................................................................................... A-72
16.7 Counterparts.................................................................................... A-72
16.8 Applicable Law.................................................................................. A-72
16.9 Invalidity of Provisions........................................................................ A-72
16.10 Consent of Partners............................................................................. A-72
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NATIONAL
PROPANE PARTNERS, L.P., dated as of , 1996, is entered into by and among
National Propane Corporation, a Delaware corporation as the Managing General
Partner, National Propane SGP, Inc., a Delaware corporation, as the Special
General Partner and Triarc Companies, Inc., a Delaware Corporation, as the
Organizational Limited Partner) together with any other Persons who become
Partners in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
'Acquisition' means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity or
revenues of the Partnership Group above the operating capacity or revenues of
the Partnership Group existing immediately prior to such transaction.
'Additional Book Basis' means the portion of any remaining Carrying Value
of an Adjusted Property that is attributable to positive adjustments made to
such Carrying Value as a result of Book-Up Events. For purposes of determining
the extent to which Carrying Value constitutes Additional Book Basis:
(i) Any negative adjustment made to the Carrying Value of an Adjusted
Property as a result of either a Book-Down Event or a Book-Up Event shall
first be deemed to offset or decrease that portion of the Carrying Value of
such Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down Event.
(ii) If Carrying Value that constitutes Additional Book Basis is
reduced as a result of a Book-Down Event and the Carrying Value of other
property is increased as a result of such Book-Down Event, an allocable
portion of any such increase in Carrying Value shall be treated as
Additional Book Basis; provided that the amount treated as Additional Book
Basis pursuant hereto as a result of such Book-Down Event shall not exceed
the amount by which the Aggregate Remaining Net Positive Adjustments after
such Book-Down Event exceeds the remaining Additional Book Basis
attributable to all of the Partnership's Adjusted Property after such
Book-Down Event (determined without regard to the application of this
clause (ii) to such Book-Down Event).
'Additional Book Basis Derivative Items' means any Book Basis Derivative
Items that are computed with reference to Additional Book Basis. To the extent
that the Additional Book Basis attributable to all of the Partnership's Adjusted
Property as of the beginning of any taxable period exceeds the Aggregate
Remaining Net Positive Adjustments as of the beginning of such period (the
'Excess Additional Book Basis'), the Additional Book Basis Derivative Items for
such period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without regard to
this sentence as the Excess Additional Book Basis bears to the Additional Book
Basis as of the beginning of such period.
'Additional Limited Partner' means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.
'Adjusted Capital Account' means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
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obligated to restore under Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses and deductions
that, as of the end of such fiscal year, are reasonably expected to be allocated
to such Partner in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that, as of the end of such fiscal year, are reasonably
expected to be made to such Partner in subsequent years in accordance with the
terms of this Agreement or otherwise to the extent they exceed offsetting
increases to such Partner's Capital Account that are reasonably expected to
occur during (or prior to) the year in which such distributions are reasonably
expected to be made (other than increases as a result of a minimum gain
chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith. The 'Adjusted Capital Account' of a Partner in respect
of an Unsubordinated General Partner Interest, a Common Unit, a Subordinated
Unit or an Incentive Distribution Right or any other specified interest in the
Partnership shall be the amount which such Adjusted Capital Account would be if
such Unsubordinated General Partner Interest, Common Unit, Subordinated Unit,
Incentive Distribution Right or other interest in the Partnership were the only
interest in the Partnership held by a Partner from and after the date on which
such Unsubordinated General Partner Interest, Common Unit, Subordinated Unit,
Incentive Distribution Right or other interest was first issued.
'Adjusted Operating Surplus' means, with respect to any period, Operating
Surplus generated during such period (a) less (i) any net increase in working
capital borrowings during such period and (ii) any net reduction in cash
reserves for Operating Expenditures during such period not relating to an
Operating Expenditure made during such period, and (b) plus (i) any net decrease
in working capital borrowings during such period and (ii) any net increase in
cash reserves for Operating Expenditures during such period required by any debt
instrument for the repayment of principal, interest or premium. Adjusted
Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i) of the definition of Operating Surplus.
'Adjusted Property' means any property the Carrying Value of which has been
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted Property
is deemed distributed by, and recontributed to, the Partnership for federal
income tax purposes upon a termination thereof pursuant to Section 708 of the
Code, such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is subsequently adjusted pursuant to Section
5.5(d)(i) or 5.5(d)(ii).
'Affiliate' means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with (either directly or indirectly),
the Person in question. As used herein, the term 'control' means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
'Aggregate Remaining Net Positive Adjustments' means, as of the end of any
taxable period, the sum of the Remaining Net Positive Adjustments of all the
Partners.
'Agreed Allocation' means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 6.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term 'Agreed Allocation' is used).
'Agreed Value' of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the Managing General Partner using such reasonable method of valuation as it
may adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Section 5.5(c)(i). Subject to Section 5.5(c)(i),
the Managing General Partner shall, in its discretion, use such method as it
deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
'Agreement' means this Amended and Restated Agreement of Limited
Partnership of National Propane Partners, L.P., as it may be amended,
supplemented or restated from time to time.
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'Assignee' means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this Agreement,
but who has not been admitted as a Substituted Limited Partner.
'Associate' means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any class
of voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
principal residence as such Person.
'Audit Committee' means a committee of the Board of Directors of the
Managing General Partner (or upon the Triarc Merger, of the Special General
Partner) composed entirely of two or more directors who are neither officers nor
employees of the General Partners or officers, directors or employees of any
Affiliate of either of the General Partners.
'Available Cash' means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional cash and
cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such Quarter resulting from
borrowings for working capital purposes made subsequent to the end of such
Quarter, less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the Managing General Partner to (i) provide
for the proper conduct of the business of the Partnership Group (including
reserves for future capital expenditures) subsequent to such Quarter, (ii)
comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any
member of the Partnership Group is a party or by which it is bound or its
assets are subject or (iii) provide funds for distributions under Section
6.4 or 6.5 in respect of any one or more of the next four Quarters;
provided, however, that the Managing General Partner may not establish cash
reserves pursuant to (iii) above if the effect of such reserves would be
that the Partnership is unable to distribute the Minimum Quarterly
Distribution on all Common Units with respect to such Quarter; and,
provided further, that disbursements made by a Group Member or cash
reserves established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with respect
to such Quarter shall be deemed to have been made, established, increased
or reduced, for purposes of determining Available Cash, within such Quarter
if the Managing General Partner so determines.
Notwithstanding the foregoing, 'Available Cash' with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.
'Bank Credit Facility' means the Credit Agreement among the Operating
Partnership, the First National Bank of Boston, as Administrative Agent and a
Lender, Bank of America NT & SA, as a Lender and BA Securities, Inc., as
Syndication Agent.
'Book Basis Derivative Items' means any item of income, deduction, gain or
loss included in the determination of Net Income or Net Loss that is computed
with reference to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an Adjusted Property).
'Book-Down Event' means an event which triggers a negative adjustment to
the Capital Accounts of the Partners pursuant to Section 5.5(d).
'Book-Tax Disparity' means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
5.5 and the hypothetical balance of such
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Partner's Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
'Book-Up Event' means an event which triggers a positive adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).
'Business Day' means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Iowa shall not be regarded as a Business
Day.
'Capital Account' means the capital account maintained for a Partner
pursuant to Section 5.5. The 'Capital Account' of a Partner in respect of an
Unsubordinated General Partner Interest, a Common Unit, a Subordinated Unit, an
Incentive Distribution Right or any other Partnership Interest shall be the
amount which such Capital Account would be if such Unsubordinated General
Partner Interest, Common Unit, Subordinated Unit, Incentive Distribution Right
or other Partnership Interest were the only interest in the Partnership held by
a Partner from and after the date on which such Unsubordinated General Partner
Interest, Common Unit, Subordinated Unit, Incentive Distribution Right or other
Partnership Interest was first issued.
'Capital Contribution' means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement.
'Capital Improvements' means (a) additions or improvements to the capital
assets owned by any Group Member or (b) the acquisition of existing, or the
construction of new, capital assets (including retail distribution outlets,
propane tanks, pipeline systems, storage facilities, appliance showrooms,
training facilities and related assets), made to increase the operating capacity
of the Partnership Group above the operating capacity of the Partnership Group
existing immediately prior to such addition, improvement, acquisition or
construction.
'Capital Surplus' has the meaning assigned to such term in Section 6.3(a).
'Carrying Value' means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the Managing
General Partner.
'Cause' means (x) a court of competent jurisdiction has entered a final,
non-appealable judgment finding the Managing General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as
general partner of the Partnership or (y) the Special General Partner, prior to
the Triarc Merger, does not have the same directors on its Board of Directors as
those of the Managing General Partner.
'Certificate' means a certificate, substantially in the form of Exhibit A
to this Agreement or in such other form as may be adopted by the Managing
General Partner in its discretion, issued by the Partnership evidencing
ownership of one or more Common Units or a certificate, in such form as may be
adopted by the Managing General Partner in its discretion, issued by the
Partnership evidencing ownership of one or more other Partnership Interests.
'Certificate of Limited Partnership' means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
'Citizenship Certification' means a properly completed certificate in such
form as may be specified by the Managing General Partner by which an Assignee or
a Limited Partner certifies that such Assignee or Limited Partner (and if such
Assignee or Limited Partner is a nominee holding for the account of another
Person, that to the best of its knowledge such other Person) is an Eligible
Citizen.
'claim' has the meaning assigned to such term in Section 7.13(c).
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'Closing Date' means the first date on which Common Units are sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
'Closing Price' has the meaning assigned to such term in Section 15.1(a).
'Code' means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
'Combined Interest' has the meaning assigned to such term in Section
11.3(a).
'Commission' means the United States Securities and Exchange Commission.
'Common Unit' means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and of the General
Partners (exclusive of their interest as holders of Unsubordinated General
Partner Interests or holders of the Incentive Distribution Rights) and having
the rights and obligations specified with respect to Common Units in this
Agreement. The term 'Common Unit' does not refer to a Subordinated Unit prior to
its conversion into a Common Unit pursuant to the terms of this Agreement.
'Common Unit Arrearage' means, with respect to any Common Unit, whenever
issued, as to any Quarter within the Subordination Period, the excess, if any,
of (a) the Minimum Quarterly Distribution with respect to such Common Unit in
respect of such Quarter over (b) the sum of all Available Cash distributed with
respect to such Common Unit in respect of such Quarter pursuant to Section
6.4(a)(i).
'Contributed Property' means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such
property shall no longer constitute a Contributed Property, but shall be deemed
an Adjusted Property.
'Contribution and Conveyance Agreements' means (i) that certain Conveyance,
Contribution and Assumption Agreement, dated as of the Closing Date, among the
General Partners, the Partnership and the Operating Partnership and (ii) the
Contribution and Assumption Agreement, dated as of the Closing Date, among the
General Partners, the Operating Partnership and National Sales and Service,
Inc., together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
'Converted Unit' has the meaning assigned to such term in Section 6.7(b).
'Cumulative Common Unit Arrearage' means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if any, of (a)
the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).
'Curative Allocation' means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).
'Current Market Price' has the meaning assigned to such term in Section
15.1(a).
'Date of Delivery' has the meaning assigned to such term in the
Underwriting Agreement.
'Delaware Act' means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. SS17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.
'Departing Partner' means a former General Partner, whether Managing
General Partner or Special General Partner, from and after the effective date of
any withdrawal or removal of such former General Partner pursuant to Section
11.1 or 11.2.
'Economic Risk of Loss' has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
'Eligible Citizen' means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business or proposes to
do business from time to time, and whose status
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as a Limited Partner or Assignee does not or would not subject such Group Member
to a significant risk of cancellation or forfeiture of any of its properties or
any interest therein.
'Event of Withdrawal' has the meaning assigned to such term in Section
11.1(a).
'Exchange Unit' has the meaning assigned to such term in Section
5.5(c)(ii).
'First Liquidation Target Amount' has the meaning assigned to such term in
Section 6.1(c)(i)(D).
'First Target Distribution' means $0.577 per Unit per Quarter (except with
respect to the period commencing on the Closing Date and ending on September 30,
1996, it means the product of $0.577 multiplied by a fraction of which the
numerator is the number of days in the period commencing on the Closing Date and
ending on September 30, 1996, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.8.
'General Partners' means the Managing General Partner and the Special
General Partner as holders of the Unsubordinated General Partner Interests and
their successors and permitted assigns as the managing general partner and
special general partner, respectively, of the Partnership. This term does not
refer to the holder of a Subordinated Unit by virtue of such Subordinated Unit
ownership even if such Unit is a general partner interest.
'Group' means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.
'Group Member' means a member of the Partnership Group.
'Holder' as used in Section 7.13, has the meaning assigned to such term in
Section 7.13(a).
'Incentive Distribution Right' means a non-voting non-managing Partnership
Interest issued to the Managing General Partner in connection with the transfer
of its assets to the Partnership pursuant to Section 5.2, which Partnership
Interest shall confer upon the holder thereof only the rights and obligations
specifically provided in this Agreement with respect to Incentive Distribution
Rights (and no other rights otherwise available to or other obligations of
holders of a Partnership Interest). Such Partnership Interest shall be a general
partner interest unless either of the General Partners (or any of their
Affiliates who holds such Partnership Interest) elects to convert such interest
into a limited partner interest at which point the Managing General Partner
shall amend the Partnership Agreement to convert such Partnership Interest into
a limited partner interest.
'Incentive Distributions' means any amount of cash distributed to the
holders of the Incentive Distribution Rights pursuant to Sections 6.4(a)(v),
(vi) and (vii) and 6.4(b)(iii), (iv) and (v).
'Indemnified Persons' has the meaning assigned to such term in Section
7.13(c).
'Indemnitee' means (a) each General Partner, any Departing Partner and any
Person who is or was an Affiliate of one of the General Partners or any
Departing Partner, (b) any Person who is or was a director, officer, employee,
agent or trustee of the Partnership, the Operating Partnership or any other
Subsidiary, (c) any Person who is or was an officer, director, employee, agent
or trustee of the one of the General Partners or any Departing Partner or any
such Affiliate, (d) any Person who is or was serving at the request of a General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent, fiduciary or trustee of another Person; provided, that
a Person shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
'Initial Common Units' means the Common Units sold in the Initial Offering.
'Initial Limited Partners' means the Underwriters, in each case upon being
admitted to the Partnership in accordance with Section 10.1.
'Initial Offering' means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.
'Initial Unit Price' means (a) with respect to the Common Units and the
Subordinated Units, the initial public offering price per Common Unit at which
the Underwriters offered the Common Units to
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the public for sale as set forth on the cover page of the prospectus included as
part of the Registration Statement and first issued at or after the time the
Registration Statement first became effective or (b) with respect to any other
class or series of Units, the price per Unit at which such class or series of
Units is initially sold by the Partnership, as determined by the Managing
General Partner, in each case adjusted as the Managing General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of Units.
'Interim Capital Transactions' means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than for working capital
purposes and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member (including Initial Common Units sold to the Underwriters pursuant
to the exercise of the Over-allotment Option); and (c) sales or other voluntary
or involuntary dispositions of any assets of any Group Member other than (w)
sales or other dispositions of inventory in the ordinary course of business, (x)
sales or other dispositions of other current assets, including receivables and
accounts in the ordinary course of business, (y) sales or other dispositions of
assets as part of normal retirements or replacements (z) like kind exchanges of
operating assets to the extent that the operating assets received are of equal
or greater value.
'Issue Price' means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting
discount charged to the Partnership.
'Limited Partner' means, unless the context otherwise requires, (a) the
Organizational Limited Partner, each Initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner, any Partner upon the change of
its status from General Partner to Limited Partner pursuant to Sections 4.12,
5.8(g), 5.8(h), 11.1(d), 11.3(b) or 13.1(l) and (b) solely for purposes of
Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee.
'Liquidation Date' means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
'Liquidator' means the Managing General Partner or one or more other
Persons selected by the Managing General Partner to perform the functions
described in Section 12.3.
'Managing General Partner' means National Propane Corporation and its
successors and assigns as managing general partner of the Partnership.
'Merger Agreement' has the meaning assigned to such term in Section 14.1.
'Minimum Quarterly Distribution' means $0.525 per Unit per Quarter (except
with respect to the period commencing on the Closing Date and ending on
September 30, 1996, it means the product of $0.525 multiplied by a fraction of
which the numerator is the number of days in the period commencing on the
Closing Date and ending on September 30, 1996, and of which the denominator is
92), subject to adjustment in accordance with Sections 6.6 and 6.8.
'National Propane Corporation' means National Propane Corporation, a
Delaware corporation which is currently the Managing General Partner of the
Partnership.
'National Securities Exchange' means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
'Net Agreed Value' means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness
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either assumed by such Partner or Assignee upon such distribution or to which
such property is subject at the time of distribution, in either case, as
determined under Section 752 of the Code.
'Net Income' means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d); provided that
the determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
'Net Loss' means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
'Net Positive Adjustments' means, with respect to any Partner, the excess,
if any, of the total positive adjustments over the total negative adjustments
made to the Capital Account of such Partner pursuant to Book-Up Events and
Book-Down Events.
'Net Termination Gain' means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
'Net Termination Loss' means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
'Non-citizen Assignee' means a Person whom the Managing General Partner has
determined in its discretion does not constitute an Eligible Citizen and as to
whose Partnership Interest the Managing General Partner has become the
Substituted Limited Partner, pursuant to Section 4.10.
'Nonrecourse Built-in Gain' means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
'Nonrecourse Deductions' means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
'Nonrecourse Liability' has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
'Notes' means the $125 million of First Mortgage Notes issued by the
Managing General Partner and assumed by the Operating Partnership in conjunction
with the Initial Offering.
'Notice of Election to Purchase' has the meaning assigned to such term in
Section 15.1(b) hereof.
'Operating Expenditures' means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partners and
their Affiliates, debt service payments, and capital expenditures, subject to
the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii)
made in connection with the refinancing or refunding of indebtedness
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with the proceeds from new indebtedness or from the sale of equity
interests. For purposes of the foregoing, at the election and in the
reasonable discretion of the Managing General Partner, any payment of
principal or premium shall be deemed to be refunded or refinanced by any
indebtedness incurred or to be incurred by the Partnership Group within 180
days before or after such payment to the extent of the principal amount of
such indebtedness.
(b) Operating Expenditures shall not include (i) capital expenditures
made for Acquisitions or for Capital Improvements, (ii) payment of
transaction expenses relating to Interim Capital Transactions or (iii)
distributions to Partners. Where capital expenditures are made in part for
Acquisitions or for Capital Improvements and in part for other purposes,
the Managing General Partner's good faith allocation between the amounts
paid for each shall be conclusive.
'Operating Partnership' means National Propane, L.P., a Delaware limited
partnership, and any successors thereto.
'Operating Partnership Agreement' means the Amended and Restated Agreement
of Limited Partnership of the Operating Partnership, as it may be amended,
supplemented or restated from time to time.
'Operating Surplus,' means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of (i) $15,400,000 plus all cash and cash equivalents of
the Partnership Group on hand as of the close of business on the Closing
Date, (ii) all cash receipts of the Partnership Group for the period
beginning on the Closing Date and ending with the last day of such period,
other than cash receipts from Interim Capital Transactions (except to the
extent specified in Section 6.5) and (iii) all cash receipts of the
Partnership Group after the end of such period but on or before the date of
determination of Operating Surplus with respect to such period resulting
from borrowings for working capital purposes, less
(b) the sum of (i) Operating Expenditures for the period beginning on
the Closing Date and ending with the last day of such period and (ii) the
amount of cash reserves that is necessary or advisable in the reasonable
discretion of the Managing General Partner to provide funds for future
Operating Expenditures, provided, however, that disbursements made
(including contributions to a Group Member or disbursements on behalf of a
Group Member) or cash reserves established, increased or reduced after the
end of such period but on or before the date of determination of Available
Cash with respect to such period shall be deemed to have been made,
established, increased or reduced for purposes of determining Operating
Surplus, within such period if the Managing General Partner so determines.
Notwithstanding the foregoing, 'Operating Surplus' with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
'Opinion of Counsel' means a written opinion of counsel (who may be regular
counsel to Triarc, the Partnership or the General Partners or any of their
Affiliates) acceptable to the Managing General Partner in its reasonable
discretion.
'Organizational Limited Partner' means Triarc, in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.
'Outstanding' means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and reflected as
Outstanding on the Partnership's books and records as of the date of
determination; provided, however, that if at any time any Person or Group (other
than the General Partners or their Affiliates or their successors or assigns)
beneficially owns 20% or more of any Outstanding Units of any class then
Outstanding, all Units owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a
meeting of Unitholders to vote on any matter (unless otherwise required by law),
calculating required votes, determining the presence of a quorum or for other
similar purposes under this Agreement, except that such Common Units shall be
considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Common
Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement).
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'Over-allotment Option' means the over-allotment option to purchase
additional Common Units granted to the Underwriters by the Partnership pursuant
to the Underwriting Agreement.
'Parity Units' means Common Units and all other Units having rights to
distributions or in liquidation ranking on a parity with the Common Units.
'Partner Nonrecourse Debt' has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
'Partner Nonrecourse Debt Minimum Gain' has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
'Partner Nonrecourse Deductions' means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.
'Partners' means the General Partners, the Limited Partners and the holders
of Common Units, Subordinated Units and Incentive Distribution Rights.
'Partnership' means National Propane Partners, L.P., a Delaware limited
partnership, and any successors thereto.
'Partnership Group' means the Partnership, the Operating Partnership and
any Subsidiary of either such entity, treated as a single consolidated entity.
'Partnership Interest' means an interest in the Partnership, which shall
include Unsubordinated General Partner Interests, Common Units, Subordinated
Units, Incentive Distribution Rights and other Partnership Securities, or a
combination thereof or interest therein, as the case may be.
'Partnership Minimum Gain' means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
'Partnership Security' means any class or series of Unit, any option,
right, warrant or appreciation rights relating thereto, or any other type of
equity interest that the Partnership may lawfully issue, or any unsecured or
secured debt obligation of the Partnership that is convertible into any class or
series of equity interests of the Partnership.
'Percentage Interest' means as of the date of such determination (a) as to
the General Partners (in their capacity as General Partners with respect to
their Unsubordinated General Partner Interests without reference to any Units or
limited partner interests held by them), 2.0%, (b) as to any Unitholder or
Assignee holding Units, the product of (i) 98% less the percentage applicable to
clause (c) multiplied by (ii) the quotient of the number of Units held by such
Unitholder or Assignee divided by the total number of all Outstanding Units, and
(c) as to the holders of additional Partnership Securities issued by the
Partnership in accordance with Section 5.6, the percentage established as a part
of such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
'Person' means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
'Per Unit Capital Amount' means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than a General Partner or any Affiliate of a General Partner who
holds Units.
'Pro Rata' means (a) when modifying Units or any class thereof, apportioned
equally among all designated Units in accordance with their relative Percentage
Interests, (b) when modifying Partners, Unitholders and Assignees, in accordance
with their respective Percentage Interests, (c) when modifying holders of
Incentive Distribution Rights, apportioned equally among all holders of
Incentive Distribution Rights in accordance with the relative number of
Incentive Distribution Rights held by each such holder and (d) when modifying
the General Partners, apportioned 50% to the Managing General Partner and 50% to
the Special General Partner, provided, however, to the extent an allocation of
losses pursuant to Section 6.1(b) or Section 6.1(c)(ii) would cause the Special
General Partner to
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have a deficit balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit in its Adjusted Capital Account),
then Pro Rata shall mean 100% to Managing General Partner and zero to the
Special General Partner.
'Purchase Date' means the date determined by the Managing General Partner
as the date for purchase of all Outstanding Units (other than Units owned by the
General Partners and their Affiliates) pursuant to Article XV.
'Quarter' means, unless the context requires otherwise, a fiscal quarter of
the Partnership.
'Recapture Income' means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
'Record Date' means the date established by the Managing General Partner
for determining (a) the identity of the Record Holders entitled to notice of, or
to vote at, any meeting of Unitholders or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Unitholders or (b) the
identity of Record Holders entitled to receive any report or distribution or to
participate in any offer.
'Record Holder' means the Person in whose name a Common Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to a holder of an Unsubordinated General Partner
Interest, a Subordinated Unit, an Incentive Distribution Right or other
Partnership Interest, the Person in whose name such Unsubordinated General
Partner Interest, Subordinated Unit, Incentive Distribution Right or other
Partnership Interest is registered on the books which the Managing General
Partner has caused to be kept as of the opening of business on such Business
Day.
'Redeemable Interests' means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.11.
'Registration Statement' means the Registration Statement on Form S-1
(Registration No. 333-2768), as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
'Remaining Net Positive Adjustments' means as of the end of any taxable
period, (i) with respect to the Unitholders holding Common Units or Subordinated
Units, the excess of (a) the Net Positive Adjustments of the Unitholders holding
Common Units or Subordinated Units as of the end of such period over (b) the sum
of those Partners Share of Additional Book Basis Derivative Items for each prior
taxable period, (ii) with respect to the General Partners as holders of the
Unsubordinated General Partner Interests, the excess of (a) the Net Positive
Adjustments of the General Partners with respect to the Unsubordinated General
Partner Interests as of the end of such period over (b) the sum of the General
Partners Share of Additional Book Basis Derivative Items with respect to the
Unsubordinated General Partner Interests for each prior taxable period, and
(iii) with respect to the holders of Incentive Distribution Rights, the excess
of (a) the Net Positive Adjustments of the holders of Incentive Distribution
Rights as of the end of such period over (b) the sum of the Share of Additional
Book Basis Derivative Items of the holders of the Incentive Distribution Rights
for each prior taxable period.
'Remaining Subordinated Units' has the meaning assigned to such term in
Section 6.1(d)(x) hereof.
'Required Allocations' means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
'Residual Gain' or 'Residual Loss' means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
'Restricted Activity' means the retail sales of propane to end users in the
continental United States.
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'Second Liquidation Target Amount' has the meaning assigned to such term in
Section 6.1(c)(i)(E).
'Second Target Distribution' means $0.665 per Unit (except with respect to
the period commencing on the Closing Date and ending on September 30, 1996, it
means the product of $0.665 multiplied by a fraction of which the numerator is
equal to the number of days in the period commencing on the Closing Date and
ending on September 30, 1996, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.8.
'Securities Act' means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.
'Share of Additional Book Basis Derivative Items' means in connection with
any allocation of Additional Book Basis Derivative Items for any taxable period,
(i) with respect to the Unitholders holding Common Units or Subordinated Units,
the amount that bears the same ratio to such Additional Book Basis Derivative
Items as such Partner's Remaining Net Positive Adjustments as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustments as of that
time, (ii) with respect to the General Partners (as holders of the
Unsubordinated General Partner Interests), the amount that bears the same ratio
to such additional Book Basis Derivative Items as such Partners Remaining Net
Positive Adjustments with respect to the Unsubordinated General Partner
Interests as of the end of such Period bears to the Aggregate Remaining Net
Positive Adjustment as of that time, and (iii) with respect to the Partners
holding Incentive Distribution Rights, the amount that bears the same ratio to
such Additional Book Basis Derivative Items as the Remaining Net Positive
Adjustments of the Partners holding the Incentive Distribution Rights as of the
end of such period bears to the Aggregate Remaining Net Positive Adjustments as
of that time.
'Special Approval' means approval by a majority of the members of the Audit
Committee.
'Special General Partner' means National Propane SGP, Inc., a Delaware
corporation and a wholly-owned subsidiary of National Propane Corporation and
its successors and assigns as special general partner of the Partnership.
'Subordinated Unit' means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and the General
Partners (other than as holder of the Unsubordinated General Partner Interests
or as holder of the Incentive Distribution Rights) and having the rights and
obligations specified with respect to Subordinated Units in this Agreement. The
term 'Subordinated Unit' as used herein does not include a Common Unit. Such
Partnership Interest shall be a non-managing general partner interest until (a)
pursuant to Section 13.1(l), the Managing General Partner or any of its
Affiliates elects to convert such Units into a limited partner interest, at
which point the Managing General Partner shall amend the Partnership Agreement
to convert such Partnership Interest into a limited partner interest or (b) the
conversion of such Unit into a limited partner interest pursuant to Sections
5.8(g) or 5.8(h) hereof, in which case, immediately prior to such transfer such
Unit shall convert into a limited partner interest.
'Subordination Period' means the period commencing on the Closing Date and
ending on the first to occur of the following dates:
(a) the first day of any Quarter beginning after June 30, 2001 in
respect of which (i) (A) distributions of Available Cash from Operating
Surplus on each of the Outstanding Common Units and Subordinated Units with
respect to each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the
Minimum Quarterly Distribution on all Outstanding Common Units and
Subordinated Units during such periods and (B) the Adjusted Operating
Surplus generated during each of the three consecutive, non-overlapping
four-Quarter periods immediately preceding such date equaled or exceeded
the sum of the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units, plus the related distribution on the
Unsubordinated General Partner Interests, during such periods and (ii)
there are no Cumulative Common Unit Arrearages; and
(b) the date on which the Managing General Partner is removed as a
general partner of the Partnership upon the requisite vote by holders of
Outstanding Units under circumstances where Cause does not exist and Units
held by the Managing General Partner and its Affiliates are not voted in
favor of such removal.
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'Subsidiary' means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
'Substituted Holder of Incentive Distribution Rights' means a Person who is
admitted to the Partnership as a holder of Incentive Distribution Rights
pursuant to Section 10.5 in place of and with all the rights of a holder of
Incentive Distribution Rights and who is shown as a holder of Incentive
Distribution Rights on the books and records of the Partnership.
'Substituted Unitholder' means a Person who is admitted as a Unitholder to
the Partnership pursuant to Section 10.2 in place of and with all the rights of
a Unitholder and who is shown as a Unitholder on the books and records of the
Partnership.
'Surviving Business Entity' has the meaning assigned to such term in
Section 14.2(b).
'Third Target Distribution' means $0.863 per Unit (except with respect to
the period commencing on the Closing Date and ending on September 30, 1996, it
means the product of $0.863 multiplied by a fraction of which the numerator is
equal to the number of days in the period commencing on the Closing Date and
ending on September 30, 1996, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.8.
'Trading Day' has the meaning assigned to such term in Section 15.1(a).
'Transfer' has the meaning assigned to such term in Section 4.4(a).
'Transfer Agent' means such bank, trust company or other Person (including
the Managing General Partner or one of its Affiliates) as shall be appointed
from time to time by the Partnership to act as registrar and transfer agent for
the Units.
'Transfer Application' means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
'Triarc' means Triarc Companies, Inc., a Delaware corporation.
'Triarc Loan' means the $40.7 million loan made on the Closing Date by the
Operating Partnership to Triarc.
'Triarc Merger' has the meaning assigned to such term in Section 4.7.
'Underwriter' means each Person named as an underwriter in Exhibit A to the
Purchase Agreement that purchases Common Units pursuant thereto.
'Underwriting Agreement' means the Purchase Agreement, dated
, 1996, among the Underwriters, the Managing General Partner, the
Partnership and certain other parties, providing for the purchase of Common
Units by such Underwriters.
'Unit' means a Partnership Interest of a Limited Partner or Assignee or the
Managing General Partner or the Special General Partner in the Partnership and
shall include Common Units and Subordinated Units but shall not include (x) the
Unsubordinated General Partner Interests or (y) Incentive Distribution Rights.
All Units issued by the Partnership to holders who are unaffiliated with the
General Partners shall be limited partner interests and shall remain limited
partner interests even if subsequently acquired by either of the General
Partners or any of their Affiliates.
'Unitholders' means the holders of Common Units and Subordinated Units.
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'Unit Majority' means, during the Subordination Period, at least a majority
of the Outstanding Common Units voting as a class and at least a majority of the
Outstanding Subordinated Units voting as a class, and thereafter, at least a
majority of the Outstanding Units.
'Unpaid MQD' has the meaning assigned to such term in Section 6.1(c)(i)(B).
'Unrealized Gain' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).
'Unrealized Loss' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
'Unrecovered Capital' means at any time, with respect to a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the Managing General
Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of such Units.
'Unsubordinated General Partner Interests' are the General Partners rights
to their allocations and distributions described herein exclusive of any right
the General Partners have as holders of Common Units, Subordinated Units or
Incentive Distribution Rights and representing a 2% Percentage Interest. The
Managing General Partner shall possess all management rights of the Partnership.
At the closing, the Unsubordinated General Partner Interests shall be held
Pro-Rata by the General Partners.
'U.S. GAAP' means United States Generally Accepted Accounting Principles
consistently applied.
'Withdrawal Opinion of Counsel' has the meaning assigned to such term in
Section 11.1(b).
1.2 CONSTRUCTION
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) 'include' or 'includes' means includes,
without limitation, and 'including' means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 FORMATION
The Managing General Partner, the Special General Partner and the
Organizational Limited Partner have previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of National
Propane Partners, L.P. in its entirety. This amendment and restatement shall
become effective on the date of this Agreement. Except as expressly provided to
the contrary in this Agreement, the rights and obligations of the Partners and
the administration, dissolution and termination of the Partnership shall be
governed by the Delaware Act. All Partnership Interests shall constitute
personal property of the owner thereof for all purposes.
2.2 NAME
The name of the Partnership shall be 'National Propane Partners, L.P.' The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Managing General Partner in its sole discretion,
including the name of the Managing General Partner. The words
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'Limited Partnership,' 'L.P.,' 'Ltd.' or similar words or letters shall be
included in the Partnership's name where necessary for the purpose of complying
with the laws of any jurisdiction that so requires. The Managing General Partner
in its discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER OFFICES
Unless and until changed by the Managing General Partner, the registered
office of the Partnership in the State of Delaware shall be located at 1209
Orange Street, New Castle County, Wilmington, Delaware 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be CT Corporation System. The principal office of the
Partnership shall be located at Suite 1700, IES Tower, 200 1st Street, S.E.,
P.O. Box 2067, Cedar Rapids, Iowa 52401-2067 or such other place as the Managing
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the Managing General Partner deems
necessary or appropriate. The address of the Managing General Partner shall be
Suite 1700, IES Tower, 200 1st Street, S.E., P.O. Box 2067, Cedar Rapids, Iowa
52401-2067 or such other place as the Managing General Partner may from time to
time designate by notice to the Limited Partners.
2.4 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) serve as a limited partner in the Operating Partnership and, in
connection therewith, to exercise all the rights and powers conferred upon the
Partnership as a limited partner in the Operating Partnership pursuant to the
Operating Partnership Agreement or otherwise, (b) engage directly in, or to
enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any business
activity that the Operating Partnership is permitted to engage in by the
Operating Partnership Agreement and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity, (c) engage directly in, or to enter into or
form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that is
approved by the Managing General Partner and which lawfully may be conducted by
a limited partnership organized pursuant to the Delaware Act and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, and
(d) do anything necessary or appropriate to the foregoing, including the making
of capital contributions or loans to a Group Member. The Managing General
Partner, the Special General Partner and their Affiliates have no obligation or
duty to the Partnership, the Special General Partner, the Unitholders, the
Limited Partners, or the Assignees to propose or approve, and in its discretion
may decline to propose or approve, the conduct by the Partnership of any
business.
2.5 POWERS
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 POWER OF ATTORNEY
(a) Each Unitholder, Limited Partner and each Assignee hereby constitutes
and appoints the Managing General Partner and, if a Liquidator shall have been
selected pursuant to Section 12.3, the Liquidator, severally (and any successor
to the Liquidator by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, as the case may be,
with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and stead,
to:
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(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements hereof or thereof) that the
Managing General Partner or the Liquidator deems necessary or appropriate
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (B) all certificates, documents and other instruments that the
Managing General Partner or the Liquidator deems necessary or appropriate
to reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including conveyances and a certificate of
cancellation) that the Managing General Partner or the Liquidator deems
necessary or appropriate to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement; (D) all certificates,
documents and other instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, Article IV, X, XI or XII; (E) all certificates, documents and
other instruments relating to the determination of the rights, preferences
and privileges of any class or series of Partnership Securities issued
pursuant to Section 5.6; and (F) all certificates, documents and other
instruments (including agreements and a certificate of merger) relating to
a merger or consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the discretion of the Managing
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is made
or given by the Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the discretion of the Managing
General Partner or the Liquidator, to effectuate the terms or intent of
this Agreement; provided, that when required by Section 13.3 or any other
provision of this Agreement that establishes a percentage of the
Unitholders or the Limited Partners or of the Limited Partners of any class
or series required to take any action, the Managing General Partner and the
Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the
Unitholders or the Limited Partners or of the Limited Partners of such
class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing
the Managing General Partner to amend this Agreement except in accordance with
Article XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any
Unitholder, Limited Partner or Assignee and the transfer of all or any portion
of such Unitholder's, Limited Partner's or Assignee's Partnership Interest and
shall extend to such Unitholder's, Limited Partner's or Assignee's heirs,
successors, assigns and personal representatives. Each such Unitholder, Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
Managing General Partner or the Liquidator acting in good faith pursuant to such
power of attorney; and each such Unitholder, Limited Partner or Assignee, to the
maximum extent permitted by law, hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the Managing General
Partner or the Liquidator taken in good faith under such power of attorney. Each
Limited Partner or Assignee shall execute and deliver to the Managing General
Partner or the Liquidator, within 15 days after receipt of the request therefor,
such further designation, powers of attorney and other instruments as the
Managing General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.
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2.7 TERM
The Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence
until the close of Partnership business on December 31, 2086, or until the
earlier termination of the Partnership in accordance with the provisions of
Article XII.
2.8 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
a General Partner, one or more of its Affiliates or one or more nominees, as the
Managing General Partner may determine. The General Partners hereby declare and
warrant that any Partnership assets for which record title is held in the name
of a General Partner or one or more of its Affiliates or one or more nominees
shall be held by such General Partner or such Affiliate or nominee for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the Managing General Partner shall use
reasonable efforts to cause record title to such assets (other than those assets
in respect of which the Managing General Partner determines that the expense and
difficulty of conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or removal of the
General Partner holding record title or as soon thereafter as practicable, such
General Partner shall use reasonable efforts to effect the transfer of record
title to the Partnership and, prior to any such transfer, will provide for the
use of such assets in a manner satisfactory to the Managing General Partner;
provided, further, notwithstanding the foregoing with respect to the transfer of
assets pursuant to the Contribution and Conveyance Agreement, the provisions of
the Contribution and Conveyance Agreement shall control. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 LIMITATION OF LIABILITY
The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.
3.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the Managing General Partner, or
any of its Affiliates or any officer, director, employee, partner, agent or
trustee of the Managing General Partner or any of its Affiliates, or any
director, employee or agent of a Group Member, in its capacity as such, if such
Person shall also be a Limited Partner or Assignee) shall participate in the
operation, management or control (within the meaning of the Delaware Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. Any action
taken by any Affiliate of the Managing General Partner or any officer, director,
employee, partner, agent or trustee of the Managing General Partner or any of
its Affiliates, or any director, employee or agent of a Group Member, in its
capacity as such, shall not be deemed to be participation in the control of the
business of the Partnership by a limited partner of the Partnership (within the
meaning of Section 17-303(a) of the Delaware Act) and shall not affect, impair
or eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
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3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such
Persons shall also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
3.4 RIGHTS OF LIMITED PARTNERS
(a) In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 3.4(b), each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon reasonable written demand and at
such Limited Partner's own expense:
(i) to obtain information regarding the status of the business and
financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to have furnished to him, a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto, together
with a copy of the executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited Partners
and Assignees, for such period of time as the Managing General Partner deems
reasonable, (i) any information that the Managing General Partner reasonably
believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the Managing General Partner in good faith believes (A) is
not in the best interests of the Partnership Group, (B) could damage the
Partnership Group or (C) that any Group Member is required by law or by
agreement with any third party to keep confidential (other than agreements with
Affiliates the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS
4.1 CERTIFICATES
Upon the Partnership's issuance of Common Units or Subordinated Units to
any Person, the Partnership shall issue one or more Certificates in the name of
such Person evidencing the number of such Units being so issued. In addition,
(a) upon a General Partner's request, the Partnership shall issue to it one or
more Certificates in the General Partners' name evidencing their Unsubordinated
General Partner Interests in the Partnership and (b) upon the request of any
Person owning Incentive
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Distribution Rights, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights. Certificates shall
be executed on behalf of the Partnership by the Managing General Partner. No
Common Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent. The Partners holding Certificates
evidencing Subordinated Units may exchange such Certificates for Certificates
evidencing Common Units on or after the date on which such Subordinated Units
are converted into Common Units pursuant to the terms of Section 5.8. In
addition, the holder of any Partnership Interest that is converted, pursuant to
this Agreement, from a general partner interest into a limited partner interest,
may exchange such certificates for new certificates evidencing such limited
partner status.
4.2 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the
Managing General Partner on behalf of the Partnership shall execute, and the
Transfer Agent shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same number of Units as the Certificate so
surrendered.
(b) The Managing General Partner shall execute, and the Transfer Agent
shall countersign and deliver a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to
the Partnership, that a previously issued Certificate has been lost,
destroyed or stolen;
(ii) requests the issuance of a new Certificate before the Partnership
has notice that the Certificate has been acquired by a purchaser for value
in good faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to the Partnership a
bond, in form and substance satisfactory to the Partnership, with surety or
sureties and with fixed or open penalty as the Partnership may reasonably
direct, in its sole discretion, to indemnify the Partnership, the Partners
and the Transfer Agent against any claim that may be made on account of the
alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Partnership.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the Managing General Partner or the Transfer
Agent receives such notification, the Limited Partner or Assignee shall be
precluded from making any claim against the Partnership, the General Partners
and the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Transfer
Agent) reasonably connected therewith.
4.3 RECORD HOLDERS
The Partnership shall be entitled to recognize the Record Holder as the
partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which the Units are listed for trading.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank,
trust company or clearing corporation or an agent of any of the foregoing) is
acting as nominee, agent or in some other representative capacity for another
Person in acquiring and/or holding Units, as between the Partnership on the one
hand, and such other Persons on the other, such representative Person (a) shall
be the Partner or Assignee (as the case may be) of record and
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beneficially, (b) must execute and deliver a Transfer Application and (c) shall
be bound by this Agreement and shall have the rights and obligations of a
partner or Assignee (as the case may be) hereunder and as, and to the extent,
provided for herein.
4.4 TRANSFER GENERALLY
(a) The term 'transfer,' when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
General Partner assigns its Unsubordinated General Partnership Interest to
another Person, by which a Unitholder assigns a Unit to another Person who is or
becomes a partner or an Assignee, by which the holder of an Incentive
Distribution Right assigns such Partnership Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any shareholder of a General Partner of any or all of the issued
and outstanding capital stock of a General Partner.
(d) Nothing contained in this Article IV, or elsewhere in this Agreement,
shall preclude the settlement of any transactions involving Partnership
Interests entered into through the facilities of any National Securities
Exchange on which such Partnership Interests are listed for trading.
4.5 REGISTRATION AND TRANSFER OF UNITS
(a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Units. The Transfer Agent is
hereby appointed registrar and transfer agent for the purpose of registering
Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates representing Units
unless such transfers are effected in the manner described in this Section 4.5.
Upon surrender for registration of transfer of any Units evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate
officers on behalf of the Partnership shall execute, and in the case of Common
Units, the Transfer Agent shall countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Certificates evidencing the same
aggregate number of Units as was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.10, the Partnership shall not
recognize any transfer of Units until the Certificates evidencing such Units are
surrendered for registration of transfer and such Certificates are accompanied
by a Transfer Application duly executed by the transferee (or the transferee's
attorney-in-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the Partnership may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.
(c) Units may be transferred only in the manner described in this Section
4.5. The transfer of any Units and the admission of any new Partner shall not
constitute an amendment to this Agreement.
(d) Until admitted as a Substituted Unitholder pursuant to Section 10.2,
the Record Holder of a Unit shall be an Assignee in respect of such Unit.
Unitholders may include custodians, nominees or any other individual or entity
in its own or any representative capacity.
(e) A transferee who has completed and delivered a Transfer Application
shall be deemed to have (i) requested admission as a Substituted Unitholder, as
applicable, (ii) agreed to comply with and be bound by and to have executed this
Agreement, (iii) represented and warranted that such transferee has the right,
power and authority and, if an individual, the capacity to enter into this
Agreement, (iv)
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granted the powers of attorney set forth in this Agreement and (v) given the
consents and approvals and made the waivers contained in this Agreement.
(f) The Managing General Partner and Special General Partner shall have the
right at any time to transfer their Subordinated Units and Common Units (whether
issued upon conversion of the Subordinated Units or otherwise) to one or more
Persons.
4.6 TRANSFER OF A GENERAL PARTNER'S UNSUBORDINATED GENERAL PARTNER INTEREST
Except for (a) an exchange by the Special General Partner of any portion of
its Unsubordinated General Partner Interest pursuant to Section 4.12 or (b) a
transfer by one of the General Partners of all, but not less than all, of its
Unsubordinated General Partner Interest to (i) an Affiliate of such General
Partner or (ii) another Person in connection with the merger or consolidation of
such General Partner with or into another Person or the transfer by such General
Partner of all or substantially all of its assets to another Person, which in
any such case, shall only be limited by the provisions of this Section 4.6 or
4.7 (whichever is applicable), prior to June 30, 2006, a General Partner shall
not transfer all or any part of its Unsubordinated General Partner Interest to a
Person unless such transfer has been approved by the prior written consent or
vote of the holders of at least a Unit Majority. Notwithstanding anything herein
to the contrary, no transfer by a General Partner of all or any part of its
Unsubordinated General Partner Interest to another Person shall be permitted
unless (A) the transferee agrees to assume the rights and duties of such
transferring General Partner under this Agreement and the Operating Partnership
Agreement and to be bound by the provisions of this Agreement and the Operating
Partnership Agreement, (B) the Partnership receives an Opinion of Counsel that
such transfer would not result in the loss of limited liability of any Limited
Partner or of any limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be treated as an association taxable
as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed) and (C) such transferee
also agrees to purchase all (or the appropriate portion thereof, if applicable)
of the partnership interest of the transferring General Partner as the general
partner of each other Group Member. In the case of a transfer pursuant to and in
compliance with this Section 4.6, the transferee or successor (as the case may
be) shall, subject to compliance with the terms of Section 10.3, be admitted to
the Partnership as a General Partner immediately prior to the transfer of the
Unsubordinated General Partner Interest, and the business of the Partnership
shall continue without dissolution.
4.7 MERGER OR LIQUIDATION OF THE MANAGING GENERAL PARTNER INTO TRIARC
Notwithstanding anything else herein contained (including the provisions of
Section 4.6 hereof), National Propane Corporation as the Managing General
Partner (or an Affiliate of National Propane Corporation that becomes the
successor Managing General Partner) may, without any consent of the Unitholders,
merge or liquidate into Triarc (the 'Triarc Merger'); provided, however that
prior to the Triarc Merger (a) the Partnership received an Opinion of Counsel
that such transfer would not result in the loss of limited liability of any
Limited Partner or of any limited partner of the Operating Partnership or cause
the Partnership or Operating Partnership to be treated as an association taxable
as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed), (b) the Special
General Partner has a 1% Unsubordinated General Partner Interest and 1.0101%
general partner interest in the Operating Partnership and (c) the Special
General Partner has been capitalized by Triarc so that at the time of the Triarc
Merger, the Special General Partner has a net worth equal to at least $15
million independent of its interest in the Partnership Group. Such transfer of
the Managing General Partner's Unsubordinated General Partner Interests upon the
Triarc Merger shall not be an Event of Withdrawal and the surviving entity as a
result of the Triarc Merger shall automatically be admitted hereunder as the
Managing General Partner of the Partnership and as the Managing General Partner
of the other Group Members. If a merger or liquidation does not qualify under
Section 4.7, such merger or liquidation may still not require Unitholder consent
if it qualifies as not requiring consent pursuant to Section 4.6. To the extent
that the Delaware Act requires consent, Unitholders by becoming Limited Partners
hereby grant such consent.
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4.8 TRANSFER OF INCENTIVE DISTRIBUTION RIGHTS
A holder of Incentive Distribution Rights may transfer any or all of the
Incentive Distribution Rights held by such holder without any consent of the
Unitholders. The Managing General Partner shall have the authority (but shall
not be required) to adopt such reasonable restrictions on the transfer of
Incentive Distribution Rights and requirements for registering the transfer of
Incentive Distribution Rights as the Managing General Partner, in its sole
discretion, shall determine are necessary or appropriate.
4.9 RESTRICTIONS ON TRANSFERS
(a) Notwithstanding the other provisions of this Article IV, no transfer of
any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental
authorities with jurisdiction over such transfer, (ii) terminate the existence
or qualification of the Partnership or the Operating Partnership under the laws
of the jurisdiction of its formation, or (iii) cause the Partnership or the
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the
extent not already so treated or taxed).
(b) The Managing General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership's or
the Operating Partnership's becoming taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes. The restrictions may be
imposed by making such amendments to this Agreement as the Managing General
Partner may determine to be necessary or appropriate to impose such
restrictions; provided, however, that any amendment that the Managing General
Partner believes, in the exercise of its reasonable discretion, could result in
the delisting or suspension of trading of any class of Units on the principal
National Securities Exchange on which such class of Units is then traded must be
approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Units of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common
Unit shall be subject to the restrictions imposed by Section 6.7(b).
4.10 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES
(a) If any Group Member is or becomes subject to any federal, state or
local law or regulation that, in the reasonable determination of the Managing
General Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Partner or Assignee, the Managing
General Partner may request any Partner or Assignee to furnish to the Managing
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Partner or Assignee is a nominee
holding for the account of another Person, the nationality, citizenship or other
related status of such Person) as the Managing General Partner may request. If a
Partner or Assignee fails to furnish to the Managing General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Partner or Assignee is not an Eligible Citizen, the Partnership
Interests owned by such Partner or Assignee shall be subject to redemption in
accordance with the provisions of Section 4.11. In addition, the Managing
General Partner may require that the status of any such Partner or Assignee be
changed to that of a Non-citizen Assignee and, thereupon, the Managing General
Partner shall be substituted for such Non-citizen Assignee as the Partner in
respect of his Units.
(b) The Managing General Partner shall, in exercising voting rights in
respect of Units held by it on behalf of Non-citizen Assignees, distribute the
votes in the same ratios as the votes of Partners (including without limitation
the General Partners) in respect of Units other than those of Non-citizen
Assignees are cast, either for, against or abstaining as to the matter.
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(c) [Intentionally Deleted]
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the Managing
General Partner, request admission as a Substituted Limited Partner with respect
to any Units of such Non-citizen Assignee not redeemed pursuant to Section 4.11,
and upon his admission pursuant to Section 10.2, the Managing General Partner
shall cease to be deemed to be the Limited Partner in respect of the Non-citizen
Assignee's Units.
4.11 REDEMPTION OF PARTNERSHIP INTERESTS OF NON-CITIZEN ASSIGNEES
(a) If at any time a Partner or Assignee fails to furnish a Citizenship
Certification or other information requested within the 30-day period specified
in Section 4.10(a), or if upon receipt of such Citizenship Certification or
other information the Managing General Partner determines, with the advice of
counsel, that a Partner or Assignee is not an Eligible Citizen, the Partnership
may, unless the Partner or Assignee establishes to the satisfaction of the
Managing General Partner that such Partner or Assignee is an Eligible Citizen or
has transferred his Partnership Interests to a Person who is an Eligible Citizen
and who furnishes a satisfactory Citizenship Certification to the Managing
General Partner prior to the date fixed for redemption as provided below, redeem
the Partnership Interest of such Partner or Assignee as follows:
(i) The Managing General Partner shall, not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Partner or Assignee, at his last address designated on the records of the
Partnership or the Transfer Agent, by registered or certified mail, postage
prepaid. The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for
redemption, the place of payment, that payment of the redemption price will
be made upon surrender of the Certificate evidencing the Redeemable
Interests and that on and after the date fixed for redemption no further
allocations or distributions to which the Partner or Assignee would
otherwise be entitled in respect of the Redeemable Interests will accrue or
be made.
(ii) The aggregate redemption price for Redeemable Interests shall be
an amount equal to the Current Market Price (the date of determination of
which shall be the date fixed for redemption) of Partnership Interests of
the class to be so redeemed multiplied by the number of Partnership
Interests of each such class included among the Redeemable Interests. The
redemption price shall be paid, in the discretion of the Managing General
Partner, in cash or by delivery of a promissory note of the Partnership in
the principal amount of the redemption price, bearing interest at the rate
of 8% annually and payable in three equal annual installments of principal
together with accrued and unpaid interest, commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Partner or Assignee, at
the place specified in the notice of redemption, of the Certificate
evidencing the Redeemable Interests, duly endorsed in blank or accompanied
by an assignment duly executed in blank, the Partner or Assignee or his
duly authorized representative shall be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no longer
constitute issued and Outstanding Partnership Interests.
(b) The provisions of this Section 4.11 shall also be applicable to
Partnership Interests held by a Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.11 shall prevent the recipient of a notice of
redemption from transferring his Partnership Interests before the redemption
date if such transfer is otherwise permitted under this Agreement. Upon receipt
of notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided the transferee of such Partnership Interests certifies to
the satisfaction of the Managing General Partner in a Citizenship Certification
delivered in connection with the Transfer Application that he is an Eligible
Citizen. If the transferee fails to make such certification, such redemption
shall be effected from the transferee on the original redemption date.
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4.12 EXCHANGE BY SPECIAL GENERAL PARTNER OF ITS UNSUBORDINATED GENERAL PARTNER
INTEREST AND ITS INTEREST IN THE OPERATING PARTNERSHIP
If the Managing General Partner has not entered into the Triarc Merger
pursuant to Section 4.7, then the Special General Partner may, at any time, in
one or more exchanges and in its sole discretion, exchange all or a portion of
its Unsubordinated General Partner Interest together with an equal portion of
its partnership interest in the Operating Partnership for Units having rights to
distributions of Available Cash from Operating Surplus equal to the distribution
rights with respect to such Available Cash from Operating Surplus of the
combined effective percentage interest in the Partnership and the Operating
Partnership that the Special General Partner exchanged. For example, as of the
Closing Date the Special General Partner's combined effective 2% interest in the
Partnership and the Operating Partnership would be exchanged into 223,419 Units
(or 242,765 Units if the over-allotment option is exercised, notwithstanding the
fact that the Special General Partner is not required to make any additional
capital contribution upon the exercise of the over-allotment option). Additional
capital contributions pursuant to Section 5.2 will increase the number of Units
into which such combined interest is exchanged. The Units received by the
Special General Partner pursuant to this Section 4.12 shall be (x) limited
partner interests and (b) issued as a combination of Subordinated Units and
Common Units; the proportion of the Subordinated Units to the total Units
received in this exchange shall be in the same proportion that the unconverted
Subordinated Units initially issued pursuant to Section 5.2 hereof that are
outstanding immediately before such exchange represent in relation to the total
Subordinated Units initially issued pursuant to Section 5.2 hereof. The Special
General Partner at the time of such conversion will have the same rights with
respect to its Common Units and Subordinated Units (including the right to
Cumulative Common Unit Arrearages) as the rights possessed by other Unitholders
of such Units, except, however, Units received upon such conversion will have an
aggregate capital account equal to the aggregate capital account of the combined
interest in the Partnership and the Operating Partnership that the Special
General Partner exchanged. Common Units issued pursuant to this Section 4.12
shall be subject to the restrictions of Section 6.7(b).
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 ORGANIZATIONAL CONTRIBUTIONS
In connection with the formation of the Partnership under the Delaware Act,
the Managing General Partner and the Special General Partner each made an
initial Capital Contribution to the Partnership in the amount of $10.00, for an
interest in the Partnership and each has been admitted as a General Partner of
the Partnership, and the Organizational Limited Partner made an initial Capital
Contribution to the Partnership in the amount of $980.00 for an interest in the
Partnership and has been admitted as a Limited Partner of the Partnership. The
Managing General Partner shall have a managing general partner interest and the
Special General Partner will have a non-managing general partner interest. As of
the Closing Date, the interest of the Organizational Limited Partner shall be
redeemed as provided in the Contribution and Conveyance Agreement; the initial
Capital Contributions of each Partner shall thereupon be refunded; and the
Organizational Limited Partner shall cease to be a Limited Partner of the
Partnership. Ninety-eight percent of any interest or other profit that may have
resulted from the investment or other use of such initial Capital Contributions
shall be allocated and distributed to the Organizational Limited Partner, and
the balance thereof shall be allocated and distributed to the General Partners,
Pro Rata.
5.2 CONTRIBUTIONS BY GENERAL PARTNERS
On the Closing Date and pursuant to the Contribution and Conveyance
Agreement, the Managing General Partner shall contribute to the Partnership, as
a Capital Contribution, all of its limited partner interest in the Operating
Partnership in exchange for (i) the continuation of its 1% Unsubordinated
General Partner Interest, subject to all of the rights, privileges and duties of
the Managing General Partner under this Agreement, (ii) 4,533,638 Subordinated
Units and (iii) all of the Incentive
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Distribution Rights. Simultaneously, on the Closing Date and pursuant to the
Contribution and Conveyance Agreement, the Special General Partner shall
contribute to the Partnership as a Capital Contribution all of its limited
partner interest in the Operating Partnership in exchange for the continuation
of its 1% Unsubordinated General Partner Interest relating to the Special
General Partner subject to all of the rights, privileges and duties of the
Special General Partner under this Agreement. In addition, upon the issuance of
any additional limited partnership interests by the Partnership (other than (a)
the conversion of general partner interests into limited partner interests
pursuant to Sections 4.12, 5.8(g), 5.8(h), 11.1(d), 11.3(b) or 13.1(l), or (b)
the issuance of the Common Units issued in the Initial Offering or pursuant to
the Over-Allotment Option), the General Partners shall be required to make,
Pro-Rata, additional Capital Contributions equal to 2/98th of any amount
contributed to the Partnership in exchange for such Additional Units. Except as
set forth in the immediately preceding sentence and Article XII, the General
Partners shall not be obligated to make any additional Capital Contributions to
the Partnership.
5.3 CONTRIBUTIONS BY INITIAL LIMITED PARTNERS
(a) On the Closing Date and pursuant to the Underwriting Agreement and the
Contribution and Conveyance Agreement, each Underwriter shall contribute to the
Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement
to be purchased by such Underwriter at the 'Closing Date,' as such term is
defined in the Underwriting Agreement. In exchange for such Capital
Contributions by the Underwriters, the Partnership shall issue Common Units to
each Underwriter on whose behalf such Capital Contribution is made in an amount
equal to the quotient obtained by dividing (i) the cash contribution to the
Partnership by or on behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.
(b) Upon the exercise of the Over-allotment Option, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price per
Initial Common Unit, multiplied by the number of Common Units specified in the
Underwriting Agreement to be purchased by such Underwriter at the Date of
Delivery. In exchange for such Capital Contributions by the Underwriters, the
Partnership shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient obtained by
dividing (i) the cash contributions to the Partnership by or on behalf of such
Underwriter by (ii) the Issue Price per Initial Common Unit.
(c) No Limited Partner Partnership Interests will be issued or issuable as
of or at the Closing Date other than (i) the Common Units issuable pursuant to
subparagraph (a) hereof in aggregate number equal to 6,190,476 and (ii) the
'Additional Units' as such term is defined in the Underwriting Agreement in
aggregate number up to 928,571 issuable upon exercise of the Over-allotment
Option pursuant to subparagraph (b) hereof.
5.4 INTEREST AND WITHDRAWAL
No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
17-502(b) of the Delaware Act.
5.5 CAPITAL ACCOUNTS
(a) The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the Managing
General Partner in its sole discretion) owning a Partnership Interest a separate
Capital
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Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
Managing General Partner based upon the provisions of the Operating
Partnership Agreement) of all property owned by the Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item of deduction
at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment in the Capital
Accounts shall be treated as an item of gain or loss.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
(iv) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code,
any deductions for depreciation, cost recovery or amortization attributable
to any Contributed Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the Partnership were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section
5.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions for
such depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such property
were equal to the Carrying Value of such property immediately following
such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero adjusted basis
for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost
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recovery deduction in the year such property is placed in service and shall
be allocated among the Partners pursuant to Section 6.1. Any restoration of
such basis pursuant to Section 48(q)(2) of the Code shall, to the extent
possible, be allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
(c) (i) Except as otherwise provided in Section 5.5(c)(ii), a transferee of
a Partnership Interest shall succeed to a pro rata portion of the Capital
Account of the transferor relating to the Partnership Interest so transferred;
provided, however, that, if the transfer causes a termination of the Partnership
under Section 708(b)(1)(B) of the Code, the Partnership's properties and
liabilities shall be deemed (i) to have been distributed in liquidation of the
Partnership to the Partners (including any transferee of a Partnership Interest
that is a party to the transfer causing such termination) pursuant to Section
12.4 (after adjusting the balance of the Capital Accounts of the Partners as
provided in Section 5.5(d)(ii)) and recontributed by such Partners in
reconstitution of the Partnership or (ii) to be treated as mandated by Treasury
Regulations issued pursuant to Section 704 and 708 of the Code. Any such deemed
contribution or distribution shall be treated as an actual contribution or
distribution, as the case may be, for purposes of this Section 5.5. In such
event, the Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed contribution and distribution pursuant to
Section 5.5(d)(ii) and such Carrying Values shall then constitute the Agreed
Values of such properties upon such deemed contribution to the new Partnership.
The Capital Accounts of such new Partnership shall be maintained in accordance
with the principles of this Section 5.5.
(ii) Immediately prior to (x) the transfer of a Subordinated Unit (other
than a transfer to an Affiliate of the Managing General Partner, unless the
Managing General Partner elects to have this subparagraph 5.5(c)(ii) apply), (y)
the transfer of a Subordinated Unit that has converted into a Common Unit
pursuant to Section 5.8 by a holder thereof or (z) transfer of Units received
upon the exchange of all or a portion of the Unsubordinated General Partner
Interests into Units ('Exchange Units') pursuant to Section 4.12, the Capital
Account maintained for such Person with respect to its Subordinated Units,
converted Subordinated Units or Exchange Units will (A) first, be allocated to
the Subordinated Units, converted Subordinated Units or Exchange Units to be
transferred in an amount equal to the product of (x) the number of such
Subordinated Units, converted Subordinated Units or Exchange Units to be
transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B)
second, any remaining balance in such Capital Account will be retained by the
transferor, regardless of whether it has retained any Subordinated Units,
converted Subordinated Units or Exchange Units. Following any such allocation,
the transferor's Capital Account, if any, maintained with respect to the
retained Subordinated Units, converted Subordinated Units or Exchange Units, if
any, will have a balance equal to the amount allocated under clause (B)
hereinabove, and the transferee's Capital Account established with respect to
the transferred Subordinated Units, converted Subordinated Units or Exchange
Units will have a balance equal to the amount allocated under clause (A)
hereinabove.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash or Contributed
Property or the conversion of the General Partner's Combined Interest to Common
Units pursuant to Section 11.3(b) (or upon the occurrence of other event listed
in such regulation), the Capital Account of all Partners and the Carrying Value
of each Partnership property immediately prior to such issuance shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each such property
immediately prior to such issuance and had been allocated to the Partners at
such time pursuant to Section 6.1(c). In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash equivalents)
immediately prior to the issuance of additional Units shall be determined by the
Managing General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the Managing General Partner, in arriving at such
valuation, must take fully into account the fair market value of the Partnership
Interests of all Partners at such time. The Managing General Partner shall
allocate such aggregate value among the assets of the Partnership (in such
manner as it determines in its discretion to be reasonable) to arrive at a fair
market value for individual properties.
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(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of all
Partners and the Carrying Value of all Partnership property shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall (A) in the
case of an actual distribution which is not made pursuant to Section 12.4 or in
the case of a deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708 of the Code, be determined and allocated in
the same manner as that provided in Section 5.5(d)(i) or (B) in the case of a
liquidating distribution pursuant to Section 12.4, be determined and allocated
by the Liquidator using such reasonable method of valuation as it may adopt.
5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES
(a) Subject to Section 5.7, the Partnership may issue additional
Partnership Securities for any Partnership purpose at any time and from time to
time to such Persons for such consideration and on such terms and conditions as
shall be established by the Managing General Partner in its sole discretion, all
without the approval of any Unitholders or Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the Managing General Partner in
the exercise of its sole discretion, including (i) the right to share
Partnership profits and losses or items thereof; (ii) the right to share in
Partnership distributions; (iii) the rights upon dissolution and liquidation of
the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and
conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; and (vii) the right, if any, of each
such Partnership Security to vote on Partnership matters, including matters
relating to the relative rights, preferences and privileges of such Partnership
Security.
(c) The Managing General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities pursuant to this Section 5.6, (ii) the
conversion of a general partner interest into a limited partner interest
pursuant to the terms of this Agreement, (iii) the admission of Additional
Limited Partners and (iv) all additional issuances of Partnership Securities.
The Managing General Partner is further authorized and directed to specify the
relative rights, powers and duties of the holders of the Units or other
Partnership Securities being so issued. The Managing General Partner shall do
all things necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in connection
with any future issuance of Partnership Securities or in connection with the
conversion of a general partner interest into a limited partner interest
pursuant to the terms of this Agreement, including compliance with any statute,
rule, regulation or guideline of any federal, state or other governmental agency
or any National Securities Exchange on which the Units or other Partnership
Securities are listed for trading.
5.7 LIMITATIONS ON ISSUANCE OF ADDITIONAL PARTNERSHIP SECURITIES
The issuance of Partnership Securities pursuant to Section 5.6 shall be
subject to the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not issue
an aggregate of more than 3,095,238 additional Parity Units or an
equivalent number of Partnership Securities having rights to
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distributions or in liquidation ranking on a parity with the Common Units,
or ranking on parity with, or prior or senior to, the Subordinated Units in
either case without the prior approval of the holders of a Unit Majority.
In applying this limitation, there shall be excluded Common Units issued
(A) in connection with the exercise of the Over-allotment Option, (B) in
accordance with Sections 5.7(b) and 5.7(c), (C) upon conversion of
Subordinated Units pursuant to Section 5.8, (D) for purchase by the
Managing General Partner or any other Group Member in respect of, or
otherwise issued upon, the exercise of options granted by the Managing
General Partner or any other Group Member pursuant to any of its employee
benefit plan or otherwise in connection with the employee benefits plans of
the Managing General Partner or any other Group Member, (E) upon the
exchange of all or a portion of the Special General Partner's
Unsubordinated General Partner Interests and of its partnership interest in
the Operating Partnership pursuant to Section 4.12 and (F) in the event of
a combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity Units
or an equivalent number of Partnership's Securities having rights to
distributions or in liquidation ranking on a parity with, or prior or
senior to, the Subordinated Units, in either case, prior to the end of the
Subordination Period and without the prior approval of the Unitholders if
such issuance occurs (i) in connection with an Acquisition or a Capital
Improvement or (ii) within 365 days of, and the net proceeds from such
issuance are used to repay debt incurred in connection with, an Acquisition
or a Capital Improvement, in each case where such Acquisition or Capital
Improvement involves assets that, if acquired by the Partnership as of the
date that is one year prior to the first day of the Quarter in which such
Acquisition is to be consummated or such Capital Improvement is to be
completed, would have resulted in an increase in:
(A) the amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all Outstanding Units) with respect
to each of the four most recently completed Quarters (on a pro forma
basis as described below) as compared to
(B) the actual amount of Adjusted Operating Surplus generated by
the Partnership on a per-Unit basis (for all Outstanding Units) with
respect to each of such four Quarters (or if the issuances of Units with
respect to an Acquisition or Capital Improvement occurs within the first
full four quarters from the Closing Date, then Adjusted Operating
Surplus as utilized in clause (i) and (ii) shall be based on the
Partnership's pro forma amount of Adjusted Operating Surplus for any
quarter (as reflected in the Registration Statement) in which there was
no actual performance).
The amount in clause (i) shall be determined on a pro forma basis
assuming that (A) all of the Parity Units or Partnership Securities to be
issued in connection with or within 365 days of such Acquisition or Capital
Improvement had been issued and outstanding, (B) all indebtedness for
borrowed money to be incurred or assumed in connection with such
Acquisition or Capital Improvement (other than any such indebtedness that
is to be repaid with the proceeds of such debt issuance) had been incurred
or assumed, in each case as of the commencement of such four-Quarter
period, (C) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the personnel
expenses for employees to be retained by the Partnership in the operation
of the acquired assets, and (D) the non-personnel costs and expenses are
computed on the same basis as those incurred by the Partnership in the
operation of the Partnership's business at similarly situated Partnership
facilities.
(c) The Partnership may also issue an unlimited number of Parity Units
or an equivalent number of Partnership Securities having rights to
distributions or in liquidation ranking on a parity with the Common Units
or ranking on parity with, or prior or senior to, the Subordinated Units,
in either case prior to the end of the Subordination Period and without the
approval of the Unitholders if the proceeds from such issuance are used
exclusively to repay up to $50 million of indebtedness of a Group Member
where the aggregate amount of distributions that would have been paid with
respect to such newly issued Units or Partnership Securities, plus the
related distributions on the Unsubordinated General Partner Interests in
respect of the four-Quarter period ending prior to the first day of the
Quarter in which the issuance is to be consummated (assuming such
additional Units or Partnership Securities had been Outstanding throughout
such
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period and that distributions equal to the distributions that were actually
paid on the Outstanding Units during the period were paid on such
additional Units) did not exceed the interest costs actually incurred
during such period on the indebtedness that is to be repaid (or, if such
indebtedness was not outstanding throughout the entire period, would have
been incurred had such indebtedness been outstanding for the entire
period).
(d) During the Subordination Period, the Partnership shall not issue
additional Partnership Securities having rights to distributions or in
liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Unit Majority.
(e) No fractional Units shall be issued by the Partnership.
5.8 CONVERSION OF SUBORDINATED UNITS
(a) A total of 1,133,410 of the Outstanding Subordinated Units plus
one-quarter (25%) of the Subordinated Units, if any, previously issued pursuant
to Section 4.12 will convert into Common Units on a one-for-one basis on the
first day after the Record Date for distribution in respect of any Quarter
ending on or after June 30, 1999, in respect of which:
(i) distributions under Section 6.4 in respect of all Outstanding
Common Units and Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equals or exceeds the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of the two
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equals or exceeds the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units, plus the
related distribution on the Unsubordinated General Partner Interests,
during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units
is zero.
(b) An additional 1,133,410 of the Outstanding Subordinated Units plus a
number of additional Outstanding Subordinated Units equal to one quarter (25%)
of the total Units previously issued pursuant to Section 4.12 will convert into
Common Units on a one-for-one basis on the first day after the Record Date for
distribution in respect of any Quarter ending on or after June 30, 2000, in
respect of which:
(i) distributions under Section 6.4 in respect of all Outstanding
Common Units and Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equals or exceeds the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of the two
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equals or exceeds the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units, plus the
related distribution on the Unsubordinated General Partner Interests,
during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units
is zero;
provided, however, that the conversion of Subordinated Units pursuant to this
Section 5.8(b) may not occur until at least one year following the conversion of
Subordinated Units pursuant to Section 5.8(a).
(c) In the event that less than all of the Outstanding Subordinated Units
shall convert into Common Units pursuant to Section 5.8(a) or 5.8(b) at a time
when there shall be more than one holder of Subordinated Units, then, unless all
of the holders of Subordinated Units shall agree to a different allocation, the
Subordinated Units that are to be converted into Common Units shall be allocated
among the holders of Subordinated Units pro rata based on the number of
Subordinated Units owned by each such holder.
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(d) Any Subordinated Units that are not converted into Common Units
pursuant to Sections 5.8(a) and (b) shall convert into Common Units on a
one-for-one basis on the first day following the Record Date for distributions
in respect of the final Quarter of the Subordination Period.
(e) Notwithstanding any other provision of this Agreement, all the then
Outstanding Subordinated Units will automatically convert into Common Units on a
one-for-one basis as set forth in, and pursuant to the terms of, Section 11.4
hereof.
(f) A Subordinated Unit that has converted into a Common Unit shall be
subject to the provisions of Section 6.7(b).
(g) A Subordinated Unit (if not previously converted into a limited partner
interest pursuant to the terms of this Agreement) that converts to a Common Unit
shall automatically become a limited partner interest immediately prior to the
time of such conversion into a Common Unit. This conversion into a limited
partner interest shall be effective even if such Unit is subject to the
restrictions of Section 6.7(b).
(h) A Subordinated Unit (if not previously converted into a limited partner
interest pursuant to the terms of this Agreement) shall automatically convert
into a limited partner interest in the hands of the transferor immediately prior
to the transfer of such Unit to a Person who is not an Affiliate of the Managing
General Partner.
5.9 LIMITED PREEMPTIVE RIGHT
Except as provided in this Section 5.9 and Section 5.2, no Person shall
have any preemptive, preferential or other similar right with respect to the
issuance of any Partnership Security, whether unissued, held in the treasury or
hereafter created. The Managing General Partner shall have the right, which it
may from time to time assign in whole or in part to any of its Affiliates, to
purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than
the Managing General Partner and its Affiliates, to the extent necessary to
maintain the Percentage Interests of the General Partners and their Affiliates
equal to that which existed immediately prior to the issuance of such
Partnership Securities.
5.10 SPLITS AND COMBINATION
(a) Subject to Sections 5.10(d), 6.6 and 6.8 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a subdivision or
combination of Partnership Securities so long as, after any such event, each
Partner shall have the same Percentage Interest in the Partnership as before
such event, and any amounts calculated on a per Unit basis (including any Common
Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of
Units (including the number of Subordinated Units that may convert prior to the
end of the Subordination Period and the number of additional Parity Units or
Partnership Securities having rights to distributions or in liquidation ranking
on a parity with or prior or senior to the Subordinated Units that may be issued
pursuant to Section 5.7 without a Unitholder vote) are proportionately adjusted
retroactive to the beginning of the Partnership.
(b) Whenever such a distribution, subdivision or combination of Partnership
Securities is declared, the Managing General Partner shall select a Record Date
as of which the distribution, subdivision or combination shall be effective and
shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of a date not less than 10 days prior to the date of such
notice. The Managing General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to
be held by each Record Holder after giving effect to such distribution,
subdivision or combination. The Managing General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the
accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or combination,
the Partnership may issue Certificates to the Record Holders of Partnership
Securities as of the applicable Record Date representing the new number of
Partnership Securities held by such Record Holders, or the Managing General
Partner may adopt such other procedures as it may deem appropriate to reflect
such changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the
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Partnership shall require, as a condition to the delivery to a Record Holder of
such new Certificate, the surrender of any Certificate held by such Record
Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution,
subdivision or combination of Units. If a distribution, subdivision or
combination of Units would result in the issuance of fractional Units but for
the provisions of Section 5.7(e) and this Section 5.10(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to
the next higher Unit).
5.11 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER PARTNERSHIP
INTERESTS
All Limited Partner Partnership Interests either (a) issued pursuant to,
and in accordance with the requirements of, this Article V or (b) converted from
a general partner interest into a limited partner interest pursuant to the terms
of this Agreement shall be fully paid and non-assessable Limited Partner
Partnership Interests in the Partnership, except as such non-assessability may
be affected by Section 17-607 of the Delaware Act.
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ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSE
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set forth in
Section 6.1(d), Net Income for each taxable year and all items of income, gain,
loss and deduction taken into account in computing Net Income for such taxable
year shall be allocated as follows:
(i) First, 100% to the General Partners, in proportion to the
aggregate Net Losses allocated to the General Partners pursuant to Section
6.1(b)(iii) for all previous taxable years, until the aggregate Net Income
allocated to the General Partners pursuant to this Section 6.1(a)(ii) for
the current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to the General Partners pursuant to Section
6.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partners, in proportion to the
aggregate Net Losses allocated to the General Partners pursuant to Section
6.1(b)(ii) for all previous taxable years, and the Unitholders, in
accordance with their respective Percentage Interests, until the aggregate
Net Income allocated to such Partners pursuant to this Section 6.1(a)(ii)
for the current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to such Partners pursuant to Section
6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General Partners, Pro
Rata, and the Unitholders in accordance with their respective Percentage
Interests.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partners, Pro Rata, and the
Unitholders, in accordance with their respective Percentage Interests,
until the aggregate Net Losses allocated pursuant to this Section 6.1(b)(i)
for the current taxable year and all previous taxable years is equal to the
aggregate Net Income allocated to such Partners pursuant to Section
6.1(a)(iii) for all previous taxable years, provided, however, that the Net
Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the
extent that such allocation would cause any Unitholder to have a deficit
balance in its Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in its Adjusted Capital Account);
(ii) Second, 100% to the General Partners, Pro Rata, and the
Unitholders in accordance with their respective Percentage Interests;
provided, however, that Net Losses shall not be allocated pursuant to this
Section 6.1(b)(ii) to the extent that such allocation would cause any
Unitholder to have a deficit balance in its Adjusted Capital Account at the
end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account); and
(iii)Third, the balance, if any, 100% to the General Partners, Pro
Rata.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of this
Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.
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(i) If a Net Termination Gain is recognized (or deemed recognized pursuant
to Section 5.5(d)), such Net Termination Gain shall be allocated among the
Partners in the following manner (and the Capital Accounts of the Partners shall
be increased by the amount so allocated in each of the following subclauses, in
the order listed, before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the total
deficit balances in the Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account;
(B) Second, 98% to all Unitholders holding Common Units, in proportion
to their relative Percentage Interests, and 2% to the General Partners, Pro
Rata, until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2) the
Minimum Quarterly Distribution for the Quarter during which the Liquidation
Date occurs, reduced by any distribution pursuant to Section 6.4(a)(i) or
(b)(i) with respect to such Common Unit for such Quarter (the amount
determined pursuant to this clause (2) is hereinafter defined as the
'Unpaid MQD') plus (3) any then existing Cumulative Common Unit Arrearage;
(C) Third, if such Net Termination Gain is recognized (or is deemed to
be recognized) prior to the expiration of the Subordination Period, 98% to
all Unitholders holding Subordinated Units, in proportion to their relative
Percentage Interests, and 2% to the General Partners, Pro Rata, until the
Capital Account in respect of each Subordinated Unit then Outstanding
equals the sum of (1) its Unrecovered Capital, determined for the taxable
year (or portion thereof) to which this allocation of gain relates, plus
(2) the Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to Section
6.4(a)(iii) with respect to such Subordinated Unit for such Quarter;
(D) Fourth, 98% to all Unitholders, in accordance with their relative
Percentage Interests, and 2% to the General Partners, Pro Rata, until the
Capital Account in respect of each Common Unit then Outstanding is equal to
the sum of (1) its Unrecovered Capital, plus (2) the Unpaid MQD, plus (3)
any then existing Cumulative Common Unit Arrearage, plus (4) the excess of
(aa) the First Target Distribution less the Minimum Quarterly Distribution
for each Quarter of the Partnership's existence over (bb) the cumulative
per Unit amount of any distributions of Operating Surplus that was
distributed pursuant to Sections 6.4(a)(iv) and 6.4(b)(ii) (the sum of (1)
plus (2) plus (3) plus (4) is hereinafter defined as the 'First Liquidation
Target Amount');
(E) Fifth, 86.7526% to all Unitholders, in accordance with their
relative Percentage Interests, 11.2268% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the First Liquidation Target Amount,
plus (2) the excess of (aa) the Second Target Distribution less the First
Target Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of Operating
Surplus that was distributed pursuant to Sections 6.4(a)(v) and 6.4(b)(iii)
(the sum of (1) plus (2) is hereinafter defined as the 'Second Liquidation
Target Amount');
(F) Sixth, 76.5464% to all Unitholders, in accordance with their
relative Percentage Interests, 21.4340% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the Second Liquidation Target
Amount, plus (2) the excess of (aa) the Third Target Distribution less the
Second Target Distribution for each Quarter of the Partnership's existence
over (bb) the cumulative per Unit amount of any distributions of Operating
Surplus that was distributed pursuant to Sections 6.4(a)(vi) and
6.4(b)(iv); and
(G) Finally, any remaining amount 51.0309% to all Unitholders, in
accordance with their relative Percentage Interests, 46.9485% to the
holders of the Incentive Distribution Rights, Pro Rata, and 2.0206% to the
General Partners, Pro Rata.
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant
to Section 5.5(d)), such Net Termination Loss shall be allocated among the
Partners in the following manner:
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(A) First, if such Net Termination Loss is recognized (or is deemed to
be recognized) prior to the conversion of the last Outstanding Subordinated
Unit, 98% to the Unitholders holding Subordinated Units, in proportion to
their relative Percentage Interests, and 2% to the General Partners, Pro
Rata, until the Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;
(B) Second, 98% to all Unitholders holding Common Units, in proportion
to their relative Percentage Interests, and 2% to the General Partners, Pro
Rata, until the Capital Account in respect of each Common Unit then
Outstanding has been reduced to zero;
(C) Third, 100% to the General Partners, Pro Rata until the Capital
Account of the Special General Partner has been reduced to zero; and
(D) Fourth, the balance, if any, 100% to the Managing General Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section
6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to Section
12.4) to any Unitholder with respect to its Units for a taxable year is
greater (on a per Unit basis) than the amount of cash or the Net Agreed
Value of property distributed to the other Unitholders with respect to
their Units (on a per Unit basis), then (1) each Unitholder receiving
such greater cash or property distribution shall be allocated gross
income in an amount equal to the product of (aa) the amount by which the
distribution (on a per Unit basis) to such Unitholder exceeds the
distribution (on a per Unit basis) to the Unitholders receiving the
smallest distribution and (bb) the number of Units owned by the
Unitholder receiving the greater distribution; and (2) the General
Partners shall be allocated, Pro Rata, gross income in an aggregate
amount equal to 2/98th of the sum of the amounts allocated in clause (1)
above.
(B) After the application of Section 6.1(d)(iii)(A), all or any
portion of the remaining items of Partnership gross income or gain for
the taxable period, if any, shall be allocated
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100% to the holders of Incentive Distribution Rights, Pro Rata, until
the aggregate amount of such items allocated to the holders of Incentive
Distribution Rights pursuant to this paragraph 6.1(d)(iii)(B) for the
current taxable year and all previous taxable years is equal to the
cumulative amount of all Incentive Distributions made to the holders of
Incentive Distribution Rights from the Closing Date to a date 45 days
after the end of the current taxable year.
(iv) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).
(v) Gross Income Allocations. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period
in excess of the sum of (A) the amount such Partner is required to restore
pursuant to the provisions of this Agreement and (B) the amount such
Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially
allocated items of Partnership gross income and gain in the amount of such
excess as quickly as possible; provided, that an allocation pursuant to
this Section 6.1(d)(v) shall be made only if and to the extent that such
Partner would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been
tentatively made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the Managing General Partner determines
in its good faith discretion that the Partnership's Nonrecourse Deductions
must be allocated in a different ratio to satisfy the safe harbor
requirements of the Treasury Regulations promulgated under Section 704(b)
of the Code, the Managing General Partner is authorized, upon notice to the
other Partners, to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any taxable period shall be allocated 100% to the Partner that bears
the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance
with Treasury Regulation Section 1.704-2(i). If more than one Partner bears
the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated
between or among such Partners in accordance with the ratios in which they
share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(c) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury regulations.
(x) Economic Uniformity. At the election of the Managing General
Partner with respect to any taxable period ending upon, or after, the
termination of the Subordination Period, all or a portion of the remaining
items of Partnership gross income or gain for such taxable period, after
taking into account allocations pursuant to Sections 6.1(d)(iii), shall be
allocated 100% to each Partner holding
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Subordinated Units that are Outstanding as of the termination of the
Subordination Period ('Remaining Subordinated Units') in the proportion of
the number of Remaining Subordinated Units held by such Partner to the
total number of Remaining Subordinated Units then Outstanding, until each
such Partner has been allocated an amount of gross income or gain which
increases the Capital Account maintained with respect to such Remaining
Subordinated Units to an amount equal to the product of (A) the number of
Remaining Subordinated Units held by such Partner and (B) the Per Unit
Capital Amount for a Common Unit. The purpose of this allocation is to
establish uniformity between the Capital Accounts underlying Remaining
Subordinated Units and the Capital Accounts underlying Common Units held by
Persons other than a Managing General Partner and its Affiliates
immediately prior to the conversion of such Remaining Subordinated Units
into Common Units. At the election of the Special General Partner, similar
allocations shall be made to it with respect to Exchange Units in order to
produce economic uniformity. This allocation method for establishing such
economic uniformity will only be available to the General Partners if the
method for allocating the Capital Account maintained with respect to the
Subordinated Units or Exchange Units between the transferred and retained
Subordinated Units or Exchange Units pursuant to Section 5.5(c)(ii) does
not otherwise provide such economic uniformity to the Subordinated Units or
Exchange Units.
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this Section 6.1, other
than the Required Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so that, to the extent
possible, the net amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required Allocations and the
Agreed Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under the
Agreed Allocations had the Required Allocations and the related Curative
Allocation not otherwise been provided in this Section 6.1.
Notwithstanding the preceding sentence, Required Allocations relating to
(1) Nonrecourse Deductions shall not be taken into account except to the
extent that there has been a decrease in Partnership Minimum Gain and
(2) Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(xi)(A) shall only be made with respect to Required Allocations to
the extent the Managing General Partner reasonably determines that such
allocations will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this Section
6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the Managing General Partner
reasonably determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The Managing General Partner shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions of
Section 6.1(d)(xi)(A) in whatever order is most likely to minimize the
economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section
6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize
such economic distortions.
(xii) Corrective Allocations. In the event of any allocation of
Additional Book Basis Derivative Items or any Book-Down Event or any
recognition of a Net Termination Loss, the following rules shall apply:
(A) In the case of any allocation of Additional Book Basis
Derivative Items (other than an allocation of Unrealized Gain or
Unrealized Loss under Section 5.5(d) hereof), the Managing General
Partner shall allocate, Pro Rata, additional items of gross income and
gain away from the holders of Incentive Distribution Rights to the
Unitholders and the General Partners, or additional items of deduction
and loss away from the Unitholders and the General Partners to the
holders of Incentive Distribution Rights, Pro Rata, to the extent that
the Additional Book Basis Derivative Items allocated to the Unitholders
or the General Partners exceed their Share of Additional Book Basis
Derivative Items. For this purpose, the Unitholders and the General
Partners shall be treated as being allocated Additional Book
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Basis Derivative Items to the extent that such Additional Book Basis
Derivative Items have reduced the amount of income that would otherwise
have been allocated to the Unitholders or the General Partners under the
Partnership Agreement (e.g., Additional Book Basis Derivative Items
taken into account in computing cost of goods sold would reduce the
amount of book income otherwise available for allocation among the
Partners). Any allocation made pursuant to this Section 6.1(d)(xii)(A)
shall be made after all of the other Agreed Allocations have been made
as if this Section 6.1(d)(xii) were not in this Agreement and, to the
extent necessary, shall require the reallocation of items that have been
allocated pursuant to such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital Accounts
of the Partners resulting from a Book-Down Event or from the recognition
of a Net Termination Loss, such negative adjustment (1) shall first be
allocated, to the extent of the Aggregate Remaining Net Positive
Adjustments, in such a manner, as reasonably determined by the Managing
General Partner, that to the extent possible the aggregate Capital
Accounts of the holders of Incentive Distribution Rights will equal the
amount which would have been the holders of Incentive Distribution
Rights Capital Account balance if no prior Book-Up Events had occurred,
and (2) any negative adjustment in excess of the Aggregate Remaining Net
Positive Adjustments shall be allocated pursuant to Section 6.1(c)
hereof.
(C) In making the allocations required under this Section
6.1(d)(xii), the Managing General Partner, in its sole discretion, may
apply whatever conventions or other methodology it deems reasonable to
satisfy the purpose of this Section 6.1(d)(xii).
6.2 ALLOCATIONS FOR TAX PURPOSES
(a) Except as otherwise provided herein, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of 'book' income, gain, loss
or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between
the Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of 'book' gain or loss
is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 5.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of 'book' gain or loss is
allocated pursuant to Section 6.1.
(iii) The Managing General Partner shall apply the principles of
Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units (or any class or classes thereof), the
Managing General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including, without limitation, gross
income) or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury regulations
under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve
or achieve uniformity of the
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Units (or any class or classes thereof). The Managing General Partner may adopt
such conventions, make such allocations and make such amendments to this
Agreement as provided in this Section 6.2(c) only if such conventions,
allocations or amendments would not have a material adverse effect on the
Partners, the holders of any class or classes of Units issued and Outstanding or
the Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The Managing General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-l(a)(6) or the legislative history of Section 197 of
the Code. If the Managing General Partner determines that such reporting
position cannot reasonably be taken, the Managing General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
Units in the same month would receive depreciation and amortization deductions,
based upon the same applicable rate as if they had purchased a direct interest
in the Partnership's property. If the Managing General Partner chooses not to
utilize such aggregate method, the Managing General Partner may use any other
reasonable depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Units that would not have a material
adverse effect on the Limited Partners or the Record Holders of any class or
classes of Units.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction attributable
to transferred Unsubordinated General Partner Interest or to transferred Units
or Incentive Distribution Rights, shall for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the New York Stock Exchange on
the first Business Day of each month; provided, however, that (i) if the
Underwriter's Over-allotment Option is not exercised, such items for the period
beginning on the Closing Date and ending on the last day of the month in which
the Closing Date occurs shall be allocated to Partners as of the opening of the
New York Stock Exchange on the first Business Day of the next succeeding month
or (ii) if the Underwriters Over-allotment Option is exercised, such items for
the period beginning on the Closing Date and ending on the last day of the month
in which the Date of Delivery occurs shall be allocated to the Partners as of
the opening of the New York Stock Exchange on the first Business Day of the next
succeeding month; and provided, further, that gain or loss on a sale or other
disposition of any assets of the Partnership other than in the ordinary course
of business shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the month in which such gain or loss
is recognized for federal income tax purposes. The Managing General Partner may
revise, alter or otherwise modify such methods of allocation as it determines
necessary, to the extent permitted or required by Section 706 of the Code and
the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Unitholder under the
provisions of this Article VI shall instead be made to the beneficial owner of
Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code or any other method acceptable to the Managing General Partner in its
sole discretion.
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6.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS; DISTRIBUTIONS TO RECORD
HOLDERS
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on September 30, 1996, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 17-607 of the Delaware
Act, be distributed in accordance with this Article VI by the Partnership to the
Partners as of the Record Date selected by the Managing General Partner in its
reasonable discretion. All amounts of Available Cash distributed by the
Partnership on any date from any source shall be deemed to be Operating Surplus
until the sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 6.4 equals the Operating Surplus
from the Closing Date through the close of the immediately preceding Quarter.
Any remaining amounts of Available Cash distributed by the Partnership on such
date shall, except as otherwise provided in Section 6.5, be deemed to be
'CapitalSurplus.'All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the Partnership, all
receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance with, and
subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion to treat taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners, as a distribution of Available Cash to such
Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by
the Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holder of such Partnership Interest as of
the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
6.4 DISTRIBUTIONS OF AVAILABLE CASH FROM OPERATING SURPLUS
(a) During Subordination Period. Available Cash with respect to any Quarter
within the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5 shall, subject to Section 17-607 of the
Delaware Act, be distributed as follows, except as otherwise required by Section
5.6(b) in respect of additional Partnership Securities issued pursuant thereto:
(i) First, 98% to the Unitholders holding Common Units, in proportion
to their relative Percentage Interests, and 2% to the General Partners, Pro
Rata, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(ii) Second, 98% to the Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 2% to the General
Partners, Pro Rata, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the Cumulative Common Unit
Arrearage existing with respect to such Quarter;
(iii) Third, 98% to the Unitholders holding Subordinated Units, in
proportion to their relative Percentage Interests, and 2% to the General
Partners, Pro Rata, until there has been distributed in respect of each
Subordinated Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(iv) Fourth, 98% to all Unitholders, in accordance with their relative
Percentage Interests, and 2% to the General Partners, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution for such Quarter;
(v) Fifth, 86.7526% to all Unitholders, in accordance with their
relative Percentage Interests, 11.2268% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Second Target Distribution
over the First Target Distribution for such Quarter;
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(vi) Sixth, 76.5464% to all Unitholders, in accordance with their
relative Percentage Interests, 21.4330% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Third Target Distribution
over the Second Target Distribution for such Quarter; and
(vii) Thereafter, 51.0309% to all Unitholders, in accordance with
their relative Percentage Interests, 46.9485% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2.0206% to the General
Partners, Pro Rata;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).
(b) After Subordination Period. Available Cash with respect to any Quarter
after the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of the
Delaware Act, shall be distributed as follows, except as otherwise required by
Section 5.6(b) in respect of additional Partnership Securities issued pursuant
thereto:
(i) First, 98% to all Unitholders, in accordance with their relative
Percentage Interests, and 2% to the General Partners, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(ii) Second, 98% to all Unitholders, in accordance with their relative
Percentage Interests, and 2% to the General Partners, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution for such Quarter;
(iii) Third, 86.7526% to all Unitholders, in accordance with their
relative Percentage Interests, and 11.2268% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Second Target Distribution
over the First Target Distribution for such Quarter;
(iv) Fourth, 76.5464% to all Unitholders, in accordance with their
relative Percentage Interests, and 21.4330% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Third Target Distribution
over the Second Target Distribution for such Quarter; and
(v) Thereafter, 51.0309% to all Unitholders, in accordance with their
relative Percentage Interests, and 46.9485% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2.0206% to the General Partners, Pro
Rata;
provided, however, that if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section 6.4(b)(v).
6.5 DISTRIBUTIONS OF AVAILABLE CASH FROM CAPITAL SURPLUS
Available Cash that is deemed to be Capital Surplus pursuant to the
provisions of Section 6.3 shall, subject to Section 17-607 of the Delaware Act,
be distributed, unless the provisions of Section 6.3 require otherwise, 98% to
all Unitholders, in accordance with their relative Percentage Interests, and 2%
to the General Partners, Pro Rata, until a hypothetical holder of a Common Unit
acquired on the
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Closing Date has received with respect to such Common Unit, during the period
since the Closing Date through such date, distributions of Available Cash that
are deemed to be Capital Surplus in an aggregate amount equal to the Initial
Unit Price. Available Cash that is deemed to be Capital Surplus shall then be
distributed 98% to all Unitholders holding Common Units, in accordance with
their relative Percentage Interests, and 2% to the General Partners, Pro Rata,
until there has been distributed in respect of each Common Unit then Outstanding
an amount equal to the Cumulative Common Unit Arrearage. Thereafter, all
Available Cash shall be distributed as if it were Operating Surplus and shall be
distributed in accordance with Section 6.4.
6.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION LEVELS
(a) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution, Third Target Distribution, Common Unit Arrearages and
Cumulative Common Unit Arrearages shall be proportionately adjusted in the event
of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 5.10. In the event of a distribution of
Available Cash that is deemed to be from Capital Surplus, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted proportionately
downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be, by a fraction of
which the numerator is the Unrecovered Capital of the Common Units immediately
after giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 6.8.
6.7 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF SUBORDINATED UNITS
(a) Except with respect to the right to vote on or approve matters
requiring the vote or approval of a percentage of the holders of Outstanding
Common Units and the right to participate in allocations of income, gain, loss
and deduction and distributions made with respect to Common Units, the holder of
a Subordinated Unit shall have all of the rights and obligations of a Unitholder
holding Common Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to Section 5.8, the
Unitholder holding a Subordinated Unit shall possess all of the rights and
obligations of a Unitholder holding Common Units hereunder, including, the right
to vote as a Common Unitholder and the right to participate in allocations of
income, gain, loss and deduction and distributions made with respect to Common
Units; provided, however, that such converted Subordinated Units shall remain
subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b).
(b) The Unitholder holding (i) a Subordinated Unit which has converted into
a Common Unit pursuant to Section 5.8 or (ii) a Common Unit issued pursuant to
Section 4.12 (such Units described in (i) and (ii) are referred to in this
Section 6.7(b) as 'Converted Units') shall not be issued a Common Unit
Certificate, and shall not be permitted to transfer its Converted Units to a
Person which is not an Affiliate of the holder until such time as the Managing
General Partner determines, based on advice of counsel, that a Converted Unit
should have, as a substantive matter, like intrinsic economic and federal income
tax characteristics, in all material respects, to the intrinsic economic and
federal income tax characteristics of an Initial Common Unit. In connection with
the condition imposed by this Section 6.7(b), the Managing General Partner may
take whatever reasonable steps are required to provide economic uniformity to
the Converted Units in preparation for a transfer of such Converted Units,
including the application of Sections 5.5(c)(ii) and 6.1(d)(x); provided,
however, that no such steps may be taken that would have a material adverse
effect on the Unitholders holding Common Units represented by Common Unit
Certificates.
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6.8 ENTITY-LEVEL TAXATION
If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership or
the Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted to equal to the
product obtained by multiplying (a) the amount thereof by (b) one minus the sum
of (i) the highest marginal federal corporate (or other entity, as applicable)
income tax rate of the Partnership for the taxable year of the Partnership in
which such Quarter occurs (expressed as a percentage) plus (ii) the effective
overall state and local income tax rate (expressed as a percentage) applicable
to the Partnership for the calendar year next preceding the calendar year in
which such Quarter occurs (after taking into account the benefit of any
deduction allowable for federal income tax purposes with respect to the payment
of state and local income taxes), but only to the extent of the increase in such
rates resulting from such legislation or interpretation. Such effective overall
state and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or the Operating
Partnership is taxable for federal income tax purposes as an association taxable
as a corporation or is otherwise subject to entity-level taxation by determining
such rate as if the Partnership or the Operating Partnership had been subject to
such state and local taxes during such preceding taxable year.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 MANAGEMENT
(a) The Managing General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the Managing General Partner, and no
Special General Partner (unless it becomes Managing General Partner pursuant to
Section 11.1(d) hereof), Unitholder, Limited Partner or Assignee shall have any
management power over the business and affairs of the Partnership. In addition
to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the Managing General
Partner under any other provision of this Agreement, the Managing General
Partner, subject to Section 7.3, shall have full power and authority to do all
things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money,
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or
the merger or other combination of the Partnership with or into another
Person subject, however, to any prior approval that may be required
pursuant to Section 7.3;
(iv) the use of the assets of the Partnership (including cash on hand)
for any purpose consistent with the terms of this Agreement, including the
financing of the conduct of the operations of the Partnership Group, the
lending of funds to other Persons (including the Operating Partnership, the
General Partners and their Affiliates), the repayment of obligations of any
member of the Partnership Group and the making of capital contributions to
the any member of the Partnership Group;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Partnership under contractual
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arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partners or
their assets other than its interest in the Partnership, even if same
results in the terms of the transaction being less favorable to the
Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees
having titles such as 'president,' 'vice president,' 'secretary' and
'treasurer') and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(viii) the maintenance of such insurance for the benefit of the
Partnership Group and the Partners as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited or
general partnerships, joint ventures, corporations or other relationships
(including the acquisition of interests in, and the contributions of
property to, the Operating Partnership from time to time);
(x) the control of any matters affecting the rights and obligations of
the Partnership, including the bringing and defending of actions at law or
in equity and otherwise engaging in the conduct of litigation and the
incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any National
Securities Exchange and the delisting of some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to any
prior approval that may be required under Section 4.9);
(xiii) the purchase, sale or other acquisition or disposition of Units
or, unless restricted or prohibited by Section 5.7, the issuance of
additional Units or other Partnership Securities; and
(xiv) the undertaking of any action in connection with the
Partnership's participation in the Operating Partnership as the limited
partner.
(b) Notwithstanding any other provision of this Agreement, the Operating
Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in Units hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of the Operating
Partnership Agreement, the Underwriting Agreement, the Conveyance and
Contribution Agreement, the Triarc Loan documents, the agreements and other
documents filed as exhibits to the Registration Statement, and the other
agreements described in or filed as a part of the Registration Statement; (ii)
agrees that the Managing General Partner (on its own or through any officer of
the Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Units; and (iii) agrees that the execution, delivery or performance
by the Managing General Partner, any Group Member or any Affiliate of any of
them, of this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the Managing General Partner or any
Affiliate of the Managing General Partner of the rights accorded pursuant to
Article XV), shall not constitute a breach by the Managing General Partner of
any duty that the Managing General Partner may owe the Partnership, the
Unitholders, the Limited Partners, the Assignees or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.
7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The Managing General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be determined by the
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Managing General Partner in its sole discretion to be reasonable and necessary
or appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to conduct business or own property. To the extent that such action is
determined by the Managing General Partner in its sole discretion to be
reasonable and necessary or appropriate, the Managing General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things necessary or appropriate to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to conduct business or own property. Subject to
the terms of Section 3.3(a) the Managing General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any
Unitholder, Limited Partner or Assignee.
7.3 RESTRICTIONS ON MANAGING GENERAL PARTNER'S AUTHORITY
(a) The Managing General Partner may not, without written approval of the
specific act by holders of all of the Outstanding Units or by other written
instrument executed and delivered by all of the Outstanding Units subsequent to
the date of this Agreement, take any action in contravention of this Agreement,
including, except as otherwise provided in this Agreement, (i) committing any
act that would make it impossible to carry on the ordinary business of the
Partnership; (ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose; (iii)
admitting a Person as a Partner; (iv) amending this Agreement in any manner; or
(v) transferring all or any part of its Unsubordinated General Partner
Interests.
(b) Except as provided in Articles XII and XIV, the Managing General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions or approve on behalf of the Partnership the sale, exchange or other
disposition of all or substantially all of the assets of the Operating
Partnership, without the approval of holders of at least a Unit Majority;
provided, however, that this provision shall not preclude or limit the Managing
General Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the Partnership or
Operating Partnership and shall not apply to any forced sale of any or all of
the assets of the Partnership or Operating Partnership pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the
approval of holders of at least a Unit Majority, the Managing General Partner
shall not, on behalf of the Partnership, (i) consent to any amendment to the
Operating Partnership Agreement or, except as expressly permitted by Section
7.9(d), take any action permitted to be taken by a partner of the Operating
Partnership, in either case, that would have a material adverse effect on the
Partnership as a partner of the Operating Partnership or (ii) except as
permitted under Sections 4.6, 11.1 and 11.2, elect or cause the Partnership to
elect a successor general partner of the Operating Partnership.
(c) At all times while serving as the general partner of the Partnership,
the Managing General Partner shall not make any dividend or distribution on, or
repurchase any shares of, its stock or take any other action within its control
if the effect of such action would cause its net worth, independent of its
interest in the Partnership Group, to be less than $15.0 million.
7.4 REIMBURSEMENT OF THE GENERAL PARTNERS
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement
or in the Operating Partnership Agreement, the General Partners shall not be
compensated for their services as general partners of any Group Member.
(b) The General Partners shall be reimbursed on a monthly basis, or such
other basis as the Managing General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses that they incur or payments
they make on behalf of the Partnership (including salary, bonus, incentive
compensation and other amounts paid to any Person, including Affiliates, to
perform services for the Partnership or for the General Partners in the
discharge of their duties to the Partnership), and (ii) all other necessary or
appropriate expenses allocable to the Partnership or otherwise reasonably
incurred
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by the Managing General Partner in connection with operating the Partnership's
business (including expenses allocated to the General Partners by their
Affiliates). The Managing General Partner shall determine the expenses that are
allocable to the Partnership in any reasonable manner determined by the Managing
General Partner in its sole discretion. Reimbursements pursuant to this Section
7.4 shall be in addition to any reimbursement to the General Partners as a
result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner, in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof), may propose and adopt on behalf of the
Partnership employee benefit plans, employee programs and employee practices
(including plans, programs and practices involving the issuance of Units or
options to purchase Units), or cause the Partnership to issue Partnership
Securities in connection with or pursuant to any employee benefit plan, employee
program or employee practice maintained or sponsored by the Managing General
Partner or any of its Affiliates, in each case for the benefit of employees of
the Managing General Partner, any Group Member or any Affiliate, or any of them,
in respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. The Partnership agrees to issue and sell to the Managing
General Partner or any of its Affiliates any Units or other Partnership
Securities that the Managing General Partner or such Affiliate is obligated to
provide to any employees pursuant to any such employee benefit plans, employee
programs or employee practices. Expenses incurred by the Managing General
Partner in connection with any such plans, programs and practices (including the
net cost to the Managing General Partner or such Affiliate of Units or other
Partnership Securities purchased by the Managing General Partner or such
Affiliate from the Partnership to fulfill options or awards under such plans,
programs and practices) shall be reimbursed in accordance with Section 7.4(b).
Any and all obligations of the Managing General Partner under any employee
benefit plans, employee programs or employee practices adopted by the Managing
General Partner as permitted by this Section 7.4(c) shall constitute obligations
of the Managing General Partner hereunder and shall be assumed by any successor
Managing General Partner approved pursuant to Section 11.1 or 11.2 or the
transferee of or successor to all of the Managing General Partner's
Unsubordinated General Partnership Interests as a general partner in the
Partnership pursuant to Section 4.6 or 4.7.
7.5 OUTSIDE ACTIVITIES
(a) Subject to Section 7.5(g), after the Closing Date, each of the General
Partners, for so long as it is a general partner of the Partnership, shall not
engage in any business or activity or incur any debts or liabilities (other than
tax liabilities) except in connection with or incidental to (i) its performance
as general partner of one or more Group Members or as described in or
contemplated by the Registration Statement, (ii) the acquiring, owning or
disposing of debt or equity securities in any Group Member, (iii) holding and
making investments in Subsidiaries and pledging its interest in such
Subsidiaries to secure indebtedness of such Subsidiaries, (iv) the acquisition
of businesses or assets to be used by a Group Member and (v) permitting its
employees to perform services for its Affiliates, including Affiliates engaging
in an activity permitted by Section 7.5(b).
(b) The Affiliates of the General Partners may engage in any activity other
than a Restricted Activity.
(c) Except as restricted by Sections 7.5(a) or (b), each of the General
Partners and their Affiliates shall have the right to engage in businesses of
every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by
any Group Member, independently or with others, including business interests and
activities in direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this Agreement or any
duty express or implied by law to any Group Member or any Partner or Assignee.
Neither any Group Member, any Limited Partner nor any other Person shall have
any rights by virtue of this Agreement, the Operating Partnership Agreement or
the partnership relationship established hereby or thereby in any business
ventures of any Indemnitee.
(d) Notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees other than a General
Partner in accordance with the provisions of this
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Section 7.5 is hereby approved by the Partnership and all Partners and (ii) it
shall be deemed not to be a breach of the General Partners' fiduciary duty or
any other obligation of any type whatsoever of the General Partners for any
Affiliate of a General Partner to engage in such business interests and
activities in preference to or to the exclusion of the Partnership (including,
without limitation, the General Partners and their Affiliates shall have no
obligation to present business opportunities to the Partnership).
(e) The General Partners and any of their Affiliates may acquire Units or
other Partnership Securities in addition to those acquired on the Closing Date
and, except as otherwise provided in this Agreement, shall be entitled to
exercise all rights of an Assignee or Limited Partner, as applicable, relating
to such Units or Partnership Securities.
(f) The term 'Affiliates' when used in Section 7.5(b) and (c) with respect
to the General Partners shall not include any Group Member or any Subsidiary of
the any Group Member.
(g) To the extent the Managing General Partner is merged or liquidated,
pursuant to Section 4.7, into Triarc, the restrictions contained in Section
7.5(a) shall no longer apply to the Managing General Partner and the Managing
General Partner may engage in any activity other than a Restricted Activity. The
restrictions contained in Section 7.5(a), even after a merger or liquidation of
the Managing General Partner, shall continue to apply to the Special General
Partner.
7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR CONTRIBUTIONS FROM THE
PARTNERSHIP; CONTRACTS WITH AFFILIATES; CERTAIN RESTRICTIONS ON THE GENERAL
PARTNERS
(a) The General Partners or any of their Affiliates thereof may lend to any
Group Member, and any Group Member may borrow from the General Partners or any
of their Affiliates, funds needed or desired by the Group Member for such
periods of time and in such amounts as the Managing General Partner may
determine; provided, however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would
be charged the borrowing party or impose terms less favorable to the borrowing
party than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arms'-length basis (without reference to
the lending party's financial abilities or guarantees). The borrowing party
shall reimburse the lending party for any costs (other than any additional
interest costs) incurred by the lending party in connection with the borrowing
of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term
'Group Member' shall include any Affiliate of a Group Member that is controlled
by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, the General
Partners or any of their Affiliates, and any Group Member, the General Partners
or their Affiliates may borrow from the Partnership, funds on terms and
conditions established in the sole discretion of the Managing General Partner;
provided, however, that the Partnership may not charge the Group Member, the
Managing General Partner or its Affiliates interest at a rate less than the rate
that would be charged to the Group Member, the General Partners or their
Affiliates, by unrelated lenders on comparable loans, provided, however, that
notwithstanding anything else herein contained, the Operating Partnership is
permitted to make the Triarc Loan substantially on the terms described in the
Registration Statement. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create any right
or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to a Group Member or to the
Managing General Partner in the discharge of its duties as a general partner of
the Partnership. Any services rendered to a Group Member by the Managing General
Partner (other than services it renders in its capacity as Managing General
Partner) or any of its Affiliates shall be on terms that are fair and reasonable
to the Partnership; provided, however, that the requirements of this Section
7.6(c) shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties, or (iii) any transaction that, taking into account the totality
of the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership
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Group), is equitable to the Partnership Group. The provisions of Section 7.4
shall apply to the rendering of services described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partners nor any of their Affiliates shall sell,
transfer or convey any property to, or purchase any property from, or pursuant
to Section 7.6(a) or 7.6(b) make any loans to or borrow funds, from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to the Conveyance and Contribution Agreement and
any other transactions (including the Triarc Loan) described in or contemplated
by the Registration Statement, (ii) any transaction approved by Special
Approval, (iii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties, or (iv) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership. With respect to any contribution of assets to the
Partnership in exchange for Units, the Audit Committee, in determining whether
the appropriate number of Units are being issued, may take into account, among
other things, the fair market value of the assets, the liquidated and contingent
liabilities assumed, the tax basis in the assets, the extent to which tax-only
allocations to the transferor will protect the existing partners of the
Partnership against a low tax basis, and such other factors as the Audit
Committee deems relevant under the circumstances.
(f) The General Partners and their Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partners
and their Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partners or their Affiliates to enter into
such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
7.7 INDEMNIFICATION
(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an Indemnitee, provided, that in each case the Indemnitee acted in
good faith and in a manner that such Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Partnership and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this Section 7.7
shall be available to the General Partners with respect to their obligations
incurred pursuant to the Underwriting Agreement or the Conveyance and
Contribution Agreement (other than obligations incurred by the Managing General
Partner on behalf of the Partnership or the Operating Partnership). The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 7.7 shall be made
only out of the assets of the Partnership, it being agreed that the General
Partners shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
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(b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
7.7(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Partnership
of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Units, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the Managing
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partners, their Affiliates and such other Persons as the Managing
General Partner shall determine, against any liability that may be asserted
against or expense that may be incurred by such Person in connection with the
Partnership's activities or such Person's activities on behalf of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute 'fines'
within the meaning of Section 7.7(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
7.8 LIABILITY OF INDEMNITEES
(a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Partnership, the
Limited Partners, the Assignees or any other Persons who have acquired interests
in the Units, for losses sustained or liabilities incurred as a result of any
act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as Managing General Partner set
forth in Section 7.1(a), the Managing General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents, and the General
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Partners shall not be responsible for any misconduct or negligence on the part
of any such agent appointed by the Managing General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partners, and the Partnership's and each of the General Partners'
directors, officers and employees under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.9 RESOLUTION OF CONFLICTS OF INTEREST
(a) Unless otherwise expressly provided in this Agreement or the Operating
Partnership Agreement, whenever a potential conflict of interest exists or
arises between one of the General Partner or any of their Affiliates, on the one
hand, and the Partnership, the Operating Partnership, any Partner or any
Assignee, on the other, any resolution or course of action by the General
Partners or their Affiliates in respect of such conflict of interest shall be
permitted and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of the Operating Partnership Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The Managing
General Partner shall be authorized but not required in connection with the
resolution of such conflict of interest to seek Special Approval of a resolution
of such conflict or course of action. Any conflict of interest and any
resolution of such conflict of interest shall be conclusively deemed fair and
reasonable to the Partnership if such conflict of interest or resolution is (i)
approved by Special Approval, (ii) on terms no less favorable to the Partnership
than those generally being provided to or available from unrelated third parties
or (iii) fair to the Partnership, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership). The Managing
General Partner may also adopt a resolution or course of action that has not
received Special Approval. The Managing General Partner (including the Audit
Committee in connection with Special Approval) shall be authorized in connection
with its determination of what is 'fair and reasonable' to the Partnership and
in connection with its resolution of any conflict of interest to consider (A)
the relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
Managing General Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to, nor shall it be
construed to, require the Managing General Partner (including the Audit
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the Managing General Partner, the resolution,
action or terms so made, taken or provided by the Managing General Partner with
respect to such matter shall not constitute a breach of this Agreement or any
other agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the Managing General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its 'sole discretion' or 'discretion,'
that it deems 'necessary or appropriate' or 'necessary or advisable' or under a
grant of similar authority or latitude, except as otherwise provided herein, the
Managing General Partner or such Affiliate shall be entitled to consider only
such interests and factors as it desires and shall have no duty or obligation to
give any consideration to any interest of, or factors affecting, the
Partnership, the Operating Partnership, any Limited Partner or any Assignee,
(ii) it may make such decision in its sole discretion (regardless of whether
there is a reference to 'sole discretion' or 'discretion') unless another
express standard is provided for, or (iii) in 'good faith' or under another
express standard, the Managing General Partner or such Affiliate shall act under
such express
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standard and shall not be subject to any other or different standards imposed by
this Agreement, the Operating Partnership Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other Law, rule or
regulation. In addition, any actions taken by the Managing General Partner or
such Affiliate consistent with the standards of 'reasonable discretion' set
forth in the definitions of Available Cash or Operating Surplus shall not
constitute a breach of any duty of the Managing General Partner to the
Partnership or the Limited Partners. The Managing General Partner shall have no
duty, express or implied, to sell or otherwise dispose of any asset of the
Partnership Group. No borrowing by any Group Member or the approval thereof by
the Managing General Partner shall be deemed to constitute a breach of any duty
of the Managing General Partner to the Partnership or the Limited Partners by
reason of the fact that the purpose or effect of such borrowing is directly or
indirectly to (A) enable distributions to the General Partners or their
Affiliates (including in their capacities as Limited Partners or Unitholders) to
exceed 2% of the total amount distributed to all partners or (B) hasten the
expiration of the Subordination Period or the conversion of any Subordinated
Units into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be 'fair and
reasonable' to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Unitholders hereby authorize the Managing General Partner, on
behalf of the Partnership as a partner of a Group Member, to approve of actions
by the general partner of such Group Member similar to those actions permitted
to be taken by the Managing General Partner pursuant to this Section 7.9.
7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL PARTNER
(a) The Managing General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the Managing General Partner reasonably believes to
be within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
(c) The Managing General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited, to the extent permitted by law, as required to permit the Managing
General Partner to act under this Agreement or any other agreement contemplated
by this Agreement and to make any decision pursuant to the authority prescribed
in this Agreement, so long as such action is reasonably believed by the Managing
General Partner to be in, or not inconsistent with, the best interests of the
Partnership.
7.11 INDEMNIFICATION OF NATIONAL PROPANE SGP, INC. BY NATIONAL PROPANE
CORPORATION
National Propane Corporation (and after the Triarc Merger, Triarc) hereby
agrees to indemnify, defend and hold harmless National Propane SGP, Inc. from
and against any liabilities, losses or damages it may suffer or incur as a
result of the status of National Propane SGP, Inc. as a general partner of the
Partnership or any other Group Member or for any other reason (whether by
operation of law, contract or agreement or otherwise) arising from any liability
with respect to the Notes or the Bank Credit Facility (or arising under any
document or instrument relating thereto), any liability assumed by, or purported
to be assumed by, any member of the Partnership Group from National Propane
Corporation
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or National Propane SGP, Inc., any account payable or other trade payable, or
any other liability of any nature whatsover no matter how or when arising. The
conversion of all or a portion of the Unsubordinated General Partner Interest of
Triarc into limited partner interests pursuant to Section 11.1(d) shall not
affect Triarc's indemnification obligation to National Propane SGP, Inc.
7.12 PURCHASE OR SALE OF UNITS
The Managing General Partner may cause the Partnership to purchase or
otherwise acquire Units; provided that, except as permitted pursuant to Section
4.11, the Managing General Partner may not cause the Partnership to purchase
Subordinated Units during the Subordination Period. As long as Units are held by
any Group Member, such Units shall not be considered outstanding for any
purpose, except as otherwise provided herein. The Managing General Partner or
any Affiliate of the Managing General Partner may also purchase or otherwise
acquire and sell or otherwise dispose of Units for its own account, subject to
the provisions of Articles IV and X.
7.13 REGISTRATION RIGHTS OF THE GENERAL PARTNERS AND THEIR AFFILIATES
(a) If (i) the General Partners or any Affiliate of either of the General
Partners (including for purposes of this Section 7.13, any Person that is an
Affiliate of the General Partners at the date hereof notwithstanding that it may
later cease to be an Affiliate of the General Partners) holds Units or other
Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another
exemption from registration is not available to enable such holder of Units (the
'Holder') to dispose of the number of Units or other securities it desires to
sell at the time it desires to do so without registration under the Securities
Act, then upon the request of either of the General Partners or any of their
Affiliates, the Partnership shall file with the Commission as promptly as
practicable after receiving such request, and use all reasonable efforts to
cause to become effective and remain effective for a period of not less than six
months following its effective date or such shorter period as shall terminate
when all Units or other Partnership Securities covered by such registration
statement have been sold, a registration statement under the Securities Act
registering the offering and sale of the number of Units or other securities
specified by the Holder; provided, however, that the Partnership shall not be
required to effect more than three registrations pursuant to this Section
7.13(a); and provided further, however, that if the Audit Committee determines
in its good faith judgment that a postponement of the requested registration for
up to six months would be in the best interests of the Partnership and its
Partners due to a pending transaction, investigation or other event, the filing
of such registration statement or the effectiveness thereof may be deferred for
up to six months, but not thereafter. In connection with any registration
pursuant to the immediately preceding sentence, the Partnership shall promptly
prepare and file (x) such documents as may be necessary to register or qualify
the securities subject to such registration under the securities laws of such
states as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation or partnership
doing business in such jurisdiction solely as a result of such registration, and
(y) such documents as may be necessary to apply for listing or to list the
securities subject to such registration on such National Securities Exchange as
the Holder shall reasonably request, and do any and all other acts and things
that may reasonably be necessary or advisable to enable the Holder to consummate
a public sale of such Units in such states. Except as set forth in Section
7.12(c), all costs and expenses of any such registration and offering (other
than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
7.13(b) shall be an underwritten offering, then, in the event that the managing
underwriter of such offering advises the Partnership and the Holder in writing
that in its opinion the inclusion of all or some of the Holder's securities
would adversely and materially affect
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the success of the offering, the Partnership shall include in such offering only
that number or amount, if any, of securities held by the Holder which, in the
opinion of the managing underwriter, will not so adversely and materially affect
the offering. Except as set forth in Section 7.13(c), all costs and expenses of
any such registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the
Holder.
(c) If underwriters are engaged in connection with any registration
referred to in this Section 7.13, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
7.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, 'Indemnified Persons') against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 7.13(c) as a 'claim' and in
the plural as 'claims') based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which any Units were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary
prospectus (if used prior to the effective date of such registration statement),
or in any summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the registration
statement current), or arising out of, based upon or resulting from the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to any Indemnified
Person to the extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary, summary or final
prospectus or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
(d) The provisions of Section 7.13(a) and 7.13(b) shall continue to be
applicable with respect to the General Partners (and any of their Affiliates)
after it ceases to be a Partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so long thereafter as
is required for the Holder to sell all of the Units or other Partnership
Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same securities
for which registration was demanded during such two-year period. The provisions
of Section 7.13(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this Section
7.13 shall (i) specify the Partnership Securities intended to be offered and
sold by the Person making the request, (ii) express such Person's present intent
to offer such shares for distribution, (iii) describe the nature or method of
the proposed offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and materials and
take all action as may be required in order to permit the Partnership to comply
with all applicable requirements in connection with the registration of such
Partnership Securities.
7.14 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner and any officer of the Managing General Partner authorized by
the Managing General Partner to act on behalf of or in the name of the
Partnership has full power and authority to encumber, sell, or otherwise use in
any manner any and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the Partnership's
sole party in interest, both legally and beneficially. Each Limited Partner
hereby
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waives any and all defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the Managing General
Partner or any such officer in connection with any such dealing. In no event
shall any Person dealing with the Managing General Partner or any such officer
be obligated to ascertain that the terms of the Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of the
Managing General Partner or any such officer. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the
Managing General Partner or any such officer shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (a) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING
The Managing General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Unitholders any information required to be provided pursuant to
Section 3.4(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including the record of the
Record Holders and Assignees of Units or other Partnership Securities, books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
8.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
8.3 REPORTS
(a) As soon as practicable, but in no event later than 120 days after the
close of each fiscal year of the Partnership, the Managing General Partner shall
cause to be mailed or furnished to each Record Holder of a Unit as of a date
selected by the Managing General Partner in its discretion, an annual report
containing financial statements of the Partnership for such fiscal year of the
Partnership, presented in accordance with U.S. GAAP, including a balance sheet
and statements of operations, Partnership equity and cash flows, such statements
to be audited by a firm of independent public accountants selected by the
Managing General Partner.
(b) As soon as practicable, but in no event later than 90 days after the
close of each Quarter except the last Quarter of each year, the Managing General
Partner shall cause to be mailed or furnished to each Record Holder of a Unit,
as of a date selected by the Managing General Partner in its discretion, a
report containing unaudited financial statements of the Partnership and such
other information as may be required by applicable law, regulation or rule of
any National Securities Exchange on which the Units are listed for trading, or
as the Managing General Partner determines to be necessary or appropriate.
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ARTICLE IX
TAX MATTERS
9.1 TAX RETURNS AND INFORMATION
The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by Record Holders for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
9.2 TAX ELECTIONS
(a) The Partnership shall make the election under Section 754 of the Code
in accordance with applicable regulations thereunder, subject to the reservation
of the right to seek to revoke any such election upon the Managing General
Partner's determination that such revocation is in the best interests of the
Unitholders. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the
Managing General Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of Units will be deemed to be
the lowest quoted closing price of the Units on any National Securities Exchange
on which such Units are traded during the calendar month in which such transfer
is deemed to occur pursuant to Section 6.2(g) without regard to the actual price
paid by such transferee.
(b) The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.
(c) Except as otherwise provided herein, the Managing General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.
9.3 TAX CONTROVERSIES
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is authorized
and required to represent the Partnership (at the Partnership's expense) in
connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the Managing General Partner
and to do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
9.4 WITHHOLDING
Notwithstanding any other provision of this Agreement, the Managing General
Partner is authorized to take any action that it determines in its discretion to
be necessary or appropriate to cause the Partnership and the Operating
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required or elects to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the amount withheld may be treated as a distribution of cash
pursuant to Section 6.3 in the amount of such withholding from such Partner.
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ARTICLE X
ADMISSION OF PARTNERS
10.1 ADMISSION OF INITIAL LIMITED PARTNERS
Upon the issuance by the Partnership of Common Units to the Underwriters as
described in Section 5.3 in connection with the Initial Offering and the
execution by each Underwriter of a Transfer Application, the Managing General
Partner shall admit the Underwriters to the Partnership as Initial Limited
Partners in respect of the Common Units purchased by them.
10.2 ADMISSION OF SUBSTITUTED UNITHOLDER
By transfer of a Unit by a Unitholder in accordance with Article IV, the
transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Unitholder subject to the conditions of, and in the
manner permitted under, this Agreement. A transferor of a Certificate shall,
however, only have the authority to convey to a purchaser or other transferee
who does not execute and deliver a Transfer Application (a) the right to
negotiate such Certificate to a purchaser or other transferee and (b) the right
to transfer the right to request admission as a Substituted Unitholder to such
purchaser or other transferee in respect of the transferred Units. Each
transferee of a Unit (including any nominee holder or an agent acquiring such
Unit for the account of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery, be an Assignee and
be deemed to have applied to become a Substituted Unitholder with respect to the
Units so transferred to such Person. Such Assignee shall become a Substituted
Unitholder (x) at such time as the Managing General Partner consents thereto,
which consent may be given or withheld in the Managing General Partner's sole
discretion and (y) when any such admission is shown on the books and records of
the Partnership. If such consent is withheld, such transferee shall be an
Assignee. An Assignee shall have an interest in the Partnership equivalent to
that of a Unitholder with respect to allocations and distributions, including
liquidating distributions, of the Partnership. With respect to voting rights
attributable to Units that are held by Assignees, the Managing General Partner
shall be deemed to be the Unitholder with respect thereto and shall, in
exercising the voting rights in respect of such Units on any matter, vote such
Units at the written direction of the Assignee who is the Record Holder of such
Units. If no such written direction is received, such Units will not be voted.
An Assignee shall have no other rights of a Unitholder.
10.3 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL PARTNERS
A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of a General Partner's Unsubordinated
General Partner Interests pursuant to Section 4.6 or 4.7, who is proposed to be
admitted as a successor or transferee General Partner shall be admitted to the
Partnership as a General Partner, effective immediately prior to the withdrawal
or removal of the General Partner pursuant to Section 11.1 or 11.2 or the
transfer of a General Partner's Unsubordinated General Partner Interests as a
general partner in the Partnership pursuant to Section 4.6 or 4.7; provided,
however, that no such successor or transferee shall be admitted to the
Partnership until compliance with the terms of Section 4.6 or 4.7 has occurred
and such successor or transferee has executed and delivered such other documents
or instruments as may be required to effect such admission. Any such successor
or transferee shall, subject to the terms hereof, carry on the business of the
Partnership and the Operating Partnership without dissolution.
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS
(a) A Person (other than an Initial Limited Partner or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the Managing General Partner
(i) evidence of acceptance in form satisfactory to the Managing General Partner
of all of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other
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documents or instruments as may be required in the sole discretion of the
Managing General Partner to effect such Person's admission as an Additional
Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4, other
than pursuant to Section 10.4(c), no Person shall be admitted as an Additional
Limited Partner without the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's sole
discretion. The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is recorded as
such in the books and records of the Partnership, following the consent of the
Managing General Partner to such admission.
(c) Upon (i) conversion of general partner interests into limited partner
interests pursuant to Sections 4.12, 5.8(g), 5.8(h), 11.1(d), 11.3(b) or
13.1(l), the holder of such Partnership Interests shall be deemed to have been
admitted to the Partnership as a Limited Partner in respect of such Partnership
Interests.
10.5 ADMISSION OF SUBSTITUTED HOLDER OF INCENTIVE DISTRIBUTION RIGHTS
By transfer of an Incentive Distribution Right by a Holder of Incentive
Distribution Rights in accordance with Article IV, the transferor shall be
deemed to have given the transferee the right to seek admission as a Substituted
Holder of Incentive Distribution Rights subject to the conditions of, and in the
manner permitted under, this Agreement. A transferor of a Certificate for an
Incentive Distribution Right shall, however, only have the authority to convey
to a purchaser or other transferee who does not execute and deliver to the
Managing General Partner a satisfactory Transfer Application (a) the right to
negotiate such Certificate to a subsequent purchaser or other transferee and (b)
the right to transfer the right to request admission as a Substituted Holder of
Incentive Distribution Rights to such purchaser or other transferee in respect
of the transferred Incentive Distribution Rights. Each transferee of an
Incentive Distribution Right (including any nominee holder or an agent acquiring
such Incentive Distribution Right for the account of another Person) who
executes and delivers a satisfactory Transfer Application shall, by virtue of
such execution and delivery, be an Assignee and be deemed to have applied to
become a Substituted Holder of Incentive Distribution Rights with respect to the
Incentive Distribution Right so transferred to such Person. Such Assignee shall
become a Substituted Holder of Incentive Distribution Rights (x) at such time as
the Managing General Partner consents thereto, which consent may be given or
withheld in the Managing General Partner's sole discretion, and (y) when any
such admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall be an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Holder of Incentive
Distribution Rights with respect to allocations and distributions, including
liquidating distributions, of the Partnership. With respect to voting rights
attributable to an Incentive Distribution Right that are held by Assignees, the
Managing General Partner shall be deemed to be the Holder of Incentive
Distribution Rights with respect thereto and shall, in exercising the voting
rights in respect of such Incentive Distribution Rights on any matter, vote such
Incentive Distribution Rights at the written direction of the Assignee who is
the Record Holder of such Incentive Distribution Rights. If no such written
direction is received, such Incentive Distribution Rights will not be voted. An
Assignee shall have no other rights of a Holder of Incentive Distribution
Rights.
10.6 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
To effect the admission to the Partnership of any Partner, the Managing
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the Managing General Partner shall prepare
and file an amendment to the Certificate of Limited Partnership, and the
Managing General Partner may for this purpose, among others, exercise the power
of attorney granted pursuant to Section 2.6.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 WITHDRAWAL OF THE GENERAL PARTNERS
(a) The Managing General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an 'Event of Withdrawal');
(i) the Managing General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners (and it shall be
deemed that the Managing General Partner has withdrawn pursuant to this
Section 11.1(a)(i) if the Managing General Partner voluntarily withdraws as
general partner of the Operating Partnership);
(ii) the Managing General Partner transfers all of its rights as
Managing General Partner pursuant to Section 4.6;
(iii) the Managing General Partner is removed pursuant to Section
11.2;
(iv) the Managing General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition for
relief under Chapter 7 of the United States Bankruptcy Code; (C) files a
petition or answer seeking for itself a liquidation, dissolution or similar
relief (but not a reorganization) under any law; (D) files an answer or
other pleading admitting or failing to contest the material allegations of
a petition filed against the Managing General Partner in a proceeding of
the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E)
seeks, consents to or acquiesces in the appointment of a trustee (but not a
debtor in possession), receiver or liquidator of the Managing General
Partner or of all or any substantial part of its properties; provided
however that none of the events listed in (A)-(E) hereof shall be an Event
of Default if (x) such event takes place after the Triarc Merger, (y) the
Managing General Partner is Triarc or its Affiliates, and (z) the Special
General Partner is a non-bankrupt General Partner of the Partnership and
the Operating Partnership at the time of the events described in this
Section 11.1(a)(iv) occur;
(v) a final and non-appealable order of relief under Chapter 7 of the
United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against
the Managing General Partner;
(vi) in the event the Managing General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the Managing
General Partner, or 90 days expire after the date of notice to the Managing
General Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation; or
(vii) (A) in the event the Managing General Partner is a partnership,
the dissolution and commencement of winding up of the Managing General
Partner; (B) in the event the Managing General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination of the
trust; (C) in the event the Managing General Partner is a natural person,
his death or adjudication of incompetency; and (D) otherwise in the event
of the termination of the Managing General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v), (vi) or
(vii)(A), (B) or (D) occurs, the withdrawing Managing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the Managing General Partner from
the Partnership.
(b) Withdrawal of the Managing General Partner from the Partnership upon
the occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Closing Date and ending at 12:00 midnight, Eastern Standard
Time, on June 30, 2006, the Managing General Partner voluntarily withdraws by
giving at least 90 days' advance notice of its intention to withdraw to the
Limited Partners; provided that prior to the effective date of such withdrawal,
the withdrawal is approved by Unitholders holding at least a Unit Majority and
the Managing General Partner delivers to the Partnership an Opinion of Counsel
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('Withdrawal Opinion of Counsel') that such withdrawal (following the selection
of the successor Managing General Partner) would not result in the loss of the
limited liability of any Limited Partner as described in the Registration
Statement or of the limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be treated as an association taxable
as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such); (ii) at any time after
12:00 midnight, Eastern Standard Time, on June 30, 2006, the Managing General
Partner voluntarily withdraws by giving at least 90 days' advance notice to the
Unitholders, such withdrawal to take effect on the date specified in such
notice; (iii) at any time that the Managing General Partner ceases to be the
Managing General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant
to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any
time that the Managing General Partner voluntarily withdraws by giving at least
90 days' advance notice of its intention to withdraw to the Unitholders, such
withdrawal to take effect on the date specified in the notice, if at the time
such notice is given one Person and its Affiliates (other than the General
Partners and their Affiliates) own beneficially or of record or control at least
50% of the Outstanding Common Units. The withdrawal of the Managing General
Partner from the Partnership upon the occurrence of an Event of Withdrawal shall
also constitute the withdrawal of the Managing General Partner as general
partner of the other Group Members. If the Managing General Partner gives a
notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor
Managing General Partner. The Person so elected as successor Managing General
Partner shall automatically become the successor general partner of the other
Group Members. If, prior to the effective date of the Managing General Partner's
withdrawal, a successor is not selected by the Unitholders as provided herein or
the Partnership does not receive a Withdrawal Opinion of Counsel, the
Partnership shall be dissolved in accordance with Section 12.1. Any successor
Managing General Partner elected in accordance with the terms of this Section
11.1 shall be subject to the provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner shall also be an
Event of Withdrawal of the Special General Partner from the Partnership and as
general partner of other Group Members at the same time and upon the same
conditions as set forth in Section 11.1(b) with respect to the Managing General
Partner.
(d) The occurrence after the Triarc Merger of an event otherwise described
in Section 11.1(a)(iv)(A), (B), (C), (D) and (E) that is not an Event of
Withdrawal pursuant to Section 11.1(a)(iv) shall result in (i) the conversion of
Triarc's 1% Unsubordinated General Partner Interests into a limited partner
interest having the same rights to distributions of cash and allocations of
income, gain, loss or deduction and obligation to restore its deficit capital
account as provided for in Section 12.8 as the holder of 1% Unsubordinated
General Partner Interests were entitled and/or obligated but having no rights to
participate in the management of the Partnership, (ii) the Partnership shall
continue without the approval of the Unitholders and (iii) the Special General
Partner shall become the Managing General Partner of the Partnership and shall
have all the rights, authority and powers given to the Managing General Partner
pursuant to this Agreement.
11.2 REMOVAL OF THE MANAGING GENERAL PARTNER
The Managing General Partner may be removed if such removal is approved by
the Unitholders holding 66 2/3% of the Outstanding Units (including Units held
by the General Partners and their Affiliates). Any such action by such holders
for removal of the Managing General Partner must also provide for the election
of a successor General Partner by the Unitholders holding at least a Unit
Majority (including Units held by the General Partners and their Affiliates).
Such removal shall be effective immediately following the admission of a
successor Managing General Partner pursuant to Section 10.3. The removal of the
Managing General Partner shall also automatically constitute the removal of the
Managing General Partner as general partner of the other Group Members. If a
Person is elected as a successor Managing General Partner in accordance with the
terms of this Section 11.2, such Person shall, upon admission pursuant to
Section 10.3, automatically become the successor general partner of the other
Group Members. The right of the holders of Outstanding Units to remove the
Managing General Partner shall not exist or be exercised unless the Partnership
has received an opinion
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opining as to the matters covered by a Withdrawal Opinion of Counsel. Any
successor Managing General Partner elected in accordance with the terms of this
Section 11.2 shall be subject to the provisions of Section 10.3.
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER
(a) In the event of (i) withdrawal of the Managing General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the Managing General Partner by the holders of Outstanding Units
under circumstances where Cause does not exist, if a successor Managing General
Partner is elected in accordance with the terms of Section 11.1 or 11.2, the
Departing Partner shall have the option exercisable prior to the effective date
of the departure of such Departing Partner to require its successor to purchase
the Unsubordinated General Partner Interests of all the Departing Partners and
the partnership interests of all the Departing Partners as the general partners
in the other Group Members and their Incentive Distribution Rights
(collectively, the 'Combined Interest') in exchange for an amount in cash equal
to the fair market value of such Combined Interest, such amount to be determined
and payable as of the effective date of its departure. If the Managing General
Partner is removed by the Unitholders under circumstances where Cause exists or
if the Managing General Partner withdraws under circumstances where such
withdrawal violates this Agreement or the Operating Partnership Agreement, and
if a successor General Partner is elected in accordance with the terms of
Section 11.1 or 11.2, such successor shall have the option, exercisable prior to
the effective date of the departure of all the Departing Partners, to purchase
the Combined Interest of all of the Departing Partners for such fair market
value of such Combined Interest. In either event, all of the Departing Partners
shall be entitled to receive all reimbursements due such Departing Partner
pursuant to Section 7.4, including any employee-related liabilities (including
severance liabilities), incurred in connection with the termination of any
employees employed by the Managing General Partner for the benefit of the
Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the
Departing Partners' Combined Interest shall be determined by agreement between
the Departing Partners and their successor or, failing agreement within 30 days
after the effective date of such Departing Partners' departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partners and their successor, which, in turn, may rely on other
experts, and the determination of which shall be conclusive as to such matter.
If such parties cannot agree upon one independent investment banking firm or
other independent expert within 45 days after the effective date of such
departure, then the Departing Partners shall designate an independent investment
banking firm or other independent expert, the Departing Partners' successor
shall designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third independent
investment banking firm or independent expert, which third independent
investment banking firm or other independent expert shall determine the fair
market value of the Combined Interest. In making its determination, such third
independent investment banking firm or other independent expert may consider the
then current trading price of Units, on any National Securities Exchange on
which Units are then listed, the value of the Partnership's assets, the rights
and obligations of the General Partners and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in
Section 11.3(a), the Departing Partners will have the right to convert the
Combined Interest into Common Units representing limited partner interests or to
receive cash from the Partnership in exchange for such Combined Interest. The
Departing Partners' Combined Interest shall be converted into Common Units
pursuant to a valuation made by an investment banking firm or other independent
expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor General Partner shall indemnify the
Departing Partners as to all debts and liabilities of the Partnership arising on
or after the date on which the Departing Partners become Limited Partners or
have their Combined Interests purchased pursuant to this Agreement. For purposes
of this Agreement, conversion of the General Partners' Combined Interest to
Common Units will be characterized as if the General Partners contributed their
Combined Interest to the Partnership in exchange for the newly issued Common
Units.
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(c) If a successor General Partner is elected in accordance with the terms
of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
Partnership cash in an amount equal to 1/99th of the Net Agreed Value of the
Partnership's assets on such date. In such event, such successor General Partner
shall, subject to the following sentence, be entitled to half of such Percentage
Interest of all Partnership allocations and distributions and any other
allocations and distributions to which the Departing Partners as holders of the
2% Unsubordinated General Partner Interests were entitled. In addition, the
successor General Partner shall cause this Agreement to be amended to reflect
that, from and after the date of such successor General Partner's admission, the
successor General Partner's interest in all Partnership distributions and
allocations shall be 1%, and that of the holders of Outstanding Units shall be
99%.
11.4 TERMINATION OF SUBORDINATION PERIOD, CONVERSION OF SUBORDINATED UNITS AND
EXTINGUISHMENT OF CUMULATIVE COMMON UNIT ARREARAGES
Notwithstanding any provision of this Agreement, if the Managing General
Partner is removed as a general partner of the Partnership under circumstances
where Cause does not exist and Units held by the General Partners and their
Affiliates are not voted in favor of such removal, (i) the Subordination Period
will end and all Outstanding Subordinated Units will immediately and
automatically convert into Common Units on a one-for-one basis and (ii) all
Cumulative Common Unit Arrearages on the Common Units will be extinguished.
11.5 WITHDRAWAL OF LIMITED PARTNERS
No Limited Partner shall have any right to withdraw from the Partnership;
provided, however, that when a transferee of a Limited Partner's Units or
Incentive Distribution Rights becomes a Record Holder of the Units or Incentive
Distribution Rights so transferred, such transferring Limited Partner shall
cease to be a Limited Partner with respect to the Units or Incentive
Distribution Rights so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION
(a) The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the Managing General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or 11.2, the Partnership
shall not be dissolved and such successor General Partner shall continue the
business of the Partnership. The Partnership shall dissolve, and (subject to
Section 12.2) its affairs shall be wound up, upon:
(i) the expiration of its term as provided in Section 2.7;
(ii) an Event of Withdrawal of the Managing General Partner as
provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a
successor is elected and an Opinion of Counsel is received as provided in
Section 11.1(b) or 11.2 and such successor is admitted to the Partnership
pursuant to Section 10.3;
(iii) an election to dissolve the Partnership by the Managing General
Partner that is approved by the holders of a Unit Majority;
(iv) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(v) the sale of all or substantially all of the assets and properties
of the Partnership Group.
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12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the Managing General Partner as provided
in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v), (vi)
or (vii), then, to the maximum extent permitted by law, within 180 days
thereafter, the holders of a Unit Majority may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as the successor general partner a
Person approved by the holders of a Unit Majority. Unless such an election is
made within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(i) the reconstituted Partnership shall continue until the end of the
term set forth in Section 2.7 unless earlier dissolved in accordance with
this Article XII;
(ii) if the successor General Partner is not the former Managing
General Partner, then the interest of the former General Partner shall be
treated in the manner provided in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary,
to file a new partnership agreement and certificate of limited partnership,
and the successor general partner may for this purpose exercise the powers
of attorney granted the Managing General Partner pursuant to Section 2.6;
provided, that the right of the holders of a Unit Majority to approve a
successor General Partner and to reconstitute and to continue the business
of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of any Limited
Partner and (y) neither the Partnership, the reconstituted limited
partnership nor the Operating Partnership would be treated as an
association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to
continue.
12.3 LIQUIDATOR
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the Managing General Partner shall select one or more Persons to
act as Liquidator. The Liquidator shall be entitled to receive such compensation
for its services as may be approved by holders of at least a majority of the
Outstanding Units. The Liquidator shall agree not to resign at any time without
15 days' prior notice and may be removed at any time, with or without cause, by
notice of removal approved by holders of at least a majority of the Outstanding
Common Units and Subordinated Units voting as a single class. Upon dissolution,
removal or resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the original
Liquidator) shall within 30 days thereafter be approved by holders of at least a
majority of the Outstanding Common Units and Subordinated Units voting as a
single class. The right to approve a successor or substitute Liquidator in the
manner provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
Managing General Partner under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of
such powers, other than the limitation on sale set forth in Section 7.3(b)) to
the extent necessary or desirable in the good faith judgment of the Liquidator
to carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
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12.4 LIQUIDATION
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such
terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall
be deemed for purposes of Section 12.4(c) to have received cash equal to
its fair market value; and contemporaneously therewith, appropriate cash
distributions must be made to the other Partners. The Liquidator may, in
its absolute discretion, defer liquidation of the Partnership's assets for
a reasonable time if it determines that an immediate sale of part or all
the Partnership's assets would be impractical or would cause undue loss to
the Partners. The Liquidator may, in its absolute discretion, distribute
the Partnership's assets in kind if it determines that a sale would be
impractical or would cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution
rights under Article VI. With respect to any liability that is contingent
or is otherwise not yet due and payable, the Liquidator shall either settle
such claim for such amount as it thinks appropriate or establish a reserve
of cash or other assets to provide for its payment. When paid, any unused
portion of the reserve shall be distributed as additional liquidation
proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall
be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined
after taking into account all Capital Account adjustments (other than those
made by reason of distributions pursuant to this Section 12.4(c)) for the
taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant
to Treasury Regulation, Section 1.704-1(b)(2)(ii)(g)), and such
distribution shall be made by the end of such taxable year (or, if later,
within 90 days after said date of such occurrence).
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
12.6 RETURN OF CONTRIBUTIONS
The General Partners shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the holders
of any Partnership Interest, or any portion thereof, it being expressly
understood that any such return shall be made solely from Partnership assets.
12.7 WAIVER OF PARTITION
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
12.8 CAPITAL ACCOUNT RESTORATION
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The Special
General Partner shall have no obligation to restore any negative balance in its
Capital Account upon the liquidation of the Partnership. The Managing General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its
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interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL PARTNER
Each Partner agrees that the Managing General Partner, without the approval
of any Partner or Assignee, may amend any provision of this Agreement, to
execute, swear to, acknowledge, deliver, file and record whatever documents may
be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing General
Partner, is necessary or advisable to qualify or continue the qualification
of the Partnership as a limited partnership or a partnership in which the
Limited Partners have limited liability under the laws of any state or to
ensure that the Partnership and the Operating Partnership will not be
treated as an association taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes (except approval of holders of a
Unit Majority will be required if such amendment would result in a
delisting or suspension of trading of the Common Units);
(d) a change that, in the sole discretion of the Managing General
Partner, (i) does not adversely affect the Unitholders in any material
respect, (ii) is necessary or advisable to (A) satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling
or regulation of any federal or state agency or judicial authority or
contained in any federal or state statute (including the Delaware Act) or
(B) facilitate the trading of the Units (including the division of any
class or classes of Outstanding Units into different classes to facilitate
uniformity of tax consequences within such classes of Units) or comply with
any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are or will be listed for trading, compliance
with any of which the Managing General Partner determines in its discretion
to be in the best interests of the Partnership and the Unitholders, (iii)
is necessary or advisable in connection with action taken by the Managing
General Partner pursuant to Section 5.10, or (iv) is required to effect the
intent expressed in the Registration Statement or the intent of the
provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and
any changes that, in the discretion of the Managing General Partner, are
necessary or advisable as a result of a change in the fiscal year or
taxable year of the Partnership including, if the Managing General Partner
shall so determine, a change in the definition of 'Quarter' and the dates
on which distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partners or their directors,
officers, trustees or agents from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, the
Investment Advisers Act of 1940, as amended, or 'plan asset' regulations
adopted under the Employee Retirement Income Security Act of 1974, as
amended, regardless of whether such are substantially similar to plan asset
regulations currently applied or proposed by the United States Department
of Labor;
(g) subject to the terms of Section 5.7, an amendment that, in the
discretion of the General Partner, is necessary or advisable in connection
with the authorization of issuance of any class or series of Partnership
Securities pursuant to Section 5.6;
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(h) any amendment expressly permitted in this Agreement to be made by
the Managing General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the Managing General
Partner, is necessary or advisable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited
liability company or other entity other than the Operating Partnership, in
connection with the conduct by the Partnership of activities permitted by
the terms of Section 2.4;
(k) [Intentionally Deleted]
(l) an amendment, that effectuates the conversion of some or all of
the Units or Incentive Distribution Rights held by the Managing General
Partner or any of its Affiliates from being general partner interests into
being limited partner interests at the election of either of the General
Partners or any of their Affiliates holding such Partnership Interests;
(m) any other amendments substantially similar to the foregoing.
13.2 AMENDMENT PROCEDURES
Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of the
Managing General Partner which consent may be given or withheld in its sole
discretion. A proposed amendment shall be effective upon its approval by the
holders of at least a majority of the Outstanding Units, unless a greater or
different percentage is required under this Agreement or by Delaware law. Each
proposed amendment that requires the approval of the holders of a specified
percentage of Outstanding Units shall be set forth in a writing that contains
the text of the proposed amendment. If such an amendment is proposed, the
Managing General Partner shall seek the written approval of the requisite
percentage of Outstanding Units or call a meeting of the Unitholders to consider
and vote on such proposed amendment. The Managing General Partner shall notify
all Record Holders upon final adoption of any such proposed amendments.
13.3 AMENDMENT REQUIREMENTS
(a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision
of this Agreement that establishes a percentage of Outstanding Units required to
take any action shall be amended, altered, changed, repealed or rescinded in any
respect that would have the effect of reducing such voting percentage unless
such amendment is approved by the written consent or the affirmative vote of
holders of Outstanding Units whose aggregate Outstanding Units constitute not
less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment
to this Agreement may (i) enlarge the obligations of any Limited Partner without
its consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 13.3(c), (ii) enlarge the obligations of,
restrict in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable to the General Partners or any
of their Affiliates without its consent, which may be given or withheld in its
sole discretion, (iii) change Section 12.1(a) or (c), or (iv) change the term of
the Partnership or, except as set forth in Section 12.1(c), give any Person the
right to dissolve the Partnership.
(c) Except as provided in Section 14.3, and except as otherwise provided,
and without limitation of the Managing General Partner's authority to adopt
amendments to this Agreement as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of Partnership Interests
must be approved by the holders of not less than a majority of the Partnership
Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 7.3 or 13.1 and except as otherwise provided by
Section 14.3(b), no amendments shall become
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effective without the approval of the holders of at least 90% of the Outstanding
Common Units and Subordinated Units voting as a single class unless the
Partnership obtains an Opinion of Counsel to the effect that such amendment will
not affect the limited liability of any Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be
amended with the approval of the holders of at least 90% of the Outstanding
Units.
13.4 SPECIAL MEETINGS
All acts of Unitholders to be taken pursuant to this Agreement shall be
taken in the manner provided in this Article XIII. Special meetings of the
Unitholders may be called by the Managing General Partner or by Unitholders
owning 20% or more of the Outstanding Units of the class or classes for which a
meeting is proposed. Unitholders shall call a special meeting by delivering to
the Managing General Partner one or more requests in writing stating that the
signing Unitholders wish to call a special meeting and indicating the general or
specific purposes for which the special meeting is to be called. Within 60 days
after receipt of such a call from Unitholders or within such greater time as may
be reasonably necessary for the Partnership to comply with any statutes, rules,
regulations, listing agreements or similar requirements governing the holding of
a meeting or the solicitation of proxies for use at such a meeting, the Managing
General Partner shall send a notice of the meeting to the Unitholders either
directly or indirectly through the Transfer Agent. A meeting shall be held at a
time and place determined by the Managing General Partner on a date not less
than 10 days nor more than 60 days after the mailing of notice of the meeting.
Unitholders shall not vote on matters that would cause the Limited Partners to
be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Unitholders' limited
liability under the Delaware Act or the law of any other state in which the
Partnership is qualified to do business.
13.5 NOTICE OF A MEETING
Notice of a meeting called pursuant to Section 13.4 shall be given to the
Record Holders in writing by mail or other means of written communication in
accordance with Section 16.1. The notice shall be deemed to have been given at
the time when deposited in the mail or sent by other means of written
communication.
13.6 RECORD DATE
For purposes of determining the Unitholders entitled to notice of or to
vote at a meeting of the Limited Partners or to give approvals without a meeting
as provided in Section 13.11, the Managing General Partner may set a Record
Date, which shall not be less than 10 nor more than 60 days before (a) the date
of the meeting (unless such requirement conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units
are listed for trading, in which case the rule, regulation, guideline or
requirement of such exchange shall govern) or (b) in the event that approvals
are sought without a meeting, the date by which Unitholders are requested in
writing by the Managing General Partner to give such approvals.
13.7 ADJOURNMENT
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than 45 days. At the adjourned
meeting, the Partnership may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 45 days
or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
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13.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES
The transactions of any meeting of Unitholders, however called and noticed,
and whenever held, shall be as valid as if occurred at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, Unitholders representing such quorum
who were present in person or by proxy and entitled to vote, sign a written
waiver of notice or an approval of the holding of the meeting or an approval of
the minutes thereof. All waivers and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. Attendance of
a Unitholder at a meeting shall constitute a waiver of notice of the meeting,
except when the Unitholder does not approve, at the beginning of the meeting, of
the transaction of any business because the meeting is not lawfully called or
convened; and except that attendance at a meeting is not a waiver of any right
to disapprove the consideration of matters required to be included in the notice
of the meeting, but not so included, if the disapproval is expressly made at the
meeting.
13.9 QUORUM
The holders of a majority of the Outstanding Units of the class or classes
for which a meeting has been called represented in person or by proxy shall
constitute a quorum at a meeting of Unitholders of such class or classes unless
any such action by the Unitholders requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater
percentage. At any meeting of the Unitholders duly called and held in accordance
with this Agreement at which a quorum is present, the act of Unitholders holding
Outstanding Units that in the aggregate represent a majority of the Outstanding
Units entitled to vote and be present in person or by proxy at such meeting
shall be deemed to constitute the act of all Unitholders, unless a greater or
different percentage is required with respect to such action under the
provisions of this Agreement, in which case the act of the Unitholders holding
Outstanding Units that in the aggregate represent at least such greater or
different percentage shall be required. The Unitholders present at a duly called
or held meeting at which a quorum is present may continue to transact business
until adjournment, notwithstanding the withdrawal of enough Unitholders to leave
less than a quorum, if any action taken (other than adjournment) is approved by
the required percentage of Outstanding Units specified in this Agreement. In the
absence of a quorum any meeting of Unitholders may be adjourned from time to
time by the affirmative vote of holders of at least a majority of the
Outstanding Units represented either in person or by proxy, but no other
business may be transacted, except as provided in Section 13.7.
13.10 CONDUCT OF A MEETING
The Managing General Partner shall have full power and authority concerning
the manner of conducting any meeting of the Unitholders or solicitation of
approvals in writing, including the determination of Persons entitled to vote,
the existence of a quorum, the satisfaction of the requirements of Section 13.4,
the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting. The Managing General Partner shall
designate a Person to serve as chairman of any meeting and shall further
designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the Managing General Partner.
The Managing General Partner may make such other regulations consistent with
applicable law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Unitholders or solicitation of approvals in
writing, including regulations in regard to the appointment of proxies, the
appointment and duties of inspectors of votes and approvals, the submission and
examination of proxies and other evidence of the right to vote, and the
revocation of approvals in writing.
13.11 ACTION WITHOUT A MEETING
If authorized by the Managing General Partner, any action that may be taken
at a meeting of the Unitholders may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Unitholders owning not
less than the minimum percentage of the Outstanding Units that would be
necessary to authorize or take such action at a meeting at which all the
Unitholders were
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present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units
are listed for trading, in which case the rule, regulation, guideline or
requirement of such exchange shall govern). Prompt notice of the taking of
action without a meeting shall be given to the Unitholders who have not approved
in writing. The Managing General Partner may specify that any written ballot
submitted to Unitholders for the purpose of taking any action without a meeting
shall be returned to the Partnership within the time period, which shall be not
less than 20 days, specified by the Managing General Partner. If a ballot
returned to the Partnership does not vote all of the Units held by the
Unitholders the Partnership shall be deemed to have failed to receive a ballot
for the Units that were not voted. If approval of the taking of any action by
the Unitholders is solicited by any Person other than by or on behalf of the
Managing General Partner, the written approvals shall have no force and effect
unless and until (a) they are deposited with the Partnership in care of the
Managing General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date sufficient
approvals are deposited with the Partnership and (c) an Opinion of Counsel is
delivered to the Managing General Partner to the effect that the exercise of
such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, and (ii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.
13.12 VOTING AND OTHER RIGHTS
(a) Only those Record Holders of the Units on the Record Date set pursuant
to Section 13.6 (and also subject to the limitations contained in the definition
of 'Outstanding') shall be entitled to notice of, and to vote at, a meeting of
Limited Partners or to act with respect to matters as to which the holders of
the Outstanding Units have the right to vote or to act. All references in this
Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
(b) With respect to Units that are held for a Person's account by another
Person (such as a broker, dealer, bank, trust company or clearing corporation,
or an agent of any of the foregoing), in whose name such Units are registered,
such other Person shall, in exercising the voting rights in respect of such
Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who
is the beneficial owner, and the Partnership shall be entitled to assume it is
so acting without further inquiry. The provisions of this Section 13.12(b) (as
well as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
ARTICLE XIV
MERGER
14.1 AUTHORITY
The Partnership may merge or consolidate with one or more corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ('Merger Agreement') in accordance with this Article XIV.
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the Managing General Partner. If the Managing
General Partner shall determine, in the exercise of its discretion, to consent
to the merger or consolidation, the Managing General Partner shall approve the
Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
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(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(the 'Surviving Business Entity');
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property
or general or limited partner interests, rights, securities or obligations
of the Surviving Business Entity; and (i) if any general or limited partner
interests, securities or rights of any constituent business entity are not
to be exchanged or converted solely for, or into, cash, property or general
or limited partner interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or general or limited partner
interests, rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business
Entity) which the holders of such general or limited partner interests,
securities or rights are to receive in exchange for, or upon conversion of
their general or limited partner interests, securities or rights, and (ii)
in the case of securities represented by certificates, upon the surrender
of such certificates, which cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other
entity (other than the Surviving Business Entity), or evidences thereof,
are to be delivered;
(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or
agreement of limited partnership or other similar charter or governing
document) of the Surviving Business Entity to be effected by such merger or
consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later
date specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, the effective time shall
be fixed no later than the time of the filing of the certificate of merger
and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Managing
General Partner.
14.3 APPROVAL BY UNITHOLDERS OF MERGER OR CONSOLIDATION
(a) The Managing General Partner, upon its approval of the Merger
Agreement, shall direct that the Merger Agreement be submitted to a vote of
Unitholders, whether at a special meeting or by written consent, in either case
in accordance with the requirements of Article XIII. A copy or a summary of the
Merger Agreement shall be included in or enclosed with the notice of a special
meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the affirmative
vote or consent of the holders of a Unit Majority unless the Merger Agreement
contains any provision that, if contained in an amendment to this Agreement, the
provisions of this Agreement or the Delaware Act would require the vote or
consent of a greater percentage of the Outstanding Units or of any class of
Unitholders, in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.
(c) After such approval by vote or consent of the Unitholders, and at any
time prior to the filing of the certificate of merger pursuant to Section 14.4,
the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
14.4 CERTIFICATE OF MERGER
Upon the required approval by the Managing General Partner and the
Unitholders of a Merger Agreement, a certificate of merger shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
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14.5 EFFECT OF MERGER
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due to any of those business entities and all
other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any
of those constituent business entities shall not revert and is not in any
way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests
in property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had
been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another.
ARTICLE XV
RIGHT TO ACQUIRE UNITS
15.1 RIGHT TO ACQUIRE UNITS
(a) Notwithstanding any other provision of this Agreement, if at any time
not more than 20% of the total Partnership Interests of any class then
Outstanding are held by Persons other than the General Partners and their
Affiliates, the Managing General Partner shall then have the right, which right
it may assign and transfer in whole or in part to the Partnership or any
Affiliate of the Managing General Partner, exercisable in its sole discretion,
to purchase all, but not less than all, of the Partnership Interests of such
class then Outstanding held by Persons other than the General Partners and their
Affiliates, at the greater of (x) the Current Market Price as of the date three
business days prior to the date that the notice described in Section 15.1(b) is
mailed and (y) the highest price paid by the General Partners or any of their
Affiliates for any such Partnership Interest purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is mailed. As
used in this Agreement, (i) 'Current Market Price' as of any date of any class
of Partnership Interests listed or admitted to trading on any National
Securities Exchange means the average of the daily Closing Prices (as
hereinafter defined) per Limited Partner Interest of such class for the 20
consecutive Trading Days (as hereinafter defined) immediately prior to such
date; (ii) 'Closing Price' for any day means the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange (other than the Nasdaq Stock Market) on which the
Partnership Interests of such class are listed or admitted to trading or, if the
Partnership Interests of such class are not listed or admitted to trading on any
National Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use, or, if on any such day the
Partnership Interests of such class are not quoted by any such organization, the
average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Partnership Interests of such
class selected by the Managing General Partner, or if on any such day no market
maker is making a market in the Partnership Interests of such class, the fair
value of such Partnership Interests on such day as determined reasonably and in
good faith by the General Partner; and (iii) 'Trading Day' means a day on which
the principal National Securities Exchange on which the Partnership Interests of
any class are listed or admitted to trading is
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open for the transaction of business or, if Partnership Interests of a class are
not listed or admitted to trading on any National Securities Exchange, a day on
which banking institutions in New York City generally are open.
(b) If the Managing General Partner, any Affiliate of the Managing General
Partner or the Partnership elects to exercise the right to purchase Partnership
Interests granted pursuant to Section 15.1(a), the Managing General Partner
shall deliver to the Transfer Agent notice of such election to purchase (the
'Notice of Election to Purchase') and shall cause the Transfer Agent to mail a
copy of such Notice of Election to Purchase to the Record Holders of Partnership
Interests (as of a Record Date selected by the Managing General Partner) at
least 10, but not more than 60, days prior to the Purchase Date. Such Notice of
Election to Purchase shall also be published for a period of at least three
consecutive days in at least two daily newspapers of general circulation printed
in the English language and published in the Borough of Manhattan, New York. The
Notice of Election to Purchase shall specify the Purchase Date and the price
(determined in accordance with Section 15.1(a)) at which Partnership Interests
will be purchased and state that the Managing General Partner, its Affiliate or
the Partnership, as the case may be, elects to purchase such Partnership
Interests, upon surrender of Certificates representing such Partnership
Interests in exchange for payment, at such office or offices of the Transfer
Agent as the Transfer Agent may specify, or as may be required by any National
Securities Exchange on which the Partnership Interests are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record Holder of
Partnership Interests at his address as reflected in the records of the Transfer
Agent shall be conclusively presumed to have been given regardless of whether
the owner receives such notice. On or prior to the Purchase Date, the Managing
General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of the Partnership Interests to be purchased in
accordance with this Section 15.1. If the Notice of Election to Purchase shall
have been duly given as aforesaid at least 10 days prior to the Purchase Date,
and if on or prior to the Purchase Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Partnership Interests
subject to purchase as provided herein, then from and after the Purchase Date,
notwithstanding that any Certificate shall not have been surrendered for
purchase, all rights of the holders of such Partnership Interests (including any
rights pursuant to Articles IV, V, VI, and XII) shall thereupon cease, except
the right to receive the purchase price (determined in accordance with Section
15.1(a)) for Partnership Interests therefor, without interest, upon surrender to
the Transfer Agent of the Certificates representing such Partnership Interests,
and such Partnership Interests shall thereupon be deemed to be transferred to
the Managing General Partner, its Affiliate or the Partnership, as the case may
be, on the record books of the Transfer Agent and the Partnership, and the
General Partner or any Affiliate of the Managing General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such
Partnership Interests from and after the Purchase Date and shall have all rights
as the owner of such Partnership Interests (including all rights as owner of
such Partnership Interests pursuant to Articles IV, V, VI and XII).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Partnership Interest subject to purchase as provided in this Section
15.1 may surrender his Certificate evidencing such Partnership Interest to the
Transfer Agent in exchange for payment of the amount described in Section
15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address described below. Any
notice, payment or report to be given or made to a Partner or Assignee hereunder
shall be deemed conclusively to have been given or made, and the obligation to
give such notice or report or to make such payment shall be
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deemed conclusively to have been fully satisfied, upon sending of such notice,
payment or report to the Record Holder of such Unit or Incentive Distribution
Right at his address as shown on the records of the Transfer Agent or as
otherwise shown on the records of the Partnership, regardless of any claim of
any Person who may have an interest in such Unit, Incentive Distribution Right
or the Unsubordinated General Partner Interest of a General Partner by reason of
any assignment or otherwise. An affidavit or certificate of making of any
notice, payment or report in accordance with the provisions of this Section 16.1
executed by the General Partner, the Transfer Agent or the mailing organization
shall be prima facie evidence of the giving or making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further mailing (until such
time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the Managing General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partners may rely
and shall be protected in relying on any notice or other document from a
Partner, Assignee or other Person if believed by it to be genuine.
16.2 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
16.3 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
16.4 INTEGRATION
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
16.5 CREDITORS
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
16.6 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
16.7 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto or, in the case of a Person acquiring a Unit, upon accepting
the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other
party.
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16.8 APPLICABLE LAW
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
16.9 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
16.10 CONSENT OF PARTNERS
Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Managing General Partner:
National Propane Corporation
By:
...................................
NAME:
TITLE:
Special General Partner
National Propane SGP, Inc.
By:
...................................
NAME:
TITLE:
Organizational Limited Partner:
Triarc Companies, Inc.
By:
...................................
NAME:
TITLE:
Limited Partners
All Limited Partners now and hereafter
admitted as Limited Partners of the
Partnership, pursuant to powers of
attorney now and hereafter executed in
favor of, and granted and delivered to
the Managing General Partner.
By:
...................................
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EXHIBIT A TO THE AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
NATIONAL PROPANE PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
NATIONAL PROPANE PARTNERS, L.P.
No. Common Units
National Propane Corporation, a Delaware corporation, as the Managing
General Partner of National Propane Partners, L.P., a Delaware limited
partnership (the 'Partnership'), hereby certifies that (the 'Holder') is the
registered owner of Common Units representing limited partner
interests in the Partnership (the 'Common Units') transferable on the books of
the Partnership, in person or by duly authorized attorney, upon surrender of
this Certificate properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by this Certificate.
The rights, preferences and limitations of the Common Units are set forth in,
and this Certificate and the Common Units represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Agreement of Limited Partnership of National Propane Partners, L.P., as
amended, supplemented or restated from time to time (the 'Partnership
Agreement'). Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at,
the principal office of the Partnership located at Suite 1700, IES Tower, 200
1st Street S.E., P.O. Box 2067, Cedar Rapids, Iowa 52401-2067. Capitalized terms
used herein but not defined shall have the meaning given them in the Partnership
Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
<TABLE>
<S> <C>
Dated: NATIONAL PROPANE CORPORATION,
as Managing General Partner
Countersigned and Registered by:
By:
as Transfer Agent and Registrar President
By: By:
Authorized Signature Secretary
</TABLE>
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[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as follows according to applicable laws or
regulations:
<TABLE>
<CAPTION>
TEN COM -- as tenants in common UNIF GIFT MIN ACT:
<S> <C> <C>
TEN ENT -- as tenants by the entireties ........................ Custodian ........................
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act .......................................................
State
</TABLE>
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
IN
NATIONAL PROPANE PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF NATIONAL PROPANE PARTNERS, L.P.
You have acquired an interest in National Propane Partners, L.P., Suite
1700, IES Tower, 200 1st Street, S.E., P.O. Box 2067, Cedar Rapids, Iowa
52401-2067, whose taxpayer identification number is 42-1453040. The Internal
Revenue Service has issued National Propane Partners, L.P. the following tax
shelter registration number: .
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE IF
YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME
BY REASON OF YOUR INVESTMENT IN NATIONAL PROPANE PARTNERS, L.P.
You must report the registration number as well as the name and taxpayer
identification number of NATIONAL PROPANE PARTNERS, L.P. on Form 8271. FORM 8271
MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS, CREDIT,
OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
NATIONAL PROPANE PARTNERS, L.P.
If you transfer your interest in National Propane Partners, L.P. to another
person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of National Propane Partners, L.P. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR
THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED BY THE
INTERNAL REVENUE SERVICE.
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FOR VALUE RECEIVED, .............................. hereby assigns, conveys,
sells and transfers unto .......................................................
<TABLE>
<S> <C>
....................................................... ........................................................
(Please print or typewrite name (Please insert Social Security or other
and address of Assignee) identifying number of Assignee)
</TABLE>
..................................... Common Units representing limited partner
interests evidenced by this Certificate, subject to the Partnership Agreement,
and does hereby irrevocably constitute and appoint ..... as its attorney-in-fact
with full power of
substitution to transfer the same on the books of National Propane Partners,
L.P.
<TABLE>
<CAPTION>
Date: ............................................ NOTE: The signature to any endorsement hereon must correspond
with the name as written upon the face of this
Certificate in every particular, without alternation,
enlargement or change.
<S> <C>
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A ........................................................
COMMERCIAL BANK OR TRUST COMPANY (Signature)
SIGNATURE(S) GUARANTEED
........................................................
(Signature)
</TABLE>
No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
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APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ('Assignee') hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Amended and
Restated Agreement of Limited Partnership of National Propane Partners, L.P.
(the 'Partnership'), as amended, supplemented or restated to the date hereof
(the 'Partnership Agreement'), (b) represents and warrants that the Assignee has
all right, power and authority and, if an individual, the capacity necessary to
enter into the Partnership Agreement, (c) appoints the Managing General Partner
of the Partnership and, if a Liquidator shall be appointed, the Liquidator of
the Partnership as the Assignee's attorney-in-fact to execute, swear to,
acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the power of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms
not defined herein have the meanings assigned to such terms in the Partnership
Agreement.
Date:.................................
<TABLE>
<S> <C>
....................................................... ........................................................
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE SIGNATURE OF ASSIGNEE
....................................................... ........................................................
PURCHASE PRICE INCLUDING COMMISSIONS, IF ANY NAME AND ADDRESS OF ASSIGNEE
</TABLE>
Type of Entity (check one):
<TABLE>
<S> <C> <C>
[ ] Individual [ ] Partnership [ ] Corporation
[ ] Trust [ ] Other (specify) .....................................
</TABLE>
Nationality (check one)
<TABLE>
<S> <C> <C>
[ ] U.S. Citizen, Resident or Domestic Entity
[ ] Foreign Corporation [ ] Non-resident Alien
</TABLE>
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
'Code'), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interestholder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identification number (Social Security Number)
is ....................................................................
A-78
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3. My home address is .......................................... .
B. Partnership, Corporation or Other Interestholder
1. .............................................. is not a foreign
(NAME OF INTERESTHOLDER)
corporation, foreign partnership, foreign trust or foreign estate (as
those terms are defined in the Code and Treasury Regulations).
2. The interestholder's U.S. employer identification number is
..................................................................... .
3. The interestholder's office address and place of incorporation
(if applicable) is......................................................
. .
The interestholder agrees to notify the Partnership within sixty (60)
days of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
..........................
NAME OF INTERESTHOLDER
..........................
SIGNATURE AND DATE
..........................
TITLE (IF APPLICABLE)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the signee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
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APPENDIX B
No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ('Assignee') hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Amended and
Restated Agreement of Limited Partnership of National Propane Partners, L.P.
(the 'Partnership'), as amended, supplemented or restated to the date hereof
(the 'Partnership Agreement'), (b) represents and warrants that the Assignee has
all right, power and authority and, if an individual, the capacity necessary to
enter into the Partnership Agreement, (c) appoints the Managing General Partner
of the Partnership and, if a Liquidator shall be appointed, the Liquidator of
the Partnership as the Assignee's attorney-in-fact to execute, swear to,
acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Ageement, (d) gives the power of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms
not defined herein have the meanings assigned to such terms in the Partnership
Agreement.
Date:.................................
Date:.................................
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......................................................
........................................................ SIGNATURE OF ASSIGNEE
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
......................................................
NAME AND ADDRESS OF ASSIGNEE
........................................................
PURCHASE PRICE INCLUDING COMMISSIONS, IF ANY
</TABLE>
Type of Entity (check one):
[ ] Individual [ ] Partnership [ ] Corporation
[ ] Trust [ ] Other (specify)
............................................................
Nationality (check one)
[ ] U.S. Citizen, Resident or Domestic Entity
[ ] Foreign Corporation [ ] Non-resident Alien
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If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
'Code'), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interestholder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is
....................................................................... .
3. My home address is .................................................... .
B. Partnership, Corporation or Other Interestholder
1. ........................................................ is not a foreign
(NAME OF INTERESTHOLDER)
corporation, foreign partnership, foreign trust or foreign estate (as
those terms are defined in the Code and Treasury Regulations).
2. The interestholder's U.S. employer identification number is ........... .
3. The interestholder's office address and place of incorporation (if
applicable) is
....................................................................... .
The interestholder agrees to notify the Partnership within sixty (60) days
of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
.................................
NAME OF INTERESTHOLDER
.................................
SIGNATURE AND DATE
.................................
TITLE (IF APPLICABLE)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
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APPENDIX C
GLOSSARY OF CERTAIN TERMS
Acquisition: Any transaction in which any member of the Partnership Group
acquires (through an asset acquisition, merger, stock acquisition or other form
of investment) control over all or a portion of the assets, properties or
business of another Person for the purpose of increasing the operating capacity
or revenues of the Partnership Group above the operating capacity or revenues of
the Partnership Group existing immediately prior to such transaction.
Adjusted Operating Surplus: With respect to any period, Operating Surplus
generated during such period, as adjusted to (a) exclude Operating Surplus
attributable to (i) any net increase in working capital borrowings during such
period and (ii) any net reduction in cash reserves for Operating Expenditures
that otherwise increased the Operating Surplus generated during such period, and
(b) include (i) any net decrease in working capital borrowings during such
period, and (ii) any net increase in cash reserves for Operating Expenditures
during such period required by any debt instrument for the repayment of
principal, interest or premium on indebtedness. Adjusted Operating Surplus does
not include that portion of Operating Surplus included in clause (a)(i) of the
definition of Operating Surplus.
Affiliate: With respect to any Person, another Person that controls, is
controlled by or is under common control with (either directly or indirectly),
such Person (including, with respect to the General Partners, without
limitation, Triarc, DWG Acquisition Group, L.P., Nelson Peltz, Peter W. May or
any of their respective Affiliates). For purposes of this definition 'control'
of a Person means the ability to direct or cause the direction of the management
and policies of such Person whether through the ownership of voting securities,
by contract or otherwise.
Audit Committee: A committee of the board of directors of the Managing
General Partner or the Special General Partner composed entirely of two or more
directors who are neither officers nor employees of such General Partner nor
officers, directors or employees of any Affiliate of such General Partner
(except that such directors may be directors of both General Partners).
Available Cash: With respect to any fiscal quarter of the Partnership,
prior to liquidation of the Partnership:
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such quarter, and (ii) all additional cash and
cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such quarter resulting from
borrowings for working capital purposes made subsequent to the end of such
quarter, less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the Managing General Partner to (i) provide
for the proper conduct of the business of the Partnership Group, (ii)
comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any
member of the Partnership Group is a party or by which it is bound or its
assets are subject, or (iii) provide funds for distributions to Unitholders
and the General Partners in respect of any one or more of the next four
quarters; provided, however, that the Managing General Partner may not
establish cash reserves pursuant to (iii) above if the effect of such
reserves would be that the Partnership is unable to distribute the Minimum
Quarterly Distribution on all Common Units with respect to such quarter;
and provided further, that disbursements made or cash reserves established,
increased or reduced after the end of any quarter but on or before the date
on which the Partnership makes its distribution of Available Cash in
respect of such quarter shall be deemed to have been made, established,
increased or reduced for purposes of determining Available Cash within such
quarter if the Managing General Partner so determines. Notwithstanding the
foregoing, 'Available Cash' after the liquidation of the Partnership occurs
shall equal zero.
Bank Credit Facility: The $40 million acquisition facility (the
'Acquisition Facility') and the $15 million working capital facility (the
'Working Capital Facility'), both entered into by the Operating Partnership.
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BTU: British thermal unit. The quantity of heat required to raise the
temperature of one pound of water by one degree Fahrenheit.
Capital Account: The capital account maintained for a Partner pursuant to
the Partnership Agreement. The Capital Account of a partner in respect of a
General Partner Interest, a Common Unit, a Subordinated Unit, an Incentive
Distribution Right or any other Partnership Interest shall be the amount which
such Capital Account would be if such general partner interest, Common Unit,
Subordinated Unit, Incentive Distribution Right, or other Partnership Interest
were the only interest in the Partnership held by a Partner from and after the
date on which such general partner interest, Common Unit, Subordinated Unit,
Incentive Distribution Right or other Partnership Interest was first issued.
Capital Improvements: Additions or improvements to the capital assets owned
by any member of the Partnership Group or the acquisition of existing or the
construction of new capital assets (including, without limitation, retail
distribution outlets, propane tanks, pipeline systems, storage facilities,
appliance showrooms, training facilities and related assets), made to increase
the operating capacity of the Partnership Group over the operating capacity of
the Partnership Group existing immediately prior to such addition, improvement,
acquisition or construction.
Capital Surplus: All Available Cash distributed by the Partnership from any
source will be treated as being distributed from Operating Surplus until the sum
of all Available Cash distributed since the commencement of the Partnership
equals the Operating Surplus as of the end of the quarter prior to such
distribution. Any excess Available Cash will be deemed to be from Capital
Surplus.
Cause: Means (A) a court of competent jurisdiction has entered a final,
non-appealable judgment finding the Managing General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as a
general partner of the Partnership or (B) the Special General Partner, prior to
the Triarc Merger does not have the same directors on its Board of Directors as
the Managing General Partner.
Closing Date: The first date on which Common Units are sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
Common Unit Arrearage: The amount by which the Minimum Quarterly
Distribution in respect of a quarter during the Subordination Period exceeds the
distribution of Available Cash from Operating Surplus actually made for such
quarter on a Common Unit, cumulative for such quarter and all prior quarters
during the Subordination Period.
Common Units: A Unit representing a fractional part of the Partnership
Interests of all partners of the Partnership and assignees of any such limited
partner's interest and having the rights and obligations specified with respect
to Common Units in the Partnership Agreement.
Conveyance, Contribution and Assumption Agreement: Collectively, the
Conveyance, Contribution and Assumption Agreement, to be dated the Closing Date,
by and among the Operating Partnership, the General Partners and the Partnership
and the Contribution and Assumption Agreement, to be dated the Closing Date, by
and among the Operating Partnership, the General Partners and NSSI, which
together provide for, among other things, the principal transaction pursuant to
which substantially all of the assets of the General Partners will be
transferred and substantially all of their liabilities will be assumed by the
Operating Partnership.
Current Market Price: With respect to any class of Units as of any date,
the average of the daily Closing Prices (as hereinafter defined) per Unit of
such class for the 20 consecutive Trading Days (as hereinafter defined)
immediately prior to such date. 'Closing Price' for any day means the last sale
price on such day, regular way, or in case no such sale takes place on such day,
the average of the closing bid and asked prices on such day, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Units of such class are listed or admitted to trading or,
if the Units of such class are not listed or admitted to trading on any national
securities exchange, the last quoted price on such day, or, if not so quoted,
the average of the high bid and low asked prices on such day in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or if on any
such day the Units of such class are not
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quoted by any such organization, the average of the closing bid and asked prices
on such day as furnished by a professional market maker making a market in the
Units of such class selected by the Managing General Partner, or if on any such
day no market maker is making a market in the Units of such class, the fair
value of such Units on such day as determined reasonably and in good faith by
the Managing General Partner. 'Trading Day' means a day on which the principal
national securities exchange on which Units of any class are listed or admitted
to trading is open for the transaction of business or, if the Units of a class
are not listed or admitted to trading on any national securities exchange, a day
on which banking institutions in New York City generally are open.
Degree Day: Degree Days measure the amount by which the average of the high
and low temperature on a given day is below 65 degrees Fahrenheit. For example,
if the high temperature is 60 degrees and the low temperature is 40 degrees for
a National Oceanic and Atmospheric Administration measurement location, the
average temperature is 50 degrees and the number of Degree Days for that day is
15.
Delaware Act: The Delaware Revised Uniform Limited Partnership Act, 6 Del
C. SS17-101, et seq., as amended, supplemented or restated from time to time,
and any successor to such statute.
Departing Partner: A former General Partner from and after the effective
date of any withdrawal or removal of such former General Partner pursuant to the
provisions of the Partnership Agreement.
EBITDA: Operating income (loss) plus depreciation and amortization
(excluding amortization of deferred financing cost). As used in this Prospectus,
EBITDA is not intended to be construed as an alternative to net income (as an
indicator of operating performance), or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations).
General Partners: The Managing General Partner and the Special General
Partner and their successors or permitted assigns as general partners of the
Partnership and the Operating Partnership.
Incentive Distributions: The distributions of Available Cash from Operating
Surplus initially made to the Managing General Partner that are in excess of the
General Partners' aggregate General Partner Interests and are not related to the
Managing General Partner's ownership of Subordinated Units or Common Units. The
Managing General Partner may transfer its right to receive such distributions to
one or more Persons.
Initial Common Units: The Common Units sold in the Offering.
Initial Unit Price: An amount per Unit equal to the initial public offering
price of the Initial Common Units as set forth on the outside front cover page
of this Prospectus.
Interim Capital Transactions: (a) Borrowings, refinancings and refundings
of indebtedness and sales of debt securities (other than for working capital
purposes and other than for items purchased on open account in the ordinary
course of business) by any member of the Partnership Group, (b) sales of equity
interests by any member of the Partnership Group (including Common Units sold to
the Underwriters pursuant to the exercise of the over-allotment option), and (c)
sales or other voluntary or involuntary dispositions of any assets of any member
of the Partnership Group (other than (i) sales or other dispositions of
inventory in the ordinary course of business, (ii) sales or other dispositions
of other current assets, including, without limitation, receivables and
accounts, in the ordinary course of business, (iii) sales or other dispositions
of assets as a part of normal retirements or replacements) or (iv) like kind
exchanges of operating assets to the extent that the operating assets received
are of equal or greater value, in each case prior to the commencement of the
dissolution and liquidation of the Partnership.
Limited Partner: Unless the context otherwise requires, any Person holding
a limited partner interest in the Partnership and having the rights and
obligations specified with respect to a Limited Partner (as such term is defined
in the Partnership Agreement).
Managing General Partner: National Propane Corporation and its successors
and permitted assigns, as managing general partner of the Partnership.
Minimum Quarterly Distribution: $0.525 per Common Unit with respect to each
quarter or $2.10 per Common Unit on an annualized basis, subject to adjustment
as described in 'Cash Distribution Policy -- Distributions from Capital Surplus'
and ' -- Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels.'
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Operating Expenditures: All Partnership Group expenditures, including, but
not limited to, taxes, reimbursements of the General Partners, debt service
payments and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets, or
(ii) made in connection with the refinancing or refunding of indebtedness
with the proceeds from new indebtedness or from the sale of equity
interests. For purposes of the foregoing, at the election and in the
reasonable discretion of the Managing General Partner, any payment of
principal or premium shall be deemed to be refunded or refinanced by any
indebtedness incurred or to be incurred by the Partnership Group within 180
days before or after such payment to the extent of the principal amount of
and premium on such indebtedness.
General Partner Interests: The 4% unsubordinated general partner interest
in the Partnership and the Operating Partnership on a combined basis. This
interest applies to all distributions and allocations, except if the
over-allotment option is exercised, this interest will be entitled to a smaller
percentage of the liquidation proceeds.
(b) Operating Expenditures shall not include (i) capital expenditures made
for Acquisitions or for Capital Improvements, (ii) payment of transaction
expenses relating to Interim Capital Transactions, or (iii) distributions to
partners. Where capital expenditures are made in part for Acquisitions or
Capital Improvements and in part for other purposes, the Managing General
Partner's good faith allocation between the amounts paid for each shall be
conclusive.
Operating Partnership: National Propane, L.P., a Delaware limited
partnership, the Partnership's subsidiary operating partnership, and any
successors thereto and any other subsidiary operating partnerships and
corporations.
Operating Partnership Agreement: The Amended and Restated Agreement of
Limited Partnership of the Operating Partnership (the form of which will be
filed as an exhibit to the Registration Statement of which this Prospectus is a
part), as it may be amended, supplemented or restated from time to time.
Operating Surplus: At the close of any fiscal quarter of the Partnership
prior to liquidation, on a cumulative basis and without duplication:
(a) the sum of (i) $15,400,000, plus all cash and cash equivalents of
the Partnership Group as of the close of business on the Closing Date, and
(ii) all cash receipts of the Partnership Group for the period beginning on
the Closing Date and ending with the last day of such period, other than
cash receipts from Interim Capital Transactions, less
(b) the sum of (i) Operating Expenditures for the period beginning on
the Closing Date and ending with the last day of such period and (ii) the
amount of cash reserves that is necessary or advisable in the reasonable
discretion of the Managing General Partner to provide funds for future
Operating Expenditures; provided however, disbursements made (including
contributions to a member of the Partnership Group or disbursements on
behalf of a member of the Partnership Group) or cash reserves established,
increased or reduced after the end of any quarter but on or before the date
on which the Partnership makes its distribution of Available Cash in
respect of such quarter shall be deemed to have been made, established,
increased or reduced for purposes of determining Operating Surplus, within
such quarter if the Managing General Partner so determines. Operating
Surplus after the liquidation of the Partnership occurs shall equal zero.
Opinion of Counsel: A written opinion of counsel (who may be regular
counsel to Triarc, the Partnership or the General Partners or any of their
Affiliates) acceptable to the Managing General Partner in its reasonable
discretion to the effect that the taking of a particular action will not result
in the loss of the limited liability of the limited partners of the Partnership
under the Delaware Act or cause the Partnership to be treated as an association
taxable as a corporation or otherwise taxed as an entity for federal income tax
purposes.
Partnership: National Propane Partners, L.P., a Delaware limited
partnership, and any successor thereto.
Partnership Agreement: The Amended and Restated Agreement of Limited
Partnership of the Partnership (the form of which is included in this Prospectus
as Appendix A), as it may be amended,
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supplemented or restated from time to time. Unless the context requires
otherwise, references to the Partnership Agreement constitute references to the
Partnership Agreement of the Partnership and the Operating Partnership
Agreement, collectively.
Partnership Group: The Partnership, the Operating Partnership and any
subsidiary of either such entity, treated as a single consolidated partnership.
Partnership Interest: An interest in the Partnership, which shall include
General Partner Interests, Common Units, Subordinated Units, rights to receive
Incentive Distributions or any other equity securities of the Partnership, or a
combination thereof or interest therein as the case may be.
Partnership Loan: The $40.7 million loan from the Operating Partnership to
Triarc made on the Closing Date.
Partnership Security: Means any class or series of Units, any option,
right, warrant or appreciation rights relating thereto, or any other type of
equity interest that the Partnership may lawfully issue, or any unsecured or
secured debt obligation of the Partnership that is convertible into any class or
series of equity interests of the Partnership.
Person: An individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, government
agency or political subdivision thereof or other entity.
Special General Partner: National Propane SGP, Inc. and its successors and
permitted assigns, as non-managing general partner of the Partnership.
Subordination Period: The Subordination Period will generally extend from
the closing of this Offering until the first day of any quarter beginning after
June 30, 2001 in respect of which (i) distributions of Available Cash from
Operating Surplus on the Common Units and the Subordinated Units with respect to
each of the three consecutive four-quarter periods immediately preceding such
date equaled or exceeded the sum of the Minimum Quarterly Distribution on all of
the outstanding Common Units and Subordinated Units during such periods, (ii)
the Adjusted Operating Surplus generated during each of the three consecutive
four-quarter periods immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the outstanding Common Units and
Subordinated Units and the related distribution on the General Partner Interests
in the Partnership during such periods, and (iii) there are no outstanding
Common Unit Arrearages. A portion of the Subordinated Units will convert into
Common Units on the first day after the record date established for the
distribution in respect of any quarter ending on or after (a) June 30, 1999
(with respect to 1,133,410 Subordinated Units, plus 25% of all Subordinated
Units issued upon conversion of all or a portion of the Special General
Partner's General Partner Interest) and (b) June 30, 2000 (with respect to
1,133,410 Subordinated Units, plus 25% of all Subordinated Units issued upon
conversion of all or a portion of the Special General Partner's General Partner
Interest), in respect of which (i) distributions of Available Cash from
Operating Surplus on the Common Units and the Subordinated Units with respect to
each of the three consecutive four-quarter periods immediately preceding such
date equaled or exceeded the sum of the Minimum Quarterly distribution on all of
the outstanding Common Units and Subordinated Units during such periods, (ii)
the Adjusted Operating Surplus generated during each of the two consecutive
four-quarter periods immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the outstanding Common Units and
Subordinated Units and the related distribution on the General Partner Interest
in the Partnership during such periods, and (iii) there are no outstanding
Common Unit Arrearages; provided, however, that the early conversion of the
second tranche of Subordinated Units may not occur until at least one year
following the early conversion of the first tranche of Subordinated Units. In
addition, if the Managing General Partner is removed as general partner of the
Partnership other than for Cause (i) the Subordination Period will end and all
outstanding Subordinated Units will immediately convert into Common Units on a
one-for-one basis, (ii) any existing Common Unit Arrearages will be extinguished
and (iii) the General Partners will have the right to convert their general
partner interests (and the right to receive Incentive Distributions) into Common
Units or to receive cash in exchange for such interests.
Subordinated Unit: A Unit representing a fractional part of the Partnership
Interests of all partners of the Partnership and assignees of any such partner's
interest and having the rights and obligations specified with respect to
Subordinated Units in the Partnership Agreement.
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Target Distribution Levels: See 'Cash Distribution Policy -- Incentive
Distributions -- Hypothetical Annualized Yield.'
Transfer Application: An application for transfer of Units in the form set
forth on the back of a certificate, substantially in the form included in this
Prospectus as Appendix B or in a form substantially to the same effect in a
separate instrument.
Unitholders: Holders of the Common Units and the Subordinated Units.
Unit Majority: During the Subordination Period, at least a majority of the
outstanding Common Units, voting as a class, and at least a majority of the
outstanding Subordinated Units, voting as a class and, thereafter, at least a
majority of the outstanding Units voting as a class.
Units: The Common Units and the Subordinated Units, collectively, but shall
not include rights to receive Incentive Distributions.
Unrecovered Capital: At any time, with respect to a Unit, the Initial Unit
Price, less the sum of all distributions theretofore made in respect of an
Initial Common Unit constituting Capital Surplus and any distributions of cash
(or the net agreed value of any distributions in kind) in connection with the
dissolution and liquidation of the Partnership theretofore made in respect of
such Unit, adjusted as the Managing General Partner determines to be appropriate
to give effect to any distribution, subdivision or combination of such Units.
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____________________________________ ___________________________________
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE PARTNERSHIP OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON UNITS IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE PARTNERSHIP SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
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Prospectus Summary................................................................................................... 6
Risk Factors......................................................................................................... 35
The Transactions..................................................................................................... 50
Use of Proceeds...................................................................................................... 51
Capitalization....................................................................................................... 52
Dilution............................................................................................................. 53
Cash Distribution Policy............................................................................................. 54
Certain Information Regarding Triarc................................................................................. 66
Selected Historical and Pro Forma Consolidated Financial and Operating Data.......................................... 73
Management's Discussion and Analysis of Financial Condition and Results of Operations................................ 75
Business and Properties.............................................................................................. 87
Management........................................................................................................... 101
Security Ownership of Certain Beneficial Owners and Management....................................................... 111
Certain Relationships and Related Transactions....................................................................... 112
Conflicts of Interest and Fiduciary Responsibility................................................................... 113
Description of the Common Units...................................................................................... 119
The Partnership Agreement............................................................................................ 121
Units Eligible for Future Sale....................................................................................... 132
Tax Considerations................................................................................................... 133
Investment in the Partnership by Employee Benefit Plans.............................................................. 150
Underwriting......................................................................................................... 151
Legal Matters........................................................................................................ 152
Experts.............................................................................................................. 152
Additional Information............................................................................................... 152
Index to Financial Statements........................................................................................ F-1
Form of Amended and Restated Agreement of Limited Partnership of National Propane Partners, L.P. .................... Appendix A
Form of Application for Transfer of Common Units..................................................................... Appendix B
Glossary of Certain Terms............................................................................................ Appendix C
</TABLE>
UNTIL , 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
UNITS, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
6,190,476 COMMON UNITS
NATIONAL PROPANE
PARTNERS, L.P.
REPRESENTING
LIMITED PARTNER INTERESTS
------------------------------
PROSPECTUS
------------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY
COMPANY, INC.
, 1996
____________________________________ ___________________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee, the NASD filing fee and the
NYSE filing fee, the amounts set forth below are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 52,780
NASD filing fee................................................................. 15,806
NYSE filing fee................................................................. 88,100
Printing and engraving expenses................................................. 850,000
Legal fees and expenses......................................................... 1,300,000
Accounting fees and expenses.................................................... 350,000
Blue Sky fees and expenses...................................................... 15,000
Transfer agent fees and expenses................................................ 20,000
Miscellaneous expenses.......................................................... 8,314
----------
Total...................................................................... $2,700,000
----------
----------
</TABLE>
- ------------
* To be furnished by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Section of the Prospectus entitled 'The Partnership
Agreement -- Indemnification' is incorporated herein by this reference.
Reference is made to Section 6 of the Purchase Agreement filed as Exhibit
1.1 to this Registration Statement.
Subject to any terms, conditions or restrictions set forth in the
Partnership Agreements, Section 17-108 of the Delaware Revised Limited
Partnership Act empowers a Delaware limited partnership to indemnify and hold
harmless any partner or other person from and against all claims and demands
whatsoever.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
There has been no sale of securities of the Partnership within the past
three years.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. Exhibits:
<TABLE>
<C> <S>
*1.1 -- Form of Purchase Agreement
*3.1 -- Form of Amended and Restated Agreement of Limited Partnership of National Propane Partners, L.P.
(included as Appendix A to the Prospectus)
*3.2 -- Form of Amended and Restated Agreement of Limited Partnership of National Propane, L.P.
*5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to the legality of the securities being
registered
*8.1 -- Opinion of Andrews and Kurth L.L.P. relating to tax matters
*10.1 -- Form of Credit Agreement among National Propane, L.P., The First National Bank of Boston, as
Administrative Agent and a Lender, Bank of America NT & SA, as a Lender, and BA Securities, Inc., as
Syndication Agent
*10.2 -- Form of Note Purchase Agreement among and National Propane Partners, L.P.
*10.3 -- Form of Conveyance, Contribution and Assumption Agreement, by and among National Propane Partners,
L.P., National Propane, L.P., National Propane Corporation and National Propane SGP, Inc.
</TABLE>
II-1
<PAGE>
<PAGE>
<TABLE>
<C> <S>
*10.4 -- Form of Note, in the principal amount of $40.7 million, issued by Triarc to National Propane, L.P.
*10.5 -- Form of 1996 National Propane Unit Option Plan
`D'10.6 -- Employment Agreement, dated as of April 24, 1993, between National Propane Corporation and Ronald D.
Paliughi (including Amendment No. 1, dated as of December 7, 1994 and Amendment No. 2, dated as of March
27, 1995)
`D'10.7 -- Severance Agreement, dated as of December 1, 1995, between National Propane Corporation and Ronald R.
Rominiecki
`D'10.8 -- Severance Agreement, dated as of March 27, 1995, between National Propane Corporation and Laurie B.
Crawford
`D'10.9 -- Triarc's 1993 Equity Participation Plan
`D'10.10 -- Form of Non-Incentive Stock Option Agreement under Triarc's 1993 Equity Participation Plan
`D'10.11 -- Letter Agreement, dated June 6, 1996, between National Propane Corporation and Ronald D. Paliughi
amending Mr. Paliughi's employment agreement, dated as of April 24, 1993 (and included as Exhibit 10.6)
`D'10.12 -- Employment Agreement, dated as of April 9, 1996, by and between National Propane Corporation and Laurie
B. Crawford
*10.13 -- Form of Contribution and Assumption Agreement, by and among National Propane, L.P., National Propane
Corporation, National Propane SGP, Inc. and National Sales and Service, Inc.
*21.1 -- List of Subsidiaries
*23.1 -- Consent of Deloitte & Touche LLP
*23.2 -- Consent of Arthur Andersen LLP
*23.3 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1)
*23.4 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 8.1)
`D'24.1 -- Powers of Attorney (included on signature page)
*27. -- Financial Data Schedule
</TABLE>
- ------------
* Filed herewith
`D' Previously filed
b. Financial Statement Schedules --
All financial statement schedules are omitted because the information is
not required, is not material or is otherwise included in the financial
statements or related notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act'), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefor, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
<PAGE>
The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 4 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on June 24, 1996.
NATIONAL PROPANE PARTNERS, L.P.
By: NATIONAL PROPANE CORPORATION
AS GENERAL PARTNER
By: *
...................
Name: Ronald D. Paliughi
Title: President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS PRE-EFFECTIVE AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED
BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED AS OF JUNE 24, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/S/ NELSON PELTZ Director of National Propane June 24, 1996
......................................... Corporation
(NELSON PELTZ)
* Director of National Propane June 24, 1996
......................................... Corporation
(PETER W. MAY)
* President, Chief Executive Officer and June 24, 1996
......................................... Director of National Propane
(RONALD D. PALIUGHI) Corporation (Principal Executive Officer)
* Senior Vice President and Chief June 24, 1996
......................................... Financial Officer of National Propane
(RONALD R. ROMINIECKI) Corporation (Principal Financial and
Accounting Officer)
*By: /S/ NELSON PELTZ June 24, 1996
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
- ----------- ---------------------------------------------------------------------------------------------- --------
<C> <S> <C>
*1.1 -- Form of Purchase Agreement.................................................................
*3.1 -- Form of Amended and Restated Agreement of Limited Partnership of National Propane Partners,
L.P. (included as Appendix A to the Prospectus).............................................
*3.2 -- Form of Amended and Restated Agreement of Limited Partnership of National Propane, L.P.....
*5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to the legality of the securities
being registered............................................................................
*8.1 -- Opinion of Andrews and Kurth L.L.P. relating to tax matters................................
*10.1 -- Form of Credit Agreement among National Propane, L.P., The First National Bank of Boston,
as Administrative Agent and a Lender, Bank of America NT & SA, as a Lender, and BA
Securities, Inc., as Syndication Agent......................................................
*10.2 -- Form of Note Purchase Agreement among and National Propane Partners, L.P....
*10.3 -- Form of Conveyance, Contribution and Assumption Agreement, by and among National Propane
Partners, L.P., National Propane, L.P., National Propane Corporation and National Propane
SGP, Inc....................................................................................
*10.4 -- Form of Note, in the principal amount of $40.7 million, issued by Triarc to National
Propane, L.P................................................................................
*10.5 -- Form of 1996 National Propane Unit Option Plan.............................................
`D'10.6 -- Employment Agreement, dated as of April 24, 1993, between National Propane Corporation and
Ronald D. Paliughi (including Amendment No. 1, dated as of December 7, 1994 and Amendment
No. 2, dated as of March 27, 1995)..........................................................
`D'10.7 -- Severance Agreement, dated as of December 1, 1995, between National Propane Corporation and
Ronald R. Rominiecki........................................................................
`D'10.8 -- Severance Agreement, dated as of March 27, 1995, between National Propane Corporation and
Laurie B. Crawford..........................................................................
`D'10.9 -- Triarc's 1993 Equity Participation Plan....................................................
`D'10.10 -- Form of Non-Incentive Stock Option Agreement under Triarc's 1993 Equity Participation
Plan........................................................................................
`D'10.11 -- Letter Agreement, dated June 6, 1996, between National Propane Corporation and Ronald D.
Paliughi amending Mr. Paliughi's employment agreement, dated as of April 24, 1993 (and
included as Exhibit 10.6)...................................................................
`D'10.12 -- Employment Agreement, dated as of April 9, 1996, by and between National Propane
Corporation and Laurie B. Crawford..........................................................
*10.13 -- Form of Contribution and Assumption Agreement, by and Among National Propane, L.P.,
National Propane Corporation, National Propane SGP, Inc. and National Sales and Service,
Inc.........................................................................................
*21.1 -- List of Subsidiaries.......................................................................
*23.1 -- Consent of Deloitte & Touche LLP...........................................................
*23.2 -- Consent of Arthur Andersen LLP.............................................................
*23.3 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1)..............
*23.4 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 8.1)................................
`D'24.1 -- Powers of Attorney (included on signature page)............................................
*27 -- Financial Data Schedule....................................................................
</TABLE>
- ------------
* Filed herewith
`D' Previously filed
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as SS
The dagger symbol shall be expressed as `D'
The division symbol shall be expressed as [div]
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
6,190,476 Common Units
NATIONAL PROPANE PARTNERS, L.P.
(a Delaware partnership)
Common Units
Representing Limited Partner Interests
PURCHASE AGREEMENT
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
_____, 1996
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
6,190,476 Common Units
NATIONAL PROPANE PARTNERS, L.P.
(a Delaware limited partnership)
Common Units
(representing limited partner interests)
PURCHASE AGREEMENT
______, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
National Propane Partners, L.P., a Delaware limited partnership (the
"Partnership"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (collectively, "Merrill Lynch"), Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Janney Montgomery Scott Inc.,
Rauscher Pierce Refsnes, Inc., The Robinson-Humphrey Company, Inc. and each of
the other Underwriters named in Exhibit A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch, DLJ, Janney
Montgomery Scott Inc., Rauscher Pierce Refsnes, Inc. and The Robinson-Humphrey
Company, Inc. are acting as representatives (in such capacity, Merrill Lynch,
DLJ, Janney Montgomery Scott Inc., Rauscher Pierce Refsnes, Inc. and The
Robinson-Humphrey Company, Inc. shall hereinafter be referred to as the
"Representatives"), with respect to the sale by the Partnership and the purchase
by the Underwriters, acting severally and not jointly, of an aggregate of
6,190,476 common units representing limited partner interests in the Partnership
(the "Common Units") in the respective numbers set forth in Exhibit A, and with
respect to the grant by the Partnership to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof (the
"Over-allotment Option") to purchase all or any part of 928,571 additional
Common Units to cover over-allotments, if any (the "Additional Units"). (The
6,190,476 Common Units are referred to herein as the "Firm Units." The Firm
Units and the Additional Units, if purchased, are collectively referred to
herein as the "Units").
(Capitalized terms used but not defined herein shall have the meaning
ascribed to them in the Registration Statement and the Prospectus (each as
defined herein)).
<PAGE>
<PAGE>
It is understood and agreed to by all parties that the Partnership (through
the Operating Partnership (as hereinafter defined)) was formed to acquire and
operate substantially all of the business and assets of National Propane
Corporation. National Propane Corporation will serve as the managing general
partner (the "General Partner") of both the Partnership and National Propane,
L.P., a Delaware limited partnership (the "Operating Partnership"). National
Propane SGP, Inc. will serve as the non-managing general partner (the "Special
General Partner") of both the Partnership and the Operating Partnership. The
Partnership, the Operating Partnership, the General Partner and the Special
General Partner are collectively referred to herein as the "Propane Entities."
Triarc Companies, Inc. is referred to herein as "Triarc."
It is understood by all parties that concurrently with the closing of the
offering of Firm Units contemplated hereby and as conditions to such closing,
(i) the General Partner will issue $125 million in aggregate principal amount of
First Mortgage Notes due 2010 (the "First Mortgage Notes") in a private
placement pursuant to one or more Note Agreements among the General Partner and
each of the purchasers listed on Schedule I thereto (the "Note Agreements"),
(ii) pursuant to a Conveyance, Contribution and Assumption Agreement, among the
General Partner, the Special General Partner, the Partnership and the Operating
Partnership, and a Contribution and Assumption Agreement, among the General
Partner, the Special General Partner, the Operating Partnership and National
Sales & Service, Inc., a subsidiary of the Operating Partnership ("National
Sales") (both agreements are collectively referred to herein as the "Conveyance
Agreements"), the General Partner and the Special General Partner will convey,
directly and indirectly (the "Conveyance"), substantially all of their assets
(other than certain specified assets) (the "Transferred Assets") to the
Operating Partnership as a capital contribution in exchange for limited partner
interests in the Operating Partnership and the assumption by the Operating
Partnership of substantially all of the liabilities of the General Partner and,
to the extent applicable, the Special General Partner (other than, in the case
of both the General Partner and the Special General Partner, income tax
liabilities), including the First Mortgage Notes, all indebtedness outstanding
under the Revolving Credit and Term Loan Agreement, dated as of October 7, 1994,
as amended, among the General Partner, the Bank of New York, as Administrative
Agent, certain Co-Agents and the several lending institutions party thereto (the
"Existing Credit Facility") and the Other Existing Indebtedness, (iii) pursuant
to the applicable Conveyance Agreement, the General Partner and the Special
General Partner will convey their limited partner interests in the Operating
Partnership to the Partnership, and in exchange for such contributions (x) the
General Partner (A) will maintain its 1% unsubordinated general partner interest
in the Partnership and (B) will receive 4,533,638 subordinated units
representing subordinated general partner interests in the Partnership (the
"Subordinated Units") and the GP Incentive Distribution Rights (as defined
below) and (y) the Special General Partner will maintain its 1% unsubordinated
general partner interest in the Partnership, (iv) the Operating Partnership will
use the net proceeds from the sale of the First Mortgage Notes conveyed to it in
the Conveyance to repay (A) an aggregate of $57.3 million of indebtedness under
the Existing Credit Facility ($30 million of which is evidenced by the Refunding
Notes (as defined in the Existing Credit Facility)) and (B) $4.9 million of
Other Existing Indebtedness, (v) the Partnership will contribute the net
proceeds from the sale of the Units to the Operating Partnership pursuant to the
applicable Conveyance Agreement, and the Operating Partnership will use such
proceeds to (A) repay all remaining indebtedness under the Existing Credit
Facility, (B) make a loan of $40.7 million to Triarc, such loan to be evidenced
by a note issued by Triarc to the Operating Partnership (the "Triarc Note") and
(C) pay certain accrued management fees and tax sharing payments due to Triarc
and certain other intercompany obligations due to Triarc and (vi) the Operating
Partnership will enter into a new $55 million bank credit facility (the ("Bank
Credit Facility") pursuant to a bank credit agreement (the "Bank Credit
Agreement"). The transactions referred to in clauses (i) through (vi) above are
collectively referred to herein as the "Transactions". The Conveyance
Agreements, all conveyances, deeds, bills of sale, assignments and, if executed
and delivered, the Agency Agreement (as defined in the Conveyance Agreements),
are collectively referred to herein as the "Conveyance Documents." The
Conveyance Documents, the Note
2
<PAGE>
<PAGE>
Agreements, the Bank Credit Agreement and the Triarc Note are collectively
referred to herein as the "Transaction Documents."
Prior to the purchase and public offering of the Firm Units by the several
Underwriters, the Partnership and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit B hereto (the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Partnership and the Representatives and shall specify the initial public
offering price, the purchase price with respect to the Firm Units and such other
applicable information as is indicated in Exhibit B hereto. The offering of the
Firm Units will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Partnership has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-2768) covering the
registration of the Units under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, at the
time it became effective and including the Rule 430A Information, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The term
"Prospectus" means the prsopectus as first filed with the Commission pursuant to
Rule 424(b) of the 1933 Act Regulations (and any amendments or supplements
thereto whether or not filed pursuant to Rule 424(b)) or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date.
SECTION 1. Representations and Warranties.
(a) The General Partner, the Special General Partner, the Partnership, the
Operating Partnership and Triarc jointly and severally represent and warrant to
each Underwriter as of the date hereof and as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the "Representation
Date") as follows:
(i) At the respective times the Registration Statement and any
post-effective amendments thereto become effective and at the Closing Time
(as hereinafter defined), the Registration Statement will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The preliminary prospectus at
June 11, 1996 complied in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the Prospectus at the
Representation Date and at Closing Time and any Date of Delivery referred
to in Section 2, will comply in all material respects with the requirements
of the 1933 Act and
3
<PAGE>
<PAGE>
the 1933 Act Regulations and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and
in conformity with information furnished to the Partnership in writing by
any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus.
(ii) Each of the statements made in the Registration Statement and the
Prospectus within the coverage of Rule 175(b) of the 1933 Act Regulations,
including (but not limited to) any statements with respect to future
available cash or future cash distributions of the Partnership, was made or
will be made by the General Partner or the Partnership, as the case may be,
with a reasonable basis and in good faith; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Partnership in writing by any Underwriter through the
Representatives expressly for use in the Registration Statement or
Prospectus.
(iii) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission.
(iv) The accountants who certified the financial statements included
in the Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(v) The financial statements included in the Registration Statement,
the preliminary prospectus at June 11, 1996 and the Prospectus, together
with any related schedules and notes, present fairly in all material
respects the financial position of the entities purported to be shown
thereby as of the dates indicated and the results of their operations and
cash flows for the periods specified; except as otherwise stated in the
Registration Statement or the Prospectus said financial statements have
been prepared in conformity with accounting principles generally accepted
in the United States ("GAAP") applied on a consistent basis throughout the
periods involved; the summary and selected financial data included in the
Registration Statement and the Prospectus have been compiled on a basis
consistent with that of the audited and unaudited historical financial
statements and pro forma financial statements from which they have been
derived; the pro forma financial statements and the related notes thereto
included in the Registration Statement and the Prospectus present fairly in
all material respects the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements (including the applicable accounting
requirements of Rule 11-02 of Regulation S-X) and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are, in the opinion of the management of the Propane
Entities, reasonable and the adjustments used therein are, in the opinion
of the management of the Propane Entities, appropriate to give effect to
the transactions and circumstances referred to therein; and any other
financial and statistical information and data included in the Registration
Statement and the Prospectus present fairly and, to the extent applicable,
in accordance with GAAP and on a basis consistent with the books and
records of the General Partner, the Partnership and Triarc, the information
required to be stated therein.
(vi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, (A) none of the Propane
4
<PAGE>
<PAGE>
Entities has sustained any material loss or interference with its business
from fire, explosion, flood, accident or other calamity, whether or not
covered by insurance, (B) there has been no change, or any development
involving a prospective change, in the partners' capital or capital stock
or any material change in long-term or short-term debt of the Propane
Entities, whether or not arising in the ordinary course of business, (C)
there have been no transactions entered into by the Propane Entities, other
than those in the ordinary course of business, which are material with
respect to the Propane Entities taken as a whole, (D) there has been no
dividend or distribution of any kind declared, paid or made by any of the
Propane Entities on any class of their capital stock or units, as the case
may be and (E) there are no liabilities or obligations of the Propane
Entities, direct or indirect, contingent or matured, which are material to
the Propane Entities taken as a whole, other than those reflected in the
Registration Statement and the Prospectus.
(vii) Each of the Partnership and the Operating Partnership (A) has
been duly formed and is validly existing as a limited partnership in good
standing under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act"), with all partnership power and authority to (x) own, lease
and operate the properties it currently owns, leases and operates or will
own, lease and operate upon consummation of the Transactions, and conduct
its business as currently conducted or as it will be conducted upon
consummation of the Transactions, in each case as described in the
Registration Statement and the Prospectus, (y) enter into and perform its
obligations under the Transaction Documents to which it is a party and
consummate the Transactions and (z) enter into and perform its obligations
under this Agreement and the Pricing Agreement and, with respect to the
Partnership, issue and sell the Units as provided herein and therein and
(B) is or at the Closing Time will be, duly qualified or registered as a
foreign limited partnership authorized to do business and in good standing
under the laws of each jurisdiction in which the nature of its business or
its leasing or ownership of property requires such qualification or
registration, except where the failure to qualify or register would not
have a Material Adverse Effect. As used herein, a "Material Adverse Effect"
means (i) any material adverse effect on the business, condition (financial
or other), earnings, assets, liabilities, results of operations or business
prospects of the Propane Entities taken as a whole or (ii) any event or
occurrence which subjects the Propane Entities to a liability or disability
that is material to the Propane Entities taken as a whole.
(viii) The Special General Partner (A) has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
state of incorporation, with all corporate power and authority to (x) own
the properties it currently owns or will own upon consummation of the
Transactions, and act as non-managing general partner of the Partnership
and the Operating Partnership, in each case as described in the
Registration Statement and the Prospectus, (y) enter into and perform its
obligations under the Transaction Documents to which it is a party and
consummate the Transactions and (z) enter into and perform its obligations
under this Agreement, and (B) is or at the Closing Time will be, duly
qualified as a foreign corporation authorized to do business and in good
standing under the laws of each jurisdiction in which the nature of its
activities or its ownership of property requires such qualification, except
where the failure to qualify would not have a Material Adverse Effect.
(ix) National Sales (A) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its state of
incorporation, with all corporate power and authority to (x) own, lease and
operate the properties it currently owns, leases and operates or will own,
lease and operate upon consummation of the Transactions, and conduct its
business as currently conducted or as it will be conducted upon
consummation of the Transactions, in each case as described in the
Registration Statement and the Prospectus, (y) enter into and perform its
obligations under the
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Transaction Documents to which it is a party and consummate the
Transactions and (B) is or at the Closing Time will be, duly qualified as a
foreign corporation authorized to do business and in good standing under
the laws of each jurisdiction in which the nature of its business or its
leasing or ownership of property requires such qualification, except where
the failure to qualify would not have a Material Adverse Effect.
(x) Each of Triarc and the General Partner (A) has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its state of incorporation, with all corporate power and
authority to (x) own, lease and operate its properties, conduct its
business and, in the case of the General Partner, act as general partner of
the Partnership and the Operating Partnership, in each case as described in
the Registration Statement and the Prospectus, (y) enter into and perform
its obligations under the Transaction Documents to which it is a party and
consummate the Transactions and (z) enter into and perform its obligations
under this Agreement and (B) is duly qualified as a foreign corporation
authorized to do business and in good standing in each jurisdiction in
which the nature of its business or its leasing or ownership of property
requires such qualification, except where the failure to qualify would not
have a Material Adverse Effect.
(xi) All of the shares of issued and outstanding capital stock of the
General Partner have been duly authorized and validly issued and are fully
paid and nonassessable, and, are owned by Triarc, directly or through
subsidiaries of Triarc, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity interest (collectively,
"Encumbrances"), other than Encumbrances in favor of the Operating
Partnership or securing obligations under the Existing Credit Facility,
which Encumbrances securing obligations under the Existing Credit Facility
shall have been released at or prior to Closing Time; at March 31, 1996,
the Partnership would have had on a pro forma basis the capitalization as
set forth in the Prospectus in the column entitled "Partnership Pro Forma"
under the caption "Capitalization."
(xii) The General Partner and the Special General Partner are the sole
general partners of the Partnership, each with, at the Closing Time and
upon consummation of the Transactions (assuming the Underwriters have not
exercised the Over-allotment Option), a 1.0% unsubordinated general partner
interest in the Partnership and, in the case of the General Partner, the
related incentive distribution rights in respect thereof (the "GP Incentive
Distribution Rights") pursuant to the Amended and Restated Agreement of
Limited Partnership of National Propane Partners, L.P., dated as of ___,
1996, among the General Partner, the Special General Partner and Triarc, as
organizational limited partner (the "Partnership Agreement"); the General
Partner and the Special General Partner are the sole general partners of
the Operating Partnership, each with, at the Closing Time and upon
consummation of the Transactions (assuming the Underwriters have not
exercised the Over-allotment Option), a 1.0101% unsubordinated general
partner interest in the Operating Partnership pursuant to the Amended and
Restated Agreement of Limited Partnership of National Propane, L.P., dated
as of ____, 1996, among the General Partner, the Special General Partner
and the Partnership (the "Operating Partnership Agreement" and together
with the Partnership Agreement, the "Partnership Agreements"); all such
general partner interests have been duly authorized and have been or at the
Closing Time will be, validly issued to the General Partner and the Special
General Partner, and are or at the Closing Time will be, owned by the
General Partner and the Special General Partner free and clear of all
Encumbrances, except for Encumbrances securing obligations under the Bank
Credit Facility, the Note Agreements and other Parity Debt (as defined in
the Bank Credit Facility); and the GP Incentive Distribution Rights have
been duly authorized and have been or at the Closing Time will be, validly
issued to the General Partner, and are owned by the General Partner, as
applicable, free and clear of all Encumbrances.
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(xiii) The Partnership is the sole limited partner of the Operating
Partnership with, at the Closing Time and upon consummation of the
Transactions (assuming the Underwriters have not exercised the
Over-allotment Option), an approximately 97.9798% limited partner interest
in the Operating Partnership; such limited partner interest has been or at
the Closing Time will be, duly authorized and validly issued in accordance
wtih the Operating Partnership Agreement, is fully paid (to the extent
required by the Operating Partnership Agreement) and nonassessable (except
as such nonassessability may be affected by matters described in the
Prospectus under the caption "The Partnership Agreement -- Limited
Liability") and is owned by the Partnership free and clear of all
Encumbrances, except for Encumbrances securing obligations under the Bank
Credit Facility, the Note Agreements and other Parity Debt.
(xiv) All of the shares of issued and outstanding capital stock of the
Special General Partner and National Sales have been duly authorized and
validly issued and are fully paid and nonassessable, and are owned by the
General Partner and the Operating Partnership, respectively, free and clear
of all Encumbrances, except for Encumbrances securing obligations under the
Bank Credit Facility, the Note Agreements and other Parity Debt.
(xv) At the Closing Time and upon consummation of the Transactions
(assuming the Underwriters do not exercise the Over-allotment Option and
the Subordinated Units are not converted into limited partner interests),
the only outstanding limited partner interests of the Partnership will be
6,190,476 Firm Units representing in the aggregate an approximate 56.6%
limited partner interest (the 4,533,638 Subordinated Units held by the
General Partner representing a subordinated general partner interest which
is convertible pursuant to the Partnership Agreement into an approximate
41.4% subordinated limited partner interest); at the Closing Time, the Firm
Units (when issued and delivered by the Partnership against payment of the
consideration set forth herein) and the Subordinated Units (when issued and
delivered pursuant to the Conveyance Agreements and the Partnership
Agreement), evidencing limited partner and subordinated general partner
interests, respectively, will be duly authorized by the Partnership
Agreement, will be validly issued to the Underwriters and the General
Partner, respectively, and in the case of the Firm Units will be fully paid
(to the extent required under the Partnership Agreement) and nonassessable
(except as such nonassessablility may be affected by matters described in
the Prospectus under the caption "The Partnership Agreement -- Limited
Liability"); at any Date of Delivery, Additional Units, if any (when issued
and delivered by the Partnership against payment of the consideration set
forth herein), will be duly authorized by the Partnership Agreement, will
be validly issued to the Underwriters and will be fully paid (to the extent
required by the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the Prospectus
under the caption "The Partnership Agreement -- Limited Liability"); at the
Closing Time, the Firm Units will be acquired by the Underwriters free and
clear of all Encumbrances created by the Partnership Agreement, and the
Subordinated Units will be owned by the General Partner free and clear of
all Encumbrances other than Encumbrances in favor of the Operating
Partnership; and at any Date of Delivery, the Additional Units issued and
delivered on such date will be acquired by the Underwriters, free and clear
of all Encumbrances created by the Partnership Agreement.
(xvi) Except as described in the Registration Statement and the
Prospectus, there are no preemptive rights or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any
partnership interests or shares of capital stock of any of the Propane
Entities pursuant to the provisions of the certificate of incorporation,
bylaws, agreement of limited partnership or other governing documents or
any agreement or other instrument to which any of the Propane Entities is a
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party or by which any of them may be bound. Except as described in the
Registration Statement and the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement and the Pricing Agreement gives rise to any
rights for or relating to the registration of any Units or other securities
(debt or equity) of the Partnership. The Units, when issued and delivered
by the Partnership against payment of the consideration set forth herein,
the Subordinated Units, when issued and delivered pursuant to the
Conveyance Agreements and the Partnership Agreement, the unsubordinated
general partner interests in the Partnership and the GP Incentive
Distribution Rights, when issued and delivered pursuant to the Conveyance
Agreements and the Partnership Agreement, will conform in all material
respects to the description thereof contained in the Registration Statement
and the Prospectus. Except as described in the Registration Statement and
Prospectus, there are no outstanding options, warrants, or other rights
calling for the issuance of, and no commitments, plans or arrangements to
issue, any Units or Subordinated Units or any security convertible into or
exercisable or exchangeable for Units or Subordinated Units.
(xvii) This Agreement has been and the Pricing Agreement will be, duly
authorized, executed and delivered by the Propane Entities and Triarc and
are or will be upon execution thereof, the valid and legally binding
agreements of the Propane Entities and Triarc, enforceable against each of
them in accordance with their terms, except as (A) the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law) and (B) rights to indemnity or contribution may be limited by
federal or state securities laws or the public policy underlying such laws.
(xviii) The Partnership Agreement is or at Closing Time will be, duly
authorized, executed and delivered by the General Partner, the Special
General Partner and Triarc as the organizational limited partner and will
be a valid and legally binding agreement of the General Partner, the
Special General Partner and Triarc as the organizational limited partner,
enforceable against each of them in accordance with its terms; the
Operating Partnership Agreement is or at Closing Time will be, duly
authorized, executed and delivered by the General Partner, the Special
General Partner and the Partnership and will be a valid and legally binding
agreement of the General Partner, the Special General Partner and the
Partnership, enforceable against each of them in accordance with its terms;
provided that, with respect to each agreement described in this paragraph
(xviii), the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, or similar
laws relating to or affecting creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(xix) The Transaction Documents have been or at the Closing Time will
be, duly authorized, executed and delivered by each of the Propane Entities
and Triarc, to the extent they are parties thereto, and are or at the
Closing Time will be, valid and legally binding agreements of such persons,
enforceable against each of such persons in accordance with their
respective terms; provided that, with respect to each agreement described
in this paragraph (xx), the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
or similar laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(xx) At or prior to Closing Time, all material actions required to be
taken by any of the Propane Entities and Triarc for the authorization,
issuance, sale and delivery of the Units and the
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Subordinated Units and the consummation of the transactions contemplated by
this Agreement, the Pricing Agreement and the Transaction Documents shall
have been validly taken.
(xxi) Except with respect to motor vehicles and other property
requiring conveyance of certificated title (as to which the Conveyance
Documents are legally sufficient to compel delivery of certificated title),
the Conveyance Documents will be, as of the Closing Time, legally
sufficient, subject to the limitations contained therein, to transfer or
convey to the Operating Partnership or National Sales all of the
Transferred Assets, except in all cases where the failure to transfer or
convey any of the Transferred Assets would not, singly or in the aggregate,
result in a Material Adverse Effect.
(xxii) The General Partner has, and (except for Excluded Assets (as
defined in the Conveyance Agreements) and leased real property and personal
property covered by the Agency Agreement (as defined in the Conveyance
Agreements) upon consummation of the Transactions and at the Closing Time
the Partnership, Operating Partnership or National Sales will have, (1)
title to the real properties set forth on Schedule I hereto (the
"Significant Properties") in fee simple, (2) all of the title to the real
properties that are not Significant Properties that the General Partner had
immediately prior to consummation of the Conveyance and (3) good title to
all other tangible personal properties owned by it (except for motor
vehicles, with respect to which the Partnership, the Operating Partnership
and National Sales will have good title within 180 days of the Closing
Time), in each case, free and clear of all Encumbrances except such as (A)
are described in the Registration Statement and the Prospectus, (B) do not
materially affect the use made or proposed to be made of such properties
taken as a whole, (C) secure obligations under the Bank Credit Facility and
the Note Agreements or (D) are set forth in the Title Policies prepared for
the Significant Properties as delivered as of the Closing Time; all of the
material leases and subleases entered into in connection with the business
of the General Partner and under which the General Partner holds, or the
Partnership, the Operating Partnership or National Sales will hold, the
properties described in the Registration Statement and the Prospectus are
and upon consummation of the Transactions will be, valid and subsisting and
in full force and effect with such exceptions as do not materially
interfere with the use made or proposed to be made of such properties taken
as a whole; and the General Partner does not have, and upon consummation of
the Transactions and at the Closing Time the Partnership, the Operating
Partnership and National Sales will not have, any notice of any claim of
any sort that has been asserted by anyone adverse to the rights of or
affecting or questioning the rights of the General Partner, the
Partnership, the Operating Partnership or National Sales, as applicable, to
the continued possession of the leased or subleased premises under any such
lease or sublease with such exceptions as do not materially interfere with
the use made or proposed to be made of such properties taken as a whole.
Upon consummation of the Transactions, the Partnership, the Operating
Partnership and National Sales will succeed in all material respects to the
business, assets, property and operations reflected in the pro forma
financial statements of the Partnership, except as disclosed in the
Prospectus.
(xxiii) None of the Propane Entities or Triarc is (A) in breach or
violation of the provisions of its certificate of incorporation, bylaws,
agreement of limited partnership or other governing documents, (B) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other instrument to
which any of such entities is a party or by which any of them may be bound,
or to which any of the property or assets of any of them is subject
(collectively, the "Agreements and Instruments") or (C) in violation of any
applicable law or statute or any rule or regulation or judgment, order,
writ or decree of any court, domestic or foreign, or governmental agency or
body having jurisdiction over them or any of their properties, except in
each case, for such breaches, violations or
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defaults which would not, either singly or in the aggregate, have a
Material Adverse Effect; to the knowledge of the Propane Entities and
Triarc, no event has occurred which with notice or lapse of time or both
would constitute such a breach, violation or default.
(xxiv) None of (A) the execution and delivery by the Propane Entities
and Triarc of and the performance of their obligations under this
Agreement, the Pricing Agreement and the issuance and sale of the Units as
contemplated herein or therein or (B) the execution and delivery by the
Propane Entities and Triarc and the performance of their respective
obligations under the Transaction Documents and the consummation of the
Transactions (including the use of the proceeds from the sale of the Units
and the sale of the First Mortgage Notes as described in the Prospectus
under the captions "The Transactions" and "Use of Proceeds"), will (in each
case, whether or not with notice or lapse of time or both) (i) result in
any breach or violation of the provisions of the certificate of
incorporation, bylaws, agreement of limited partnership or other governing
documents of any of the Propane Entities or Triarc, (ii) conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any Encumbrance upon any
property or assets of the Propane Entities or Triarc pursuant to any
Agreements and Instruments, except for (A) Encumbrances described in the
Registration Statement and Prospectus, (B) conflicts, breaches, Repayment
Events or Encumbrances that would not, singly or in the aggregate, have a
Material Adverse Effect or (C) conflicts, breaches, Repayment Events or
Encumbrances under the Existing Credit Facility or arising in connection
with the Other Existing Indebtedness (which Existing Credit Facility and
Other Existing Indebtedness are being repaid in their entirety in
connection with the Transactions as described in the Prospectus) or (iii)
result in the violation of any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over any
of the Propane Entities or Triarc or any of their assets or properties,
[except where such violations would not, singly or in the aggregate, have a
Material Adverse Effect]a. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Propane Entities or Triarc.
(xxv) No filing with, permit, consent, approval, license,
registration, qualification, authorization or order or decree
(collectively, the "Consents") of any court, governmental agency or body or
financial institution, is required of any of the Propane Entities or Triarc
in connection with the execution, delivery and performance of this
Agreement, the Pricing Agreement and the Transaction Documents and the
issuance and sale of the Units as contemplated herein and therein, or the
consummation of the Transactions, except such Consents (A) as have already
been or prior to Closing Time will be obtained, (B) as are required under
the 1933 Act, the 1933 Act Regulations, the Securities Exchange Act of 1934
(the "1934 Act"), the rules and regulations of the Commission under the
1934 Act (the "1934 Act Regulations"), or the securities or "blue sky" laws
of certain jurisdictions, (C) which (1) are of a routine or administrative
nature, (2) are not customarily obtained or made prior to the consummation
of transactions such as those contemplated hereby and by the Transaction
Documents and (3) are expected in the reasonable judgment of the General
Partner to be obtained in the ordinary course of business subsequent to the
consummation of the Transactions and (D) which, if not obtained, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(xxvi) No regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the issuance of the Units or
the Subordinated Units, or suspends the effectiveness of the Registration
Statement, prevents or suspends the use of any Prospectus or suspends the
sale of
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the Units in any jurisdiction in which the Units are qualified pursuant to
Section 3(g) hereof; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued with respect to the Propane Entities which would prevent or suspend
the issuance or sale of the Units or the Subordinated Units, as applicable,
the effectiveness of the Registration Statement, or the use of any
Prospectus in any jurisdiction in which the Units are qualified pursuant to
Section 3(g).
(xxvii) No labor dispute with the employees of the Propane Entities
exists or, to the knowledge of the Propane Entities, is imminent, in either
case, which could reasonably be expected to have a Material Adverse Effect,
and to the knowledge of the Propane Entities (without independent inquiry),
there is no existing or imminent labor disturbance by the employees of any
of the principal suppliers, manufacturers, customers or contractors of the
Propane Entities which could reasonably be expected to have a Material
Adverse Effect.
(xxiii) There is no action, suit, proceeding, inquiry or investigation
before or by any court or governmental agency or body, domestic or foreign,
now pending or, to the knowledge of the Propane Entities, threatened
against or affecting the Propane Entities, which is required to be
disclosed in the Registration Statement (other than as disclosed therein),
or which might reasonably be expected to result in a Material Adverse
Effect (other than as disclosed in the Registration Statement and the
Prospectus); all pending legal or governmental proceedings to which any of
the Propane Entities is a party or of which any of their respective
property or assets is the subject are described in the Registration
Statement, other than those proceedings (including ordinary routine
litigation incidental to the business) that could not reasonably be
expected to have a Material Adverse Effect.
(xxix) There are no Agreements and Instruments of the Propane Entities
or Triarc which are required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto and the
descriptions thereof or references thereto are accurate in all material
respects.
(xxx) The General Partner carries or is covered by, and upon
consummation of the Transactions the Partnership, the Operating Partnership
and National Sales will carry or be covered by insurance in such amounts
and covering such risks as is, in the reasonable judgment of management of
the Propane Entities, adequate for the conduct of their businesses and the
value of their properties. No such entity has received notice from any
insurer or agent of such insurer that substantial capital improvements or
other expenditures will have to be made in order to continue such
insurance; and on the date hereof all such insurance is, and at the Closing
Time and upon consummation of the Transactions will be, outstanding and
duly in force.
(xxxi) The General Partner owns or possesses, or can acquire on
reasonable terms, and upon consummation of the Transactions, the
Partnership, the Operating Partnership and National Sales, as applicable,
will own or possess, or be able to acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names described in the Prospectus as
being owned by them or necessary for the conduct of their respective
businesses (collectively, "patent and proprietary rights"); no such entity
has received or is aware of any notice of any infringement of or conflict
with asserted rights of others with respect to any patent or proprietary
rights, or any facts which would render any patent and proprietary rights
invalid or inadequate to protect the interest of such entities therein, and
which infringement or conflict or
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invalidity or inadequacy, singly or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(xxxii) The General Partner possesses, and upon consummation of the
Transactions and at the Closing Time the Partnership, the Operating
Partnership and National Sales, as applicable, will possess, such
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies as are necessary to
conduct the business operated by them except for any of the foregoing the
absence of which would not have a Material Adverse Effect, and no such
entity has received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, singly or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(xxxiii) The Propane Entities are in compliance with the provisions of
that certain Florida act relating to disclosure of doing business with
Cuba, codified as Section 517.075 of the Florida statutes, and the rules
and regulations thereunder (collectively, the "Cuba Act") or are exempt
therefrom.
(xxxiv) None of the Propane Entities or Triarc is (a) deemed to be a
"gas utility company" within the meaning of Section 2(a)(4) of the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"), (b) a "holding
company" [or a "subsidiary company" of a "holding company" or an
"affiliate" thereof,] within the meaning of PUHCA or (c) an "investment
company" [or a company "controlled by" an "investment company"] within the
meaning of the Investment Company Act of 1940, as amended, and the rules
and regulations thereunder.
(xxxv) Except as set forth in the Registration Statement, the Propane
Entities are in material compliance with all applicable existing federal,
state, local and foreign laws and regulations relating to protection of
human health or the environment or imposing liability or standards of
conduct concerning any Hazardous Material (as hereinafter defined)
("Environmental Laws"), except, in each case, where such noncompliance,
singly or in the aggregate, would not have a Material Adverse Effect. The
term "Hazardous Material" means (A) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl, and (E) any pollutant or
contaminant or hazardous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
(xxxvi) There is no alleged liability, or to the knowledge of the
Propane Entities, circumstance or condition which is reasonably likely to
result in any liability (including, in either case, without limitation,
liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries, or
penalties), of the Propane Entities arising out of, based on or resulting
from (A) the presence or release into the environment of any Hazardous
Material at any location, whether or not owned by the Propane Entities or
(B) any violation or alleged violation of any Environmental Law, (x) which
liability is required to be disclosed in the Registration Statement or the
Prospectus (and which is not so disclosed), or (y) (except as described in
the Registration Statement and Prospectus) which liability, singly or in
the aggregate, would have a Material Adverse Effect.
(xxxvii) Each of the Propane Entities is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable
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event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Propane Entities could reasonably
be expected to have any material liability under Title IV of ERISA; the
Propane Entities have not incurred and, to the knowledge of the Propane
Entities, there is no pending or threatened material liability of the
Propane Entities under (A) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (B) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension
plan" for which the Propane Entities would have any material liability that
is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified in all
material respects and to the knowledge of the Propane Entities nothing has
occurred, whether by action or by failure to act, which would cause the
loss of such qualification.
(xxxiii) Each of the Propane Entities and Triarc has filed all federal
income tax returns and all other material tax returns, domestic or foreign,
required to be filed by it through the date hereof and has paid all federal
taxes and assessments shown to be due on such returns and all other
material taxes and assessments, domestic and foreign, in each case payable
by it which have become due, other than those not yet delinquent and except
for those contested in good faith and for which adequate reserves have been
provided in accordance with GAAP.
(xxxix) Each of the Propane Entities maintains or causes to be
maintained on its behalf a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general and specific
authorizations, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorizations and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxx) None of the Propane Entities or Triarc has (A) taken, directly
or indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Units, to facilitate the
sale or resale of the Units or (B) since the initial filing of the
Registration Statement, except as contemplated by this Agreement, (i) sold,
bid for, purchased or paid anyone any compensation for soliciting purchases
of, the Units or (ii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Partnership.
(xxxxi) None of the Partnership, the Operating Partnership or National
Sales has engaged in any business other than in connection with its
organization and the consummation of the Transactions.
(xxxxii) The Units have been approved for listing on the New York
Stock Exchange ("NYSE"), subject only to official notice of issuance.
(xxxxiii) The issuance and delivery of the Subordinated Units to the
General Partner is exempt from the registration requirements of the 1933
Act and the securities laws of any state having jurisdiction with respect
thereto, and none of the Propane Entities or Triarc has taken or will take
any action that would cause the loss of such exemption.
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(xxxxiv) No relationship, direct or indirect, exists between the
Propane Entities, Triarc or any of their affiliates, on the one hand, and
any director, officer, stockholder, customer or supplier of any of them, on
the other hand, which is required by the 1933 Act or by the 1933 Act
Regulations to be described in the Registration Statement or the Prospectus
which is not so described as required.
(xxxxv) At the Closing Time, each of the General Partner will have
(excluding its interests in the Partnership and the Operating Partnership
and any notes or receivables from or payable to the Partnership and the
Operating Partnership) a net worth of at least $15,000,000 million. For
purposes of this representation, assets will be valued at fair market
value, and the General Partner's interest in the Partnership and the
Operating Partnership (as general partner, limited partner and creditor)
shall not be taken into account except as an offset to the Partnership's or
the Operating Partnership's liabilities that are taken into account in
computing such net worth.
(b) Any certificate signed by any officer of any of the Propane Entities or
Triarc and delivered to the Representatives or to counsel for the Underwriters
on or after the date hereof in connection with this Agreement shall be deemed a
representation and warranty by the Propane Entities or Triarc to each
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Partnership agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Partnership, at the price
per Unit set forth in the Pricing Agreement, the number of Units set forth in
Exhibit A opposite the name of such Underwriter (except as otherwise provided in
the Pricing Agreement), plus any additional number of Units which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(1) If the Partnership has elected not to rely upon Rule 430A under
the 1933 Act Regulations, the initial public offering price and the
purchase price per Firm Unit to be paid by the several Underwriters for the
Firm Units have each been determined and set forth in the Pricing
Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectus will be filed before the Registration
Statement becomes effective.
(2) If the Partnership has elected to rely upon Rule 430A under the
1933 Act Regulations, the initial public offering price and the purchase
price per Firm Unit to be paid by the several Underwriters for the Firm
Units shall be determined by agreement between the Representatives and the
Partnership and, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourteenth business day following
the date of this Agreement, this Agreement shall terminate forthwith,
without liability of any party to any other party, unless otherwise agreed
to by the Partnership and the Representatives. For purposes of this
Agreement, the term "business day" means a day on which the New York Stock
Exchange is open and trading in securities thereon is permitted.
(b) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Partnership hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to 928,571 Additional Units at the price per Additional
Unit set forth in the Pricing Agreement. The option hereby granted will expire
30 days after (i) the date the Registration Statement becomes
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effective, if the Partnership has elected not to rely on Rule 430A under the
1933 Act Regulations, or (ii) the Representation Date, if the Partnership has
elected to rely on Rule 430A under the 1933 Act Regulations, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Units upon notice by the Representatives to the
Partnership setting forth the number of Additional Units as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Additional Units. Any such time and date of delivery for the
Additional Units (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined, unless otherwise agreed by the Representative and the
Partnership. If the option is exercised as to all or any portion of the
Additional Units, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Additional Units then being
purchased which the number of Firm Units set forth in Exhibit A opposite the
name of such Underwriter bears to the total number of Firm Units (except as
otherwise provided in the Pricing Agreement), subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment of the purchase price for, and delivery of certificates for,
the Firm Units shall be made at the office of Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, New York 10019, or at such
other place as shall be agreed upon by the Representatives and the Partnership
at 10:00 A.M. on July __, 1996, unless postponed in accordance with the
provisions of Section 10 (such time and date of payment and delivery being
herein called "Closing Time"). In addition, in the event that any or all of the
Additional Units are purchased by the Underwriters, payment of the purchase
price for, and delivery of certificates for, such Additional Units shall be made
at the above-mentioned offices of Paul, Weiss, Rifkind, Wharton & Garrison, or
at such other place as shall be agreed upon by the Representatives and the
Partnership, on each Date of Delivery as specified in the notice from the
Representatives to the Partnership. Payment shall be made to the Partnership by
same-day funds payable to the order of the Partnership against delivery to the
Underwriters of the Firm Units to be purchased by them. Certificates for the
Firm Units and the Additional Units, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
two business days before the Closing Time or the relevant Date of Delivery, as
the case may be. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Firm Units and the Additional Units, if
any, which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for, the Firm Units and the Additional Units, if
any, to be purchased by any Underwriter whose funds have not been received by
the Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder. The
certificates for the Firm Units and the Additional Units, if any, will be made
available for examination and packaging by the Representatives in New York City
not later than 2:00 P.M. on the last business day prior to the Closing Time or
the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Propane Entities and Triarc. The Propane
Entities and Triarc covenant with each Underwriter as follows, but as to Triarc
only with respect to clause (l) below:
(a) To notify the Representatives promptly, and, if requested by the
Representatives, confirm the notice in writing, (i) of the effectiveness of
the Registration Statement and any amendment thereto (including any
post-effective amendment), (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for additional information and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or any
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Prospectus, or of the suspension by any state securities commission of the
qualification of the Units for offering or sale in any jurisdiction, or the
initiation of any proceedings for such purposes. To make every reasonable
effort to prevent the issuance of any such stop order or suspension and, if
any such stop order or suspension is issued, to obtain the lifting thereof
at the earliest reasonably possible moment. If necessary, to file (i) an
amendment to the Registration Statement or (ii) a post-effective amendment
to the Registration Statement, if required, pursuant to Rule 430A under the
1933 Act, as soon as practicable after the execution and delivery of this
Agreement and will use their reasonable best efforts to cause the
Registration Statement or such post-effective amendment to become effective
at the earliest possible time. To prepare and file with the Commission,
promptly upon the Underwriters' reasonable request, any amendment to the
Registration Statement or amendments or supplements to the Prospectus that
may be necessary or advisable in connection with the distribution of the
Units by the several Underwriters and to use their reasonable best efforts
to cause the same to become effective as promptly as possible.
(b) To give the Representatives notice of the intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus,
whether pursuant to the 1933 Act or otherwise (including any revised
Prospectus which the Partnership proposes for use by the Underwriters in
connection with the offering of the Units which differs from the Prospectus
on file at the Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) of the 1933 Act Regulations), to furnish the
Representatives with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case
may be, and not to file any such amendment or supplement or use any such
prospectus to which the Underwriters or counsel for the Underwriters shall
reasonably object in writing within two business days after being furnished
a copy thereof.
(c) To deliver to the Representatives and counsel for the
Underwriters, without charge, photocopies of the signed Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein) and
photocopies of all signed consents and certificates of experts, and to also
deliver to the Representatives such number of conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) as the Underwriters may reasonably request.
(d) To furnish to each Underwriter, without charge, from time to time
during the period when the Prospectus is required to be delivered (the
"Delivery Period") under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter
may reasonably request for the purposes contemplated by the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations.
(e) To use reasonable best efforts to comply with the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, so as to
permit the completion of the distribution of the Units as contemplated by
this Agreement and the Prospectus. If during the Delivery Period any event
shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Propane Entities or for the Underwriters,
to amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if for any other reason it shall be necessary
to amend or supplement the Prospectus in order to comply with the 1933 Act,
the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or any
other law, to promptly amend or supplement the Prospectus (in form and
substance reasonably
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satisfactory to counsel for the Underwriters and in compliance with the
1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations) so that, as so amended or supplemented, the Prospectus will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time they are delivered to a
purchaser, not misleading and comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations; to promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements, and to furnish to the Underwriters such number of copies of
such amendment or supplement as the Underwriters may reasonably request.
(f) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule
430A of the 1933 Act Regulations, then following the execution of the
Pricing Agreement, to prepare and timely file or transmit for filing with
the Commission in accordance with Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of the amended Prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement (including
an amended Prospectus), containing all information so omitted and to use
its reasonable best efforts to cause such post-effective amendment to be
declared effective as promptly as practicable.
(g) To endeavor, in cooperation with the Underwriters, to qualify the
Units for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Underwriters may
designate, and to maintain such qualifications in effect for as long as may
be required for the distribution of the Units; provided, however that
neither the General Partner, the Special General Partner nor the
Partnership shall be obligated to file any general consent to service,
subject itself (or its partners) to taxation in any such jurisdiction if it
(or its partners) are not so subject, of process or qualify as foreign
corporations or limited partnerships, as the case may be, in any
jurisdiction in which they are not so qualified. In each jurisdiction in
which the Units have been so qualified, to file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be reasonably required in
connection with the distribution of the Units. To supply the
Representatives with such information regarding the Propane Entities as is
necessary for the determination of the legality of the Units for investment
under the laws of such jurisdictions as the Representatives may reasonably
request.
(h) To make generally available to the security holders of the
Partnership as soon as practicable, but not later than 105 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
which need not be audited covering a twelve month period beginning not
later than the first day of the Partnership's fiscal quarter next following
the "effective date" (as defined in said Rule 158) of the Registration
Statement.
(i) To cause (i) the Partnership to use the net proceeds from the sale
of the Common Units and the Additional Units, if any, (ii) the General
Partner to use the net proceeds from the sale of the First Mortgage Notes
and (iii) the Operating Partnership to apply such net proceeds contributed
to it, in each case, as described in the Prospectus under the captions "The
Transactions" and "Use of Proceeds."
(j) To use reasonable best efforts to effect the listing of the Units
on the NYSE.
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(k) In the case of the Propane Entities, not to (i) offer, sell,
contract to sell or otherwise dispose of any Common Units, Subordinated
Units or unsubordinated general partner interests in the Partnership or any
securities convertible into or exchangeable or exercisable for Common
Units, Subordinated Units or unsubordinated general partner interests in
the Partnership (other than in connection with the General Partner Merger
or, in the case of the Partnership, the issuance of Common Units in
connection with Acquisitions or Capital Improvements) or (ii) grant any
options or warrants to purchase Common Units, Subordinated Units or
unsubordinated general partner interests in the Partnership or any
securities convertible into or exchangeable or exercisable for Common
Units, Subordinated Units or unsubordinated general partner interests in
the Partnership (other than the grant of options to purchase Common Units
or Subordinated Units pursuant to the National Propane Corporation 1996
Unit Option Plan that are not exercisable until at least 180 days after the
date of the Pricing Agreement) for a period of 180 days after the date of
the Pricing Agreement without the prior written consent of Merrill Lynch.
(l) In the case of Triarc, not to (i) offer, sell, contract to sell or
otherwise dispose of any Common Units, Subordinated Units or unsubordinated
general partner interests in the Partnership or any securities convertible
into or exchangeable or exercisable for Common Units, Subordinated Units or
unsubordinated general partner interests in the Partnership or (ii) grant
any options or warrants to purchase Common Units, Subordinated Units or
unsubordinated general partner interests in the Partnership or any
securities convertible into or exchangeable or exercisable for Common
Units, Subordinated Units or unsubordinated general partner interests in
the Partnership for a period of 180 days after the date of the Pricing
Agreement without the prior written consent of Merrill Lynch.
(m) For a period of five years after the Closing Time, to furnish to
the Representatives, as they may reasonably request, copies of (i) any
reports (excluding exhibits) filed by the Partnership with the Commission
on Forms 10-Q and 10-K, (ii) all reports and financial statements furnished
by the Partnership to the principal national securities exchange or
automated quotation system upon which the Units may be listed pursuant to
requirements of or agreements with such exchange and (iii) all other
reports and information furnished to the Partnership's security holders,
promptly as they become available.
(n) In accordance with the Cuba Act and without limitation to the
provisions of Sections 6 and 7 hereof, to indemnify and hold harmless each
Underwriter from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including fees and disbursements of
counsel), as incurred, arising out of any violation by the Propane Entities
of the Cuba Act.
(o) Prior to filing with the Commission any reports on Form SR
pursuant to Rule 463 of the Rules and Regulations, to furnish a copy
thereof to the counsel for the Underwriters and receive and consider its
comments thereon, and to deliver promptly to the Representatives a signed
copy of each report on Form SR filed by it with the Commission.
(p) To cause to be accomplished or obtained as soon as practicable all
consents, recordings and filings necessary to perfect, preserve and protect
the title of the Operating Partnership and National Sales to the
Transferred Assets owned by them as a result of the Transactions.
(q) To cause the Partnership, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, to use
reasonable best efforts to file all documents
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required to be filed with the Commission pursuant to the 1934 Act within
the time periods required by the 1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses. The Propane Entities will pay all expenses
incident to the performance of their obligations under this Agreement and the
Pricing Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters, the Pricing Agreement, the Prospectus (and any amendments or
supplements thereto) and such other documents as may be required in connection
with the offering, purchase, sale and delivery of the Units, (iii) the
preparation, issuance and delivery of the certificates for the Units to the
Underwriters, including any transfer taxes or duties payable upon the sale of
the Units to the Underwriters, (iv) the fees and disbursements of counsel for
the Propane Entities and Triarc, accountants and other advisors, (v) the
qualification of the Units under securities laws in accordance with the
provisions of Section 3(g) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky memoranda and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of the
Blue Sky memoranda and any supplement thereto, (viii) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Units, (viii) the fees and
expenses incurred in connection with the listing of the Units on the NYSE and
(ix) the performance by the Propane Entities and Triarc of their other
obligations under this Agreement, the Pricing Agreement and the Transaction
Documents.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 5(b), 9(a)(i) or Section 11 hereof, the Propane Entities
shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
Except as expressly provided in this Agreement, all other fees and expenses
incurred by or on behalf of the Underwriters shall be borne by the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
(a) The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Propane Entities and
Triarc herein contained, to the performance in all material respects by the
Propane Entities and Triarc of their obligations hereunder to be performed prior
to the Closing Time, and to the following further conditions:
(i) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or with the consent of the
Representatives, at a later time and date, not later, however, than 5:30
P.M. on the first business day following the date hereof, or at such later
time and date as may be approved by a majority in interest of the several
Underwriters; and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission and no stop order suspending the sale of the Units in any
jurisdiction designated by the Underwriters pursuant to Section 3(g) hereof
shall have been issued and no proceeding for that purpose shall have been
commenced. If the Partnership has elected to rely upon Rule 430A of the
1933 Act Regulations, the price of the Units and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the
prescribed time period and, prior to Closing Time, the Partnership shall
have provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment
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providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A of the 1933 Act
Regulations. Any request on the part of the Commission or any state
securities authority in a jurisdiction designated by the Underwriters
pursuant to Section 3(g) for additional information shall have been
complied with to the reasonable satisfaction of counsel to the
Underwriters.
(ii) No Underwriter shall have been advised by the Partnership or
shall have discovered and disclosed to the Partnership that the
Registration Statement, as amended at the time it becomes effective, or the
Prospectus, at the Representation Date or at the Closing Time, or any
amendment or supplement thereto, contains an untrue statement of fact which
is material and is required to be stated therein or is necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) At Closing Time the Representatives shall have received an
opinion reasonably satisfactory to the Underwriters of Latham & Watkins,
counsel to the Underwriters, covering such matters as are customarily
covered in such opinions.
(iv) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of Paul,
Weiss, Rifkind Wharton & Garrison, counsel for the Propane Entities
and Triarc, in form and substance reasonably satisfactory to counsel
for the Underwriters, to the effect that:
A. Each of the Partnership and the Operating Partnership (A)
has been duly formed and is validly existing as a limited
partnership in good standing under the Delaware Act, with all
partnership power and authority to (x) own, lease and operate the
properties it will own upon consummation of the Transactions, and
conduct its business as it will be conducted upon consummation of
the Transactions, in each case as described in the Registration
Statement and the Prospectus, (y) enter into and perform its
obligations under the Transaction Documents to which it is a
party and (z) enter into and perform its obligations under this
Agreement and the Pricing Agreement and, with respect to the
Partnership, issue and sell the Units as provided herein and
therein.
B. The Special General Partner (A) has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its state of incorporation, with all
corporate power and authority to (x) own the properties it will
own upon consummation of the Transactions, and act as
non-managing general partner of the Partnership and the Operating
Partnership, in each case as described in the Registration
Statement and the Prospectus, (y) enter into and perform its
obligations under the Transaction Documents to which it is a
party and (z) enter into and perform its obligations under this
Agreement.
C. National Sales (A) has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of its state of incorporation, with all corporate power and
authority to (x) own, lease and operate the properties it
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will own upon consummation of the Transactions, and conduct its
business as it will be conducted upon consummation of the
Transactions, in each case as described in the Registration
Statement and the Prospectus and (y) enter into and perform its
obligations under the Transaction Documents to which it is a
party.
D. Each of the General Partner and Triarc (A) has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its state of incorporation, with all
corporate power and authority to (x) own, lease and operate its
properties, conduct its business and, in the case of the General
Partner, act as general partner of the Partnership and the
Operating Partnership, in each case as described in the
Registration Statement and the Prospectus, (y) enter into and
perform its obligations under the Transaction Documents to which
it is a party and (z) enter into and perform its obligations
under this Agreement and (B) in the case of Triarc, based solely
on certificates from such jurisdictions, is duly qualified as a
foreign corporation authorized to do business and in good
standing in each jurisdiction listed on a schedule to such
counsel's opinion, and to such counsel's knowledge such
jurisdictions are the only ones in which the nature of its
business or its leasing or ownership of property requires such
qualification, except where the failure to qualify would not have
a Material Adverse Effect.
E. All of the shares of issued and outstanding capital stock
of the General Partner have been duly authorized and validly
issued and are fully paid and nonassessable, and are owned by
Triarc, directly or through subsidiaries of Triarc, free and
clear of all Encumbrances (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of
Delaware naming Triarc as a debtor is on file in the office of
the Secretary of State of the State of Delaware or (ii) otherwise
known to such counsel without independent investigation, except
for Encumbrances created by or arising under the General
Corporation Law of the State of Delaware (the "DGCL") or
Encumbrances in favor of the Operating Partnership and
Encumbrances under the Existing Credit Facility.
F. All of the unsubordinated general partner interests in
the Partnership and the Operating Partnership are owned by the
General Partner and the Special General Partner, and the GP
Incentive Distribution Rights are owned by the General Partner,
in each case, free and clear of all Encumbrances (i) in respect
of which a financing statement under the Uniform Commercial Code
of the State of Delaware naming the General Partner or the
Special General Partner, as the case may be, as a debtor is on
file in the office of the Secretary of State of the State of
Delaware or (ii) otherwise known to such counsel without
independent inquiry, except for Encumbrances created by or
arising under the Delaware Act, and except for Encumbrances
securing obligations under the Bank Credit Facility, the Note
Agreements and other Parity Debt with respect to the
unsubordinated general partner interests held by the General
Partner and the Special General Partner.
G. All of the limited partner interests in the Operating
Partnership are owned by the Partnership free and clear of all
Encumbrances (i) in respect of which a financing statement under
the Uniform Commercial Code of the State of Delaware naming the
Partnership as debtor is on file in the office of the Secretary
of State of the
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State of Delaware or (ii) otherwise known to such counsel without
independent inquiry, except for Encumbrances created by or
arising under the Delaware Act, and except for Encumbrances
securing obligations under the Bank Credit Facility, the Note
Agreements and other Parity Debt.
H. All of the shares of issued and outstanding capital stock
of the Special General Partner and National Sales have been duly
authorized and validly issued and are fully paid and
nonassessable, and are owned by the General Partner and the
Operating Partnership, respectively, free and clear of all
Encumbrances (i) in respect of which a financing statement under
the Uniform Commercial Code of the State of Delaware naming the
General Partner or the Operating Partnership, respectively, as a
debtor is on file in the office of the Secretary of State of the
State of Delaware or (ii) otherwise known to such counsel without
independent inquiry, except for Encumbrances created by or
arising under the DGCL, and except for Encumbrances securing
obligations under the Bank Credit Facility, the Note Agreements
and other Parity Debt with respect to the capital stock of
National Sales.
I. The Units, when issued and delivered by the Partnership
against payment of the consideration set forth herein, will be
acquired by the Underwriters free and clear of all Encumbrances
created by the Partnership Agreement.
J. The Subordinated Units, when issued and delivered
pursuant to the Conveyance Agreements and the Partnership
Agreement, will be owned by the General Partner, free and clear
of all Encumbrances (i) in respect of which a financing statement
under the Uniform Commercial Code of the State of Delaware naming
the General Partner is on file in the office of the Secretary of
State of the State of Delaware or (ii) otherwise known to such
counsel without independent investigation, except for
Encumbrances created by or arising under the Delaware Act.
K. Except as described in the Registration Statement and the
Prospectus, there are no preemptive rights or other rights to
subscribe for or to purchase, nor any restriction upon the voting
or transfer of, any partnership interests in the Partnership or
the Operating Partnership pursuant to the provisions of the
Partnership Agreements or any Agreement or Instrument known to
such counsel to which any of the Propane Entities is a party or
by which any of them may be bound. To such counsel's knowledge,
except as described in the Registration Statement and the
Prospectus, neither the filing of the Registration Statement nor
the offering or sale of the Units as contemplated by this
Agreement and the Pricing Agreement gives rise to any rights for
or relating to the registration of any Units or other securities
(debt or equity) of the Partnership. Except as described in the
Registration Statement and the Prospectus, to such counsel's
knowledge, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any Units or Subordinated Units or any
security convertible into or exercisable or exchangeable for
Units or Subordinated Units.
L. This Agreement and the Pricing Agreement have each been
duly authorized, executed and delivered by the Propane Entities
and Triarc.
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M. The Transaction Documents have been, or at Closing Time
will be, duly authorized, executed and delivered by each of the
Propane Entities and Triarc, to the extent they are parties
thereto, and (assuming due authorization, execution and delivery
by each other party thereto), the Transaction Documents that are
governed by the laws of the State of New York are valid and
legally binding agreements of the Propane Entities and Triarc, to
the extent they are parties thereto, as applicable, enforceable
against each of them in accordance with their respective terms,
except that the enforceability of any such agreement may be
limited by (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or similar laws relating to or affecting
creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), (ii) public policy, applicable
law relating to fiduciary duties and the judicial imposition of
an implied covenant of good faith and fair dealing and (iii)
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
N. None of (A) the execution and delivery by the Propane
Entities and Triarc of and the performance of their obligations
under this Agreement, the Pricing Agreement and the issuance and
sale of the Units as contemplated herein or therein or (B) the
execution and delivery by the Propane Entities and Triarc and the
performance of their obligations under the Transaction Documents
and of the consummation of the Transactions (including the use of
the proceeds from the sale of the Units and the sale of the First
Mortgage Notes as described in the Prospectus under the captions
"The Transactions" and "Use of Proceeds"), will (in each case,
whether or not with notice or lapse of time or both) (i) result
in any breach or violation of the provisions of the certificate
of incorporation or bylaws of any of the General Partner, the
Special General Partner, National Sales or Triarc, (ii) conflict
with or constitute a breach of, or default or Repayment Event
under, or result in the creation or imposition of any Encumbrance
upon any property or assets of the Propane Entities or Triarc
pursuant to any material Agreements and Instruments in effect on
the date of the opinion that have been filed as exhibits to the
Registration Statement, except for (A) Encumbrances described in
the Registration Statement and Prospectus, (B) conflicts,
breaches or Repayment Events under the Existing Credit Facility
and the Other Existing Indebtedness that is being repaid at the
Closing Time, (C) conflicts, breaches, Repayment Events or
Encumbrances that would not, singly or in the aggregate, have a
Material Adverse Effect or (iii) result in the violation of the
DGCL or any applicable New York State or Federal law, statute,
rule or regulation or any judgment, order, writ or decree known
to such counsel of any New York State or Federal government,
government instrumentality or court, having jurisdiction over any
of the Propane Entities or Triarc or any of their assets or
properties.
O. No Consent of any New York, Delaware or Federal court,
governmental agency or body or under the DGCL or the Delaware Act
is required of any of the Propane Entities or Triarc in
connection with the execution, delivery and performance of this
Agreement, the Pricing Agreement and the Transaction Documents
and the issuance and sale of the Units as contemplated herein and
therein, except such Consents (A) as have already been obtained,
(B) as are required under the 1933 Act, the 1933 Act Regulations,
the 1934 Act, the 1934 Act Regulations or securities or
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"blue sky" laws of certain jurisdictions, (C) which (1) are of a
routine or administrative nature, (2) are not customarily
obtained or made prior to the consummation of transactions such
as those contemplated hereby and by the Transaction Documents and
(3) are expected in the reasonable judgment of the General
Partner to be obtained in the ordinary course of business
subsequent to the consummation of the Transactions, (D) which, if
not obtained, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and [(E)
as may be required by the Interstate Commerce Commission, the
Federal Communications Commission or under PUHCA.]
P. The issuance and delivery of the Subordinated Units to
the General Partner pursuant to the Conveyance Agreements is
exempt from the registration requirements of the 1933 Act and the
securities laws of any state having jurisdiction with respect
thereto.
Q. To such counsel's knowledge, there is no action, suit,
proceeding, inquiry or investigation before or by any court or
governmental agency or body, domestic or foreign, now pending or
threatened against or affecting the Propane Entities, which is
required to be disclosed in the Registration Statement (other
than as disclosed therein), or which might reasonably be expected
to result in a Material Adverse Effect (except as disclosed in
the Registration Statement and the Prospectus).
R. To such counsel's knowledge, there are no Agreements and
Instruments of the Propane Entities or Triarc which are required
to be described in the Registration Statement or to be filed as
exhibits thereto other than those described therein or filed as
exhibits thereto.
S. To such counsel's knowledge, (A) none of the Propane
Entities or Triarc is in breach or violation of the provisions of
its certificate of incorporation, bylaws, agreement of limited
partnership or other governing documents and [(B) no default by
any of the Propane Entities exists in the due performance or
observance of any of the material Agreements and Instruments that
are filed as an exhibit to the Registration Statement (other than
under the Existing Credit Facility and the Other Existing
Indebtedness that is being repaid at Closing Time), which default
could reasonably be expected to have a Material Adverse Effect.]
T. The statements in the Registration Statement and the
Prospectus at the time the Registration Statement becomes
effective and in the Prospectus at the Representation Date and at
Closing Time under the captions "The Transactions", "Cash
Distribution Policy -- Partnership Loan", "Management's
Discussion and Analysis of Financial Condition and Results of
Operations --Contingencies" (other than the second paragraph
thereof), "-- Description of Indebtedness", "Business and
Properties -- Government Regulation", "--Litigation and
Contingent Liabilities" and "-- Transfer of the Partnership
Assets", insofar as such statements constitute a summary of the
Transaction Documents or of legal matters or proceedings referred
to therein, fairly and accurately present in all material
respects the information set forth therein with respect to such
documents, legal matters and proceedings.
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U. Triarc is not (a) deemed to be a "gas utility
company"within the meaning of Section 2(a)(4) of PUHCA, (b) a
"holding company" [or a "subsidiary company" of a "holding
company" or an "affiliate" thereof], within the meaning of PUHCA
or (c) an "investment company" [or a company "controlled by" an
"investment company"] within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
In addition such counsel shall state that the Commission has advised such
counsel that the Registration Statement was declared effective under the 1933
Act on _____, 1996; the Prospectus was filed with the Commission pursuant to
Rule 424(b)(_) of the 1933 Act Regulations on _____, 1996; and to such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been initiated
or threatened by the Commission.
In rendering such opinion, counsel may rely as to factual matters upon
certificates or written statements from officers or other appropriate
representatives of the Propane Entities or Triarc or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States (except that such
counsel need not opine on the Federal Motor Safety Carrier Act and, except in
paragraph U, the 1940 Act and PUHCA), the law of the State of New York (except
that such counsel need not opine on state and municipal fire safety codes and
permits), the DGCL and the Delaware Act.
(2) The favorable opinion, dated as of Closing Time, of Andrews &
Kurth L.L.P., counsel for the Propane Entities, in form and substance
reasonably satisfactory to counsel for the Underwriters, to the effect
that:
A. The Partnership Agreement has been duly authorized,
executed and delivered by the General Partner, the Special
General Partner and Triarc, as the organizational limited
partner, and is a valid and legally binding agreement of the
General Partner, the Special General Partner and Triarc, as the
organizational limited partner, enforceable against each of them
in accordance with its terms; the Operating Partnership Agreement
has been duly authorized, executed and delivered by the General
Partner, the Special General Partner and the Partnership and is a
valid and legally binding agreement of the General Partner, the
Special General Partner and the Partnership, enforceable against
each of them in accordance with its terms; provided that,
enforceability of the Partnership Agreements may be limited by
(i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws relating to or affecting
creditors' rights generally, (ii) public policy, applicable law
relating to fiduciary duties and the judicial imposition of an
implied covenant of good faith and fair dealing and (iii) general
equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
B. The General Partner and the Special General Partner are
the sole general partners of the Partnership and the Operating
Partnership, each with, at the Closing Time and upon consummation
of the Transactions (assuming the Underwriters have not exercised
the Over-allotment Option), a 1.0% unsubordinated general partner
interest in the Partnership pursuant to the Partnership Agreement
and a 1.0101% unsubordinated general partner interest in the
Operating Partnership pursuant to the
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Operating Partnership Agreement; all such general partner
interests and the GP Incentive Distribution Rights have been duly
authorized by the Partnership Agreements and were validly issued
to the General Partner and the Special General Partner, as the
case may be, in accordance with the Operating Partnership
Agreements.
C. The Partnership is the sole limited partner of the
Operating Partnership with, at the Closing Time and upon
consummation of the Transactions (assuming the Underwriters have
not exercised the Over-allotment Option), an approximately
97.9798% limited partner interest in the Operating Partnership;
such limited partner interest in the Operating Partnership has
been duly authorized by the Operating Partnership Agreement, was
validly issued in accordance with the Operating Partnership
Agreement, and is fully paid (to the extent required by the
Operating Partnership Agreement) and nonassessable (except as
such nonassessability may be affected by matters described on the
Prospectus under the caption "The Partnership Agreement --
Limited Liability").
D. The 6,190,476 Firm Units to be issued and sold to the
Underwriters by the Partnership and the limited partner interest
represented thereby are duly authorized by the Partnership
Agreement and, when issued and delivered by the Partnership
against payment of the consideration set forth in the Purchase
Agreement, will be validly issued to the Underwriters in
accordance with the Partnership Agreement, fully paid (to the
extent required by the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters
described in the Prospectus under the caption "The Partnership
Agreement -- Limited Liability"); on the date hereof, the Firm
Units are the only limited partner interests of the Partnership.
E. The 4,533,638 Subordinated Units and the GP Incentive
Distribution Rights to be issued to the General Partner pursuant
to the applicable Conveyance Agreement and the subordinated
general partner interests represented thereby are duly authorized
by the Partnership Agreement and, when issued and delivered
pursuant to the terms of the applicable Conveyance Agreement and
the Partnership Agreement, will be validly issued to the General
Partner in accordance with the Partnership Agreement.
F. None of (A) the execution and delivery by the Propane
Entities and Triarc of and the performance of their obligations
under this Agreement and the Pricing Agreement and the issuance
and sale of the Units as contemplated herein or therein or (B)
the execution and delivery by the Propane Entities and Triarc and
the performance of their obligations under the Transaction
Documents and the consummation of the Transactions (including the
use of the proceeds from the sale of the Units and the sale of
the First Mortgage Notes as described in the Prospectus under the
caption "Use of Proceeds"), will (in each case, whether or not
with notice or lapse of time or both) (i) result in any breach or
violation of the provisions of the Partnership Agreements or (ii)
result in the violation of the Delaware Act.
G. The statements in the Registration Statement and
Prospectus under the captions "Conflicts of Interest and
Fiduciary Responsibility", "Cash Distribution Policy" (other than
(i) the table under the subsection "-- Incentive Distributions --
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Hypothetical Annualized Yield" and (ii) the statements under the
subsection "-- Cash Available for Distribution," as to which such
counsel need not express any opinion), "Description of the Common
Units" and "The Partnership Agreement," insofar as such
statements constitute descriptions of the Partnership Agreements,
or refer to statements of law or legal conclusions, are accurate
and complete in all material respects.
H. None of the Propane Entities is (a) deemed to be a "gas
utility company" within the meaning of Section 2(a)(4) of PUHCA,
(b) a "holding company", within the meaning of PUHCA or (c) an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations
thereunder.
I. The Units, when issued and delivered by the Partnership
against payment of the consideration set forth herein, the
Subordinated Units, the unsubordinated general partner interests
in the Partnership and the GP Incentive Distribution Rights,
conform or will conform in all material respects to the
description thereof contained in the Registration Statement and
the Prospectus.
J. The opinion of Andrews & Kurth L.L.P. filed as Exhibit
8.1 to the Registration Statement is confirmed, and the
Underwriters may rely upon such opinion as if it were addressed
to them.
In rendering such opinion, counsel may rely as to factual matters upon
certificates or written statements from officers or other appropriate
representatives of the Propane Entities or Triarc or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the Delaware Act
and the DGCL.
(3) The favorable opinion, dated as of Closing Time, of local
counsel for the Propane Entities in the states of Arizona, Arkansas,
Colorado Connecticut, Florida, Illinois, Iowa, Kansas, Maine,
Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New
Mexico, New York, Rhode Island, and Wisconsin, (each, a "State") in
form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect that:
A. Each of the Propane Entities and National Sales has been
duly qualified or registered as a foreign corporation or a
foreign limited partnership authorized to do business and in good
standing under the laws of [state].
B. The Partnership has all requisite partnership power and
authority under the laws of [state] to own or lease its
properties and to conduct its business in such state; the
Operating Partnership has all requisite partnership power and
authority under the laws of [state] to own or lease its
properties and to conduct its business in such state; and upon
the execution, delivery and performance of their obligations
under the Conveyance Documents, assuming that the Partnership
will not be liable under the laws of the State of Delaware for
the liabilities of the Operating Partnership and that the
Unitholders will not be liable under the laws of the State of
Delaware for the liabilities of the Partnership or the Operating
Partnership, the Partnership will not be liable under the laws of
such state for the liabilities of the Operating Partnership, and
the Unitholders will not be liable
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under the laws of such state for the liabilities of the
Partnership or the Operating Partnership.
C. The execution, delivery and performance of the Conveyance
Documents in connection with the Conveyance and relating to the
transfer of the Transferred Assets in [state] in accordance with
the terms thereof will not violate any statute of such state or,
to such counsel's knowledge, any order, rule or regulation of any
agency of such state having jurisdiction over any of the Propane
Entities or any of their respective properties, except for any
such violations which, individually or in the aggregate, would
not have a Material Adverse Effect.
D. To the extent that the Conveyance Documents executed in
connection with the Conveyance are valid and legally binding
agreements under applicable law as stated therein, and assuming
the due authorization, execution and delivery thereof by the
parties thereto, such Conveyance Documents are valid and legally
binding agreements of the parties thereto under the laws of
[state], enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting the rights of contracting parties and to general
equity principles; each of the Conveyance Documents executed in
connection with, and in order to give effect to, the Conveyance,
is in a form legally sufficient as between the parties thereto to
convey to the transferee thereunder all of the right, title and
interest of the transferor stated therein in and to the
properties located in such state, as described in the applicable
Conveyance Documents, subject to the conditions, reservations and
limitations contained in the Conveyance Documents, except motor
vehicles or other property requiring conveyance of certificated
title as to which the applicable Conveyance Documents are legally
sufficient to compel delivery of such certificated title.
E. Each Conveyance Document executed in connection with, or
to give effect to, the Conveyance (including, without limitation,
the form of the exhibits and schedules thereto) is in a form
legally sufficient for recordation in the appropriate public
offices of [state], to the extent such recordation is required,
and, upon proper recordation of any such Conveyance Document
which is required to be recorded, will constitute notice to all
third parties under the recordation statutes of each state
concerning record title to the portion of the Transferred Assets
described in each of the applicable Conveyance Documents.
Recordation in the office of the County Clerk for each county in
which the Propane Entities own property is the appropriate public
office in such state for the recordation of deeds and assignments
of interests in real property located in such county.
F. No consent, approval, authorization, order, registration
or qualification of or with any governmental agency or body of
such [state] governing (A) changes in ownership or control of
industrial or other facilities generally, (B) retail propane
sales generally or (C) the issuance of securities by entities
owning retail propane sales facilities, or, to such counsel's
knowledge, based solely upon their participation as special
[state] counsel with respect to matters relating to the
Transactions and without having conducted an independent
investigation, any other governmental agency or body of such
state having jurisdiction over the Propane Entities
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or any of their respective properties is required for the issue
and sale of the Units by the Partnership or for the conveyance of
the properties constituting Transferred Assets located in such
state to be conveyed to the Operating Partnership in connection
with the Conveyance and pursuant to the applicable Conveyance
Documents, except such permits, consents, approvals and similar
authorizations (1) required under the 1933 Act, the 1933 Act
Regulations, the 1934 Act, the 1934 Act Regulations and the
securities or "blue sky" laws of certain jurisdictions, (2)
which, if not obtained, would not, singly or in the aggregate,
have a Material Adverse Effect, (3) which (a) are of a routine or
administrative nature, (b) are not customarily obtained or made
prior to the consummation of transactions such as those
contemplated hereby and by the Transaction Documents and (c) are
expected in the reasonable judgment of the General Partner to be
obtained in the ordinary course of business subsequent to the
consummation of the Transactions or (4) which, if not obtained,
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
In rendering such opinion, counsel (i) may rely as to factual matters upon
certificates or written statements from officers or other appropriate
representatives of the Propane Entities and Triarc or upon certificates of
public officials, (ii) need not express any opinion with regard to the laws of
any jurisdiction other than their state of practice and (iii) may state that
they express no opinion with respect to the title of any of the Propane Entities
to any of their respective real or personal property.
(3) The favorable opinion, dated as of Closing Time, of Rosen &
Read, L.L.P., tax counsel for the Propane Entities and Triarc in form
and substance reasonably satisfactory to counsel for the Underwriters,
to the effect that: the statements in the Registration Statement and
the Prospectus at the time the Registration STatement becomes
effective and in the Prospectus at the Representation Date and at
Clsoing Time in the second paragraph under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations --Contingencies", insofar as such statements constitute a
summary of he Transaction Documents or of legal matters or proceedings
referred to therein, fairly and accurately present in all material
respects the information set forth therein with respect to such
documents, legeal matters and proceedings.
In giving the opinions required by subsections (iv)(1) of this Section
5(a), Paul, Weiss, Rifkind, Wharton & Garrison shall additionally state that
such counsel participated in the preparation of the Registration Statement and
the Prospectus and in meetings with representatives of the Propane Entities and
Triarc, representatives of the Underwriters and representatives of Deloitte &
Touche L.L.P. at which the contents of the Registration Statement and related
matters were discussed, and although such counsel is not passing upon, and does
not assume responsibility for the accuracy, completeness or fairness of, any
portion of the Registration Statement or the Prospectus, as amended or
supplemented (except to the extent specified in such counsel's opinion), (i)
such counsel is of the opinion that the Registration Statement as of its
effective date, and the Prospectus as of its date and as of the date of such
opinion, complied as to form in all material respects with the requirements of
the 1933 Act and the applicable 1933 Act Regulations, except that such counsel
need express no opinion with respect to the financial statements or other
financial or statistical data contained in the Registration Statement or the
Prospectus and (ii) such counsel has no reason to believe that the Registration
Statement, as of its effective date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus,
as of its date and at the Closing Time, contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements or other financial or statistical
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data contained in the Registration Statement or the Prospectus or the statements
under the captions "Prospectus Summary -- Tax Risks", "-- Summary of Tax
Considerations", "Risk Factors -- Tax Risks", "Cash Distribution Policy"
(except for the subsection " -- Partnership Loan"), "Description of the Common
Units", "The Partnership Agreement", "Tax Considerations", "Investment in the
Partnership by Employee Benefit Plans."
In giving the opinion required by subsection (iv)(2) of this Section 5(a),
Andrews & Kurth L.L.P. shall additionally state that such counsel has
participated in meetings with representatives of the Propane Entities and
Triarc, representatives of the Underwriters and representatives of Deloitte &
Touche L.L.P. at which the contents of the Registration Statement and related
matters were discussed, and although such counsel is not passing upon, and does
not assume responsibility for the accuracy, completeness or fairness of, any
portion of the Registration Statement or the Prospectus, as amended or
supplemented (except to the extent specified in such counsel's opinion), such
counsel has no reason to believe that, as of its effective date, the statements
in the Registration Statement under the captions "Prospectus Summary -- Tax
Risks", "-- Summary of Tax Considerations", "Risk Factors -- Tax Risks", "Cash
Distribution Policy" (other than (i) the table under the subsection "--
Incentive Distributions-Hypothetical Annualized Yield", (ii) the statements
under the subsection "-- Cash Available for Distribution", and (iii) the
statements under the subsection "-- Partnership Loan", as to which such counsel
need express no opinion), "Description of Common Units", "Tax Considerations",
"Risk Factors -- "Tax Risks", "The Partnership Agreement" and "Investment in the
Partnership by Employee Benefit Plans" (other than the financial data and other
statistical data included therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date or the Closing Time, the
statements in the Prospectus under the captions "Prospectus Summary -- Tax
Risks", "-- Summary of Tax Considerations", "Risk Factors -- Tax Risks", "Cash
Distribution Policy" (other than (i) the table under the subsection "--
Incentive Distributions-Hypothetical Annualized Yield", (ii) the statements
under the subsection "-- Cash Available for Distribution", and (iii) the
statements under the subsection "-- Partnership Loan", as to which such counsel
need express no opinion), "Description of Common Units", "Tax Considerations",
"Investment in the Partnership by Employee Benefit Plans" and "The Partnership
Agreement" (other than the financial data and other statistical data included
therein, as to which such counsel need express no opinion) contained or contains
an untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(v) Except as contemplated by the Prospectus, at Closing Date
there shall not have been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(i) any material change in the partners' capital, capital stock,
short-term or long-term debt of any of the Propane Entities, taken as
a whole, or Triarc, (ii) any liabilities or obligations incurred by
the Propane Entities or Triarc, direct or indirect, contingent or
matured, which are material to the Propane Entities, taken as a whole,
or Triarc other than such liabilities or obligations as are reflected
in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) or (iii) any other event or development that may
reasonably be expected, either singly or in the aggregate, to result
in a Material Adverse Effect.
(vi) The Representatives shall have received a certificate signed
on behalf of the Partnership and the Operating Partnership by the
President, or a Vice President of the General Partner and by the
principal financial or principal accounting officer of the General
Partner, dated as of Closing Time, to the effect that (i) the
representations and warranties of the Partnership and the Operating
Partnership in Section 1 hereof are true and correct with the same
force and effect as though expressly made at and as of Closing Time
(except to the extent any relate to a specific date), (ii) the
Partnership and the Operating
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Partnership have complied in all material respects with all agreements
and satisfied all conditions on their part to be performed or
satisfied pursuant to the Agreement, the Pricing Agreement, the
Transaction Documents or otherwise at or prior to Closing Time, (iii)
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission, (iv) such persons have
carefully examined the Registration Statement and the Prospectus, and
any amendments or supplements thereto, and to such persons' knowledge
such documents do not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (v) no
event of the type contemplated in subsection (v) of this Section 5(a)
in respect of the Partnership or the Operating Partnership has
occurred.
(vii) The Representatives shall have received a certificate
signed on behalf of the General Partner and the Special General
Partner by the Chairman, the President or a Vice President and the
chief financial or accounting officer of the General Partner and the
Special General Partner to the effect that (i) the representations and
warranties of such entity contained in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time (except to the extent any relate to a specific
date), (ii) such entity has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied pursuant to the Agreement, the Pricing Agreement, the
Transaction Documents or otherwise at or prior to Closing Time, (iii)
such persons have carefully examined the Registration Statement and
the Prospectus, and any amendments or supplements thereto, and to such
persons' knowledge, such documents do not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and (iv) no event of the type contemplated in subsection
(v) of this Section 5(a) in respect of such entity has occurred.
(viii) The Representatives shall have received a certificate
signed on behalf of Triarc by the Chairman, the President or a Vice
President and the chief financial or accounting officer of Triarc to
the effect that (i) the representations, warranties and agreements of
Triarc contained in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of Closing
Time, (ii) Triarc has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied pursuant to the Agreement, the Pricing Agreement, the
Transaction Documents or otherwise at or prior to Closing Time (iii)
such persons have carefully examined the Registration Statement and
the Prospectus, and any amendments or supplements thereto, and to such
persons' knowledge such documents do not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and (iv) no event of the type contemplated in subsection
(v) of this Section 5(a) in respect of Triarc has occurred.
(ix) At the time of the execution of this Agreement, the
Underwriters shall have received an accountants' "comfort letter" from
Deloitte & Touche, dated such date, in form and substance reasonably
satisfactory to the Underwriters,
(x) At Closing Time the Underwriters shall have received from
Deloitte & Touche a bring-down letter, dated as of Closing Time, to
the effect that Deloitte & Touche, LLP reaffirms the statements made
in the letter furnished pursuant to subsection (ix) of this Section
5(a), except that the specified date referred to shall be a date not
more than five days prior to Closing Time and, if the Partnership has
elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that it has carried out certain specified procedures
with respect to certain amounts, percentages and financial
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information specified by the Underwriters and deemed to be a part of
the Registration Statement pursuant to Rule 430A(b).
(xi) At the Closing Time the Units shall have been approved for
listing on the NYSE, subject only to official notice of issuance, and
the NASD shall have approved the Underwriters' participation in the
distribution of the Units and such approval shall not have been
withdrawn or limited.
(xii) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Pricing
Agreement, the Transaction Documents, the Registration Statement and
Prospectus and all other legal matters relating to this Agreement and
the Transactions shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Propane Entities and
Triarc shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
(xiii) The Existing Credit Facility shall have will be repaid in
its entirety and all obligations thereunder discharged, cancelled or
extinguished substantially contemporaneously with the Closing Time.
(xiv) The Operating Partnership shall have entered into the Bank
Credit Facility and the Representatives shall have received
counterparts, conformed as executed, thereof.
(xv) Simultaneously with or prior to the sale of the Firm Units
at the Closing Time, the Transactions shall have been consummated and
shall conform in all material respects to the description thereof in
the Registration Statement and the Prospectus.
(xvi) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Additional Units, the representations and warranties of the Propane
Entities and Triarc contained herein and the statements in any
certificates furnished by the Propane Entities or Triarc hereunder
shall be true and correct as of each Date of Delivery (except to the
extent any relate to a specific date) and, at the relevant Date of
Delivery, the Representatives shall have received:
(1) Certificates, dated such Date of Delivery, of officers
of the Propane Entities and Triarc, as applicable, confirming
that the certifications made in the applicable certificate
delivered at the Closing Time pursuant to Sections 5(a)(vi)
through 5(a)(viii) hereof remain true and correct as of such Date
of Delivery.
(2) The favorable opinions of Paul, Weiss, Rifkind, Wharton
& Garrison and Andrews & Kurth L.L.P., counsel for the Propane
Entities and Triarc, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery,
relating to the Additional Units to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required
by Sections 5(a)(iv)(1) and 5(a)(iv)(2) hereof.
(3) The favorable opinion of Latham & Watkins, counsel for
the Underwriters, dated such Date of Delivery, relating to the
Additional Units to be purchased on such Date of Delivery.
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(4) A letter from Deloitte & Touche LLP, in form and
substance satisfactory to the Representatives and dated such Date
of Delivery, substantially the same in form and substance as the
letter furnished to the Representatives pursuant to Section
5(a)(ix) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(b) If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Partnership at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 3(n), 6
and 7 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) The Partnership, the Operating Partnership, the General Partner, the
Special General Partner and Triarc jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each officer and director of each Underwriter and of any such
controlling person as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Partnership; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the reasonable fees and disbursements of
counsel chosen by the Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement (A) shall not apply
to any loss, liability, claim, damage or expense to the extent arising out
of any untrue statement or omission or alleged untrue statement or alleged
omission made in reliance upon and in conformity with written information
furnished to the Partnership by any Underwriter through the Representatives
expressly for use in the Registration
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Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) and (B) with respect to
any preliminary prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter
or any officer or director of such Underwriter or of any such controlling
person) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Units by such Underwriter to any person if the
Partnership shall sustain the burden of proving that the Prospectus or any
subsequent amendment or supplement to such Prospectus (whether or not filed
with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations)
shall not have been delivered or sent to such person within the time
required by the 1933 Act or the 1933 Act Regulations and the untrue
statement contained in or omission from such preliminary prospectus was
corrected in the Prospectus, provided that the Partnership has delivered
the Prospectus to the several Underwriters in compliance with Section 3(d)
hereof in reasonably requested quantities and on a timely basis to permit
such delivery or sending.
In making a claim for indemnification under this Section 6 (other
than pursuant to clause (a)(iii) of this Section 6) or contribution under
Section 7 by the Propane Entities or Triarc, the indemnified parties may
proceed against either (i) both the Propane Entities and Triarc or (ii)
the Propane Entities only, but may not proceed solely against Triarc. In
the event that the indemnified parties are entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage ad
expense incurred with respect to a final judgment from a trial court then,
as a precondition to any indemnified party obtaining indemnification or
contribution from Triarc (but not any of the Propane Entities), the
indemnified parties shall first obtain a final judgment from a trial court
that such indemnified parties are entitled to indemnity or contribution
under this Agreement with respect to such loss, liability, claim, damage
or expense (the "Final Judgment") from the Propane Entities and Triarc and
shall seek to satisfy such Final Judgment in full from the Propane
Entities by making a written demand upon the Partnership for such
satisfaction. Only in the event such Final Judgment shall remain
unsatisfied in whole or in part 45 days following the date of receipt by
the Partnership of such demand shall any indemnified party have the right
to take action to satisfy such Final Judgment by making demand directly on
Triarc (but only if and to the extent the Propane Entities have not
already satisfied such Final Judgment, whether by settlement, release or
otherwise). The indemnified parties may exercise this right to first seek
to obtain payment from the Propane Entities and thereafter obtain payment
from Triarc without regard to the pursuit by any party of its rights to
the appeal of such Final Judgment. The indemnified parties shall, however,
be relieved of their obligation to first obtain a Final Judgment, to seek
to obtain payment from the Propane Entities with respect to such Final
Judgment or, having sought such payment, to wait such 45 days after
failure by the Propane Entities to immediately satisfy any such Final
Judgment if (i) any of the Propane Entities files a petition for relief
under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an
order for relief is entered against any of the Propane Entities in an
involuntary case under the Bankruptcy Code and the continuance in effect
of such order for 60 consecutive days, (iii) any of the Propane Entities
makes an assignment for the benefit of its creditors, or (iv) any court
orders or approves the appointment of a receiver or custodian for any of
the Propane Entities or a substantial portion of its assets and the
continuance in effect of such order for 60 consecutive days. The foregoing
provisions of this paragraph are not intended to require any indemnified
party to obtain a Final Judgment against the Propane Entities or Triarc
before obtaining reimbursement of expenses pursuant to clause (a)(iii) of
this Section 6. However, the indemnified parties shall first seek to
obtain such reimbursement in full from the Propane Entities by making a
written demand upon the Partnership for such reimbursement. Only in the
event such expenses shall remain unreimbursed in whole or in part 45 days
following the date of receipt by the Partnership of such demand shall any
indemnified party have the right to receive reimbursement of such expenses
from Triarc by making written demand directly on Triarc (but only if and
to the extent the Propane Entities have not already
34
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<PAGE>
satisfied the demand for reimbursement, whether by settlement, release or
otherwise). The indemnified parties shall, however, be relieved of their
obligation to first seek to obtain such reimbursement in full from the
Propane Entities or, having made written demand therefor, to wait such 45
days after failure by the Propane Entities to immediately reimburse such
expenses if (i) any of the Propane Entities files a petition for relief
under the Bankruptcy Code, (ii) an order for relief is entered against any
of the Propane Entities in an involuntary case under the Bankruptcy Code
and the continuance in effect of such order for 60 consecutive days, (iii)
any of the Propane Entities makes an appointment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a
receiver or custodian for any of the Propane Entities or a substantial
portion of its assets and the continuance in effect of such order for 60
consecutive days.
(b) Each Underwriter severally, but not jointly, agrees to indemnify and
hold harmless the Propane Entities and Triarc, their respective directors, each
of their officers who signed the Registration Statement, and each person, if
any, who controls any of the Propane Entities or Triarc within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Partnership by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or
Prospectus (or any amendment or supplement thereto). The parties hereto
severally acknowledge that the only information expressly provided in writing by
the Underwriters for inclusion in the Registration Statement and the preliminary
prospectus and the Prospectus are the statements with respect to Underwriting
discounts and commission on the cover page of the Prospectus, the last full text
paragraph on the cover page of the Prospectus, the legend concerning
stabilization on the inside front cover page of the Prospectus, and the second
and fifth full text paragraphs of the "Underwriting" section of the Prospectus.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement except to the extent
the indemnifying party is materially prejudiced thereby. An indemnifying party
may participate at its own expense in the defense of such action if it so elects
within a reasonable time after receipt of such notice. An indemnifying party,
jointly with any other indemnifying parties receiving such notice, may assume
the defense of such action with counsel chosen by it, unless such indemnified
parties reasonably object to such assumption on the ground that such indemnified
party shall have been advised by its counsel that representation of such
indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of appropriate conduct due to actual or
potential differing interests between them. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is a party and indemnity has been sought hereunder by such
indemnified party (whether or not the indemnified parties are actual
35
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<PAGE>
or potential parties thereto), unless such settlement includes a release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding. No indemnifying party shall be liable for any settlement of any
such action effected without its prior written consent, but if settled with its
prior written consent, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability by reason
of such settlement.
(d) Triarc shall not be responsible for the payment of an amount pursuant
to this Section 6 which exceeds the net proceeds received by the Partnership
from the sale of the Units pursuant to this Agreement and the Pricing Agreement.
(e) If any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(c) hereof effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Propane Entities,
Triarc and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by a Propane Entity or Triarc and one or more of
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
public offering price appearing thereon and the Propane Entities and Triarc
shall be responsible for the balance on the same basis as the Propane Entities
and Triarc would have been obligated to provide indemnification pursuant to
Section 6; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 7, (a) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Units underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay pursuant to Section 6 and
(b) Triarc shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by the Partnership from the sale of
the Units pursuant to this Agreement and the Pricing Agreement exceeds the
aggregate amount Triarc has otherwise paid pursuant hereto and to Section 6(a).
For purposes of this Section, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
and each officer and director of each Underwriter and of any such controlling
person shall have the same rights to contribution as such Underwriter, and each
director of any of the Propane Entities or Triarc, each officer of any of the
Propane Entities or Triarc who signed the Registration Statement, and each
person, if any, who controls any of the Propane Entities or Triarc within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each
officer and director of any such controlling person shall have the same rights
to contribution as the Propane Entities and Triarc.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties, indemnities and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Propane Entities or Triarc submitted pursuant hereto, shall remain operative
and in
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<PAGE>
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Partnership,
and shall survive delivery of and payment for the Units.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Partnership, at any time at or prior to Closing Time (i) if there has been,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the Prospectus, any Material Adverse Effect,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or elsewhere, any outbreak of hostilities or escalation thereof or other
calamity or crisis, in each case the effect of which on the financial markets of
the United States is such as to make it, in the judgment of the Representatives,
impracticable to market the Units or to enforce contracts for the sale of the
Units, or (iii) if trading generally on the American Stock Exchange, the NYSE or
the NASDAQ National Market System has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, (iv) if a banking
moratorium has been declared by either Federal or New York authorities, or (v)
if there has occurred any change or development involving a prospective change
in national or international political, financial or economic conditions or
currency exchange rates or exchange controls which, in the reasonable opinion of
the Representatives, is likely to have a material and adverse effect on the
market for the Units. As used in this Section 9(a), the term "Prospectus" means
the Prospectus in the form first used by the Underwriters to confirm sales of
the Units.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 3(n), 6 and 7
shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Units which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Units"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Units in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Units does not exceed 10% of the number
of Units to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the
full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Units exceeds 10% of the number of
Units to be purchased on such date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
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In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Partnership shall have the
right to postpone Closing Time or a Date of Delivery for a period not exceeding
seven days in order to effect any required changes in the Registration Statement
or Prospectus or in any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Default by the Partnership. If the Partnership shall fail at
Closing Time to sell and deliver the aggregate principal amount of Units which
it is obligated to sell hereunder, then this Agreement shall terminate.
The termination of this Agreement pursuant to this Section shall not
relieve the Partnership from liability, if any, in respect of the default
resulting in such termination.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1209, attention of Theodore D. Sands,
or to such other address designated in a notice so delivered; notices to the
Partnership shall be directed to it at Suite 1700, IES Tower, 200 1st Street,
S.E., P.O. Box 2067, Cedar Rapids, Iowa, 52401-2067, attention of Ronald R.
Rominiecki, Senior Vice President and Chief Financial Officer, or to such other
address designated in a notice so delivered.
SECTION 13. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters and the Propane
Entities and Triarc and their respective successors. Nothing expressed or
mentioned in this Agreement or the Pricing Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Propane Entities and Triarc and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein or therein contained. This Agreement and the Pricing Agreement
and all conditions and provisions hereof and thereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Propane Entities, Triarc and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Units from an Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE PRICING
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID
STATE. EXCEPT AS OTHERWISE SET FORTH HEREIN SPECIFIED TIMES OF DAY REFER TO NEW
YORK CITY TIME.
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<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Partnership a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters, the Propane Entities and Triarc in accordance with its terms.
Very truly yours,
NATIONAL PROPANE CORPORATION
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
NATIONAL PROPANE SGP, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
NATIONAL PROPANE PARTNERS, L.P.
By: National Propane Corporation,
its Managing General Partner
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
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<PAGE>
NATIONAL PROPANE, L.P.
By: National Propane Corporation,
its Managing General Partner
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
TRIARC COMPANIES, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
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CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:__________________________________
Name:
Title:
For itself and as Representatives of the other
Underwriters named in Exhibit A hereto.
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EXHIBIT A
Name of Underwriter Number of Firm Units
Merrill Lynch, Pierce, Fenner & Smith Incorporated............................
Donaldson, Lufkin & Jenrette Securities Corporation...........................
Janney Montgomery Scott Inc...................................................
Rauscher Pierce Refsnes, Inc..................................................
The Robinson-Humphrey Company, Inc............................................
---------
Total................................................................6,190,476
=========
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<PAGE>
EXHIBIT B
6,190,476 Firm Units
NATIONAL PROPANE PARTNERS, L.P.
(a Delaware limited partnership)
Common Units
(representing limited partner interests)
Pricing Agreement
_____, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Dear Ladies and Gentlemen:
Reference is made to the Purchase Agreement dated _____, 1996 (the
"Purchase Agreement") relating to the purchase by the several Underwriters named
in Exhibit A thereto, for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Janney Montgomery Scott Inc., Rauscher Pierce Refsnes, Inc. and The
Robinson-Humphrey Company, Inc. are acting as representatives (the
"Representatives"), of the above Units (the "Firm Units"), of National Propane
Partners, L.P., a Delaware limited partnership (the "Partnership").
Pursuant to Section 2 of the Purchase Agreement, the Partnership agrees
with each Underwriter as follows:
1. The initial public offering price per Firm Unit, determined as provided
in said Section 2, shall be $____.
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2. The purchase price per Firm Unit to be paid by the several Underwriters
shall be $____, being an amount equal to the initial public offering price set
forth above less $____ per Firm Unit.
3. Incentive Distributions shall be made as follows:
<TABLE>
<CAPTION>
Marginal Percentage
Interest in Distributions
-------------------------
Quarterly
Distribution Hypothetical
Target Annualized General
Amount Yield Unitholders Partners
------ ----- ----------- --------
<S> <C> <C> <C> <C>
Minimum Quarterly Distribution....... $ % 96% 4%
First Target Distribution............ $ % 96% 4%
Second Target Distribution........... $ % 85% 15%
Third Target Distribution............ $ % 75% 25%
Thereafter........................... above $ above % 50% 50%
</TABLE>
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Partnership a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Partnership in accordance with its terms.
Very truly yours,
NATIONAL PROPANE PARTNERS, L.P.
By: National Propane Corporation,
its Managing General Partner
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
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CONFIRMED AND ACCEPTED,
as of the date first above written:
45
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MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
JANNEY MONTGOMERY SCOTT INC.
RAUSCHER PIERCE REFSNES, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:________________________________
Name:
Title:
For itself and as Representatives of the other
Underwriters named in Exhibit A hereto.
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Draft 6/24/96
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE, L.P.
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
1.1 Definitions......................................................1
1.2 Construction....................................................10
ARTICLE II
Organization
2.1 Formation.......................................................11
2.2 Name............................................................11
2.3 Registered Office; Registered Agent; Principal Office;
Other Offices ..................................................11
2.4 Purpose and Business............................................12
2.5 Powers..........................................................12
2.6 Power of Attorney...............................................12
2.7 Term............................................................14
2.8 Title to Partnership Assets.....................................14
ARTICLE III
Rights of the Limited Partners
3.1 Limitation of Liability.........................................14
3.2 Management of Business..........................................14
3.3 Rights of Limited Partners Relating to the Partnership..........15
3.4 Outside Activities of the Limited Partners......................16
ARTICLE IV
Transfer of Partnership Interests
4.1 Transfer Generally..............................................16
4.2 Transfer of a General Partner's Partnership Interest............16
4.3 Transfer of the Limited Partner's Partnership Interests.........17
4.4 Restrictions on Transfers.......................................17
4.5 Exchange by Special General Partner of its General Partner
Partnership Interest in the Partnership and the MLP.............17
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ARTICLE V
Contributions and Initial Transfers
5.1 Initial Contributions...........................................18
5.2 Contributions and Initial Transfers by the MLP and the General
Partners .......................................................18
5.3 Additional Capital Contributions................................19
5.4 Interest and Withdrawal.........................................19
5.5 Capital Accounts................................................19
5.6 Loans from Partners.............................................22
5.7 Limited Preemptive Rights.......................................23
5.8 Fully Paid and Non-Assessable Nature of Limited Partner
Partnership Interests ..........................................23
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes........................23
6.2 Allocations for Tax Purposes....................................27
6.3 Distributions...................................................29
ARTICLE VII
Management and Operation of Business
7.1 Management......................................................30
7.2 Certificate of Limited Partnership..............................32
7.3 Restrictions on Managing General Partner's Authority............32
7.4 Reimbursement of the General Partners...........................33
7.5 Outside Activities..............................................34
7.6 Loans from the General Partners; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain
Restrictions on the General Partners ...........................35
7.7 Indemnification.................................................36
7.8 Liability of Indemnitees........................................38
7.9 Resolution of Conflicts of Interest.............................39
7.10 Other Matters Concerning the Managing General Partner...........40
7.11 Indemnification of National Propane SGP Inc. by National
Propane Corporation ............................................41
7.12 Reliance by Third Parties.......................................41
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting..........................................42
8.2 Fiscal Year.....................................................42
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ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns......................................42
9.2 Tax Elections...................................................43
9.3 Tax Controversies...............................................43
9.4 Withholding.....................................................43
ARTICLE X
Admission of Partners
10.1 Admission of the General Partners and Limited Partners..........44
10.2 Admission of Substituted Limited Partners.......................44
10.3 Admission of Successor or Transferee General Partners...........44
10.4 Admission of Additional Limited Partners........................45
10.5 Amendment of Agreement and Certificate of Limited Partnership...45
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partners..............................45
11.2 Removal of the Managing General Partner.........................48
11.3 Interest of Departing Partner and Successor General Partner.....48
11.4 Withdrawal of the Limited Partner...............................48
ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution.....................................................49
12.2 Continuation of the Business of the Partnership After
Dissolution ....................................................49
12.3 Liquidator......................................................50
12.4 Liquidation.....................................................51
12.5 Cancellation of Certificate of Limited Partnership..............52
12.6 Return of Capital Contributions.................................52
12.7 Waiver of Partition.............................................52
12.8 Capital Account Restoration.....................................52
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ARTICLE XIII
Amendment of Partnership Agreement
13.1 Amendment to be Adopted Solely by the Managing General Partner..52
13.2 Amendment Procedures............................................54
ARTICLE XIV
Merger
14.1 Authority.......................................................54
14.2 Procedure for Merger or Consolidation...........................54
14.3 Approval by Limited Partners of Merger or Consolidation.........55
14.4 Certificate of Merger...........................................56
14.5 Effect of Merger................................................56
ARTICLE XV
General Provisions
15.1 Addresses and Notices...........................................57
15.2 References......................................................57
15.3 Further Action..................................................57
15.4 Binding Effect..................................................57
15.5 Integration.....................................................57
15.6 Creditors.......................................................57
15.7 Waiver..........................................................57
15.8 Counterparts....................................................58
15.9 Applicable Law..................................................58
15.10 Invalidity of Provisions........................................58
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF National
Propane, L.P. dated as of _________, 1996, is entered into by and among National
Propane Corporation, a Delaware corporation, as the Managing General Partner,
National Propane SGP, Inc., a Delaware corporation, as the Special General
Partner, and National Propane Partners, L.P., a Delaware limited partnership, as
the initial Limited Partner, together with any other Persons who become Partners
in the Partnership or parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
Definitions
1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
"Adjusted Capital Account" of a Partner in respect of a general partner interest
or any other specified interest in the Partnership shall be the amount which
such adjusted capital account would be if such general partner interest or other
interest in the Partnership were the
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only interest in the Partnership held by a Partner from and after the date on
which such general partner interest or other interest was first issued.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant to Section 708
of the Code, such property shall thereafter constitute a Contributed Property
until the Carrying Value of such property is subsequently adjusted pursuant to
Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with (either directly or indirectly),
the Person in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the Managing General Partner using such reasonable method of valuation as it
may adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Section 5.5(c). Subject to Section 5.5(c), the
Managing General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to the fair market value of
each Contributed Property.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of National Propane, L.P., as it may be amended, supplemented or
restated from time to time.
"Assets" has the meaning assigned to such term in the Contribution and
Assumption Agreement.
"Assumed Liabilities" has the meaning assigned to such term in the
Contribution and Assumption Agreement.
"Audit Committee" means a committee of the Board of Directors of the
Managing General Partner composed entirely of two or more directors who are
neither officers, directors or employees of either of the General Partners or
any Affiliate of either of the General Partners.
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"Available Cash," means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Quarter resulting from borrowings for
working capital purposes, in each case subsequent to the end of such Quarter,
less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the Managing General Partner to (i) provide for
the proper conduct of the business of the Partnership Group (including reserves
for future capital expenditures) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any member of the
Partnership Group is a party or by which it is bound or its assets are subject
or (iii) provide funds for distributions under Section 6.4 or 6.5 of the MLP
Agreement in respect of any one or more of the next four Quarters; provided,
however, that the Managing General Partner may not establish cash reserves
pursuant to (iii) above if the effect of such reserves would be that the MLP is
unable to distribute the Minimum Quarterly Distribution on all Common Units with
respect to such Quarter; and, provided further, that disbursements made by a
Group Member or cash reserves established, increased or reduced after the end of
such Quarter but on or before the date of determination of Available Cash with
respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such
Quarter if the Managing General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Iowa shall not be regarded as a Business
Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement.
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"Cause" means (x) a court of competent jurisdiction has entered a final,
non-appealable judgment finding the Managing General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as a
general partner of the Partnership or (y) the Special General Partner, prior to
the Triarc Merger, does not have the same directors on its Board of Directors as
those of the Managing General Partner.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Closing Date" means the first date on which Common Units are sold by the
MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
"Common Unit" has the meaning assigned to such term in the MLP Agreement.
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such
property shall no longer constitute a Contributed Property, but shall be deemed
an Adjusted Property.
"Contribution and Conveyance Agreements" means (i) that certain
Contribution, Conveyance and Assumption Agreement, dated, as of the Closing
Date, among the General Partners, the MLP, the Partnership and (ii) the
Contribution and Assumption Agreement, dated as of the Closing Date (the
"Contribution and Assumption Agreement") among the General Partners, the
Partnership and National Sales and Service, Inc., together with the additional
conveyance documents and instruments contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. ss.17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2.
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"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1.
"General Partners" means the Managing General Partner and the Special
General Partner.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means (a) each General Partner, any Departing Partner and any
Person who is or was an Affiliate of one of the General Partners or any
Departing Partner, (b) any Person who is or was a director, officer, employee,
agent or trustee of the Partnership, the MLP or any Subsidiary, (c) any Person
who is or was a director, officer, employee, agent or trustee of one of the
General Partners or any Departing Partner or any such Affiliate, (d) any Person
who is or was serving at the request of a General Partner or any Departing
Partner or any such Affiliate as a director, officer, employee, partner, agent,
fiduciary or trustee of another Person; provided, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.
"Initial Offering" means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.
"Limited Partner" means any Person that is admitted to the Partnership as
a limited partner pursuant to the terms and conditions of this Agreement; but
the term Limited Partner shall not include any Person from and after the time
such Person withdraws as a Limited Partner from the Partnership.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Managing General
Partner to perform the functions described in Section 12.3.
"Managing General Partner" means National Propane Corporation and its
successors and permitted assignees as Managing General Partner of the
Partnership and any other Person that holds an interest as managing general
partner in the Partnership.
"Merger Agreement" has the meaning assigned to such term in Section 14.1.
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"Minimum Quarterly Distribution" has the meaning assigned to such term in
the MLP Agreement.
"MLP" means National Propane Partners, L.P., a Delaware limited
partnership.
"MLP Agreement" means the Amended and Restated Agreement of Limited
Partnership of the MLP, dated as of __________ ___, 1996.
"National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property (as adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution,
in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
"Net Termination Gain" means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
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"Net Termination Loss" means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
"Notes" means the $125 million of First Mortgage Notes issued by the
Managing General Partner and assumed by the Partnership in conjunction with the
Initial Offering.
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to Triarc, the Partnership or either of the General Partners or
any of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"Over-allotment Option" has the meaning assigned to such term in the MLP
Agreement.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partners and the Limited Partners.
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"Partnership" means National Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP Subsidiaries,
treated as a single consolidated entity.
"Partnership Interest" means the interest of a Partner in the Partnership.
"Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means the percentage interest in the Partnership
held by each Partner upon completion of the transactions in Section 5.2 and
shall mean (a) as to each of the General Partners (each in its capacity as
General Partner of the Partnership), 1.0101%, and (b) as to the Limited Partner,
97.9798%.
"Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Pro Rata" means when modifying the General Partners, apportioned equally
between the General Partners.
"Quarter" means, unless the context requires otherwise, a fiscal quarter
of the Partnership.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-2768), as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Securities and
Exchange Commission under the Securities Act to register the offering and sale
of the Common Units in the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss
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is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A),
respectively, to eliminate Book-Tax Disparities.
"Restricted Activity" has the meaning assigned to such term in the MLP
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Special Approval" means approval by a majority of the members of the
Audit Committee.
"Special General Partner" means National Propane SGP, Inc., a Delaware
corporation and a wholly-owned subsidiary of National Propane Corporation and
its successors and assigns as special general partner of the Partnership.
"Subordinated Unit" has the meaning assigned to such term in the MLP
Agreement.
"Subordination Period" has the meaning assigned to such term in the MLP
Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
Partnership Interests of such partnership (considering all of the Partnership
Interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section 4.1(a).
"Triarc" means Triarc Companies, Inc., a Delaware corporation.
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"Triarc Loan" means the $40.7 million loan made on the Closing Date by the
Partnership to Triarc.
"Triarc Merger" has the meaning assigned to such term in Section 4.7 of
the MLP Agreement.
"Underwriter" means each Person named as an underwriter in Exhibit A to
the Underwriting Agreement that purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Purchase Agreement dated_________,
1996, among the Underwriters, the MLP, the Managing General Partner and certain
other parties, providing for the purchase of Common Units by such Underwriters.
"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting Principles
consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 11.1(b).
1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) "include" or "includes" means includes,
without limitation, and "including" means including, without limitation.
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ARTICLE II
Organization
2.1 Formation.
The General Partners and the MLP have previously formed the Partnership as
a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of National
Propane, L.P. in its entirety. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. All Partnership Interests shall constitute personal
property of the owner thereof for all purposes.
2.2 Name.
The name of the Partnership shall be "National Propane, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Managing General Partner, including, in its sole
discretion, the name of the Managing General Partner. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
the Partnership's name where necessary for the purpose of complying with the
laws of any jurisdiction that so requires. The Managing General Partner in its
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the Managing General Partner, the registered
office of the Partnership in the State of Delaware shall be located at 1209
Orange Street, New Castle County, Wilmington, Delaware 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be CT Corporation System. The principal office of the
Partnership shall be located at Suite 1700, IES Tower, 200 1st Street, S.E.,
P.O. Box 2067, Cedar Rapids, Iowa, 52401-2067 or such other place as the
Managing General Partner may from time to time designate by notice to the
Limited Partner. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
necessary or appropriate. The address of the Managing General Partner shall be
Suite 1700, IES Tower, 200 1st Street, S.E., P.O. Box 2067, Cedar Rapids, Iowa,
52401-2067 or such other place as the Managing General Partner may from time to
time designate by notice to the Limited Partners.
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2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage and operate the Assets and any similar assets or
properties, and to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any type of business or activity engaged in by the
Managing General Partner immediately prior to the Closing Date and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
(b) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in, any business activity that is approved by the Managing General
Partner and which may lawfully be conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity and (c) do anything necessary or appropriate
to the foregoing, including the making of capital contributions or loans to any
Group Member, the MLP or any Subsidiary of the MLP. The Managing General
Partner, the Special General Partner and their Affiliates have no obligation or
duty to the Partnership, the Limited Partners, or the Assignees to propose or
approve, and in its discretion may decline to propose or approve, the conduct by
the Partnership of any business.
2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney.
(a) The Limited Partners hereby constitute and appoint the Managing
General Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator, severally (and any successor to the Liquidator by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as his true and lawful agent and attorney-in-fact, with full
power and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements hereof or thereof) that the
Managing General Partner or the Liquidator deems necessary or appropriate
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct business or
own property; (B) all certificates, documents and other
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instruments that the Managing General Partner or the Liquidator deems
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including conveyances and a
certificate of cancellation) that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Partnership Interests; and (F) all certificates, documents and
other instruments (including agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the discretion of the
Managing General Partner or the Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action
that is made or given by the Partners hereunder or is consistent with the
terms of this Agreement or is necessary or appropriate, in the discretion
of the Managing General Partner or the Liquidator, to effectuate the terms
or intent of this Agreement; provided, that when the approval of the
Limited Partners is required by any provision of this Agreement, the
Managing General Partner or the Liquidator may exercise the power of
attorney made in this Section 2.6(a)(ii) only after the necessary vote,
consent or approval of the Limited Partners is obtained.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
Managing General Partner to amend this Agreement except in accordance with
Article XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
the Limited Partners and the transfer of all or any portion of the Limited
Partners' Partnership Interest and shall extend to the Limited Partners' heirs,
successors, assigns and personal representatives. The Limited Partners hereby
agree to be bound by any representation made by the Managing General Partner or
the Liquidator acting in good faith pursuant to such power of attorney; and the
Limited Partners hereby waive, to the maximum extent permitted by law, any and
all defenses that may be available to contest, negate or disaffirm the action of
the Managing General Partner or the Liquidator taken in good faith under such
power of attorney. The Limited Partners shall execute and deliver to the
Managing General Partner or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and other
instruments as the Managing General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
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2.7 Term.
The Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence
until the close of Partnership business on December 31, 2086, or until the
earlier termination of the Partnership in accordance with the provisions of
Article XII.
2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, a General
Partner, one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare and warrant
that any Partnership assets for which record title is held in the name of a
General Partner, one or more of its Affiliates or one or more nominees shall be
held by such General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however, that the Managing General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the Managing General Partner determines that the expense and difficulty
of conveyancing makes transfer of record title to the Partnership impracticable)
to be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, such General Partner shall use reasonable
efforts to effect the transfer of record title to the Partnership and, prior to
any such transfer, will provide for the use of such assets in a manner
satisfactory to the Managing General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
Rights of the Limited Partners
3.1 Limitation of Liability.
The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business.
No Limited Partner (other than the Managing General Partner, or any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officer, director,
employee or agent of a Group Member, in its capacity as such, if such Person
shall also be a Limited Partner) shall participate in the operation, management
or
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control (within the meaning of Section 17-303(a) of the Delaware Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. Any action
taken by any Affiliate of the Managing General Partner or any officer, director,
employee, partner, agent or trustee of the Managing General Partner or any of
its Affiliates, or any officer, member of the board of directors, employee or
agent of a Group Member, the MLP or any Subsidiary of the MLP, in its capacity
as such, shall not be deemed to be participation in the control of the business
of the Partnership by a limited partner of the Partnership (within the meaning
of the Delaware Act) and shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners under this Agreement.
3.3 Rights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.3(b), each of the Limited
Partners shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon reasonable
demand and at the Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, a current list of the name and
last known business, residence or mailing address of each Partner;
(iv) to have furnished to it, a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto, together
with a copy of the executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited
Partners and Assignees, for such period of time as the Managing General Partner
deems reasonable, (i) any information that the Managing General Partner
reasonably believes to be in the nature of trade secrets or (ii) other
information the disclosure of which the Managing General Partner in good faith
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believes (A) is not in the best interests of the MLP or the Partnership Group,
(B) could damage the MLP or the Partnership Group or (C) that the MLP or any
Group Member is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates the primary purpose of which
is to circumvent the obligations set forth in this Section 3.3).
3.4 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such Person
shall also be a Limited Partner, any Limited Partner shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
in direct competition with the Partnership Group.
ARTICLE IV
Transfer of Partnership Interests
4.1 Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which a
Partner assigns its Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any shareholder of a General Partner of any or all of
the issued and outstanding capital stock of a General Partner.
4.2 Transfer of a General Partner's Partnership Interest.
Except as provided in Section 4.5, if a General Partner transfers
its partnership interest as a general partner of the MLP to any Person in
accordance with the provisions of the MLP Agreement, such General Partner shall
contemporaneously therewith transfer all, but not less than all, of its
Partnership Interest as a General Partner of the Partnership to such Person, and
the Limited Partners hereby expressly consent to such transfer. Except as set
forth in the immediately preceding sentence and in Section 5.2, a General
Partner may not transfer all or any part of its Partnership Interest as the
General Partner of the Partnership.
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4.3 Transfer of the Limited Partner's Partnership Interests.
Any Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a limited partner of the Partnership in connection with
the merger, consolidation or other combination of any of the Limited Partners
with or into any other Person or the transfer by any of the Limited Partners of
all or substantially all of its assets to another Person, and following any such
transfer such Person may become a Substituted Limited Partner pursuant to
Article X. Except as set forth in the immediately preceding sentence and in
Section 5.2, or in connection with any pledge of (or any related foreclosure on)
the Limited Partner's Partnership Interest as a limited partner of the
Partnership solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, and except for the transfers
contemplated by Sections 5.2 and 10.1, a Limited Partner may not transfer all or
any part of its Partnership Interest or withdraw from the Partnership.
4.4 Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and
regulations of the Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (ii) terminate
the existence or qualification of the Partnership or the MLP under the laws of
the jurisdiction of its formation or (iii) cause the Partnership or the MLP to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes (to the extent not already so
treated or taxed).
(b) The Managing General Partner may impose restrictions on the
transfer of Partnership Interests if a subsequent Opinion of Counsel determines
that such restrictions are necessary to avoid a significant risk of the
Partnership's or the MLP's becoming taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes. The restrictions may be
imposed by making such amendments to this Agreement as the Managing General
Partner may determine to be necessary or appropriate to impose such
restrictions.
4.5 Exchange by Special General Partner of its General Partner
Partnership Interest in the Partnership and the MLP.
If the Managing General Partner has not entered into the Triarc Merger,
then the Special General Partner may, at any time, in one or more exchanges and
in its sole discretion, exchange all or a portion of its Unsubordinated General
Partner Interest (as such term is defined in the MLP Agreement) in the MLP
together with an equal portion of its partnership interest in the Partnership
for Units having rights to distributions of Available Cash from Operating
Surplus (as such terms are defined in the MLP Agreement) equal to the
distribution rights with respect to such Available Cash from Operating Surplus
of the combined effective percentage interest in the Partnership and the MLP
that the Special General Partner exchanged. For example, as of the Closing Date,
the Special General Partner's combined effective 2% interest in the Partnership
and the MLP would be
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exchanged into 223,419 Units (or 242,765 Units if the over-allotment option for
the issuance of additional Units is exercised, notwithstanding the fact that the
Special General Partner is not required to make any additional capital
contribution upon the exercise of the over-allotment option). Additional capital
contributions pursuant to Section 5.3 of this Agreement or Section 5.2 of the
MLP Agreement will increase the number of Units into which such combined
interest is exchanged. The Units received by the Special General Partner
pursuant to this Section 4.5 shall be (x) limited partner interests and (b)
issued as a combination of Subordinated Units and Common Units; the proportion
of the Subordinated Units to the total Units received in this exchange shall be
in the same proportion that the unconverted Subordinated Units initially issued
pursuant to Section 5.2 of the MLP Agreement that are outstanding immediately
before such exchange represent in relation to the total Subordinated Units
initially issued pursuant to Section 5.2 of the MLP Agreement. Except as
otherwise provided in Sections 4.12, 5.5(c)(ii), 6.1(d)(x) and 6.7(b) of the
MLP Agreement, the Special General Partner at the time of such conversion will
have the same rights with respect to its Common Units and Subordinated Units as
the rights possessed by other holders of such Units. Immediately prior to the
exchange of any portion of the Special General Partners' general partner
interest in the Partnership, the interest being exchanged shall automatically
convert into a limited partner interest in the Partnership. The Managing General
Partner shall be required to take all actions necessary to effectuate such
conversion.
ARTICLE V
Contributions and Initial Transfers
5.1 Initial Contributions.
In connection with the formation of the Partnership under the Delaware Act
and pursuant to an Agreement of Limited Partnership dated March 14, 1996 and an
Amended Agreement of Limited Partnership dated June 21, 1996, (i) the Managing
General Partner and the Special General Partner each made a Capital Contribution
to the Partnership in the aggregate amount of $20.96 in exchange for a 2.0956%
interest in the Partnership and each has been admitted as a General Partner of
the Partnership, (ii) the MLP made a net Capital Contribution to the Partnership
in the amount of $.01 in exchange for a .0001% interest in the Partnership and
has been admitted as a limited partner of the Partnership and (iii) the General
Partners have contributed an aggregate $958.07 in exchange for a 95.8087%
limited partner interest in the Partnership. The Managing General Partner
received a managing general partner interest and the Special General Partner
received a non-managing general partner interest.
5.2 Contributions and Initial Transfers by the MLP and the General
Partners.
On the Closing Date, pursuant to, and subject to the conditions of, the
Contribution and Conveyance Agreements, the following transactions shall occur
in the following order:
(a) The General Partners shall convey substantially all of their
assets (which assets will not include an existing intercompany note from Triarc,
approximately $59.3 million of
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the net proceeds from the issuance of First Mortgage Notes and certain other
assets of the Managing General Partner). In exchange, the Partnership shall (A)
continue each of the General Partner's 2.0956% general partner interest in the
Partnership, (B) continue the General Partners' 95.8087% limited partner
interest in the Partnership and (C) assume the Assumed Liabilities.
(b) The General Partners shall thereafter convey all their limited
partner interest in the Partnership to the MLP in exchange for the interests
received pursuant to 5.2 of the MLP Agreement.
(c) After the Partnership has utilized approximately $62.2 million
received in Section 5.2(a) above to repay a portion of the indebtedness assumed
in Section 5.2(a) above, the MLP will contribute the net offering proceeds
(approximately $118.2 million) received from the Underwriters on the sale of
Common Units to the Partnership. As a result of the conveyances set forth in
this Section 5.2(c), the MLP will receive an additional limited partner interest
in the Partnership so that its aggregate limited partner interest in the
Partnership will be 97.9798% and the General Partners will each have a 1.0101%
general partner interest in the Partnership. The Managing General Partner will
continue to hold the managing general partner interest and the Special General
Partner will continue to hold a non-managing general partner interest.
5.3 Additional Capital Contributions.
With the consent of the Managing General Partner, any Limited Partner may,
but shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any Capital Contributions by a
Limited Partner in addition to those provided in Sections 5.1 and 5.2 hereof,
each of the General Partners shall be obligated to make an additional Capital
Contribution to the Partnership in an amount equal to 1.0101 [div] 98.9899 of
the Net Agreed Value of the additional Capital Contribution then made by such
Limited Partner (other than with respect to additional Capital Contributions by
the Limited Partner of the net proceeds received by the MLP upon the issuance of
Common Units pursuant to the Over-allotment Option). Except as set forth in the
immediately preceding sentence and Article XII, the General Partners shall not
be obligated to make any additional Capital Contributions to the Partnership.
5.4 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions, and
no Partner shall be entitled to withdrawal or return of any part of its Capital
Contributions or to receive any distribution from the Partnership, except as
provided in Articles VI, XI and XII.
5.5 Capital Accounts.
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(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1, and decreased by
(x) the amount of cash or the Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction which is to be allocated pursuant to Article VI and is
to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership
shall be treated as owning directly its proportionate share (as determined
by the Managing General Partner) of all property owned by any OLP
Subsidiary that is classified as a partnership for federal income tax
purposes.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if any,
shall, for purposes of Capital Account maintenance, be treated as an item
of deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and, as
to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the
Code, without regard to the fact that such items are not includable in
gross income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of
the Code is required, pursuant to Treasury Regulation Section 1.704-
2(b)(2)(iv)(m) to be taken into account in determining Capital Accounts,
the amount of such adjustment in the Capital Accounts shall be treated as
an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such
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date of disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 5.5(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined (A) as
if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate
of depreciation, cost recovery or amortization derived from the same
method and useful life (or, if applicable, the remaining useful life) as
is applied for federal income tax purposes; provided, however, that, if
the asset has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery or amortization deductions shall be determined
using any reasonable method that the Managing General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes pursuant
to Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is
placed in service and shall be allocated among the Partners pursuant to
Section 6.1. Any restoration of such basis pursuant to Section 48(q)(2) of
the Code shall, to the extent possible, be allocated in the same manner to
the Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred; provided, however, that, if the transfer
causes a termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties and liabilities shall be deemed (i) to have been
distributed in liquidation of the Partnership to the Partners (including any
transferee of a Partnership Interest that is a party to the transfer causing
such termination) pursuant to Section 12.4 (after adjusting the balance of the
Capital Accounts of the Partners as provided in Section 5.5(d)(ii)) and
recontributed by such Partners in reconstitution of the Partnership or (ii) to
be treated as mandated by Treasury Regulations issued pursuant to Sections 708
and 704 of the Code as amended. Any such deemed contribution and distribution
shall be treated as an actual contribution and distribution for purposes of this
Section 5.5. In such event, the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed contribution and distribution
pursuant to Section 5.5(d)(ii) and such Carrying Values shall then constitute
the Agreed Values of such properties upon such deemed contribution to the new
Partnership. The Capital Accounts of such new Partnership shall be maintained in
accordance with the principles of this Section 5.5.
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(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property, the Capital Account of all Partners and
the Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the Managing
General Partner using such reasonable method of valuation as it may adopt;
provided, however, that the Managing General Partner, in arriving at such
valuation, must take fully into account the fair market value of the
Partnership Interests of all Partners at such time. The Managing General
Partner shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines in its discretion to be
reasonable) to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to a distribution
shall (A) in the case of an actual distribution which is not made pursuant
to Section 12.4 or in the case of a deemed contribution and/or
distribution occurring as a result of a termination of the Partnership
pursuant to Section 708 of the Code, be determined and allocated in the
same manner as that provided in Section 5.5(d)(i) or (B) in the case of a
liquidating distribution pursuant to Section 12.4, be determined and
allocated by the Liquidator using such reasonable method of valuation as
it may adopt.
5.6 Loans from Partners.
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable
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or collectible only out of the Partnership assets in accordance with the terms
and conditions upon which such advances are made.
5.7 Limited Preemptive Rights.
Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Partnership Interests; or
(e) issuance or sale of any other securities that may be issued or sold by the
Partnership.
5.8 Fully Paid and Non-Assessable Nature of Limited Partner Partnership
Interests.
All Limited Partner Partnership Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and
non-assessable Partnership Interests in the Partnership, except as such
non-assessability may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable year shall be allocated as follows:
(i) First, 100% to the General Partners, Pro Rata, until the
aggregate Net Income allocated to the General Partners pursuant to this
Section 6.1(a)(i) for the current taxable year and all previous taxable
years is equal to the aggregate Net Losses allocated to the General
Partners pursuant to Section 6.1(b)(ii) for all previous taxable years;
(ii) Second, 100% to the General Partners and the Limited
Partners, in accordance with their respective Percentage Interests.
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(b) Net Losses. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partners and the Limited
Partners, in accordance with their respective Percentage Interests;
provided, that Net Losses shall not be allocated pursuant to this Section
6.1(b)(i) to the extent that such allocation would cause a Limited Partner
to have a deficit balance in its Adjusted Capital Account at the end of
such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, the balance, if any, 100% to the General
Partners, Pro Rata.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before the
Liquidation Date; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant
to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Gain shall be
allocated between the General Partners and the Limited Partners in the
following manner (and the Capital Accounts of the Partners shall be
increased by the amount so allocated in each of the following subclauses,
in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
(A) First, to each Partner having a deficit balance in
its Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of all
Partners, until each such Partner has been allocated Net Termination
Gain equal to any such deficit balance in its Capital Account; and
(B) Second, 100% to the General Partners and the Limited
Partners in accordance with their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss shall be
allocated to the Partners in the following manner:
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(A) First, 100% to the General Partners and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Capital Accounts; and
(B) Second, the balance, if any, 100% to the General
Partners, Pro Rata.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vi)). This Section
6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(iv) and 6.1(d)(v), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with
the chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership
income and gain shall be specially allocated to such Partner in an amount
and
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manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and (B)
the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership gross income and gain in
the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(iv) shall be made only if and
to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided in this
Section 6.1 have been tentatively made as if this Section 6.1(d)(iv) were
not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the Managing General Partner
determines in its good faith discretion that the Partnership's Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe
harbor requirements of the Treasury Regulations promulgated under Section
704(b) of the Code, the Managing General Partner is authorized, upon
notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner
that bears the Economic Risk of Loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with respect to a
Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount of
Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in
Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(viii)Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(c) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
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account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury Regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of this Section
6.1, other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations so
that, to the extent possible, the net amount of items of income,
gain, loss and deduction allocated to each Partner pursuant to the
Required Allocations and the Agreed Allocations, together, shall be
equal to the net amount of such items that would have been allocated
to each such Partner under the Agreed Allocations had the Required
Allocations and the related Curative Allocation not otherwise been
provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse
Deductions shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(ix)(A) shall only be made with respect to Required
Allocations to the extent the Managing General Partner reasonably
determines that such allocations will otherwise be inconsistent with
the economic Agreement among the Partners. Further, allocations
pursuant to this Section 6.1(d)(ix)(A) shall be deferred with
respect to allocations pursuant to clauses (1) and (2) hereof to the
extent the Managing General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required
Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1) apply the
provisions of Section 6.1(d)(ix)(A) in whatever order is most likely
to minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 6.1(d)(ix)(A) among the Partners in a manner
that is likely to minimize such economic distortions.
6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1.
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(b) In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code that takes into account the
variation between the Agreed Value of such property and its adjusted basis
at the time of contribution; and (B) any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 5.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(iii) The Managing General Partner shall apply the principles
of Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax
Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of Units of the MLP (or any class or classes
thereof), the Managing General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of Units of the MLP (or any class or classes
thereof). The Managing General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units of the MLP issued and outstanding or the Partnership, and if
such allocations are consistent with the principles of Section 704 of the Code.
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(d) The Managing General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-l(a)(6) or the legislative history of Section 197 of
the Code. If the Managing General Partner determines that such reporting
position cannot reasonably be taken, the Managing General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
Units of the MLP in the same month would receive depreciation and amortization
deductions, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the Managing General Partner
chooses not to utilize such aggregate method, the Managing General Partner may
use any other reasonable depreciation and amortization conventions to preserve
the uniformity of the intrinsic tax characteristics of any class or classes of
Units of the MLP that would not have a material adverse effect on any Limited
Partner or the holders of any class or classes of Units of the MLP.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 6.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The Managing General Partner may adopt such methods of
allocation of income, gain, loss or deduction between a transferor and a
transferee of a Partnership Interest as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
6.3 Distributions.
(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on September 30, 1996, an amount equal to 100% of Available
Cash with respect to such Quarter shall, subject to Section 17-607 of the
Delaware Act, be distributed in accordance with this Article VI by the
Partnership to the Partners in accordance with their respective Percentage
Interests. The immediately preceding sentence shall not require any distribution
of cash if and to
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the extent such distribution would be prohibited by applicable law or by any
loan Agreement, security Agreement, mortgage, debt instrument or other Agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject. All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the
Liquidation Date occurs (other than from borrowings described in (a)(ii) of the
definition of Available Cash) shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion to treat
taxes paid by the Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners, as a distribution of Available Cash to
such Partners.
ARTICLE VII
Management and Operation of Business
7.1 Management.
(a) The Managing General Partner shall conduct, direct and manage
all activities of the Partnership. Except as otherwise expressly provided in
this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the Managing General Partner, and no
Special General Partner (unless it becomes Managing General Partner pursuant to
Section 11.1(d)), Limited Partner shall have any management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the Managing General Partner under any other
provision of this Agreement, the Managing General Partner, subject to Section
7.3, shall have full power and authority to do all things and on such terms as
it, in its sole discretion, may deem necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and
to effectuate the purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other
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combination of the Partnership with or into another Person subject,
however, to any prior approval that may be required pursuant to Section
7.3;
(iv) the use of the assets of the Partnership (including cash
on hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of the
Partnership Group, the lending of funds to other Persons (including the
MLP, the General Partners and their Affiliates), the repayment of
obligations of the MLP or any member of the Partnership Group and the
making of capital contributions to any member of the Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual arrangements to
all or particular assets of the Partnership, with the other party to the
contract to have no recourse against the General Partners or their assets
other than its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership than
would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as "president," "vice president," "secretary"
and "treasurer") and agents, outside attorneys, accountants, consultants
and contractors and the determination of their compensation and other
terms of employment or hiring;
(viii)the maintenance of such insurance for the benefit of the
Partnership Group and the Partners (including the assets of the
Partnership) as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and
the contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations or other
relationships;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation; and
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
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(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners (i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of the MLP Agreement, the Underwriting
Agreement, the Conveyance and Contribution Agreement, the agreements and other
documents filed as exhibits to the Registration Statement, and the other
agreements described in or filed as a part of the Registration Statement; (ii)
agrees that the Managing General Partner (on its own or through any officer of
the Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners; and (iii) agrees that the execution, delivery or performance by
the Managing General Partner, the MLP, any Group Member or any Affiliate of any
of them, of this Agreement or any Agreement authorized or permitted under this
Agreement, shall not constitute a breach by the Managing General Partner of any
duty that the Managing General Partner may owe the Partnership or the Limited
Partners or the Assignees or any other Persons under this Agreement (or any
other agreements) or of any duty stated or implied by law or equity.
7.2 Certificate of Limited Partnership.
The Managing General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be determined by the Managing
General Partner in its sole discretion to be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent that such action is
determined by the Managing General Partner in its sole discretion to be
reasonable and necessary or appropriate, the Managing General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.3(a), the Managing General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner or Assignee.
7.3 Restrictions on Managing General Partner's Authority.
(a) The Managing General Partner may not, without written approval
of the specific act by the Limited Partner or by other written instrument
executed and delivered by the Limited Partner subsequent to the date of this
Agreement, take any action in contravention of this Agreement, including, except
as otherwise provided in this Agreement, (i) committing any act that would make
it impossible to carry on the ordinary business of the Partnership; (ii)
possessing Partnership property, or assigning any rights in specific Partnership
property, for other than a
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Partnership purpose; (iii) admitting a Person as a Partner; (iv) amending this
Agreement in any manner; or (v) transferring its interest as general partner of
the Partnership.
(b) Except as provided in Articles XII and XIV, the Managing General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions without the approval of the Limited Partners; provided, however,
that this provision shall not preclude or limit the Managing General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership and shall not apply to any
forced sale of any or all of the assets of the Partnership pursuant to the
foreclosure of, or other realization upon, any such encumbrance.
(c) At all times while serving as the general partner of the
Partnership, the Managing General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any other action
within its control if the effect of such action would cause its net worth,
independent of its interest in the Partnership Group, to be less than $15
million.
7.4 Reimbursement of the General Partners.
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the MLP Agreement, the General Partners shall not be compensated
for its services as general partners of the MLP or any Group Member.
(b) The General Partners shall be reimbursed on a monthly basis, or
such other reasonable basis as the Managing General Partner may determine in its
sole discretion, for (i) all direct and indirect expenses that they incur or
payments they make on behalf of the Partnership (including salary, bonus,
incentive compensation and other amounts paid to any Person, including
Affiliates of the General Partner, to perform services for the Partnership or
for the General Partners in the discharge of their duties to the Partnership),
and (ii) all other necessary or appropriate expenses allocable to the
Partnership or otherwise reasonably incurred by the Managing General Partner in
connection with operating the Partnership's business (including expenses
allocated to the General Partners by their Affiliates). The Managing General
Partner shall determine the expenses that are allocable to the Partnership in
any reasonable manner determined by the Managing General Partner in its sole
discretion. Reimbursements pursuant to this Section 7.4 shall be in addition to
any reimbursement to the General Partners as a result of indemnification
pursuant to Section 7.7.
(c) The Managing General Partner, in its sole discretion and without
the approval of the Limited Partners (who shall have no right to vote in respect
thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices for the benefit of employees of
the Managing General Partner, any Group Member or any Affiliate, or any of them,
in respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. Expenses incurred by the Managing General Partner in
connection with any such plans, programs and practices shall be reimbursed in
accordance with Section 7.4(b). Any and all obligations of the Managing General
Partner under any employee benefit plans, employee programs
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or employee practices adopted by the Managing General Partner as permitted by
this Section 7.4(c) shall constitute obligations of the Managing General Partner
hereunder and shall be assumed by any successor Managing General Partner
approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to
all of the Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.2.
7.5 Outside Activities.
(a) Subject to Section 7.5(f), after the Closing Date, each of the
General Partners, for so long as it is a general partner of the Partnership,
shall not engage in any business or activity or incur any debts or liabilities
(other than tax liabilities) except in connection with or incidental to (i) its
performance as general partner of the MLP or one or more Group Members or as
described in or contemplated by the Registration Statement, (ii) the acquiring,
owning or disposing of debt or equity securities in the MLP or any Group
Members, (iii) holding and making investments in Subsidiaries and pledging its
interest in such Subsidiaries to secure indebtedness of such Subsidiaries, (iv)
the acquisition of businesses or assets to be used by the MLP or a Group Member
and (v) permitting its employees to perform services for its Affiliates,
including Affiliates engaging in an activity permitted by Section 7.5(b).
(b) The Affiliates of the General Partners may engage in any
activity other than a Restricted Activity.
(c) Except as restricted by Sections 7.5(a), each of the General
Partners and their Affiliates shall have the right to engage in businesses of
every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by
the MLP or any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities
of the MLP or any Group Member, and none of the same shall constitute a breach
of this Agreement or any duty express or implied by law to the MLP or any Group
Member or any Partner or Assignee. Neither the MLP, any Group Member, any
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement, the MLP Agreement or the partnership relationship established hereby
or thereby in any business ventures of any Indemnitee.
(d) Notwithstanding anything to the contrary in this Agreement, (i)
the engaging in competitive activities by any Indemnitees other than a General
Partner in accordance with the provisions of this Section 7.5 is hereby approved
by the Partnership and all Partners and (ii) it shall be deemed not to be a
breach of the General Partners' fiduciary duty or any other obligation of any
type whatsoever of the General Partners for any Affiliate of a General Partner
to engage in such business interests and activities in preference to or to the
exclusion of the Partnership (including, without limitation, the General
Partners and their Affiliates shall have no obligation to present business
opportunities to the Partnership).
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(e) The term "Affiliates" when used in Section 7.5(b) and (c) with
respect to the General Partners shall not include the MLP, any Group Member or
any Subsidiary of the Group Member.
(f) To the extent the Managing General Partner is merged or
liquidated, pursuant to Section 4.7, into Triarc, the restrictions contained in
Section 7.5(a) shall no longer apply to the Managing General Partner and the
Managing General Partner may engage in any activity other than a Restricted
Activity. The restrictions contained in Section 7.5(a), even after a merger or
liquidation of the Managing General Partner, shall continue to apply to the
Special General Partner.
7.6 Loans from the General Partners; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the
General Partners.
(a) The General Partners or any of their Affiliates thereof may lend
to the MLP or any Group Member, and the MLP or any Group Member may borrow from
the General Partners or any of their Affiliates, funds needed or desired by the
MLP or the Group Member for such periods of time and in such amounts as the
Managing General Partner may determine; provided, however, that in any such case
the lending party may not charge the borrowing party interest at a rate greater
than the rate that would be charged the borrowing party or impose terms less
favorable to the borrowing party than would be charged or imposed on the
borrowing party by unrelated lenders on comparable loans made on an arms'-length
basis (without reference to the lending party's financial abilities or
guarantees). The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 7.6(a)
and Section 7.6(b), the term "Group Member" shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, the
General Partners or any of their Affiliates and any Group Member, the General
Partners or any of their Affiliates may borrow from the Partnership, funds on
terms and conditions established in the sole discretion of the Managing General
Partner; provided, however, that the Partnership may not charge the Group
Member, General Partners or their Affiliates interest at a rate less than the
rate that would be charged to the Group Member, the General Partners or any of
their Affiliates by unrelated lenders on comparable loans; provided, however,
that notwithstanding anything else herein contained, the Partnership is
permitted to make the Triarc Loan substantially on the terms described in the
Registration Statement. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create any right
or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter into an
Agreement with any of its Affiliates to, render services to a Group Member or to
the Managing General Partner in the discharge of its duties as a general partner
of the Partnership. Any services rendered to a Group Member by the Managing
General Partner (other than services it renders in its capacity as Managing
General Partner) or any of its Affiliates shall be on terms that are fair and
reasonable to
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the Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The provisions of
Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).
(d) Any Group Member may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partners nor any of their Affiliates shall
sell, transfer or convey any property to, or purchase any property from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.1 and 5.2, the Conveyance and
Contribution Agreement and any other transactions described in or contemplated
by the Registration Statement, (ii) any transaction approved by Special
Approval, (iii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties, or (iv) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership.
(f) The General Partners and their Affiliates will have no
obligation to permit the MLP or any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing with such use, nor
shall there be any obligation on the part of the General Partners or their
Affiliates to enter into such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened
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to be involved, as a party or otherwise, by reason of its status as an
Indemnitee, provided, that in each case the Indemnitee acted in good faith and
in a manner that such Indemnitee reasonably believed to be in, or not opposed
to, the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful;
provided, further, no indemnification pursuant to this Section 7.7 shall be
available to the General Partners with respect to their obligations incurred
pursuant to the Underwriting Agreement or the Conveyance and Contribution
Agreement (other than obligations incurred by the Managing General Partner on
behalf of the Partnership or the MLP). The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, it being agreed that the General Partners shall not
be personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 7.7(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
Managing General Partner or its Affiliates for the cost of) insurance, on behalf
of the General Partners, their Affiliates and such other Persons as the Managing
General Partner shall determine, against any liability that may be asserted
against or expense that may be incurred by such Person in connection with the
Partnership's activities or such Person's activities on behalf of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit
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plan in the performance of its duties for a purpose reasonably believed by it to
be in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is in, or not opposed to, the best interests of
the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair (i) the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
or (ii) the obligations of the Partnership to indemnify any such Indemnitee
under and in accordance with the provisions of this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Units, for losses sustained or liabilities incurred as
a result of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as Managing General
Partner set forth in Section 7.1(a), the Managing General Partner may exercise
any of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents, and the
General Partners shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by the Managing General Partner in good
faith.
(c) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partners, and the Partnership's and General Partners' directors,
officers and employees under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
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7.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
one of the General Partners or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partners or their Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of the MLP
Agreement, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The Managing General Partner shall be authorized but not required
in connection with its resolution of such conflict of interest to seek Special
Approval of such resolution. Any conflict of interest and any resolution of such
conflict of interest shall be conclusively deemed fair and reasonable to the
Partnership if such conflict of interest or resolution is (i) approved by
Special Approval, (ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iii)
fair to the Partnership, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership). The Managing General
Partner may also adopt a resolution or course of action that has not received
Special Approval. The Managing General Partner (including the Audit Committee in
connection with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and in
connection with its resolution of any conflict of interest to consider (A) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
Managing General Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the Managing General Partner (including the Audit
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the Managing General Partner, the resolution,
action or terms so made, taken or provided by the Managing General Partner with
respect to such matter shall not constitute a breach of this Agreement or any
other agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the Managing General Partner or any of its Affiliates is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion," that it deems "necessary or appropriate" or "necessary or
advisable" or under a grant of similar authority or latitude, except as
otherwise provided herein, the Managing General Partner or such Affiliate shall
be entitled to consider only such interests and factors as it desires and shall
have no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, the Limited Partner or, any Limited Partner
or any Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is
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a reference to "sole discretion" or "discretion") unless another express
standard is provided for, or (iii) in "good faith" or under another express
standard, the Managing General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, the MLP Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the Managing General Partner or such Affiliate
consistent with the standards of "reasonable discretion" set forth in the
definitions of Available Cash shall not constitute a breach of any duty of the
General Partner to the Partnership, the Limited Partner or any limited partner
of the Limited Partner. The Managing General Partner shall have no duty, express
or implied, to sell or otherwise dispose of any asset of the Partnership Group
other than in the ordinary course of business. No borrowing by any Group Member
or the approval thereof by the Managing General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the Partnership or the
Limited Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (A) enable distributions to the General
Partners or their Affiliates (including in their capacities as Limited Partners)
to exceed 2% of the total amount distributed to all partners or (B) hasten the
expiration of the "Subordination Period" under the MLP Agreement or the
conversion of any Subordinated Units in the MLP into Common Units in the MLP.
(c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Limited Partner hereby authorizes the Managing General
Partner, on behalf of the Partnership as a partner of a Group Member, to approve
of actions by the general partner of such Group Member similar to those actions
permitted to be taken by the Managing General Partner pursuant to this Section
7.9.
7.10 Other Matters Concerning the Managing General Partner.
(a) The Managing General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the Managing General Partner reasonably believes to
be within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
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(c) The Managing General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited, to the extent permitted by law, as required to permit the
Managing General Partner to act under this Agreement or any other Agreement
contemplated by this Agreement and to make any decision pursuant to the
authority prescribed in this Agreement, so long as such action is reasonably
believed by the Managing General Partner to be in, or not inconsistent with, the
best interests of the Partnership.
7.11 Indemnification of National Propane SGP, Inc. by National Propane
Corporation.
National Propane Corporation (and after the Triarc Merger, Triarc) hereby
agrees to indemnify, defend and hold harmless National Propane SGP, Inc. from
and against any liabilities, losses or damages it may suffer or incur as a
result of the status of National Propane SGP, Inc. as a general partner of the
Partnership, the MLP or any other Group Member or for any other reason (whether
by operation of law, contract or agreement or otherwise) arising from any
liability with respect to the Notes or the Bank Credit Facility (or arising
under any document or instrument relating thereto), any liability assumed by, or
purported to be assumed by, the MLP or any member of the Partnership Group from
National Propane Corporation or National Propane SGP, Inc., any account payable
or other trade payable, or any other liability of any nature whatsoever no
matter how or when arising. The conversion of the Managing General Partner's
Unsubordinated General Partner Interest into a limited partner interest,
pursuant to Section 11.1(d), shall not affect National Propane Corporation's
indemnification obligation to National Propane SGP, Inc.
7.12 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner and any officer of the Managing General Partner authorized by
the Managing General Partner to act on behalf of and in the name of Partnership
has full power and authority to encumber, sell or otherwise use in any manner
any and all assets of the Partnership and to enter into any authorized contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the Partnership's
sole party in interest, both legally and beneficially. Each Limited Partner
hereby waives any and all defenses or other remedies that may be available
against such Person to contest, negate or disaffirm any action of the Managing
General Partner or any such officer in connection with any such dealing. In no
event shall any Person dealing with the Managing General Partner or any such
officer or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the Managing General Partner or any such officer or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the Managing
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General Partner or its representatives shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (a) at the time
of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting.
The Managing General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Limited Partners any information required to be provided pursuant
to Section 3.3(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
8.2 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year.
ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns.
The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income and deductions
and other items shall be on the accrual method of accounting for federal income
tax purposes.
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9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of the
Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the Managing
General Partner's determination that such revocation is in the best interests of
the Limited Partners.
(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing General
Partner shall determine whether the Partnership should make any other elections
permitted by the Code.
9.3 Tax Controversies.
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in Section 6231 of the Code)
and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with the Managing General
Partner and to do or refrain from doing any or all things reasonably required by
the Managing General Partner to conduct such proceedings.
9.4 Withholding.
Notwithstanding any other provision of this Agreement, the Managing
General Partner is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may be treated as a distribution of cash pursuant to Section 6.3
in the amount of such withholding from such Partner.
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ARTICLE X
Admission of Partners
10.1 Admission of the General Partners and Limited Partners.
(a) The General Partners were previously admitted as the General
Partners and as Limited Partners and the MLP as Limited Partners. Upon the
conveyance referred to in Section 5.2(a), the General Partners shall be continue
as general partners and limited partners of the Partnership.
(b) Upon the transfer referred to in Section 5.2(b), the MLP shall
become the sole Limited Partner and the General Partners shall cease to be
Limited Partners of the Partnership.
10.2 Admission of Substituted Limited Partners.
Any person that is the successor in interest to a Limited Partner as
described in Section 4.3 shall be admitted to the Partnership as a Limited
Partner upon (a) furnishing to the Managing General Partner (i) acceptance in
form satisfactory to the Managing General Partner of all of the terms and
conditions of this Agreement and (ii) such other documents or instruments as may
be required to effect its admission as a Limited Partner in the Partnership and
(b) obtaining the consent of the Managing General Partner, which consent may be
given or withheld in the Managing General Partner's sole discretion. Such Person
shall be admitted to the Partnership as a Limited Partner immediately prior to
the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.
10.3 Admission of Successor or Transferee General Partners.
A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest as a general partner in the Partnership pursuant to Section 4.2 who is
proposed to be admitted as a successor General Partner shall, subject to
compliance with the terms of Section 11.3, if applicable, be admitted to the
Partnership as a General Partner, effective immediately prior to the withdrawal
or removal of the General Partner pursuant to Section 11.1 or 11.2 or the
transfer of the General Partner's Partnership Interest as a general partner in
the Partnership pursuant to Section 4.2; provided, however, that no such
successor shall be admitted to the Partnership and such successor has executed
and delivered such other documents or instruments as may be required to effect
such admission. Any such successor shall, subject to the terms hereof, carry on
the business of the Partnership without dissolution.
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10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partners, the MLP or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement (other than the Capital Contributions pursuant
to Section 5.2) shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the Managing General Partner (i) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including the granting of the power of attorney
granted in Section 2.6 and (ii) such other documents or instruments as may be
required in the discretion of the Managing General Partner to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4
but except as provided in Section 10.1, no Person shall be admitted as an
Additional Limited Partner without the consent of the Managing General Partner,
which consent may be given or withheld in the Managing General Partner's
discretion. The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is recorded as
such in the books and records of the Partnership, following the consent of the
Managing General Partner to such admission.
10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the Managing
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an
amendment to the Certificate of Limited Partnership, and the Managing General
Partner may for this purpose, among others, exercise the power of attorney
granted pursuant to Section 2.6.
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partners.
(a) The Managing General Partner shall be deemed to have withdrawn
from the Partnership upon the occurrence of any one of the following events
(each such event herein referred to as an "Event of Withdrawal");
(i) the Managing General Partner voluntarily withdraws from
the Partnership by giving written notice to the other Partners;
(ii) the Managing General Partner transfers all of its rights
as Managing General Partner pursuant to Section 4.2;
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(iii) the Managing General Partner is removed pursuant to
Section 11.2;
(iv) the managing general partner of the MLP withdraws from,
or is removed as the managing general partner of, the MLP.
(v) the Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary bankruptcy
petition for relief under Chapter 7 of the United States Bankruptcy Code;
(C) files a petition or answer seeking for itself a liquidation,
dissolution or similar relief (but not a reorganization) under any law;
(D) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the Managing General
Partner in a proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(v); or (E) seeks, consents to or acquiesces in the
appointment of a trustee (but not a debtor in possession), receiver or
liquidator of the General Partner or of all or any substantial part of its
properties; provided however that none of the events listed in (A)-(E)
hereof shall be an Event of Default if (x) such event takes place after
the Triarc Merger, (y) the Managing General Partner is Triarc or its
Affiliates, and (z) the Special General Partner is a non-bankrupt General
Partner of the Partnership and the MLP at the time of the events described
in this Section 11.1(a)(v) occur;
(vi) a final and non-appealable order of relief under Chapter
7 of the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or involuntary petition
by or against the Managing General Partner; or
(vii) (A) in the event the Managing General Partner is a
corporation, a certificate of dissolution or its equivalent is filed for
the Managing General Partner, or 90 days expire after the date of notice
to the Managing General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation; (B) in the event the Managing General Partner is a
partnership, the dissolution and commencement of winding up of the
Managing General Partner; (C) in the event the Managing General Partner is
acting in such capacity by virtue of being a trustee of the trust, the
termination of the trust; (D) in the event the Managing General Partner is
a natural person, his death or adjudication of incompetency; (E) and
otherwise in the event of the termination of the Managing General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv) (with respect to
withdrawal), (v), (vi) or (vii) (A), (B), (C) or (E) occurs, the withdrawing
Managing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 11.1 shall result in the withdrawal of the
Managing General Partner from the Partnership.
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(b) Withdrawal of the Managing General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall not constitute a breach of
this Agreement under the following circumstances: (i) at any time during the
period beginning on the Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on June 30, 2006, the Managing General Partner voluntarily
withdraws by giving at least 90 day advance notice of its intention to withdraw
to the Limited Partners; provided, that prior to the effective date of such
withdrawal, all the Limited Partners approve such withdrawal and the Managing
General Partner delivers to the Partnership an Opinion of Counsel ("Withdrawal
Opinion of Counsel") that such withdrawal (following the selection of the
successor Managing General Partner) would not result in the loss of the limited
liability of any Limited Partner, any limited partner of the MLP, or any limited
partner of any Group Member or cause the MLP or the Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes; (ii) at any time after 12:00 midnight, Eastern
Standard Time, on June 30, 2006, the Managing General Partner voluntarily
withdraws by giving at least 90 days' advance notice to the Limited Partners,
such withdrawal to take effect on the date specified in such notice; or (iii) at
any time that the Managing General Partner ceases to be the Managing General
Partner pursuant to Section 11.1(a)(ii), (iii) or (iv). If the Managing General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i) or Section
11.1(a)(i) of the MLP Agreement, a majority in interest of the Limited Partners
may, prior to the effective date of such withdrawal or removal, elect a
successor Managing General Partner; provided, however, that such successor shall
be the same Person, if any, that is elected by the limited partners of the MLP
pursuant to Section 11.1 of the MLP Agreement as the successor to the Managing
General Partner in its capacity as Managing General Partner of the MLP. If,
prior to the effective date of the Managing General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor Managing
General Partner elected in accordance with the terms of this Section 11.1 shall
be subject to the provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner shall
also be an Event of Withdrawal of the Special General Partner from the
Partnership and the MLP and as general partner of other Group Members at the
same time and upon the same conditions as set forth in Section 11.1(b) with
respect to the Managing General Partner.
(d) The occurrence after the Triarc Merger of an event otherwise
described in Section 11.1(a)(iv)(A), (B), (C), (D) and (E) that is not an Event
of Withdrawal pursuant to Section 11.1(a)(iv) shall result in (i) the conversion
of Triarc's 1.0101% general partner interest into a limited partner interest
having the same rights to distributions of cash and allocations of income, gain,
loss or deduction and obligation to restore its deficit capital account as
provided for in Section 12.8 as the holder of the 1.0101% general partner
interests were entitled and/or obligated but having no rights to participate in
the management of the Partnership, (ii) the Partnership shall continue without
the approval of the Limited Partners and (iii) the Special General Partner shall
become the Managing General Partner of the Partnership and shall have all
rights, authority and powers given to the Managing General Partner pursuant to
this Agreement.
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11.2 Removal of the Managing General Partner.
The Managing General Partner shall be removed if such Managing General
Partner is removed as a Managing General Partner of the MLP pursuant to Section
11.2 of the MLP Agreement. Such removal shall be effective concurrently with the
effectiveness of the removal of such Managing General Partner as the Managing
General Partner of the MLP pursuant to the terms of the MLP Agreement. If a
successor Managing General Partner is elected in connection with the removal of
such Managing General Partner as a Managing General Partner of the MLP, such
successor Managing General Partner shall, upon admission pursuant to Article X,
automatically become a successor Managing General Partner of the Partnership.
The admission of any such successor Managing General Partner to the Partnership
shall be subject to the provisions of Section 10.3.
11.3 Interest of Departing Partner and Successor General Partner.
(a) The Partnership Interest of a Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall (unless
it is otherwise required to be converted into Common Units pursuant to Section
11.3(b) of the MLP Agreement or 11.1(d) of this Agreement) be purchased by the
successor to the Departing Partner for cash in the manner specified in the MLP
Agreement. Such purchase (or conversion into Common Units, as applicable) shall
be a condition to the admission to the Partnership of the successor as the
General Partner. Any successor General Partner shall indemnify the Departing
General Partner as to all debts and liabilities of the Partnership arising on or
after the effective date of the withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership.
11.4 Withdrawal of the Limited Partner.
Without the prior written consent of the Managing General Partner, which
may be granted or withheld in its sole discretion, and except as provided in
Section 10.1, no Limited Partner shall have the right to withdraw from the
Partnership.
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ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the Managing General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or 11.2, the Partnership
shall not be dissolved and such successor Managing General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner as
provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor
is elected and an Opinion of Counsel is received as provided in Section 11.1(b)
or 11.2 and such successor is admitted to the Partnership pursuant to Section
10.3;
(c) an election to dissolve the Partnership by the Managing General
Partner that is approved by all of the Limited Partners;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(f) the dissolution of the MLP.
12.2 Continuation of the Business of the Partnership After Dissolution.
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the Managing General Partner as provided
in Section 11.1(a)(i) or (iii) and following a failure of the Limited Partners
to appoint a successor Managing General Partner as provided in Section 11.1 or
11.2, then within 90 days thereafter or (b) dissolution of the Partnership upon
an event constituting an Event of Withdrawal pursuant to Section 11.1(a)(iv),
(v) or (vi) of the MLP Agreement, then, to the maximum extent permitted by law,
within 180 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as a Managing
General Partner a Person
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approved by the majority of the Limited Partners. In addition, upon dissolution
of the Partnership pursuant to Section 12.1(f), if the MLP is reconstituted
pursuant to Section 12.2 of the MLP Agreement, the reconstituted MLP may
(whether or not it is the sole limited partner), within 180 days after such
event of dissolution, as [(a)] Limited Partner, elect to reconstitute the
Partnership in accordance with the immediately preceding sentence. Upon any such
election by the Limited Partners, all Partners shall be bound thereby and shall
be deemed to have approved same. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind up its affairs. If such an election is so made,
then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former
Managing General Partner, then the interest of the former Managing General
Partner shall be purchased by the successor General Partner or converted
into Common Units of the MLP or purchased for cash by the MLP as provided
in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate of
limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the Managing General
Partner pursuant to Section 2.6; provided, that the right to approve a
successor General Partner and to reconstitute and to continue the business
of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of
the right would not result in the loss of limited liability of the Limited
Partners or any limited partner of the MLP and (y) neither the
Partnership, the reconstituted limited partnership nor any Group Member
would be treated as an association taxable as a corporation or otherwise
be taxable as an entity for federal income tax purposes upon the exercise
of such right to continue.
12.3 Liquidator.
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the Managing General Partner shall select one or more Persons to
act as Liquidator. The Liquidator (if other than the Managing General Partner)
shall be entitled to receive such compensation for its services as may be
approved by the Limited Partners. The Liquidator (if other than the Managing
General Partner) shall agree not to resign at any time without 15 days' prior
notice and may be removed at any time, with or without cause, by notice of
removal approved by the Limited Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by a majority in interest of the
Limited Partners. The right to approve a successor or substitute Liquidator in
the manner provided herein shall be deemed to refer also to any such successor
or
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substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
Managing General Partner under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of
such powers, other than the limitation on sale set forth in Section 7.3(a)) to
the extent necessary or desirable in the good faith judgment of the Liquidator
to carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public
or private sale or by distribution in kind to one or more Partners on such terms
as the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation of the Partnership's assets for a reasonable time if it
determines that an immediate sale of all or part of the Partnership's assets
would be impractical or would cause undue loss to the Partners. The Liquidator
may, in its absolute discretion, distribute the Partnership's assets, in whole
or in part, in kind if it determines that a sale would be impractical or would
cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent or is
otherwise not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of cash or other
assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess
of that required to discharge liabilities as provided in Section 12.4(b) shall
be distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation,
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of
such taxable year (or, if later, within 90 days after said date of such
occurrence).
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12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and property
as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
12.6 Return of Capital Contributions.
The General Partners shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of any Limited
Partner, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The Special
General Partner shall have no obligation to restore any negative balance in its
Capital Account upon the liquidation of the Partnership. The Managing General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
ARTICLE XIII
Amendment of Partnership Agreement
13.1 Amendment to be Adopted Solely by the Managing General Partner.
Each Partner agrees that the Managing General Partner, without the
approval of any Partner, may amend any provision of this Agreement, to execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
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(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing General
Partner, is necessary or advisable to qualify or continue the qualification of
the Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership and the MLP will not be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing General
Partner, (i) does not adversely affect the Limited Partners in any material
respect, (ii) is necessary or advisable to satisfy any requirements, conditions
or guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any federal
or state statute (including the Delaware Act), compliance with any of which the
Managing General Partner determines in its discretion to be in the best
interests of the Partnership and the Limited Partners, (iii) is required to
effect the intent expressed in the Registration Statement or the intent of the
provisions of this Agreement or is otherwise contemplated by this Agreement or
(iv) is required to conform the provisions of this Agreement with the provisions
of the MLP Agreement as the provisions of the MLP Agreement may be amended,
supplemented or restated from time to time;
(e) a change in the fiscal year or taxable year of the Partnership
and any changes that, in the discretion of the Managing General Partner, are
necessary or advisable as a result of a change in the fiscal year or taxable
year of the Partnership including, if the Managing General Partner shall so
determine, a change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partners or their directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made
by the Managing General Partner acting alone (including a conversion of a
general partner interest into a limited partner interest pursuant to Section 4.6
hereof);
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
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(i) an amendment that, in the discretion of the Managing General
Partner, is necessary or advisable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability
company or other entity in connection with the conduct by the Partnership of
activities permitted by the terms of Section 2.4;
(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures.
Except as provided in Section 13.1, all amendments to this Agreement shall
be made in accordance with the following requirements: Amendments to this
Agreement may be proposed only by or with the consent of the Managing General
Partner which consent may be given or withheld in its sole discretion. A
proposed amendment shall be effective upon its approval by a majority in
interest of the Limited Partners.
ARTICLE XIV
Merger
14.1 Authority.
The Partnership may merge or consolidate with one or more corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this Article XIV.
14.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the Managing General Partner. If the Managing
General Partner shall determine, in the exercise of its discretion, to consent
to the merger or consolidation, the Managing General Partner shall approve the
Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
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(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Managing General
Partner.
14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the Managing General
Partner, upon its approval of the Merger Agreement, shall direct that a copy or
a summary of the Merger Agreement be submitted to the Limited Partners for their
approval.
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(b) Except as provided in Section 14.3(d) The Merger Agreement shall
be approved upon receiving the approval of a majority in interest of the Limited
Partners.
(c) After such approval by the Limited Partners, and at any time
prior to the filing of the certificate of merger pursuant to Section 14.4, the
merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
14.4 Certificate of Merger.
Upon the required approval by the Managing General Partner and the Limited
Partners of a Merger Agreement, a certificate of merger shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities
and all other things and causes of action belonging to each of those
business entities shall be vested in the Surviving Business Entity and
after the merger or consolidation shall be the property of the Surviving
Business Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not revert
and is not in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and may
be enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XIV
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.
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ARTICLE XV
General Provisions
15.1 Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when received by it at the principal
office of the Partnership referred to in Section 2.3.
15.2 References.
Except as specifically provided as otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
15.3 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.4 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.5 Integration.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
15.6 Creditors.
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
15.7 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
57
<PAGE>
<PAGE>
15.8 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, independently of the signature of any other
party.
15.9 Applicable Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
15.10 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Managing General Partner:
National Propane Corporation
By: ________________________________
Name:
Title:
Special General Partner:
National Propane SGP, Inc.
By: ________________________________
Name:
Title:
58
<PAGE>
<PAGE>
LIMITED PARTNERS:
NATIONAL PROPANE PARTNERS, L.P.
By: National Propane Corporation, as
Managing General Partner
By: ________________________________
Name:
Title:
NATIONAL PROPANE CORPORATION
By: ________________________________
Name:
Title:
NATIONAL PROPANE SGP, INC.
By: ________________________________
Name:
Title:
59
<PAGE>
<PAGE>
[Letterhead of Paul, Weiss, Rifkind, Wharton & Garrison]
[1285 Avenue of the Americas]
[New York, New York 10019]
[212-373-3000]
June 25, 1996
National Propane Partners, L.P
Suite 1700, IES Tower
200 1st Street, S.E.
Cedar Rapids, Iowa 52401
National Propane Partners, L.P.
Registration Statement on Form S-1
File No. 333-2768
Ladies and Gentlemen:
In connection with the above-captioned Registration Statement on Form S-1
(the "Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations promulgated thereunder (the "Rules"), we have been requested to
render our opinion as to the legality of 7,119,047 common units (the "Common
Units") representing limited partner interests in National Propane Partners,
L.P. (the "Partnership") (including 928,571 Common Units issuable upon exercise
of the underwriters' over-allotment option).
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"): the Registration Statement (including
all amendments thereto), the form of Purchase Agreement and the Certificate of
Limited
<PAGE>
<PAGE>
2
Partnership of the Partnership. In addition, we have examined such statutes and
regulations and such other certificates, agreements and documents as we deemed
relevant and necessary as a basis for the opinions hereinafter expressed.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as certified, photostatic, reproduced
or conformed copies of valid existing agreements or other documents, the
authenticity of all such latter documents and the legal capacity of all
individuals who have executed any of the Documents. As to certain matters of
fact, we have relied on representations, statements or certificates of officers
of the managing general partner of the Partnership.
Based upon the foregoing, and subject to the assumptions set forth herein,
we are of the opinion that the Common Units when issued and delivered and paid
for as contemplated by the Registration Statement and the Purchase Agreement,
will be validly issued, fully paid (to the extent required by the Agreement of
Limited Partnership of the Partnership) and non-assessable, except as such
non-assessability may be affected by the matters set forth in the Registration
Statement under the caption "The Partnership Agreement - Limited Liability."
Our opinions expressed above are limited to the Delaware Revised Uniform
Limited Partnership Act, as amended. Our opinions are rendered only with respect
to the laws, and the rules, regulations and orders thereunder, which are
currently in effect.
<PAGE>
<PAGE>
3
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our name under the caption "Legal Matters" in
the prospectus included in the Registration Statement. In giving this consent,
we do not thereby agree that we come within the category of persons whose
consent is required by the Act or the Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
<PAGE>
[Letterhead of Andrews & Kurth L.L.P.]
212-850-2800
June 21, 1996
National Propane Partners, L.P.
Suite 1700, IES Tower
200 1st Street, S.E.
P.O. Box 2067
Cedar Rapids, Iowa 52401-2067
Tax Opinion
Gentlemen:
We have acted as special counsel to National Propane Partners, L.P, a
Delaware limited partnership (the "Partnership"), in connection with the
offering of up to 7,119,047 common units representing limited partner interests
("Common Units") in the Partnership pursuant to the Registration Statement on
Form S-1 of the Partnership (Registration No. 333-2768) relating to the Common
Units (the "Registration Statement").
All statements of legal conclusions contained in the discussion under the
caption "Tax Considerations" in the prospectus included in the Registration
Statement, unless otherwise noted, represent our opinion with respect to the
matters set forth therein.
In addition, based on the foregoing, we are of the opinion that the federal
income tax discussion in the prospectus included in the Registration Statement
with respect to those matters as to which no legal conclusions are provided is
an accurate discussion of such federal income tax matters (except for the
representations and statements of fact of the Partnership and its general
partners, included in such discussion, as to which we express no opinion).
We hereby consent to the references to our firm and this opinion contained
in the prospectus included in the Registration Statement.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
Andrews & Kurth L.L.P.
<PAGE>
<PAGE>
FCS&H Draft
06/24/96 Date:
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of June 26, 1996
among
NATIONAL PROPANE, L.P.,
THE FIRST NATIONAL BANK OF BOSTON,
as Administrative Agent and a Lender,
BANK OF AMERICA NT & SA,
as a Lender,
and
BA SECURITIES, INC.,
as Syndication Agent
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
i
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
ARTICLE I DEFINITIONS .................................................... 1
SECTION 1.01. Defined Terms ........................................... 1
SECTION 1.02. Terms Generally ......................................... 34
SECTION 1.03. Types of Borrowings ..................................... 34
ARTICLE II THE CREDITS ................................................... 35
SECTION 2.01. Commitment to Make Loans ................................ 35
SECTION 2.02. Loans ................................................... 35
SECTION 2.03. Notice of Borrowings .................................... 38
SECTION 2.04. Notes; Repayment of Loans ............................... 38
SECTION 2.05. Fees .................................................... 39
SECTION 2.06. Interest on Loans ....................................... 40
SECTION 2.07. Default Interest ........................................ 41
SECTION 2.08. Alternate Rate of Interest .............................. 41
SECTION 2.09. Termination and Reduction of Commitments ................ 42
SECTION 2.10. Conversion and Continuation of Tranche B Term
Borrowings ............................................. 43
SECTION 2.11. Mandatory Repayments and Prepayments .................... 45
SECTION 2.12. Optional Prepayments .................................... 47
SECTION 2.13. Reserve Requirements; Certain Changes in Circumstances .. 48
SECTION 2.14. Change in Legality ...................................... 50
SECTION 2.15. Indemnity ............................................... 50
SECTION 2.16. Pro Rata Treatment ...................................... 51
SECTION 2.17. Sharing of Setoffs ...................................... 51
SECTION 2.18. Payments ................................................ 52
SECTION 2.19. Taxes ................................................... 52
SECTION 2.20. Assignment of Commitments and Loans Under Certain
Circumstances .......................................... 54
SECTION 2.21. Letters of Credit ....................................... 55
ARTICLE III REPRESENTATIONS AND WARRANTIES ............................... 60
SECTION 3.01. Organization; Powers .................................... 60
SECTION 3.02. Authorization ........................................... 60
SECTION 3.03. Enforceability .......................................... 61
SECTION 3.04. Consents and Governmental Approvals ..................... 61
SECTION 3.05. Business; Financial Statements .......................... 61
<PAGE>
<PAGE>
ii
SECTION 3.06. No Material Adverse Change .............................. 62
SECTION 3.07. Title to Properties; Possession Under Leases ............ 63
SECTION 3.08. Subsidiaries ............................................ 63
SECTION 3.09. Litigation; Compliance with Laws ........................ 63
SECTION 3.10. Agreements .............................................. 64
SECTION 3.11. Federal Reserve Regulations ............................. 64
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act ............................................ 65
SECTION 3.13. Use of Proceeds ......................................... 65
SECTION 3.14. Tax Returns ............................................. 65
SECTION 3.15. No Material Misstatements ............................... 66
SECTION 3.16. Employee Benefit Plans .................................. 66
SECTION 3.17. Environmental and Safety Matters ........................ 67
SECTION 3.18. Security Interests ...................................... 68
SECTION 3.19. Solvency ................................................ 69
SECTION 3.20. Transactions with Affiliates ............................ 69
SECTION 3.21. Ownership ............................................... 69
SECTION 3.22. Insurance ............................................... 70
SECTION 3.23. Labor Relations ......................................... 70
SECTION 3.24. Changes, etc ............................................ 70
SECTION 3.25. Indebtedness ............................................ 71
SECTION 3.26. Transfer of Assets and Business ......................... 71
SECTION 3.27. Chief Executive Office .................................. 73
SECTION 3.28. Fixed Price Supply Contracts ............................ 73
SECTION 3.29. Trading and Inventory Policies .......................... 73
ARTICLE IV CONDITIONS OF LENDING ......................................... 73
SECTION 4.01. Effectiveness ........................................... 73
SECTION 4.02. All Extensions of Credit ................................ 80
SECTION 4.03. Tranche B Extensions of Credit .......................... 81
ARTICLE V ACCOUNTING; FINANCIAL STATEMENTS; INSPECTION ................... 82
SECTION 5.01. Accounting .............................................. 82
SECTION 5.02. Financial Statements .................................... 83
SECTION 5.03. Inspection .............................................. 88
ARTICLE VI BUSINESS AND FINANCIAL COVENANTS .............................. 88
SECTION 6.01. Indebtedness ............................................ 89
SECTION 6.02. Liens, etc .............................................. 92
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<PAGE>
iii
SECTION 6.03. Investments, Guaranties, etc ........................... 94
SECTION 6.04. Restricted Payments .................................... 95
SECTION 6.05. Transactions with Affiliates ........................... 96
SECTION 6.06. Prohibited Stock and Indebtedness ...................... 96
SECTION 6.07. Consolidation, Merger, Sale of Assets, etc ............. 97
SECTION 6.08. Partnership or Corporate Existence, etc.; Business ..... 102
SECTION 6.09. Payment of Taxes and Claims ............................ 102
SECTION 6.10. Compliance with ERISA .................................. 103
SECTION 6.11. Maintenance of Properties; Insurance ................... 103
SECTION 6.12. Operative Agreements; Collateral Documents ............. 104
SECTION 6.13. Chief Executive Office ................................. 104
SECTION 6.14. Recordation ............................................ 105
SECTION 6.15. Covenant to Secure Notes Equally ....................... 105
SECTION 6.16. Compliance with Laws ................................... 105
SECTION 6.17. Further Assurances ..................................... 106
SECTION 6.18. Subsidiaries ........................................... 107
SECTION 6.19. Certain Post-Closing Matters ........................... 109
SECTION 6.20. Use of Proceeds ........................................ 109
SECTION 6.21. Accounting Changes ..................................... 109
SECTION 6.22. Certain Real Property .................................. 109
SECTION 6.23. Sale and Lease-Back Transactions ....................... 110
SECTION 6.24. Acquisitions ........................................... 111
SECTION 6.25. Impairment of Security Interests ....................... 111
SECTION 6.26. Limitation on Restrictions on Subsidiary Dividends, etc 111
SECTION 6.27. No Other Negative Pledges .............................. 111
SECTION 6.28. Sales of Receivables ................................... 112
SECTION 6.29. Fixed Price Supply Contracts; Certain Policies ......... 112
SECTION 6.30. Certain Operations ..................................... 112
SECTION 6.31. Funded Debt to Cash Flow; Net Working Capital .......... 112
SECTION 6.32. Independent Corporate Existence ........................ 113
ARTICLE VII EVENTS OF DEFAULT ........................................... 114
SECTION 7.01. Events of Default ...................................... 114
SECTION 7.02. Remedies ............................................... 119
ARTICLE VIII THE AGENTS AND ISSUING BANK ................................ 119
SECTION 8.01. Appointment and Authorization .......................... 119
SECTION 8.02. Liability of Agents .................................... 120
SECTION 8.03. Action by Agents ....................................... 121
SECTION 8.04. Successor Agents ....................................... 121
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iv
SECTION 8.05. Agent and Affiliate .................................... 121
SECTION 8.06. Indemnification ........................................ 121
SECTION 8.07. Credit Decision ........................................ 122
SECTION 8.08. Trust Agreement ........................................ 122
ARTICLE IX MISCELLANEOUS ................................................ 122
SECTION 9.01. Notices ................................................ 122
SECTION 9.02. Survival of Agreement .................................. 123
SECTION 9.03. Binding Effect ......................................... 123
SECTION 9.04. Successors and Assigns ................................. 123
SECTION 9.05. Expenses; Indemnity .................................... 127
SECTION 9.06. Right of Setoff ........................................ 129
SECTION 9.07. Applicable Law ......................................... 129
SECTION 9.08. Waivers; Amendment ..................................... 129
SECTION 9.09. Interest Rate Limitation ............................... 130
SECTION 9.10. Entire Agreement ....................................... 131
SECTION 9.11. Severability ........................................... 131
SECTION 9.12. Counterparts ........................................... 131
SECTION 9.13. Headings ............................................... 131
SECTION 9.14. Jurisdiction; Consent to Service of Process;
Waiver of Jury Trial .................................. 131
SECTION 9.15. Legend ................................................. 132
Schedules
- ---------
Schedule 1.01 Restricted Subsidiaries
Schedule 3.05(d) Undisclosed Liabilities
Schedule 3.07 Real Property
Schedule 3.08 Subsidiaries
Schedule 3.09 Compliance with Laws
Schedule 3.10 Material Contracts
Schedule 3.14 Tax Return Extensions
Schedule 3.17 Environmental Matters
Schedule 3.18 Security Interests
Schedule 3.20 Transactions with Affiliates
Schedule 3.26 Filing Jurisdictions
Schedule 3.28 Fixed Price Supply Contracts
Schedule 4.01(d)(vii) Required Mortgages
Schedule 4.01(u) Environmental Review
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<PAGE>
v
Schedule 6.01(g) Indebtedness
Schedule 6.02 Liens
Schedule 6.19 Required Environmental Remediation
Schedule 6.32 Independent Corporate Existence
Exhibits
- --------
Exhibit A Commitments
Exhibit B-1 Form of Tranche A Revolving Credit Note
Exhibit B-2 Form of Tranche B Note
Exhibit C-1 Form of General Partner Guarantee Agreement
Exhibit C-2 Form of Subsidiaries Guarantee Agreement
Exhibit D-1 Form of Partners Security Agreement
Exhibit D-2 Form of Borrower Security Agreement
Exhibit E Form of Intercompany Note
Exhibit F Form of Agency Account Agreement
Exhibit G-1 Form of Mortgage
Exhibit G-2 Form of Deed of Trust
Exhibit H Form of Assignment and Acceptance
Exhibit I-1 Form of Opinion of Paul, Weiss, Rifkind, Wharton &
Garrison
Exhibit I-2 Form of Opinion of Andrews & Kurth
Exhibit I-3 Form of Opinion of Local Counsel to Borrower
Exhibit J Form of Cash Collateral Agreement
Exhibit K Form of Perfection Certificate
Exhibit L Form of Supplemental Agreement
Exhibit M Form of Notice of Borrowing
Exhibit N Form of Compliance Certificate
Exhibit O Form of Triarc Note
Exhibit P Form of Trust Agreement
<PAGE>
<PAGE>
CREDIT AGREEMENT dated as of June 26, 1996, among NATIONAL PROPANE, L.P., a
Delaware limited partnership, THE FIRST NATIONAL BANK OF BOSTON, as
Administrative Agent and a Lender, BANK OF AMERICA NT & SA, as a Lender, and BA
SECURITIES, INC., as Syndication Agent.
The Borrower (such term, and all other capitalized terms in this paragraph,
being used as hereinafter defined) has requested the Lenders to extend credit to
the Borrower in the aggregate principal amount of up to $55,000,000, of which up
to $15,000,000 may be extended under Facility A and up to $40,000,000 may be
extended under Facility B. The Lenders are willing to extend such credit to the
Borrower upon the terms and subject to the conditions set forth herein.
Accordingly, the Borrower, the Lenders, the Agents and the Issuing Bank agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Revolving Loan or ABR Tranche B Term Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Tranche A Revolving Loan" shall mean any Tranche A Revolving Loan
bearing interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Tranche B Revolving Loan" shall mean any Tranche B Revolving Loan
bearing interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Tranche B Term Loan" shall mean any Tranche B Term Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, the rate, rounded upwards to the nearest 1/100%,
obtained by dividing (a) the LIBO Rate for such Interest Period by (b) an amount
equal to 1 minus the Statutory Reserves, if any; provided, however, that if any
time during such
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2
Interest Period the Statutory Reserves applicable to such Eurodollar Borrowing
changes, the Adjusted LIBO Rate shall automatically be adjusted to reflect such
change, effective as of the date of such change.
"Administrative Agent" shall mean The First National Bank of Boston, in its
capacity as administrative agent for the Lenders hereunder, and its successors
in such capacity.
"Administrative Questionnaire" shall mean, with respect to each Lender, the
administrative questionnaire in the form submitted to such Lender by the
Administrative Agent and returned to the Administrative Agent duly completed by
such Lender.
"Affiliate", as applied to any Person, shall mean any other Person directly
or indirectly controlling or controlled by or under common control with such
Person, provided that (i) 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, (ii) as applied to the
Borrower, the term "Affiliate" shall include, without limitation, Triarc, each
General Partner and the Public Partnership, and (iii) neither the Lenders nor
any other Person which is an institution shall be deemed to be an Affiliate of
the Borrower solely by reason of ownership of the Facilities Obligations or
other securities issued in exchange for the Facilities Obligations or by reason
of having the benefits of any agreements or covenants contained in this
Agreement or the other Operative Agreements.
"After Acquired Property" shall have the meaning assigned to such term in
Section 6.22.
"Agency Account Agreement" shall mean an agreement among any Lender or
other bank, the Borrower or any Restricted Subsidiary, and the Administrative
Agent in substantially the form attached hereto as Exhibit F.
"Agency Agreement" shall mean an agreement between the Managing General
Partner and the Borrower dated as of the Closing Date in form and substance
satisfactory in all respects to the Agents.
"Agents" shall mean the Administrative Agent and the Syndication Agent.
"Aggregate Cost of Unmortgaged Property" shall have the meaning assigned to
such term in Section 6.22.
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3
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Federal Funds Effective Rate in effect on such day plus
0.50% and (b) the Prime Rate in effect on such day. If the Administrative Agent
shall have determined (which determination shall be conclusive absent
demonstrable error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively, without notice to the Borrower.
"Applicable Margin" shall mean (a) with respect to any Eurodollar Tranche A
Revolving Loan, the Applicable Tranche A Eurodollar Margin, (b) with respect to
any ABR Tranche B Revolving Loan or ABR Tranche B Term Loan, the Applicable
Tranche B ABR Margin and (c) with respect to any Eurodollar Tranche B Revolving
Loan or Eurodollar Tranche B Term Loan, the Applicable Tranche B Eurodollar
Margin.
"Applicable Tranche A Eurodollar Margin" shall mean, with respect to any
Tranche A Revolving Loan outstanding on any day, (a) 1.25%, if such day is prior
to the Pricing Adjustment Date; and (b) if such day is on or after the Pricing
Adjustment Date:
(i) 1.000%, if such day falls within a Level I Pricing Period;
(ii) 1.125%, if such day falls within a Level II Pricing Period;
(iii) 1.250%, if such day falls within a Level III Pricing Period;
(iv) 1.375% if such day falls within a Level IV Pricing Period; and
(v) 1.500% if such day falls within a Level V Pricing Period.
"Applicable Tranche B ABR Margin" shall mean, with respect to any Tranche B
Revolving Loan or Tranche B Term Loan outstanding on any day, (a) 0.250% if such
day falls within a Level V Pricing Period and (b) otherwise, 0.000%.
"Applicable Tranche B Eurodollar Margin" shall mean, with respect to any
Tranche B Revolving Loan or Tranche B Term Loan outstanding on any day, (a)
1.50%, if such day is prior to the Pricing Adjustment Date; and (b) if such day
is on or after the Pricing Adjustment Date:
(i) 1.250%, if such day falls within a Level I Pricing Period;
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4
(ii) 1.375%, if such day falls within a Level II Pricing Period;
(iii) 1.50%, if such day falls within a Level III Pricing Period;
(iv) 1.625% if such day falls within a Level IV Pricing Period; and
(v) 1.750% if such day falls within a Level V Pricing Period.
"Assets" shall mean the assets conveyed to the Borrower pursuant to the
Conveyance Agreements.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit H or such other form as shall be approved by the
Administrative Agent.
"Audited Financial Statements" shall have the meaning assigned to such term
in Section 3.05(d).
"Available Cash", with respect to any calendar quarter, shall mean (a) the
sum of (i) all cash of the Borrower and the Restricted Subsidiaries on hand at
the end of such quarter and (ii) all additional cash of the Borrower and the
Restricted Subsidiaries on hand through available borrowings under Facility A
made after the end of such quarter (provided that such borrowings shall in no
event exceed available borrowings under Facility A as of the end of such
quarter), less (b) (I) any cash reserves that the Managing General Partner shall
determine to be necessary or appropriate in its reasonable discretion to (A)
provide for the proper conduct of the business of the Borrower and the
Restricted Subsidiaries (including cash reserves for future capital
expenditures) or (B) provide funds for distributions under Sections 6.4(a)(i),
(ii), and (iii) or 6.4(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 and the Note Agreement), mortgage, security
agreement, debt instrument or other agreement or obligation to which the
Borrower or any Restricted Subsidiary is a party or its assets are subject,
(including the payment of principal, Make Whole Amount (as defined in the Note
Agreement), Premium Amount (as defined in the Note Agreement) or premium, if
applicable, and interest) of the Borrower in respect of the Mortgage Notes, (II)
all funds and the amount of all Cash Equivalents deposited by the Borrower and
the Restricted Subsidiaries with an independent unrelated transfer in
con_________ with any Defeased Indebtedness (or contemplated by clause (a) of
the definitions thereof) and (III) all amounts which a Restricted Subsidiary is
prohibited from dividending or distributing to the Borrower; provided that
Available Cash shall not include amounts received, directly or indirectly, from
prepayments of the Triarc Note other than amounts scheduled to have been
received on or prior to the date of determination of Available Cash pursuant to
the terms of the Triarc Note; provided further that Available Cash shall be
reduced
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5
by, 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 the Borrower 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 Facilities and any 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 Mortgage 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
Mortgage 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 Mortgage Notes and other such Indebtedness secured equally and
ratably with the Mortgage Notes in such principal payment quarter; in the second
calendar quarter immediately preceding a principal payment quarter, a reserve
(including the corresponding reserved amount from the prior quarter) equal to at
least 50% of the aggregate amount of all principal to be paid in respect of such
Mortgage Notes and other such Indebtedness in such principal payment quarter;
and in the calendar quarter immediately preceding a principal payment quarter, a
reserve (including the corresponding reserved amount from the prior two
quarters) equal to at least 75% of the aggregate amount of all principal to be
paid in respect of such Mortgage Notes and other such Indebtedness in such
principal payment quarter, and (z) with respect to the Mortgage Notes and any
other Indebtedness secured equally and ratably with the Mortgage 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 Mortgage
Notes and such other Indebtedness a reserve equal to at least 50% of the
aggregate amount of all principal to be paid in respect of such Mortgage Notes
and other such Indebtedness in the next quarter; provided further that the
amount of such reserve specified in clauses (y) and (z) of this definition for
principal 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.
"Average Life" shall mean, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of (A) the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness multiplied by (B)
the amount of such payment by (ii) the sum of all such payments.
"Bankruptcy Law" shall have the meaning assigned to such term in Section
7.01(g).
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
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<PAGE>
6
"Borrower" shall mean National Propane, L.P., a Delaware limited
partnership, and its permitted successors, and, for the purposes of calculating
any financial test or financial covenant under this Agreement with respect to
any period prior to the Closing Date, "Borrower" shall mean the General Partners
and their Affiliates (to the extent that any such Affiliate operated a portion
of the Business).
"Borrower Security Agreement" shall mean the Pledge and Security Agreement
among the Borrower, National Propane Corp., the Restricted Subsidiaries (other
than National Sales and Services, Inc.) and the Trustee in the form attached
hereto as Exhibit D-2, as amended from time to time.
"Borrowing" shall mean a group of Loans of a single Class and Type made by
the Lenders on a single date and as to which a single Interest Period is in
effect. For purposes of Section 4.02, (a) a "Borrowing" does not include a
conversion or continuation of the Type of, or the duration of the Interest
Period applicable to, a previously outstanding Tranche B Term Borrowing pursuant
to Section 2.10 and (b) a "Borrowing" includes each Revolving Credit Borrowing
in which Revolving Loans are refinanced with new Loans as contemplated by
Section 2.02(g).
"Business" shall mean the operation by the Borrower and its Subsidiaries
(and prior to the consummation of the Conveyance Agreements, by the General
Partners and their Affiliates) of the wholesale and retail sale, distribution
and storage of propane gas and related petroleum derivative products, the
leasing of propane storage tanks and the related retail sale of supplies and
equipment, including home appliances, and such other businesses in which the
Borrower and its Restricted Subsidiaries were engaged on the Closing Date as
described in the Registration Statement.
"Business Day" shall mean any day (other than a day which is a Saturday,
Sunday or legal holiday in the States of Massachusetts, Iowa, New York or Texas)
on which banks are open for business in Boston, Massachusetts, Cedar Rapids,
Iowa, New York, New York and Houston, Texas; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
applicable interbank market.
"Capital Expenditures" shall mean, for any period, all amounts (whether
paid in cash or accrued as a liability) which would, in accordance with GAAP, be
included on a consolidated statement of cash flows of the Borrower and its
Restricted Subsidiaries for such period as additions to property, plant and
equipment, Capital Lease Obligations or other capital expenditures.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP (as
opposed to being accounted for as
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7
operating lease expenses on an income statement of such Person under GAAP) and,
for the purposes of this Agreement, the amount of such obligations at any time
shall be the capitalized amount thereof at such time determined in accordance
with GAAP.
"Capital Stock" of any Person shall mean any and all shares, partnership
and other interests (general or limited), rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated) the
equity of such Person.
"Cash Collateral Agreement" shall mean the Cash Collateral Agreement
between the Borrower and the Administrative Agent in the form attached hereto as
Exhibit J, as amended from time to time.
"Cash Equivalents" shall mean:
(a) 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;
(b) 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
Moody's Investors Service, Inc.;
(c) 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 Moody's Investors Service, Inc.;
(d) 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, (I) 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 changed) by Standard & Poor's Ratings Group or Prime-2
or better (or comparably if the rating system is changed) by Moody's
Investors Service, Inc. or (II) 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 Moody's Investors Service, Inc. ("Permitted
Banks");
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8
(e) bankers' acceptances eligible for rediscount under requirements of
the Board and accepted by Permitted Banks; and
(f) obligations of the type described in clause (a), (b), (c) or (d)
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 the Borrower or a Subsidiary by
a custodian which is a Permitted Bank and which is not a counterparty to
the repurchase agreement in question.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"Change in Control" shall mean the occurrence of any of the following
events: (i) the partners of the Borrower shall approve any plan or proposal for
the liquidation or dissolution of the Borrower; (ii) the Managing General
Partner shall cease for any reason to be the managing general partner of the
Borrower or any other Person shall have become the managing general partner of
the Borrower; (iii) the Public Partnership ceases for any reason to beneficially
own, directly or indirectly, 100% of all classes of Capital Stock of the
Borrower (other than the General Partners' 2.0202% unsubordinated general
partners' interests in the Borrower); (iv) the Managing General Partner shall
cease for any reason to beneficially own the limited partnership interests in
the Public Partnership owned on the Closing Date (unless, after giving effect
thereto, the Managing General Partner shall beneficially own limited partnership
interests of the Public Partnership representing the lesser of (A) at least 25%
of all outstanding partnership interests of the Public Partnership and (B)
3,000,000 subordinated units of the Public Partnership (appropriately adjusted
for splits, consolidations, recapitalizations and similar events)); (v) the
Managing General Partner shall cease for any reason to be the managing general
partner of the Public Partnership or any other Person shall have become the
managing general partner of the Public Partnership; (vi) Triarc shall cease for
any reason to beneficially own, directly or indirectly, a majority of the
Capital Stock of the General Partners (on a fully diluted basis) or shall cease
for any reason to beneficially own, directly or indirectly, a majority of the
total voting power of all classes of Capital Stock then outstanding of the
General Partners normally entitled to vote in the election of directors (except
by reason of a merger of Triarc and National Propane Corp. in which Triarc
assumes all the Facilities Obligations of National Propane Corp.); (vii) any
"person" or "group" (within the meaning of Section 13(d) and 14(d) of the
Exchange Act), other than the Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all securities that
any such Person has the right to acquire, whether such right is exercisable
immediately or only
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9
after the passage of time), directly or indirectly, of (A) 50% or more of the
total voting power of all classes of Capital Stock then outstanding of Triarc
normally entitled to vote in elections of directors ("Triarc Voting Stock") or
(B) a greater percentage of the Triarc Voting Stock than is then beneficially
owned, directly or indirectly, by the Permitted Holders; or (viii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Triarc (together with any new directors
whose election by such Board or whose nomination for election by the
shareholders of Triarc, as the case may be, was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Triarc then in office.
"Charges" shall have the meaning assigned to such term in Section 9.09.
"Class" shall have the meaning assigned to such term in Section 1.03.
"Closing" shall mean the time at which this Agreement shall become
effective, as indicated in a certificate from the Lenders to the Borrower to
that effect.
"Closing Date" shall mean the date on which the Closing shall occur.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" shall mean all the collateral pledged or purported to be
pledged pursuant to any of the Collateral Documents.
"Collateral Documents" shall mean the Security Agreements, the Perfection
Certificate, the Agency Account Agreements, the Mortgages, the Guarantee
Agreements, the Trust Agreement, the Cash Collateral Agreement, checking and
deposit account agreements and all other security agreements and other documents
and instruments executed and delivered pursuant to the terms hereof or thereof
(including the certificates of title referred to in Section 4.01(c) of the
Borrower Security Agreement) in order to secure any Facilities Obligations and
Parity Debt or perfect any Lien granted for the benefit of the Lenders and the
holders of Parity Debt pursuant thereto or to guarantee the Borrower's and the
General Partners' obligations hereunder and under the other Loan Documents.
"Commitment" shall mean, with respect to any Lender, such Lender's Tranche
A Revolving Credit Commitment and Tranche B Commitment.
"Commitment Fees" shall mean the Tranche A Commitment Fees and the Tranche
B Commitment Fees.
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10
"Commodities Inventory" shall mean all inventory consisting of propane gas
and other petroleum derivative products of, and held for sale by, the Borrower
or any Restricted Subsidiary.
"Commodity Hedging Agreement" shall mean any agreement or arrangement
designed solely to protect the Borrower and the Restricted Subsidiaries against
fluctuations in the price of propane with respect to quantities of propane that
the Borrower and the Restricted Subsidiaries reasonably expect to purchase from
suppliers, sell to their customers or need for their inventory during the period
covered by such agreement or arrangement.
"Consolidated Cash Flow" shall mean at any date of determination, for the
Reference Period with respect to such date of determination, (i) the sum of,
without duplication, the amounts for such period, taken as a single accounting
period, (a) Consolidated Net Income and (b) all amounts deducted in the
determination of such Consolidated Net Income for such period in respect of (I)
interest charges (including amortization of debt discount and expense and
imputed interest on Capital Lease Obligations), (II) provisions for all taxes
and reserves (including reserves for deferred income taxes), (III) non-cash
items, including depreciation and amortization and (IV) all fees, costs and
expenses with respect to the retirement or repayment of Indebtedness of either
of the General Partners existing immediately prior to the Closing, less (ii)
without duplication, any non-cash items added in the determination of such
Consolidated Net Income for such period, less (iii) interest income, including
interest accrued on the Triarc Note, less (iv) all amounts added in the
determination of such Consolidated Net Income attributable to a Restricted
Subsidiary to the extent such Restricted Subsidiary is prohibited from
dividending or distribution such amount to the Borrower. Consolidated Cash Flow
shall be calculated after giving effect, on a pro forma basis for the Reference
Period with respect to any date of determination to, without duplication, any
asset sales or asset acquisitions (including any asset acquisition giving rise
to the need to make such calculation as a result of the Borrower 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, but excluding the acquisition by the Borrower
of the Business in the Transactions) occurring during the period commencing on
the first day of such Reference Period to and including the date of
determination, as if such asset sale or asset acquisition occurred on the first
day of such Reference Period. The pro forma calculations required by this
definition will be determined in accordance with GAAP, shall be certified by a
Financial Officer of the Borrower, and shall be calculated in a manner
reasonably satisfactory to the Required Lenders; provided that such calculations
shall assume (x) the historical sales and gross profit margins associated with
any Eligible Propane Acquisition for the period of 12 consecutive months
immediately prior to the date of such acquisition, less estimated
post-acquisition loss of sales volume of three percent (3%) and (y) other
expenses as if such Eligible Propane Acquisition had occurred on the first day
of such period. If the applicable Reference Period for any calculation of
Consolidated Cash Flow shall
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11
include a partial period occurring prior to the Closing Date, then such
Consolidated Cash Flow shall be calculated based upon the actual Consolidated
Cash Flow for the portion of the Reference Period occurring on and after the
Closing Date and based upon the following for such portion of the Reference
Period occurring prior to the Closing Date: (1) Consolidated Cash Flow for the
fiscal quarter ended September 30, 1995 shall be deemed to equal $____________;
(2) Consolidated Cash Flow for the fiscal quarter ended December 31, 1995 shall
be deemed to equal $_____________; (3) Consolidated Cash Flow for the fiscal
quarter ended March 31, 1995 shall be deemed to equal $_____________; and (4)
Consolidated Cash Flow for the fiscal quarter ended June 30, 1995 shall be
calculated as the actual amount for such period, plus $_____________.
"Consolidated Interest Expense" shall mean as of any date of determination,
the total amount of interest expense of the Borrower and the Restricted
Subsidiaries, determined in accordance with GAAP on a consolidated basis, during
the Reference Period with respect to such date of determination, including
amortization of debt discount and expense and imputed interest on actual
payments under Capital Lease Obligations; provided that, except for purposes of
calculating Consolidated Cash Flow, Consolidated Interest Expense for any such
Reference Period ending on the last day of the first, second or third full
fiscal quarter of the Borrower after the Closing Date shall be calculated as the
product of (i) Consolidated Interest Expense for such one, two or three fiscal
quarters after the Closing Date and (ii) a fraction, the numerator of which is 4
and the denominator of which is the number of such full fiscal quarters after
the Closing Date. Consolidated Interest Expense shall be calculated after giving
effect, on a pro forma basis for the applicable period most recently completed
at least 45 days (except that, in connection with any calculation required
pursuant to Section 6.04, for the applicable period most recently completed)
prior to such date of determination to, without duplication, any incurrence or
assumption of Indebtedness (and the concurrent repayment of any other
Indebtedness) occurring during the period commencing on the first day of such
four fiscal quarter period to and including the date of determination, as if
such incurrence or assumption of Indebtedness (and the concurrent repayment of
any other Indebtedness) occurred on the first day of the Reference Period;
provided that such Indebtedness was incurred to finance an Eligible Propane
Acquisition or was pre-existing Indebtedness of a Person acquired in an Eligible
Propane Acquisition.
"Consolidated Net Income" shall mean, with reference to any period, the net
income (or deficit) of the Borrower and the 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
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12
is merged into or consolidated with the Borrower or a Restricted Subsidiary, (b)
the income (or deficit) of any Person (other than a Restricted Subsidiary) in
which the Borrower or any Restricted Subsidiary has an ownership interest,
except to the extent that any such income has been actually received by the
Borrower or such Restricted Subsidiary in the form of dividends or similar
distributions, (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
term 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
the Borrower 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 of 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 the Borrower 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.
"Consolidated Net Worth" shall mean, as to the Borrower, the amount by
which (i) the total assets of the Borrower and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Borrower and the Restricted
Subsidiaries prepared in accordance with GAAP as of the date of determination
exceeds (ii) total liabilities of the Borrower and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Borrower 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 (i) 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.
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13
"Consolidated Pro Forma Debt Service" shall mean, as of any date of
determination, the total amount payable by the Borrower 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 cash interest charges with respect to Indebtedness of
the Borrower and the Restricted Subsidiaries outstanding on such date of
determination, after giving effect to any Indebtedness proposed to be incurred
on such date, to the concurrent repayment of any other Indebtedness and to the
concurrent satisfaction of the conditions for any other Indebtedness to become
Defeased Indebtedness, and (a) including actual payments under Capital Lease
Obligations, (b) assuming, in the case of Indebtedness (other than Indebtedness
incurred under the 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 Facilities, that (i) 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
Facilities during the most recent four fiscal quarters, (ii) except for the
12-month period immediately prior to the termination or final maturity thereof
(unless extended, renewed or replaced), no principal payments will be made under
Facility A and (iii) principal payments relating to the Facility B 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) is effected on the dates set
forth therein, (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 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 and (e)
including any other repayments of Indebtedness due within twelve months from
such date of determination.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and "Controlling" and "Controlled" shall have meanings correlative thereto.
"Conveyance Agreements" shall mean (a) the Contribution, Conveyance and
Assumption Agreement, dated as of the Closing Date, among the General Partners,
the Borrower and National Sales and Services, Inc., (b) the Contribution,
Conveyance and Assumption Agreement dated as of the Closing Date, among the
Public Partnership, the General Partners and the Borrower, and (c) each of the
individual conveyances, assignments and bills of sale delivered to the Borrower
pursuant to the Contribution, Conveyance and Assumption Agreement referred to in
the foregoing clauses (a) and (b).
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14
"Current Assets" shall mean, as of any date, all assets which would, in
accordance with GAAP, be included on a consolidated balance sheet of the
Borrower and the Restricted Subsidiaries as of such date as current assets.
"Current Liabilities" shall mean, as of any date, without duplication, (a)
all liabilities which would, in accordance with GAAP, be included on a
consolidated balance sheet of the Borrower and the Restricted Subsidiaries as of
such date as current liabilities and (b) all Indebtedness as of such date in
respect of the Tranche A Revolving Loans and Tranche A Letters of Credit.
"Current Value" shall have the meaning assigned to such term in Section
6.22.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Defeased Indebtedness" shall mean Indebtedness with respect to which the
Borrower or a Restricted Subsidiary has:
(a) deposited irrevocably in trust with an independent, unrelated
trustee for the holders of such Indebtedness money or Cash Equivalents of
the type referred to in paragraph (a) of the definition thereof for the
payment of principal and interest on the Indebtedness being defeased to
maturity or redemption, as the case may be; and
(b) delivered to such trustee and the Agents a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited Cash Equivalents plus any deposited money
without investment will provide cash at such times and in such amounts as
will be sufficient to pay principal and interest when due on all such
Indebtedness to maturity or redemption, as the case may be.
"Disqualified Stock" of any Person shall mean any Capital Stock of such
Person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable at the option of the
holder), upon the happening of any event or otherwise (a) matures or is
mandatorily redeemable or subject to any mandatory repurchase requirement,
pursuant to a sinking fund obligation or otherwise, (b) is convertible into or
exchangeable or exercisable, at the option of the holder, for Indebtedness or
Disqualified Stock or (c) is redeemable or subject to any mandatory repurchase
requirement at the option of the holder thereof, in whole or in part, in each
case on or prior to the first anniversary of the Tranche B Maturity Date.
"dollars" or "$" shall mean lawful money of the United States of America.
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15
"Eligible Propane Acquisitions" shall mean acquisitions by the Borrower or
any Restricted Subsidiary of controlling stock or all or any part of the assets
of Persons primarily engaged in the distribution of propane and, incidental
thereto, propane appliances, within the continental United States of America. A
Person shall be "primarily engaged" in the distribution of propane and propane
appliances within the continental United States of America in the event that at
least eighty-five (85%) of its annual gross revenue is derived from such
distribution activities.
"Environmental Laws" shall mean all applicable Federal, state, local and
foreign laws, rules or regulations relating to pollution or protection of
employee and public health and safety or the environment, including laws
relating to (a) emissions, discharges, releases or threatened releases of any
Hazardous Material into the environment (including air, surface water, ground
water or land) or (b) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Tranche B Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Tranche A Revolving Loan" shall mean any Tranche A Revolving
Loan bearing interest at a rate determined by reference to the Adjusted LIBO
Rate in accordance with the provisions of Article II.
"Eurodollar Tranche B Revolving Loan" shall mean any Tranche B Revolving
Loan bearing interest at a rate determined by reference to the Adjusted LIBO
Rate in accordance with the provisions of Article II.
"Eurodollar Tranche B Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Tranche B Term Loans.
"Eurodollar Tranche B Term Loan" shall mean any Tranche B Term Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
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16
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"Excess Proceeds" shall have the meaning assigned to such term in Section
6.07(c)(iii)(B).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Existing Unmortgaged Property" shall have the meaning assigned to such
term in Section 6.22.
"Facilities" shall mean Facility A and Facility B.
"Facilities Obligations" shall mean (a) the Borrower's obligations in
respect of the due and punctual payment of principal of and interest on the
Loans and all unreimbursed 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 this Agreement or any other Loan
Document, (c) all obligations of the Borrower to any Agent or Lender (or
Affiliate of a Lender) under any Interest Rate Agreement, including Hedging
Agreements and Commodity Hedging Agreements, (d) 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 and
(e) all cash management fees and other similar miscellaneous administrative
costs, charges and expenses payable to any Lender by the Borrower or any
Restricted Subsidiary (whether or not pursuant to the terms of the Loan
Documents).
"Facility A" shall mean the Tranche A Revolving Loans and the Tranche A
Letters of Credit provided or participated in by the Lenders to the Borrower
pursuant to this Agreement and the other Loan Documents.
"Facility B" shall mean the Tranche B Revolving Loans, the Tranche B
Letters of Credit and the Tranche B Term Loans provided or participated in by
the Lenders to the Borrower pursuant to this Agreement and the other Loan
Documents.
"Federal Funds Effective Rate" shall mean, for any day, the rate equal to
the weighted average (rounded upwards to the nearest 1/100 of 1%) of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, (a) as such weighted average is
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York or
(b) if such rate is not so published for such Business Day, as determined by the
Administrative Agent using any reasonable means of determination. Each
determination by the Administrative Agent
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17
of the Federal Funds Effective Rate shall, in the absence of demonstrable error,
be conclusive.
"Fees" shall mean the Commitment Fees, the other fees payable pursuant to
Section 2.05 and the Letter of Credit Fees.
"Financial Officer" shall mean, as to any corporation, the chief financial
officer or principal accounting officer of such corporation and, as to any
partnership, an officer of its managing general partner who would qualify as a
Financial Officer of such general partner hereunder.
"Fitch" shall mean Fitch Investor Services and its successors.
"Funded Debt", as applied to any Person, shall mean 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 (including any current installment thereof due within one year
of the date of determination); 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.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States from time to time.
"General Partners" shall mean National Propane Corp. and National Propane
SGP.
"General Partners Guarantee Agreement" shall mean the Guarantee Agreement
among the General Partners and the Trustee in the form attached hereto as
Exhibit C-1, as amended from time to time.
"Governmental Authority" shall mean any Federal, state, local or foreign
governmental department, commission, board, bureau, authority, agency, court,
instrumentality or judicial or regulatory body or entity.
"Growth-Related Capital Expenditures" shall mean, with respect to any
Person, all capital expenditures by such Person made to improve or enhance the
existing capital assets or to increase the customer base of such Person or to
acquire or construct new capital assets, but excluding (a) capital expenditures
made to maintain, up to the level thereof that existed at the time of such
expenditure, the operating capacity of the capital assets of such Person as such
assets existed at the time of such expenditure and (b) Eligible Propane
Acquisitions.
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18
"Guaranty", as applied to any Person, shall mean any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease (other than operating leases in accordance with GAAP under
which the Borrower or a Restricted Subsidiary is the lessee), dividend or other
obligation of another, including 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 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.
"Guarantee Agreements" shall mean the General Partners Guarantee Agreement
and the Subsidiaries Guarantee Agreement.
"Hazardous Materials" shall mean any toxic or hazardous substance or waste,
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.
"Hedging Agreement" shall mean any interest rate swap, collar, cap or
similar interest rate arrangement designed solely to protect the Borrower
against fluctuations in interest rates on Indebtedness outstanding or committed
under the Facilities.
"Incur" shall have the meaning assigned to such term in Section 6.01.
"Indebtedness", as applied to any Person, shall mean the following (without
duplication):
(a) any indebtedness for borrowed money which such Person has directly
or indirectly created, incurred or assumed;
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19
(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, and all obligations upon
which interest charges are customarily paid;
(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 Capital Lease Obligations 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 Disqualified 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 Restricted 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;
(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;
(j) all obligations of such Person in respect of Interest Rate
Agreements; and
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20
(k) all standby letters of credit (including the Letters of Credit) of
such Person and 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 the Borrower
and the Restricted Subsidiaries, there shall be excluded all undrawn commercial
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. The Indebtedness of any Person
shall include the Indebtedness of any partnership in which such Person is a
general partner unless such Indebtedness is non-recourse to such Person and its
assets.
"Indemnified Party" shall have the meaning assigned to such term in Section
9.05(b).
"Intercompany Notes" shall mean the promissory notes of the Subsidiaries
issued to the Borrower as contemplated by Sections 4.01(d)(ii) and 6.01(c),
substantially in the form attached hereto as Exhibit E or such other form as may
be satisfactory to the Administrative Agent, representing all Indebtedness of
the Subsidiaries to the Borrower outstanding at any time.
"Interest Payment Date" shall mean, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of any Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing and, in addition, in the case of any Eurodollar Borrowing, the
date of any refinancing or conversion of such Borrowing with or to a Borrowing
of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing (including a conversion or continuation
of the Type of, or the duration of the Interest Period applicable to, a
previously outstanding Tranche B Term Borrowing pursuant to Section 2.10) and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect, and (b) as to any ABR Borrowing,
the period commencing on the date of such Borrowing (including a conversion or
continuation of the Type of, or the duration of the Interest Period applicable
to, a previously outstanding Tranche B Term Borrowing pursuant to Section 2.10)
and ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 or December 31 and (ii) with respect to any Tranche A Revolving
Loan, Tranche B Revolving Loan or Tranche B Term Loan, the Tranche A Maturity
Date, the Tranche B Conversion Date or the
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21
Tranche B Maturity Date, respectively; provided that if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to, but excluding, the last day of such Interest Period.
"Interest Rate Agreement" shall mean any interest rate swap, collar, cap,
foreign currency exchange agreement or other arrangement requiring payments
contingent upon interest or exchange rates, including all Hedging Agreements and
Commodities Hedging Agreements.
"Investment", as applied to any Person, shall mean 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 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 6.03, the amount
involved in Investments made during any period shall be the aggregate cost to
the Borrower 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 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 BBB- or higher by Fitch, Baa3 or higher by
Moody's or BBB- or higher by S&P.
"Issuing Bank" shall mean, as to any Letter of Credit, The First National
Bank of Boston or Bank of America NT & SA, in its capacity as the issuer of such
Letter of Credit, and its successors in such capacity.
"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.
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22
"Lender" shall mean each financial institution listed on the signature
pages hereof, each assignee which becomes a Lender pursuant to Section 9.04(b),
and their respective successors.
"Letters of Credit" shall mean any and all Tranche A Letters of Credit and
Tranche B Letters of Credit.
"Letter of Credit Disbursement" shall mean a payment or disbursement made
by the Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" shall mean at any time the sum of (i) the
Tranche A Letter of Credit Exposure and (ii) the Tranche B Letter of Credit
Exposure. The Letter of Credit Exposure of any Lender at any time shall mean the
sum of its Tranche A Letter of Credit Exposure and Tranche B Letter of Credit
Exposure at such time.
"Letter of Credit Fees" shall mean the Tranche A Letter of Credit Fees and
Tranche B Letter of Credit Fees.
"Level I Pricing Period" shall mean, subject to Section 2.06(e), any period
on or after the Pricing Adjustment Date during which the Leverage Ratio is less
than 3.50:1.00 and no Event of Default has occurred and is continuing.
"Level II Pricing Period" shall mean, subject to Section 2.06(e), any
period on or after the Pricing Adjustment Date during which the Leverage Ratio
is greater than or equal to 3.50:1.00 but less than 3.75:1.00 and no Event of
Default has occurred and is continuing.
"Level III Pricing Period" shall mean, subject to Section 2.06(e), any
period on or after the Pricing Adjustment Date during which the Leverage Ratio
is greater than or equal to 3.75:1.00 but less than 4.00:1.00 and no Event of
Default has occurred and is continuing.
"Level IV Pricing Period" shall mean, subject to Section 2.06(e), any
period on or after the Pricing Adjustment Date during which the Leverage Ratio
is greater than or equal to 4.00:1.00 but less than 4.50 and no Event of Default
has occurred and is continuing.
"Level V Pricing Period" shall mean, subject to Section 2.06(e), any period
on or after the Pricing Adjustment Date which is not a Level I Pricing Period,
Level II Pricing Period, Level III Pricing Period or Level IV Pricing Period.
"Leverage Ratio" as of any date shall mean the ratio of (a) Total Funded
Debt as of the last day of the Reference Period with respect to such date to (b)
Consolidated Cash Flow for such Reference Period.
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23
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum (rounded upwards, if necessary to the
nearest 1/16 of 1%) reported, at 11:00 a.m. (London time) on the date two
Business Days prior to the first day of such Interest Period, on Telerate Access
Service Page 3750 (British Bankers Association Settlement Rate) as the London
interbank offered rate for Dollar deposits having a term comparable to the
duration of such Interest Period and in an amount equal to or greater than
$1,000,000.
"Lien", as to any Person, shall mean 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 Obligation 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.
"Loan Documents" shall mean (a) this Agreement, (b) the Notes, (c) the
Letters of Credit, (d) the Intercompany Notes, (e) the Collateral Documents, (f)
any Interest Rate Agreements entered into by the Borrower with any Agent or
Lender (or any Affiliate thereof) and (g) any Supplemental Agreements.
"Loan Parties" shall mean the Public Partnership, the General Partners, the
Borrower and the Restricted Subsidiaries.
"Loans" shall mean any or all of the Tranche A Revolving Loans, the Tranche
B Revolving Loans and the Tranche B Term Loans.
"Make Whole Amount" shall have the meaning set forth in the Note Agreement
as in effect on the Closing Date.
"Managing General Partner" shall mean National Propane Corp. except that
(a) if National Propane SGP has succeeded as managing general partner of the
Borrower under the Partnership Agreement, "Managing General Partner" shall mean
National Propane SGP and (b) if Triarc is the surviving corporation in a merger
with National Propane Corp., "Managing General Partner" shall mean Triarc.
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24
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower and the Restricted Subsidiaries, taken as a whole, or the Business, (b)
the ability of the Borrower, the General Partners 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 any Lender or the
Trustee.
"Maximum Consolidated Pro Forma Debt Service" shall mean, as of any date of
determination, the highest total amount payable by the Borrower 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 maturity date of the Mortgage
Notes, in respect of scheduled principal payments and all cash interest charges
with respect to all Indebtedness of the Borrower and the Restricted Subsidiaries
outstanding or to be outstanding, after giving effect to any Indebtedness
proposed to be incurred on such date, to the concurrent repayment of any other
Indebtedness, and to the concurrent satisfaction of the conditions for any other
Indebtedness to become Defeased Indebtedness, and (a) including actual payments
under Capital Lease Obligations, (b) assuming, in the case of Indebtedness
(other than Indebtedness incurred under the 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 Facilities, that (i) 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 Facilities during the most recent four fiscal quarters, (ii)
except for the 12-month period immediately prior to the termination or final
maturity thereof (unless extended or renewed), no principal payments will be
made under the Facility A and (iii) principal payments relating to Facility B
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) is effected on
the dates set forth therein, (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 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 and (e) including any other repayments of
Indebtedness due within twelve months from such date of determination.
"Material Contracts" shall have the meaning assigned to such term in
Section 3.10(a).
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25
"Maximum Rate" shall have the meaning assigned to such term in Section
9.09.
"MLP Agreement" shall mean the Amended and Restated Agreement of Limited
Partnership of the Public Partnership.
"Moody's" shall mean Moody's Investor Services and its successors.
"Mortgage" shall mean each mortgage, assignment of rents, security
agreement and fixture filing, and each deed of trust, assignment of rents and
fixture filing, or similar instrument creating and evidencing a lien on a real
property and other property and rights incidental thereto, which shall be
substantially in the forms of Exhibit G-1 and Exhibit G-2 (with any conforming
changes therein required to accommodate a Restricted Subsidiary as a mortgagor),
containing such schedules and including such exhibits as shall not be
inconsistent with the provisions of Section 4.01(d) or shall be necessary to
conform such instrument to applicable local law and which shall be dated the
date of delivery thereof and made by the owner of the real property described
therein for the benefit of the Trustee, as mortgagee (or beneficiary), assignee
and secured party for the benefit of the Secured Parties, as the same may be
amended from time to time.
"Mortgage Notes" shall mean the mortgage notes of the Borrower in the
aggregate principal amount of $125,000,000 issued pursuant to the Note
Agreement.
"Mortgaged Properties" shall mean the real properties identified on
Schedule 3.07 and each other real property subjected to a Mortgage under Section
6.22 or otherwise.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"National Propane Corp." shall mean National Propane Corporation, a
Delaware corporation.
"National Propane Group" shall mean the Loan Parties and, insofar as Triarc
has at any time directly operated or owned any portion of the Business (other
than solely by owning the Capital Stock of National Propane Corp. or National
Propane SGP or any Subsidiary of either of them), Triarc.
"National Propane SGP" shall mean National Propane SGP, Inc., a Delaware
corporation.
"Net Working Capital" as of any date shall mean (a) Current Assets as of
such date, minus (ii) Current Liabilities as of such date.
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26
"Non-Excluded Taxes" shall have the meaning assigned to such term in
Section 2.19.
"Non-Related Subsidiaries" shall mean Subsidiaries of Triarc other than (i)
any such Subsidiary which is a Related Person and (ii) the General Partners.
"Note Agreement" shall mean, collectively, the Note Purchase Agreements
dated as of June ___, 1996, among the General Partners, the Borrower and the
investors named therein.
"Noteholders" shall mean the owners and holders of the Mortgage Notes.
"Notes" shall mean the Tranche A Revolving Credit Notes and the Tranche B
Notes.
"Obsolete Assets" shall mean [definition to track Note Agreement.]
"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 Note Agreement, the
Notes, the Mortgage Notes, the Collateral Documents, the General Partners'
Guarantee Agreement, the Subsidiaries Guarantee Agreement, the Underwriting
Agreement, the Triarc Note, the Conveyance Agreements, the Agency Agreement, the
MLP Agreement and the Partnership Agreement.
"Parity Debt" shall mean Indebtedness of the Borrower incurred in
accordance with Sections 6.01(a), 6.01(b), 6.01(i) and 6.01(k) (but only to the
extent such Indebtedness under Section 6.01(k) is incurred to any Lender or
Affiliate of a Lender) and secured by the lien of the Collateral Documents in
accordance with Section 6.02(g) or 6.02(h).
"Partners Security Agreement" shall mean the Pledge and Security Agreement
among the Public Partnership, the General Partners and the Trustee in the form
attached hereto as Exhibit D-1, as amended from time to time.
"Partnership Agreement" shall mean the Amended and Restated Agreement of
Limited Partnership of the Borrower, as in effect on the Closing Date, and as
the same may from time to time be amended, modified or supplemented in
accordance with the terms thereof and Section 6.12 hereof.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Perfection Certificate" shall mean a certificate from the Borrower
substantially in the form of Exhibit K.
"Permitted Encumbrances" shall mean the encumbrances and exceptions to
title to the Assets (a) described in exhibits to the Collateral Documents or
otherwise expressly permitted by the Mortgages or (b) existing on the date of
Closing as permitted by all applicable provisions hereof with respect to real
property owned or leased by the Borrower and not subject to a Lien of a
Mortgage.
"Permitted Exceptions" shall have the meaning set forth in Section 3.02.
"Permitted Holders" shall mean Nelson Peltz, Peter W. May and any Affiliate
thereof, so long as either (a) in the case of any corporate Affiliate, Nelson
Peltz and Peter W. May together beneficially own, directly or indirectly, a
majority of the Capital Stock (on a fully diluted basis) and a majority of the
total voting power of all classes of Capital Stock then outstanding of such
Affiliate normally entitled to vote in the election of directors of such
Affiliate or (b) such Affiliate is reasonably satisfactory to the Required
Lenders.
"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.
"Permitted Maximum Ratio" on any date of determination shall mean (a) if
such date is on or prior to June 30, 1997, 4.50:1.00 and (b) if such date is
after June 30, 1997, 4.25:1.00.
"Person" shall mean any natural Person, corporation, limited liability
company, business trust, joint venture, association, company, limited liability
company, partnership, government (or any agency or political subdivision
thereof) or other entity.
"Plan" shall mean an "employee benefit plan" (as defined in Section 3 (3)
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by either General Partner, the Borrower or
any Related Person or to which either General Partner, the Borrower or any
Related Person is or has been obligated to contribute, or an employee benefit
plan as to which either General Partner, the Borrower or any Related Person
could be treated as a contributory sponsor under Section 4069 or Section 4212 of
ERISA if such plan were terminated.
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"Preferred Stock", as applied to the Capital Stock of any Person, shall
mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such Person.
"Pricing Adjustment Date" shall mean the date which is five Business Days
after the delivery by the Borrower to the Administrative Agent of the financial
statements required by Section 5.02(a) for the quarter ended June 30, 1996.
"Prime Rate" shall mean the rate of interest per annum adopted from time to
time by the Administrative Agent as its Base Rate (which may not be the lowest
rate at which the Administrative Agent makes loans to borrowers) in effect at
its principal office in Boston, Massachusetts. Each change in the Prime Rate
shall be effective on the date such change is adopted, without notice to the
Borrower.
"Public Partnership" shall mean National Propane Partners, L.P., a Delaware
limited partnership.
"Rating Agency" shall mean Fitch, Moody's and S&P.
"RCRA" shall mean the Federal Resource Conservation and Recovery Act, as
amended.
"Reference Period" with respect to any date of determination shall mean the
period of four consecutive fiscal quarters of the Borrower most recently
completed at least 45 days prior to such date, except that (a) solely for
purposes of Section 6.31 (but not for purposes of determining the Applicable
Margin, calculating the Leverage Ratio as required by Sections 4.03(g), 6.01,
6.03, 6.07 and 6.24 hereof, calculating the ratio of Consolidated Cash Flow to
Consolidated Interest Expense as required by Section 6.04 or any other purpose
(other than determining compliance with Section 6.31 as required by Section
6.04), the "Reference Period" with respect to any date of determination shall
have the meaning set forth in the last sentence of Section 6.31(a), (b) for
purposes of determining compliance with Section 6.31 as required by Section 6.04
(but not for purposes of calculating the ratio of Consolidated Cash Flow to
Consolidated Interest Expense as required by Section 6.04), the "Reference
Period" with respect to any date of determination shall have the meaning set
forth in the last sentence of Section 6.31(a) for the applicable period
immediately preceding, or ending on, such date of determination and (c) for
purposes of calculating Consolidated Interest Expense for the period ending on
the last day of the first, second or third fiscal quarter after the Closing
Date, "Reference Period" shall be subject to the provisions set forth in the
definition of Consolidated Interest Expense.
"Register" shall have the meaning assigned to such term in Section 9.04(d).
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"Registration Statement" shall mean the Registration Statement on Form S-1
under the Securities Act of 1933, as amended, of the Public Partnership
(Registration Number 333-2768), as initially filed with the SEC on March 26,
1996, as amended by Amendment No. 1 thereto filed with the SEC on May 14, 1996,
Amendment No. 2 thereto filed with the SEC on May 31, 1996, Amendment No. 3
thereto filed with the Securities and Exchange Commission on June 11, 1996 and
Amendment No. 4 thereto filed with the Securities and Exchange Commission on
_______, 1996.
"Regulation G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"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 either General Partner or the Borrower under
Section 414 of the Code.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the 30-day notice period
is waived under applicable PBGC regulations.
"Required Consents" shall have the meaning set forth in Section 3.02.
"Required Lenders" shall mean, at any time, Lenders holding Loans and
participations in Letters of Credit, and having Commitments, representing in the
aggregate at least 66-2/3% of the sum at such time of (a) the aggregate
principal amount of the Loans outstanding, (b) the aggregate amount of the
Letter of Credit Exposure and (c) the aggregate amount of unused Commitments.
"Responsible Officer" shall mean, with respect to any Person, the Chairman,
the President, any Executive Vice President or Senior Vice President, the Chief
Financial Officer, the Treasurer and the Secretary of such Person, and any other
employee of such Person who is responsible for compliance with or performance of
any obligation under this Agreement, the Loan Documents or the other Operative
Agreements, and with respect to a Person which is a partnership, any such
employee of its managing general partner.
"Restricted Payment" shall mean (a) any payment, dividend or other
distribution, direct or indirect, in respect of any Capital Stock of the
Borrower or any Restricted Subsidiary, except a distribution payable solely in
additional Capital Stock
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of the Borrower (other than Disqualified Stock), (b) any payment, direct or
indirect, on account of the redemption, retirement, purchase or other
acquisition of any Capital Stock of the Borrower or any Restricted Subsidiary
now or hereafter outstanding, except to the extent that the consideration
therefor consists of Capital Stock of the Borrower (other than Disqualified
Stock) and (c) except for any prepayment of Parity Debt contemplated by Section
2.11 and the Collateral Documents, any principal payment on, or redemption,
repurchase, defeasance or other acquisition, or retirement for value, prior to
any scheduled repayment or maturity, of (i) any Indebtedness subordinated in
right of payment to the Facilities Obligations or (ii) any Mortgage Notes or
other Parity Debt; provided that payments by the Borrower or a Restricted
Subsidiary of the Borrower made in accordance with all applicable provisions of
this Agreement to any General Partner or any of its Affiliates for services
rendered to or on behalf of the Borrower or any Restricted Subsidiary of the
Borrower or expenses incurred in connection with the operation of the business
of the Borrower or any Restricted Subsidiary of the Borrower (including, without
limitation, reimbursement of expenses incurred under any employee benefit plan,
including plans providing for the issuance of Units or options to acquire Units
in the Public Partnership) shall not be deemed to be Restricted Payments;
provided further that any prepayment made at the option of the Borrower on the
Mortgage Notes shall not constitute a Restricted Payment, so long as (A)
concurrently with such prepayment, (I) the Borrower shall reduce the outstanding
Commitments, if any, pursuant to Section 2.09(b) by an amount which bears the
same proportion to the total Commitments as the principal amount and premium
prepaid on the Mortgage Notes bears to the aggregate principal amount of
Mortgage Notes prior to such prepayment (such proportion, the "prepayment
percentage") and (II) the Borrower shall prepay outstanding Loans pursuant to
Section 2.12 and reduce the Letter of Credit Exposure as contemplated by Section
2.21(k) (by depositing cash collateral with the Administrative Agent to be held
pursuant to the Cash Collateral Agreement) by an aggregate amount equal to the
prepayment percentage of the aggregate principal amount of outstanding Loans and
the Letter of Credit Exposure and (B) of the amounts applied pursuant to the
foregoing clause (A), (I) all Tranche B Revolving Credit Commitments shall be
terminated before any Tranche A Revolving Credit Commitments are reduced, (II)
all Tranche B Loans shall be repaid in full and the Tranche B Letter of Credit
Exposure shall be eliminated before any Tranche A Revolving Loans are repaid or
any Tranche A Letter of Credit Exposure is reduced, (III) all outstanding
Tranche B Loans shall be repaid in full before any Tranche B Letter of Credit
Exposure is reduced and (IV) all outstanding Tranche A Revolving Loans shall be
repaid in full before any Tranche A Letter of Credit Exposure is reduced.
"Restricted Subsidiary" shall mean any Wholly Owned Subsidiary of the
Borrower (a) organized under the laws of the United States of America 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
of America and which business consists of the
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wholesale and retail sale, distribution and storage of propane gas and related
petroleum derivative products, the leasing of propane storage tanks and/or the
related retail sale of supplies and equipment, including home appliances and the
provision of related services, and (d) designated by the Borrower as a
Restricted Subsidiary in Schedule 1.01 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 6.18.
"Revolving Credit Borrowing" shall mean a Borrowing consisting of Revolving
Loans.
"Revolving Credit Commitment" shall mean any and all Tranche A Revolving
Credit Commitments and Tranche B Revolving Credit Commitments.
"Revolving Loans" shall mean any and all Tranche A Revolving Loans and
Tranche B Revolving Loans.
"S&P" shall mean Standard & Poor's Ratings Group and its successors.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative Agent
and the Syndication Agent, in their capacities as such under each Loan Document,
(c) each Agent or Lender with which the Borrower enters into an Interest Rate
Agreement, in its capacity as a party to such agreement, (d) the beneficiaries
of each indemnification obligation undertaken by the Borrower or any of the Loan
Parties under any Loan Document, (e) the holders of any Parity Debt and (f) the
successors and assigns of the foregoing.
"Security Agreements" shall mean the Partners Security Agreement, the
Borrower Security Agreement and the Triarc Note.
"Single Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" shall have the meaning assigned to such term in Section 3.19.
"Specified Events" shall mean the events, conditions and occurrences
referred to in Sections 4.03(g), 6.01, 6.03, 6.07 and 6.24 hereof for which such
Sections contemplate pro forma adjustments in connection with calculations of
the
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Leverage Ratio. All such adjustments shall be made reasonably and in good faith
by the Borrower and subject to the reasonable satisfaction of the Agents.
"Statutory Reserves" shall mean the stated maximum rate (expressed as a
decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in effect,
required by the Board and any other banking authority to which any Lender is
subject for (a) "Eurocurrency liabilities" as specified in Regulation D of the
Board, (b) any other category of liabilities that includes eurodollar deposits
by reference to which the LIBO Rate for any Eurodollar Borrowing is determined,
(c) the principal amount of or interest on any portion of any Eurodollar
Borrowing or (d) any other category of extensions of credit, or other assets,
that is based upon the LIBO Rate by a non-United States office of any of the
Lenders to United States residents, in each case without the benefits of credits
for prorations, exceptions or offsets that may be available to a Lender.
"Sub-investment Grade Rating" on any date shall mean a rating for the
Mortgage Notes in effect on such date by Fitch of lower than Investment Grade
or, if Fitch is no longer making publicly available a rating for the Mortgage
Notes, then (a) a failure for there to be at least one other Rating Agency
making publicly available a rating for the Mortgage Notes of Investment Grade on
such date or (b) a rating for the Mortgage Notes in effect on such date by any
Rating Agency (other than Fitch) of lower than Investment Grade. For purposes of
the foregoing, if the Borrower shall, directly or indirectly, cause any Rating
Agency to cease publishing a rating for the Mortgage Notes, such Rating Agency
shall be deemed to have issued a rating for the Mortgage Notes of lower than
Investment Grade until such time as such Rating Agency shall have issued a new
rating, which is of Investment Grade.
"Subsidiaries Guarantee Agreement" shall mean the Guarantee Agreement among
the Restricted Subsidiaries (other than National Sales and Services, Inc.) and
the Trustee in the form attached hereto as Exhibit C-2, as amended from time to
time.
"Subsidiary" of any Person shall mean any corporation, association,
partnership, limited liability company, 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
Subsidiaries of such Person, 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
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of a contingency. Unless the context clearly indicates otherwise, the term
"Subsidiary" refers to a Subsidiary of the Borrower.
"Supplemental Agreement" shall mean an agreement between a Restricted
Subsidiary, the Administrative Agent and the Trustee in the form attached hereto
as Exhibit L, as amended from time to time.
"Syndication Agent" shall mean Bank of America NT & SA, in its capacity as
syndication agent hereunder.
"Title Company" shall mean Chicago Title Insurance Company or such other
title insurance company as shall be satisfactory to the Agents.
"Total Funded Debt" as of any date shall mean (a) all Funded Debt of the
Borrower and its Restricted Subsidiaries as of such date, including Indebtedness
in respect of the Mortgage Notes, Tranche B Revolving Loans, Tranche B Term
Loans and Tranche B Letters of Credit, but excluding Indebtedness in respect of
the Tranche A Revolving Loans and Tranche A Letters of Credit, minus (b) Net
Working Capital of the Borrower and its Restricted Subsidiaries as of such date
(or, if such Net Working Capital is negative, plus the amount thereof); provided
that if such Net Working Capital is positive, it shall not exceed $10,000,000
for purposes of the foregoing calculation.
"Tranche A Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Tranche A Letters of Credit" shall mean any and all standby letters of
credit issued pursuant to Section 2.21(a).
"Tranche A Letter of Credit Disbursement" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Tranche A Letter of Credit.
"Tranche A Letter of Credit Exposure" shall mean at any time the sum of (i)
the aggregate undrawn amount of all outstanding Tranche A Letters of Credit,
plus (ii) the aggregate amount of all Tranche A Letter of Credit Disbursements
not yet reimbursed by the Borrower as provided in Section 2.21, minus (iii) the
aggregate principal amount of cash collateral in respect of outstanding Tranche
A Letters of Credit deposited by the Borrower with the Administrative Agent and
held pursuant to the Cash Collateral Agreement. The Tranche A Letter of Credit
Exposure of any Lender at any time shall mean its pro rata share (based on the
percentage of the aggregate Tranche A Revolving Credit Commitments represented
by such Lender's Tranche A Revolving Credit Commitment) of the aggregate Tranche
A Letter of Credit Exposure at such time.
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34
"Tranche A Letter of Credit Fees" shall mean the fees payable to the
Issuing Bank and the Lenders in respect of Tranche A Letters of Credit pursuant
to Section 2.21(f).
"Tranche A Maturity Date" shall mean June 30, 1999.
"Tranche A Rating Premium" shall mean, (a) with respect to any Tranche A
Revolving Loan outstanding on any day on which there is a Sub-investment Grade
Rating:
(i) 0.125%, if such day falls within a Level I Pricing Period, Level
II Pricing Period or Level III Pricing Period;
(ii) 0.250%, if such day falls within a Level IV Pricing Period; and
(iii) 0.500%, if such day falls within a Level V Pricing Period; and
(b) with respect to the commitment fee accruing pursuant to Section 2.05(a)
on any day on which there is a Sub-investment Grade Rating, (i) 0.00%, if such
day falls within a Level I Pricing Period and (ii) 0.125%, if such day falls
within a Level II Pricing Period, Level III Pricing Period, Level IV Pricing
Period or a Level V Pricing Period.
"Tranche A Revolving Credit Availability Period" shall mean the period from
and including the Closing Date to but excluding the earlier of (a) the date five
Business Days prior to the Tranche A Maturity Date and (b) the termination of
the Tranche A Revolving Credit Commitments of the Lenders in accordance with the
terms hereof.
"Tranche A Revolving Credit Borrowing" shall mean a Borrowing comprised of
Tranche A Revolving Loans.
"Tranche A Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche A Revolving Loans
hereunder as set forth in Section 2.01(a), in the amount set forth in Exhibit A
or in an assignment in accordance with Section 9.04, as the same may be reduced
from time to time pursuant to Section 2.09 or changed from time to time pursuant
to an assignment in accordance with Section 9.04. The aggregate amount of the
Lenders' collective Tranche A Revolving Credit Commitments as of the Closing
Date shall equal $15,000,000.
"Tranche A Revolving Credit Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit B-1, evidencing Tranche A
Revolving Loans, and any substitutions or replacements therefor.
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35
"Tranche A Revolving Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01(a). Each Tranche A Revolving
Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Revolving Loans hereunder as set
forth in Section 2.01(b), as the same may be reduced from time to time pursuant
to Section 2.09 or changed from time to time pursuant to an assignment in
accordance with Section 9.04, and to make a Tranche B Term Loan hereunder as set
forth in Section 2.01(c).
"Tranche B Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(b).
"Tranche B Conversion Date" shall mean June 30, 1998.
"Tranche B Letters of Credit" shall mean any and all standby letters of
credit issued pursuant to Section 2.21(b).
"Tranche B Letter of Credit Disbursement" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Tranche B Letter of Credit.
"Tranche B Letter of Credit Exposure" shall mean at any time the sum of (i)
the aggregate undrawn amount of all outstanding Tranche B Letters of Credit,
plus (ii) the aggregate amount of all Tranche B Letter of Credit Disbursements
not yet reimbursed by the Borrower as provided in Section 2.21, minus (iii) the
aggregate principal amount of cash collateral in respect of Tranche B Letters of
Credit deposited by the Borrower with the Administrative Agent and held pursuant
to the Cash Collateral Agreement. The Tranche B Letter of Credit Exposure of any
Lender at any time shall mean its pro rata share (based on the percentage of the
aggregate Tranche B Revolving Credit Commitments represented by such Lender's
Tranche B Revolving Credit Commitment) of the aggregate Tranche B Letter of
Credit Exposure at such time.
"Tranche B Letter of Credit Fees" shall mean the fees payable to the
Issuing Bank and the Lenders in respect of Tranche B Letters of Credit pursuant
to Section 2.21(f).
"Tranche B Loans" shall mean the Tranche B Revolving Loans and the Tranche
B Term Loans.
"Tranche B Maturity Date" shall mean June 30, 2001.
"Tranche B Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit B-2, evidencing Tranche B Revolving Loans
and (after the
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36
Tranche B Conversion Date) Tranche B Term Loans, and any substitutions or
replacements therefor.
"Tranche B Rating Premium" shall mean, (a) with respect to any Tranche B
Revolving Loan or Tranche B Term Loan outstanding on any day on which there is a
Sub-investment Grade Rating:
(i) 0.250%, if such day falls within a Level I Pricing Period, Level
II Pricing Period, Level III Pricing Period or Level IV Pricing Period; and
(ii) 0.750%, if such day falls within a Level V Pricing Period; and
(b) with respect to the commitment fee accruing pursuant to Section 2.05(b)
on any day on which there is a Sub-investment Grade Rating, 0.125%.
"Tranche B Repayment Date" shall have the meaning assigned to such term in
Section 2.11(c).
"Tranche B Revolving Credit Availability Period" shall mean the period from
and including the Closing Date to but excluding the earlier of (a) the date five
Business Days prior to the Tranche B Conversion Date and (b) the termination of
the Tranche B Revolving Credit Commitments of the Lenders in accordance with the
terms hereof.
"Tranche B Revolving Credit Borrowing" shall mean a Borrowing comprised of
Tranche B Revolving Loans.
"Tranche B Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche B Revolving Loans
hereunder as set forth in Section 2.01(b), in the amount set forth in Exhibit A
or in an assignment in accordance with Section 9.04, as the same may be reduced
from time to time pursuant to Section 2.09 or changed from time to time pursuant
to an assignment in accordance with Section 9.04. The aggregate amount of the
Lenders' collective Tranche B Revolving Credit Commitment as of the Closing Date
shall equal $40,000,000.
"Tranche B Revolving Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01(b). Each Tranche B Revolving
Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B
Term Loans.
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37
"Tranche B Term Loan Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make a Tranche B Term Loan hereunder as set
forth in Section 2.01(c).
"Tranche B Term Loans" shall have the meaning assigned to such term in
Section 2.01(c). Each Tranche B Term Loan shall be a Eurodollar Term Loan or an
ABR Term Loan.
"Transactions" shall mean the transactions described or referred to under
the caption "The Transactions" in the Registration Statement.
"Triarc" shall mean Triarc Companies, Inc., a Delaware corporation.
"Triarc Note" shall mean the promissory note dated as of the Closing Date
made by Triarc in favor of the Borrower, in the form of Exhibit O hereto, which
note is secured pursuant to its terms by a pledge by Triarc to the Borrower of,
among other things, all of the Capital Stock of National Propane Corp. directly
owned by Triarc, as such note may from time to time be amended, modified or
supplemented as expressly permitted by Section 6.12 or, if such amendment,
modification or supplement is not expressly permitted by Section 6.12, then as
permitted by the Required Lenders.
"Trust Agreement" shall mean the Intercreditor and Trust Agreement, dated
as of the Closing Date, among the Borrower, the Public Partnership, the General
Partners, the Restricted Subsidiaries, the Trustee, the Lenders and the
Noteholders, substantially in the form attached hereto as Exhibit P, as amended
from time to time.
"Trustee" shall mean The Bank of New York, as Trustee under the Trust
Agreement, and its successors and assigns thereunder.
"Type" shall have the meaning assigned to such term in Section 1.03.
"Underwriters" shall mean the underwriters named in the Underwriting
Agreement.
"Underwriting Agreement" shall mean the Purchase Agreement among the Public
Partnership, the General Partners, the Borrower and the Underwriters, relating
to securities of the Public Partnership registered under the Registration
Statement.
"Units" shall mean the units to be issued and sold by the Public
Partnership pursuant to the Underwriting Agreement, representing preference
limited partnership interests in the Public Partnership.
"Unrestricted Subsidiary" shall mean any Wholly Owned Subsidiary other than
a Restricted Subsidiary which is organized under the laws of the United States
of
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America 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 of America and which
business consists principally of the distribution of propane gas or related
supplies and equipment.
"Wholly Owned", as applied to any Subsidiary, shall mean a Subsidiary all
the outstanding Capital Stock (other than directors' qualifying shares, if
required by law) of which is at the time owned by the Borrower or by one or more
Wholly Owned Subsidiaries or by the Borrower and one or more Wholly Owned
Subsidiaries.
"Work Letters" shall have the meaning assigned to such term in Section
2.05(c).
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Unless otherwise expressly provided
herein, all terms of an accounting or financial nature used herein shall be
interpreted in accordance with GAAP, as in effect from time to time; provided,
however, that, for purposes of (a) making any calculation contemplated by the
provisions of Article II and (b) determining compliance with any covenant set
forth in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in preparing the Audited Financial Statements. As used herein,
the "knowledge" of the Borrower includes the knowledge of all Responsible
Officers of each and every Loan Party. Unless otherwise expressly provided
herein, the word "day" means a calendar day.
SECTION 1.03. Types of Borrowings. The term "Borrowing" refers to the
portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific Interest
Period pursuant to a notice of Borrowing pursuant to Section 2.03. Each Lender's
ratable share of each Borrowing is referred to herein as a separate "Loan".
Borrowings, Loans, Letters of Credit and certain related terms hereunder may be
distinguished by "Class" and by "Type". The "Class" of a Loan or of a Commitment
to make such a Loan or of a Borrowing comprising such Loans refers to whether
such Loan is a Tranche A Revolving Loan, a Tranche B Revolving Loan or a Tranche
B Term Loan, each of which constitutes a Class. The "Class" of a Letter of
Credit refers to whether such Letter of Credit is a Tranche A Letter of Credit
or a Tranche B Letter of Credit, each of which constitutes a Class. The "Type"
of a Loan refers to whether such Loan is an ABR Loan or a Eurodollar Loan.
Borrowings and Loans may (but need not) be
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identified both by Class and Type (e.g., a "Eurodollar Tranche A Revolving Loan"
is a Loan which is both a Tranche A Revolving Loan and a Eurodollar Loan).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitment to Make Loans. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, to make Tranche A Revolving Loans
to the Borrower, at any time and from time to time during the Tranche A
Revolving Credit Availability Period, in an aggregate principal amount at any
time outstanding not to exceed the excess, if any, of (i) such Lender's Tranche
A Revolving Credit Commitment over (ii) its Tranche A Letter of Credit Exposure
at such time.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Tranche B Revolving Loans to the Borrower, at any time
and from time to time during the Tranche B Revolving Credit Availability Period,
in an aggregate principal amount at any time outstanding not to exceed the
excess, if any, of (i) such Lender's Tranche B Revolving Credit Commitment over
(ii) its Tranche B Letter of Credit Exposure at such time.
(c) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make a single loan to the Borrower (each such loan, a
"Tranche B Term Loan") on the Tranche B Conversion Date in a principal amount
not to exceed the lesser of (i) the excess, if any, of (A) such Lender's Tranche
B Revolving Credit Commitment immediately prior to such date over (B) its
Tranche B Letter of Credit Exposure immediately prior to such date and (ii) the
aggregate outstanding principal amount of such Lender's Tranche B Revolving
Loans immediately prior to such date.
(d) The Borrower may borrow, pay or prepay and reborrow Tranche A Revolving
Loans during the Tranche A Revolving Credit Availability Period, within the
limits set forth in Section 2.01(a) and upon the other terms and subject to the
other conditions and limitations set forth herein. The Borrower may borrow, pay
or prepay and reborrow Tranche B Revolving Loans during the Tranche B Revolving
Credit Availability Period, within the limits set forth in Section 2.01(b) and
upon the other terms and subject to the other conditions and limitations set
forth herein. Amounts paid or prepaid in respect of Tranche B Term Loans may not
be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective
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Tranche A Revolving Credit Commitments, Tranche B Revolving Credit Commitments
or Tranche B Term Loan Commitments, as the case may be; provided, however, that
the failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). The Loans comprising each
Borrowing shall be in an aggregate principal amount which is (i) an integral
multiple of $100,000 and not less than $500,000 in the case of Eurodollar Loans
and (ii) an integral multiple of $100,000 in the case of ABR Loans (or, in the
case of ABR Loans, an aggregate principal amount equal to the remaining balance
of the Tranche A Revolving Credit Commitments, Tranche B Revolving Credit
Commitments or Tranche B Term Loan Commitments, as the case may be).
(b) A particular Borrowing of any Class shall consist solely of ABR Loans
or Eurodollar Loans of such Class, as the Borrower may request pursuant to
Section 2.03. Each Lender may at its option fulfill its Commitment with respect
to any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall
not result in any increased cost to the Borrower for withholding pursuant to
Section 2.19, and shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement and the applicable Note.
Borrowings of more than one Type and Eurodollar Loans bearing interest for more
than one specific Interest Period may be outstanding at the same time; provided,
however, that the Borrower shall not be entitled to request any Borrowing which,
if made, would result in an aggregate of more than eight separate Eurodollar
Loans of any Lender being outstanding hereunder at any one time. For purposes of
the foregoing, Loans having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.02(g), each Lender shall make a Loan in the amount
of its pro rata portion, as determined under Section 2.16, of each Borrowing
hereunder on the proposed date thereof by wire transfer of immediately available
funds to the Administrative Agent in Boston, Massachusetts, not later than 12:00
Noon, Boston time, and the Administrative Agent shall by 2:00 p.m., Boston time,
credit the amounts so received to the general deposit account of the Borrower
with the Administrative Agent or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met, return
the amounts so received to the respective Lenders.
(d) If the Administrative Agent has not received from the Borrower the
payment required by Section 2.21(g) by 12:30 p.m., Boston time, on the date on
which the Issuing Bank has notified the Borrower and the Administrative Agent
that payment of a draft presented under any Letter of Credit of any Class will
be made, as provided in Section 2.21(g), the Administrative Agent will promptly
notify the Issuing Bank and each Lender of the Letter of Credit Disbursement of
such Class and, in the
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case of each Lender, its pro rata share (based on the percentage of the
aggregate Revolving Credit Commitments of the applicable Class represented by
such Lender's Revolving Credit Commitment of such Class) of such Letter of
Credit Disbursement. Not later than 2:00 p.m., Boston time, on such date, each
Lender shall make available its pro rata share, as so determined, of such Letter
of Credit Disbursement, in Federal or other funds immediately available in
Boston, to the Administrative Agent at its address set forth in Section 9.01,
and the Administrative Agent will promptly make such funds available to the
Issuing Bank. The Administrative Agent will promptly remit to each Lender that
shall have made such funds available its pro rata share, as so determined, of
any amounts subsequently received by the Administrative Agent from the Borrower
in respect of such Letter of Credit Disbursement.
(e) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing, or prior to the time of any required
payment by such Lender in respect of a Letter of Credit Disbursement, that such
Lender will not make available to the Administrative Agent such Lender's pro
rata portion of such Borrowing or payment, the Administrative Agent may assume
that such Lender has made such portion available to the Administrative Agent on
the date of such Borrowing or payment in accordance with Section 2.02(c) or (d),
as applicable, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower or Issuing Bank, as applicable, on
such date a corresponding amount. If and to the extent that such Lender shall
not have made such portion available to the Administrative Agent, and the
Administrative Agent shall have made such amount available to the Borrower, such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower or the
Issuing Bank (or, if the Administrative Agent and the Issuing Bank are the same
Person, from the date of such payment in respect of a Letter of Credit
Disbursement), as applicable, until the date such amount is repaid to the
Administrative Agent at, (i) in the case of the Borrower, the interest rate
applicable thereto pursuant to Section 2.06 or 2.21(g), as applicable, and (ii)
in the case of such Lender, the Federal Funds Effective Rate. If such Lender
shall repay to the Administrative Agent such corresponding amount in respect of
a Borrowing, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(f) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request (i) any Tranche A Revolving Credit Borrowing if
the Interest Period requested with respect thereto would end after the Tranche A
Maturity Date or (ii) any Tranche B Revolving Credit Borrowing if the Interest
Period requested with respect thereto would end after the Tranche B Conversion
Date. Any Revolving Credit Borrowing which cannot be refinanced as a Eurodollar
Borrowing by reason of the preceding sentence shall be automatically converted
at the end of the Interest Period in effect for such Borrowing into an ABR
Revolving Credit
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Borrowing. Further, and notwithstanding any other provision of this Agreement to
the contrary, the Borrower shall not be entitled to request, nor shall any
Lender be required to make, any Eurodollar Loan during the existence of a
Default or an Event of Default unless the Required Lenders otherwise agree.
(g) The Borrower may refinance (i) all or any part of any Revolving Credit
Borrowing of either Class with a Revolving Credit Borrowing of the same Class
and of the same or a different Type and (ii) all or any part of any Tranche B
Revolving Credit Borrowing outstanding on the Tranche B Conversion Date with a
Tranche B Term Borrowing of the same or a different Type, in each case upon the
terms and subject to the conditions and limitations set forth in this Agreement.
Any Revolving Credit Borrowing or part thereof so refinanced shall be deemed to
be repaid or prepaid in accordance with Section 2.04 or 2.12, as applicable,
with the proceeds of such new Revolving Credit Borrowing or Tranche B Term
Borrowing, as applicable; and the proceeds of such new Revolving Credit
Borrowing or Tranche B Term Borrowing, as applicable (to the extent they do not
exceed the principal amount of the Revolving Credit Borrowing being refinanced),
shall not be paid by the Lenders to the Administrative Agent or by the
Administrative Agent to the Borrower pursuant to Section 2.02(c).
SECTION 2.03. Notice of Borrowings. The Borrower shall give the
Administrative Agent written or telecopy notice in the form of Exhibit M hereto
(or telephone notice promptly confirmed in writing or by telecopy in the form of
Exhibit M hereto) (a) in the case of a Eurodollar Borrowing, not later than
10:00 a.m., Boston time, two Business Days before a proposed borrowing and (b)
in the case of an ABR Borrowing, not later than 11:00 a.m., Boston time, on the
Business Day of the proposed borrowing. Such notice shall be irrevocable and
shall in each case refer to this Agreement and specify (i) the applicable Class
and Type of such Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day) and the amount thereof; and (iii) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto. If no election
as to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. If the
Borrower shall not have given notice, in accordance with this Section 2.03, of
its election to refinance a Revolving Credit Borrowing prior to the end of the
Interest Period in effect for such Borrowing, then the Borrower shall (unless
such Borrowing is repaid at the end of such Interest Period) be deemed to have
given notice of an election to refinance such Borrowing with an ABR Borrowing.
The Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.03 and of each Lender's pro rata portion of the
requested Borrowing.
SECTION 2.04. Notes; Repayment of Loans. The Tranche A Revolving Loans and
Tranche B Loans made by each Lender shall be evidenced by a Tranche A
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Revolving Credit Note or a Tranche B Note, as applicable, duly executed and
delivered on behalf of the Borrower, dated the Closing Date, in substantially
the form attached hereto as Exhibit B-1 or B-2, as applicable, with the blanks
appropriately filled, payable to the order of such Lender in a principal amount
equal to such Lender's Tranche A Revolving Credit Commitment (in the case of its
Tranche A Revolving Credit Note) and Tranche B Revolving Credit Commitment (in
the case of its Tranche B Note). The outstanding principal balance of each Loan,
as evidenced by the applicable Note, shall be payable (a) in the case of a
Tranche A Revolving Loan, on the last day of the Interest Period applicable to
such Loan and on the Tranche A Maturity Date, (b) in the case of a Tranche B
Revolving Loan, on the last day of the Interest Period applicable to such Loan
and on the Tranche B Conversion Date and (c) in the case of a Tranche B Term
Loan, as provided in Section 2.11. Each Note shall bear interest from the date
of the first Borrowing hereunder on the outstanding principal balance thereof as
set forth in Section 2.06. Each Lender shall, and is hereby authorized by the
Borrower to, endorse on the schedule attached to each Note delivered to such
Lender (or on a continuation of such schedule attached to such Note and made a
part thereof), or otherwise to record in such Lender's internal records, an
appropriate notation evidencing the date and amount of each applicable Loan from
such Lender, each payment and prepayment of principal of any such Loan, each
payment of interest on any such Loan and the other information provided for on
such schedule; provided, however, that the failure of any Lender to make such a
notation or any error therein shall not affect the obligation of the Borrower to
repay the Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
SECTION 2.05. Fees. (a) The Borrower shall pay to the Administrative Agent
for the account of each Lender, on the last day of March, June, September and
December in each year, and on the last day of the Tranche A Revolving Credit
Availability Period, a commitment fee (a "Tranche A Commitment Fee") on the
average daily unused amount of the Tranche A Revolving Credit Commitment of such
Lender during the preceding quarter (or shorter period commencing with the date
of this Agreement or ending with the last day of the Tranche A Revolving Credit
Availability Period), equal to (i) during the period prior to the Pricing
Adjustment Date, 0.375% per annum and (ii) during the period commencing on the
Pricing Adjustment Date, (A) during any Level I Pricing Period or Level II
Pricing Period, 0.25% per annum, (B) during any Level III Pricing Period, 0.375%
per annum, (C) during any Level IV Pricing Period or Level V Pricing Period,
0.50% per annum and, (D) during any period when there is a Sub-investment Grade
Rating, the Tranche A Rating Premium. The "unused amount" of the Tranche A
Revolving Credit Commitment of a Lender on any date means the amount of such
Lender's Tranche A Revolving Credit Commitment on such date, less the sum of its
outstanding Tranche A Revolving Loans on such date and its Tranche A Letter of
Credit Exposure on such date. All Tranche A Commitment Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. The
Tranche A Commitment Fee due
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to each Lender shall commence to accrue from the date of this Agreement and
shall cease to accrue on the last day of the Tranche A Revolving Credit
Availability Period.
(b) The Borrower shall pay to the Administrative Agent for the account of
each Lender, on the last day of March, June, September and December in each
year, and on the last day of the Tranche B Revolving Credit Availability Period,
a commitment fee (a "Tranche B Commitment Fee") on the average daily unused
amount of the Tranche B Revolving Credit Commitment of such Lender during the
preceding calendar quarter (or shorter period commencing with the date of this
Agreement or ending with the last day of the Tranche B Revolving Credit
Availability Period), equal to (i) during the period prior to the Pricing
Adjustment Date, 0.50% per annum and (ii) during the period commencing on the
Pricing Adjustment Date, (A) during any Level I Pricing Period, 0.25% per annum,
(B) during any Level II Pricing Period, 0.375% per annum, (C) during any Level
III Pricing Period, Level IV Pricing Period or Level V Pricing Period, 0.50% per
annum and, (D) during any period when there is a Sub-investment Grade Rating,
the Tranche B Rating Premium. The "unused amount" of the Tranche B Revolving
Credit Commitment of a Lender on any date means the amount of such Lender's
Tranche B Revolving Credit Commitment on such date, less the sum of its
outstanding Tranche B Revolving Loans on such date and its Tranche B Letter of
Credit Exposure on such date. All Tranche B Commitment Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. The
Tranche B Commitment Fee due to each Lender shall commence to accrue from the
date of this Agreement and shall cease to accrue on the last day of the Tranche
A Revolving Credit Availability Period.
(c) The Borrower agrees to pay to (i) the Administrative Agent, for its own
account, the annual administration fee and all other fees and expenses provided
for in the letter agreement dated May 17, 1996 from the Administrative Agent to
National Propane Corp., and accepted by National Propane Corp. on May 22, 1996,
and (ii) the Syndication Agent and Bank of America NT & SA, for the account of
each, all fees and expenses provided for in the letter agreement dated May ___,
1996 from Bank of America NT & SA to National Propane Corp., and accepted by
National Propane Corp. on May ___, 1996 (the letter agreements referred to in
the foregoing clauses (i) and (ii) being referred to herein jointly as the "Work
Letters"). The first payment of the annual administration fee will be due on the
Closing Date and each payment of such annual administration fee thereafter will
be due in advance on each anniversary of the Closing Date. Such fees shall be in
addition to reimbursement of the Agents' reasonable out-of-pocket expenses.
(d) All Fees shall be paid on the dates due, in immediately available
funds. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to Section 2.07, each Tranche
A Revolving Loan comprising an ABR Borrowing shall bear interest for each day
from the date such Loan is made until it becomes due (computed on the basis of
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45
the actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the Alternate Base Rate, plus, during any period when there is a
Sub-investment Grade Rating, the Tranche A Rating Premium.
(b) Subject to Section 2.07, each Tranche B Revolving Loan or Tranche B
Term Loan comprising an ABR Borrowing shall bear interest for each day from the
date such Loan is made until it becomes due (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Alternate Base Rate, plus the Applicable Tranche B ABR Margin, plus, during any
period when there is a Sub-investment Grade Rating, the Tranche B Rating
Premium.
(c) Subject to Section 2.07, each Tranche A Revolving Loan comprising a
Eurodollar Borrowing shall bear interest for each day from the date such Loan is
made until it becomes due (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing, plus the Applicable
Tranche A Eurodollar Margin, plus, during any period when there is a
Sub-investment Grade Rating, the Tranche A Rating Premium.
(d) Subject to Section 2.07, each Tranche B Revolving Loan or Tranche B
Term Loan comprising a Eurodollar Borrowing shall bear interest for each day
from the date such Loan is made until it becomes due (computed on the basis of
the actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing, plus the Applicable Tranche B Eurodollar Margin, plus, during any
period when there is a Sub-investment Grade Rating, the Tranche B Rating
Premium.
(e) Any change in any Applicable Margin, the Tranche A Rating Premium or
the Tranche B Rating Premium required hereunder shall be deemed to occur five
Business Days after the date the Borrower delivers its financial statements
required by Section 5.02(a) or (b), as the case may be, in respect of its most
recent fiscal quarter and the certificate required by Section 5.02(c); provided
that if the Borrower fails to deliver such financial statements and certificate
on or before the date such statements and certificate are required to be
delivered pursuant to Section 5.02(a) or (b), as the case may be, and Section
5.02(c), the Applicable Margin, the Tranche A Rating Premium and the Tranche B
Rating Premium for the period from such required date until the date such
statements and certificate are actually delivered shall be calculated as if a
Level V Pricing Period were in effect, and after the date such statements and
certificate are actually delivered the Applicable Margin, the Tranche A Rating
Premium and the Tranche B Rating Premium shall be determined as otherwise
provided for herein.
(f) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan, except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day
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46
within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
demonstrable error.
SECTION 2.07. Default Interest. If and for so long as any Event of Default
or Default shall have occurred and be continuing, interest shall accrue on the
principal amount of the Loans, and to the extent permitted by law, on the
outstanding amount of all other Facilities Obligations (except as expressly
provided in clause (ii) below), during the period from (and including) the date
of such Event of Default or Default to (but not including) the date such Event
of Default or Default is cured (after as well as before judgment) at the sum of
(a) (i) in the case of principal or interest on any Loan of any Class, the rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) applicable to ABR Loans of such Class pursuant to Section 2.06
plus 1.00% or (ii) in the case of any other amount (other than the Tranche A
Commitment Fees, the Tranche B Commitment Fees and fees described in clauses (b)
and (e) of the definition of Facilities Obligations), a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 360 days) equal
to the rate applicable to ABR Tranche A Revolving Loans pursuant to Section 2.06
plus 1.00%, and (b) if such Event of Default or Default is caused by a failure
to pay principal of or interest on any Loan or any other amount due under this
Agreement or any other Loan Document, by acceleration or otherwise, 1.00% on
such overdue amount. The Borrower shall pay all such accrued but unpaid interest
from time to time upon demand.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the applicable
interbank market, or that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to any Lender of making
or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, any request by the Borrower for a Eurodollar
Borrowing pursuant to Section 2.03 or 2.10 shall, until the Administrative Agent
shall have advised the Borrower and the Lenders that the circumstances giving
rise to such notice no longer exist, be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent demonstrable error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Tranche A
Revolving Credit Commitments shall be automatically terminated at 5:00 p.m.,
Boston time, on (i) August 31, 1996, if the Closing hereunder in accordance with
Article IV has not occurred by such date and (ii) otherwise, the
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Tranche A Maturity Date. The Tranche B Revolving Credit Commitments shall be
automatically terminated at 5:00 p.m., Boston time, on (i) August 31, 1996, if
the Closing hereunder in accordance with Article IV has not occurred by such
date and (ii) otherwise, the Tranche B Conversion Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Tranche A Revolving Credit Commitments and/or the Tranche B Revolving Credit
Commitments; provided, however, that (i) each partial reduction of the Revolving
Credit Commitments of any Class shall be in a minimum aggregate principal amount
which is an integral multiple of $100,000 and not less than $500,000 and (ii)
the Tranche A Revolving Credit Commitments may not be so terminated in whole or
in part unless and until (A) the Tranche B Revolving Credit Commitments have
been terminated in whole, (B) the Tranche B Revolving Loans and Tranche B Term
Loans, together with interest, fees and all other obligations in respect
thereof, have been paid in full, (C) all Tranche B Letters of Credit (other than
any such Letters of Credit for which the Borrower has deposited with the
Administrative Agent pursuant to the Cash Collateral Agreement an amount in cash
equal to 100% of the undrawn amount of such Letters of Credit as provided in
Section 2.21(k)) have been cancelled or have expired and (D) all Tranche B
Letter of Credit Disbursements have been reimbursed in full.
(c) In the event, and on each occasion, that the Borrower is required to
prepay or repay Tranche A Revolving Loans and/or to provide cash collateral for
Tranche A Letters of Credit as provided in Section 2.11(e) or (f) and Section
2.11(h), then on the date of such required action, the Tranche A Revolving
Credit Commitments shall be automatically and permanently reduced by an amount
equal to the sum of such required payment and cash collateral. In the event, and
on each occasion, that the Borrower is required to prepay or repay Tranche B
Revolving Loans and/or to provide cash collateral for Tranche B Letters of
Credit as provided in Section 2.11(e) or (f) and Section 2.11(h), then on the
date of such required action, the Tranche B Revolving Credit Commitments shall
be automatically and permanently reduced by an amount equal to the sum of such
required payment and cash collateral. In addition, in the event that the amount
of any Excess Proceeds referred to in paragraph (e) or (f) of Section 2.11 which
is allocable to the Facilities Obligations exceeds the amount of all outstanding
Loans and Letter of Credit Exposure, the Commitments shall be further reduced by
such excess, by reduction, first to the Tranche B Revolving Credit Commitments
(if prior to the Tranche B Conversion Date) and, second, to the Tranche A
Revolving Credit Commitments. For purposes of applying the requirements of this
Section 2.09(c), the amount of any Excess Proceeds referred to in paragraph (e)
or (f) of Section 2.11 which is allocable to the Facilities Obligations shall be
calculated as if the definition set forth in the last sentence of Section
2.11(e) included, in addition, the maximum aggregate amount of the unused
Tranche B Revolving Credit Commitments.
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(d) The Tranche A Revolving Credit Commitments and Tranche B Revolving
Credit Commitments shall be automatically terminated upon the occurrence of a
Change in Control.
(e) Each reduction in the Revolving Credit Commitments of any Class shall
be made ratably among the Lenders in accordance with their respective Revolving
Credit Commitments of such Class. The Borrower shall pay to the Administrative
Agent for the account of the Lenders, on the date of each termination or
reduction of the Revolving Credit Commitments of any Class, the Commitment Fees
on the amount of the Revolving Credit Commitments of such Class so terminated or
reduced accrued to the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Tranche B Term Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 11:00 a.m., Boston time, on the Business
Day of conversion, to convert any Eurodollar Tranche B Term Borrowing into an
ABR Tranche B Term Borrowing, (b) not later than 11:00 a.m., Boston time, two
Business Days prior to conversion or continuation, to convert any ABR Tranche B
Term Borrowing into a Eurodollar Tranche B Term Borrowing or to continue any
Eurodollar Tranche B Term Borrowing as a Eurodollar Tranche B Term Borrowing for
an additional Interest Period and (c) not later than 11:00 a.m., Boston time,
two Business Days prior to conversion, to convert the Interest Period with
respect to any Eurodollar Tranche B Term Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Tranche
B Term Loans comprising the converted or continued Tranche B Term
Borrowing;
(ii) the aggregate principal amount of such Tranche B Term Borrowing
converted into or continued as (A) a Eurodollar Tranche B Term Borrowing,
shall be an integral multiple of $100,000 and not less than $500,000 or (B)
an ABR Tranche B Term Borrowing, shall be the lesser of (I) the remaining
outstanding principal amount of such Borrowing and (II) an integral
multiple of $100,000;
(iii) each conversion or continuation shall be effected by each Lender
by applying the proceeds of the new Tranche B Term Loan of such Lender
resulting from such conversion or continuation to the Tranche B Term Loan
(or portion thereof) of such Lender being converted or continued; accrued
interest on a Eurodollar Tranche B Term Loan (or portion thereof) being
converted or continued shall be paid by the Borrower at the time of
conversion;
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(iv) if any Eurodollar Tranche B Term Borrowing is converted or
continued at a time other than the end of the Interest Period applicable
thereto, the Borrower shall pay, upon demand, any amounts due to the
Lenders pursuant to Section 2.15;
(v) any portion of a Tranche B Term Borrowing maturing or required to
be repaid in less than one month may not be converted into or continued as
a Eurodollar Tranche B Term Borrowing;
(vi) unless the Required Lenders otherwise agree, during the existence
of a Default or an Event of Default, the Borrower shall not be entitled to
elect to have any Tranche B Term Borrowing converted into or continued as a
Eurodollar Tranche B Term Borrowing;
(vii) any portion of a Tranche B Term Borrowing which cannot be
converted into or continued as a Eurodollar Tranche B Term Borrowing by
reason of clause (v) or (vi) above shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR Tranche
B Term Borrowing;
(viii) no Interest Period may be selected for any Eurodollar Tranche B
Term Borrowing that would end later than a Tranche B Repayment Date
occurring on or after the first day of such Interest Period if, after
giving effect to such selection, the aggregate outstanding amount of (A)
Eurodollar Tranche B Term Borrowings with Interest Periods ending on or
prior to such Tranche B Repayment Date and (B) the ABR Tranche B Term
Borrowings would not be at least equal to the principal amount of Tranche B
Term Borrowings to be paid on such Tranche B Repayment Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (I) the principal amount, the Type and, in
the case of a Eurodollar Tranche B Term Borrowing, the Interest Period of the
Tranche B Term Borrowing that the Borrower requests be converted or continued,
(II) whether such Tranche B Term Borrowing is to be converted to or continued as
a Eurodollar Tranche B Term Borrowing or an ABR Tranche B Term Borrowing, (III)
if such notice requests a conversion, the date of such conversion (which shall
be a Business Day) and (IV) if such Tranche B Term Borrowing is to be converted
to or continued as a Eurodollar Tranche B Term Borrowing, the Interest Period
with respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Tranche B Term
Borrowing, the Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the other Lenders of
any notice given pursuant to this Section 2.10 and of each Lender's pro rata
portion of any converted or continued Tranche B Term Borrowing. If the Borrower
shall not have given notice in accordance with this Section 2.10 to continue any
Tranche B Term Borrowing into a
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subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Tranche B Term Borrowing),
such Tranche B Term Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Tranche B Term Borrowing.
SECTION 2.11. Mandatory Repayments and Prepayments. (a) On the Tranche A
Maturity Date, all Tranche A Revolving Credit Borrowings shall be due and
payable to the extent not previously paid.
(b) On the Tranche B Conversion Date, all Tranche B Revolving Credit
Borrowings shall be due and payable to the extent not previously paid (and shall
be refinanced with Tranche B Term Loans).
(c) Subject to adjustment as provided in Section 2.11(h) and Section
2.12(b), the Borrower shall repay the Tranche B Term Loans and reduce the
Tranche B Letter of Credit Exposure in 12 quarterly installments (each of which
shall be equal to one-twelfth of the sum of the aggregate principal amount of
the Tranche B Term Loans and the Tranche B Letter of Credit Exposure on the
Tranche B Conversion Date), commencing on September 30, 1998, and continuing on
the last day of every third calendar month thereafter through June 30, 2001 (the
due date of each such installment being called a "Tranche B Repayment Date").
All payments under this paragraph (c) shall be applied (I) first, to repay any
outstanding Tranche B Term Loans and (II) second, after the Tranche B Term Loans
have been paid in full, to reduce the Tranche B Letter of Credit Exposure. Any
such payments so applied to reduce the Tranche B Letter of Credit Exposure shall
be deposited with the Administrative Agent pursuant to the Cash Collateral
Agreement as provided in Section 2.21(k).
(d) During each year, the Borrower will cause a period of at least 30
consecutive days to occur, at any time between March 1 and August 31 of such
year, during which no Tranche A Revolving Credit Borrowings shall be
outstanding.
(e) If at any time the Borrower or any of the Restricted Subsidiaries
disposes of property or any 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 Borrower does not apply such Excess Proceeds in the manner described in
Section 6.07(c)(iii)(B)(I), the Borrower shall prepay, upon notice as provided
in paragraph (g) of this Section 2.11 (which notice shall be given not later
than 360 days after the date of such sale of property), a principal amount of
the outstanding Facilities Obligations equal to the amount of such remaining
Excess Proceeds allocable to the Facilities Obligations, determined by
allocating such remaining Excess Proceeds pro rata among the Lenders and the
holders of Parity Debt, if any, outstanding on the date such prepayment is to be
made, according to the aggregate then unpaid principal amounts of the Facilities
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Obligations and Parity Debt (and the Make Whole Amount on the principal amount
of the Mortgage Notes to be prepaid). For purposes of this Section 2.11, the
"aggregate then unpaid principal amount of the Facilities Obligations" shall
equal the sum of (i) the aggregate principal amount of the outstanding Loans,
(ii) the Letter of Credit Exposure and (iii) the maximum aggregate amount of the
unused Tranche A Revolving Credit Commitments.
(f) 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 Collateral
Documents, or there shall be proceeds under title insurance policies with
respect to any real property, all Net Insurance Proceeds (as defined in the
Mortgage), self-insurance amounts, Net Awards (as defined in the Mortgage) or
title insurance proceeds which, as of any date, shall not theretofore have been
applied to the cost of Restoration (as defined in the Mortgage) shall be deemed
to be proceeds of property disposed of voluntarily, shall be subject to the
provisions of Section 6.07(c) and, if subdivision (iii)(B)(II) of Section
6.07(c) is applicable thereto, shall be subject to the prepayment provisions of
paragraph (e) of this Section 2.11; provided that, if any such event or
circumstances (individually or together with all other related events and
circumstances) shall result in proceeds of more than $25,000,000 in the
aggregate, the Borrower shall not apply such proceeds to replacement or other
assets or undertake any Restoration without the prior written consent of the
Required Lenders.
(g) The Borrower will give the Administrative Agent irrevocable written
notice of each prepayment under paragraph (e) or (f) of this Section 2.11 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 Facilities Obligations to be prepaid, the principal
amount of each issue of Parity Debt to be prepaid and the paragraph under which
such prepayment is to be made. Each Lender shall receive, on the date scheduled
for any such prepayment, a certificate of a Financial Officer of the Borrower
certifying that the applicable conditions of this Section 2.11 have been
fulfilled and specifying the particulars of such fulfillment. Such certificate
shall set forth the principal amount of the Facilities Obligations being prepaid
and specify how such amount was determined, and certify that such amount has
been computed in accordance with this Section 2.11.
(h) All mandatory prepayments of the Facilities Obligations under
paragraphs (e) and (f) of this Section 2.11 shall be applied (i) first, to pay
or prepay any outstanding Tranche B Revolving Loans or Tranche B Term Loans and,
to the extent that the remaining amount of such prepayment is greater than the
aggregate principal amount of outstanding Tranche B Loans, to reduce the Tranche
B Letter of Credit Exposure as provided in Section 2.21(k) and (ii) second, to
pay or prepay any outstanding Tranche A Revolving Loans and, to the extent that
the remaining amount of such prepayment is greater than the aggregate principal
amount of outstanding Tranche A Revolving Loans, to reduce the Tranche A Letter
of Credit Exposure as provided in Section 2.21(k). All such mandatory
prepayments so applied on or after
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the Tranche B Conversion Date shall be applied to reduce the amount of scheduled
payments due under Section 2.11(c) after the date of such prepayment in the
inverse order of maturity (without affecting the requirement that such
prepayments be applied first to pay all outstanding Tranche B Term Loans and
only thereafter to reduce the Tranche B Letter of Credit Exposure). Subject to
the foregoing provisions, any such mandatory prepayment of Loans of any Class
shall be applied to prepay all ABR Loans of such Class before any Eurodollar
Loans of such Class are prepaid. Any such payments under paragraphs (e) and (f)
of this Section 2.11 so applied to reduce the Letter of Credit Exposure shall be
deposited with the Trustee and applied as provided in the Trust Agreement.
(i) In the event and on each occasion that the sum of (i) the aggregate
outstanding principal amount of the Tranche A Revolving Loans and (ii) the
Tranche A Letter of Credit Exposure exceeds the aggregate amount of the Tranche
A Revolving Credit Commitments at such time, the Borrower shall immediately
prepay Tranche A Revolving Loans (and, to the extent that the amount of such
excess is greater than the aggregate principal amount of outstanding Tranche A
Revolving Loans, reduce the Tranche A Letter of Credit Exposure by making a
deposit with the Administrative Agent pursuant to the Cash Collateral Agreement
as provided in Section 2.21(k)) in an aggregate principal amount equal to such
excess.
(j) In the event and on each occasion that the sum of (i) the aggregate
outstanding principal amount of the Tranche B Revolving Loans and (ii) the
Tranche B Letter of Credit Exposure exceeds the aggregate amount of the Tranche
B Revolving Credit Commitments at such time, the Borrower shall immediately
prepay Tranche B Revolving Loans (and, to the extent that the amount of such
excess is greater than the aggregate principal amount of outstanding Tranche B
Revolving Loans, reduce the Tranche B Letter of Credit Exposure by making a
deposit with the Administrative Agent pursuant to the Cash Collateral Agreement
as provided in Section 2.21(k)) in an aggregate principal amount equal to such
excess.
(k) In the event that a Change of Control occurs, (i) the Borrower shall
immediately prepay all the Tranche A Revolving Loans (and, to the extent that
the amount of such excess is greater than the aggregate principal amount of
outstanding Tranche A Revolving Loans), reduce the Tranche A Letter of Credit
Exposure by making a deposit with the Administrative Agent pursuant to the Cash
Collateral Agreement as provided in Section 2.21(k)) in an aggregate principal
amount equal to such excess and (ii) the Borrower shall immediately prepay all
the Tranche B Revolving Loans (and, to the extent that the amount of such excess
is greater than the aggregate principal amount of outstanding Tranche A
Revolving Loans), reduce the Tranche B Letter of Credit Exposure by making a
deposit with the Administrative Agent pursuant to the Cash Collateral Agreement
as provided in Section 2.21(k)) in an aggregate principal amount equal to such
excess.
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(l) Each payment of Borrowings pursuant to this Section 2.11 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment. The repayments and prepayments of the Loans required by the
respective subsections of this Section 2.11 and the optional prepayments
permitted by Section 2.12 are separate and cumulative, so that any one such
repayment or prepayment shall reduce any other repayment or prepayment only as
and to the extent expressly specified herein. All payments under this Section
2.11 shall be subject to Section 2.15, but otherwise shall be without premium or
penalty.
SECTION 2.12. Optional Prepayments. (a) Subject to Section 2.12(b), the
Borrower shall have the right at any time and from time to time to prepay any
Borrowing or payment due under Section 2.11(c), in whole or in part, upon prior
written or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the Administrative Agent (i) in the case of any prepayment
of amounts payable under Section 2.11(c), not later than 11:00 a.m., Boston
time, two Business Days in advance of the proposed prepayment, (ii) in the case
of any prepayment of Eurodollar Revolving Loans, not later than 11:00 a.m.,
Boston time, two Business Days in advance of the proposed prepayment and (iii)
in the case of any prepayment of ABR Revolving Loans, not later than 11:00 a.m.,
Boston time, on the Business Day of the proposed prepayment; provided, however,
that (A) each partial prepayment of ABR Loans shall be in a minimum amount of
$100,000 and each partial prepayment of Eurodollar Loans shall be in an amount
which is an integral multiple of $100,000 and not less than $500,000 and (B) a
partial prepayment of a Eurodollar Borrowing under this Section 2.12(a) shall
not be made that would result in the remaining aggregate outstanding principal
amount thereof being less than $500,000. Each notice of prepayment of any
Borrowing or payment due under Section 2.11(c) shall specify the prepayment
date, the Class, the Type and the Interest Period of the Borrowing to be prepaid
(in the case of a Eurodollar Borrowing), and the principal amount thereof to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing or payment by the amount stated therein on the date stated therein
unless revoked by written notice to the Administrative Agent on or before the
date set for prepayment. If the Borrower elects to revoke any such prepayment
commitment, the Borrower shall pay to the Administrative Agent,
contemporaneously with sending such notice of revocation, any and all costs and
expenses incurred by the Administrative Agent and the Lenders in preparing for
such prepayment, including, without limitation, costs for which the Lenders are
indemnified under Section 2.15.
(b) All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise shall be without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued interest on the principal
amount being prepaid to, but excluding, the date of payment. All prepayments
under this Section 2.12 of amounts payable under Section 2.11(c) shall be
applied to reduce the amount of scheduled payments of amounts due under Section
2.11(c) after the date of such prepayment on a pro rata basis (without affecting
the requirement that such
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54
prepayments be applied first to pay all outstanding Tranche B Term Loans and
only thereafter to provide cash collateral in respect of Tranche B Letters of
Credit). Subject to the foregoing provisions, any optional prepayment of Loans
of any Class pursuant to Section 2.12(a) shall be applied to prepay all ABR
Loans of such Class before any Eurodollar Loans of such Class are prepaid.
SECTION 2.13. Reserve Requirements; Certain Changes in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any Fees
or other amounts payable hereunder (other than changes in respect of taxes,
including franchise or branch profits taxes, imposed on the overall net income
of such Lender), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by such Lender (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or the applicable interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder or under the Notes (whether of principal,
interest or otherwise) or Letters of Credit by an amount deemed by such Lender
to be material, then from time to time the Borrower shall pay to such Lender
within 15 days after demand such additional amount or amounts as will compensate
such Lender for such additional costs incurred or reduction suffered (after such
Lender shall have allocated all such amounts fairly and equitably among all of
its customers of any class generally affected thereby).
(b) If any Lender shall have reasonably determined in good faith that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the foregoing by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of this Agreement,
the Letters of Credit or the Loans made by such Lender pursuant hereto to a
level below that which such Lender or such Lender's holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy) by an amount
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55
deemed by such Lender or such Lender's holding company to be material, then from
time to time the Borrower shall pay to such Lender within 15 days after demand
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered (after such Lender
shall have allocated all such amounts fairly and equitably among all of its
customers of any class generally affected thereby).
(c) A certificate of each Lender setting forth such amount or amounts (with
the calculations thereof in reasonable detail) as shall be necessary to
compensate such Lender or its holding company as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Lender the amount
shown as due on any such certificate delivered by it within 15 days after its
receipt of the same.
(d) No Lender shall be entitled to compensation under this Section 2.13 for
any costs incurred or reductions suffered with respect to any date unless such
Lender shall have notified the Borrower that it will demand compensation for
such costs or reductions not more than 120 days after such Lender obtains actual
knowledge thereof; provided, however, that if any Lender fails to give such
notice within 120 days after it obtains actual notice of such an event, such
Lender shall, with respect to any amounts otherwise payable pursuant to this
Section 2.13 in respect of any costs resulting from such event, only be entitled
to payment under this Section 2.13 for costs incurred from and after the date
that such Lender does give such notice; and provided further, that each Lender
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy consideration of such Lender) to designate a different lending office for
the Loans of such Lender affected by such event if such designation will avoid
the need for, or reduce the amount of, such additional amounts that would
otherwise be payable pursuant to this Section 2.13, provided that such
designation will not, in the sole opinion of such Lender, be disadvantageous to
such Lender. The Borrower agrees to pay all expenses incurred by any Lender in
utilizing another lending office of such Lender as requested by the Borrower
pursuant to this Section 2.13. The protection of this Section 2.13 shall be
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of the law, rule, regulation, guideline or other change,
condition or circumstances which shall have occurred or been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other provision
herein, if any change in any law or regulation or in the interpretation thereof
by any Governmental Authority charged with the administration or interpretation
thereof shall make it unlawful for any Lender to make or maintain any
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56
Eurodollar Loan or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Loan, then, by written or telecopy notice to the
Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in Section 2.14(b).
In the event that any Lender shall exercise its rights under clause (i) or (ii)
above, all payments and prepayments of principal which would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such Lender
or the converted Eurodollar Loans of such Lender shall instead be applied to
repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
(c) Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of Section 2.14 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event; provided that such designation is made on terms such
that the Lender and its lending office, in such Lender's reasonable judgment,
shall suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section 2.14. The Borrower agrees to pay all expenses incurred by any Lender in
utilizing another lending office of such Lender as requested by the Borrower
pursuant to this Section 2.14. Nothing in this Section 2.14 shall affect or
postpone any of the obligations of the Borrower or the rights of any Lender
elsewhere herein.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender against
any loss or expense which such Lender may sustain or incur as a consequence of
(a) any failure by the Borrower to fulfill on the date of any borrowing
hereunder the applicable conditions set forth in Article IV, (b) any failure by
the Borrower to borrow or to refinance, convert or continue any Loan hereunder
after irrevocable notice of such borrowing, refinancing, conversion or
continuation has been given
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57
pursuant to Section 2.03 or 2.10, (c) any payment, prepayment or conversion of a
Eurodollar Loan required by any other provision of this Agreement or otherwise
made or deemed made on a date other than the last day of the Interest Period
applicable thereto (provided that the foregoing shall not constitute a waiver of
the Borrower's rights against any Lender which is in breach of its obligation to
lend hereunder), (d) any default in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, whether by scheduled maturity,
acceleration, notice of prepayment or otherwise) or (e) the occurrence of any
Event of Default, including, in each such case, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Loan or any part
thereof as a Eurodollar Loan. Such loss or reasonable expense shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(i) its cost of obtaining the funds for the Loan being paid, prepaid, converted
or not borrowed, refinanced, converted or continued or not paid or prepaid
(assumed to be the Adjusted LIBO Rate applicable thereto) for the period from
the date of such payment, prepayment, conversion or failure to borrow,
refinance, convert or continue or failure to pay or prepay to the last day of
the Interest Period for such Loan (or, in the case of a failure to borrow,
refinance, convert or continue, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, converted or not borrowed, refinanced,
converted or continued for such period or Interest Period, as the case may be
(based upon the purchase of debt securities customarily issued by the Treasury
of the United States of America which have a maturity date approximating the
last Business Day of such Interest Period). A certificate of any Lender setting
forth any amount or amounts which such Lender is entitled to receive pursuant to
this Section 2.15 shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay each Lender the amount shown as
due on any such certificate delivered by it within 10 days after its receipt of
the same.
SECTION 2.16. Pro Rata Treatment. Except as required under Section 2.13 or
2.14, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Commitments, each payment in respect of participations in
Letter of Credit Disbursements and each refinancing of any Borrowing with,
conversion of any Borrowing to, or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective Commitments of the applicable Class (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans of the applicable Class). Each
Lender agrees that in computing such Lender's portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing,
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computed in accordance with Exhibit A, to the next higher or lower whole dollar
amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise (except pursuant to Section 2.20),
or by any other means, obtain payment (voluntary or involuntary) in respect of
any Loan or Loans as a result of which the unpaid principal portion of its Loans
of any Class shall be proportionately less than the unpaid principal portion of
the Loans of such Class of any other Lender, it shall be deemed simultaneously
to have purchased from such other Lender at face value, and shall promptly pay
to such other Lender the purchase price for, a participation in such Loans of
such other Lender, so that the aggregate unpaid principal amount of the Loans
and participations in Loans of any Class held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Loans of such
Class then outstanding as the principal amount of its Loans of such Class prior
to such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Loans of such Class outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest (unless the party from which such recovery
is made is obligated by law to pay interest on the amount recovered, in which
case each of the Lenders shall be responsible for its pro rata share of such
interest). The Borrower expressly consents to the foregoing arrangements
(provided such set-off is permitted under Section 9.06) and agrees that any
Lender holding a participation in a Loan deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
SECTION 2.18. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Fees or other amounts)
hereunder or under any other Loan Document not later than 12:00 (noon), Boston
time, on the date when due in dollars to the Administrative Agent at its offices
at 100 Federal Street, Boston, Massachusetts 02110, in immediately available
funds, it being understood that written, telex or telecopy notice by the
Borrower to the Administrative Agent to make such a payment from the funds in
the Borrower's account at the Administrative Agent's office shall constitute the
making of such payment to the extent of such funds held in such account, so long
as such notice is received prior to such time and such payment is not prohibited
by law. Any such
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payment received after such time on any date shall be deemed made on the next
Business Day.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) All payments made by the Borrower under this
Agreement, the Notes and the Letters of Credit shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
stamp, documentary, excise, property or other taxes, levies, imposts, duties,
charges, assessments, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding income taxes, gross receipts taxes (excluding sales taxes), and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent, the Syndication Agent or any Lender as a result of a
present or former connection between the Administrative Agent, the Syndication
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative Agent,
the Syndication Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement, the Notes
or any Letters of Credit). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Administrative Agent,
the Syndication Agent or any Lender hereunder or under the Notes or any Letters
of Credit, then the Borrower shall withhold such Non-Excluded Taxes and the
amounts so payable to the Administrative Agent, the Syndication Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent, the Syndication Agent or such Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement, the Notes and any Letters of Credit,
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not incorporated or organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of Section 2.19(b). Whenever any Non-Excluded Taxes
are payable by the Borrower, as promptly as possible thereafter the Borrower
shall send to the Administrative Agent for its own account or for the account of
the Syndication Agent or such other Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes after notice from
the Administrative Agent or any Lender when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative
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Agent, the Syndication Agent and the Lenders for any incremental taxes, interest
or penalties that may become payable by the Administrative Agent, the
Syndication Agent or any Lender as a result of any such failure.
(b) Each Lender that is not incorporated or organized under the laws of the
United States of America or a state thereof shall:
(i) deliver to the Borrower and the Administrative Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and completing such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
unless in any such case a change (including any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender so advises the Borrower and the Administrative
Agent. Such Lender shall certify (x) in the case of a Form 1001 or 4224, that it
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States Federal income taxes and (y) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
participant pursuant to Section 9.04 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this Section 2.19, provided that, in the case of a
participant, such participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.
(c) The provisions of this Section 2.19 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby and the repayment of any of
the Loans.
(d) Any Agent or Lender claiming any indemnity payment or additional
amounts payable pursuant to this Section 2.19 shall use reasonable efforts
(consistent
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with legal and regulatory restrictions) to file any certificate or document
reasonably requested in writing by the Borrower or to change the jurisdiction of
its applicable lending office if the making of such a filing or change would
avoid the need for or reduce the amount of any such indemnity payment or
additional amounts that may thereafter accrue and would not, in the sole
determination of such Agent or Lender, be otherwise disadvantageous to such
Lender.
(e) Nothing contained in this Section 2.19 shall require any Agent or
Lender to make available any of its tax returns (or any other information that
it deems to be confidential or proprietary).
(f) No Lender shall be entitled to claim any indemnity payment or
additional amount payable pursuant to this Section 2.19 with respect to any tax
unless such Lender shall have notified the Borrower that it will demand
compensation for such payment or amount not more than 120 days after the date on
which such Lender becomes aware of the costs or reductions giving rise to such
claim. Failure on the part of any Lender to demand any indemnity payment or any
such additional amount with respect to any period shall not constitute a waiver
of such Lender's right to demand compensation with respect to any other period.
SECTION 2.20. Assignment of Commitments and Loans Under Certain
Circumstances. In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.13 or 2.14, or the Borrower shall be required
to pay additional amounts to any Lender under Section 2.19, the Borrower shall
have the right, at its own expense, upon notice to such Lender and the
Administrative Agent, to require such Lender to transfer and assign without
recourse (in accordance with and subject to the provisions set forth in Section
9.04, including clause (i) of the proviso to Section 9.04(b)) all its interests,
rights and obligations under this Agreement to another financial institution
designated by the Borrower which shall assume such obligations; provided that
(i) no such assignment shall conflict with any law, rule, regulation or order of
any Governmental Authority and (ii) the Borrower shall pay, or cause the
assignee to pay, to the affected Lender in immediately available funds on the
date of such assignment the entire amount of principal of and interest accrued
to the date of payment on the Loans and participations in Letter of Credit
Disbursements made by it hereunder and all other amounts accrued for its account
or owed to it hereunder; provided further that if prior to any such assignment
the circumstances or event that resulted in such Lender's notice or certificate
under Section 2.13 or 2.14 or demand for additional amounts under Section 2.19,
as the case may be, shall cease to exist or become inapplicable for any reason
or if such Lender shall waive its rights in respect of such circumstances or
event under Section 2.13, 2.14 or 2.19, as the case may be, then such Lender
shall not thereafter be required to make any such assignment hereunder.
SECTION 2.21. Letters of Credit. (a) The Borrower may request the issuance
of Tranche A Letters of Credit, in a form reasonably acceptable to the
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Administrative Agent and the Issuing Bank, for the account of the Borrower, at
any time and from time to time during the Tranche A Revolving Credit
Availability Period; provided that any Tranche A Letter of Credit shall be
issued only if, and each request by the Borrower for the issuance of any Tranche
A Letter of Credit shall be deemed a representation and warranty of the Borrower
that, immediately following the issuance of such Letter of Credit, (i) the sum
of (A) the Tranche A Letter of Credit Exposure and (B) the aggregate principal
amount of outstanding Tranche A Revolving Loans shall not exceed the aggregate
amount of the Tranche A Revolving Credit Commitments at such time and (ii) the
Tranche A Letter of Credit Exposure shall not exceed $7,500,000. Each Tranche A
Letter of Credit shall expire at the close of business on the earlier of (I) the
last day of the Tranche A Revolving Credit Availability Period and (II) the
first anniversary of the date of issuance of such Tranche A Letter of Credit,
unless such Tranche A Letter of Credit expires by its terms on an earlier date.
Each Letter of Credit shall provide for payments of drawings in dollars.
(b) The Borrower may request the issuance of Tranche B Letters of Credit,
in a form reasonably acceptable to the Administrative Agent and the Issuing
Bank, for the account of the Borrower, at any time and from time to time during
the Tranche B Revolving Credit Availability Period; provided that any Tranche B
Letter of Credit shall be issued only if, and each request by the Borrower for
the issuance of any Tranche B Letter of Credit shall be deemed a representation
and warranty by the Borrower that, immediately following the issuance of such
Letter of Credit, the sum of (i) the Tranche B Letter of Credit Exposure and
(ii) the aggregate principal amount of outstanding Tranche B Revolving Loans
shall not exceed the aggregate amount of the Tranche B Revolving Credit
Commitments at such time. Each Tranche B Letter of Credit shall expire no later
than the close of business on the Tranche B Maturity Date. Each Letter of Credit
shall provide for payments of drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at least two
Business Days' prior irrevocable written or telecopy notice (or such shorter
notice as shall be acceptable to the Issuing Bank) from the Borrower to the
Administrative Agent and the Issuing Bank specifying, on the Issuing Bank's
standard form or on such other form as is acceptable to the Issuing Bank, the
date of issuance, the date on which such Letter of Credit is to expire, the
amount of such Letter of Credit, the name and address of the beneficiary of such
Letter of Credit, whether such Letter of Credit is a Tranche A Letter of Credit
or a Tranche B Letter of Credit, and such other information as may be necessary
or desirable to complete such Letter of Credit. The Issuing Bank will give the
Administrative Agent prompt notice of the issuance and amount of such Letter of
Credit and the expiration date of such Letter of Credit (and the Administrative
Agent shall give prompt notice thereof to each Lender). The Issuing Bank also
will give the Administrative Agent (i) daily notice of the amount available to
be drawn under each outstanding Letter of Credit and (ii) a quarterly summary
indicating, on a daily basis during such quarter, the issuance of any Letter of
Credit and the amount thereof, the expiration of any Letter of Credit and the
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amount thereof and the payment on any draft presented under any Letter of
Credit. The Administrative Agent will promptly provide the Lenders with copies
of each such quarterly summary.
(d) By the issuance of a Letter of Credit and without any further action on
the part of the Issuing Bank, the Administrative Agent or the Lenders in respect
thereof, the Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Bank, effective upon the issuance of such Letter of
Credit, a participation in such Letter of Credit equal to (i) in the case of any
such Tranche A Letter of Credit, such Lender's pro rata share (based on the
percentage of the aggregate Tranche A Revolving Credit Commitments represented
by such Lender's Tranche A Revolving Credit Commitment) of the aggregate amount
available to be drawn under such Tranche A Letter of Credit and (ii) in the case
of any such Tranche B Letter of Credit, such Lender's pro rata share (based on
the percentage of the aggregate Tranche B Revolving Credit Commitments
represented by such Lender's Tranche B Revolving Credit Commitment) of the
aggregate amount available to be drawn under such Tranche B Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, on behalf of the
Issuing Bank, in accordance with Section 2.02(d), (A) such Lender's pro rata
share (based on the percentage of the aggregate Tranche A Revolving Credit
Commitments represented by such Lender's Tranche A Revolving Credit Commitment)
of each Tranche A Letter of Credit Disbursement made by the Issuing Bank and not
reimbursed by the Borrower when due in accordance with Section 2.21(g) and (B)
such Lender's pro rata share (based on the percentage of the aggregate Tranche B
Revolving Credit Commitments represented by such Lender's Tranche B Revolving
Credit Commitment) of each Tranche B Letter of Credit Disbursement made by the
Issuing Bank and not reimbursed by the Borrower when due in accordance with
Section 2.21(g); provided that the Lenders shall not be obligated to make any
such payment with respect to any wrongful Letter of Credit Disbursement made as
a result of the gross negligence or willful misconduct of the Issuing Bank.
(e) Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to Section 2.21(d) in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever (subject only to the proviso set forth in
Section 2.21(d)).
(f) During the Tranche A Revolving Credit Availability Period, the Borrower
shall pay to the Administrative Agent, on the last day of March, June, September
and December in each year and on the date on which the Tranche A Revolving
Credit Commitments shall be terminated as provided herein, (i) for the account
of the Lenders, ratably in proportion to their Tranche A Revolving Credit
Commitments, a fee on the average daily aggregate amount available to be drawn
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under all outstanding Tranche A Letters of Credit, if any, during the preceding
quarter (or shorter period commencing with the date of this Agreement) at a rate
per annum equal to the Applicable Tranche A Eurodollar Margin from time to time
in effect during such period pursuant to Section 2.06, plus, during any period
when there is a Sub-investment Grade Rating, the Tranche A Rating Premium, and
(ii) for the account of the Issuing Bank, a fee on the average daily aggregate
amount available to be drawn under all outstanding Tranche A Letters of Credit,
if any, during the preceding quarter (or shorter period commencing with the date
of this Agreement) at a rate per annum equal to 0.125%. During the Tranche B
Revolving Credit Availability Period, the Borrower shall pay to the
Administrative Agent, on the last day of March, June, September and December in
each year and on the date on which the Tranche B Revolving Credit Commitments
shall be terminated as provided herein, (i) for the account of the Lenders,
ratably in proportion to their Tranche B Revolving Credit Commitments, a fee on
the average daily aggregate amount available to be drawn under all outstanding
Tranche B Letters of Credit, if any, during the preceding quarter (or shorter
period commencing with the date of this Agreement) at a rate per annum equal to
the Applicable Tranche B Eurodollar Margin from time to time in effect during
such period pursuant to Section 2.06, plus, during any period when there is a
Sub-investment Grade Rating, the Tranche B Rating Premium, and (ii) for the
account of the Issuing Bank, a fee on the average daily aggregate amount
available to be drawn under all outstanding Tranche B Letters of Credit, if any,
during the preceding quarter (or shorter period commencing with the date of this
Agreement) at a rate per annum equal to 0.125%. Such fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. Such fees
shall accrue from and including the date of this Agreement to but excluding the
last day of the Tranche A Revolving Credit Availability Period or the Tranche B
Maturity Date, as applicable. In addition to the foregoing, the Borrower shall
pay directly to the Issuing Bank, for its account, payable within 15 days after
demand therefor by the Issuing Bank, the Issuing Bank's customary processing and
documentation fees in connection with the issuance or amendment of or payment on
any Letter of Credit.
(g) The Borrower hereby agrees to reimburse the Issuing Bank for any
payment or disbursement made by the Issuing Bank under any Letter of Credit, by
making payment in immediately available funds to the Administrative Agent within
three Business Days after receipt of notice of such payment or disbursement, in
an amount equal to the amount of such payment or disbursement, plus interest on
the amount so paid or disbursed by the Issuing Bank, to the extent not
reimbursed prior to 3:00 p.m. (Boston time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but excluding the
date the Issuing Bank is reimbursed by the Borrower therefor, at a rate per
annum equal to (i) in the case of amounts due in respect of Tranche A Letters of
Credit, the rate applicable to ABR Tranche A Revolving Loans during such period
pursuant to Section 2.06 and (ii) in the case of amounts due in respect of
Tranche B Letters of Credit, the rate applicable to ABR Tranche B Revolving
Loans during such period pursuant to Section 2.06. If the Borrower shall fail to
pay any amount required to be paid by it under this
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65
Section 2.21(g) when due, such unpaid amount shall bear interest as provided in
Section 2.07. The Issuing Bank shall give the Borrower prompt notice of each
drawing under any Letter of Credit, provided that the failure to give any such
notice shall in no way affect, impair or diminish the Borrower's obligations
hereunder. The Administrative Agent shall promptly pay any such amounts received
by it to the Issuing Bank.
(h) The Borrower's obligation to reimburse Letter of Credit Disbursements
as provided in Section 2.21(g) shall be absolute, unconditional and irrevocable
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
any other Loan Document;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower, any Subsidiary or any other Person may at any time have
against the beneficiary under any Letter of Credit, the Issuing Bank, any
Agent, any Lender or any other Person in connection with this Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
failing to comply with the Uniform Customs and Practices for Documentary
Credits, as in effect from time to time, or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; provided that such payment was not
wrongfully made as a result of the gross negligence or wilful misconduct of
the Issuing Bank; and
(v) any other act or omission or delay of any kind or any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the
provisions of this Section 2.21(h), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(i) It is expressly understood and agreed that, for purposes of determining
whether a wrongful payment under a Letter of Credit resulted from the Issuing
Bank's gross negligence or wilful misconduct, (i) the Issuing Bank's acceptance
of documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the
contrary, (ii) the Issuing
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Bank's exclusive reliance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including the amount of any
draft presented under such Letter of Credit, whether or not the amount due to
the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect (so long as such document on its face appears to be
in order), and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or invalid or
any statement therein proves to be inaccurate or untrue in any respect
whatsoever and (iii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute wilful misconduct or gross negligence of
the Issuing Bank. It is further understood and agreed that, notwithstanding the
proviso to clause (iv) of Section 2.21(h), the Borrower's obligation hereunder
to reimburse Letter of Credit Disbursements will not be excused by the gross
negligence or wilful misconduct of the Issuing Bank to the extent that such
Letter of Credit Disbursement actually discharged a liability of, or otherwise
benefited, or was recovered by, the Borrower; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages suffered by the Borrower that are caused by the
Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof.
(j) The Issuing Bank shall, promptly following its receipt thereof, examine
all documents purporting to represent a demand for payment under a Letter of
Credit, including as to compliance with the Uniform Customs and Practices for
Documentary Credits, as then in effect. The Issuing Bank shall as promptly as
possible give telephonic notification, confirmed by telex or telecopy, to the
Administrative Agent and the Borrower of such demand for payment and whether the
Issuing Bank has made or will make a Letter of Credit Disbursement thereunder,
provided that the failure to give such notice shall not relieve the Borrower of
its obligation to reimburse any such Letter of Credit Disbursement in accordance
with this Section 2.21. The Administrative Agent shall promptly give each Lender
notice thereof.
(k) In the event that the Borrower is required or elects pursuant to the
terms of this Agreement (other than Sections 2.11(h) and 7.01) to provide cash
collateral in respect of the Letter of Credit Exposure of any Class, the
Borrower shall deposit in an account with the Administrative Agent an amount in
cash equal to the Letter of Credit Exposure of such Class (or such lesser amount
as shall be required or elected hereunder). Any such deposit shall be held by
the Administrative Agent in accordance with the Cash Collateral Agreement. In
the event that the Borrower is required pursuant to the terms of Section 2.11(h)
or Section 7.01 of this Agreement to provide cash Collateral in respect of the
Letter of Credit Exposure of any Class, the Borrower shall deposit such cash
collateral in an account with the Trustee pursuant to the Trust Agreement. Such
deposit shall be held by the Trustee in accordance with the Trust Agreement. Any
such deposit to be held by the Administrative Agent or the
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Trustee, as provided herein, shall be accompanied by notice from the Borrower,
in form satisfactory to the Administrative Agent or the Trustee, as the case may
be, setting forth the basis for such deposit, identifying in reasonable detail
the Letters of Credit to which such deposit relates, and setting forth any other
information related to such deposit reasonably requested by the Administrative
Agent or the Trustee, as the case may be. The Borrower shall promptly provide
the Administrative Agent with a copy of any such notice to the Trustee and shall
promptly provide the Trustee with a copy of any such notice to the Borrower.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the Loan
Parties (a) is a limited partnership (in the case of the Borrower and the Public
Partnership) or a corporation (in the case of the other Loan Parties) 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, (c) is duly qualified or registered to do business and
is in good standing as a foreign limited partnership (in the case of the
Borrower and the Public Partnership) or corporation (in the case of the other
Loan Parties) in all jurisdictions in which, after giving effect to the
conveyance to the Borrower of the Assets, 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, in the case of the Borrower and the Public Partnership,
Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho,
Iowa, Illinois, Indiana, Massachusetts, Maine, Michigan, Minnesota, Missouri,
New Hampshire, New Mexico, New York, South Carolina, Texas, Vermont, Rhode
Island and Wisconsin) and (d) has the partnership or corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents and each other agreement or instrument contemplated thereby to which
it is or will be a party, to consummate the Transactions and, in the case of the
Borrower, to obtain extensions of credit hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
each of the Borrower and the Loan Parties of each of the Loan Documents to which
it is or will be a party, the consummation of the Transactions and, in the case
of the Borrower, the extensions of credit hereunder (a) have been duly
authorized by all requisite partnership or corporate action and (b) will not (i)
upon obtaining the consents listed on Schedule 3.02 (the "Required Consents"),
violate (A) any provision of law, statute, rule or regulation, (B) any provision
of the agreement of limited
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partnership, articles of incorporation or other constitutive documents or
by-laws of the Borrower and the other Loan Parties, (C) any order of any
Governmental Authority or (D) any provision of any indenture, agreement or other
instrument to which the Borrower or any of the other Loan Parties is a party or
by which any of them or any of their property is or may be bound, (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 indenture,
agreement or other instrument or (iii) except for the Liens of the Collateral
Documents and of the Triarc Note and the restrictions pursuant to the terms of
the MLP Agreement and the Partnership Agreement, result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned
or hereafter acquired by the Borrower or any of the other Loan Parties, other
than, in the case of clauses (i)(A), (i)(D) and (ii), where as a result thereof,
individually or in the aggregate, there would not occur a Material Adverse
Effect (the "Permitted Exceptions").
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document and
Operative Agreement when executed and delivered by the Borrower or any of the
other Loan Parties will constitute, the legal, valid and binding obligation of
such party enforceable against such party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors and general principles of
equity (regardless of whether such enforcement is considered at law or in
equity).
SECTION 3.04. Consents and Governmental Approvals. As of the Closing Date,
all the Required Consents will have been made or obtained and will be in full
force and effect. No other consent or approval of, registration or filing with
or any other action by (a) any Governmental Authority, (b) any creditor or
holder of any Capital Stock of the Borrower, any of the other Loan Parties or
any Affiliate thereof or (c) any other Person is or will be required with
respect to any Loan Party in connection with the Transactions, the Facilities or
the performance by the Borrower or any of the other Loan Parties of the Loan
Documents to which it is or will be a party, in each case except such as have
been made or obtained and are in full force and effect, except for consents,
approvals, registrations and filings or other actions (other than the Required
Consents) related to transfers made pursuant to the Conveyance Agreements (i)
which are not required at such time and are routine or administrative in nature
and are obtained or given in the ordinary course of business within 90 days
after the Closing Date or (ii) in the case of clauses (b) and (c), which if not
obtained or given, would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.05. Business; Financial Statements. (a) Prior to the Closing
Date, the Borrower has not engaged in any business or activities, except for
activities
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related to its formation, organization and prospective operations, and will not
have any significant assets or liabilities prior to its acquisition of the
Assets and assumption of liabilities, as contemplated by this Agreement and the
Registration Statement. As of the Closing Date, the Business (as conducted by
the National Propane Group) does not include and, to the knowledge of the
Borrower, has never included (whether conducted by the National Propane Group or
any of its predecessors) the sale, distribution or storage of any petroleum
derivative product (other than propane gas and other than storage of diesel fuel
used for vehicles of the National Propane Group).
(b) The Borrower has delivered to the Agents complete and correct copies of
the Registration Statement filed with the SEC. The pro forma consolidated
financial statements of the Public Partnership set forth in the Registration
Statement comply in all material respects with the applicable accounting
requirements of the Securities Act, and the published rules and regulations
thereunder and, in the opinion of the Borrower, the assumptions on which the pro
forma adjustments to such pro forma consolidated financial statements of the
Public Partnership are based provide a reasonable basis for presenting the
significant effects of the transactions contemplated by such pro forma
consolidated financial statements and such pro forma adjustments give
appropriate effect to such assumptions and are properly applied in such pro
forma consolidated financial statements. The financial statements and schedules
included in the Registration Statement (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 in all material
respects 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. The financial data included
under the caption "Selected Historical and Pro Forma Consolidated Financial and
Operating Data" for National Propane Corp. and for the Public Partnership in the
Registration Statement fairly present in all material respects, on the basis
stated in the Registration Statement, the information set forth therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The historical aspects of the
financial data included under the caption "Capitalization" in the Registration
Statement fairly present, on the basis stated in the Registration Statement, the
information set forth therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration Statement;
the pro forma aspects of such financial data included under the caption
"Capitalization" have been prepared in all material respects in accordance with
all applicable rules and guidelines of the SEC with respect to pro forma
financial information; and the assumptions on which the pro forma adjustments to
the pro forma aspects of the financial data included under the caption
"Capitalization" are based provide a reasonable basis for presenting all of the
significant effects of the Transactions and such pro forma adjustments give
appropriate effect to such assumptions and are properly applied in such pro
forma financial data.
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(c) The Borrower has delivered to the Agents the unaudited pro forma
balance sheet of the Borrower as of March 31, 1996. Such balance sheet presents
fairly the pro forma financial condition of the Borrower as of that date in
accordance with GAAP.
(d) The Borrower has heretofore furnished to the Lenders (i) the balance
sheet of the Public Partnership as of March 31, 1996 and (ii) the consolidated
balance sheets of National Propane Corp. and its Subsidiaries as of December 31,
1994 and 1995 and the related consolidated statements of operations and cash
flows for each of the years in the three-year period ended December 31, 1995, in
each case audited by and accompanied by the opinion of Deloitte & Touche, LLP,
independent public accountants (the financial statements referred to in clauses
(i) and (ii) above, collectively, the "Audited Financial Statements"). The
Audited Financial Statements present fairly in all material respects in
accordance with GAAP the consolidated financial position and the consolidated
results of operations and cash flows of National Propane Corp. and its
Subsidiaries as of such dates and for such periods. The balance sheets and the
notes thereto included in the Audited Financial Statements disclose all
material liabilities, actual or contingent, of National Propane Corp. and its
Subsidiaries as of the dates thereof. The unaudited pro forma balance sheet of
the Borrower referred to in paragraph (c) above, including the footnotes
thereto, discloses all material liabilities, actual or contingent, of the
Borrower as of the Closing Date. The Audited Financial Statements were prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto).
SECTION 3.06. No Material Adverse Change. Since March 31, 1996, there has
occurred no material adverse change in the business, operations, property or
condition (financial or otherwise) of the National Propane Group. Since the
Closing Date, there has occurred no condition, event or other occurrence that,
individually or in the aggregate, has had, and there exists no condition, event
or other occurrence, that, individually or in the aggregate, could reasonably be
expected to have, a Material Adverse Effect.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Except for
Excluded Assets (as defined in the Conveyance Agreements) and leased property
and personal property covered by the Agency Agreement, immediately upon
consummation of the Transactions on the Closing Date, (i) the Borrower and the
Restricted Subsidiaries will own fee simple title to, or hold valid leasehold
interests in, all the properties and assets used in the operation of the
Business and (ii) the interests of the Borrower and the Restricted Subsidiaries
in all such leased properties and assets shall be the same as the interests of
the National Propane Group therein prior to the Closing Date. Each of the
Borrower and the Restricted Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets, free and
clear of Liens, except for Permitted Encumbrances and Liens permitted by Section
6.02.
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(b) Schedule 3.07 sets forth, as of the Closing Date, a true, complete and
correct list of (i) all real property owned by the Borrower and the
Subsidiaries; (ii) all real property leased by the Borrower or any Subsidiary;
and (iii) the location and use of each such property. All real property
interests listed on Schedule 4.01(d)(vii) are owned, leased or otherwise used in
the operation of the Business as of the Closing Date. As of the Closing Date,
the aggregate fair market value of the real property interests listed on
Schedule 4.01(d)(vii) is 80% or more of the aggregate fair market value of the
real property interests used in the operation of the Business, as such fair
market value has been determined pursuant to the appraisals delivered pursuant
to Section 4.01(v). As of the Closing Date, the collective net operating
revenues of the real property interests listed on Schedule 4.01(d)(vii) are 80%
or more of the collective net operating revenues of the real property interests
used in the operation of the Business. Part A of Schedule 4.01(d)(vii)
constitutes a true, complete and accurate list of all real property interests
that are owned by the Borrower and that individually have a fair market value in
excess of $250,000. Part B of Schedule 4.01(d)(vii) constitutes a true, complete
and accurate list of all other real property interests owned by the Borrower
other than real property interests that, individually and in the aggregate, are
not material to the operation of the Business or any material individual
location of the Business. Except for leasehold interests in real property that
are encumbered by a Mortgage at Closing, no leasehold interest in real property
that is held by the Borrower or any Subsidiary is material to the Business or
any material individual location of the Business.
(c) Each of the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. Each of the Borrower and the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date
a list of all the Subsidiaries, the respective jurisdictions of organization
thereof and the percentage ownership interest, direct or indirect, of the
Borrower therein.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth in
Schedule 3.09, there are no actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower, any other Loan Party or
any business, property or rights of the Borrower or any other Loan Party (i)
which involve any Loan Document or the Transactions or (ii) as to which there is
a reasonable possibility of an adverse determination which could be reasonably
expected to result, individually or in the aggregate, in a Material Adverse
Effect.
(b) Neither the Borrower nor any other Loan Party is in violation of any
law, rule or regulation, or in default with respect to any judgment, writ,
injunction or decree, of any Governmental Authority, where such violation or
default could be reasonably expected to result, individually or in the
aggregate, in a Material Adverse
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Effect. Except as set forth in Schedule 3.09, neither the Borrower nor any other
Loan Party has received any written communication during the three years prior
to the Closing Date from any Governmental Authority that alleges that the
Borrower or any other Loan Party or the Business is not in compliance in any
material respect with any law, rule or regulation or any judgment, writ,
injunction or decree.
SECTION 3.10. Agreements. Neither the Borrower nor any of the other Loan
Parties is a party to any agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. Each indenture
or other agreement or instrument evidencing Indebtedness and each other material
agreement, contract, lease, license, commitment or other instrument to which the
Borrower or any of the Loan Parties is a party or by which it or any of its
properties or assets are or may be bound as of the Closing Date, after giving
effect to the Transactions, is listed on Schedule 3.10 hereto (collectively with
any agreements listed on Schedule 3.20, the "Material Contracts").
(b) As of the Closing Date, after giving effect to the Transactions, each
Material Contract will be in all material respects valid, binding and in full
force and effect and will be enforceable by the Borrower or the Loan Party which
is a party thereto in accordance with its terms. Except as set forth in Schedule
3.10, as of the Closing Date, after giving effect to the Transactions, each of
the Borrower and the Loan Parties will have performed in all material respects
all obligations required to be performed by it to date under the Material
Contracts and it will not be (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder and, to
the knowledge of the Borrower, no other party to any of the Material Contracts
will be (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder. As of the Closing Date,
after giving effect to the Transactions, neither the Borrower nor any of the
Loan Parties, nor, to the knowledge of the Borrower, any other party to any
Material Contract, will have given notice of termination of, or taken any action
inconsistent with the continuation of, any Material Contract. As of the Closing
Date, none of such other parties will have any presently exercisable right to
terminate any Material Contract.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Borrower nor any
of the other Loan Parties is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the regulations of the Board, including
Regulation G, U and X.
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SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any of the other Loan Parties is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940, (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935 or (c) subject to
regulation as a "public utility" or a "public service corporation" or the
equivalent under any Federal or state law.
SECTION 3.13. Use of Proceeds. (a) The proceeds of all Tranche A Revolving
Loans will be used solely for working capital. The Tranche A Letters of Credit
will be issued solely to support various payment obligations of the Borrower and
the Restricted Subsidiaries incurred in the ordinary course of business.
(b) The proceeds of all Tranche B Revolving Loans will be used solely (i)
to fund the purchase price of any Eligible Propane Acquisitions by the Borrower
or any Restricted Subsidiary (provided, in the case of an acquisition of Capital
Stock, that the Person so acquired becomes a Restricted Subsidiary) and (ii) to
fund Growth-Related Capital Expenditures of up to $5,000,000 per fiscal year.
The Tranche B Letters of Credit will be issued solely to support obligations of
the Borrower incurred in connection with such acquisitions and Growth-Related
Capital Expenditures.
(c) The proceeds of all Tranche B Term Loans will be used solely to
refinance Tranche B Revolving Loans outstanding on the Tranche B Conversion
Date.
(d) The proceeds of the sale of the Units by the Public Partnership will be
used by the Public Partnership and the Borrower as contemplated by the
Registration Statement. In particular, the proceeds of the sale of any Units
subject to the Underwriters' over-allotment option will be contributed by the
Public Partnership to the capital of the Borrower for no additional
consideration. Of the proceeds of the sale of the Mortgage Notes, approximately
$59,300,000 will be paid by National Propane Corp. as dividends to Triarc, a
portion will be used to pay transaction costs and expenses and approximately
$57,300,000 will be contributed by National Propane Corp. to the Borrower under
the Conveyance Agreements and will be used by the Borrower to repay in full
certain indebtedness assumed by the Borrower under the Conveyance Agreements
(including, without limitation, the Refunding Notes (as defined in the
Registration Statement)). As of the Closing Date, the Borrower will have Net
Working Capital of at least $__________________.
SECTION 3.14. Tax Returns. Each of the Borrower and its Affiliates has
filed all tax returns required by law to be filed by it (or, with respect to
those tax returns listed on Schedule 3.14, has properly filed for extensions of
time for the filing thereof) 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 (a) those which are not past
due or are presently being contested in good faith by appropriate proceedings
diligently conducted for which such reserves
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or other appropriate provisions, if any, as shall be required by GAAP have been
made and (b) in the case of any such Person other than the Borrower and the
Restricted Subsidiaries, those which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. The
Borrower is a limited partnership that is treated as a pass-through entity for
U.S. Federal income tax purposes. The Borrower is a limited partnership not
subject to taxation with respect to its income or gross receipts under
applicable state laws, except in states where such taxation would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.15. No Material Misstatements. (a) No written information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Borrower, any Restricted Subsidiary, the General Partners or any of their
Affiliates to any Agent or Lender in connection with the negotiation of any Loan
Document or included therein or delivered pursuant thereto contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made
not misleading (other than statements made regarding general economic conditions
relating to national or local economies and except for projections made and
delivered in good faith and on the basis of reasonable assumptions). There is no
fact actually known to the Borrower which has or in the future would (so far as
the Borrower or the General Partners can now reasonably foresee) have a Material
Adverse Effect which has not been set forth in this Agreement (including the
schedules hereto) or the Registration Statement. The Agents and the Lenders
shall be entitled to rely on the statements and disclosures set forth in the
Registration Statement.
(b) All representations and warranties of the Borrower and the General
Partners set forth in the Note Agreement were true and correct in all material
respects on and as of the date of such agreement and will be true and correct in
all material respects on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties were true and correct in all material
respects on and as of such earlier date).
SECTION 3.16. Employee Benefit Plans. (a) None of the General Partners, the
Borrower, any Subsidiary or any Related Person (other than Triarc or any of its
Non-Related Subsidiaries) has ever established, maintained, contributed to or
been obligated to contribute to, and none of the General Partners, the Borrower
or any Related Person has any liability or obligation with respect to, any Plan
that is subject to Section 302 of Title IV of ERISA or Section 412 of the Code
(other than a Multiemployer Plan). Neither the Borrower nor any Related Person
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 (other than pursuant to a
Multiemployer Plan). None of the General Partners,
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the Borrower, any Subsidiary or any Related Person has incurred any material
liability under or pursuant to Title I or Title IV of ERISA with respect to any
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 General
Partners, the Borrower, any Subsidiary or any Related Person has engaged in any
transaction, including the transactions contemplated hereunder, which could
subject the Borrower or any Related Person to a material 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 other than one for which the applicable
notice requirements have been waived by PBGC regulations) 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 General
Partners, the Borrower or any Subsidiary to a material liability under Section
502(i) or 502(l) 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 General Partners, the
Borrower, any Subsidiary or any Related Person. None of the General Partners,
the Borrower, any Subsidiary or 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. Full timely payment has been made of all amounts which the
General Partners, the Borrower, any Subsidiary or any Related Person is required
under applicable law, the terms of each Plan or any collective bargaining
agreement to have paid as contributions to each such Plan. The aggregate
withdrawal liability of the General Partners, the Borrower, its Subsidiaries and
the Related Persons with respect to all Multiemployer Plans, determined as if a
complete withdrawal had occurred on the date hereof, would not have a Material
Adverse Effect. No Multiemployer Plan is insolvent or in reorganization within
the meaning of Section 4241 or 4245 of ERISA. None of the General Partners or
the Borrower has any obligation to provide any material amount of
post-employment welfare benefits or coverage (other than continuation coverage
provided pursuant to Section 4980B of the Code or Section 606 et seq. of ERISA).
SECTION 3.17. Environmental and Safety Matters. (a) Except as disclosed in
Schedule 3.17, each of the Borrower, the Restricted Subsidiaries and the General
Partners is, and after giving effect to the transfer to the Borrower of the
Assets will be, 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 Borrower and the Restricted Subsidiaries 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 3.17 lists, as of the Closing
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Date, (i) all notices from Federal, state or local environmental agencies to the
Borrower, any Restricted Subsidiary, either of the General Partners or any
Affiliate thereof citing environmental violations affecting the Business or
Assets that have not been finally resolved and disposed of, and no such
violation, whether or not notice regarding such violation is listed on Schedule
3.17, if ultimately resolved against such party, individually or in the
aggregate, would have a Material Adverse Effect and (ii) all current reports
filed by the Borrower, each Restricted Subsidiary or either of the General
Partners with any Federal, state or local environmental agency having
jurisdiction over the Assets which disclose the release or threatened release of
a Hazardous Material or noncompliance with an Environmental Law. True and
complete copies of all current reports filed by the Borrower, each Restricted
Subsidiary or either of the General Partners prior to the Closing with any
Federal, state or local environmental agency having jurisdiction over the
Assets, have been made available to the Lenders. Notwithstanding any such
notice, except for matters the consequences of which will not have a Material
Adverse Effect, (y) the Business and Assets are currently being operated in all
material respects within the limits set forth in such environmental permits or
licenses and (z) any current noncompliance with such permits or licenses will
not result in any liability or penalty to the Borrower, any Restricted
Subsidiary or either General Partner or in the revocation, loss or termination
of any such environmental permits or licenses.
(b) Except as disclosed in Schedule 3.17, 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 none of the Borrower, any
Restricted Subsidiary or the General Partners has received, or, to the knowledge
of the Borrower, been threatened with, a notice of violation of RCRA regarding
such facilities.
(c) Except as disclosed in Schedule 3.17, no Hazardous Materials are or
have been located or present at any of the real property included in the Assets
or any previously owned properties in violation of any Environmental Law, which
violation will have a Material Adverse Effect, or in such circumstances as to
give rise to liability, which liability 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 Environmental Law 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 referred to in
clause (i), (ii) or (iii) above will have a Material Adverse Effect.
(d) Except as disclosed in Schedule 3.17, the Borrower has not received
notice that it has been identified as a potentially responsible party under
CERCLA or any comparable state, local or foreign law nor has the Borrower
received any notification that any Hazardous Materials that it has used,
generated, stored, treated,
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handled, transported or disposed of or arranged for transport for disposal or
treatment of, or arranged for disposal or treatment of, has been found at any
site at which any Governmental Authority or private party is conducting or plans
to conduct a remedial investigation or other action pursuant to any
Environmental Law.
(e) For purposes of this Section 3.17, the "Assets" include all assets and
properties covered by the Agency Agreement.
SECTION 3.18. Security Interests. The Trustee for the benefit of the
Secured Parties will at all times have the Liens provided for in the Collateral
Documents and, subject to the filing by the Trustee of continuation statements
to the extent required by the Uniform Commercial Code, the recordations,
publications, registrations and filings contemplated by Section 6.14 with
respect to motor vehicles and rolling stock and the execution and delivery of
Agency Account Agreements for certain bank accounts (which shall be accomplished
in accordance with all applicable terms of this Agreement and the Collateral
Documents), the Collateral Documents will at all times constitute a valid and
continuing lien of record and first priority perfected security interest in all
the Collateral referred to therein. No filings or recordings are required in
order to perfect the security interests created under the Collateral Documents,
except for filings or recordings listed on Schedule 3.18. All such listed
filings and recordings will have been made on or prior to the Closing Date,
except as otherwise expressly provided in Schedule 3.18, and on the Closing Date
will, when taken together with all Mortgages recorded at or prior to the Closing
Date that constitute first priority perfected liens on the real property
interests they purport to encumber, constitute and evidence first priority
perfected security interests and Liens on Assets representing more than 80% of
the aggregate fair market value of all the Assets and all assets and properties
covered by the Agency Agreement.
SECTION 3.19. Solvency. Upon the making of the initial Loan or the issuance
of the initial Letter of Credit hereunder and the concurrent or prior
consummation of the Transactions, each of the Borrower and the Restricted
Subsidiaries will be Solvent. "Solvent" means, with respect to any Person, that
(a) the sum of the assets of such Person, both at a fair valuation and at
present fair saleable value, will exceed the liabilities of such Person, (b)
such Person will have sufficient capital with which to conduct its business as
presently conducted and as proposed to be conducted and (c) such Person has not
incurred debts, and does not intend to incur debts, beyond its ability to pay
such debts as they mature. For purposes of the foregoing definition, "debts"
means any liabilities on claims, and "claim" means (i) a right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (ii) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured. With respect to any
contingent liabilities, such liabilities shall be computed at the amount which,
in light
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of all the facts and circumstances existing at the time, represents the amount
which can reasonably be expected to become an actual or matured liability.
SECTION 3.20. Transactions with Affiliates. Except as set forth in Schedule
3.20 and except for agreements and arrangements among the Borrower and
Restricted Subsidiaries or among Restricted Subsidiaries, as of the Closing
Date, neither the Borrower nor any of the Subsidiaries is a party to, and none
of the properties and assets of the Borrower or any of the Subsidiaries is
subject to or bound by, any agreement or arrangement with, and neither the
Borrower nor any of the Subsidiaries is engaged in any transaction with, (a) any
Affiliate of the Borrower or any of the Subsidiaries or (b) any Affiliate of
Triarc.
SECTION 3.21. Ownership. The only general partners of the Borrower are the
General Partners and the only general partners of the Public Partnership are the
General Partners. Upon the consummation of the Closing, the National Propane
Corp. will own a 1.0101% general partner interest in the Borrower and National
Propane SGP will own a 1.0101% general partner interest in the Borrower. The
only limited partner of the Borrower is the Public Partnership. Upon the
consummation of the Closing, the Public Partnership will own a 97.9798% limited
partner interest in the Borrower acquired as provided in the Registration
Statement. Upon consummation of the Closing, the General Partners will each own
an unsubordinated 1.0% general partner interest in the Public Partnership and
the Managing General Partner will own a 41.4% subordinated general partner
interest in the Public Partnership (40.6% on a combined basis).
SECTION 3.22. Insurance. The Borrower and the Subsidiaries maintain with
Permitted Insurers policies of fire and other all risk perils available on a
commercially reasonable basis, liability, business interruption and other forms
of insurance in such amounts, with such deductibles and against such risks and
losses as are reasonable for the business and assets of the Borrower and the
Subsidiaries. All such policies are in full force and effect, all premiums due
and payable thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date under comprehensive
general liability and workmen's compensation insurance policies), and no notice
of cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancellation. The activities and operations of the Borrower and the
Subsidiaries have been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies.
SECTION 3.23. Labor Relations. Neither the Borrower nor any of the
Subsidiaries is engaged in unfair labor practice that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
There is (a) no material unfair labor practice complaint pending against the
Borrower or any of the Subsidiaries or affecting the Business for which the
Borrower or any of the
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Subsidiaries has received actual notice or, to the knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, (b)
no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement pending against the Borrower or any of the
Subsidiaries or affecting the Business or, to the knowledge of the Borrower,
threatened against any of them, (c) no strike, labor dispute, slowdown or
stoppage pending against the Borrower or any of the Subsidiaries or, to the
knowledge of the Borrower, threatened against the Borrower or any of the
Subsidiaries, (d) to the knowledge of the Borrower, no union representation
question existing with respect to the employees of the Borrower or any of the
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect and (e) to the knowledge of the Borrower, no union organizing activities
are taking place which could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.24. Changes, etc. Except as contemplated by this Agreement, the
other Loan Documents or the Registration Statement, subsequent to the respective
dates as of which information is given in the Registration Statement and prior
to or on the Closing Date, the Borrower and the other Loan Parties have not
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction not in the ordinary course of business,
and no events have occurred which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, and there has not been
any Restricted Payment of any kind declared, paid or made by the Borrower or
either of the General Partners (other than (a) intercompany transfers from
National Propane Corp. to Triarc in the ordinary course of business and of the
nature of such transfers historically made by National Propane Corp. to Triarc
prior to the initial filing of the Registration Statement and (b) distributions
being made as part of the Transactions as described in the Registration
Statement).
SECTION 3.25. Indebtedness. Other than the Indebtedness represented by the
Mortgage Notes, Indebtedness set forth on Schedule 6.01(g) or Indebtedness
incurred hereunder, none of the Borrower and the Subsidiaries will have any
secured or unsecured Indebtedness outstanding as of the Closing Date. As of the
Closing Date, no instrument or agreement to which the Borrower or any of the
Subsidiaries is a party or by which the Borrower or any of the Subsidiaries is
bound or which is applicable to the Borrower or any of the Subsidiaries (other
than this Agreement and the Note Agreement) contains any restrictions on the
incurrence by the Borrower or any of the Subsidiaries of additional
Indebtedness.
SECTION 3.26. Transfer of Assets and Business. (a) The Borrower and its
Subsidiaries will at the Closing, after giving effect to the transfer of the
Assets on or prior to the Closing Date as described in the Registration
Statement, be in possession of and operating in compliance in all material
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 (including to own,
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lease or use the Assets and to assume certain liabilities relating to the Assets
as described in the Registration Statement and the Operative Agreements) 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
(i) which are not required at this time and are routine or administrative in
nature and are expected in the reasonable judgment of the Borrower to be
obtained or given in the ordinary course of business after the date of the
Closing or (ii) which are included in the Permitted Exceptions.
(b) Upon the consummation of the Closing (and after giving effect to any
releases of Liens obtained at the Closing), the Borrower will have (i) good and
marketable title to the portion of the Assets constituting real property owned
in fee simple by the Borrower, (ii) good and valid leasehold interests in the
portion of the Assets constituting real property leased by the Borrower other
than certain leased property covered by the Agency Agreement (which will not
constitute more than [ ]% of the Assets] and (iii) good and sufficient title to
or leasehold interests in the portion of the Assets constituting personal
property other than certain personal property covered by the Agency Agreement
(which will not constitute more than [ ]% of the Assets), in each case subject
to no Liens except those permitted under Section 6.02. The Assets are all of the
assets and properties necessary to enable the Borrower to conduct the Business
in the same manner as previously conducted by the National Propane Group and
include all options to purchase or rights of first refusal granted to or for the
General Partners with respect to any of the Assets leased by either of the
General Partners. The Assets constituting an interest in real property to be
conveyed to the Borrower pursuant to the Conveyance Agreements are located in
the counties and states listed in Schedule 3.26. Upon consummation of the
Closing (and receipt of all Required Consents on or prior to the Closing) and
the execution and delivery of the Agency Agreement, the Borrower will have the
same possessory and other rights in the Assets, and as are necessary for the
operation of the Business, as the General Partners had prior to the consummation
of the Transactions. All leases that are Assets are valid and subsisting and are
in full force and effect. Except to perfect and to protect security interests
permitted under Section 6.02, (A) at the time of the Closing, no presently
effective financing statement under the Uniform Commercial Code which names the
Borrower, any Restricted Subsidiary, Triarc or either of the General Partners as
debtor, which individually or in the aggregate relates to any part of the
Assets, any other assets pledged pursuant to any Collateral Document or any
assets covered by the Agency Agreement (other than financing statements in favor
of The Bank of New York for which executed termination statements will be
delivered at Closing or financing statements in respect of Indebtedness
permitted under Section 6.01(g) and secured by Liens permitted under Section
6.02(k)(iii)), will be on file in any jurisdiction and (B) at the time of the
Closing, none of the Borrower, Triarc or either of the General Partners will
have signed any presently effective financing statement or any presently
effective security agreement, which relates to any part of the Assets, any other
assets pledged pursuant to any Collateral Document or any assets covered by the
Agency Agreement, autho-
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rizing any secured party thereunder to file any such financing statement, except
for financing statements to be executed and filed in connection with the Closing
or financing statements in respect of Indebtedness permitted under Section
6.01(g) and secured by Liens permitted under Section 6.02(k)(iii).
(c) Upon the consummation of the Closing, (i) the General Partners will
have transferred to the Borrower beneficial and (except in the case of motor
vehicles covered by certificates of title where the certificates of title will
have been duly executed in favor of the Borrower, the Lien of the Trustee will
have been duly provided for thereon and such certificates of title will have
been delivered to the Borrower and/or the Trustee, but will not have yet been
submitted to the appropriate governmental agency for reissuance) record
ownership of all properties (including trademarks, tradenames and other
intellectual property used in the Business), easements and licenses comprising
the Assets, (ii) the Conveyance Agreements and the Collateral Documents (other
than the Trust Agreement), or proper notices, statements or other instruments in
respect thereof, will have been duly recorded, published, registered and filed
as required by Section 4.01(d), (iii) the Triarc Note or proper notices,
statements or other instruments in respect thereof, covering all of the assets
covered by such Triarc Note, shall have been duly executed, and all other
actions reasonably deemed necessary by the Administrative Agent shall have been
duly performed or taken, in such manner as is required by applicable law to
establish, perfect, preserve and protect the rights and first priority Liens
purported to be granted by such Triarc Note to the Borrower and its respective
successors and assigns and (iv) the Security Agreements (other than the Triarc
Note) and proper notices, statements or other instruments in respect thereof,
covering all the Assets covered by the Security Agreements (except as expressly
contemplated by the terms thereof and of Section 3.18) shall have been duly
executed, and all other actions reasonably deemed necessary by the
Administrative Agent shall have been duly performed or taken, in such manner as
is required by applicable law to establish, perfect, preserve and protect the
rights and first priority Liens purported to be granted by the Security
Agreements to the Trustee with respect to the Assets for the benefit of the
Lenders and their respective successors and assigns. Upon consummation of the
Closing, the Borrower will hold all right, title and interest in and to the
trade name "National Propane" and all other trademarks and trade names used in
the Business as are held by Triarc and its Affiliates on the date of this
Agreement and will hold exclusive right, title and interest in and to all
customer lists used in the Business.
SECTION 3.27. Chief Executive Office. The chief executive office of the
Borrower and the General Partners and the office where each maintains its
records relating to the transactions contemplated by the Operative Agreements
are located at Suite 1700, IES Tower, 200 1st Street, P.O. Box 2067, Cedar
Rapids, Iowa 52401-2067.
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SECTION 3.28. Fixed Price Supply Contracts. None of the Borrower and the
Restricted Subsidiaries is a party to any contract for the purchase or supply by
such parties of propane or other product except where (a) the purchase price is
set with reference to a spot index or indices substantially contemporaneously
with the delivery of such product or (b) delivery of such propane or other
product is to be made no more than one year after the purchase price is agreed
to. All such contracts referred to in the foregoing clause (b) which are in
effect on the Closing Date are set forth in Schedule 3.28.
SECTION 3.29. Trading and Inventory Policies. As of the Closing Date, the
Borrower maintains a trading policy to the effect that neither it nor any of the
Restricted Subsidiaries will trade any commodities (except that the Borrower may
enter into Commodity Hedging Agreements in the ordinary course of business and
consistent with customary industry practices). As of the Closing Date, the
Borrower maintains a supply inventory position policy to the effect that neither
it nor any of the Restricted Subsidiaries will hold on hand, as of any date,
more Commodities Inventory than will be sold in the normal course of business
during any 60-day period. As of the Closing Date, the Borrower and the
Restricted Subsidiaries are in compliance with such policies.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Effectiveness. This Agreement shall become effective when all
of the conditions precedent set forth in this Section 4.01 shall have been
satisfied:
(a) Each Lender shall have received counterparts hereof signed by each of
the parties hereto.
(b) Each Lender shall have received duly executed Notes, dated the Closing
Date, complying with the provisions of Section 2.04.
(c) Each Lender shall have received counterparts of the General Partners
Guarantee Agreement duly executed by each of the General Partners and the
Subsidiaries Guarantee Agreement duly executed by the Restricted Subsidiaries.
(d) The Trustee on behalf of the Secured Parties shall have a security
interest in the Collateral of the type and priority described in each Collateral
Document, perfected to the extent contemplated by Section 3.18 and each Lender
shall have received:
(i) counterparts of (A) the Partners Security Agreement, duly executed
by each of the General Partners and the Public Partnership, (B) the
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Triarc Note (duly executed by Triarc and duly endorsed by the Borrower in a
manner satisfactory to the Administrative Agent), accompanied by undated
assignments executed in blank, blank stock powers and certificates
representing all of the Capital Stock of National Propane Corp. owned
directly by Triarc as of the Closing Date, which shall constitute at least
75.7% of the common stock of National Propane Corp., (C) the Borrower
Security Agreement, duly executed by the Borrower, National Propane Corp.
and the Restricted Subsidiaries (other than National Sales and Services,
Inc.), and (D) a duly completed and executed Perfection Certificate from
the Borrower;
(ii) certificates representing all outstanding Capital Stock of the
Subsidiaries (or, in the case of any foreign Subsidiary, 65% of its
outstanding Capital Stock), accompanied by undated stock powers endorsed in
blank, and Intercompany Notes, duly executed by the Subsidiaries,
accompanied by undated assignments executed in blank;
(iii) counterparts of the Cash Collateral Agreement;
(iv) an acknowledgement copy, or other evidence satisfactory to each
Lender, of the proper filing, registration or recordation of each document
(including each Uniform Commercial Code financing statement) required by
law or reasonably requested by the Lenders to be filed, registered or
recorded, in each jurisdiction where the Borrower, any Restricted
Subsidiary or any other Loan Party owns any Assets or conducts any portion
of the Business and in which such filing, registration or recordation is so
required or requested, in order to create in favor of the Trustee for the
benefit of the Secured Parties a valid, legal and perfected security
interest in or lien on the Collateral (other than motor vehicles and
rolling stock) that is the subject of the Security Agreements;
(v) certified copies of Requests for Information (form UCC-11), or
equivalent reports from Prentice-Hall Financial Services or other
independent search service satisfactory to the Lenders, listing (A) any
judgment naming any member of the National Propane Group as judgment
debtor, (B) any tax lien that names any member of the National Propane
Group as a delinquent taxpayer in any of the jurisdictions referred to in
clause (iii) above and (C) any Uniform Commercial Code financing statement
that names any member of the National Propane Group as debtor or seller
filed in any of the jurisdictions referred to in clause (iv) above;
(vi) appropriate duly executed termination statements (Form UCC-3)
signed by all persons disclosed as secured parties in the jurisdictions
referred to in clause (iv) above in form for filing under the Uniform
Commercial Code of such jurisdictions;
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(vii) counterparts of each Mortgage covering the real property
interests listed on Schedule 4.01(d)(vii), duly executed by National
Propane Corp. and the Borrower or the Subsidiary that is to be a party
thereto, and such other documents relating to the Mortgaged Properties as
may be requested by the Lenders, including such appraisals with respect to
the Mortgaged Properties as are required to be obtained in order to comply
with applicable laws, including banking laws, regulations and guidelines
applicable to any Lender, such landlord waivers, subordination agreements,
estoppel certificates and other customary closing documents as shall be
reasonably requested by the Lenders (other than any such subordination
agreements, estoppel certificates and other closing documents as are
immaterial in the judgment of the Required Lenders) and such legal opinions
as are required to be furnished pursuant to the terms of the Mortgages or
reasonably requested by the Lenders;
(viii) counterparts of the Trust Agreement;
(ix) counterparts of the Conveyance Agreements in form and substance
satisfactory in all respects to the Agents;
(x) counterparts of the Agency Agreement in form and substance
satisfactory in all respects to the Agents (including satisfaction as to
the assets and properties covered by the Agency Agreement); and
(xi) counterparts of each Agency Account Agreement covering all
"clearing" or "sweep" accounts of the Borrower, duly executed by the
parties thereto.
(e) The Trustee shall have received:
(i) a mortgagee's policy of title insurance, including mechanic's lien
coverage, with respect to all of the properties and facilities listed on
Schedule 4.01(d)(vii), issued by a Title Company or Companies authorized to
issue title insurance in the states in which such properties or facilities
are located and satisfactory in form and substance to the Lenders with
provisions for coinsurance or reinsurance, if any, satisfactory to the
Lenders, dated the Closing Date and satisfactory in substance and form to
the Lenders, insuring the interest of the Trustee under the Collateral
Documents as valid first liens on the Mortgaged Properties, free of Liens
(other than Liens permitted by Section 6.02) or other exceptions to title
not approved and accepted by the Lenders, such policies to be in an amount
at least equal to the amounts set forth opposite each of the individual
properties and facilities so identified on Schedule 3.07; and
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(ii) The Trustee shall have received copies of "As-Built" ALTA surveys
with respect to all of the properties and facilities listed on Schedule
4.01(d)(vii), certified to the Trustee and the Title Company or Companies,
and reasonably satisfactory to the Lenders.
(f) The Lenders shall have received opinions of (i) Paul, Weiss, Rifkind,
Wharton & Garrison, special counsel to the Borrower, substantially in the form
of Exhibit I-1 hereto, (ii) Andrews & Kurth, special tax counsel to the
Borrower, substantially in the form of Exhibit I-2 hereto and (iii) local
counsel to the Borrower satisfactory to the Lenders in each jurisdiction in
which a Mortgage is recorded as contemplated by Section 4.01(d)(vii),
substantially in the form of Exhibit I-3 hereto and (iv) _________________,
counsel to the Trustee, in form and substance reasonably satisfactory to the
Lenders, and covering such additional matters relating to the transactions
contemplated hereby as the Lenders may reasonably request, each such opinion to
be dated the Closing Date and addressed to the Lenders. In addition, the Lenders
shall have received copies of each of the opinions delivered pursuant to the
Underwriting Agreement (other than the opinion of counsel to the Underwriters)
and the Note Agreement, accompanied by letters, dated the Closing Date and
addressed to the Lenders (unless such opinions are addressed to the Lenders or
expressly include such reliance provision), from the counsel rendering such
opinions, including Andrews & Kurth L.L.P., counsel to the Borrower, stating
that the Lenders are entitled to rely on such opinions as if they were addressed
to the Lenders.
(g) The Lenders shall have received:
(i) a certificate, dated the Closing Date and signed by a Financial
Officer of each of the Loan Parties, confirming compliance with the
conditions precedent set forth in paragraphs (j), (l), (n), (p), (w), (x),
(y), (z) and (aa) of this Section 4.01;
(ii) a copy of the partnership agreement, certificate of incorporation
or other constitutive documents, including all amendments thereto, of each
of the Loan Parties, certified as of a recent date by the Secretary of
State of the State of its organization, and a certificate as to the good
standing of each such party as of a recent date, from such Secretary of
State;
(iii) a certificate of the Secretary or Assistant Secretary of each of
the Loan Parties dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such party (or, in
the case of the Borrower and the Public Partnership, of the General
Partners) as in effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party (or, in the case of
the Borrower and the Public Partnership, of the General Partners)
authorizing the execution, delivery and performance
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of the Loan Documents to which such Loan Party is or will be a party, the
consummation of the Transactions and, in the case of the Borrower, the
extensions of credit hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that
the certificate of incorporation or other constitutive documents of such
Loan Party (or, in the case of the Borrower and the Public Partnership, of
the General Partners) have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished
pursuant to clause (ii) above, (D) in the case of the certificate of the
Managing General Partner, that the Registration Statement at the time it
became effective did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading and (E) as to the
incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf
of such Loan Party (or, in the case of the Borrower and the Public
Partnership, of the Managing General Partner);
(iv) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to clause (iii) above;
(v) a true and complete copy of the Note Agreement, the Registration
Statement and the Underwriting Agreement; and
(vi) such other documents, opinions, certificates and agreements in
connection with the Transactions and the Facilities, in form and substance
satisfactory to the Lenders, as they or their counsel shall reasonably
request, including counterpart originals or certified copies of all the
other Operative Agreements.
(h) Each Lender shall have completed, and shall be reasonably satisfied in
all respects with the results of, its due diligence investigation of (i) the
Transactions, (ii) the business, assets, condition (financial and otherwise),
liabilities (actual and contingent) and prospects of the Borrower, (iii)
litigation, tax, accounting, labor, health and safety, environmental, insurance,
pension and other employee benefit matters and (iv) real estate leases, material
contracts, debt agreements, property ownership, and contingent liabilities of
the Borrower and the Subsidiaries.
(i) Each Lender shall be reasonably satisfied with (i) the structure and
all other aspects of the Transactions as they affect the Borrower, including all
legal, tax and accounting matters relating to the Transactions and the terms of
all agreements and instruments to be entered into in connection with the
Transactions, (ii) the amount, terms and conditions (including maturity,
amortization, interest rates and fees, covenants, events of default, redemption
and other provisions) of the Mortgage
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Notes and (iii) the ownership structure of the Borrower, the Public Partnership
and the General Partners after giving effect to the Transactions.
(j) There shall not have occurred or become known any material adverse
change with respect to the business, assets, operations, properties, condition
(financial or otherwise) or liabilities (actual or contingent) of the Borrower
from that shown in the information and projections reviewed by the Lenders prior
to the date of this Agreement.
(k) All components of the Transactions shall be consummated in accordance
with applicable laws and regulations, on terms satisfactory in all material
respects to each Lender, and contemporaneously with the effectiveness of the
Facilities.
(l) The Borrower shall have paid all Fees and other amounts due and payable
to any Agent or Lender on or prior to the Closing Date, including reimbursement
or payment of all out-of-pocket expenses required to be reimbursed or paid by
the Borrower under the Work Letters with the Managing General Partner executed
prior to the date hereof or under any Loan Document (to the extent invoices or
statements therefor have been received).
(m) In the case of each Lender, each other Lender, the Administrative
Agent, each Issuing Bank and the Syndication Agent shall have simultaneously
executed and delivered this Agreement.
(n) After giving effect to the Transactions, (i) the Borrower and the
Subsidiaries shall have no indebtedness or other liabilities to third parties
(including affiliates), whether accrued, absolute, contingent or threatened, and
whether due or to become due, except in respect of (A) the Facilities, (B) the
Mortgage Notes, (C) as set forth on Schedule 6.01(g), (D) accounts payable and
other liabilities disclosed on Schedule 3.05(d) or the unaudited pro forma
balance sheet referred to in Section 3.05(c) and satisfactory in all respects to
the Lenders and (E) liabilities (other than indebtedness for borrowed money)
incurred in the ordinary course of business since March 31, 1996 (none of which
other liabilities, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect), (ii) any existing credit facilities
of the National Propane Group shall have been permanently terminated and (iii)
except for Liens permitted by Section 6.02, any liens on or claims or
encumbrances affecting any assets or properties of the Borrower and the
Subsidiaries or any other Collateral (including the Capital Stock of the
Borrower) shall have been released in a manner reasonably satisfactory to the
Administrative Agent.
(o) The Lenders shall be reasonably satisfied with all legal matters and
documentation incident to the Facilities and all corporate and other proceedings
taken or to be taken in connection therewith.
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(p) The Underwriting Agreement and the Note Agreement shall have been
executed and delivered by the parties thereto; such agreements shall not have
been amended or modified, nor any material provision thereof waived by any party
thereto, except such as shall be reasonably satisfactory to the Lenders; all
conditions precedent to the obligations of the Underwriters and the purchases of
Mortgage Notes set forth therein shall have been satisfied (without giving
effect to any waiver thereof, except such as shall be reasonably satisfactory to
the Lenders); simultaneously with the effectiveness of the Facilities, there
shall occur the consummation of the closing under such agreements; and the
aggregate net cash proceeds from the sale of the Units shall be at least
$115,000,000 and from the sale of the Mortgage Notes shall be at least
$115,000,000 and no more than $125,000,000. Prior to the Closing, the Mortgage
Notes shall have received a rating of at least BBB from Fitch Investors
Services, Inc., which rating remains in effect as of the Closing.
(q) The Lenders shall have received (i) financial statements and other
financial information satisfactory in all respects to the Lenders, including
historical, pro forma and projected information and (ii) a statement of sources
and uses of funds in connection with the Transactions.
(r) The Lenders shall have received such information as the Lenders may
request as to the aging and concentration of the accounts receivable of the
Borrower and the Subsidiaries and as to their inventory, and shall have
completed and be reasonably satisfied with their review thereof.
(s) The Lenders shall be reasonably satisfied with the amount and scope of
the insurance coverage of the Borrower and the Subsidiaries and the identity of
the insurers providing such coverage, and shall have received (i) a satisfactory
report from the Borrower's independent insurance broker, Kaye Insurance
Associates, Inc. together with any other evidence reasonably requested by the
Agents, demonstrating that the insurance required by Section 6.11 and by the
terms of the other Loan Documents is in effect and (ii) insurance certificates
on Accord Form 27, demonstrating that such insurance is in effect.
(t) The Lenders shall be satisfied in all material respects with all
agreements and transactions between any of the Borrower and the Subsidiaries, on
the one hand, and any of their Affiliates, on the other hand.
(u) Environmental Strategies Corporation shall have conducted environmental
reviews and audits of the properties of the Borrower and the Subsidiaries listed
on Schedule 4.01(d)(vii), in form and substance satisfactory to the Lenders, and
the Lenders shall be satisfied with the amount and nature of any environmental
exposures to which any of the Borrower and the Subsidiaries may be subject and
the plans of the Borrower with respect thereto.
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(v) The Lenders shall have received true and complete copies of an
appraisal report of Valuation Research setting forth their appraisal of the
Assets and the contents of such report shall be reasonably satisfactory to the
Lenders.
(w) All Required Consents and all other governmental, regulatory,
shareholder and third party consents, approvals, filings, registrations and
other actions required in order to consummate the Transactions or the Facilities
shall have been obtained or made, as applicable, except for the Permitted
Exceptions, and shall remain in full force and effect, in each case without the
imposition of any condition or restriction which is, in the judgment of the
Lenders, materially adverse to the Borrower or any of the Subsidiaries.
(x) There shall not be any pending proceeding requesting an injunction or
restraining order with respect to the Transactions or the Facilities or
challenging the validity or enforceability of the Transactions or the
Facilities.
(y) The representations and warranties set forth in Article III hereof and
the representations and warranties of the Borrower and the other Loan Parties
set forth in the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects on and as of such earlier date).
(z) Upon consummation of the Transactions on the Closing Date, no Default
or Event of Default shall have occurred and be continuing.
(aa) Prior to the Closing, the Conveyance Agreements and the Collateral
Documents (other than the Trust Agreement), or proper notices, statements or
other instruments in respect thereof, covering all or substantially all of the
Assets covered by the Conveyance Agreements and Collateral Documents (other than
as relate to motor vehicles, rolling stock [and intellectual property]), shall
have been duly recorded, published, registered and filed, and all other actions
deemed necessary by the Lenders shall have been duly performed or taken, in such
manner and in such places as is required by applicable law (i) to convey to the
Borrower record and beneficial ownership of the Assets purported to be conveyed
by such Conveyance Agreements and (ii) to establish, perfect, preserve and
protect the rights and first priority liens and security interests purported to
be granted by each of the Collateral Documents to the Trustee with respect to
the Assets (other than motor vehicles, rolling stock[, intellectual property]
and certain bank accounts) for the benefit of the Lenders 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 establishment of the Facilities
shall have been paid in full.
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SECTION 4.02. All Extensions of Credit. The obligations of the Lenders to
make Loans hereunder, and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, are subject to the satisfaction of the conditions precedent
set forth in this Section 4.02 on the date of each Borrowing and on the date of
issuance of each Letter of Credit:
(a) The Administrative Agent shall have received a notice of such Borrowing
as required by Section 2.03 or a notice requesting the issuance of a Letter of
Credit as required by Section 2.21(c), as applicable.
(b) The representations and warranties set forth in Article III hereof and
the representations and warranties of the Borrower and the other Loan Parties
set forth in the other Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing (other than a Borrowing of any
Class which does not increase the aggregate outstanding principal amount of all
Borrowings of such Class and other than the refinancing on the Tranche B
Conversion Date pursuant to Section 2.11(b)) or the date of the issuance of such
Letter of Credit with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct in all material respects on and as of such earlier date).
(c) At the time of and immediately after such Borrowing or the issuance of
such Letter of Credit, the aggregate outstanding principal amount of the Loans
of each Class and the Letter of Credit Exposure of each Class will not exceed
the limitations set forth in Sections 2.01, 2.21 and 6.01(e), respectively.
(d) At the time of and immediately after such Borrowing (other than a
Borrowing of any Class which does not increase the aggregate outstanding
principal amount of all Borrowings of such Class and other than the refinancing
on the Tranche B Conversion Date pursuant to Section 2.11(b)) or the issuance of
such Letter of Credit, no Default or Event of Default shall have occurred and be
continuing.
Each Borrowing hereunder and each request for the issuance of a Letter of Credit
hereunder shall be deemed to constitute a representation and warranty by the
Borrower on the date of such Borrowing or issuance as to the matters specified
in paragraphs (b), (c) and (d) of this Section 4.02. For purposes of Section
4.02, the "issuance" of a Letter of Credit shall include any extension, renewal
or amendment of a Letter of Credit.
SECTION 4.03. Tranche B Extensions of Credit. The obligations of the
Lenders to make Tranche B Revolving Loans hereunder, and the obligation of the
Issuing Bank to issue Tranche B Letters of Credit hereunder, are subject to the
satisfaction of the conditions precedent set forth in this Section 4.03 and the
additional conditions precedent set forth under Section 4.02 on the date of each
Tranche B
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Revolving Credit Borrowing and on the date of issuance of each Tranche B Letter
of Credit:
(a) At the time of and immediately after any Tranche B Revolving Credit
Borrowing made and/or any Tranche B Letter of Credit issued in connection with
any Eligible Propane Acquisition, (i) the ratio of (A) the sum (I) of the
principal amount of such Borrowing and (II) the face amount of such Letter of
Credit to (B) the cash flow of such acquired business for the then most recent
period of four fiscal quarters, calculated on the same basis, including pro
forma adjustments, as provided for an acquired business or asset in the
definition of Consolidated Cash Flow, shall be no greater than 8.00:1.00 and
(ii) the Borrower shall have prepared and furnished to the Agents prior to such
Borrowing or issuance pro forma financial statements demonstrating the
fulfillment of such condition to the satisfaction of the Agents.
(b) If Capital Stock is being purchased with proceeds from such Tranche B
Revolving Credit Borrowing, the Agents and the Trustee shall have received
counterparts of a Supplemental Agreement duly executed by the issuer of such
Capital Stock (and all terms of such Supplemental Agreement shall have been
satisfied).
(c) In the case of any Tranche B Revolving Credit Borrowing (or series of
related Tranche B Revolving Credit Borrowings) in a principal amount, and/or any
Tranche B Letter of Credit (or series of related Tranche B Letters of Credit)
having a face amount, in excess of $1,500,000 to be used for Growth-Related
Capital Expenditures, the Agents shall have received (A) all financial
information reasonably requested by the Agents in connection with such
Growth-Related Capital Expenditures, (B) a statement of sources and uses of
funds in connection with such Growth-Related Capital Expenditures, and (C) a
statement that such expenditures are Growth-Related Capital Expenditures, and
not expenditures for maintenance of existing capital assets, in each case
certified by a Financial Officer of the Borrower.
(d) All components of the Eligible Propane Acquisition or Growth-Related
Capital Expenditure financed with such Tranche B Revolving Credit Borrowing or
Tranche B Letter of Credit shall be consummated in all material respects in
accordance with applicable laws and regulations.
(e) All governmental, regulatory, shareholder and third party consents,
approvals, filings, registrations and other actions required in order to
consummate the Eligible Propane Acquisition or Growth-Related Capital
Expenditure financed with such Tranche B Revolving Credit Borrowing or Tranche B
Letter of Credit (other than any such actions the absence of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect) shall have been obtained in all material respects or made and
shall remain in full force and effect, without the imposition of any condition
or restriction which is, materially adverse to the Borrower or any of the
Subsidiaries.
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(f) There shall not be any pending proceeding requesting an injunction or
restraining order with respect to the Eligible Propane Acquisition or
Growth-Related Capital Expenditure financed with such Tranche B Revolving Credit
Borrowing or Tranche B Letter of Credit or challenging the validity or
enforceability of such acquisition or Growth-Related Capital Expenditure.
(g) On the date of the making of such Tranche B Revolving Credit Borrowing
or the issuance of such Tranche B Letter of Credit, (i) after giving effect to
such Borrowing or issuance and the Eligible Propane Acquisition or
Growth-Related Capital Expenditure for which such Borrowing or Letter of Credit
is being used (and any other such Borrowings, issuances, acquisitions,
expenditures or other Specified Events which have occurred since the first day
of the applicable Reference Period) (A) no Default or Event of Default shall
have occurred and be continuing and (B) the Leverage Ratio as of the last day of
the Reference Period with respect to the date of such Borrowing or issuance,
calculated on a pro forma basis as if such Borrowing or issuance, related
Eligible Propane Acquisition or Growth-Related Capital Expenditure and other
Specified Events had occurred on the first day of such Reference Period, shall
be no greater than the Permitted Maximum Ratio on the date of such Borrowing or
issuance and (ii) the Borrower shall have prepared and furnished to the Agents
prior to such Borrowing or issuance pro forma financial statements demonstrating
the fulfillment of such condition in reasonable detail.
(h) The Agents shall have received an Officers' Certificate, dated the date
of such Tranche B Revolving Credit Borrowing or issuance of such Tranche B
Letter of Credit, to the effect that the use of proceeds of such Borrowing or
such Letter of Credit complies with Section 3.13(b), specifying the basis for
such conclusion in reasonable detail.
Each Tranche B Revolving Credit Borrowing hereunder and each request for the
issuance of a Tranche B Letter of Credit hereunder shall be deemed to constitute
a representation and warranty by the Borrower on the date of such Borrowing or
issuance as to the matters specified in paragraphs (a), (d), (e), (f), (g) and
(h) of this Section 4.03. For purposes of this Section 4.03, the "issuance" of a
Tranche B Letter of Credit shall include any extension, renewal or amendment of
a Tranche B Letter of Credit.
ARTICLE V
ACCOUNTING; FINANCIAL STATEMENTS; INSPECTION
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Facilities Obligations shall be unpaid,
and until the Commitments have been terminated and the Loans, together with
interest, Fees and all other Facilities Obligations have been paid in full, all
Letters of Credit
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have been cancelled or have expired and all Letter of Credit Disbursements have
been reimbursed in full, unless the Required Lenders shall otherwise consent in
writing:
SECTION 5.01. Accounting. The Borrower will maintain, and 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.
SECTION 5.02. Financial Statements. The Borrower will deliver to the
Lenders:
(a) 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 the
Borrower, (i) consolidated (and (A) if the Restricted Subsidiaries or a
Restricted Subsidiary constitute (or constitutes, as the case may be) a
Substantial Portion, then as to the Restricted Subsidiaries or (B) if the
Restricted Subsidiaries do not or a Restricted Subsidiary does not constitute a
Substantial Portion, but one or more Restricted Subsidiaries have outstanding
Indebtedness owing to Persons other than the Borrower or any Restricted
Subsidiary and other than pursuant to any Collateral Documents, then as to such
Restricted Subsidiaries, consolidating) balance sheets of the Borrower and the
Restricted Subsidiaries as at the end of such period and the related
consolidated (and, as to statements of income and cash flows, if applicable and
as appropriate, consolidating) statements of income, surplus or partners'
capital, cash flows and stockholders' equity of the Borrower and the Restricted
Subsidiaries for such period and (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 (except in the case of
financial statements with respect to the first full fiscal year of the Borrower
immediately following the Closing or if consolidating balance sheets of the
Restricted Subsidiaries were not required to be delivered pursuant to this
subdivision (a) for the previous corresponding period) 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 each of the General
Partners 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; provided that, for purposes of this Section 5.02, "Substantial
Portion" shall mean that either (x) either (1) the book value of the assets of
the Restricted Subsidiaries exceeds 10% of the book value of the consolidated
assets of the Borrower and the Restricted Subsidiaries or (2) the Restricted
Subsidiaries account for more than 10% of the Consolidated Net Income of the
Borrower and its Restricted Subsidiaries, in each case in respect of the four
fiscal quarters ended as of the date of the applicable financial statement] or
(y) either (A) the book value of the assets of any Restricted Subsidiary exceeds
5% of the book value of the consolidated assets of the Borrower and the
Restricted Subsidiaries, or (B) any Restricted Subsidiary accounts for more than
5%
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of the Consolidated Net Income of the Borrower and its Restricted Subsidiaries,
in each case in respect of the four fiscal quarters ended as of the date of the
applicable financial statement and (ii) copies of the Public Partnership's
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the SEC;
(b) as soon as practicable, but in any event within 120 days after the end
of each fiscal year of the Borrower ending after the date of this Agreement, (i)
consolidated (and (A) if the Restricted Subsidiaries or a Restricted Subsidiary
constitute (or constitutes, as the case may be) a Substantial Portion, then as
to the Restricted Subsidiaries or (B) if the Restricted Subsidiaries do not or a
Restricted Subsidiary does not constitute a Substantial Portion, but one or more
Restricted Subsidiaries have outstanding Indebtedness owing to Persons other
than the Borrower or any Restricted Subsidiary and other than pursuant to any
Collateral Documents, then as to the Restricted Subsidiaries, consolidating)
balance sheets of the Borrower and the Restricted Subsidiaries and the
consolidated balance sheet of each of the General Partners as at the end of such
year and the related consolidated (and, as to statements of income and cash
flows, if applicable and as appropriate, consolidating) statements of income,
partners' capital, cash flows and stockholders' equity of the Borrower and the
Restricted Subsidiaries and the consolidated statements of income, surplus, cash
flow and stockholders' equity of each of the General Partners for such fiscal
year, setting forth in each case (except in the case of the financial statements
with respect to the first full fiscal year of the Borrower immediately following
the Closing) in comparative form the consolidated and, where applicable and as
appropriate, consolidating figures for the previous fiscal year, all in
reasonable detail, and (ii) copies of the Public Partnership's Annual Report on
Form 10-K prepared in compliance with the requirements therefor and filed with
the SEC, and (1) in the case of such consolidated financial statements of the
Borrower, accompanied by a report thereon of Deloitte & Touche LLP or other
independent public accountants of recognized national standing selected by the
Borrower, which report shall state that such consolidated financial statements
present fairly in all material respects the financial position of the Borrower
and the Restricted 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 GAAP and (2) in the case of such consolidated financial
statements of the General Partners and such consolidating financial state ments
of the Borrower, certified by the principal financial officer of the General
Partners, as presenting fairly in all material respects 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
paragraphs (a) and (b) of this Section 5.02, an Officers' Certificate of the
Borrower in the form of Exhibit N hereto (i) stating that the signers have
reviewed the terms of
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95
this Agreement and the other Loan Documents, and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions and
condition of the Borrower 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
Default or, if any such condition or event exists, specifying the nature and
period of existence thereof and what action the Borrower has taken or is taking
or proposes to take with respect thereto, (ii) stating whether, since the date
of the most recent financial statements previously delivered, there has been any
material change in GAAP applied in the preparation of the Borrower's financial
statements and, if so, describing such change, (iii) specifying the amount
available at the end of such accounting period for Restricted Payments in
compliance with Section 6.04 and showing in reasonable detail all calculations
required in arriving at such amount, (iv) demonstrating in reasonable detail, if
applicable, compliance during and at the end of such accounting period with the
restrictions contained in Sections 6.01(b), (d), (f) and (h), the last paragraph
of Section 6.01, 6.02(i), 6.03(b)(iv), 6.07(c)(iii), Section 6.30 and Section
6.31, (v) if not specified in the related financial statements being delivered
pursuant to paragraphs (a) and (b) above, specifying the aggregate amount of
interest paid or accrued by the Borrower and the Restricted Subsidiaries, and
the aggregate amount of depreciation, depletion and amortization charged on the
books of the Borrower and the Restricted Subsidiaries, during the fiscal period
covered by such financial statements and (vi) 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 Borrower from the liens of the
Security Documents pursuant to the Trust Agreement and in the case of the fee
owned property, the sales price of the fee owned property caused to be released
by the Borrower during such accounting period;
(d) together with each delivery of consolidated financial statements
pursuant to paragraph (b) of this Section 5.02, 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 and the
other Loan Agreements were reviewed to the extent considered necessary for the
purpose of expression of an opinion on the consolidated financial statements and
for making the statement contained in clause (ii) of this paragraph (d) (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 an Event of Default or Default insofar as
such Event of Default or Default relates to accounting or financial matters,
and, if so, specifying the nature and period of existence thereof;
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96
(e) promptly upon their becoming publicly available, copies of all (i)
financial statements, reports, notices and proxy statements sent or made
available by the Borrower, either of the General Partners or the Public
Partnership to all of its security holders in compliance with the Exchange Act
or any comparable Federal or state laws relating to the disclosure by any Person
of information to its security holders, (ii) all regular and periodic reports
and all registration statements and prospectuses filed by the Borrower, either
of the General Partners or the Public Partnership with any securities exchange
or with the SEC (other than Registration Statements on Form S-8), and (iii) all
press releases and other statements made available by the Borrower, either of
the General Partners or the Public Partnership to the public concerning material
developments in the business of the Borrower, either of the General Partners or
the Public Partnership, as the case may be;
(f) promptly, but in any event (i) within five days after any Responsible
Officer of the Borrower knows or (ii) within 10 days after any Responsible
Officer of the Borrower should (in the course of the normal performance of his
or her duties) know that (x) any condition or event which constitutes an Event
of Default or Default has occurred or exists, or is expected to occur or exist,
(y) any Lender has given any notice or taken any other action with respect to a
claimed Event of Default or Default or (z) any Person has given any notice to
the Borrower, either of the General Partners 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 7.01(f), an Officers' Certificate of the
Borrower describing the same and the period of existence thereof and what action
the Borrower has taken, is taking and proposes to take with respect thereto;
(g) promptly, but in any event (i) within five days after any Responsible
Officer of the Borrower knows or (ii) within 10 days after any Responsible
Officer of the Borrower should (in the course of the normal performance of his
or her duties) know of (x) the occurrence of an adverse development with respect
to any litigation or proceeding (including those regarding environmental
matters) involving the Borrower or any of its Subsidiaries which in the
reasonable judgment of the Borrower presents a reasonable likelihood of having a
Material Adverse Effect or (y) the commencement of any litigation or proceeding
(including those regarding environmental matters) involving the Borrower or any
of its Subsidiaries which in the reasonable judgment of the Borrower presents a
reasonable likelihood of having a Material Adverse Effect, a written notice of
such Responsible Officer describing in reasonable detail such commencement of,
or adverse development with respect to, such litigation or proceeding;
(h) promptly, but in any event (i) within five days after any Responsible
Officer of the Borrower knows or (ii) within 10 days after any Responsible
Officer of the Borrower 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 exist, a
statement setting forth details
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respecting such event or condition and the action, if any, that the Borrower 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 IRS 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 the Borrower 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 the Borrower 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 the
Borrower 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 the Borrower 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 the
Borrower or any Related Person of notice from a Multiemployer Plan
regarding any alleged withdrawal or that it intends to impose withdrawal
liability on the Borrower 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 the Borrower or any Related Person to enforce Sec
tion 515 of ERISA;
(vii) the occurrence or existence of any event or series of events
which could result in a liability to the Borrower 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
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98
result in the imposition of a lien on any property of the Borrower or any
Related Person 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 the Borrower 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 the
Borrower 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);
(i) promptly, but in any event within five days, after an officer of any of
the Borrower, any Subsidiary or either of the General Partners receives any
notice or request from any Person (other than any agent, attorney or similar
party employed by the Borrower or either of the General Partners) for
information, or if the Borrower, any Subsidiary or either of the General
Partners by an officer provides any notice or information to any such Person
(other than any agent, attorney or similar party employed by the Borrower or
either of the General Partners), 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 the Borrower or any Subsidiary, other than notices or
requests received or filings made in the normal course of business which do not
pertain to a violation by or potential liability of the Borrower or any
Subsidiary under an Environmental Law, copies of each such notice, request or
information;
(j) if requested by any Lender, reports as of the last day of such month as
to the aging and concentration of the accounts receivable of the Borrower and
its Restricted Subsidiary and as to their inventory, in substantially the form
of the reports delivered pursuant to Section 4.01(r);
(k) as soon as available, and in any event no later than 60 days after the
end of each fiscal year of the Borrower, quarterly financial projections for the
next fiscal year, including all material assumptions to such projections;
(l) within 15 days of receipt, any management letter issued or provided by
the auditors of the Borrower or any Restricted Subsidiary; and
(m) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower, any other
Loan Party or (to the extent such information relates to environmental matters
or any material litigation or proceeding) any Unrestricted Subsidiary, or in any
event
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compliance with the terms of any Loan Document, and such reports submitted to
the Borrower, as any Lender may reasonably request.
SECTION 5.03. Inspection. The Borrower will permit, or cause the General
Partners to permit, any authorized representatives designated by the Lenders
upon prior written notice and during normal business hours to visit and inspect
any of the properties of the Borrower, any Restricted Subsidiary and (to the
extent relating to environmental or litigation matters) any Unrestricted
Subsidiary, and in any event any properties of either of the General Partners or
of either of the General Partners' subsidiaries relating to the Business,
including the books of account of the Borrower, the Restricted Subsidiaries,
such Unrestricted Subsidiaries, the General Partners and the General Partners'
subsidiaries, and to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and accounts with its and their senior officers and
(with reasonable notice) independent public accountants (and by this provision
each of the Borrower and the General Partners authorizes such accountants to
discuss with such representatives the affairs, finances and accounts of the
Borrower, any Restricted Subsidiary, such Unrestricted Subsidiaries, the General
Partners or any of such subsidiaries of either of the General Partners, as the
case may be, all at such times and as often as reasonably may be requested),
provided that the Borrower will bear the expense for the foregoing if an Event
of Default or Default has occurred and is continuing. Without limitation of the
foregoing, the Agents shall have the right, upon written notice and during
normal business hours, to conduct an audit of the accounts receivable and
inventory of the Borrower and its Restricted Subsidiaries from time to time. The
Borrower shall pay the reasonable out-of-pocket expenses of the Agents for up to
two such audits in any 12-month period and for any additional audit conducted
during the continuance of, or occasioned by, an Event of Default.
ARTICLE VI
BUSINESS AND FINANCIAL COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect or any Facilities Obligations shall be unpaid,
and until the Commitments have been terminated and the Loans, together with
interest, Fees and all other Facilities Obligations have been paid in full, all
Letters of Credit have been cancelled or have expired and all Letter of Credit
Disbursements have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing:
SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to (collectively, "Incur"), any Indebtedness, except that:
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(a) the Borrower may become and remain liable with respect to the
Indebtedness evidenced by the Mortgage Notes;
(b) the Borrower and the Restricted Subsidiaries may become and remain
liable with respect to Indebtedness incurred by the Borrower 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 Indebtedness; provided that (i) the aggregate principal amount of
Indebtedness incurred under this Section 6.01(b) and outstanding at any time
shall not exceed an amount equal to the sum of (A) the net cash proceeds
received by the Borrower from the General Partners or from the Public
Partnership as a capital contribution, in each case for the sole purpose of
financing such expenditures, and (B) the fair market value (based on a 30-day
trailing average closing trading price per unit) of Units contributed to the
Borrower or issued directly to a third party selling such asset or making such
repair or addition by the Public Partnership for the sole purpose of financing
such expenditures, only to the extent, however, that such Units are used to pay,
substantially concurrently with the date of contribution or issuance, a portion
of the purchase price or cost of such improvements, repairs or additions and
(ii) if such Indebtedness is to be secured under the Collateral Documents as
provided in Section 6.02(h), the agreement or instrument pursuant to which such
Indebtedness is incurred (A) contains no financial or business covenants that
are more restrictive on the Borrower or its Subsidiaries than or that are in
addition to those contained in Section 10 of the Note Agreement (unless prior
to or simultaneously with the incurrence of such Indebtedness, this Agreement
and the other Loan Documents are amended to provide the benefits of such more
restrictive covenants to the Secured Parties thereunder) and (B) specifies no
events of default (other than with respect to the payment of principal and
interest on such Indebtedness 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 Article
7 hereof (unless prior to or simultaneously with the incurrence of such
Indebtedness, this Agreement and the other Loan Documents are amended to
provide, and continue in effect during the period during which such other
Indebtedness is outstanding, the benefits of such more restrictive covenants to
the Secured Parties thereunder);
(c) any Restricted Subsidiary may become and remain liable with respect to
unsecured Indebtedness of such Restricted Subsidiary owing to the Borrower or to
another Restricted Subsidiary; provided that such Indebtedness is evidenced by
an Intercompany Note pledged to the Trustee pursuant to the Borrower Security
Agreement; and provided, further, that the aggregate principal amount of all
such Indebtedness of National Sales and Services, Inc. shall not exceed
$_____________ at any time outstanding;
(d) the Borrower and the Restricted Subsidiaries may become and remain
liable with respect to unsecured Indebtedness owing to the General Partners or
the
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Public Partnership or any Affiliate of any of the foregoing; provided that (i)
the aggregate principal amount of such Indebtedness of the Borrower and the
Restricted Subsidiaries outstanding at any time shall not be in excess of
$20,000,000, (ii) such Indebtedness is created and is outstanding under an
agreement or instrument pursuant to which such Indebtedness is subordinated to
the Indebtedness secured under the Collateral Documents at least to the extent
provided in the subordination provisions set forth in Exhibit E, and (iii) such
Indebtedness is evidenced by a promissory note, in the form of Exhibit E or such
other form that is in form and substance satisfactory to the Required Lenders,
which is pledged to the Trustee pursuant to the Partners Security Agreement;
(e) the Borrower may become and remain liable with respect to Indebtedness
incurred under this Agreement and the other Loan Documents, including any
amendment hereof increasing the aggregate amount of credit which may be extended
hereunder, provided that such amendment is entered into in accordance with
Section 9.08;
(f) the Borrower and the Restricted Subsidiaries may become and remain
liable with respect to unsecured Indebtedness, in addition to that otherwise
permitted by the foregoing paragraphs of this Section 6.01, if on the date the
Borrower 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 1.00 and (ii) the
ratio of Consolidated Cash Flow to Maximum Consolidated Pro Forma Debt Service
is greater than 1.25 to 1.00; provided that, in addition to the foregoing, after
giving effect to any such additional Indebtedness (on a pro forma basis as if
the incurrence of such Indebtedness had occurred on the first day of the
applicable Reference Period), no condition or event shall exist which
constitutes an Event of Default or Default;
(g) the Borrower may become and remain liable with respect to the
Indebtedness referred to in Schedule 6.01(g); provided that the aggregate
principal amount of such Indebtedness at any time outstanding shall not exceed
$1,500,000;
(h) the Borrower and any Restricted Subsidiary may become and remain liable
with respect to pre-existing Indebtedness relating to any Person, business or
assets acquired by the Borrower or such Restricted Subsidiary and may incur
Indebtedness to finance the acquisition of any Person, business or assets;
provided that (i) after giving effect to such acquisition and such Indebtedness
(and any other such acquisitions which have occurred and related Indebtedness
which has been assumed and any other Specified Events which have occurred since
the first day of the applicable Reference Period) (A) no condition or event
shall exist which constitutes an Event of Default or Default and (B) the
Leverage Ratio as of the last day of the Reference Period with respect to the
date on which such acquisition is consummated, calculated on a pro forma basis
as if such acquisition and the incurrence of such
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Indebtedness and any other such Specified Events had occurred on the first day
of such Reference Period, shall be no greater than the Permitted Maximum Ratio
on such date of consummation, (ii) such Indebtedness was not incurred in
anticipation of the acquisition of such Person, business or assets, (iii) the
acquisition of such Person, business or assets is permitted by all other
applicable provisions of the Loan Documents, including Sections 6.03 and 6.24
and (iv) the aggregate principal amount of all such Indebtedness outstanding at
any time shall not exceed $10,000,000; provided further, that any Indebtedness
incurred pursuant to this Section 6.01(h), (A) may not be refinanced in any
manner except with Tranche B Revolving Loans, (B) any Liens securing such
Indebtedness shall encumber only the assets being acquired and (C) the sum of
(I) the aggregate principal amount of such Indebtedness outstanding at any time
and (II) the aggregate principal amount of Tranche B Loans outstanding at such
time shall not exceed the excess, if any, of the amount of Tranche B Revolving
Credit Commitments at such time over the Tranche B Letter of Credit Exposure at
such time;
(i) so long as no Event of Default or Default has occurred and is
continuing, the Borrower and the Restricted Subsidiaries may become and remain
liable with respect to Indebtedness secured under the Collateral Documents which
is incurred for any extension, renewal, refunding or replacement of the Mortgage
Notes; provided that (i) the principal amount of such Indebtedness shall not
exceed the principal amount of such Indebtedness being extended, renewed,
refunded or replaced together with any accrued interest and Make Whole Amount
with respect thereto, (ii) the Leverage Ratio as of the last day of the
Reference Period with respect to the date on which such Indebtedness is
incurred, calculated on a pro forma basis as if such incurrence (and any other
Specified Events which have occurred since the first day of such Reference
Period) had occurred on the first day of such Reference Period, shall be no
greater than the Permitted Maximum Ratio on such date of incurrence, (iii) such
Indebtedness is incurred pursuant to an agreement or instrument which complies
with the requirements set forth in clause (ii) of the proviso to Section
6.01(b), (iv) such Indebtedness shall not mature prior to the stated maturity of
the Mortgage Notes, (v) such Indebtedness shall have an Average Life equal to or
greater than the remaining Average Life of the Mortgage Notes, (vi) the spread
over the U.S. Government Notes with a comparable maturity reflected in the yield
on such Indebtedness upon issuance is no greater than that reflected in the
yield on the Mortgage Notes upon issuance and (vii) after giving effect to the
incurrence of any such Indebtedness under this Section 6.01(i), no condition or
event shall exist which constitutes an Event of Default or Default;
(j) so long as no Event of Default or Default has occurred and is
continuing, the Borrower 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) or (f) of this Section 6.01; provided that (i) the
principal amount of such unsecured Indebtedness to be incurred shall not exceed
the principal amount of such
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Indebtedness being extended, renewed, refunded or replaced together with any
accrued interest or other premium with respect thereto, and, in the case of the
Mortgage Notes, Make Whole Amount with respect thereto and any costs and
expenses related to such extension, renewal, refunding or replacement, (ii) the
Leverage Ratio as of the last day of the Reference Period with respect to the
date on which such Indebtedness is incurred, calculated on a pro forma basis as
if such incurrence (and any other Specified Events which have occurred since the
first day of such Reference Period) had occurred on the first day of such
Reference Period, shall be no greater than the Permitted Maximum Ratio on such
date of incurrence, (iii) such unsecured Indebtedness to be incurred shall not
mature prior to the stated maturity of such Indebtedness being extended,
renewed, refunded or replaced and (iv) such unsecured Indebtedness to be
incurred shall have an Average Life equal to or greater than the remaining
Average Life of such Indebtedness being extended, renewed, refunded or replaced;
(k) the Borrower may create and become liable with respect to any Hedging
Agreements and Commodity Hedging Agreements; and
(l) any Restricted Subsidiary may become and remain liable with respect to
Indebtedness evidenced by the Collateral Documents.
Notwithstanding the foregoing, (I) the aggregate principal amount of all
Indebtedness of all Restricted Subsidiaries at any time outstanding (other than
Indebtedness permitted by Section 6.01(l)) shall not exceed $10,000,000 and (II)
neither the Borrower nor any of the Restricted Subsidiaries shall, directly or
indirectly, Incur any Indebtedness to be used directly or indirectly to refund
or replace Facility A in whole or in part, except that foregoing shall not
prohibit the Borrower from refunding or replacing Facility A on or after the
Tranche A Maturity Date if the Borrower has offered to extend Facility A for one
year on terms at least as favorable to the Lenders as those herein set forth and
the Lenders are not willing to do so; provided that the Borrower shall not offer
any more favorable terms and conditions to any other prospective lender without
first offering them to the Lenders. For the purpose of this Section 6.01, 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. The Borrower or any Restricted Subsidiary shall be deemed to have
become liable with respect to any Indebtedness securing any real property
acquired by the Borrower or such Restricted Subsidiary, as the case may be, at
the time of such acquisition.
SECTION 6.02. Liens, etc. The Borrower will not, and will not 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
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instrument in respect of goods or accounts receivable) of the Borrower 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 Facilities Obligations in accordance with the
provisions of Section 6.15), except:
(a) Liens for taxes, assessments or other governmental charges the payment
of which is not at the time required by Section 6.09;
(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 6.09, 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 the
Borrower or any Restricted Subsidiary and which do not interfere in any material
respect with the ordinary conduct of the business of the Borrower or any
Restricted Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary securing
Indebtedness of such Restricted Subsidiary owing to the Borrower or any other
Restricted Subsidiary;
(g) Liens created by any of the Collateral Documents securing the
Facilities Obligations, the Mortgage Notes and any other Indebtedness incurred
in accordance with Section 6.01(b), 6.01(i) and 6.01(k) (but only to the extent
such Indebtedness incurred under Section 6.01(k) is incurred to any Lender or
Affiliate of a Lender;
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(h) Liens created by any of the Collateral Documents securing Indebtedness
incurred in accordance with Section 6.01(b), 6.01(i) or 6.01(k) (but only to the
extent such Indebtedness under Section 6.01(k) is incurred to any Lender);
provided that (i) such Liens are effected through an amendment to the Collateral
Documents to the extent necessary to provide the holders of such Indebtedness
equal and ratable security in the property and assets subject to the Collateral
Documents with the Secured Parties, (ii) the Collateral 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, (iii)
the Borrower 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 the Borrower of such property or assets and the fair market value of
such property or assets (as determined in good faith by the Managing General
Partner) and to the effect that the amendments to the Collateral Documents
required by this Section 6.02(h) and the filing and recordation of such
amendments and related supplements will not have a Material Adverse Effect and
that such incurrence of Indebtedness pursuant to Section 6.01(b), 6.01(i) or
6.01(k), as the case may be, complies in all respects with the requirements of
such Section and (iv) the Borrower has delivered to the Trustee an opinion of
counsel reasonably satisfactory to the Trustee to the effect that the Lien of
the Collateral Documents has attached and is perfected with respect to such
additional property and assets;
(i) Liens existing on any property of a newly-acquired Restricted
Subsidiary at the time of acquisition or upon any property acquired by the
Borrower or any 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) the Indebtedness secured by any such Lien is permitted
under Section 6.01(h), (iii) the principal amount of the Indebtedness secured by
any such Lien shall not exceed, at any time, an amount equal to the lesser of
(A) the cost of such property to the Borrower 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 Managing General Partner) at the time of such acquisition
by the Borrower or such Restricted Subsidiary and (iv) the aggregate principal
amount of all Indebtedness secured by any such Liens shall at no time exceed
$10,000,000;
(j) Liens in amounts not exceeding $100,000 incurred, required or provided
for under state law in connection with self-insurance arrangements; and
(k) (i) Liens arising from or constituting encumbrances or exceptions to
title to the Assets expressly permitted by the Collateral Documents, (ii) Liens
contemplated by any Commodity Hedging Agreement that are confined solely to the
commodities that are the subject of such agreement and (iii) Liens that are
existing on the Assets at the time of consummation of the Transactions and are
listed on Schedule 6.02.
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SECTION 6.03. Investments, Guaranties, etc. The Borrower will not, and will
not permit any Restricted Subsidiary to, directly or indirectly (a) make or own
any Investment in any Person or (b) create or become liable with respect to any
Guaranty, except:
(i) the Borrower or any Restricted Subsidiary may make and own
Investments in Cash Equivalents;
(ii) the Borrower and any Restricted Subsidiary may make and own any
Investment in Capital Stock of any Person which simultaneously with the
consummation thereof becomes a Restricted Subsidiary; provided that (A)
after giving effect to such Investment (and any other such Investments or
other Specified Events which have occurred since the first day of the
applicable Reference Period), (I) no condition or event shall exist which
constitutes an Event of Default or Default and (II) the Leverage Ratio as
of the last day of the Reference Period with respect to the date on which
such Investment is consummated, calculated on a pro forma basis as if such
Investments and other Specified Events had occurred on the first day of
such Reference Period, shall be no greater than the Permitted Maximum Ratio
on such consummation date and (B) the Borrower shall have prepared and
furnished to the Agents prior to the consummation of such Investment pro
forma financial statements, a pro forma business plan and pro forma
projections covering the balance of the term of the Facilities
demonstrating to the reasonable satisfaction of the Agents that the
Leverage Ratio reflecting such pro forma adjustments will not exceed the
Permitted Maximum Ratio at such time or during such period;
(iii) (A) any Restricted Subsidiary may make and permit to be
outstanding Investments in the Borrower and may create or become liable
with respect to any Guarantee in respect of obligations secured under the
Collateral Documents and (B) the Borrower may make and own loans evidenced
by the Intercompany Notes, to the extent such Intercompany Notes are
permitted under Section 6.01(c);
(iv) the Borrower or any Restricted Subsidiary may make and own
Investments in the Capital Stock of, or contributions to capital in the
ordinary course of business of, any Unrestricted Subsidiary 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
paragraph (iv) shall not at any time exceed $10,000,000 and (B) the
aggregate amount of all Investments made and outstanding pursuant to this
paragraph (iv) as at the end of any fiscal year of the Borrower shall not
exceed by more than $5,000,000 the amount of such Investments outstanding
as of the end of the immediately preceding fiscal year of the Borrower, in
each case, net of cash distributions received from all Unrestricted
Subsidiaries since the date hereof;
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(v) the Borrower or any Restricted Subsidiary may make and own
Investments (A) constituting trade credits or advances to any Person
incurred in the ordinary course of business, (B) arising out of loans and
advances to employees for travel, entertainment, relocation and other
similar business related expenses, in each case incurred in the ordinary
course of business or (C) acquired by reason of the exercise of customary
creditors' rights upon default or pursuant to the bankruptcy, insolvency or
reorganization of a debtor;
(vi) the Borrower 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; and
(vii) the Borrower or any Restricted Subsidiary may create and become
liable with respect to Hedging Agreements and Commodity Hedging Agreements.
SECTION 6.04. Restricted Payments. The Borrower will not directly or
indirectly declare, order, pay, make or set apart any sum for any Restricted
Payment, except that the Borrower may make, pay or set apart once during each
calendar quarter a cash distribution on its Units and other partnership
interests if (a) such Restricted Payment is in an amount not exceeding an
amount equal to (i) Available Cash for the immediately preceding calendar
quarter determined as of the last day of such calendar quarter or thereafter up
to the date of declaration of such Restricted Payment, [less (ii) the aggregate
amount of Parity Debt prepaid, retired, purchased or otherwise acquired during
the calendar quarter in which such Restricted Payment is declared, order, paid,
made or set apart,] (b) prior to and immediately after giving effect to any such
proposed action, (i) after giving effect to any Indebtedness incurred since the
first day of the Reference Period with respect to such date of declaration and
any other Specified Events on a pro forma basis as if such incurrence or other
events had occurred on the first day of such Reference Period, the covenant set
forth in Section 6.31 shall not and would not be violated on such date of
declaration, and (ii) no other condition or event shall or would exist which
constitutes or would constitute an Event of Default or Default, (c) the ratio of
Consolidated Cash Flow to Consolidated Interest Expense for the Reference Period
with respect to the date of such payment is greater than 1.75 to 1.00 and (d)
the Borrower shall have delivered to the Lenders, not later than the date such
Restricted Payment is declared (which declaration date shall be at least 10 days
prior to the date such Restricted Payment is made) an Officers' Certificate to
the effect that such Restricted Payment is permitted under this Section 6.04 and
showing in reasonable detail all calculations required in arriving at such
conclusion, including the calculation of the aggregate amount available at the
end of the preceding quarter for payment of cash distributions in compliance
with this Section 6.04. The Borrower will not, in any event, directly or
indirectly declare, order, pay or make any Restricted Payment except for cash
distributions payable to the holders of its Capital Stock. The Borrower will not
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permit any Restricted Subsidiary to declare, order, pay or make any Restricted
Payment or to set apart any sum or property for any such purpose (except for
Restricted Payments made solely to the Borrower or any other Restricted
Subsidiary).
SECTION 6.05. Transactions with Affiliates. (a) Except for the transactions
or conduct effected pursuant to the Operative Agreements as in effect on the
Closing Date or any other transactions or conduct described in or contemplated
by the Registration Statement, the Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, engage in any transaction with
any Affiliate of the Borrower, including the purchase, sale or exchange of
assets or the rendering of any service, to the Borrower's or such Restricted
Subsidiary's business except upon fair and reasonable terms that are no less
favorable to the Borrower 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 the Borrower and any Restricted Subsidiary or between
Restricted Subsidiaries.
(b) The Borrower will not pay, and will not permit any Restricted
Subsidiary to pay, any management fee or other compensation in connection with
the management of the Borrower by the General Partners (or any of their
Affiliates); provided that, (i) the Borrower may reimburse the Managing General
Partner at cost for all direct and indirect expenses incurred by the Managing
General Partner on behalf of the Borrower, including the cost of compensation
and employee benefit plans properly allocable to the Borrower and all other
expenses necessary or appropriate to the conduct of the business of, and
allocable to, the Borrower, (ii) the General Partners and their Affiliates
(including Triarc) may provide administrative services on behalf of the Borrower
and will be reimbursed at cost for all expenses incurred in connection therewith
and (iii) subject to Section 6.05(a), the General Partners and their Affiliates
(including Triarc) may provide other services to the Borrower, for which the
Borrower may be charged reasonable fees by the Managing General Partner.
SECTION 6.06. Prohibited Stock and Indebtedness. The Borrower will not:
(a) directly or indirectly sell, assign, pledge or otherwise dispose of any
Indebtedness or Capital Stock of (or warrants, rights or options to acquire
Capital Stock of) any Restricted Subsidiary, except (i) to a Restricted
Subsidiary and (ii) in the case of the sale of all the Capital Stock of a
Restricted Subsidiary as an entirety, as permitted under Section 6.07;
(b) permit any Restricted Subsidiary directly or indirectly to sell,
assign, pledge or otherwise dispose of any Indebtedness of (i) the Borrower or
(ii) any other Restricted Subsidiary, or any Capital Stock of (or warrants,
rights or options to acquire Capital Stock of) any other Restricted Subsidiary,
except (A) to, in the case of
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clause (i), the Borrower or, in all other cases, a Restricted Subsidiary and (B)
in the case of the sale of all the Capital Stock of a Restricted Subsidiary as
an entirety, as permitted under Section 6.07;
(c) permit any Restricted Subsidiary to have outstanding any Preferred
Stock (other than Preferred Stock owned by the Borrower or any other Restricted
Subsidiary); or
(d) permit any Restricted Subsidiary directly or indirectly to issue or
sell (including in connection with a merger or consolidation of a Restricted
Subsidiary otherwise permitted by Section 6.07(a)) any of its Capital Stock (or
warrants, rights or options to acquire its Capital Stock) except to the Borrower
or a Restricted Subsidiary;
provided that, any Restricted Subsidiary may sell, assign or otherwise dispose
of Indebtedness of the Borrower if, assuming such Indebtedness were incurred
immediately after such sale, assignment or disposition, such Indebtedness would
be permitted under Section 6.01 (and, if such Indebtedness is secured, such Lien
would be permitted pursuant to Section 6.02).
SECTION 6.07. Consolidation, Merger, Sale of Assets, etc. The Borrower will
not, and will not 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; provided that:
(i) any Restricted Subsidiary may consolidate with or merge into the
Borrower or a Restricted Subsidiary if, in the case of a consolidation with
or merger into the Borrower, the Borrower shall be the surviving Person and
if, immediately after giving effect to such transaction, no condition or
event shall exist which constitutes a Default or an Event of Default; and
(ii) any Person (other than a Restricted Subsidiary) may consolidate
with or merge into the Borrower or a Restricted Subsidiary if the Borrower
or such Restricted Subsidiary, as the case may be, shall be the surviving
Person and if, immediately after giving effect to such transaction, (A) the
Borrower (I) shall not have a Consolidated Net Worth (determined in
accordance with GAAP applied on a basis consistent with the financial
statements of the Borrower most recently delivered pursuant to Section
5.02(b) (but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting materials) of less
than the Consolidated Net Worth of the Borrower immediately prior to the
effectiveness of such transaction, (II) 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
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the date of such transaction, and (III) could incur, if the consolidating
or merging Person has outstanding Indebtedness, at least $1 of additional
Indebtedness in compliance with Section 6.01(f) after giving effect to such
transaction on a pro forma basis, (B) substantially all of the assets of
the Borrower and the Restricted Subsidiaries shall be located and
substantially all of their business shall be conducted within the United
States of America, and (C) immediately after giving effect to such
transaction, (I) no condition or event shall exist which constitutes a
Default or an Event of Default and (II) the Leverage Ratio as of the last
day of such Reference Period, calculated on a pro forma basis as if such
transaction (and any other such transactions and any other Specified Events
which have occurred since the first day of the applicable Reference Period)
had occurred on the first day of such Reference Period, shall be no greater
than the Permitted Maximum Ratio on the date on which such transaction is
consummated; and
(iii) the Borrower may consolidate with or merge into any other Person
if (A) the surviving Person is a corporation, limited partnership, limited
liability company or business trust 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 United States of America, (B) such surviving Person
expressly and unconditionally assumes the obligations of the Borrower under
this Agreement, the Loan Documents and each of the other Operative
Agreements and delivers to each Lender in connection with such assumption
an opinion of counsel reasonably satisfactory to the Required Lenders with
respect to such matters incident to such assumption as may be reasonably
requested by the Required Lenders, including as to the due authorization
and execution of the related agreement of assumption and the enforceability
of such agreement against such surviving Person, (C) immediately after
giving effect to such transaction, such surviving Person (I) shall not have
a Consolidated Net Worth (determined in accordance with GAAP applied on a
basis consistent with the financial statements of the Borrower most
recently delivered pursuant to Section 5.02(b) but without giving effect to
any write-up in assets or amounts attributable pursuant to purchase
accounting methods) of less than the Consolidated Net Worth of the Borrower
immediately prior to the effectiveness of such transaction, (II) 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 (III) could incur, if the consolidating or merging
Person had outstanding Indebtedness, at least $1 of additional Indebtedness
in compliance with Section 6.01(f) after giving effect to such transaction
on a pro forma basis, and (D) immediately after giving effect to such
transaction, (I) no condition or event shall exist which constitutes a
Default or an Event of Default and (II) the Leverage Ratio as of the last
day of such Reference Period, calculated on a pro forma basis as if
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such transaction (and any other such transactions and any other Specified
Events which have occurred since the first day of the applicable Reference
Period) had occurred on the first day of such Reference Period, shall be no
greater than the Permitted Maximum Ratio on the date on which such
transaction is consummated; and
(iv) with regard to any merger contemplated by clause (ii) or (iii)
above, the Borrower shall have prepared and furnished to the Agents prior
to consummation of the transaction pro forma financial statements
demonstrating to the satisfaction of the Agents compliance with the
applicable requirements set forth therein;
(b) sell, lease, abandon or otherwise dispose of all or substantially all
its assets, provided that any Restricted Subsidiary may sell, lease or otherwise
dispose of all or substantially all its assets to the Borrower or to any other
Restricted Subsidiary; or
(c) sell, lease, abandon or otherwise dispose of any property to any Person
other than the Borrower or any Restricted Subsidiary (except (i) in a
transaction permitted by subdivision (a)(iii) or (b)(ii) of this Section 6.07,
(ii) an Investment in an Unrestricted Subsidiary permitted by Section 6.03(iv),
(iii) dispositions of inventory in the ordinary course of business and (iv)
dispositions of Obsolete Assets in the ordinary course of business not exceeding
$150,000 in the aggregate in fair market value in any one calendar year);
provided that the Borrower or any Restricted Subsidiary may engage in any such
transaction referred to in this paragraph (c), excluding any such transaction
referred to in paragraph (a) or (b) above, if all of the following conditions
are satisfied:
(i) at least 80% of the consideration therefor shall be in the form of
cash consideration or marketable securities that are promptly converted
into cash (to the extent of the cash received); provided that the amount of
(A) any liabilities (as shown on the Borrower's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the
Borrower or any Restricted Subsidiary (other than Indebtedness that is by
its terms subordinated in right of payment to the Notes or the Mortgage
Notes) that is assumed by the transferee of any such assets and (B) any
notes or other obligations received by the Borrower or any such Restricted
Subsidiary from such transferee that are promptly converted into cash (to
the extent of the cash received), shall be deemed to be cash for the
purposes of this Section 6.07(c)(i);
(ii) immediately after giving effect to such proposed disposition, no
condition or event shall exist which constitutes an Event of Default or
Default;
(iii) either
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(A) the aggregate net after-tax proceeds of all property so
disposed of (whether or not leased back) by the Borrower and all
Restricted Subsidiaries during the current fiscal year (including
property disposed of through dispositions of Capital Stock permitted
under Section 6.06 and including all proceeds under title insurance
policies with respect to real property and all Net Insurance Proceeds
(as defined in the Mortgage), self-insurance amounts and Net Awards
(as defined in the Mortgage) 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 Mortgage)), less the sum of (x)
the amount of all such net after-tax proceeds previously applied in
accordance with paragraph (iii)(B) of this Section 6.07(c) and (y) an
amount equal to the purchase price of any assets acquired (so long as
(1) such assets were acquired within 90 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 after-tax proceeds of
property disposed of under this Section 6.07(c), (3) such assets were
acquired for subsequent replacement of the property so disposed of or
may be productively used in the United States of America in the
conduct of the Business, (4) such assets are subject to the Lien of
the Collateral Documents, (5) if and to the extent that there were
unused Tranche B Revolving Credit Commitments, the acquisition of such
assets was not financed in whole or in part with the proceeds of
Indebtedness (other than Tranche B Revolving Loans) and (6) to the
extent such assets were acquired (in whole or in part) with the
proceeds of Indebtedness, such Indebtedness has been repaid in full),
when aggregated with such net after-tax proceeds of all prior
transactions under this Section 6.07(c), shall not exceed $5,000,000;
or
(B) in the event that such net after-tax proceeds (less the sum
of (x) the amount thereof previously applied in accordance with this
paragraph (iii)(B) and (y) an amount equal to the purchase price of
any assets acquired (so long as (1) such assets were acquired within
90 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 after-tax proceeds of property disposed of under this
Section 6.07(c), (3) such assets were acquired for subsequent
replacement of the property so disposed of or may be productively used
in the United States of America in the conduct of the Business, (4)
such assets are subject to the Lien of the Collateral Documents, (5)
if and to the extent that there were unused Tranche B Revolving Credit
Commitments, the acquisition of such assets was not financed in whole
or in part with the proceeds of Indebtedness (other than Tranche B
Revolving Loans) and (6) to the extent such assets were acquired (in
whole or in part) with the proceeds of Indebtedness, such Indebtedness
has been repaid in
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full)), when aggregated with such net proceeds of all prior
transactions under this Section 6.07(c), exceed $5,000,000 (the amount
of such excess net after-tax proceeds actually realized being herein
called "Excess Proceeds"), the Borrower shall promptly pay over to the
Trustee such Excess Proceeds not at the time held by the Trustee for
application by the Trustee (I) within 270 days (or 360 days if the
Borrower has executed a binding contract for acquisition or
replacement of assets meeting the requirements specified in this
clause (iii) within 270 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 of America in the conduct of the Business (and such
newly acquired assets shall be subjected to the Lien of the Collateral
Documents) or to the cost of Restoration (as defined in the Mortgage),
or (II) to the extent of Excess Proceeds not applied pursuant to the
immediately preceding clause (I), to the payment and/or prepayment of
the Facilities Obligations and Parity Debt, if any, pursuant to
Section 2.11, all as provided in Section 4(d) of the Trust Agreement
and Section 2.11, and the Trustee shall have received an Officers'
Certificate from the General Partners certifying that the
consideration received for such property is at least equal to its fair
value (as determined in good faith by the Board of Directors) and that
such consideration has been applied in accordance with the terms of
this Agreement;
(iv) in the case of any sale, lease or other disposition of Collateral
which includes real property (or any interest therein), or any sale, lease
or other disposition of Collateral resulting in the aggregate net after-tax
proceeds of all such sales, leases or other dispositions exceeding
$10,000,000, the Trustee shall have received an Officers' Certificate from
the General Partners certifying that such sale, lease or other disposition
is in the best interest of the Borrower and will not have a Material
Adverse Effect; and
(v) in the case of any sale, lease or other disposition (or series of
related sales, leases or dispositions) of Collateral involving aggregate
net after-tax proceeds of $5,000,000 or more, the Borrower shall have
prepared and furnished to the Agents prior to the consummation of such
transaction pro forma financial statements demonstrating to the
satisfaction of the Agents compliance with the requirements set forth in
paragraph (ii) above.
Notwithstanding the foregoing, the Borrower and any Restricted Subsidiary
may sell or dispose of (x) real property assets sold or disposed of within 12
months of the acquisition of such assets and (y) all other assets sold or
disposed of within 6 months of the acquisition of such assets, in each case
referred to in clause (x) or (y) constituting a portion of an acquired business;
provided that (1) such assets are specifically designated to the Administrative
Agent in writing prior to such acquisition
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(or within 30 days thereafter) as assets to be disposed of, (2) the
Administrative Agent shall have received an Officers' Certificate from the
Managing General Partner certifying that the consideration received for such
property is at least equal to its fair market value (as determined in good faith
by the Managing General Partner), (3) such acquisition was not financed in whole
or in part with the proceeds of Indebtedness (other than Tranche B Revolving
Loans), (4) if such acquisition was financed in whole or in part with Tranche B
Revolving Loans, the proceeds of such disposition shall be applied to repay such
Tranche B Revolving Loans and (5) no Event of Default or Default shall have
occurred and be continuing. Such dispositions under this paragraph will not be
applied towards the cumulative limitations in paragraph (c)(iii)(A) of this
Section 6.07. In addition, notwithstanding the foregoing, the Borrower may, at
any time, exchange assets for other like assets which may be used in the conduct
of the Business, provided (1) the fair value of the assets so acquired is
substantially equivalent to the fair value of the assets so exchanged (as
determined in good faith by the Managing General Partner), (2) such acquired
assets are subject to the Lien of the Collateral Documents and (3) (A) with
respect to miscellaneous machinery and equipment not exchanged as part of an
exchange of operating locations, the total book value of all such miscellaneous
machinery and equipment so exchanged after the date of this Agreement shall not
in the aggregate exceed 15% of the total book value of the machinery and
equipment of the Borrower as of the date of this Agreement, and (B) with respect
to assets exchanged as part of an exchange of operating locations, the total
cash flow of all such assets exchanged after the date of this Agreement
(calculated in all material respects on the same basis as provided for in the
definition of Consolidated Cash Flow) shall not exceed 15% of Consolidated Cash
Flow of the Borrower for the Reference Period ending on June 30, 1996. The
Lenders agree to take, at the expense of the Borrower, all actions reasonably
requested by the Borrower to cause dispositions of Collateral made in compliance
with this Section 6.07 to be made free and clear of the liens created by the
Collateral Documents.
SECTION 6.08. Partnership or Corporate Existence, etc.; Business. (a) (i)
The Borrower will at all times preserve and keep in full force and effect its
partnership existence and its status as a partnership not taxable as a
corporation for Federal income tax purposes; (ii) the Borrower will cause each
Restricted Subsidiary to keep in full force and effect its partnership or
corporate existence; and (iii) the Borrower will, and 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 6.06 and 6.07 and except that the partnership
or corporate existence of any Restricted Subsidiary, and any right or franchise
of the Borrower or any Restricted Subsidiary, may be terminated if, in the good
faith judgment of the General Partners, such termination is in the best interest
of the Borrower, is not disadvantageous to the Lenders in any material respect
and would not have a Material Adverse Effect).
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(b) The Borrower will not, and will not permit any Restricted Subsidiary
to, engage in any material line of business substantially different than 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; provided that, the Borrower will not
permit National Sales and Services, Inc. to exist for any purpose, or to carry
on any business, other than the ownership and operation of the Service Assets
(as defined in the Conveyance Agreements) and other assets of that type.
(c) The Borrower shall not permit National Propane SGP to exist for any
purpose or to engage in any business or business activity, except to serve as a
General Partner of the Borrower (including serving as the Managing General
Partner thereof in the circumstances provided in the Partnership Agreement);
provided that the foregoing exception shall not permit National Propane SGP to
conduct any business or business activity directly.
(d) The Borrower will not, and will not permit any of its Affiliates to,
take any action or refuse to take any reasonable action the effect of which, if
taken or not taken, as the case may be, would be to cause the Public Partnership
or the Borrower to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity other than a partnership for Federal income
tax purposes.
SECTION 6.09. Payment of Taxes and Claims. The Borrower will, and 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, and all claims (including 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 Agents, the Issuing Bank and the Lenders 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 the failure to pay or
reimburse the same would not, individually or in the aggregate, have a Material
Adverse Effect or if it is 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
Partners.
SECTION 6.10. Compliance with ERISA. The Borrower will not, and will not
permit any Subsidiary or Related Person of the Borrower to:
(a) (i) engage in any transaction in connection with which the Borrower 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,
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or take, or fail to take, any other action with respect to any Plan (including 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 the Borrower, (iv) fail to make full
payment when due of all amounts which, under the provisions of any Plan or
applicable law, the Borrower or any Subsidiary or Related Person of the Borrower
is required to pay as contributions 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 the Borrower, any Subsidiary
or any Related Person of the Borrower could be subject to liability pursuant to
Section 4069(a) or 4212(c) of ERISA, if, any such event, condition or
transaction described in clauses (i) through (v) above, either individually or
together with any other such event, condition or transaction, could result in
(x) the imposition of a Lien on any assets or property of the Borrower or any
Subsidiary pursuant to Section 302(f) of ERISA or Section 412(m) of the Code or
(y) any liability to the Borrower, any Subsidiary or any Related Person of the
Borrower, 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 the Borrower or
any Subsidiary or Related Persons of the Borrower to exceed the current value of
the assets of any such Plan by more than $1,000,000 or (ii) permit the aggregate
liability incurred by the Borrower and any Subsidiary and Related Persons of the
Borrower 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 6.10, 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 6.11. Maintenance of Properties; Insurance. (a) The Borrower will
maintain or cause to be maintained in working order and condition, in accordance
with normal industry standards, all material properties used or useful in the
business of the Borrower and the Restricted Subsidiaries and from time to time
will make or cause to be made all appropriate repairs, renewals and replacements
thereof.
(b) The Borrower will, and will cause each of the Restricted Subsidiaries
to, keep its insurable properties adequately insured at all times by Permitted
Insurers; maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in
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connection with the use of any properties owned, occupied or controlled by it;
maintain such other insurance as may be required by law or any Collateral
Document; and cause each such insurance policy to name the Trustee, on behalf of
the Secured Parties, as an additional insured or loss payee thereunder. The
Borrower will permit the Agents and an insurance consultant retained by the
Agents, at the expense of the Borrower, to review the insurance policies
maintained by the Borrower on an annual basis and will implement any changes to
such policies reasonably recommended by such consultant, if available on a
commercially reasonable basis.
SECTION 6.12. Operative Agreements; Collateral Documents. The Borrower
will, and will cause each Restricted Subsidiary to, perform and comply in all
material respects 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 surrender, release or 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 would not be
disadvantageous in any material respect to the Lenders; provided that any
termination of the Triarc Note, other than as a result of its prepayment in full
or payment in full of the principal amount thereof as specified in the Triarc
Note, shall be deemed to have a Material Adverse Effect; provided further that
prepayment in full or payment in full of the principal amount of the Triarc Note
to the Borrower, in and of itself, shall not be deemed to have a Material
Adverse Effect. The Borrower will not, and will not permit any other Loan Party
to, amend, modify or supplement any Operative Agreement or its partnership
agreement, certificate of incorporation or by-laws without the prior written
consent of the Required Lenders; provided that (i) the MLP Agreement and the
Partnership Agreement (other than Sections _____, _____, _____ and _____ of the
Partnership Agreement) may be amended, modified or supplemented without the
prior written consent of the Required Lenders if such amendment, modification or
supplement would not have a Material Adverse Effect and the Borrower shall have
delivered to each Lender 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,
(ii) the Note Agreement may be amended, modified or supplemented without the
prior written consent of the Required Lenders if such amendment, modification or
supplement may be made without the written consent of any Lenders under the
Trust Agreement and (iii) the Triarc Note may be amended, modified or
supplemented without the prior written consent of the Required Lenders if such
amendment, modification or supplement would not have a Material Adverse Effect,
would not be disadvantageous in any material respect to the Lenders and would
not modify, amend or supplement [list prohibited amendments].
SECTION 6.13. Chief Executive Office. The Borrower will not move its chief
executive office and the office at which it maintains its records relating to
the transactions contemplated by this Agreement and the Collateral Documents
unless
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(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 Lender and (b) such action, reasonably satisfactory to the Trustee and each
Lender, to maintain any security interest in the property subject to the
Collateral Documents at all times fully perfected and in full force and effect
shall have been taken.
SECTION 6.14. Recordation. (a) The Borrower will promptly, but in any event
within 30 days after the Closing Date, cause to be duly recorded, published,
registered and filed all Conveyance Agreements and all Collateral Documents, not
previously recorded, published, registered or filed in accordance with Section
4.01(d) 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 the
Collateral covered by such Conveyance Agreements and the Collateral Documents.
The Borrower shall deliver to the Trustee and the Administrative Agent within
six calendar months of the Closing Date copies (originals with respect to
certificates of title of motor vehicles and other rolling stock) of such duly
recorded, published, registered and filed Collateral Documents. With respect to
motor vehicles and other rolling stock, all Collateral Documents necessary for
the creation and perfection of the Liens contemplated hereby shall be duly
prepared, executed and available at Closing. The Borrower 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.
(b) The Borrower, at its expense, will furnish to the Trustee and to the
Lenders on or before December 31 of each year, beginning with December 31, 1996,
and at such other times as the Trustee may reasonably request in connection with
the perfection of Liens granted pursuant to the Collateral Documents, an opinion
of counsel satisfactory to the Trustee stating that in the opinion of such
counsel such action has been taken with respect to the recording, filing,
re-recording and re-filing of the Collateral Documents and any financing
statements necessary to maintain the Lien or security interest created thereby
and reciting the details of such action or stating that in the opinion of such
counsel no such other action is necessary to maintain such lien or security
interest.
SECTION 6.15. Covenant to Secure Notes Equally. The Borrower covenants
that, if it or any Restricted Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of Section 6.02 (unless prior written
consent to the creation or assumption thereof shall have been obtained from the
Required Lenders), it will make or cause to be made effective provisions whereby
the Facilities Obligations 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; provided, however, that the provision of such
equal and ratable security shall not constitute a cure or waiver of any related
Event of Default.
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SECTION 6.16. Compliance with Laws. (a) The Borrower will, and will cause
each Subsidiary to, comply with all applicable statutes, rules, regulations, and
orders of, and all applicable restrictions imposed by, the United States of
America, foreign countries, states, provinces and municipalities, and of or by
any Governmental Authority, including any court, arbitrator or grand jury, in
respect of the conduct of their respective businesses and the ownership of their
respective properties or business, 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 could not
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will, and will cause each Restricted Subsidiary to, comply
with all Environmental Laws, other than noncompliance which could not reasonably
be expected to result in a Material Adverse Effect, individually or in the
aggregate with any other liability under any Environmental Laws.
(c) The Borrower will, and will cause each Restricted Subsidiary to,
promptly give notice to the Administrative Agent upon becoming aware of (i) any
material violation of or notice of potential liability under any Environmental
Law or (ii) any release or threatened release of any Hazardous Material at, on,
into, under or from any real property of any facility or equipment thereat in
excess of reportable or allowable standards or levels under any Environmental
Law, or in a manner and/or amount which could reasonably be expected to result
in liability under any Environmental Law, which liability would result in a
Material Adverse Effect.
(d) The Borrower will, and will cause each Restricted Subsidiary to,
promptly provide the Administrative Agent with copies of any notice, submission
or documentation provided by the Borrower or any Restricted Subsidiary to the
Governmental Authority or third party under any Environmental Law if the matter
which is the subject of the notice, submission or other documentation could
reasonably be expected to have a Material Adverse Effect. Such notice,
submission or documentation shall be provided to the Administrative Agent
promptly and, in any event, within 30 days after such material is provided to
the Governmental Authority or third party.
SECTION 6.17. Further Assurances. (a) At any time and from time to time
promptly, the Borrower shall, at its expense, execute and deliver to each Lender
and to the Trustee such further instruments and documents, and take such further
action, as may be required under applicable law or as the Lenders 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 Lenders; provided
that, except as provided in Section 6.22, the Borrower shall not be required to
file Mortgages on properties listed on Schedule 3.17(a).
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(b) Without limitation of Section 6.17(a), the Borrower will, and will
cause the Subsidiaries to, perform any and all acts and execute any and all
documents (including the execution, amendment, supplementation, delivery and
recordation and filing of security agreements and financing statements and
continuation statements under the Uniform Commercial Code of any applicable
jurisdiction) for filing under the provisions of the Uniform Commercial Code and
the rules and regulations thereunder, or any other statute, rule or regulation
of any applicable foreign, Federal, state or local jurisdictions, including any
filings in the United States Patent and Trademark Office or similar foreign
office, which are necessary (or reasonably requested by the Agents), from time
to time, in order to grant and maintain in favor of the Trustee for the ratable
benefit of the Secured Parties a security interest in each item of the
Collateral of the type and priority described in the relevant Collateral
Document, perfected to the extent contemplated hereby and thereby.
(c) Without limitation of Section 6.17(a), the Borrower will, and will
cause the Subsidiaries to, deliver or cause to be delivered to the Lenders from
time to time such other documentation, consents, authorizations, approvals and
orders in form and substance satisfactory to the Agents, as the Agents shall
deem reasonably necessary or advisable to perfect or maintain the Liens for the
benefit of the Secured Parties, including Liens on assets which are required to
become Collateral after the Closing Date.
(d) The Borrower will use its reasonable best efforts to cause all property
and assets covered by the Agency Agreement to be conveyed to the Borrower in the
same manner as the conveyance of the Assets on the Closing Date, to be pledged
and mortgaged under the Collateral Documents in the same manner as the pledges
and mortgages of the Assets on the Closing Date, and generally to do all things
necessary to give the Lenders the same rights, benefits, certificates, opinions
and the like, as if such properties and assets had been conveyed on the Closing
Date. The Borrower shall use its reasonable best efforts to accomplish the
foregoing within 120 days after the Closing Date; provided that the foregoing
shall not result in any Default or Event of Default so long as the foregoing
actions have been accomplished with respect to 80% of the properties and assets
covered by the Agency Agreement within 180 days after the Closing Date.
SECTION 6.18. Subsidiaries. (a) The Borrower may designate any Restricted
Subsidiary or newly acquired or formed Wholly Owned Subsidiary satisfying the
requirements in clauses (a), (b) and (c) of the definition of Restricted
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
Default;
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(ii) immediately after giving effect to such designation, (A) except
in the case of a designation as a Restricted Subsidiary of an Unrestricted
Subsidiary that does not have any Indebtedness and that has positive
Consolidated Cash Flow for the most recent Reference Period, the Borrower
would be permitted to incur at least $1 of additional Indebtedness in
compliance with Section 6.01(f), (B) the Borrower and the Restricted
Subsidiary would not be liable with respect to Indebtedness or any
Guaranty, would not own any Investment and their property would not be
subject to any Lien which is not permitted by this Agreement and (C)
substantially all of the Borrower's and the Restricted Subsidiaries' assets
will be located, and substantially all of the Borrower's and the Restricted
Subsidiaries' business will be conducted, in the United States of America;
(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 the Borrower of all the assets of the Subsidiary so designated
(other than cash in the case of a newly acquired or formed Subsidiary) such
sale would be in compliance with paragraph (iii)(A) of Section 6.07(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 the Borrower in respect of all the assets of the Subsidiary
so designated, such Investment would be in compliance with clause (iv) of
Section 6.03, 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 6.18(a) shall not apply to an
acquisition or formation by the Borrower or a Restricted Subsidiary of a
newly acquired or formed Unrestricted Subsidiary to the extent such
acquisition or formation is funded solely by the net cash proceeds received
by the Borrower from the General Partners or from the Public Partnership as
a capital contribution or as consideration for the issuance by the Public
Partnership of additional limited partnership interests; and provided
further, that any sale of assets or of the Capital Stock of an Unrestricted
Subsidiary (which within the last 12 months had been a Restricted
Subsidiary or were assets of a Restricted Subsidiary) shall be deemed to
constitute a sale by the Borrower of all the assets of such Unrestricted
Subsidiary, which sale shall be subject to Sections 6.07 and 2.11;
(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;
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(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) the Borrower shall deliver to each Lender, within five 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 6.18; and
(vii) 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.
(b) The Borrower 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 Borrower Security Agreement, the Trust Agreement and the Subsidiary
Guarantee Agreement by execution of a Supplemental Agreement and (ii) enter into
such documents as may be necessary or as the Required Lenders may request, in
form and substance satisfactory to the Required Lenders, 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. Prior
to the designation of a Subsidiary as a Restricted Subsidiary, the Borrower
shall deliver to the Lenders an opinion of counsel with respect to the due
execution and delivery of Supplemental Agreement and as to the enforceability of
the Borrower Security Agreement, the Trust Agreement, the Supplemental Agreement
and the Subsidiary Guarantee Agreement, such opinion to be in form and substance
satisfactory to the Borrower.
(c) The Borrower 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 6.19. Certain Post-Closing Matters. The Borrower shall perform all
of the investigatory and remedial work recommended in the Environmental
Assessment Reports prepared by Environmental Strategies Corporation and
delivered to the Lenders as contemplated by Section 4.01(u), and covering the
properties owned by or to be transferred to the Borrower and the Restricted
Subsidiaries, as such work is listed and described on Schedule 6.19 hereto. All
remedial work and additional investigation recommended in the Environmental
Report shall be commenced within 60 days from the date hereof, and shall be
performed in accordance with applicable Environmental Laws. The Borrower agrees
to diligently pursue the completion of such remedial work and additional
testing. To the extent that any such additional investigation undertaken as
contemplated above indicates that additional work or remediation is required by
applicable Environmental Laws, then the Borrower agrees
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to promptly commence such additional work or remediation and thereafter
diligently pursue such additional work or remediation until completed.
SECTION 6.20. Use of Proceeds. The Borrower will use the proceeds of the
Loans and will use the Letters of Credit only for the purposes set forth in
Section 3.13.
SECTION 6.21. Accounting Changes. The Borrower will not, and will not
suffer or permit any Restricted Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP. The
Borrower will, and will cause each Restricted Subsidiary to, cause its fiscal
year to end on December 31 in each year.
SECTION 6.22. Certain Real Property. Without affecting the obligations of
the Borrower or any of the Restricted Subsidiaries under any of the Collateral
Documents, in the event that the Borrower or any Restricted Subsidiary (other
than National Sales and Services, Inc.), at any time after the date hereof,
whether directly or indirectly, acquires any interest in any real property,
including any fee or other ownership interest in any property, with a cost in
excess of $50,000, or any interest under any lease of real property for a term
in excess of three years and involving average payments in excess of $100,000
per annum (each such interest, an "After Acquired Property"), the Borrower will,
or will cause such Restricted Subsidiary to, as soon as practical provide
written notice thereof to the Administrative Agent, 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 then current value of such real property
("Current Value"). The Administrative Agent shall provide notice to the Borrower
of whether the Required Lenders intend to cause the Borrower or the applicable
Restricted Subsidiary to grant and record a Mortgage 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 such event, the
Borrower or such Restricted Subsidiary shall execute and deliver to the
Administrative Agent a Mortgage, together with such of the documents or
instruments referred to in Sections 4.01(d) and 4.01(e) as the Agents shall
reasonably require. The Borrower shall also cause to be prepared, at its
expense, reports of the type referred to in Sections 4.01(u) and (v) with
respect to each item of After Acquired Property for which the cost or fair
market value exceeds $250,000. In no event shall the 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 time, the aggregate cost to
the Borrower and the Restricted Subsidiaries (other than National Sales and
Services, Inc.) of interests in real property for which a Mortgage in favor of
the Trustees is not in effect (the "Aggregate Cost of Unmortgaged Property"),
exceeds $500,000, the Borrower will as soon as practical provide written notice
thereof to each Lender, setting forth with specificity a description of such
interests in real property, the
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location of such real property and an appraisal or its good-faith estimate of
the then current value of such real property interests. The Required Lenders may
require the Borrower or the applicable Restricted Subsidiary (other than
National Sales and Services, Inc.) to grant and record a Mortgage in favor of
the Trustee on one or more of such real property interests 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 granted, the Borrower or
such Restricted Subsidiary shall execute and deliver to the Trustee a Mortgage,
together with such documents or instruments as the Required Lenders shall
reasonably 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, which is currently owned or held by the Borrower or any
Restricted Subsidiary, which is not being encumbered by a Mortgage of even date
herewith and which has a current fair market value in excess of $50,000 or any
interest under a lease of real property for a term in excess of three years and
involving aggregate payments in excess of $100,000 per annum (each such
interest, an "Existing Unmortgaged Property"), upon the written request of the
Required Lenders, the Borrower will, or will cause any applicable Restricted
Subsidiary to, execute and deliver to the Administrative Agent a Mortgage,
together with such of the documents or instruments referred to in Section
4.01(d) and 4.01(e) as the Agents shall require; provided that a title insurance
policy, survey and environmental report shall only be required if the fair
market value of such interest in real property at the time such mortgage is
executed exceeds $250,000. 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 Borrower shall pay all
reasonable fees and expenses, including reasonable attorneys' fees and expenses
and expenses of any customary environmental due diligence, and all title
insurance charges and premiums, in connection with the obligations of the
Borrower and the Restricted Subsidiaries under this Section 6.22.
SECTION 6.23. Sale and Lease-Back Transactions. The Borrower will not, and
will not 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, with an intent to 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 6.24. Acquisitions. Except in merger permitted by Section 6.07, the
Borrower will not, and will not 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 (other than a Restricted Subsidiary), except that (a) the Borrower and
any of the Restricted Subsidiaries may purchase inventory in the ordinary course
of business and (b) the Borrower or any
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Restricted Subsidiary may engage in any such acquisition if (i) after giving
effect to such acquisition, (A) no condition or event shall exist which
constitutes an Event of Default or Default and (B) the Leverage Ratio as of the
last day of such Reference Period, calculated on a pro forma basis as if such
acquisition (and any other such acquisitions and other Specified Events which
have occurred since the first day of the applicable Reference Period) had
occurred on the first day of such Reference Period, shall be no greater than the
Permitted Maximum Ratio on the date of consummation of such acquisition and (ii)
if such acquisition is made for aggregate consideration in excess of
$____________, the Borrower shall have prepared and furnished to the Agents
prior to the consummation of such acquisition pro forma financial statements, a
pro forma business plan and pro forma projections covering the balance of the
term of the Facilities demonstrating to the satisfaction of the Agents that the
Leverage Ratio reflecting such pro forma adjustments will not exceed the
Permitted Maximum Ratio at such time or during such period.
SECTION 6.25. Impairment of Security Interests. The Borrower will not, and
will not 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 on behalf of the Secured Parties
with respect to the Collateral, and the Borrower will not, and will not permit
any of the Subsidiaries to, grant to any Person (other than the Trustee on
behalf of the Secured Parties) any interest whatsoever in the Collateral.
SECTION 6.26. Limitation on Restrictions on Subsidiary Dividends, etc. The
Borrower will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual 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 the Borrower or any Restricted Subsidiary, (b) make loans or advances to
the Borrower or any Restricted Subsidiary or (c) transfer any of its properties
or assets to the Borrower 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, (ii) restrictions on the payment of dividends and distributions
pursuant to the terms of any Indebtedness incurred by such Restricted Subsidiary
in accordance with Section 6.01(h) or (iii) this Agreement, the other Loan
Documents and the Note Agreement.
SECTION 6.27. No Other Negative Pledges. The Borrower will not, and will
not 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 the Borrower 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 and
the Note Agreement and the
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terms of any other Indebtedness incurred in accordance with Section 6.01
(provided that the terms of such agreement for such other Indebtedness are no
more onerous to the Borrower and its Subsidiaries than those set forth in
Section 6.02); provided that no such agreement shall prohibit the granting of
Liens on assets of the Loan Parties as contemplated by the terms of this
Agreement, the Collateral Documents and any documents evidencing or creating any
other Parity Debt.
SECTION 6.28. Sales of Receivables. The Borrower will not, and will not
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 6.29. Fixed Price Supply Contracts; Certain Policies. (a) The
Borrower will not, and will not 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) The Borrower will not amend, modify or waive the trading policy or
supply inventory position policy referred to in Section 3.29, except that the
Borrower may enter into Commodity Hedging Agreements as permitted under the
other provisions hereof. The Borrower will provide the Agents and the Lenders
with prompt written notice of any such new Commodity Hedging Agreement. Subject
to the foregoing exception, the Borrower and the Restricted Subsidiaries will
comply in all material respects with such policies at all times.
SECTION 6.30. Certain Operations. The Borrower shall not permit Triarc or
any of its Affiliates (other than the Borrower and the Restricted Subsidiaries)
to engage in the retail sale of propane to end users in the continental United
States.
SECTION 6.31. Funded Debt to Cash Flow; Net Working Capital. (a) The
Borrower will not permit the ratio on any day (the "date of determination") of
(i) Total Funded Debt as of the last day of the Reference Period with respect to
such date of determination to (ii) Consolidated Cash Flow for such Reference
Period to be greater than the ratio set forth below opposite the calendar period
during which such date of determination occurs:
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Maximum
Calendar Period Permitted Ratio
--------------- ---------------
Closing Date through 4.50 : 1.00
June 30, 1997
After July 1, 1997 4.25 : 1.00
and thereafter
For purposes of this Section 6.31 only, but not for purposes of determining the
Applicable Margin, calculating the Leverage Ratio as required by Sections
4.03(g), 6.01, 6.03, 6.07 and 6.24, calculating the ratio of Consolidated Cash
Flow to Consolidated Interest Expense as required by Section 6.04 or any other
purpose (other than determining compliance with Section 6.31 as required by
Section 6.04), Consolidated Cash Flow for any Reference Period (other than any
Reference Period including any period prior to June 30, 1996) shall mean the
greater of (i) Consolidated Cash Flow for the most recent period of four
consecutive fiscal quarters prior to the date of determination and (ii) 50% of
Consolidated Cash Flow for the most recent period of eight consecutive fiscal
quarters prior to the date of determination.
(b) The Borrower will not permit Net Working Capital as of any day set
forth below to be less than the amount set forth below opposite such day:
Minimum Required
Date of Determination Net Working Capital
--------------------- -------------------
September 30, 1996 $
June 30, 1997 $
September 30, 1997 $
June 30, 1998 $
September 30, 1998 $
June 30, 1999 $
September 30, 1999 $
June 30, 2000 $
September 30, 2000 $
June 30, 2001 $
SECTION 6.32. Independent Corporate Existence. Except as set forth on
Schedule 6.32, (a) the Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, books, records and accounts that are separate from the
books, records and accounts of Triarc, either of the General Partners or any of
their respective Subsidiaries (other than the Borrower and its Subsidiaries)
such that: (i) the revenues of the Borrower and its Subsidiaries will be
credited to the accounts of the Borrower and its Subsidiaries only; (ii) all
expenses incurred by the Borrower
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and its Subsidiaries shall be paid only from the accounts of the Borrower and
its Subsidiaries (other than those paid by the Managing General Partner and
allocated to the Borrower in the manner set forth in clause (c) of this
Section); (iii) only officers and employees of the Managing General Partner, the
Borrower and its Subsidiaries in their capacity as such shall have the authority
to make disbursements with respect to the accounts of the Borrower and its
Subsidiaries; (iv) there shall occur no sharing of accounts or funds between the
Borrower and its Subsidiaries, on the one hand, and Triarc, either of the
General Partners or any of their respective Subsidiaries (other than the
Borrower and its Subsidiaries), on the other hand; and (v) all cash and funds of
the Borrower and its Subsidiaries shall be managed separately from the cash and
funds of Triarc, either of the General Partners or any of their respective
Subsidiaries (other than the Borrower and its Subsidiaries), and there shall not
occur any commingling, including for investment purposes, of funds or assets of
the Borrower and its Subsidiaries with the funds or assets of Triarc, either of
the General Partners or any of their respective Subsidiaries (other than the
Borrower and its Subsidiaries).
(b) All full-time employees, consultants and agents of the Borrower and its
Subsidiaries shall be compensated directly from the bank accounts of the
Managing General Partner, the Borrower and such Subsidiaries for services
provided by such employees, consultants and agents and, to the extent any
employee, consultant or agent is also an employee, consultant or agent of
Triarc, either of the General Partners or any of their respective Subsidiaries
(other than the Borrower and its Subsidiaries), the compensation of such
employee, consultant or agent shall be allocated in accordance with clause (c)
of this Section among the Borrower and its Subsidiaries, on the one hand, and
Triarc, the General Partners and any of their respective Subsidiaries (other
than the Borrower and its Subsidiaries), on the other hand, on a basis which
reasonably reflects the services rendered to the Borrower and its Subsidiaries.
(c) All overhead expenses (including telephone and other utility charges)
for items shared by the Borrower and its Subsidiaries, on the one hand, and
Triarc, either of the General Partners or any of their respective Subsidiaries
(other than the Borrower and 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) The Borrower shall not permit Triarc, either of the General Partners or
any of their respective Subsidiaries (other than the Borrower and its
Subsidiaries) to be named as a loss payee or additional insured on the insurance
policy covering the property of the Borrower or any of 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 Triarc, either of
the General Partners or any of their respective Subsidiaries (other than the
Borrower and its Subsidiaries).
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ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. In case of the happening of any of the
following events ("Events of Default"):
(a) default shall be made in the payment of any principal of any Loan or
any reimbursement obligation in respect of a Letter of Credit when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on any Loan or any
Fee or any other amount (other than an amount referred to in paragraph (a)
above) due under any Loan Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(c) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
Section 5.02(g) or any of Sections 6.01 through 6.08, inclusive, Section 6.10,
Section 6.11 (other than the failure to deliver any broker report on a timely
basis as required by Section 15.3 of the Mortgage) and Sections 6.18 through
6.31, inclusive, of this Agreement or in Section 4.21 or 4.23 of the Borrower
Security Agreement;
(d) default shall be made in the due observance or performance by the
Borrower or any other Loan Party of any covenant, condition or agreement
contained in any Loan Document (other than those specified in paragraph (a), (b)
or (c) above) and such default shall continue unremedied for a period of 30 days
after such default shall first have become known to any Responsible Officer of
any Loan Party or written notice thereof shall have been received by the
Managing General Partner from the Administrative Agent or any Lender;
(e) any representation or warranty made in writing or deemed made by or on
behalf of the Borrower or any of its Affiliates in this Agreement, any other
Operative Agreement or in any instrument furnished in connection with the
Transactions shall prove to have been false or incorrect in any material respect
on the date as of which made or deemed made;
(f) the Borrower or any Restricted Subsidiary (as principal or guarantor or
other surety) shall default (after receiving the applicable notice, if any,
and/or the expiration of any applicable grace period) (i) in the payment of any
amount of principal of or premium or interest on the Mortgage Notes or any other
Indebtedness (other than the Facilities) in a principal amount of at least
$3,000,000 or (ii) any other event shall occur or condition shall exist in
respect of any Indebtedness which is out-
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standing in a principal amount of at least $5,000,000 or the Mortgage Notes or
under any evidence of any such Indebtedness or the Mortgage Notes or of any
mortgage, indenture or other agreement relating to such Indebtedness or the
Mortgage Notes, the effect of any of which is to cause (or to permit one or more
Persons to cause) such Indebtedness or the Mortgage Notes to become due before
its stated maturity or before its regularly scheduled dates of payment or to
permit the holders of such Indebtedness or the Mortgage Notes to cause the
Borrower or any Restricted Subsidiary to repurchase or repay such Indebtedness
or the Mortgage Notes, 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;
(g) filing by or on the behalf of the Borrower or the Managing General
Partner 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 the Borrower or the
Managing General Partner for, or consent or acquiescence to, the appointment of
a receiver, trustee or other custodian of the Borrower or the Managing General
Partner, or of all or a substantial part of its property; or the making by the
Borrower or the Managing General Partner of any assignment for the benefit of
creditors; or the admission by the Borrower or the Managing General Partner in
writing of its inability to pay its debts as they become due;
(h) filing of any involuntary petition against the Borrower or the Managing
General Partner 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 of
competent jurisdiction for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer having similar powers over the Borrower
or the Managing General Partner 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 the Borrower or the Managing General Partner 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 the
Borrower or the Managing General Partner; and continuance of any such event for
60 consecutive days unless dismissed, bonded to the satisfaction of the court of
competent jurisdiction or discharged;
(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
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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;
(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
of competent jurisdiction 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 of
competent jurisdiction or discharged;
(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 the Borrower or any
Restricted Subsidiary for the payment of money in excess of $2,500,000 in the
aggregate and any one of such judgments shall not be discharged or execution
thereon stayed pending appeal within 60 days after the date due, or, in the
event of such a stay, such judgment shall not be discharged within 60 days after
such stay expires, or any action shall be legally taken by a judgment creditor
to levy upon assets or properties of the Borrower or any Restricted Subsidiary
to enforce any such judgment;
(l) any of the Loan Documents or other 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
the validity or the enforceability of any of the Loan Documents or other
Operative Agreements shall be contested by or on behalf of the Borrower or any
other Loan Party, or the Borrower or any other Loan Party shall renounce any of
the Loan Documents or other Operative Agreements, or deny that it is bound by
the terms of any of the Loan Documents or other Operative Agreements;
(m) any Lien purported to be created by any Collateral Document shall cease
to be, or shall for any reason be asserted by the Borrower or any other Loan
Party not to be, a valid, perfected, first priority Lien on the securities,
properties or
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assets covered thereby, other than as a result of an act or omission of any
Agent or Lender;
(n) any order, judgment or decree is entered in any proceedings against the
Borrower decreeing a split-up of the Borrower which requires the divestiture of
material assets of the Borrower 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 6.07(c) and such order,
judgment or decree shall not be dismissed or execution thereon stayed pending
appeal within 60 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;
(o) there shall occur at any time a change in Legal Requirements
specifically applicable to the Borrower 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 and 60 days after the earlier of (i) such occurrence shall first have
become known to any officer of the Borrower or either of the General Partners or
(ii) written notice thereof shall have been received by the Borrower from the
Administrative Agent or any Lender, such Material Adverse Effect shall be
continuing;
(p) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan (other
than a Multiemployer Plan), (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, or any Lien shall arise on the assets of the Borrower or
any Related Person in favor of the PBGC or a Plan, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed (or a trustee shall be appointed) to administer, or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA at a time when the assets of the Plan are not sufficient to satisfy all
benefit liabilities thereunder, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA or (v) the Borrower or any Related Person
shall, or in the reasonable opinion of the Required Lenders is likely to, incur
any liability in connection with a withdrawal from, or the termination,
reorganization or insolvency of (within the meaning of such terms as used in
ERISA), a Multiemployer Plan and, in each case in clauses (i) through (v) above,
such event or condition, together with all other such events or conditions, if
any, could reasonably be expected to result in liabilities of the Borrower and
the Restricted Subsidiaries in an aggregate amount in excess of $1,000,000 or
any other event or condition shall occur or exist with respect to a Plan, the
occurrence of which, individually or in the aggregate, would have a Material
Adverse Effect;
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(q) either (i) the Borrower or any Restricted Subsidiary shall be liable,
whether directly, indirectly through required indemnification of any Person or
otherwise, for the costs of investigation and/or remediation of any Hazardous
Material originating from or affecting property or properties, whether or not
owned, leased or operated by the Borrower or any Restricted Subsidiary, which
liability, together with all other such liabilities, could reasonably be
expected to result in liabilities of the Borrower and the Restricted
Subsidiaries in excess of $1,000,000 or (ii) any Federal, state, regional, local
or other environmental regulatory agency or authority shall commence an
investigation or take any other action that could reasonably be expected to be
determined adversely to the Borrower or any Restricted Subsidiary and, on the
basis of such a determination, to result in liabilities of the Borrower and the
Restricted Subsidiaries in excess of $1,000,000; provided that any obligation to
undertake investigation or remediation or otherwise incur costs in connection
with contamination at the Mayfield, Wisconsin facility shall not constitute an
Event of Default hereunder unless the same could reasonably be expected to
result in liabilities in excess of $5,000,000 in the aggregate or $2,500,000 in
any 12-month period; or
(r) any Governmental Authority revokes or fails to renew any material
license, permit or franchise of the Borrower or any Restricted Subsidiary, or
the Borrower or any Restricted Subsidiary for any reason loses any material
license, permit or franchise, or the Borrower 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, the occurrence of any of
which, individually or in the aggregate, would have a Material Adverse Effect;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Administrative Agent may, and at the request of the Required
Lenders, shall take one or more of the following actions, at the same or
different times: (i) by notice to the Borrower terminate the Commitments and
they shall immediately terminate; (ii) by notice to the Borrower declare the
Loans then outstanding to be forthwith due and payable (in whole or, in the sole
discretion of the Required Lenders, from time to time in part), whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder or under any other Loan Document, shall thereupon
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; (iii) require the Borrower to deposit cash collateral
with the Trustee pursuant to the Trust Agreement in an amount not exceeding the
Letter of Credit Exposure; (iv) exercise any remedies available under the
Guarantee Agreements, the Collateral Documents or otherwise; or (v) any
combination of the foregoing; provided that in the case of any of the Events of
Default with respect to the Borrower described in paragraph (g) or (h) above,
the Commitments shall automatically terminate and the principal of the Loans
then
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outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder or under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
SECTION 7.02. Remedies. In case any one or more Events of Default or
Defaults shall occur and be continuing, (i) any Lender may proceed to protect
and enforce the rights of such Lender by an action at law, suit in equity or
other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any other Loan Document, 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 (ii)
the Trustee and the Lenders may exercise any rights or remedies in their
respective capacities under the Collateral Documents in accordance with the
provisions thereof. In case of a default in the payment or performance of any
provision hereof or of the Loan Documents, the Borrower will pay to each Lender
such further amount as shall be sufficient to cover the cost and expenses of
collection, including 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 Loan Documents.
No course of dealing and no delay on the part of any Lender in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such Lender's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any other Loan Document upon any Lender 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.
ARTICLE VIII
THE AGENTS AND ISSUING BANK
SECTION 8.01. Appointment and Authorization. (a) Each of the Lenders, and
each subsequent holder of any Note by its acceptance thereof, hereby irrevocably
appoints and authorizes each of the Agents and the Issuing Bank to take such
actions as agent on behalf of such Lender or holder and to exercise such powers
as are specifically delegated to such Agent or the Issuing Bank, as the case may
be, by the terms and provisions hereof and of the other Loan Documents, together
with such actions and powers as are reasonably incidental thereto.
(b) The Administrative Agent is hereby expressly authorized by the Lenders
to, without hereby limiting any implied authority, and hereby agrees (in the
case of clause (ii) below, at the direction of the Required Lenders) to, (i)
receive on
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behalf of the Lenders all payments of principal of and interest on the Loans and
all other amounts due to the Lenders hereunder, and promptly to distribute to
each Lender its proper share of each payment so received; (ii) give notice on
behalf of each of the Lenders to the Borrower of any Event of Default specified
in this Agreement of which the Administrative Agent has actual knowledge
acquired in connection with its agency hereunder; and (iii) distribute to each
Lender copies of all notices, financial statements and other materials delivered
by the Borrower or any Subsidiary pursuant to this Agreement or any other Loan
Document as received by the Administrative Agent (other than materials required
hereunder to be delivered by the Borrower directly to the Lenders).
SECTION 8.02. Liability of Agents. Neither the Agents, the Issuing Bank,
nor any of their respective directors, officers, employees or agents, shall be
liable as such for any action taken or omitted to be taken by any of them,
except for such party's own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower or
any Subsidiary of any of the terms, conditions, covenants or agreements
contained in any Loan Document. Neither the Agents nor the Issuing Bank shall be
responsible to the Lenders or the holders of the Notes for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement, the
Notes or any other Loan Documents or other instruments or agreements. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof until it shall have received from the payee of
such Note notice, given as provided herein, of the transfer thereof in
compliance with Section 9.04. Each of the Agents and the Issuing Bank shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders and each
subsequent holder of any Note. Each of the Agents, the Issuing Bank and the
Required Lenders shall, in the absence of knowledge to the contrary, be entitled
to rely on any instrument or document believed by it in good faith to be genuine
and correct and to have been signed or sent by the proper Person or Persons.
Neither the Agents, the Issuing Bank nor any of their respective directors,
officers, employees or agents, shall have any responsibility to the Borrower on
account of the failure of or delay in performance or breach by any Lender of any
of its obligations hereunder or to any Lender on account of the failure of or
delay in performance or breach by any other Lender or the Borrower or any
Subsidiary of any of their respective obligations hereunder or under any other
Loan Document or in connection herewith or therewith. Each of the Agents and the
Issuing Bank may execute any and all duties hereunder by or through agents or
employees, shall be entitled to consult with legal counsel, independent public
accountants and other experts selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts.
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SECTION 8.03. Action by Agents. The Lenders hereby acknowledge that none of
the Agents and the Issuing Bank shall be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do so by the Required
Lenders. The obligations of the Agents and the Issuing Bank under the Loan
Documents are only those expressly set forth herein and therein. Without
limiting the generality of the foregoing, no Agent shall be required to take any
action with respect to any Default or Event of Default, except as expressly
required pursuant to Article VII.
SECTION 8.04. Successor Agents. Subject to the appointment and acceptance
of a successor as provided below, each of the Agents and the Issuing Bank
(except, in the case of the Issuing Bank, in respect of Letters of Credit issued
by it) may resign at any time by notifying the Lenders and the Borrower. Upon
any such resignation, the Required Lenders shall have the right to appoint a
successor. If no successor shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the retiring
Agent or Issuing Bank, as the case may be, gives notice of its resignation, then
the retiring Agent or Issuing Bank, as the case may be, may, on behalf of the
Lenders, appoint a successor, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank. Upon the acceptance of any appointment as an Agent
or Issuing Bank, as the case may be, hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent or Issuing Bank and the retiring
Agent or Issuing Bank shall be discharged from its duties and obligations
hereunder. After the resignation of an Agent or the Issuing Bank, as the case
may be, hereunder, the provisions of this Article and Section 9.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as an Agent or Issuing Bank.
SECTION 8.05. Agent and Affiliate. With respect to the Loans made by it
hereunder, the Letters of Credit issued by it hereunder and the Notes issued to
it, each of the Agents and the Issuing Bank in its individual capacity and not
as an Agent or the Issuing Bank shall have the same rights and powers as any
other Lender and may exercise the same as though it were not an Agent or the
Issuing Bank. Each of the Agents and the Issuing Bank (and its Affiliates) may
accept deposits from, lend money to and generally engage in any kind of business
and transactions with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not an Agent or the Issuing Bank (or such Affiliate thereof).
SECTION 8.06. Indemnification. Each Lender agrees (a) to reimburse each of
the Agents and the Issuing Bank, on demand, in the amount of its pro rata share
(based on its Commitment hereunder) of any expenses incurred for the benefit of
the Lenders by such Agent or the Issuing Bank, as the case may be, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf
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of the Lenders, which shall not have been reimbursed by the Borrower and (b) to
indemnify and hold harmless each of the Agents, the Issuing Bank and any of
their respective directors, officers, employees or agents, promptly after
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as an
Agent or the Issuing Bank or any of them in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted by
it or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower; provided that no Lender
shall be liable to any Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or wilful misconduct of such
Agent, the Issuing Bank or any of their respective directors, officers,
employees or agents.
SECTION 8.07. Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agents, the Issuing Bank or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agents, the Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
SECTION 8.08. Trust Agreement. The Lenders hereby authorize the
Administrative Agent to enter into the Trust Agreement and agree to be bound by
the terms thereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy as follows:
(a) if to the Borrower, to it at Suite 1700, IES Tower, 200 1st Street,
S.E., P.O. Box 2067, Cedar Rapids, Iowa 52401-2067, Attention of Ronald R.
Romaniecki (Telecopy No. (319) 365-______) with a copy to Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064,
Attention of Paul D. Ginsberg (Telecopy No. (212) 757-3990);
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(b) if to the Administrative Agent, to it at 100 Federal Street, Mail Stop
01-08-02, Boston, MA 02110, Attention of Michael P. Hannon (Telecopy No. (617)
434-3652); with a copy to Fennebresque, Clark, Swindell & Hay, at NationsBank
Corporate Center, 100 North Tryon Street, Suite 2900, Charlotte, NC 28202-4011,
Attention of Andrew C. Karp (Telecopy No. (704) 347-3838);
(c) if to the Syndication Agent, to it at
___________________________________, Attention of _________________________,
(Telecopy No. (____) ____-______); and
(d) if to a Lender (other than The First National Bank of Boston and Bank
of America NT & SA), to it at its address in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders, the Agents and the Issuing Bank and shall
survive the making by the Lenders of the Loans, the execution and delivery to
the Lenders of the Notes evidencing such Loans, and the issuance of the Letters
of Credit, regardless of any investigation made by the Lenders, the Agents or
the Issuing Bank or on their behalf, and shall continue in full force and effect
as long as (a) the principal of or any accrued interest on any Loan, any Fee,
any Letter of Credit Disbursement or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid, (b) the
Commitments have not been terminated or (c) any Letter of Credit has not expired
or been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective when
the conditions precedent set forth in Section 4.01 are satisfied (except that,
solely for the purpose of calculating any fees stated herein to commence to
accrue on the date of this Agreement, this Agreement shall become effective when
the conditions precedent set forth in Section 4.01(a) are satisfied).
SECTION 9.04. Successors and Assigns. (a) Subject to Section 9.04(j),
whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party
and all covenants,
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promises and agreements by or on behalf of the Borrower, the Agents, the Issuing
Bank or the Lenders that are contained in this Agreement shall be binding upon
and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment, the Loans at the time owing to it, the Notes held by
it and the participations in Letters of Credit held by it); provided, however,
that (i) except in the case of an assignment to a Lender or an Affiliate of a
Lender, the assignor shall have obtained the prior written consent to such
assignment (which consent shall not be unreasonably withheld) of the Borrower
(unless an Event of Default or Default shall have occurred and be continuing, in
which case such consent shall not be required), the Agents and, in the case of
an assignment of a Revolving Credit Commitment, the Issuing Bank, (ii) until
each of The First National Bank of Boston and Bank of America NT & SA hold total
Loans, Letter of Credit Exposure and unused Commitments equal to $15,000,000 or
less, any assignment by either of them shall be made together with the other on
a pro rata basis, (iii) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the sum of (A) the principal amount of the outstanding
Loans subject to each such assignment and (B) the unused amount of the
Commitment of the assigning Lender subject to such assignment (in each case
determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than the
lesser of (I) $5,000,000 and (II) the entire remaining amount of the outstanding
Loans and unused Commitment of such Lender, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with the Note or Notes subject to such assignment and a
processing and recordation fee of $2,500 and (v) the assignee, if it shall not
be a Lender or an Affiliate thereof, shall deliver to the Administrative Agent
an Administrative Questionnaire. Upon acceptance and recording pursuant to
Section 9.04(e), from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof (unless the Administrative Agent shall otherwise agree),
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued
for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning
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Lender warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim; (ii) except as set forth
in clause (i) above, such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto, or the financial condition of the Borrower or any
other Loan Party or the performance or observance by the Borrower or any other
Loan Party of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of the Loan Documents, together with copies of the most recent
financial statements required hereunder and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (v) such assignee will independently
and without reliance upon the Agents, the Issuing Bank, such assigning Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes each of the Agents and the Issuing Bank to exercise such powers under
this Agreement as are delegated to such party by the terms hereof, together with
such powers as are reasonably incidental hereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in
Boston, Massachusetts, a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitments of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error and the
Borrower, the Agents and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower, the Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee together with the Note or Notes subject
to such assignment, an Administrative Questionnaire completed in respect of the
assignee (unless the assignee shall already be a Lender hereunder or shall be an
Affiliate of a Lender), the processing and recordation fee referred to in
Section 9.04(b) and, if required, the written consent of the Borrower and the
Issuing Bank to such assignment, and, if required, upon granting its own consent
to such assignment,
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the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Issuing Bank, the Syndication Agent and the Lenders.
Within five Business Days after receipt of notice, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent, in exchange for
the surrendered Note or Notes, a new Note or Notes payable to the order of such
assignee in a principal amount equal to the applicable portion thereof (and the
corresponding Commitment, if any) assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained any portion of such Note or
Notes (and such Commitment, if any), a new Note or Notes payable to the order of
such assigning Lender in a principal amount equal to the applicable portion of
such Note or Notes (and such Commitment, if any) retained by it. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note; such new Note or Notes shall be dated
the date of the surrendered Note or Notes which they replace and shall otherwise
be in substantially the form of Exhibits B-1 and B-2 hereto, as applicable.
Cancelled Notes shall be returned to the Borrower.
(f) Each Lender may, with the prior consent of the Borrower which consent
will not be unreasonably withheld (except that no such consent of the Borrower
shall be required if a Default or Event of Default has occurred and is
continuing), and without the consent of the Agents or the Issuing Bank, sell
participations in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment, the Loans owing to it,
the Notes held by it and the participations in Letters of Credit held by it) to
one or more participants; provided, however, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) except in the case of a
participation to an existing participant or its Affiliate, the outstanding
principal amount of the Loans subject to each such participation shall not be
less than the lesser of (A) $5,000,000 and (B) the entire remaining amount of
the outstanding Loans and unused Commitment of such Lender, (iii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iv) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.13, 2.15 and 2.19 to the same extent as if they were Lenders and (v) the
Borrower, the Agents, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrower relating to the Loans and
to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing the
principal amount of any Loan, extending the Tranche A Maturity Date, the Tranche
B Conversion Date or the Tranche B Maturity Date, extending any Tranche B
Repayment Date or any date for the payment of any interest on any Loan, waiving
or excusing any such payment or any part thereof, decreasing the rate of
interest on any Loan, changing or extending any Commitment or decreasing any
Commitment Fees or Letter of Credit Fees or postponing the date fixed for any
reimbursement of a Letter of Credit Disbursement, permitting the
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release of any material amount of Collateral under any Collateral Document,
permitting the release of any material guarantor from the Guarantee Agreements
or increasing the aggregate Commitments of the Lenders).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or any of the other Loan
Parties furnished to such Lender by or on behalf of the Borrower or any of the
other Loan Parties; provided that, prior to any such disclosure of information
designated by the Borrower as confidential, each such assignee or participant or
proposed assignee or participant shall execute an agreement whereby such
assignee or participant shall agree (subject to customary exceptions) to
preserve the confidentiality of such confidential information.
(h) Assignments and participations pursuant to this Section 9.04 shall be
pro rata between the Facilities.
(i) Any Lender may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it to a Federal Reserve Bank;
provided that no such assignment shall release a Lender from any of its
obligations hereunder.
(j) Except in a transaction permitted under Section 6.07(a)(iii), the
Borrower shall not assign or delegate any of its rights or duties hereunder or
any interest herein (whether voluntarily, by operation of law or otherwise). Any
purported assignment or delegation in violation of the foregoing shall be void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay (whether
or not the transactions contemplated hereby shall be consummated) all reasonable
out-of-pocket costs and expenses incurred by any Agent or the Issuing Bank in
connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents, the closing of the Facilities, the administration of
the Facilities or any amendment, modification or waiver of the provisions hereof
or thereof or incurred by any Agent, the Issuing Bank or any Lender in
connection with the enforcement or protection of the rights of the Agents, the
Issuing Bank and the Lenders under this Agreement and the other Loan Documents
or in connection with the Loans made hereunder, the Notes issued hereunder or
the Letters of Credit issued hereunder, including the reasonable fees, charges
and disbursements of (i) Fennebresque, Clark, Swindell & Hay, counsel for the
Administrative Agent, (ii) Ropes & Gray, environmental counsel to the
Administrative Agent, (iii) reasonable expenses and hourly fees of in-house
counsel to the Agents, (iv) any third party consultants retained, with the
consent of the Borrower, to assist the Agents in analyzing any environmental,
insurance and other due diligence issues and (v) in connection with any such
enforcement or protection, any other counsel for any Agent, the Issuing Bank or
any Lender.
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(b) The Borrower agrees to indemnify each of the Agents, the Issuing Bank,
the affiliates of any Agent, the Issuing Bank, the Lenders, and their respective
directors, officers, employees, agents, Controlling Persons and the Trustee
(each, an "Indemnified Party") from and against any and all losses, claims
(whether valid or not), damages and liabilities, joint or several, to which such
Indemnified Party may become subject, related to or arising out of (i) the
Transactions or the Facilities, (ii) any accident or injury to or death of
persons or loss of or damage to property occurring on or about any of the
Mortgaged Properties, (iii) the ownership of any of the Mortgaged Properties, or
any interest therein, or receipt of any rent or other sum therefrom, (iv) any
use, non-use or condition of any of the Mortgaged Properties or any part
thereof, (v) any failure of the Borrower or any other obligor to perform or
comply with any of the terms of any of the Loan Documents, (vi) the performance
of any labor or services or the furnishing of any materials or other property in
respect of any of the Mortgaged Properties or any part thereof, (vii) any work
in connection with any alterations, changes or construction of any of the
Mortgaged Properties, (viii) the execution or delivery of this Agreement or any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or the consummation of the Transactions and
the other transactions contemplated hereby and thereby, (ix) the use of the
Letters of Credit or the proceeds of the Loans or (x) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnified Party is a party thereto. The Borrower further agrees to reimburse
each Indemnified Party for all expenses (including reasonable attorneys' fees
and expenses) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom. Notwithstanding the foregoing, the obligation to
indemnify any Indemnified Party under this Section 9.05(b) shall not apply in
respect of any loss, claim, damage or liability to the extent that a court of
competent jurisdiction shall have determined by final and nonappealable judgment
that such loss, claim, damage or liability resulted from such Indemnified
Party's wilful misconduct, gross negligence or bad faith.
(c) The Borrower agrees to indemnify each of the Agents, the Issuing Bank,
the Lenders and the other Indemnified Parties from and against any and all
losses, claims (whether valid or not), damages and liabilities, joint or
several, to which such Indemnified Party may become subject, related to or
arising out of (i) any Environmental Laws affecting the Borrower or any other
Loan Party or its properties or assets, (ii) any Hazardous Materials managed by
the Borrower or any other Loan Party, (iii) any event, condition or circumstance
involving environmental pollution, regulation or control affecting the Borrower
or any other Loan Party or its properties or assets or (iv) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Party is a party thereto. The Borrower further
agrees to reimburse each Indemnified Party for all expenses (including
reasonable attorneys' fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
claim or any
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action or proceeding arising therefrom. Notwithstanding the foregoing, the
obligation to indemnify any Indemnified Party under this Section 9.05(c) shall
not apply in respect of any loss, claim, damage or liability to the extent that
a court of competent jurisdiction shall have determined by final and
nonappealable judgment that (A) such loss, claim, damage or liability resulted
from such Indemnified Party's wilful misconduct or gross negligence or the
breach by such Indemnified Party of its obligations, if any, under this
Agreement, or (B) the loss, claim, damage or liability occurred after the
Administrative Agent or any Lender has taken exclusive possession and control of
the Mortgaged Property for operational purposes pursuant to Section 21.10 of the
Mortgage or Section 6.03 of the Borrower Security Agreement or has foreclosed on
a Lien under any Security Document and has transferred title to the Trustee.
(d) In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Party harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Party in respect of
such Indemnified Party's losses, claims, damages or liabilities in such
proportions as appropriately reflect the relative benefits received by and fault
of the Borrower and such Indemnified Party in connection with the matters as to
which such losses, claims, damages or liabilities relate and other equitable
considerations.
(e) If any action, proceeding or investigation is commenced, as to which
any Indemnified Party proposes to demand such indemnification, it shall notify
the Borrower with reasonable promptness; provided, however, that any failure by
such Indemnified Party to notify the Borrower shall not relieve the Borrower
from its obligations hereunder except to the extent the Borrower is prejudiced
thereby. The Borrower shall be entitled to assume the defense of any such
action, proceeding or investigation, including the employment of counsel and the
payment of all fees and expenses. Each Indemnified Party shall have the right to
employ separate counsel in connection with any such action, proceeding or
investigation and to participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by such Indemnified Party, unless (i) the
Borrower has failed to assume the defense and employ counsel as provided herein,
(ii) the Borrower has agreed in writing to pay such fees and expenses of
separate counsel or (iii) an action, proceeding or investigation has been
commenced against such Indemnified Party and the Borrower and outside counsel to
the Indemnified Party is of the opinion that representation of both the Borrower
and such Indemnified Party by the same counsel would be inappropriate because of
actual or potential conflicts of interest between the parties (in the case of
any Agent or Lender, the existence of any such actual or potential conflict of
interest to be determined by such party, taking into account, among other
things, any relevant regulatory concerns). In the case of any circumstance
described in clause (i), (ii), or (iii) of the immediately preceding sentence,
the Borrower shall be responsible for the reasonable fees and expenses of such
separate counsel; provided, however, that the Borrower shall not in any event be
required to pay the fees and expenses of more than one separate counsel (plus
appropriate local counsel under the
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direction of such separate counsel and in-house counsel to the Agents) for all
Indemnified Parties. The Borrower shall be liable only for settlement of any
claim against an Indemnified Party made with the Borrower's written consent.
(f) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of any Agent or Lender. All amounts due under this Section 9.05 shall be payable
on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter existing under this Agreement and the other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES OF SUCH
STATE.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of any Agent, the
Issuing Bank or any Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 9.08(b), and
then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
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146
(b) None of this Agreement, the other Loan Documents and any provision
hereof or thereof may be waived, amended or modified, except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders; provided, however, that no such waiver, amendment or modification shall
(i) decrease the principal amount of any Loan, extend the Tranche A Maturity
Date, the Tranche B Conversion Date or the Tranche B Maturity Date, extend any
Tranche B Repayment Date or any date for the payment of any interest on any
Loan, or waive or excuse any such payment or any part thereof, or decrease the
rate of interest on any Loan, without the prior written consent of each holder
of a Note affected thereby, (ii) change or extend the Commitment or decrease the
Commitment Fees or Letter of Credit Fees of any Lender without the prior written
consent of such Lender, (iii) postpone the date fixed for any reimbursement of a
Letter of Credit Disbursement without the prior written consent of each Lender
affected thereby, (iv) permit the release of any material amount of Collateral
under any Collateral Document or permit the release of any material guarantor
from the Guarantee Agreements without the prior written consent of each Lender,
(v) increase the aggregate Commitments of the Lenders without the prior written
consent of each Lender, (vi) waive, amend or modify Section 6.01 so as to permit
any renewal, refunding or refinancing of Facility A without the prior written
consent of each Lender or (vii) amend or modify the provisions of Section 2.16,
the provisions of Section 9.04(j), the provisions of this Section 9.08 or the
definition of "Required Lenders" or otherwise change the percentage of the
Commitments, the percentage of the aggregate unpaid principal amount of the
Notes or the number of Lenders which shall be required for the Lenders or any of
them to take any action under any provision of this Agreement or any other Loan
Document, without the prior written consent of each Lender; provided further
that (A) if any amendment, modification or waiver of Section 2.11(e), (f), (g)
or (h) would affect the holders of Tranche A Revolving Loans or Tranche B
Revolving Loans, as applicable (an "Affected Class"), then such amendment,
modification or waiver shall require the prior written consent of Lenders
holding Loans and participations in Letters of Credit, and having Commitments,
representing a majority of the outstanding principal amount of all Loans of the
Affected Class, the aggregate amount of the Letter of Credit Exposure of the
Affected Class and the aggregate amount of unused Commitments of the Affected
Class and (B) no such agreement shall amend, modify or otherwise affect the
rights or duties of any Agent or the Issuing Bank hereunder without the prior
written consent of such Agent or the Issuing Bank, as applicable. Each Lender
and each holder of a Note shall be bound by any waiver, amendment or
modification authorized by this Section 9.08 regardless of whether its Note
shall have been marked to make reference thereto, and any consent by any Lender
or holder of a Note pursuant to this Section 9.08 shall bind any Person
subsequently acquiring a Note from it, whether or not such Note shall have been
so marked.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein or
in the Notes to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the
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147
"Charges"), as provided for herein or in any other document executed in
connection herewith, or otherwise contracted for, charged, received, taken or
reserved by any Lender, shall exceed the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by such
Lender in accordance with applicable law, the rate of interest payable under the
affected Note held by such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
SECTION 9.10. Entire Agreement. This Agreement, the other Loan Documents,
the other Operative Agreements and the Work Letters constitute the entire
contract among the parties relative to the subject matter hereof and thereof.
Any agreement previously entered into among the parties with respect to the
subject matter hereof and thereof is superseded by this Agreement, the other
Loan Documents, the other Operative Agreements and the Work Letters. Nothing in
this Agreement, the other Loan Documents or the other Operative Agreements,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and the other Secured Parties, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, the other Loan Documents,
the other Operative Agreements or the Work Letters.
SECTION 9.11. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.03.
SECTION 9.13. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial. (a) Each party to this Agreement hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
the Borough of Manhattan, New York, New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, the other Loan
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148
Documents or any Operative Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement or the other Loan Documents against the Borrower or its
properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State court or Federal court of the United States of America sitting in
the Borough of Manhattan, New York, New York. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
(d) TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE
BORROWER, THE LENDERS, THE AGENTS AND THE ISSUING BANK HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.15. Legend. THIS AGREEMENT AND THE NOTES ARE SUBJECT TO THE TERMS
AND CONDITIONS CONTAINED IN THE TRUST AGREEMENT WHICH, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY FOR THIS AGREEMENT AND
THE NOTES AND THE SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER SECURED
CREDITORS. COPIES OF THE TRUST AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THE
NOTES UPON REQUEST TO THE BORROWER.
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149
IN WITNESS WHEREOF, the Borrower, the Agents, the Issuing Bank and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
Attest: NATIONAL PROPANE, L.P., as
Borrower
by NATIONAL PROPANE CORPORATION,
its managing general partner
by by
--------------------------- ---------------------------
Name: Name:
Title: Title:
(Corporate Seal)
THE FIRST NATIONAL BANK OF BOSTON,
as Administrative Agent and as a Lender
by
--------------------------
Name:
Title:
BANK OF AMERICA NT & SA,
as a Lender
by
--------------------------
Name:
Title:
BA SECURITIES, INC.,
as Syndication Agent
by
--------------------------
Name:
Title:
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<PAGE>
Draft -- June 22, 1996
================================================================================
NATIONAL PROPANE CORPORATION,
NATIONAL PROPANE SGP, INC.
AND
NATIONAL PROPANE, L.P.
$125,000,000
8.54% First Mortgage Notes due June 30, 2010
(Private Placement Number: ____________)
-------------------------
NOTE AGREEMENT
-------------------------
Dated as of June __, 1996
================================================================================
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<PAGE>
TABLE OF CONTENTS
Section Page
1. AUTHORIZATION OF INITIAL NOTES AND NOTES...........................1
2. SALE AND PURCHASE OF INITIAL NOTES AND
ISSUANCE OF NOTES...............................................2
3. CLOSING............................................................3
4. CONDITIONS TO CLOSING..............................................3
4.1. Representations and Warranties..............................3
4.2. Performance; No Default.....................................4
4.3. Compliance Certificates.....................................4
4.4. Opinions of Counsel.........................................4
4.5. Legal Investment............................................5
4.6. Trust Agreement.............................................6
4.7. Security Documents..........................................6
4.8. Conveyance; Recordation; Taxes, etc.........................7
4.9. Operative Agreements........................................8
4.10. Sale of Other Initial Notes; Issuance of Other Notes........8
4.11. Sale of Units...............................................8
4.12. Proceedings and Documents...................................9
4.13. Rating......................................................9
4.14. Insurance Broker's Certificate..............................9
4.15. Title Insurance; Survey.....................................9
4.16. Payment of Closing Fees....................................10
4.17. Private Placement Number...................................10
4.18. Environmental Audit........................................10
4.19. Appraisal..................................................10
4.20. Other Agreements...........................................10
5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE
GENERAL PARTNERS AND THE COMPANY...............................10
5.1. Organization, Standing, etc................................10
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5.2. Partnership Interests......................................11
5.3. Qualification..............................................11
5.4. Business; Financial Statements.............................12
5.5. Changes, etc...............................................14
5.6. Tax Returns and Payments...................................14
5.7. Indebtedness...............................................14
5.8. Transfer of Assets and Business............................14
5.9. Litigation, etc............................................17
5.10. Compliance with Other Instruments, etc.....................17
5.11. Governmental Consent.......................................18
5.12. Offer of Initial Notes and Notes...........................18
5.13. Use of Proceeds............................................18
5.14. Federal Reserve Regulations................................18
5.15. Investment Company Act.....................................19
5.16. Public Utility Holding Company Act; Federal Power Act......19
5.17. ERISA......................................................19
5.18. Environmental Matters......................................21
5.19. Foreign Assets Control Regulations, etc....................22
5.20. Disclosure.................................................23
5.21. Chief Executive Office.....................................23
5.22. Solvency...................................................23
6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS......................24
7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER
INFORMATION....................................................26
8. INSPECTION........................................................33
9. PREPAYMENT OF NOTES...............................................34
9.1. Required Prepayments of the Notes..........................34
9.2. Optional Prepayments of the Notes with Make Whole Amount...35
9.3. Prepayment on Change of Control............................35
9.4. Contingent Prepayments on Disposition of Property, Taking
or Destruction...........................................36
9.5. Notice of Prepayments; Officers' Certificate...............37
9.6. Allocation of Partial Prepayments..........................37
9.7. Maturity; Surrender, etc...................................38
9.8. Acquisition of Notes.......................................38
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<PAGE>
10. BUSINESS AND FINANCIAL COVENANTS OF THE
COMPANY........................................................38
10.1. Indebtedness...............................................38
10.2. Liens, etc.................................................44
10.3. Investments, Guaranties, etc...............................47
10.4. Restricted Payments........................................50
10.5. Transactions with Affiliates...............................50
10.6. Subsidiary Stock and Indebtedness..........................51
10.7. Consolidation, Merger, Sale of Assets, etc.................52
10.8. Partnership or Corporate Existence, etc.; Business.........57
10.9. Payment of Taxes and Claims................................58
10.10. Compliance with ERISA......................................58
10.11. Maintenance of Properties; Insurance.......................59
10.12. Operative Agreements; Security Documents...................60
10.13. Chief Executive Office.....................................61
10.14. Recordation; Opinions......................................61
10.15. Information Required by Rule 144A..........................62
10.16. Covenant to Secure Notes Equally...........................62
10.17. Compliance with Laws.......................................62
10.18. Further Assurances.........................................62
10.19. Subsidiaries...............................................63
10.20. Damage, Destruction, Taking, etc...........................65
10.21. Accounting Changes.........................................65
10.22. Certain Real Property......................................65
10.23. Sale and Lease-Back Transactions...........................67
10.24. Acquisitions...............................................67
10.25. Impairment of Security Interests...........................67
10.26. Limitation on Restrictions on Subsidiary Dividends, etc....68
10.27. No Other Negative Pledges..................................68
10.28. Sales of Receivables.......................................68
10.29. Fixed Price Supply Contracts; Certain Policies.............68
10.30. Certain Operations.........................................69
10.31. Independent Corporate Existence............................70
10.32. Environmental Matters......................................71
10.33. Other Debt.................................................71
11. EVENTS OF DEFAULT; ACCELERATION..................................72
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12. REMEDIES ON DEFAULT; RECOURSE, ETC...............................77
13. DEFINITIONS......................................................77
14. REGISTRATION, TRANSFER AND SUBSTITUTION OF
NOTES.........................................................101
14.1. Note Register; Ownership of Notes.........................101
14.2. Transfer and Exchange of Notes............................102
14.3. Replacement of Notes......................................102
14.4. Notes Held by Company, etc., Deemed Not Outstanding.......102
15. PAYMENTS ON NOTES...............................................103
15.1. Place of Payment..........................................103
15.2. Home Office Payment.......................................103
16. EXPENSES, INDEMNIFICATION, ETC..................................103
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................107
18. AMENDMENTS AND WAIVERS..........................................107
19. NOTICES, ETC....................................................108
20. REPRODUCTION OF DOCUMENTS.......................................108
21. MISCELLANEOUS...................................................109
22. SUBMISSION TO JURISDICTION......................................109
23. WAIVER OF JURY TRIAL............................................110
24. GOVERNING LAW...................................................110
25. CONFIDENTIAL INFORMATION........................................110
iv
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<PAGE>
Schedule A -- Schedule of Purchasers
Schedule 4.15 -- Schedule of Pre-Closing Title Insurance Requirements
Schedule 5.2 -- Subsidiaries and Investments
Schedule 5.3 -- Jurisdiction of Qualification
Schedule 5.7 -- Indebtedness
Schedule 5.8(a) -- List of Assets
Schedule 5.8(b) -- List of Non-Mortgage Jurisdictions; List of Counties
Schedule 5.9 -- Litigation
Schedule 5.18 -- Environmental Notices
Schedule 10.2 -- Liens
Schedule 10.31 -- Schedule on Corporate Matters
Exhibit A1 -- Form of Initial Note
Exhibit A2 -- Form of Note
Exhibit B1 -- Form of Opinion of Company Counsel
Exhibit B2 -- Form of Opinion of Local Counsel for the Company
Exhibit B3 -- Form of Opinion of Trustee's Counsel
Exhibit B4 -- Form of Opinion of Debevoise & Plimpton
Exhibit -- Form of Trust Agreement
Exhibit D1 -- Form of Mortgage, Security Agreement and Fixture Filing
v
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<PAGE>
Exhibit D2 -- Form of Deed of Trust, Security Agreement and Fixture
Filing
Exhibit E -- Form of Subordination Provisions
Exhibit F -- Form of Cash Collateral Agreement
Exhibit G -- Form of Company Security Agreement
Exhibit H -- Form of General Partner's Guarantee Agreement
Exhibit I -- Form of Intercompany Note
Exhibit J -- Form of Agency Account Agreement
Exhibit K -- Form of Partnership Agreement
Exhibit L -- Form of Partnership Note
Exhibit M -- Form of Partners Security Agreement
Exhibit N -- Form of Perfection Certificate
Exhibit O -- Restricted Subsidiaries
Exhibit P -- Form of Subsidiary Guarantee Agreement
Exhibit Q -- Form of Supplemental Agreement
vi
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<PAGE>
NATIONAL PROPANE CORPORATION
NATIONAL PROPANE SGP, INC.
NATIONAL PROPANE, L.P.
Suite 1700, IES Tower
200 1st Street, S.E.
P.O. Box 2067
Cedar Rapids, Iowa 52401-2067
8.54% First Mortgage Notes due June 30, 2010
Dated as of June __, 1996
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A
Dear Purchaser:
National Propane Corporation, a Delaware corporation ("National Propane
Corp."), National Propane SGP, Inc., a Delaware corporation formerly known as
All Seasons Acquisition Corp. ("National Propane SGP," and together with
National Propane Corp., collectively the "General Partners") and National
Propane, L.P., a Delaware limited partnership (the "Company"), having been
formed to acquire from National Propane Corp. and National Propane SGP and to
operate the Assets, hereby agree with you as follows:
SECTION 1. AUTHORIZATION OF INITIAL NOTES AND NOTES.
National Propane Corp. will authorize the issue and sale of $125,000,000
aggregate principal amount of its 8.54% First Mortgage Notes due June 30, 2010
(the "Initial Notes"). The Company will authorize the issue and delivery, in
exchange for the Initial Notes, of $125,000,000 aggregate principal amount of
its 8.54% First Mortgage Notes due June 30, 2010 (the "Notes", such term to
include any Notes issued in substitution therefor or replacement thereof
pursuant to Section 14). The Initial Notes and the Notes shall be substantially
in the form of Exhibit A1 and Exhibit A2, respectively, with such changes
therefrom, if any, as may be approved by you and National Propane Corp. or the
Company, as the case may be. Certain capi-
<PAGE>
<PAGE>
talized terms used in this Note Agreement (the "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 INITIAL NOTES AND
ISSUANCE OF NOTES.
Subject to the terms and conditions of this Agreement, National Propane
Corp. will issue and sell to you and you will purchase from National Propane
Corp., at the Closing provided for in Section 3, Initial Notes in the principal
amount specified opposite your name for purchase by you at the Closing in
Schedule A, at the purchase price of 100% of the principal amount thereof. At
the Closing provided for in Section 3, the General Partners will then convey all
of their assets (other than an existing intercompany note from Triarc to
National Propane Corp. in the principal amount of $[__________], approximately
$59,300,000 in cash and certain other assets of National Propane Corp.
identified in the Conveyance Agreements) to the Company pursuant to the
Conveyance Agreements in exchange for general and limited partner interests in
the Company and the assumption by the Company of substantially all the
liabilities of the General Partners (excluding certain income tax liabilities),
including the Initial Notes and certain intercompany debt. Contemporaneously
therewith, the Company will issue to you and you will accept from the Company,
at the Closing provided for in Section 3, Notes in the principal amount
specified opposite your name in Schedule A in exchange for the Initial Notes you
purchased from National Propane Corp. pursuant to this Agreement. Upon such
exchange, such Initial Notes shall be deemed to be canceled and no longer be
outstanding.
Contemporaneously with entering into this Agreement, the General Partners
and the Company are entering into identical Note Agreements (the "Other
Agreements") with each of the other purchasers named in Schedule A (the "Other
Purchasers"), providing for the sale to the Other Purchasers, at the Closing, of
Initial Notes in the principal amount specified opposite its name in Schedule A
and the issuance to the Other Purchasers, at the Closing, of Notes in the
principal amount specified opposite its name in Schedule A in exchange for such
Initial Notes. The sale of Initial Notes, and the issuance of the Notes in
exchange for the Initial Notes, to you and the Other Purchasers are to be
separate sales, and this Agreement and the Other Agreements constitute separate
agreements.
2
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<PAGE>
SECTION 3. CLOSING.
The sale of the Initial Notes, and the issuance of the Notes in exchange
for the Initial Notes, to you and the Other Purchasers shall take place at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019, at 10:00 a.m., New York City time, at a
closing (the "Closing") on July __, 1996, or such later date as may be agreed
upon by the General Partners, the Company, you and the Other Purchasers. At the
Closing, (i) National Propane Corp. will deliver to you Initial Notes in the
principal amount to be purchased by you, in the form of a single Initial Note
(or such greater number of Initial Notes as you may request), each dated the
date of the Closing and registered in your name (or in the name of your nominee
as indicated in Schedule A), against payment of the purchase price therefor on
the date of Closing by transfer of immediately available funds to National
Propane Corp., or as otherwise directed by National Propane Corp. in writing (at
least two days prior to the date of the Closing) and (ii) contemporaneously
therewith, the Company will deliver to you Notes in the principal amount of the
Initial Notes purchased by you, in the form of a single Note (or such greater
number of Notes as you may request), each dated the date of the Closing and
registered in your name (or in the name of your nominee as indicated in Schedule
A), in exchange for the Initial Notes purchased by you under this Agreement. If
at the Closing National Propane Corp. or the Company shall fail to tender such
Initial Notes or Notes, as the case may be, to you as provided above in this
Section 3 or if any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any other
rights you may have by reason of such failure or such nonfulfillment. If the
Closing shall not have occurred on or prior to July 31, 1996, you will promptly
thereafter instruct the Trustee to release its lien on, and its security
interest in, all of the Mortgaged Property.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Initial Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction, prior to
or at the Closing, of the following conditions:
4.1. Representations and Warranties. The representations and warranties of
the Company and its Affiliates contained in this Agreement, the other Operative
Agreements, and those otherwise made in writing by or on behalf of the Company
or any Affiliate of the Company in connection with the transactions contemplated
by this
3
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<PAGE>
Agreement, shall be true and correct when made and at the time of the Closing,
except as affected by the consummation of such transactions and except for any
representation and warranty that is expressly stated to relate to a specific
date, in which case any such representation and warranty shall be true and
correct as of such earlier date.
4.2. Performance; No Default. Each of the Company 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.
4.3. Compliance Certificates. You shall have received Officers'
Certificates of the Company, Triarc, each General Partner and the Public
Partnership, each dated the date of the Closing and satisfactory in substance
and form to you, certifying that the conditions specified in Sections 4.1 and
4.2 have been fulfilled in all material respects insofar as the relevant
representation or warranty is made by, or the relevant agreement or condition is
required to be performed or complied with by, or the relevant Event of Default,
Potential Event of Default or default has been caused by or relates to, each of
such entities and, with respect to the Officers' Certificate of the Company, its
subsidiaries, and, in the case of the Officers' Certificate of National Propane
Corp. and the Company, certifying that no material adverse change has occurred
in the financial condition of the Business subsequent to the date of the
financial statements delivered pursuant to Section 5.4(c) and, in the case of
the Officers' Certificate of Triarc, certifying that neither the Memorandum nor
the Registration Statement contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
4.4. Opinions of Counsel. You shall have received favorable opinions from
(a) Paul, Weiss, Rifkind, Wharton & Garrison, special counsel for the Company
and its Affiliates, substantially in the form of Exhibit B1, (b) Andrews &
Kurth, special tax counsel to the Company and its Affiliates, in form and
substance satisfactory to you and your special counsel, (c) (i) Friday, Eldridge
& Clarke, special Arkansas counsel for the Company and its Affiliates, (ii)
Snell & Wilmer, special Arizona counsel for the Company and its Affiliates,
(iii) Parcel, Mauro, Hultin & Spaanstra, special Colorado counsel for the
Company and its Affiliates, (iv) Pepe & Hazard, spe-
4
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<PAGE>
cial Connecticut counsel for the Company and its Affiliates, (v) Fowler, White,
Burnett, Hurley, Banick & Strickroot, special Florida counsel for the Company
and its Affiliates, (vi) Keck, Mehin & Cate, special Illinois counsel for the
Company and its Affiliates, (vii) Simmons Perrine Albright & Ellwood, special
Iowa counsel for the Company and its Affiliates, (viii) Pierce, Atwood,
Scribner, Allen, Smith & Lancaster, special Maine counsel for the Company and
its Affiliates, (ix) Palmer & Dodge, L.L.P, special Massachusetts counsel for
the Company and its Affiliates, (x) Jaffe, Raitt, Heuer & Weiss, special
Michigan counsel for the Company and its Affiliates (xi) Gray, Plant, Mooty,
Mooty & Bennett, special Minnesota counsel for the Company and its Affiliates,
(xii) Gray, Plant, Mooty, Mooty & Bennett, special Kansas counsel for the
Company and its Affiliates, (xiii) Sheehan, Phinney, Bass & Green, special New
Hampshire counsel for the Company and its Affiliates, (xiv) Modrall, Sperling,
Roehl, Harris & Sisk, P.A., special New Mexico counsel for the Company and its
Affiliates, (xv) Schupbach, Williams & Pavone, special New York counsel for the
Company and its Affiliates, (xvi) Steven B. McInnis, special Rhode Island
counsel for the Company and its Affiliates, and (xvii) Godfrey & Kahn S.C.,
special Wisconsin counsel for the Company and its Affiliates, each substantially
in the form of Exhibit B2, (d) _______________, counsel for the Trustee,
substantially in the form of Exhibit B3 and (e) Debevoise & Plimpton, your
special counsel in connection with the transactions contemplated by this
Agreement, substantially in the form of Exhibit B4, and in each case covering
such other matters incident to such transactions as you may reasonably request,
each addressed to you, dated the date of the Closing and otherwise reasonably
satisfactory in substance and form to you. You shall have received copies of
each of the opinions delivered pursuant to the Underwriting Agreement (other
than the opinion of counsel to the underwriters), accompanied by letters, dated
the date of the Closing and addressed to you, from the counsel rendering such
opinions, stating that you are entitled to rely on such opinions as if they were
addressed to you. The Company and the General Partners hereby direct each of
their counsel referred to in clauses (a) and (b) of this Section 4.4, and each
of its counsel who deliver opinions pursuant to the Underwriting Agreement, to
deliver to you such opinions and letters to be delivered by it and authorizes
you to rely thereon.
4.5. Legal Investment. On the date of the Closing your purchase of Initial
Notes and acceptance of Notes in exchange therefor shall be permitted by the
laws and regulations of each jurisdiction to which your 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 you by
prior written
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request to the Company or the General Partners, you shall have received, at
least five Business Days prior to the Closing, an Officers' Certificate of the
Company or one or both of the General Partners, as the case may be, certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6. Trust Agreement. The Company, National Propane Corp., the Public
Partnership, the Qualifying Restricted Subsidiaries, if any, 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, binding and enforceable obligation of the Company, National Propane
Corp., the Public Partnership, the Qualifying Restricted Subsidiaries, if any,
and the Trustee, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of creditors, and
no default on the part of the Company, National Propane Corp., the Public
Partnership or the Qualifying Restricted Subsidiaries shall exist thereunder.
4.7. Security Documents. (a) National Propane Corp., the Company and the
Qualifying Restricted Subsidiaries shall have duly authorized, executed and
delivered the Mortgages relating to the Mortgaged Property located in Arkansas,
Arizona, Colorado, Connecticut, Florida, Illinois, Iowa, Kansas, Massachusetts,
Michigan, Minnesota, Missouri, New Hampshire, New Mexico, New York, Rhode
Island, and Wisconsin substantially in the form of Exhibit D1 or D2, as the case
may be. Each Mortgage shall be in full force and effect and shall (i) constitute
the valid, binding and enforceable obligation of National Propane Corp., the
Company and the Qualifying Restricted Subsidiaries, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, and (ii) to the extent duly
recorded pursuant to Section 4.8 (x) constitute a valid first mortgage lien or
deed of trust lien, as the case may be, of record on the real property and all
other interests described therein which may be subjected to a mortgage lien or
deed of trust lien, as the case may be, subject only to Permitted Encumbrances,
and (y) 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 National Propane Corp., the Company or
any Qualifying Restricted Subsidiary shall exist thereunder.
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(b) Each of the Security Documents shall have been duly authorized,
executed and delivered by each of the Company and/or its Affiliates party
thereto, shall be in full force and effect and shall (i) constitute the valid,
binding and enforceable obligation of each such party, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, and (ii) to the extent duly
recorded pursuant to Section 4.8, 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 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.
4.8. Conveyance; Recordation; Taxes, etc. Prior to the Closing, the
Conveyance Agreements referred to in clause (b) of the definition of such term,
the Mortgages, the Company Security Agreement, the Partners Security Agreement
and the Partnership Note, or proper notices, statements or other instruments in
respect thereof, covering all of the Assets covered by such Conveyance
Agreements and such Mortgages, shall have been duly recorded, published,
registered and filed, and all other actions deemed necessary by your special
counsel shall have been duly performed or taken, in such manner and in such
places as is required by applicable law (a) to convey to the Company record and
beneficial ownership of the Assets referred to in Section 5.8(c)(ii) purported
to be conveyed by such Conveyance Agreements, (b) to establish, perfect,
preserve and protect the rights and first priority Liens purported to be granted
by each such Security Document to the Trustee with respect to the Assets
referred to in Section 5.8(c)(ii) for the benefit of the holders of the Notes
and their respective successors and assigns, and (c) to establish, perfect,
preserve and protect the rights and first priority Liens purported to be granted
by such Partnership Note to the Company with respect to the assets specified
therein, 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 shall have been paid in full.
4.9. Operative Agreements. Each of the Operative Agreements shall have
been duly authorized, executed and delivered by the respective parties thereto,
in form and substance satisfactory to you, shall be in full force and effect,
and shall constitute the legal, valid and binding obligations of the respective
parties thereto, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of creditors, and
all actions required to be
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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 you and the Trustee shall have received a fully executed original, or a true
and correct copy, of each such document.
4.10. Sale of Other Initial Notes; Issuance of Other Notes.
Contemporaneously with the Closing, (i) National Propane Corp. shall sell to the
Other Purchasers the Initial Notes to be purchased by them at the Closing as
specified in Schedule A and (ii) the Company shall issue to each Other
Purchaser, and such Other Purchaser will accept from the Company, the Notes in
the principal amount specified opposite such Other Purchaser's name in Schedule
A in exchange for the Initial Notes such Other Purchaser purchases from National
Propane Corp.
4.11. Sale of Units. At the time of the Closing, (a) the Underwriting
Agreement shall be in full force and effect, (b) all conditions to closing
contained in the Underwriting Agreement shall have been fulfilled or waived in a
manner acceptable to you, (c) your special counsel shall have received a copy of
each agreement, document, opinion (as specified in Section 4.4) and certificate
delivered in connection with the closing under the Underwriting Agreement, and
(d) simultaneously with the receipt of the proceeds of the sale of the Initial
Notes to you and the Other Purchasers at the Closing, (i) the Public Partnership
shall sell to the Underwriters the Units provided to be sold under the
Underwriting Agreement for an aggregate gross purchase price of not less than
[$130,000,000], (ii) National Propane Corp. shall transfer its 97.9798% limited
partner interest in the Company to the Public Partnership in exchange for a
45.1% subordinated general partner interest in the Public Partnership (____%, if
the Overallotment Option is exercised in full) and a 1% unsubordinated general
partner interest in the Public Partnership, and (iii) all transactions
contemplated by the Registration Statement and the Memorandum to be completed by
the General Partners, the Company and their Affiliates prior to or substantially
simultaneously with the issuance of the Notes shall have been completed
substantially as contemplated therein and in a manner acceptable to you.
4.12. Proceedings 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 you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
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4.13. Rating. Prior to the Closing, the Notes shall have received a rating
of at least BBB from Fitch Investors Service, Inc., which rating remains in
effect as of the Closing.
4.14. Insurance Broker's Certificate. Insurance complying with the
provisions of Section 15 of the Mortgage and Section 10.11 hereof shall be in
full force and effect and you, the Other Purchasers and the Trustee shall have
received a certificate from Kaye Insurance Associates, Inc. or such other
independent insurance brokers or consultants as shall be reasonably satisfactory
to you, dated the date of the Closing, which certificate shall satisfy the
requirements set forth in Section 15.3 of the Mortgage.
4.15. Title Insurance; Survey. (a) The Trustee shall have received a
mortgagee's policy of title insurance, including mechanic's lien coverage, with
respect to the properties and facilities listed on Schedule 4.15, issued by a
title insurance company or companies authorized to issue title insurance in the
states in which such properties or facilities are located with provisions for
coinsurance or reinsurance satisfactory to you, dated the date of the Closing
and satisfactory in substance and form to you and your special counsel, insuring
the interest of the Trustee under the Security Documents, subject only to
Permitted Encumbrances, such policies to be in an amount at least equal to the
amounts set forth opposite each of the individual properties and facilities
listed on Schedule 4.15.
(b) The Trustee shall have received copies of ALTA surveys with respect to
the properties and facilities listed on Schedule 4.15, certified to the Trustee
and the title company or companies and satisfactory to you and your special
counsel.
4.16. Payment of Closing Fees. The Company shall have paid the fees and
disbursements required by Section 16 to be paid by the Company on the date of
the Closing.
4.17. Private Placement Number. The Company shall have obtained for 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).
4.18. Environmental Audit. The Company shall have delivered to you, a true
and complete copy of the environmental reports relating to the properties listed
on Schedule 4.15, dated a recent date, prepared by Environmental Strategies
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Corporation, and the results of such reports shall be satisfactory to you, your
special counsel and your independent environmental consultant.
4.19. Appraisal. The Company shall have delivered to you a true and
complete copy of an appraisal report of Valuation Research, dated as of
_________________, setting forth their appraisal of certain of the Assets, and
the contents of such report shall be satisfactory to you and your special
counsel.
4.20. Other Agreements. The Company shall have delivered to you a true and
complete copy of the Bank Credit Facilities, the Registration Statement and the
Underwriting Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE
GENERAL PARTNERS AND THE COMPANY.
Each of the General Partners and the Company represents and warrants that:
5.1. Organization, Standing, etc. (a) The Company 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 its business as described in the Registration Statement
after giving effect to the transfer of the Assets, to enter into this Agreement
and the other Operative Agreements to which it is a party, to issue and deliver
the Notes and to carry out the terms of this Agreement, such other Operative
Agreements and the Notes.
(b) Each General Partner is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and operate its properties, to
conduct its business as described in the Registration Statement, to enter into
and carry out the terms of this Agreement and the other Operative Agreements to
which it is a party, and in the case of National Propane Corp., to issue and
sell the Initial Notes, and to execute and deliver as a general partner of the
Company this Agreement, the Notes and the other Operative Agreements to which
the Company is a party.
(c) Each Restricted Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation
and has all requisite corporate power and authority to own and operate its
properties, to conduct its business as described in the Registration Statement
after giving effect to
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the transfer of the Assets, and to execute, deliver and perform the other
Operative Agreements to which it is a party.
(d) The Public Partnership 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, to conduct its business as described in the Registration
Statement, and to execute, deliver and carry out the terms of the Operative
Agreements to which it is a party.
5.2. Partnership Interests. The only general partners of the Company are
the General Partners, each of which upon the consummation of the Closing will
own a 1.0101% general partner interest in the Company. Upon the consummation of
the Closing the only limited partner of the Company will be the Public
Partnership, which will own a 97.9798% limited partner interest in the Company
acquired as provided in the Registration Statement. The Company will not have
any other partners upon the consummation of the Closing. Except as disclosed in
Schedule 5.2, the Company does not have, and immediately after giving effect to
the transactions contemplated by the Conveyance Agreements will not have, any
Subsidiaries or any Investments in any Person (other than Investments of the
types described in Section 10.3(a)).
5.3. Qualification. The Company is duly qualified or registered and is in
good standing as a foreign limited partnership for the transaction of business,
and each General Partner and each Restricted Subsidiary is qualified or
registered and is in good standing as a foreign corporation for the transaction
of business, in the jurisdictions set forth in Schedule 5.3 which are the only
jurisdictions in which, after giving effect to the conveyance to the Company of
the Assets, 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. Each of the General Partners, Triarc, the
Restricted Subsidiaries and the Company has taken all necessary partnership or
corporate action to authorize the execution, delivery and performance by it of
this Agreement, the Initial Notes or the Notes, as the case may be, and each
other Operative Agreement to which it is a party. Each of the General Partners,
Triarc, the Restricted Subsidiaries and the Company has duly executed and
delivered each of this Agreement, the Initial Notes or the Notes, as the case
may be, and the other Operative Agreements to which it is a party, and each of
them constitutes its legal, valid, binding and enforceable obligation in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency,
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reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors.
5.4. Business; Financial Statements. (a) The Company has not engaged in
any business or activities prior to the date of this Agreement, except for
activities related to its formation, organization and prospective operations,
and will not have any significant assets or liabilities prior to its acquisition
of the Assets and assumption of liabilities, as contemplated by this Agreement
and the Registration Statement.
(b) The Company has delivered to you complete and correct copies of (i)
the Registration Statement, and (ii) a memorandum dated May 1996 prepared by
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch & Co. for
use in connection with National Propane Corp.'s private placement of the Initial
Notes and the Notes (the "Memorandum"). The pro forma consolidated financial
statements of the Public Partnership set forth in the Registration Statement
comply in all respects with the applicable accounting requirements of the
Securities Act of 1933, as amended, and the published rules and regulations
thereunder and, in the opinion of the Company, the assumptions on which the pro
forma adjustments to such pro forma consolidated financial statements of the
Public Partnership are based provide a reasonable basis for presenting the
significant effects of the transactions contemplated by such pro forma
consolidated financial statements and such pro forma adjustments give
appropriate effect to such assumptions and are properly applied in such pro
forma consolidated financial statements. The financial statements and schedules
included in the Registration Statement (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. Since December 31, 1995 to the date of the
Closing, there has been no material adverse change in the business, financial
condition, or results of operations of Triarc, the General Partners and their
consolidated subsidiaries taken as a whole. The financial data included under
the caption "Selected Historical and Pro Forma Consolidated Financial and
Operating Data" for National Propane Corp. and for the Public Partnership in the
Registration Statement present fairly, on the basis stated in the Registration
Statement, the information set forth therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The historical aspects of the financial data included
under the caption "Capitalization" in the Registration Statement present fairly,
on the basis stated in the Registration Statement, the information set forth
therein and have been compiled on a basis
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consistent with that of the audited financial statements included in the
Registration Statement; the pro forma aspects of such financial data included
under the caption "Capitalization" have been prepared in all material respects
in accordance with all applicable rules and guidelines of the Securities and
Exchange Commission with respect to pro forma financial information; and the
assumptions on which the pro forma adjustments to the pro forma aspects of the
financial data included under the caption "Capitalization" are based provide a
reasonable basis for presenting all of the significant effects of the
transactions contemplated by such pro forma financial data and such pro forma
adjustments give appropriate effect to such assumptions and are properly applied
in such pro forma financial data.
(c) The unaudited pro forma balance sheets of National Propane Corp. as of
March 31, 1996 present fairly the financial condition of National Propane Corp.
as of that date. Since March 31, 1996 to the date of the Closing, there has been
no change or event which could reasonably be expected to have a Material Adverse
Effect. The financial data for National Propane Corp. in the Memorandum present
fairly, on the basis stated in the Memorandum, the information set forth therein
and have been compiled based on the audited financial statements included in
the Registration Statement. The financial data identified as historical included
in the Memorandum present fairly, on the basis stated in the Memorandum, the
information set forth therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration Statement;
the pro forma financial data included in the Memorandum represent, in all
material respects and on the basis stated in the Memorandum, National Propane
Corp.'s best estimate at such time with respect to pro forma financial
information; and the assumptions on which the pro forma adjustments to the pro
forma aspects of the financial data included in the Memorandum are based provide
a reasonable basis for presenting all of the significant effects of the
transactions contemplated by such pro forma financial data and such pro forma
adjustments give appropriate effect to such assumptions and are properly applied
in such pro forma financial data.
5.5. Changes, etc. Except as contemplated by this Agreement, the other
Operative Agreements, the Registration Statement or the Memorandum, subsequent
to the respective dates as of which information is given in the Registration
Statement or the Memorandum, the Company and its Affiliates have not incurred
any material liabilities or obligations, direct or contingent, or entered into
any material transaction not in the ordinary course of business, no events have
occurred, which individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, and there has not been (a) any Restricted
Payment of any kind declared, paid or made by
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the Company or either General Partner (other than those referred to in Section
5.13) or (b) any incurrence of Indebtedness under the Bank Credit Facilities.
5.6. Tax Returns and Payments. Each of the Company and its Affiliates has
filed all tax returns required by law to be filed by it or, with respect to
those tax returns listed on Schedule 5.6, has properly filed for an extension of
time for the filing thereof 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, except 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. The Company is a limited partnership
that is treated as a pass-through entity for federal income tax purposes.
5.7. Indebtedness. At the time of the Closing, other than the Indebtedness
represented by the Notes and the Indebtedness listed in Schedule 5.7, none of
Company, either General Partner or any Subsidiary will have any secured or
unsecured Indebtedness outstanding. At the time of the Closing, no instrument or
agreement to which the Company or, other than Section 7.5(a) of the MLP
Agreement, either General Partner is a party or by which the Company or either
General Partner is bound or which is applicable to the Company or either General
Partner (other than this Agreement and the Bank Credit Facilities) contains any
restrictions on the incurrence by the Company or either General Partner of
additional Indebtedness.
5.8. Transfer of Assets and Business. (a) The Company and its
Subsidiaries, will at the Closing, after giving effect to the transfer of the
Assets on or prior to the date of the Closing as described in the Registration
Statement, be 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 (including, without limitation, to own, lease or use the Assets
and to assume certain liabilities relating to the Assets as described in the
Registration Statement and the Operative Agreements) 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 such time and are routine or
administrative in nature and are expected in the reasonable judgment of National
Propane Corp. 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
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Adverse Effect. At the time of the Closing and after giving effect to the
transfer of the Assets on or prior to the date of the Closing as described in
the Registration Statement, the Company does not own or lease any real property
in the jurisdictions set forth on Schedule 5.8, other than such owned or leased
property that, in the aggregate, have minimal value and generate only a small
fraction of the Company's revenues and the information in Schedule 5.8(a) is
true and correct as of the date of Closing.
(b) National Propane Corp. has, and upon the consummation of the Closing
the Company will have, (i) good and marketable title to the portion of the
Assets constituting real property owned in fee simple, (ii) good and valid
leasehold interests in the portion of the Assets constituting real property and
leased, other than certain immaterial leased property (constituting not more
than [ ]% of the Assets) subject to the Agency Agreement pursuant to which the
Company shall enjoy undisturbed possession thereof and (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 other than certain immaterial personal
property (constituting not more than [__]% of the Assets) which will be subject
to the Agency Agreement, in each case subject to no Liens except Permitted
Encumbrances. The Assets are all of the assets and properties necessary to
enable the Company to conduct the Business in the same manner as previously
conducted by the General Partners and include all options to purchase or rights
of first refusal granted to or for the General Partners with respect to any of
the Assets leased by either General Partner. The Assets constituting an interest
in real property to be conveyed to the Company pursuant to the Conveyance
Agreements are located in the counties listed in Schedule 5.8(b). The General
Partners enjoy, and upon execution and delivery of the Operative Agreements and
the consummation of the Conveyance Agreements the Company will enjoy, peaceful
and undisturbed possession under all leases necessary for the operation of its
properties and assets, other than certain immaterial leased property of which
the Company shall enjoy undisturbed possession, and all such leases are valid
and subsisting and are in full force and effect. Except to perfect and to
protect security interests permitted by Section 10.2, (x) at the time of the
Closing, no effective financing statement under the Uniform Commercial Code
which names the Company, Triarc, any Restricted Subsidiary or either General
Partner as debtor, which individually or in the aggregate relates to any part of
the Assets or other assets pledged pursuant to any Security Document, will be on
file in any jurisdiction and (y) at the time of the Closing, none of the
Company, Triarc, any Restricted Subsidiary or either General Partner will have
signed any effective financing statement (other than financing statements in
favor of
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The Bank of New York, as administrative agent, for which executed termination
statements will be delivered at the Closing) or any effective security
agreement, which relates to any part of the Assets or other assets pledged
pursuant to any Security Document, 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.
(c) Upon the consummation of the Closing, (i) the General Partners will
have transferred to the Company beneficial and (except in the case of motor
vehicles covered by certificates of title where the certificates of title will
have been duly executed in favor of the Company, the Lien of the Trustee will
have been duly noted thereon and such certificates of title will have been
delivered to the Company and/or the Trustee, but will not have yet been
submitted to the appropriate governmental agency for re-issuance) record
ownership of properties, easements and licenses comprising the Assets, (ii) the
Conveyance Agreements referred to in clause (b) of the definition of such term,
the Mortgages, the Company Security Agreement and the Partners Security
Agreement or proper notices, statements or other instruments in respect thereof,
will have been duly recorded, published, registered and filed as required by
Section 4.8 with respect to 80% of the counties in which Assets constituting
real property are located and covering at least 80% of the value of the personal
property and mortgaged real property included in the Assets, and (iii) the
Partnership Note or proper notices, statements or other instruments in respect
thereof, covering all of the assets covered by such Partnership Note, shall have
been duly executed, and all other actions deemed necessary by your special
counsel shall have been duly performed or taken, in such manner as is required
by applicable law to establish, perfect, preserve and protect the rights and
first priority Liens purported to be granted by such Partnership Note to the
Company and its respective successors and assigns.
5.9. Litigation, etc. Except as set forth on Schedule 5.9, there is no
action, proceeding or investigation pending or, to the best knowledge of the
Company and the General Partners upon reasonable inquiry, threatened (or any
basis therefor known to the Company or either General Partner) which questions
the validity of this Agreement, any other Operative Agreement or the Initial
Notes or any action taken or to be taken pursuant to this Agreement, any other
Operative Agreement or the Initial Notes, or which could reasonably be expected
to have, either in any case or in the aggregate, a Material Adverse Effect.
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5.10. Compliance with Other Instruments, etc. Neither the Company, any
Restricted Subsidiary nor either General Partner (i) is in violation of any term
of the Partnership Agreement or, in the case of the Restricted Subsidiaries and
the General Partners, of their respective certificates of incorporation or
by-laws, or (ii) is in violation of any term of any other agreement or
instrument to which the Company, any Restricted Subsidiary or either 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 (ii), would have a Material Adverse Effect; the execution,
delivery and performance by each of the General Partners, the Restricted
Subsidiaries and the Company of this Agreement and the other Operative
Agreements to which it is a party and the Initial Notes or the Notes, as the
case may be, 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 the Company, any Restricted Subsidiary or either General
Partner to create) any Lien upon any of the properties or assets of the Company,
any Restricted Subsidiary or either General Partner prohibited by any such term,
except for any such term relating to Indebtedness to be repaid in full at the
time of the Closing; and there is no such term the compliance with which would
have, or in the future may in the reasonable judgment of either General Partner
or the Company be likely to have, a Material Adverse Effect.
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 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 Initial Notes and the Notes pursuant to this Agreement
and the Other Agreements.
5.12. Offer of Initial Notes and Notes. Neither the Company nor any of its
Affiliates nor anyone acting on its or their behalf has directly or indirectly
offered the Initial Notes or 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
you, the Other Purchasers and not more than [__] other institutional investors.
Neither the General Partners nor the Company nor anyone authorized to act on
their behalf has taken or will take any action which would subject the issuance
and sale of the Initial Notes or issuance and
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delivery 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; provided, however, that it is understood that any action taken
by you or any Other Purchaser shall not have been taken on behalf of the Company
or the General Partners.
5.13. Use of Proceeds. The proceeds of the sale of the Units by the Public
Partnership will be used by the Public Partnership and the Company as
contemplated by the Registration Statement. Of the proceeds of the sale of the
Initial Notes to you and the Other Purchasers, approximately $59,300,000 will be
paid by National Propane Corp. as dividends to Triarc, approximately $3,500,000
will be used to pay transaction costs and expenses and approximately $62,200,000
will be contributed by National Propane Corp. to the Company under the
Conveyance Agreements and will be used by the Company to repay certain
Indebtedness assumed by the Company under the Conveyance Agreements.
5.14. Federal Reserve Regulations. Neither National Propane Corp. nor the
Company will, directly or indirectly, use any of the proceeds of the sale of the
Initial Notes or 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 G of the Board
of Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
otherwise take or permit to be taken any action which would involve a violation
of such Regulation G 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 Initial Notes was
incurred for the purpose of purchasing or carrying any stock which is currently
a "margin stock", and none of either General Partner, the Public Partnership or
the Company owns or has any present intention of acquiring with the proceeds
thereof any amount of such "margin stock".
5.15. Investment Company Act. None of the General Partners or the
Company is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
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5.16. Public Utility Holding Company Act; Federal Power Act. None of the
General Partners or the Company 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; each of the General
Partners, the Company, the issue and sale of the Initial Notes by National
Propane Corp. and the issue and delivery of the Notes by the Company is not
subject to regulation under such Act; and none of the General Partners or the
Company is a "public utility" as such term is defined in the Federal Power Act,
as amended.
5.17. ERISA. (a) None of the General Partners, the Company, any Subsidiary
of the Company or any Related Person of either of the General Partners or the
Company (other than Triarc and any Subsidiaries of Triarc (except for the
General Partners and any Subsidiary of either of the General Partners that is a
Related Person of the Company)) is obligated to contribute to, and none of the
General Partners, the Company or any Related Person of the Company has any
liability or obligation with respect to, any Plan that is subject to Section 302
or Title IV of ERISA or Section 412 of the Code (other than a Multiemployer
Plan). None of the Company, any Subsidiary of the Company or any Related Person
of the Company 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 (other than
pursuant to a Multiemployer Plan), continuation coverage provided pursuant to
Section 4980B of the Code or Section 601, et seq., of ERISA, or any liability or
obligation for contributions pursuant to a Plan not yet required to be paid.
None of the General Partners, the Company, any Subsidiary of the Company or any
Related Person of the Company 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 General Partners, the Company, any Subsidiary of the
Company or any Related Person has engaged in any transaction, including the
transactions contemplated hereunder which could subject the Company or any
Related Person of the Company to a material 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 other than one for which the applicable
notice requirements have been waived by PBGC regulation) 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 (other than a
Multiemployer Plan) by the PBGC. No
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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 General Partner, the
Company or any Subsidiary of the Company to a material liability under Section
502(i) or 502(l) of ERISA or Section 4975 of the Code. No material 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 the General Partners, the Company, any
Subsidiary of the Company or any Related Person of the Company. None of the
General Partners, the Company, any Subsidiary of the Company or any Related
Person of the Company 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 (other than the
National Propane Corporation 401(k) Plan). Timely payment has been made of all
amounts which the General Partners, the Company, any Subsidiary of the Company
or any Related Person of the Company is required under applicable law, the terms
of each Plan or any collective bargaining agreement to have paid as
contributions to each such Plan except to the extent that failure to do so would
not have a Material Adverse Effect. To the knowledge of the General Partners and
the Company, no Multiemployer Plan has been terminated or presents a material
risk of termination, is insolvent or is in reorganization within the meaning of
Section 4241 or 4245 of ERISA and the transactions contemplated hereby will not
result in a withdrawal from any Multiemployer Plan that would have a Material
Adverse Effect. None of the General Partners, the Company or any Subsidiary of
the Company has any obligation to provide any material amount of post-employment
welfare benefits or coverage (other than continuation coverage provided pursuant
to Section 4980B of the Code or Section 601, et seq., of ERISA).
(b) The execution and delivery of this Agreement and the Other Agreements
and the issue and sale of the Initial Notes, the exchange of the Initial Notes
and the issue and delivery of the Notes hereunder and thereunder 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 the Company and
the General Partners in the immediately preceding sentence are made in reliance
upon and subject to the accuracy of your representation in Section 6.2 of this
Agreement and the representations of the Other Purchasers in Section 6.2 of the
Other Agreements as to the source of the funds to be used to pay the purchase
price of the Initial Notes to be purchased by you and the Other Purchasers,
respectively. With respect to each employee benefit plan identified to the
Company in accordance with clause (c) of Section 6.2 of this Agreement or of
any of the Other Agreements, none of the General Partners, the Company or any
"affiliate" (as defined in Section V(c) of the QPAM
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Exemption) of either General Partner or the Company 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 you or any Other Purchaser as
manager of any of the assets of any such plan or to negotiate the terms of any
management agreement with you or any Other Purchaser on behalf of any such plan.
5.18. Environmental Matters. (a) Except as disclosed in Schedule 5.18 each
of the Company, each Restricted Subsidiary and each General Partner is, and
after giving effect to the transfer to the Company of the Assets will be, 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 Company and the Restricted Subsidiaries 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 the
Company, any Restricted Subsidiary or either 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 the Company, any Restricted
Subsidiary or either General Partner, as the case may be, individually or in the
aggregate, would have a Material Adverse Effect, and (ii) all current reports
filed by the Company, each Restricted Subsidiary or either 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
you, your special counsel and your environmental advisor. Notwithstanding any
such notice, the Company, each Restricted Subsidiary and each 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 the
Company, any Restricted Subsidiary or either 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 none of the Company, any Restricted
Subsidiary or either General Partner has received, or, to the knowledge of the
Com-
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pany and each 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.
5.19. Foreign Assets Control Regulations, etc. The issue and sale of the
Initial Notes by National Propane Corp. and its use of the proceeds thereof as
contemplated by this Agreement, and the issue and delivery of the Notes by the
Company, 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
of the Notes) administered by the Office of Foreign Assets Control, the United
States Department of the Treasury, including, without limitation, the Foreign
Assets Control Regulations, the Transaction Control Regulations, the Cuban
Assets Control Regulations, the Foreign Funds Control Regulations, the Iranian
Assets Control Regulations, the Iranian Transactions Regulations, the Iraqi
Sanctions Regulations, the Libyan Sanctions Regulations, and the Soviet Gold
Coin Regulations of the United States Treasury Department (31 C.F.R., Subtitle
B, Chapter V, as amended) or the restrictions set forth in Executive Orders No.
8389, 9193, 12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq), 12724
(Iraq), 12775 (Haiti), 12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or
12831 (Yugoslavia), as amended, of the President of the United States of America
or of any rules or regulations issued thereunder.
5.20. Disclosure. Neither this Agreement, the other Operative Agreements,
the Memorandum, the Registration Statement, nor any other historical financial
statement, document, certificate or instrument delivered to you by or on behalf
of the Company, any Restricted Subsidiary, any General Partner or any of their
Affiliates 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
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make the statements contained therein, in light of the circumstances under which
they were made, not misleading. There is no fact actually known to the Company
or either General Partner which has or in the future would (so far as the
Company or either General Partner can now reasonably foresee) have a Material
Adverse Effect which has not been set forth or referred to in this Agreement,
the Memorandum or the Registration Statement. You and the Other Purchasers shall
be entitled to rely on the statements and disclosures set forth in the
Registration Statement.
5.21. Chief Executive Office. The chief executive office of the Company
and National Propane Corp. and the office where each maintains its records
relating to the transactions contemplated by the Operative Agreements is located
at Suite 1700, IES Tower, 200 1st Street S.E., P.O. Box 2067, Cedar Rapids, Iowa
52401-2067.
5.22. Solvency. Upon the sale of the Initial Notes and the concurrent or
prior consummation of the transactions contemplated hereby, National Propane
Corp. will be Solvent. Upon the exchange of the Notes by the Company and the
concurrent or prior consummation of the transactions contemplated hereby, the
Company and its Restricted Subsidiaries will be solvent. "Solvent" means, with
expect to any Person, that (a) the sum of the assets of such Person, both at a
fair valuation and at present fair saleable value, will exceed the liabilities
of such Person, (b) such Person will have sufficient capital with which to
conduct its business as presently conducted and as proposed to be conducted and
(c) such Person has not incurred debts, and does not intend to incur debts,
beyond its ability to pay such debts as they mature. For purposes of the
foregoing definition, "debts" means any liabilities on claims, and "claim" means
(i) a right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (ii) a right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured. With respect to
any contingent liabilities, such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured liability.
SECTION 6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.
6.1. You represent that you are purchasing the Initial Notes and accepting
the Notes in exchange for the Initial Notes for your own account or for one or
more
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separate accounts maintained by you 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 your property shall at all times be
within your control. If you are 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), you represent that (except to the
extent that you have otherwise advised Debevoise & Plimpton and the Company in
writing) you have sole investment discretion with respect to the acquisition of
the Initial Notes to be issued to you pursuant to this Agreement and the Notes
to be issued upon exchange thereof and the determination and decision on your
behalf to purchase such Initial Notes and the Notes to be issued upon exchange
thereof for such pension or trust funds is being made by the same individual or
group of individuals who customarily pass on such investments.
6.2. You represent that at least one of the following statements is an
accurate representation as to the source of funds to be used by you to pay the
purchase price of the Initial Notes purchased by you hereunder:
(a) if you are an insurance company, no part of such funds constitutes
assets allocated to any separate account maintained by you in which an
employee benefit plan (or its related trust) has any interest; or
(b) if you are an insurance company, to the extent that any of such funds
constitutes assets allocated to any separate account maintained by you, (i)
such separate account is a "pooled separate account" within the meaning of
Prohibited Transaction Class Exemption 90-1, in which case you have
disclosed to the Company 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 you have delivered to the Company in
writing; or
(c) if you are 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
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an "investment fund" (as defined in Part V of the QPAM Exemption) managed by
you, 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 (as defined
in Part V of the QPAM Exemption) of such employer or by the same employee
organization and (ii) managed by you, exceed 20% of the total client assets
managed by you, the conditions of the QPAM Exemption (other than Section
I(a) thereof) are satisfied and you have disclosed to the Company the names
of all employee benefit plans whose assets are included in such investment
fund; or
(d) if you are 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 you have delivered to the Company in writing; or
(e) if you are an insurance company, the source of the funds is an
insurance company general account in respect of which the reserves and
liabilities for the general account contract(s) held by or on behalf of any
benefit plan (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners
(the "NAIC Annual Statement"), determined before reduction for credits on
account of any reinsurance ceded on a coinsurance basis) together with the
amount of the reserves and liabilities for the general account contract(s)
held by or on behalf of any other benefit plans (as defined by the NAIC
Annual Statement) maintained by the same employer (or affiliate thereof as
defined in Prohibited Transaction Class Exemption 95-60) or by the same
employee organization (as defined by the NAIC Annual Statement) in the
general account do not exceed 10% of the total reserves and liabilities of
the general account (exclusive of separate account liabilities) plus surplus
as set forth in the NAIC Annual Statement filed with the state of domicile
of the insurance company.
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
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INFORMATION.
The Company will maintain, and 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 Company will deliver (in
duplicate, unless you have advised us otherwise) to you, so long as you shall be
entitled to purchase Initial Notes under this Agreement or you or your nominee
shall be the holder of any Notes, and to each other Institutional Investor
holding any Notes (other than a Competitor (or an Affiliate thereof) of the
Company):
(a) as soon as practicable, but in any event within 50 days after the end
of each of the first three quarterly fiscal periods in each fiscal year of
the Company, consolidated (and (i) if the Restricted Subsidiaries or a
Restricted Subsidiary constitutes a Substantial Portion, then as to the
Restricted Subsidiaries or (ii) if the Restricted Subsidiaries do not or a
Restricted Subsidiary does not constitute a Substantial Portion, but one or
more Restricted Subsidiaries have outstanding Indebtedness owing to Persons
other than the Company or any Restricted Subsidiary and other than pursuant
to any Security Document, then as to the Restricted Subsidiaries,
consolidating) balance sheets of the Company and the Restricted Subsidiaries
as at the end of such period and the related consolidated (and, as to
statements of income and cash flows, if applicable and as appropriate,
consolidating) statements of income, surplus or partners' capital, cash
flows and stockholders' equity of the Company and the Restricted
Subsidiaries (i) for such period and (ii) (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
(except in the case of financial statements with respect to the fiscal year
of the Company beginning January 1, 1996 or if consolidating balance sheets
of the Restricted Subsidiaries were not required to be delivered pursuant to
this subdivision (a) for the previous corresponding period) 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 the Company 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, provided that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission
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shall be deemed to satisfy the requirements hereof to the extent such
reports otherwise satisfy such requirements (for purposes of this Section 7,
"Substantial Portion" shall mean that either (x) either (A) the book value
of the assets of the Restricted Subsidiaries exceeds 10% of the book value
of the consolidated assets of the Company and the Restricted Subsidiaries,
or (B) the Restricted Subsidiaries account for more than 10% of the
Consolidated Net Income of the Company and the Restricted Subsidiaries, in
each case in respect of the four fiscal quarters ended as of the date of the
applicable financial statement) or (y) either (A) the book value of the
assets of any Restricted Subsidiary exceeds 5% of the book value of the
consolidated assets of the Company and the Restricted Subsidiaries, or (B)
any Restricted Subsidiary accounts for more than 5% of the Consolidated Net
Income of the Company and its Restricted Subsidiaries, in each case in
respect of the four fiscal quarters ended as of the date of the applicable
financial statement);
(b) as soon as practicable, but in any event within 95 days after the end
of each fiscal year of the Company beginning with the fiscal year beginning
January 1, 1996, consolidated (and (i) if the Restricted Subsidiaries or a
Restricted Subsidiary constitutes a Substantial Portion, then as to the
Restricted Subsidiaries or (ii) if the Restricted Subsidiaries do not or a
Restricted Subsidiary does not constitute a Substantial Portion, but one or
more Restricted Subsidiaries have outstanding Indebtedness owing to Persons
other than the Company or any Restricted Subsidiary and other than pursuant
to any Security Document, then as to the Restricted Subsidiaries,
consolidating) balance sheets of the Company and the Restricted Subsidiaries
and the consolidated balance sheets of each General Partner as at the end of
such year and the related consolidated (and, as to statements of income and
cash flows, if applicable and as appropriate, consolidating) statements of
income, partners' capital, cash flows and stockholders' equity of the
Company and the Restricted Subsidiaries and the consolidated statements of
income, surplus, cash flow and stockholders' equity of each General Partner
for such fiscal year, setting forth in each case (except in the case of the
financial statements with respect to the fiscal year of the Company
beginning January 1, 1996 or if consolidating balance sheets of the
Restricted Subsidiaries were not required to be delivered pursuant to this
subdivision (b) for the preceding corresponding period) in comparative form
the consolidated and, where applicable and as appropriate, consolidating
figures for the previous fiscal year, all in reasonable detail, provided
that delivery within the time periods specified above of copies of the
Company's Annual Report on Form 10-K prepared in compliance with the
requirements therefor and filed with the
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Securities and Exchange Commission shall be deemed to satisfy the
requirements hereof to the extent such reports otherwise satisfy such
requirements, and (i) in the case of such consolidated financial statements
of the Company, accompanied by a report thereon of Deloitte & Touche LLP or
other independent public accountants of recognized national standing
selected by the Company, which report shall state that such consolidated
financial statements present fairly in all material respects the financial
position of the Company and the Restricted 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 from time to
time, and (ii) in the case of such consolidated financial statements of the
general partner of the Company and such consolidating financial statements
of the Company, certified by the principal financial officer of the general
partner of the Company, as presenting fairly in all material respects 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 the
Company (i) stating that the signers have reviewed the terms of this
Agreement and the other Operative Agreements and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of the Company 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 Company has taken or is taking or
proposes 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),
(g), (h) and (i), 10.3(c), 10.7(a)(ii), 10.7(a)(iii), 10.7(c)(iii), 10.19
and 10.30, (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 Company and the
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Restricted Subsidiaries, and the aggregate amount of depreciation, depletion
and amortization charged on the books of the Company 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 Company 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 Company 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 and the
other Operative Agreements 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 an Event of Default
or Potential Event of Default insofar as such Event of Default or Potential
Event of Default relates to accounting or financial matters, and, if so,
specifying the nature and period of existence thereof;
(e) promptly upon their becoming publicly available, copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available by the Company, either General Partner 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, (ii) all regular and periodic reports and all registration
statements and prospectuses filed by the Company, either General Partner 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 (iii)
all press releases and other statements made available by the Company,
either General Partner or the Public Partnership to the public concerning
material developments in the business of the Company, either General Partner
of the Company or the Public Partnership, as the case may be;
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(f) promptly, but in any event (i) within five days after any Responsible
Officer of the Company knows or (ii) within ten days after any Responsible
Officer should (in the course of the normal performance of his or her
duties) know, that (x) 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, (y) 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 (z) any Person has given any notice to the Company, either
General Partner 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 the Company describing the
same and the period of existence thereof and what action the Company has
taken, is taking and proposes to take with respect thereto;
(g) promptly, and in any event within five Business Days after a
Responsible Officer of the Company obtains knowledge of (i) the occurrence
of an adverse development with respect to any litigation or proceeding
involving the Company, any of its Subsidiaries or either General Partner
which in the reasonable judgment of the Company presents a reasonable
likelihood of having a Material Adverse Effect or (ii) the commencement of
any litigation or proceeding involving the Company, any of the Subsidiaries
or either General Partner which in the reasonable judgment of the Company
presents a reasonable likelihood of having a Material Adverse Effect, a
written notice of such Responsible Officer describing in reasonable detail
such commencement of, or adverse development with respect to, such
litigation or proceeding;
(h) promptly, but in any event (i) within five days after any Responsible
Officer of the Company knows, or (ii) within ten days after any Responsible
Officer of the Company 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 exist, a statement setting forth details respecting such event or
condition and the action, if any, that the Company 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):
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(A) any reportable event, as defined in Section 4043(b) of ERISA and the
regulations issued thereunder;
(B) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;
(C) a substantial cessation of operations within the meaning of Section
4062(e) of ERISA under circumstances which could result in the treatment
of the Company 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 the Company or any Related Person;
(D) 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 the
Company 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;
(E) the complete or partial withdrawal by the Company 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 the
Company or any Related Person of notice from a Multiemployer Plan
regarding any alleged withdrawal or that it intends to impose withdrawal
liability on the Company 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;
(F) the taking of any steps concerning the threat or the institution of
a proceeding against the Company or any Related Person to enforce Section
515 of ERISA;
(G) the occurrence or existence of any event or series of events which
could result in a liability to the Company or any Related Person pursuant
to Section 4069(a) or 4212(c) of ERISA;
(H) 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
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in the imposition of a lien on any property of the Company or any Related
Person 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 the Company or any Related Person;
(I) 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 the
Company 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
(J) 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);
(i) promptly, but in any event within five days, after an officer of any
of the Company, any Subsidiary or either General Partner receives any notice
or request from any Person (other than any Affiliate or any agent, attorney
or similar party employed by the Company or either General Partner of the
Company) for information, or if the Company, any Subsidiary or either
General Partner provides any notice or information to any such Person (other
than any Affiliate or any agent, attorney or similar party employed by the
Company or either General Partner), 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 the Company, any
Subsidiary or either General Partner, copies of each such notice, request or
information, except such notices or requests for information received or
filings made in the normal course of business which do not pertain to the
violation by the Company, any Subsidiary or either General Partner of an
Environmental Law; and
(j) with reasonable promptness, such other financial reports and
information and data with respect to the Company, any Restricted Subsidiary,
any Subsidiary (to the extent such reports, information and data relate to
environmental matters or any material litigation or proceeding) or either
General Partner as from time to time may be requested by you (so long as you
hold a Note), or by any holder of any Note other than a Competitor (or
Affiliate thereof) of the Company.
SECTION 8. INSPECTION.
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The Company will permit or cause the general partner of the Company to
permit (a) at any time when an Event of Default or Potential Event of Default
shall have occurred and be continuing, any authorized representatives designated
by you, so long as you shall be entitled to purchase the Initial Notes under
this Agreement or you or your nominee shall be the holder of any Notes, or by
any other institutional holder of any Notes (other than a Competitor (or
Affiliate thereof) of the Company), and (b) at any other time, any authorized
representative designated by any Purchaser or Purchasers holding at least 5% of
the principal amount of the Notes, or by any other holder or holders of at least
5% of the principal amount of the Notes (other than a Competitor (or an
Affiliate thereof) of the Company) then outstanding and an authorized
representative of all of the holders of the Notes, in each case, upon prior
written notice and as may be reasonably requested, to visit during normal
business hours and inspect any of the properties of the Company, any Restricted
Subsidiary and any other Subsidiary (to the extent relating to environmental or
litigation matters) and, to the extent relating to the Business, any properties
of either General Partner or of such General Partner's Subsidiaries, including
the books of account of the Company, the Restricted Subsidiaries, such other
Subsidiaries, the General Partner 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 senior officers and (with
reasonable prior written notice) independent public accountants (and by this
provision each of the Company and each General Partner authorizes such
accountants to discuss with such representatives the affairs, finances and
accounts of the Company, any Restricted Subsidiary, such other Subsidiaries,
such General Partner 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 you
shall bear the expenses of your authorized representative, except the Company
will bear the expenses of such authorized representatives if an Event of Default
or Potential Event of Default has occurred and is continuing; and the Company
shall at all times bear the expenses of its and its Affiliates' officers and
independent public accountants.
SECTION 9. PREPAYMENT OF NOTES.
9.1. Required Prepayments of the Notes. On each of the dates set forth in
the following table, the Company will prepay the principal amount of the Notes
set forth opposite such date in such table (or such lesser principal amount of
the Notes as shall at the time be outstanding), at the principal amount of the
Notes so prepaid, without premium, together with interest accrued thereon:
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Principal Amount
Date of Prepayment of Prepayment
- ------------------------------------------ ----------------
June 30, 2003 $15,625,000
June 30, 2004 15,625,000
June 30, 2005 15,625,000
June 30, 2006 15,625,000
June 30, 2007 15,625,000
June 30, 2008 15,625,000
June 30, 2009 15,625,000
Any partial prepayment of the Notes pursuant to Section 9.2, 9.3 or 9.4
(to the extent not applied to satisfy a prepayment required under this Section
9.1) shall be applied to reduce each prepayment thereafter required to be made
pro rata, but no acquisition of the Notes by the Company or any of its
Affiliates, otherwise shall relieve the Company from its obligation to make the
required prepayments provided for in this Section 9.1. The Company shall notify
the holders of the Notes of any application provided for in the immediately
preceding sentence five days prior to such application. On the maturity date,
the Company will pay the then outstanding principal amount of the Notes together
with interest accrued thereon.
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 $5,000,000), at the option of the Company,
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.
9.3. Prepayment on Change of Control. (a) The Company will, within 90 days
after any Change of Control give written notice of such Change of Control to
each holder of Notes. Such notice shall contain and constitute an offer to
prepay the Notes as described in subdivision (b) of this Section 9.3 and shall
be accompanied by the certificate described in subdivision (e) of this Section
9.3.
(b) The offer to prepay Notes contemplated by subdivision (a) of this
Section 9.3 shall be an offer to prepay, in accordance with and subject to this
Section 9.3, all, but not less than all, the Notes held by each holder (in this
case only, "holder" in respect of any Note registered in the name of a nominee
for a disclosed beneficial owner shall mean such beneficial owner) on a date
specified in such offer
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(the "Proposed Prepayment Date") that is not less than 20 days and not more than
30 days after the date of such offer (if the Proposed Prepayment Date shall not
be specified in such offer, the Proposed Prepayment Date shall be the 20th day
after the date of such offer).
(c) A holder of Notes may accept the offer to prepay made pursuant to this
Section 9.3 by causing a notice of such acceptance to be delivered to the
Company at least 5 days prior to the Proposed Prepayment Date. A failure by a
holder of Notes to respond to an offer to prepay made pursuant to this Section
9.3 shall be deemed to constitute a rejection of such offer by such holder.
(d) Prepayment of the Notes to be prepaid pursuant to this Section 9.3
shall be at 100% of the principal amount of such Notes, plus a premium equal to
1% of such principal amount (the "Premium Amount"), together with interest on
such Notes accrued to the date of prepayment. The principal amount and the
Premium Amount shall, with respect to all Notes the holder of which accepted the
offer to prepay pursuant to subdivision (c), become due and payable on the
Proposed Prepayment Date.
(e) Each offer to prepay the Notes pursuant to this Section 9.3 shall be
accompanied by an Officers' Certificate, executed by a senior financial officer
and a Responsible Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 9.3; (iii) the principal amount of each Note offered to
be prepaid; (iv) the premium due in connection with such prepayment; (v) the
interest that would be due on each Note offered to be prepaid, accrued to the
Proposed Prepayment Date; (vi) that the conditions of this Section 9.3 have been
fulfilled; (vii) in reasonable detail, the nature and date of the Change of
Control; and (viii) that a failure to respond to such notice shall be deemed a
rejection of such offer to prepay the Notes.
9.4. Contingent Prepayments on Disposition of Property, Taking or
Destruction. (a) If at any time the Company 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 Company does not apply such Excess Proceeds in the
manner described in Section 10.7(c)(iii)(B)(x), and if the next scheduled date
of prepayment of the Notes pursuant to Section 9.1 occurs within 270 days after
receipt of such Excess Proceeds, such Excess Proceeds may be applied to such
prepayment required under Section 9.1 (unless such scheduled
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prepayment has been paid by the Company). To the extent that there are such
Excess Proceeds remaining after application in accordance with the first
sentence of this Section 9.4(a), the Company shall prepay, upon notice as
provided in Section 9.5 (which notice shall be given not later than 270 days
after the date of such sale of property), a principal amount of the outstanding
Notes equal to the amount of such remaining Excess Proceeds allocable to the
Notes, determined by allocating such remaining Excess Proceeds pro rata among
the holders of all Notes and Parity Debt, if any, outstanding on the date such
prepayment is to be made, according to the aggregate then unpaid principal
amounts of the Notes (and the Make Whole Amount on the principal amount of the
Notes to be prepaid) and Parity Debt, respectively. Each prepayment of Notes
pursuant to this Section 9.4(a) 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, the Make Whole Amount thereon.
(b) 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
Mortgage), self-insurance amounts, Net Awards (as defined in the Mortgage) or
title insurance proceeds which, as of any date, shall not theretofore have been
applied to the cost of Restoration (as defined in the Mortgage) 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
9.4(a). Any amounts prepaid pursuant to this Section 9.4(b) on the date on which
a prepayment is required under Section 9.1 may be applied to satisfy such
prepayment required under Section 9.1.
9.5. Notice of Prepayments; Officers' Certificate. The Company will give
each holder of any Notes irrevocable written notice of each prepayment under
Section 9.2 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 Company shall, on or before the
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Business Day next succeeding the date which the Company sends 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 Company. Each holder of a Note shall
receive, on the Business Day immediately preceding the date scheduled for any
such prepayment, an Officers' Certificate 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
Company shall promptly give notice to the holders of the Notes, accompanied by
an Officers' Certificate setting forth the principal amount of each of the Notes
that was prepaid and specifying how each such amount was determined, setting
forth the reduced amount of each required prepayment thereafter becoming due
with respect to the Notes under Section 9.1, and certifying that such reduction
has been computed in accordance with such Section.
9.6. Allocation of Partial Prepayments. Upon any partial prepayment of the
Notes pursuant to Section 9.1, 9.2 or 9.4 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.
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 or
other premium, if any. From and after such date, unless the Company shall fail
to pay such principal amount when so due and payable, together with the interest
and Make Whole Amount or other premium, 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 Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.
9.8. Acquisition of Notes. None of the General Partners or the Company
shall, nor shall any permit any of their respective Subsidiaries or any
Restricted Affiliate 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
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acquire, directly or indirectly, Notes held by any holder, except, pursuant to
an offer to purchase made pro rata to the holders of all of the Notes on the
same terms and conditions. Any Notes prepaid or otherwise retired or purchased
or otherwise acquired by the Company or any of its Subsidiaries or Affiliates
shall not be deemed to be outstanding for any purpose under this Agreement or
any other Operative Agreement. None of the General Partners or the Company
shall, nor shall they permit any of their respective Subsidiaries to, in whole
or in part, prepay or otherwise retire, prior to their stated maturity, or
purchase or otherwise acquire, directly or indirectly, any Parity Debt, other
than (i) refundings or refinancings permitted pursuant to Section 10.1, (ii)
pursuant to scheduled prepayments in accordance with the terms of such Parity
Debt, (iii) prepayments of Indebtedness outstanding under the Working Capital
Facility or other Parity Debt of a similar revolving nature, and (iv) any
prepayment in an amount not exceeding the amount the Company could distribute as
a Restricted Payment pursuant to Section 10.4.
SECTION 10. BUSINESS AND FINANCIAL COVENANTS OF THE
COMPANY.
The Company covenants that from the date of this Agreement through the
Closing and thereafter so long as any of the Notes are outstanding:
10.1. Indebtedness. The Company will not, and will not 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 Company may become and remain liable with respect to the
Indebtedness evidenced by the Notes;
(b) the Company and the Restricted Subsidiaries may become and remain
liable with respect to Indebtedness incurred by the Company and the
Restricted Subsidiaries to finance the making of expenditures for the
improvement or repair of or additions to the Assets, provided that (i) the
aggregate principal amount of Indebtedness incurred under this Section
10.1(b) and outstanding at any time shall not exceed an amount equal to the
sum of (x) the net cash proceeds received by the Company from the general
partner of the Company or from the Public Partnership as a capital
contribution or as consideration for the issuance by the Company of
additional partnership interests, in each case for the sole purpose of
financing such expenditures, and (y) the fair market value of (based on a
30-day
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trailing average closing trading price per unit) Units contributed to the
Company by the Public Partnership or issued directly to the Person selling
such asset or making such repair or improvement by the Public Partnership
for the sole purpose of financing such expenditures, only to the extent,
however, that such Units are used to pay, substantially concurrently with
the date of contribution, at least 50% of the purchase price or cost of such
improvements, repairs or additions, and (ii) if such Indebtedness is to be
secured under the Security Documents as provided in Section 10.2(i), the
agreement or instrument pursuant to which such Indebtedness is incurred (A)
contains no financial or business covenants that are more restrictive on
the Company or its Subsidiaries than or that are in addition to those
contained in this Section 10 (unless prior to or simultaneously with the
incurrence of such Indebtedness this Agreement and the Other Agreements are
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 Indebtedness
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 Indebtedness this Agreement
and the Other Agreements are 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 the Company 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 E and provided further that such
Indebtedness is evidenced by an Intercompany Note pledged to the Trustee;
(d) the Company and the Restricted Subsidiaries may become and remain
liable with respect to unsecured Indebtedness owing to the general partner
of the Company or an Affiliate of the general partner of the Company,
provided that (i) the aggregate principal amount of such Indebtedness of the
Company and the Restricted Subsidiaries outstanding at any time shall not be
in excess of $20,000,000 and (ii) such Indebtedness is created and is
outstanding under an agreement or instrument pursuant to which such
Indebtedness is subordinated to
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the Notes and to Indebtedness secured under the Security Documents at least
to the extent provided in the subordination provisions set forth in Exhibit
E;
(e) the Company may become and remain liable with respect to Indebtedness
incurred under the Bank Credit Facilities, provided that
(i) the aggregate principal amount outstanding under the Initial
Acquisition Facility, together with amounts outstanding pursuant to
Indebtedness permitted by subdivisions (h)(3)(i) and (o) of Section 10.1,
will be in an aggregate principal amount not in excess of $40,000,000
outstanding at any time, and
(ii) in respect of the Working Capital Facility:
(1) there shall be a period of at least 30 consecutive days during each
fiscal year of the Company on each day of which there shall be no such
Indebtedness outstanding under the Working Capital Facility, and
(2) the aggregate principal amount of loans, exposure under letters of
credit in respect of the Working Capital Facility and the unfunded
commitments thereunder at any time outstanding thereunder shall not be in
excess of $15,000,000;
(f) the Company 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 the
Company 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
incurred by the Company 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);
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(g) the Company may become and remain liable with respect to the
Indebtedness referred to in Schedule 5.7, provided that all the aggregate
principal amount of such Indebtedness at any time outstanding shall not
exceed $1,500,000;
(h) the Company and any Restricted Subsidiary may become and remain liable
with respect to pre-existing Indebtedness relating to any Person, business
or assets acquired by the Company 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, either (i) the sum of (A) such Indebtedness, (B) the then aggregate
principal amount of outstanding Indebtedness under the Initial Acquisition
Facility and (C) the then outstanding principal amount of any Indebtedness
permitted by subdivision (o), does not exceed $40,000,000, or (ii) the
Company 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, the Company and the Restricted Subsidiaries may
become and remain liable with respect to Indebtedness secured equally and
ratably with the Notes incurred for any extension, renewal, refunding or
refinancing of Indebtedness permitted pursuant to subdivisions (a), (b),
(e)(i) and (f) of this Section 10.1, provided that (i) the principal amount
(including any exposure under letters of credit and any unfunded
commitments) of such Indebtedness shall not exceed the principal amount of
such Indebtedness being extended, renewed, refunded or refinanced together
with any accrued interest and Make Whole Amount or other premium with
respect thereto and any costs and expenses related to such extension,
renewal, refunding or refinancing, (ii) the maturity date of such
Indebtedness shall not be sooner than the maturity date of such Indebtedness
being extended, renewed, refunded or refinanced, (iii) the average life to
maturity of such Indebtedness shall be equal to or greater than the
remaining average life to maturity of such Indebtedness being extended,
renewed, refunded or refinanced and (iv) if such Indebtedness is incurred
for any extension, renewal, refunding or refinancing of Indebtedness
permitted pursuant to (A) subdivision (b) or (f), such Indebtedness
satisfies the conditions specified in clause (ii) of the proviso to
subdivision (b) or (B) subdivision (e)(i), the financial and business
covenants of such Indebtedness are no more restrictive on
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the Company and its Subsidiaries and there are no additional covenants than
those contained in the Bank Credit Facility as of the date of this Agreement
and complies with clause (ii)(B) of the proviso to Section 10.1(b);
(j) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to Indebtedness secured equally and
ratably with the Notes, incurred for any extension, renewal, refunding or
refinancing of Indebtedness permitted pursuant to subdivision (e)(ii) of
this Section 10.1, provided that (i) the aggregate principal amount of such
Indebtedness, any exposure under letters of credit issued pursuant to such a
working capital facility and the amount of the unfunded commitments
thereunder, shall not exceed $15,000,000, and (ii) such Indebtedness, any
such letters of credit and commitments shall be incurred pursuant to a
working capital facility (A) which complies with the requirements set forth
in clause (ii)(1) of Section 10.1(e) and (B) the financial and business
covenants of such Indebtedness are no more restrictive on the Company and
its Subsidiaries and there are no additional covenants than those contained
in the Bank Credit Facility as of the date of this Agreement and complies
with clause (ii)(B) of the proviso to Section 10.1(b);
(k) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to unsecured Indebtedness incurred for
any extension, renewal, refunding or refinancing of Indebtedness otherwise
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 being extended, renewed, refunded or refinanced
together with any accrued interest and Make Whole Amount or other premium
with respect thereto and any costs and expenses related to such extension,
renewal, refunding or refinancing, (ii) the maturity date of such unsecured
Indebtedness shall not be sooner than the maturity date of such Indebtedness
being extended, renewed, refunded or refinanced and (iii) the average life
to maturity of such unsecured Indebtedness shall be equal to or greater than
the remaining average life to maturity of such Indebtedness being extended,
renewed, refunded or refinanced;
(l) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to secured Indebtedness incurred for
any extension, renewal, refunding or refinancing of secured Indebtedness
(other than
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Indebtedness permitted by subdivisions (a), (b), (e) or (f)) otherwise
permitted pursuant to this Section 10.1, provided that (i) the principal
amount of such Indebtedness to be incurred shall not exceed the principal
amount of such Indebtedness being extended, renewed, refunded or refinanced
together with any accrued interest and premium with respect thereto and any
and all costs and expenses related to such extension, renewal, refunding or
refinancing, (ii) the maturity date of such Indebtedness shall not be sooner
than the maturity date of such Indebtedness being extended, renewed,
refunded or refinanced, and (iii) the average life to maturity of such
Indebtedness to be incurred shall be equal to or greater than the remaining
average life to maturity of such Indebtedness being extended, renewed,
refunded or refinanced;
(m) the Company and any Restricted Subsidiaries may become and remain
liable with respect to any Interest Rate Agreement;
(n) any Restricted Subsidiary may become and remain liable with respect to
Indebtedness evidenced by the Subsidiary Guarantee Agreements; and
(o) the Company may become and remain liable with respect to Indebtedness
issued to a seller of assets or stock purchased by the Company in an amount
not exceeding the sum of (i) $40,000,000, less (ii) the amount of any
Indebtedness outstanding under subdivision (h)(3)(i) and subdivision (e)(i),
provided, if such Indebtedness is to be secured under the Security Documents
as provided in Section 10.2(i), the agreement or instrument pursuant to
which such Indebtedness is incurred (A) contains no financial or business
covenants that are more restrictive on the Company or its Subsidiaries than
or that are in addition to those contained in this Section 10 (unless prior
to or simultaneously with the incurrence of such Indebtedness this Agreement
and the Other Agreements are amended to provide the benefits of such more
restrictive covenants to the holders of the Notes), (B) specifies no events
of default (other than with respect to the payment of principal and interest
on such Indebtedness 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
Indebtedness this Agreement and the Other Agreements are amended to provide
the benefit of such events of default to the holders of the Notes), and (C)
the financial terms of such Indebtedness are the same as (or more favorable
than) that set forth in the Initial Acquisition Facility.
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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(n) or Section 10.1(m) but only to the
extent such Restricted Subsidiary is a party to Interest Rate Agreements with
respect to Indebtedness for which it is directly liable) shall not exceed $10
million. 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. The Company or
any Restricted Subsidiary shall be deemed to have become liable with respect to
any Indebtedness securing any real property acquired by the Company or such
Restricted Subsidiary, as the case may be, at the time of such acquisition. Any
amendment of the terms of this Agreement required by clause (ii) of Section
10.1(b) shall provide that such amendment shall only be effective until the date
the Indebtedness (the incurrence of which required the amendment of this
Agreement) is paid in full and all commitments to lend and letters of credit
outstanding under such facility are canceled or terminated. The Company shall
provide written notice to each holder of the repayment in full in cash of such
Indebtedness and the cancellation of all commitments and letters of credit
pursuant to any such facility, which notice shall provide, that the amendments
to this Agreement required by clause (ii) of the proviso to Section 10.2(b) with
respect to such facility, are no longer effective.
10.2. Liens, etc. The Company will not, and will not 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 the Company 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
10.16), 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
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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 the Company or any Restricted Subsidiary and which do not materially
interfere with the ordinary conduct of the business of the Company or any
Restricted Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary securing
Indebtedness of such Restricted Subsidiary owing to the Company or any other
Restricted Subsidiary;
(g) Liens existing on the Assets at the time of the acquisition thereof
by the Company and described in Schedule 10.2;
(h) Liens created by any of the Security Documents securing Indebtedness
incurred in accordance with Section 10.1(a) or Section 10.1(e);
(i) Liens created by any of the Security Documents securing Indebtedness
incurred in accordance with Section 10.1(b), Section 10.1(o) or, to the
extent incurred to finance the making of capital improvements, repairs and
additions to the Company'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
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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), 10.1(f) or 10.1(o), (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)
the Company 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 the Company 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 the Company), that such incurrence of Indebtedness
pursuant to Section 10.1(b), 10.1(f) or 10.1(o), 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) the Company 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
the Company or any Restricted Subsidiary through purchase, merger or
consolidation or otherwise, whether or not assumed by the Company 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 the Company or a Restricted Subsidiary
or to pay the cost of an improvement (other than improvements to property
subject to the Lien of the Security Documents), 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 the Company or
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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 the Company) at the time such Person owning such property becomes a
Restricted Subsidiary or at the time of such acquisition by the Company 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 such Person's becoming a Restricted
Subsidiary or such acquisition of property by the Company 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 securing Indebtedness referred to in Section 10.1(i), (j) or
(l) renewing or extending 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 principal amount of such Indebtedness outstanding
(including any exposure under letters of credit and any unfunded
commitments) immediately prior to the renewal or extension of such Lien,
(ii) no Assets encumbered by any such Lien other than the Assets encumbered
immediately prior to such renewal or extension 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 or extension of such Lien.
10.3. Investments, Guaranties, etc. The Company will not, and will not
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) the Company 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
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full faith and credit of the United States of America 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
rating obtainable from either Standard & Poor's Ratings Group or Moody's
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 ratings obtainable from either Standard & Poor's Ratings Group or
Moody's 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 changed) by Standard & Poor's Ratings Group or
Prime-2 or better (or comparably if the rating system is changed) by
Moody's 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 Moody's 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 the Company or a Restricted
Subsidiary by a custodian which is a Permitted Bank and [which is not a
counterparty to the repurchase agreement in question];
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(b) the Company 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 the Company and may create or become liable
with respect to the Subsidiary Guarantee Agreement in respect of the
Company's obligations under the Notes or under Parity Debt;
(c) the Company or any Restricted Subsidiary may make and own Investments
in the capital stock of, or joint venture, partnership or other equity
interests in, or the contributions to capital in the ordinary course of
business of, any Unrestricted Subsidiary 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 $20,000,000 and (B) the aggregate amount of all
Investments made and outstanding pursuant to this subdivision (c) as at the
end of any fiscal quarter of the Company shall not exceed by more than
$10,000,000 the amount of such Investments outstanding as at the end of the
corresponding fiscal quarter of the immediately preceding fiscal year of the
Company, and in the case of both clauses (A) and (B) of this subdivision
(c), (i) the amounts specified therein may be increased by an amount equal
to the net cash proceeds received by the Company from the general partner of
the Company or from the Public Partnership as a capital contribution or as
consideration for the issuance by the Company of additional partnership
interests, such amount not to exceed $10,000,000 in the aggregate and (ii)
net of cash distributions received from all Unrestricted Subsidiaries for
such period;
(d) the Company or any Restricted Subsidiary may make and own Investments
(x) constituting trade credits or advances to any Person incurred in the
ordinary course of business, (y) 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 (z) acquired by reason of the
exercise of customary creditors' rights upon default or pursuant to the
bankruptcy, insolvency or reorganization of a debtor;
(e) the Company or any Restricted Subsidiary may create or become liable
with respect to any Guaranty constituting an obligation, warranty or
indemnity,
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not guaranteeing Indebtedness of any Person, which is undertaken or made in
the ordinary course of business;
(f) the Company or any Restricted Subsidiary may create and become liable
with respect to any Interest Rate Agreements; and
(g) the Company may create and become liable with respect to Commodity
Hedging Agreements.
10.4. Restricted Payments. The Company will not directly or indirectly,
nor will it permit any Subsidiary to, declare, order, pay, make or set apart any
sum for any Restricted Payment, except that (a) the Company may make, pay or set
apart once during each calendar quarter a Restricted Payment if (i) such
Restricted Payment is in an amount not exceeding the sum of (x) Available Cash
for the immediately preceding calendar quarter, less (y) the aggregate amount of
Parity Debt prepaid, retired, purchased or otherwise acquired during the
calendar quarter in which such Restricted Payment is declared, order, paid, made
or set apart pursuant to clause (iv) of the last sentence of Section 9.8, (ii)
prior to and immediately after giving effect to any such proposed action no
condition or event shall exist which constitutes a Potential Event of Default
under Section 11(b) or an Event of Default, (iii) the ratio of Consolidated Cash
Flow to Consolidated Interest Expense is greater than 1.75 to 1.00 and (iv) the
Company 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 and (b) any Subsidiary may
make, pay or set apart dividends and distributions so long as such dividends or
distributions are made, paid or set apart for each holder of such Person's
capital stock or other equity on a pro-rata basis. The Company will not, in any
event, directly or indirectly declare, order, pay or make any Restricted Payment
except in cash.
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 or any other transactions or conduct described in or contemplated by the
Registration Statement, the Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, engage in any transaction with any
Affiliate of the Company, including, without limitation, the purchase, sale or
exchange of assets or the rendering of any service, to the Company's or such
Restricted Subsidiary's business except upon fair and reasonable terms that are
no less favorable to the Company 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
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which are not such an Affiliate, provided that the foregoing limitations and
restrictions shall not apply to any transaction between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries.
10.6. Subsidiary Stock and Indebtedness. The Company will not:
(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) the Company
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),
the Company 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 the Company unless such shares of
preferred stock or similar interests are owned by the Company; or
(d) permit any Restricted 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 the Company
or a Restricted Subsidiary;
provided that, (i) any Restricted Subsidiary may sell, assign or otherwise
dispose of Indebtedness of the Company or a Subsidiary 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) or (ii) subject to compliance with Section 10.7(c), all Indebtedness and
shares of stock or partnership interests of any Restricted Subsidiary owned by
the Company or by another Restricted Subsidiary may be simultaneously sold as an
entirety for consideration at least equal to the fair value thereof (as
determined in good faith by the general partner of the Company) at the time of
such sale if such Restricted Subsidiary does not at the time own (A) any In-
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debtedness of the Company (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).
10.7. Consolidation, Merger, Sale of Assets, etc. The Company will not,
and will not 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 the
Company or a Restricted Subsidiary if, in the case of a consolidation with
or merger into the Company, the Company 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 the Company or a Restricted Subsidiary if the Company
or such Restricted Subsidiary, as the case may be, shall be the surviving
Person and if, immediately after giving effect to such transaction, (w)
the Company (1) shall not have a Consolidated Net Worth (determined in
accordance with GAAP applied on a basis consistent with the financial
statements of the Company most recently delivered pursuant to Section 7(b)
(but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting methods) of less
than the Consolidated Net Worth of the Company 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 the Company and the Restricted
Subsidiaries shall be located and substantially all of their business
shall be conducted within the United States of America, and (y) no
condition or event shall exist which constitutes an Event of Default or
Potential Event of Default; and
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(iii) the Company may consolidate with or merge into any other entity
if (v) the surviving entity is a corporation, limited partnership, limited
liability company or business trust 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 United States of America, (w) such
corporation, limited partnership, limited liability company or business
trust expressly and unconditionally assumes the obligations of the Company
under this Agreement and each of the other Operative Agreements 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, limited partnership, limited liability company or
business trust, (x) immediately after giving effect to such transaction,
such corporation, limited partnership, limited liability company or
business trust (1) shall not have a Consolidated Net Worth (determined in
accordance with GAAP applied on a basis consistent with the financial
statements of the Company most recently delivered pursuant to Section
7(b) but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting methods) of less
than the Consolidated Net Worth of the Company 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 had outstanding
Indebtedness, at least $1 of additional Indebtedness in compliance with
Section 10.1(f) after giving effect to such transaction, and (y)
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; 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 the Company or to a Restricted
Subsidiary; and
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(ii) the Company may sell, lease or otherwise dispose of all or
substantially all its assets to any corporation, limited partnership,
limited liability company or business trust into which the Company could
be consolidated or merged in compliance with clause (a)(iii) of this
Section 10.7, provided that each of the conditions set forth in such
subdivision (a)(iii) shall have been fulfilled; or
(c) sell, lease, abandon or otherwise dispose of any property to any
Person other than the Company or any Restricted Subsidiary (except in a
transaction permitted by subdivision (a)(iii) or (b)(ii) of this Section
10.7, an Investment in an Unrestricted Subsidiary permitted by Section
10.3(c), sales of Obsolete Assets during any calendar year having a fair
market value in an aggregate amount not exceeding $150,000 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 or marketable securities that are promptly converted
into cash, provided, that the amount of (A) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto) of the Company or any Restricted Subsidiary (other
than liabilities that are by their terms subordinated in right of payment
to the Notes) that are assumed by the transferee of any such assets and
(B) any notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are promptly converted
into cash (to the extent of the cash received), shall be deemed to be cash
for the purposes of this Section 10.7(c)(i),
(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 after-tax proceeds of all property so disposed
of (whether or not leased back) by the Company 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 Mortgage), self-insurance amounts
and Net Awards (as defined in the
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Mortgage) 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 Mortgage)), less the amount of all such
net after-tax proceeds previously applied in accordance with subdivision
(iii)(B) of this Section 10.7(c) and the amount of such net after-tax
proceeds equal to the purchase price of any assets acquired to the
extent that (1) such assets were acquired within 90 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 after-tax
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 of America
in the conduct of the Business, (4) such assets are subject to the Lien
of the Security Documents (except to the extent the same were acquired
to replace disposed property that was not 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 after-tax proceeds of all prior
transactions under this Section 10.7(c), shall not exceed $20,000,000;
or
(B) in the event that such net after-tax 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 90 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
after-tax 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 of
America in the conduct of the Business, (4) such assets are subject to
the Lien of the Security Documents (except to the extent the same were
acquired to replace disposed property that was not 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 after-tax proceeds of all prior
transactions under this Section 10.7(c), exceed $20,000,000 (the larger
amount of such excess net after-tax proceeds actually realized being
herein called "Excess Proceeds"), the Company shall promptly pay over to
the Trustee under the Trust Agreement such Excess Proceeds not at the
time held by the Trustee
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for application by the Trustee (x) within 270 days (or 360 days if the
Company has executed a binding contract for acquisition or replacement
of assets meeting the requirements specified in this clause (iii) within
270 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 used in the United States of America in
the conduct of the Business (and such newly acquired assets shall be
subjected to the Lien of the Security Documents (except to the extent
the same were acquired to replace disposed property that was not subject
to the Lien of the Security Documents)) or to the cost of Restoration
(as defined in the Mortgage), 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 and Parity Debt, if any, pursuant
to Section 9.1 and/or 9.4(a), all as provided in Section 4(d) of the
Trust Agreement and such Section 9.1 and/or 9.4(a), and the Trustee
shall have received an Officers' Certificate from the general partner of
the Company 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 the Company) 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 after-tax 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 the Company certifying
that such sale, lease or other disposition is in the best interest of the
Company and will not have a Material Adverse Effect.
Notwithstanding the foregoing, the Company 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 or within 30 Business Days thereafter as assets to be disposed of,
and (z) the Trustee shall have received an Officers' Certificate from the
general partner of the Company 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 the Company). Such sales under this paragraph will
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not be applied towards the annual or cumulative limitations in subdivision (c)
of this Section 10.7. In addition, notwithstanding the foregoing, the Company
may, at any time, exchange assets for other like assets which may be used in the
conduct of the Business, provided (1) the fair value of the assets so acquired
is substantially equivalent to the fair value of the assets so exchanged (as
determined in good faith by the general partner of the Company), (2) such
acquired assets are subject to the Lien of the Security Documents and (3) the
total value of the assets so exchanged shall not in the aggregate exceed 15% of
the total assets of the Company. The holders of Notes agree to take all actions
reasonably requested by the Company (and at the expense of the Company) 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.
10.8. Partnership or Corporate Existence, etc.; Business. (a) (i) The
Company 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) the Company will cause each Restricted
Subsidiary to keep in full force and effect its partnership or corporate
existence; and (iii) the Company will, and 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, and any right or franchise of the Company or any
Restricted Subsidiary, may be terminated if, in the good faith judgment of the
general partner of the Company, such termination is in the best interest of the
Company, is not disadvantageous to the holders of the Notes in any material
respect and would not have a Material Adverse Effect).
(b) The Company shall not be obligated to preserve its status as a
partnership not taxable as a corporation for federal income tax purposes if (i)
the Company'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 of the Company for
such period had the Company been taxable as a corporation.
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(c) The Company will not, and will not permit any Restricted Subsidiary
to, engage in any material lines of business other than the Business as
described in the Registration Statement and other activities incidental or
related to the Business; provided that, the Company will not permit National
Sales and Services, Inc. to exist for any purpose, or to carry on any business
other than the ownership and operation of the Service Assets (as defined in the
Conveyance Agreements).
10.9. Payment of Taxes and Claims. The Company will, and 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 the failure to pay would not have a Material Adverse
Effect or if it is 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
the Company.
10.10. Compliance with ERISA. The Company will not, and will not permit
any Subsidiary or Related Person of the Company to:
(a) (i) engage in any transaction in connection with which the Company 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 the Company, (iv) fail to make full payment when
due of all amounts which, under the provisions of any Plan or applicable
law, the Company or any Subsidiary or Related Person of the Company is
required to pay as contributions or permit to exist any
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material accumulated funding deficiency, whether or not waived, with respect
to any Plan or (v) engage in any transaction in connection with which the
Company, any Subsidiary or any Related Person of the Company could be
subject to liability pursuant to Section 4069(a) or 4212(c) of ERISA, if any
such event, condition or transaction described in clauses (i) through (v)
above, either individually or together with any other such event, condition
or transaction, could reasonably be expected to result in (x) the imposition
of a Lien in a material amount on any assets or property of the Company or
any Subsidiary of the Company pursuant to Section 302(f) of ERISA or Section
412(n) of the Code or (y) any liability to the Company, any Subsidiary of
the Company or any Related Person of the Company, 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 (other than a Multiemployer Plan)
maintained at such time by the Company or any Subsidiary or Related Persons
of the Company to exceed the current value of the assets of any such Plan by
more than $1,000,000 or (ii) permit the aggregate liability incurred by the
Company and any Subsidiary of the Company and Related Persons of the Company
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.
10.11. Maintenance of Properties; Insurance. (a) The Company will maintain
or cause to be maintained in working order and condition, in accordance with
normal industry standard, all material properties used or useful in the business
of the normal industry standards, all materials properties used or useful in the
business of the Company and the Restricted Subsidiaries and from time to time
will make or cause to be made all appropriate repairs, renewals and replacements
thereof.
(b) The Company will, and will cause each of the Restricted Subsidiaries
to, keep its insurable properties adequately insured at all times by Permitted
Insurers; maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses, including public
liability insurance against claims
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for personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by it;
maintain such other insurance policy as may be required by law or any Security
Document; and cause each such insurance policy to name the Trustee, as an
additional insured or loss payee thereunder. The Company will permit the holders
of the Notes and an insurance consultant retained by the Required Holders, at
the expense of the Company, to review the insurance policies maintained by the
Company on an annual basis and will implement any changes to such policies
reasonably recommended by such consultant.
10.12. Operative Agreements; Security Documents. The Company will, and
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
(any termination of the Partnership Note other than its prepayment or payment at
maturity of the principal amount thereof as specified in the Partnership Note
shall be deemed a Material Adverse Effect), and will not amend, modify or
supplement any Operative Agreement without the prior written consent of the
Required Holders (or with respect to this Agreement as specified in Section 18),
provided that (i) the MLP Agreement and the Partnership Agreement (other than
Sections ____, ____, ____ and ____ of 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 the Company shall have delivered to each holder of any Notes
a copy of such proposed amendment, modification or supplement together with an
Officers' Certificate describing such proposed amendment, modification or
supplement and stating that to the best of the Company's knowledge (after due
inquiry) that such proposed amendment, modification or supplement would not have
a Material Adverse Effect and (ii) 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.
10.13. Chief Executive Office. The Company will not 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
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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.
10.14. Recordation; Opinions. (a) The Company 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 Conveyance Agreements (as set forth in
paragraph (b) of the definition of such term) and the 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 and shall deliver to the Trustee and your special
counsel within six calendar months of the date of the Closing copies (originals
with respect to certificates of title for motor vehicles and other rolling
stock) of such duly recorded, published, registered and filed Security
Documents. The Company 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.
(b) The Company, at its expense, will furnish to the Trustee and each
holder of a Note during the period commencing April 1 to May 1 of the years 2001
and 2006 and at such other times as the Trustee may reasonably request in
connection with the perfection of Liens granted pursuant to the Security
Documents (as, an opinion of counsel satisfactory to the Trustee stating that in
the opinion of such counsel such action has been taken with respect to the
recording, filing, re-recording and re-filing of the Security Documents and any
financing statements necessary to maintain the Lien or security interest created
thereby and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien or security
interest.
10.15. Information Required by Rule 144A. The Company 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 the Company 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
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Section 10.15, the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act of 1933, as amended.
10.16. Covenant to Secure Notes Equally. The Company covenants that, if it
or any Restricted Subsidiary shall create or assume any Lien upon any of its
property or assets, whether 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.
10.17. Compliance with Laws. The Company will, and will cause each
Subsidiary to, comply with all applicable statutes, rules, regulations, and
orders of, and all applicable restrictions imposed by, the United States of
America, 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 could not
reasonably be expected to have a Material Adverse Effect.
10.18. Further Assurances. At any time and from to time promptly, the
Company shall, at its 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.
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10.19. Subsidiaries. (a) The Company 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), the Company would
be permitted to incur at least $1 of additional Indebtedness in compliance
with subdivisions (i) and (ii) of Section 10.1(f), (2) the Company and the
Restricted Subsidiaries would not be liable with respect to Indebtedness
or any Guaranty, 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 the Company's and the Restricted Subsidiaries'
assets will be located, and substantially all of the Company's and the
Restricted Subsidiaries' business will be conducted, in the United States
of America;
(iii) in the case of a designation as an Unrestricted Subsidiary, 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 the Company in respect of all the assets of the Subsidiary
so designated, such Investment would be in compliance with Section
10.3(c), with the amount of such Investment being deemed to equal the fair
market value of such assets (as determined in good faith (after due
inquiry) by the board of directors of the general partner of the Company)
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 the Company 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 the Company from the general partner of the Company or from
the Public Partnership as a capital contribution or as consideration for
the issuance by the Company of additional partnership interests or (2) the
assets involved in such acquisition are acquired in exchange for
additional partnership
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interests of the Company or the Public Partnership provided, further, the
fair market value of the Restricted Subsidiary designated an Unrestricted
Subsidiary and the cost of the acquisition or formation of a newly
acquired or formed Subsidiary (other than cash) shall be deemed proceeds
from the sale of assets of the Company for purposes of Section 10.7 and
Section 9.4.;
(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; and
(vi) the Company 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.
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.
(b) The Company 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 Company Security Agreement, the Trust Agreement and the Subsidiary
Guarantee Agreement by execution of a Supplemental Agreement and (ii) enter into
such documents as may be necessary or as you may request in form and substance
satisfactory to the Required Holders 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. Prior to the
designation of a Subsidiary as a Restricted Subsidiary, the Company shall
deliver to the holders of the Notes an opinion of counsel with respect to the
due execution and delivery of the Supplemental Agreement by such Subsidiary and
as to the enforceability of the Company Security Agreement, the Trust Agreement,
the Supplemental Agreement and the Subsidiary Guarantee Agreement with respect
to such Subsidiary, such opinion to be in form and substance satisfactory to the
Required Holders.
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(c) The Company will not own as Subsidiaries other than Wholly Owned
Subsidiaries satisfying the requirements in clauses (a), (b) and (c) of the
definition of Restricted Subsidiary.
10.20. 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, the Company will not
apply any Net Insurance Proceeds (as defined in the Mortgage), self-insurance
amounts, Net Awards (as defined in the Mortgage) 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 Mortgage) or to replacements or other assets without the
prior written consent of the Required Holders.
10.21. Accounting Changes. The Company will not, and will not suffer or
permit any Restricted Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP. The Company will,
and will cause each Restricted Subsidiary to, cause its fiscal year to end on
December 31 in each year, except, the Company may change its fiscal year end to
September 30, provided, that (a) the fiscal year end of each Restricted
Subsidiary shall also be September 30 and (b) references in this Agreement which
provide dollar amount limits during a fiscal year shall be reduced by 25% (only
for the year of the change in fiscal years).
10.22. Certain Real Property. Without affecting the obligations of the
Company or any of the Qualifying Restricted Subsidiaries under any of the
Security Documents, in the event that the Company or any Qualifying Restricted
Subsidiary, at any time after the date hereof, whether directly or indirectly,
acquires any interest in any one real property, including any fee or other
ownership interest with an aggregate cost in excess of $50,000, or any interest,
any lease 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 Company will, or will cause such Qualifying
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 Company or the applicable Qualifying Restricted
Subsidiary to grant and record a mortgage or deed of trust in favor of the
Trustee on such After
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Acquired Property, provided that no new mortgage or deed of trust on such After
Acquired Property shall be required if in the reasonable judgment of the
Company, 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 Company or such Qualifying 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 time, the aggregate cost to the Company and the Qualifying
Restricted Subsidiaries of their interests in real property acquired after the
date hereof for which a mortgage in favor of the Trustee is not in effect (the
"Aggregate Cost of Unmortgaged Property") exceeds $500,000, the Company will as
soon as practical 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 then current value of each such real property. The Required
Holders may require the Company or the applicable Qualifying Restricted
Subsidiary to grant and record a mortgage or deed of trust in favor of the
Trustee on one or more of such interests in 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, in the reasonable
judgment of the Company, 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 Company or such Qualifying 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 the Company or any Qualifying Restricted
Subsidiary and which is not being encumbered by a mortgage or deed of trust of
even date herewith with a fair market value in excess of $50,000 or any interest
under a lease of real property for a term in excess of three years and involving
aggregate payments in excess of $100,000 per annum (each such interest, an
"Existing Unmortgaged Property"), upon the written request of the Required
Holders, the Company will, or will cause any applicable Qualifying Restricted
Subsidiary to, execute and deliver to the Trustee a mortgage or deed of trust,
together with such documents or instruments as the Required Holders shall
require, provided, that a title insurance policy, survey and
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environmental report shall only be delivered if the fair market value of such
interest in real property exceeds $250,000. 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 Company shall pay all fees and expenses, including reasonable
attorneys' fees and expenses and expenses of any customary environmental due
diligence, and all title insurance charges and premiums, in connection with the
obligations of the Company and the Qualifying Restricted Subsidiaries under this
Section 10.22.
10.23. Sale and Lease-Back Transactions. The Company will not, and will
not 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.
10.24. Acquisitions. Except as otherwise permitted by Section 10.7, the
Company will not, and will not 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) the Company and any of the Restricted Subsidiaries may
purchase Inventory in the ordinary course of business and (b) the Company 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.
10.25. Impairment of Security Interests. The Company will not, and will
not 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 the Company will not, and will not permit any of the Subsidiaries
to, grant to any Person (other than the Trustee) any interest whatsoever in the
Mortgaged Property.
10.26. Limitation on Restrictions on Subsidiary Dividends, etc. The
Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary
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to (a) pay dividends or make any other distributions on or in respect of its
capital stock, or pay any Indebtedness owed to the Company or any Restricted
Subsidiary, (b) make loans or advances to the Company or any Restricted
Subsidiary or (c) transfer any of its properties or assets to the Company 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, (ii) restrictions on the
payment of dividends and distributions pursuant to the terms of Indebtedness
incurred by such Restricted Subsidiary in accordance with Section 10.1 or (iii)
this Agreement or any other Operative Agreement.
10.27. No Other Negative Pledges. The Company will not, and will not 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 the Company 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 the this Agreement, the Other Agreements
and the Bank Credit Facilities.
10.28. Sales of Receivables. The Company will not, and will not 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.
10.29. Fixed Price Supply Contracts; Certain Policies. (a) The Company
will not, and will not 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) The Company will not amend, modify or waive the trading policy or
supply inventory position policy existing as of the date of Closing, except that
the Company 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 Company will provide each
holder of a Note with prompt written notice of any such new commodity hedging
agreement or
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any such change in such policy. Subject to the foregoing exception, the Company
and the Restricted Subsidiaries will comply in all material respects with such
policies at all times.
10.30. Certain Operations. The Company shall not permit Triarc, any of its
Subsidiaries, any other Persons which Triarc, directly or indirectly, controls,
or any of Triarc's Restricted Affiliates (other than the Company and the
Restricted Subsidiaries) (collectively, the "Triarc Parties") to acquire a
business which derives any revenues from the sale of propane if, after giving
effect to such acquisition, Triarc's Pro Forma Propane Volumes would equal or
exceed the lesser of (a) 15% of the Company'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, Triarc's Pro Forma Propane Volumes exceeds the maximum permitted
amount, Triarc 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 (based on the most recently completed four fiscal
quarters of the business sold) to reduce Triarc's Pro Forma Propane Volumes
below the maximum permitted amount. For purposes of this Section 10.30,
"Triarc's Pro Forma Propane Volumes" shall mean the actual propane volumes sold
by the Triarc Parties 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 any Triarc Party owns a propane
business, the Company shall not permit any Triarc party 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 the Company and the Restricted
Subsidiaries) a customer of the Company and the Restricted Subsidiaries.
[The Company shall not permit Triarc or any of its Affiliates (other than the
Company and the Restricted Subsidiaries) to engage in the retail sale of propane
to end users in the United States.]
10.31. Independent Corporate Existence. Except as set forth on Schedule
10.31,
(a) the Company shall maintain, and shall cause each of its Subsidiaries
to maintain, books, records and accounts that are separate from the books,
records
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and accounts of Triarc, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries) such that: (i)
the revenues of the Company and its Subsidiaries will be credited to the
accounts of the Company and its Subsidiaries only; (ii) all expenses
incurred by the Company and its Subsidiaries shall be paid only from the
accounts of the Company and its Subsidiaries (other than those paid by
Triarc and allocated to the Company in the manner set forth in subdivision
(c) of this Section); (iii) only officers and employees of the general
partner of the Company, the Company and its Subsidiaries in their capacity
as such shall have the authority to make disbursements with respect to the
accounts of the Company and its Subsidiaries; (iv) there shall occur no
sharing of accounts or funds between the Company and its Subsidiaries, on
the one hand, and Triarc, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries), on the other
hand; and (v) all cash and funds of the Company and its Subsidiaries shall
be managed separately from the cash and funds of Triarc, either General
Partner or any of their respective Subsidiaries (other than the Company and
its Subsidiaries), and there shall not occur any commingling, including for
investment purposes, of funds or assets of the Company and its Subsidiaries
with the funds or assets of Triarc, either General Partner or any of their
respective Subsidiaries (other than the Company and its Subsidiaries).
(b) All full-time employees, consultants and agents of the Company and its
Subsidiaries shall be compensated directly from the bank accounts of the
general partner of the Company, the Company and such Subsidiaries for
services provided by such employees, consultants and agents and, to the
extent any employee, consultant or agent is also an employee, consultant or
agent of Triarc, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries), the compensation
of such employee, consultant or agent shall be allocated in accordance with
subdivision (c) of this Section among the Company and its Subsidiaries, on
the one hand, and Triarc, either General Partner and any of their respective
Subsidiaries (other than the Company and its Subsidiaries), on the other
hand, on a basis which reasonably reflects the services rendered to the
Company and its Subsidiaries.
(c) All overhead expenses (including telephone and other utility charges)
for items shared by the Company and its Subsidiaries, on the one hand, and
Triarc, either General Partner or any of their respective Subsidiaries
(other than the Company and its Subsidiaries), on the other hand, shall be
allocated on the
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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) The Company shall not permit Triarc, either General Partner or any of
their respective Subsidiaries (other than the Company and its Subsidiaries)
to be named as a loss payee or additional insured on the insurance policy
covering the property of the Company or any of 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 Triarc, either
General Partner and their respective Subsidiaries (other than the Company
and its Subsidiaries).
10.32. Environmental Matters. The Company shall perform all of the
investigatory and remedial work recommended in the Environmental Assessment
Report prepared by [___________________] dated [_______________] (the
"Environmental Report"), covering the properties owned or to be transferred to
the Company. All remedial work and additional investigation recommended by the
Environmental Report shall be commenced within thirty (30) days from the date
hereof, and shall be performed in accordance with applicable laws. The Company
agrees to diligently pursue the completion of such remedial work and additional
investigation. To the extent that any such additional investigation recommended
by the Environmental Report indicates that any additional work or remediation is
required by applicable laws, or if required by the Required Holders in their
reasonable discretion, then the Company agrees to immediately commence such
additional work or remediation and thereafter diligently pursue such additional
work or remediation until completed.
10.33. Other Debt. (a) The Company shall ensure that the lenders from time
to time in respect of any Parity Debt or any other Indebtedness in the aggregate
principal amount of at least $2,500,000 outstanding as permitted by paragraphs
(b) through (f), (i) through (l) and (o) of Section 10.1, in the documents
governing the terms of such Indebtedness, (i) recognize the existence and
validity of the obligations represented by the Notes and (ii) agree to refrain
from making or asserting any claim that this Agreement or the obligations
represented by the Notes are invalid or not enforceable in accordance with its
and their terms as a result of the circumstances surrounding the incurrence of
such obligations.
(b) Each holder of Notes from time to time, as evidenced by its acceptance
of such Notes, (i) acknowledges the existence and validity of the obligations of
the Company under the Bank Credit Facilities (and any extension, renewal,
refunding or
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refinancing thereof permitted by Section 10.1) and (ii) agrees to refrain from
making or asserting any claim that such obligations or the instruments governing
the terms thereof are invalid or not enforceable in accordance with its and
their terms as a result of the circumstances surrounding the incurrence of such
obligations.
10.34.Restriction on General Partners. SGP shall not engage in any
business or activity (other than the ownership of its general partnership
interest in the Company and the Public Partnership) or incur any Indebtedness or
other liabilities (other than tax liabilities). Neither General Partner shall
sell, transfer, pledge, convey or otherwise dispose of any or all of its
partnership interests in the Company or the Public Partnership without the prior
written consent of the Required Holders, except for the pledge to the Trustee
pursuant to the Partners Security Agreement. National Propane Corp. shall not
sell, transfer, pledge, convey or otherwise dispose of any or all of its
ownership of capital stock of National Propane SGP, except for the pledge to the
Trustee pursuant to the Partners Security Agreement.
SECTION 11. EVENTS OF DEFAULT; ACCELERATION.
If any of the following conditions or events ("Events of Default") shall
occur and be continuing:
(a) the Company shall default in the payment of any principal of or Make
Whole Amount, Premium Amount or premium, 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
(b) the Company 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 Company or any Restricted Subsidiary shall default in the perfor
mance of or compliance with any term contained in Section 7(f), any of
Sections 10.1 through 10.8 (other than Section 10.8(c)), inclusive, or
Section 10.10(b) or the Dedicated Funds are not used to repay Indebtedness
as specified in the pro forma calculations set forth in the definition of
Consolidated Pro Forma Debt Service or the definition of Maximum
Consolidated Pro Forma Debt Service, as the case may be; or
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(d) the Company, either General Partner, Triarc, 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 Business
Days after the earlier of the date such default shall first have become
actually known to any Responsible Officer of such Person or the date written
notice thereof shall have been received by the Company; or
(e) any representation or warranty made in writing by or on behalf of the
Company or any of its 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) the Company or any Restricted Subsidiary (as principal or guarantor or
other surety) shall default (after receiving notice, if any, and/or the
expiration of any applicable grace period) in the payment of any amount of
principal of or premium or interest on the Bank Credit Facilities, or other
Indebtedness which is outstanding (other than the Notes); or any event shall
occur or condition shall exist in respect of the Bank Credit Facilities or
any facility extending, renewing or refinancing the Bank Credit Facilities,
or of any mortgage, indenture or other agreement relating to the Bank Credit
Facilities or any facility extending, renewing or refinancing the Bank
Credit Facilities the effect of which is to cause (or to permit one or more
Persons to cause) such Bank Credit Facilities or any facility extending,
renewing or refinancing the Bank Credit Facilities to become due before its
stated maturity or before its regularly scheduled dates of payment or to
permit the holders thereof to cause the Company or any Restricted Subsidiary
to repurchase or repay such Bank Credit Facilities or any facility
extending, renewing or refinancing the Bank Credit Facilities, and such
default, event or condition shall continue for more than the period of
grace, if any, specified therein and shall not have waived pursuant thereto;
or any event shall occur or condition shall exist in respect of other
Indebtedness which is outstanding in a principal amount of at least
$5,000,000 or under any evidence of any such Indebtedness or of any
mortgage, indenture or other agreement relating to such other Indebtedness
the effect of which is to cause such other Indebtedness to become due before
its stated maturity or before its regularly scheduled dates of payment; or
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(g) filing by or on the behalf of the Company or the general partner of
the Company 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 the Company or the general partner of the Company for, or consent
or acquiescence to, the appointment of a receiver, trustee or other
custodian of the Company or the general partner of the Company, or of all or
a substantial part of its property; or the making by the Company or the
general partner of the Company of any assignment for the benefit of
creditors; or the admission by the Company or the general partner of the
Company in writing of its inability to pay its debts as they become due; or
(h) filing of any involuntary petition against the Company or the general
partner of the Company 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 the Company or the general partner of the Company 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 the Company or the
general partner of the Company 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 the Company or the
general partner of the Company; 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 Material 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 Material Restricted Subsidiary for, or consent or
acquiescence to, the appointment of a receiver, trustee or other custodian
of such Material Restricted Subsidiary or of all or a substantial part of
its property; or the making by any Material Restricted Subsidiary of any
assignment for the benefit of creditors; or the admission by any Material
Restricted Subsidiary in writing of its inability to pay its debts as they
become due; or
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(j) filing of any involuntary petition against any Material 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 Material 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 Material 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 Material 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 the Company
or any Restricted Subsidiary for the payment of money in excess of
$5,000,000 in the aggregate and any one of such judgments shall not be
discharged or execution thereon stayed pending appeal within 60 days after
the date due, or, in the event of such a stay, such judgment shall not be
discharged within 60 days after such stay expires or any action shall be
legally taken by a judgment creditor to levy upon the assets or properties
of the Company or any Restricted Subsidiary to enforce any such judgment; or
(l) any of the Security Documents shall at any time, for any reason, cease
in any material respect 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 Security
Documents shall be contested by or on behalf of the Company, either General
Partner, the general partner of the Company, the Public Partnership, Triarc
or any Restricted Subsidiary, or the Company, either General Partner, the
general partner of the Company, the Public Partnership, Triarc or any
Restricted Subsidiary shall renounce any of the
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Security Documents or deny that it is bound by the terms of any of the
Security Documents; or
(m) any order, judgment or decree is entered in any proceedings against
the Company or any Restricted Subsidiary decreeing a split-up of the Company
or such Restricted Subsidiary which requires the divestiture of assets
representing a substantial part, or the divestiture of the stock of a
Restricted Subsidiary whose assets represent a substantial part, of the
consolidated assets of the Company and its Restricted Subsidiaries
(determined in accordance with generally accepted accounting principles) or
which requires the divestiture of assets, or stock of a Restricted
Subsidiary, which shall have contributed a substantial part of the
Consolidated Net Income of the Company and its Restricted Subsidiaries
(determined in accordance with GAAP) for any of the three fiscal years then
most recently ended, and such order, judgment or decree shall not be
dismissed or execution thereon stayed pending appeal or review within 30
days after entry thereof, or in the event of such a stay, such order,
judgment or decree shall not be dismissed within 30 days after such stay
expires;
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 (without Make
Whole Amount), or, (y) upon the occurrence and continuance of any other Event of
Default, any holder or holders of more than 50% 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 the Company, 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 subdivision (b) 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 the Company, 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 with respect to such Notes.
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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
Company, 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 Company
has 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 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 the 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, (i) 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 (ii) the Trustee and the holders of the Notes may exercise any
rights or remedies in their respective capacities under 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 Company 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
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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: The First National Bank of Boston, in its capacity
as administrative agent for the Banks under the Bank Credit Facilities, and its
successors in such capacity.
Affiliate: as applied to any Person, any other Person directly or
indirectly controlling or controlled by or under common control with such
Person, provided that (i) 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, (ii) as applied to the
Company, the term "Affiliate" shall include each General Partner and the Public
Partnership, (iii) neither you nor any other Person which is an institution
shall be deemed to be an Affiliate of the Company 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 the other Operative Agreements, and (iv) neither you nor any other
Person which is an institution shall be deemed an Affiliate of a Competitor
solely by reason of ownership of notes or other instruments evidencing
Indebtedness of such Competitor, either secured or unsecured, or by reason of
having the benefits of any agreements or covenants contained in any agreement or
document pursuant to which such notes or Indebtedness were issued.
Agency Account Agreement: any and all agreements among any bank, in its
capacity as the depository bank, the Company or a Restricted Subsidiary and the
Trustee in substantially the form attached hereto as Exhibit J, as amended from
time to time.
Agreement: the meaning specified in Section 1.
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Assets: the assets conveyed to the Company pursuant to the Conveyance
Agreements.
Available Cash: with respect to any calendar quarter, (a) the sum of (i)
all cash of the Company and the Restricted Subsidiaries on hand at the end of
such quarter and (ii) all additional cash of the Company 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) (i) any
cash reserves in such amounts as the general partner of the Company shall
determine to be necessary or appropriate in its reasonable discretion to (A)
provide for the proper conduct of the business of the Company and the Restricted
Subsidiaries (including, without limitation, cash reserves for future capital
expenditures) or (B) provide funds for distributions under Sections 6.4(a)(i),
(ii), and (iii) or 6.4(b)(i) of the MLP Agreement in respect of any one or more
of 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 the Company or any Restricted Subsidiary
is a party or its assets are subject, (including the payment of principal, Make
Whole Amount, Premium Amount or premium, if applicable, and interest) of the
Company in respect of the Notes, (ii) all Dedicated Funds and (iii) all amounts
which a Restricted Subsidiary is prohibited from dividending or distributing to
the Company; provided that Available Cash shall not include amounts received as
prepayments on the Partnership Note other than amounts scheduled to have been
received on or prior to the end of such calendar quarter pursuant to the terms
of the Partnership Note; provided further that Available Cash shall exclude
without duplication (x) in each calendar quarter a [cash] reserve equal to at
least 50% of the aggregate amount of all interest payments in respect of all
Indebtedness of the Company 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 [cash] reserve equal to at least
25% of the aggregate
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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 [cash] 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 [cash] 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 [cash] 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 (y) and (z) of this
definition for principal 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 Facilities: that Credit Agreement, dated as of the Closing,
among the Company, The First National Bank of Boston, as administrative agent,
BA Securities, Inc., as syndication agent, and the Banks, 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 the Company.
Bankruptcy Law: the meaning specified in Section 11(g).
Banks: 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: the operation by the Company and its Subsidiaries (and prior to
the consummation of the Conveyance Agreements by National Propane Corp. and its
Affiliates) of the wholesale and retail sale, distribution and storage of
propane gas and related petroleum derivative products, the leasing of propane
storage tanks and the related retail sale of supplies and equipment, including
home appliances, and such other businesses in which the Company and its
Restricted Subsidiaries were engaged on the date of Closing as described in the
Registration Statement.
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Business Day: 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: 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: 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: the Cash Collateral Agreement between the
Company, the Trustee and the Administrative Agent, in the form attached hereto
as Exhibit F, as amended from time to time.
CERCLA: the Federal Comprehensive Environmental Response, Compensation and
Liability Act, as amended.
Change of Control: any of the following:
(a) the liquidation or dissolution of the general partner of the Company;
(b) any merger or consolidation of the general partner of the Company with
or into any Person (other than Triarc or any of its Affiliates, including,
without limitation, Nelson Peltz, Peter W. May, DWG Acquisition Group, L.P. or
any of their respective Affiliates (each a "Permitted Holder")) if the general
partner of the Company is not the surviving entity thereof, or any sale, whether
direct or indirect, of all or substantially all of the assets of the general
partner of the Company to any Person or "group" (as used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than to a
Permitted Holder;
(c) any Person or "group" (other than a Permitted Holder) is or becomes,
directly or indirectly, the beneficial owner of more than 50% of the then
outstanding total voting power of all classes of stock (or other securities) of
the general partner of the Company, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the directors (or
Persons performing similar functions) of the general partner of the Company; or
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(d) during any period of twelve consecutive months after the date of
Closing, individuals who at the beginning of such twelve month period (or
Persons nominated by such members of the Board of Directors of the general
partner of the Company to succeed them) constitute the Board of Directors of the
general partner of the Company cease, for any reason, to constitute a majority
of the Board of Directors of the general partner of the Company then in office;
provided it shall not be a Change of Control pursuant to paragraphs (b), (c) or
(d), if any two of the persons employed for six months, three months and three
months, respectively, as Chief Executive Officer, Chief Financial Officer or
Chief Operating Officer of the Company immediately prior to the events specified
therein, serve as Chief Executive Officer, Chief Financial Officer or Chief
Operating Officer (but not necessarily in the same position as employed prior to
such events) for at least six and three months, respectively, after the
occurrence of such an event.
Closing: the meaning specified in Section 3.
Code: the Internal Revenue Code of 1986, as amended from time to time.
Commodity Hedging Agreement(s): any agreement or arrangement designed
solely to protect the Company against fluctuations in the price of propane with
respect to quantities of propane that the Company reasonably expects to purchase
from suppliers, sell to its customers or need for its inventory during the
period covered by such agreement or arrangement.
Company: the meaning specified in the Introduction and, for the purposes
of calculating any financial test or financial covenant under this Agreement
with respect to the period prior to the date of the Closing, "Company" shall
mean the General Partners and their Affiliates (to the extent that any such
Affiliate operated a portion of the Business).
Company Security Agreement: the Pledge and Security Agreement among the
Company, National Propane Corp., the Restricted Subsidiaries and the Trustee in
the form attached hereto as Exhibit G, as amended from time to time.
Competitor: any Person engaged primarily in the wholesale and retail sale,
distribution and storage of propane gas and related petroleum derivative
products.
Consolidated Cash Flow: at any date of determination, for the period of
four consecutive fiscal quarters most recently completed at least 45 days
(except that, in
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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 the determination of such Consolidated Net Income for such
period in respect of (v) interest charges (including amortization of debt
discount and expense and imputed interest on Capital Lease obligations), (x)
provisions for all taxes and reserves (including reserves for deferred
income taxes), (y) non-cash items, and (z) all fees, cost and expenses with
respect to the retirement or repayment of Indebtedness of the general
partner of the Company existing immediately prior to the Closing, less
(b) (i) without duplication, all amounts added in the determination of such
Consolidated Net Income for such period in respect of (a) non-cash items and
(b) interest income received by the Company in connection with the
Partnership Note.
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 the
Company 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 with respect to an acquired business or asset (other than the acquisition
of the Business by the Company), if the applicable Reference Period for any
calculation of Consolidated Cash Flow shall include any fiscal quarters prior to
the date of acquisition (the "Preceding Fiscal Quarters"), Consolidated Cash
Flow generated by such acquired business or asset shall be determined for any
such Preceding Fiscal Quarters on the basis of, without duplication, (a) the
actual gross profit (revenues minus cost of goods sold) of the acquired business
or asset during such Preceding Fiscal Quarters, and (b) the pro forma expenses
that would have been incurred by the
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Company in the operation of such acquired business or asset during such period
computed on the basis of personnel expenses for employees retained or to be
retained by the Company in the operation of such acquired business or asset and
non-personnel costs and expenses incurred by the Company or the general partner
of the Company in the operation of the Company's business at similarly situated
Company facilities or Restricted Subsidiary facilities. If the applicable
Reference Period for any calculation of Consolidated Cash Flow shall include a
partial period occurring prior to the Closing, then such Consolidated Cash Flow
shall be calculated based upon the Consolidated Cash Flow on a pro forma basis
for such portion of the Reference Period prior to the Closing (giving effect to
the transactions occurring on the date of Closing) and the Consolidated Cash
Flow for the remaining portion of the Reference Period occurring on and after
the Closing, giving pro forma effect, as described in the preceding sentences,
to all applicable transactions occurring on the date of Closing or otherwise.
Consolidated Interest Expense: as of any date of determination, the total
amount payable by the Company and the Restricted Subsidiaries on a consolidated
basis, during the period of twelve consecutive months immediately following such
date of determination in respect of all interest charges (including amortization
of debt discount and expense and imputed interest on payments under Capital
Lease obligations) with respect to Indebtedness of the Company and the
Restricted Subsidiaries outstanding on the date of determination, assuming for
such purpose (a) the amount of such Indebtedness is not reduced or increased
during such twelve month period, and (b) that interest expense for such twelve
month period with respect to Indebtedness of a revolving nature shall equal the
actual interest expense for Indebtedness of a revolving nature during the most
recently completed twelve month period .
Consolidated Net Income: with reference to any period, the net income (or
deficit) of the Company and the 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
the Company or a Restricted Subsidiary, (b) the income (or deficit) of any
Person (other than a Restricted Subsidiary) in which the Company or
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any Restricted Subsidiary has an ownership interest, except to the extent that
any such income has been actually received by the Company or such Restricted
Subsidiary in the form of dividends or similar distributions, (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 term 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 the Company 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 of 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 the Company
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.
Consolidated Net Worth: as to the Company, the amount by which
(i) the total assets of the Company and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Company 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
(ii) total liabilities of the Company and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Company 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
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(i) 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: as of any date of determination, the
total amount payable by the Company 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 cash interest charges with respect to Indebtedness of the Company and
the Restricted Subsidiaries outstanding on such date of determination, after
giving effect to any Indebtedness proposed to be incurred on such date (the
"Incurrence Date") and to any Indebtedness proposed to be repaid from funds of
such newly incurred Indebtedness (x) within 30 days of the Incurrence Date, or
(y) within the twelve months following such Incurrence Date which funds for such
payments have been within 30 days of the Incurrence Date irrevocably placed in
escrow with the Trustee with irrevocable instructions to the Trustee to make
such repayments (such funds pursuant to clauses (x) and (y) collectively, the
"Dedicated Funds") 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 In debtedness 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 refinanced),
no principal payments will be made under the Working Capital Facility and (3)
principal payments relating to the Initial Acquisition Facility will (unless
already converted to a fixed amortization schedule) become due based on the
assumption that the conversion to the fixed amortization schedule pursuant to
Sections [___and___] of the Bank Credit Facilities is effected on the dates set
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forth therein, (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 and
(e) including any other designated repayments of Indebtedness due within twelve
months from such date of determination.
Conveyance Agreements: (a) (i) the Contribution and Assumption Agreement,
dated as of the date of the Closing, among the Company and the General Partners
and National Sales and Service, Inc., and (ii) the Conveyance, Contribution and
Assumption Agreement, dated as of the date of the Closing, among the Public
Partnership, the Company and the General Partners, and (b) each of the
individual conveyances, assignments and bills of sale delivered to the Company
pursuant to the Agreements referred to in the foregoing clause (a).
Dedicated Funds: the meaning specified in the definition of "Consolidated
Pro Forma Debt Service."
Discounted Value: 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.
Dollar and sign "$": lawful money of the United States of America.
Environmental Laws: 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: the Employee Retirement Income Security Act of 1974, as amended
from time to time.
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Event of Default: the meaning specified in Section 11.
Excess Proceeds: the meaning specified in Section 10.7(c).
GAAP: generally accepted accounting principles in effect in the United
States from time to time.
General Partner(s): the meaning specified in the Introduction.
General Partner's Guarantee Agreement: the General Partner's Guarantee
Agreement among National Propane Corp. and the Trustee in the form attached
hereto as Exhibit H, as amended from time to time.
general partner of the Company: National Propane Corp., so long as it
holds a general partner interest in the Company and shall be the managing
general partner as provided in Section of the Partnership Agreement, and any
successor to such interest or any part thereof, so long as such successor shall
hold such interest or part thereof or, if National Propane Corp. shall no longer
be such managing general partner, then National Propane SGP, so long as it holds
a general partner interest in the Company and shall be the managing general
partner as provided in Section ____ of the Partnership Agreement, and any
successor to such interest or part thereof, so long as such successor shall hold
such interest or part thereof.
Guaranty: as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any indebtedness, lease
(other than operating leases which the Company or a Restricted Subsidiary is the
lessee thereunder), 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
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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.
Hazardous Materials: 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.
Incurrence Date: the meaning specified in the definition of "Consolidated
Pro Forma Debt Service".
Indebtedness: 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);
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(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 capital stock of such Person redeemable at the option of the
holder prior to the final maturity of the Notes, valued at the greater of
its voluntary or involuntary maximum fixed repurchase price or any mandatory
redemption payment obligations in respect thereon plus, in either case,
accrued dividends thereon;
(h) any preferred stock of any Restricted Subsidiary of such Person
redeemable at the option of the holder prior to the final maturity of the
Notes, 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;
(i) all liabilities of such Person in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing
obligations for borrowed money);
(j) any indebtedness of the character referred to in clause (a) through
(i) of this definition deemed to be extinguished under GAAP but for which
such Person remains legally liable; and
(k) any indebtedness of any other Person of the character referred to in
clause (a) through (j) 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 the Company
and the Restricted Subsidiaries, there shall be excluded all undrawn letters of
credit (not
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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: that Initial Acquisition Facility under the
Bank Credit Facilities which shall permit borrowings thereunder in an aggregate
amount 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.
Initial Notes: the meaning specified in Section 1.
Institutional Investor: means (a) any original purchaser of a Note, (b)
any holder of a Note holding $1,000,000 or more of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
Intercompany Notes: any and all promissory notes of a Restricted
Subsidiary issued to the Company or to another Restricted Subsidiary, in the
form attached hereto as Exhibit I or such other form as may be satisfactory to
the Required Holders, representing all Indebtedness of such Restricted
Subsidiary to the Company or such other Restricted Subsidiary, as the case may
be.
Interest Rate Agreement: any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed solely to protect the Company against fluctuations in
interest rates on Indebtedness.
Inventory: goods held by a Person for sale or lease and accounted for as
inventory under GAAP.
Investment: 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
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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
the Company 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 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).
Legal Requirement: 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: 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.
Make Whole Amount: 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.
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Material Adverse Effect: a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) or prospects (financial
or otherwise) of the Company and the Restricted Subsidiaries, taken a whole or
the Business, (b) the ability of the Company, either 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.
Material Restricted Subsidiary: with respect to any Restricted Subsidiary,
a Restricted Subsidiary which, at the date of any determination, has assets with
a net book value in excess of 5% of the aggregate net book value of all assets
of the Company and the Restricted Subsidiaries at the end of the most recently
completed fiscal year of the Company, or which is more than 5% of Consolidated
Net Income for such fiscal year.
Maximum Consolidated Pro Forma Debt Service: as of any date of
determination, the highest total amount payable by the Company 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 maturity date of the Notes, in
respect of scheduled principal payments and all cash interest charges with
respect to all Indebtedness of the Company and the Restricted Subsidiaries
outstanding or to be outstanding, after giving effect to any Indebtedness to be
incurred on the Incurrence Date and to any Indebtedness proposed to be repaid
from Dedicated Funds 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 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 refinanced) no principal payments will be made under the Working
Capital Facility and (3) principal payments relating to the Initial Acquisition
Facility will (unless already converted to a fixed amortization schedule) become
due based on the assumption that the conversion to the fixed amortization
schedule pursuant to Sections [2.01(c) and 2.01(g)] of the Bank Credit
Facilities is effected on the dates set forth therein, (d) treating the
principal
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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 and (e) including any other
designated repayments of Indebtedness.
Memorandum: the meaning specified in Section 5.4(b).
MLP Agreement: the Amended and Restated Agreement of Limited Partnership
of the Public Partnership.
Mortgages: the separate mortgage, security agreement and fixture filings
and the separate deed of trust, security agreement and fixture filings, each
among the Company, National Propane Corp. and the Trustee, dated as of the date
hereof and any mortgage, security agreement and fixture filing or deed of trust,
security agreement and fixture filing between any Restricted Subsidiary,
National Propane Corp. or the Company and the Trustee securing the Company's and
National Propane Corp.'s obligations under the Notes, the Initial Notes and the
Agreements and Parity Debt substantially in the forms of Exhibit D1 or D2, as
the case may be, with any changes therein required to refer to the mortgagor or
trustee thereunder as the respective Restricted Subsidiary.
Mortgaged Property: collectively, the properties referred to as the
"Mortgaged Property" in the Mortgages, as the "Collateral" under the Company
Security Agreement and as the "Security" in the Trust Agreement.
Multiemployer Plan: a Plan which is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
National Propane Corp.: the meaning specified in the Introduction.
National Propane SGP: the meaning specified in the Introduction.
Non-Related Subsidiaries: Subsidiaries of Triarc other than (i) the
General Partners and (ii) any such Subsidiary which is a Related Person.
Notes: the meaning specified in Section 1.
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Obsolete Assets:
Officers' Certificate: 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: this Agreement, the Other Agreements, the Notes, the
Bank Credit Facilities, the Security Documents, the Intercompany Notes, the
Partnership Note, the Underwriting Agreement, the Conveyance Agreements, the MLP
Agreement and the Partnership Agreement.
Other Agreements: the meaning specified in Section 2.
Other Purchasers: the meaning specified in Section 2.
Overallotment Option: the overallotment option granted to the Underwriters
by the Public Partnership pursuant to the Underwriting Agreement.
Parity Debt: Indebtedness of the Company incurred in accordance with
Section 10.1(b), 10.1(e), 10.1(f), 10.1(i), 10.1(j) or 10.1(o) and secured by
the lien of the Security Documents in accordance with Section 10.2(h), 10.2(i)
or 10.2(m).
Partnership Agreement: the Amended and Restated Agreement of Limited
Partnership of the Company, 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, in the form of Exhibit K.
Partnership Note: the note issued by Triarc in favor of the Company in an
amount of approximately $40,700,000, which note is secured by a pledge by Triarc
to the Company of, among other things, all of the shares of National Propane
Corp. owned by Triarc, in the form of Exhibit L.
Partners Security Agreement: the Pledge and Security Agreement among the
Public Partnership, National Propane Corp. and the Trustee in the form attached
hereto as Exhibit M, as amended from time to time.
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PBGC: the Pension Benefit Guaranty Corporation or any governmental
authority succeeding to any of its functions.
Perfection Certificate: a certificate from the Company in substantially
the form attached hereto as Exhibit N.
Permitted Banks: the meaning specified in Section 10.3(a).
Permitted Encumbrances: the encumbrances and exceptions to title to the
Assets (a) described in the Security Documents or (b) existing on the date of
Closing as permitted by the applicable provisions hereof with respect to real
property owned or leased by the Company and not subject to a Lien of a Mortgage.
Permitted Exceptions: the meaning specified in Section 5.8(a).
Permitted Insurers: 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 of America and Canada and with assets of no
less than $500 million.
Person: a corporation, a limited liability company, a firm, a joint
venture, an association, a partnership, 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.
Plan: an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by either General Partner, the Company or any Related
Person of the Company or the General Partners or to which either General
Partner, the Company or any Related Person of the Company or the General
Partners is or has been obligated to contribute, or an employee benefit plan as
to which either General Partner, the Company or any Related Person could be
treated as a contributory sponsor under Section 4069 or Section 4212 of ERISA if
such plan were terminated.
Potential Event of Default: any condition or event which, with notice or
lapse of time or both, would become an Event of Default.
Premium Amount: the meaning specified in Section 9.3(d).
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Public Partnership: National Propane Partners, L.P., a Delaware limited
partnership.
Purchase Money Lien: the meaning specified in Section 10.2(j).
QPAM Exemption: the meaning specified in Section 6.2(c).
Qualifying Restricted Subsidiaries: the Restricted Subsidiaries other than
National Sales and Service, Inc.
RCRA: the Federal Resource Conservation and Recovery Act, as amended.
Registration Statement: the Registration Statement on Form S-1 under the
Securities Act of 1933, as amended, of the Public Partnership (Registration
Number 33-2768), as initially filed with the Securities and Exchange Commission
on March 26, 1996, as amended by Amendment No. 1 thereto filed with the
Securities and Exchange Commission on May 14, 1996, Amendment No. 2 thereto
filed with the Securities and Exchange Commission on May 31, 1996, Amendment No.
3 thereto filed with the Securities and Exchange Commission on June 11, 1996,
and Amendment No. 4 thereto filed with the Securities and Exchange Commission on
_______, 1996.
Reinvestment Yield: with respect to the Called Principal of any Note, the
yield to maturity implied by (i) 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 "[GovtPX]" on the
Bloomberg Financial Markets (or such other display as may replace [GovtPX] on
the Bloomberg Financial Markets) 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, (ii) the
Treasury constant maturity series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Date 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 (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
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Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
Related Person: with respect to a Person, any trade or business, whether
or not incorporated, which, as of any date of determination, would be treated as
a single employer together with such Person under Section 414 of the Code.
Remaining Average Life: with respect to the Called Principal of any Note,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) each Remaining Scheduled Payment of such Called Principal (but
not of interest thereon) by (b) the number of years (calculated to the nearest
one-twelfth year) which will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
Remaining Scheduled Payments: 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: the holders of at least 66-2/3% in principal amount of
the Notes at the time outstanding.
Responsible Officer: with respect to any Person, the President, any Senior
Vice President, the Chief Financial Officer, the Treasurer and the Secretary of
such Person and any other officer of such Person who is responsible for
compliance with or performance of any obligation under this Agreement or the
other Operative Agreements, with respect to the Company, any such officer of the
general partner of the Company and, in any case, any employee of the Company
performing any of the above functions.
Restricted Affiliate: any of Triarc, DWG Acquisition Group, L.P. or any of
their respective subsidiaries or Nelson Peltz or Peter W. May as long as any
such Person would otherwise be an Affiliate of the Company.
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Restricted Payment: as to any Person, (a) any payment, dividend or other
distribution, direct or indirect, in respect of any partnership interest
(general or limited) in, or on account of any shares of any class of stock of,
such Person, except a distribution payable solely in additional partnership
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 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, provided payments by the
Company or a Restricted Subsidiary of the Company to any General Partner or any
of its Affiliates for services rendered to or on behalf of the Company or any
Restricted Subsidiary of the Company or expenses incurred in connection with the
operation of the business of the Company or any Restricted Subsidiary of the
Company (including, without limitation, reimbursement of expenses incurred under
any employee benefit plan, including plans providing for the issuance of Units
or options to acquire Units in the Public Partnership) shall not be deemed to be
Restricted Payments.
Restricted Subsidiary: any Wholly Owned Subsidiary of the Company (a)
organized under the laws of the United States of America 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 of America 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 for the provision of
related services and (d) designated by the Company as a Restricted Subsidiary in
Exhibit O or at a subsequent date, provided 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).
Security Documents: the Trust Agreement, the Mortgage(s), the Company
Security Agreement, the General Partner's Guarantee Agreement, the Subsidiary
Guarantee Agreement, the Partners Security Agreement, the Partnership Note, the
Perfection Certificate, the Agency Account Agreement, the Cash Collateral
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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 or to guarantee the Company's and the
General Partners' obligations hereunder and under the Notes and the Initial
Notes.
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 Sec tion 11, as the context requires.
Subsidiary: of any Person, means any corporation, limited liability
company, business trust, 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 Subsidiaries of such Person, 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 the Company.
Subsidiary Guarantee Agreement: the Guarantee Agreement among the
Restricted Subsidiaries and the Trustee in the form attached hereto as Exhibit
P, as amended from time to time.
Substantial Portion: the meaning specified in Section 7(a).
Supplemental Agreement: an agreement between a Restricted Subsidiary and
the Trustee in the form attached hereto as Exhibit Q, as amended from time to
time.
Triarc: Triarc Companies, Inc., a Delaware corporation.
Trust Agreement: the Intercreditor and Trust Agreement, dated as of the
date of the Closing, among the Company, the General Partners, the Public
Partnership, the Restricted Subsidiaries, the Trustee, the holders of the Notes,
the Administrative
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Agent and the Banks, substantially in the form attached hereto as Exhibit C, as
amended from time to time.
Trustee: The Bank of New York, as Trustee under the Trust Agreement and
its successors and assigns thereunder.
Underwriters: the underwriters named in the Underwriting Agreement.
Underwriting Agreement: the Underwriting Agreement, dated June __, 1996,
among the Public Partnership, the General Partners, the Company and the
Underwriters, relating to securities of the Public Partnership registered under
the Registration Statement.
Uniform Commercial Code: the Uniform Commercial Code or similar statute
in effect from time to time in any jurisdiction.
Units: the units to be issued and sold by the Public Partnership pursuant
to the Underwriting Agreement, representing preference limited partnership
interests in the Public Partnership.
Unrestricted Subsidiary: any Subsidiary other than a Restricted Subsidiary
which is organized under the laws of the United States of America 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 of America and which business consists
principally of the distribution of propane gas or related supplies and
equipment.
Wholly Owned: 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 the Company or by one or more Wholly Owned Restricted Subsidiaries or by the
Company and one or more Wholly Owned Restricted Subsidiaries.
Working Capital Facility: that Working Capital Facility under the Bank
Credit Facilities which shall permit borrowings thereunder in an 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.
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SECTION 14. REGISTRATION, TRANSFER AND SUBSTITUTION OF
NOTES.
14.1. Note Register; Ownership of Notes. Any Notes issued in substantially
the form of Exhibit A2 are in "registered form". The Company will keep at its
principal office a register in which the Company will provide for the
registration of Notes in registered form and the registration of transfers of
Notes in registered form. The Company 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 or premium, if
any, and interest on such Note and for all other purposes, whether or not such
Note shall be overdue, and the Company 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.
14.2. Transfer and Exchange of Notes. Upon surrender of any Note for
registration of transfer or for exchange to the Company at its principal office,
the Company at its expense will execute and deliver in exchange therefor a new
Note or Notes in denominations of at least $250,000 (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, $250,000), 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.
14.3. Replacement of Notes. Upon receipt of evidence reasonably
satisfactory to the Company 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 Company may
determine (or, in the case of any Note held by you or another institutional
holder or your or its nominee, of an unsecured indemnity agreement from you or
such other holder), or, in the case of any such mutilation, upon the surrender
of such Note for cancellation to the Company at its principal office, the
Company at its expense will execute and deliver, in lieu thereof, a new Note 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
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Note and otherwise of like tenor. Any Note in lieu of which any such new Note
has been so executed and delivered by the Company shall not be deemed to be an
outstanding Note for any purpose of this Agreement.
14.4. Notes Held by Company, 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 the Company, either General
Partner, the general partner of the Company or any of their respective
Affiliates shall be disregarded and deemed not to be outstanding.
SECTION 15. PAYMENTS ON NOTES.
15.1. Place of Payment. Payments of principal, Make Whole Amount, Premium
Amount or premium, 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 by 12:00 noon, unless the Company, 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.
15.2. Home Office Payment. So long as you or your nominee shall be the
holder of any Note, and notwithstanding anything contained in Section 15.1 or in
such Note to the contrary, the Company will pay all sums becoming due on such
Note for principal, Make Whole Amount or premium, 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 purpose in Schedule A, or by such other reasonable method or
at such other address as you shall have from time to time specified to the
Company in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that any Note paid or
prepaid in full shall, after such payment or prepayment in full, be surrendered
to the Company at its principal office or at the place of payment maintained by
the Company pursuant to Section 15.1 for cancellation. Prior to any sale or
other disposition of any Note held by you or your nominee you will, at your
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
Company in exchange for a new Note or Notes pursuant to Sec-
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tion 14.2. The Company 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 you under this Agreement and which has made the same agreement
relating to such Note as you have made in this Section 15.2.
SECTION 16. EXPENSES, INDEMNIFICATION, ETC.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company 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, the other
Operative Agreements or the Initial Notes, including, without limitation: (i)
the cost and expenses of preparing and reproducing this Agreement, the other
Operative Agreements and the Initial Notes, of furnishing all opinions by
counsel for the Company, the Restricted Subsidiaries, Triarc or the General
Partners (including any opinions requested by your special counsel, Debevoise &
Plimpton, as to any legal matter arising hereunder) and all certificates on
behalf of the Company, either General Partner, Triarc or any Restricted
Subsidiary, and of the Company's, either General Partner's, Triarc's or any
Restricted Subsidiary'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 your principal office, insured to your satisfaction,
the Notes issued in exchange for the Initial Notes sold to you hereunder and any
Notes delivered to you upon any substitution thereof pursuant to Section 14 and
of your delivering any Notes, insured to your satisfaction, upon any such
substitution; (iii) the fees, expenses and disbursements of your special
counsel, Debevoise & Plimpton and your local counsel in connection with such
transactions and any such amendments or waivers; (iv) the costs and expenses,
including attorneys' fees, incurred by you or any subsequent holder of a Note in
enforcing (or determining whether or how to enforce) any rights under this
Agreement, any other Operative Agreement or the Initial Notes or in responding
to any subpoena or other legal process in connection with this Agreement, any
other Operative Agreement or the Initial Notes or the transactions contemplated
hereby or by reason of you 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 the
Notes; and (vi) the reasonable out-of-pocket expenses incurred by you in
connection with such transactions and any such amendments or waivers, provided
that the Company shall be required to pay the cost and expenses of only one firm
(and any local counsel) retained by the Noteholders in connection with any
waivers or amendments. The Company also will pay, and will save you and each
holder of any
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Notes harmless from, all claims in respect of the fees, if any, of brokers and
finders (unless engaged by you) and any and all liabilities with respect to any
taxes (including interest and penalties) (other than income taxes) which may be
payable in respect of the execution and delivery hereof, the issue of the
Initial Notes or the Notes hereunder and any amendment or waiver under or in
respect hereof or of the Initial Notes or the Notes. In furtherance of the
foregoing, on the date of the Closing the Company will pay (a) the fees and
disbursements of your special counsel which are reflected as unpaid in the
statement of Debevoise & Plimpton, your special counsel, delivered to the
Company prior to the date of the Closing and (b) the fees and disbursements of
your environmental consultant; and thereafter the Company will pay, promptly
upon receipt of supplemental statements therefor from time to time, addi tional
fees, if any, and disbursements of your special counsel in connection with the
transactions hereby contemplated (including unposted disbursements as of the
date of the Closing).
(b) The Company 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 (a) ownership of the
Mortgaged Property, or any interest therein, or receipt of any rent or other sum
therefrom, (b) 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, (c) any use, non-use or condition of the Mortgaged Property or any part
thereof, (d) any failure on the part of the Company, either General Partner 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, (e) 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, (f) any
negligence or tortious act on the part of the Company, either General Partner,
any of their respective Subsidiaries or Affiliates or any of their respective
agents, contractors, sublessees, licensees or invitees, (g) any work in
connection with any alterations, changes or construction of the Mortgaged
Property, (h) any other relationship that has arisen or may arise between the
Company, either General Partner 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
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connection herewith or therewith, (i) 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 Initial Notes or at any time thereafter and whether or
not the Company, either General Partner or any of their respective Subsidiaries
or Affiliates is responsible therefor or (j) 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 Company to indemnify the Indemnified Parties for conditions (other than
matters covered by clause (f) above) first occurring subsequent to the earlier
of (x) the taking of exclusive possession and control of the Mortgaged Property
for operational purposes pursuant to Section 21.10 of the Mortgage or Section
6.03 of the Company Security Agreement, (y) the foreclosure of the Lien under
any Security Document and the transfer of title to the Trustee, or (z) for their
respective gross negligence or willful misconduct, or for their breach of their
respective obligations under the Agreement.
In case any action, claim, suit or proceeding is brought against an
Indemnified Party by reason of any such occurrence, the Company may, and upon
the request of such Indemnified Party will, at the Company's 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 Company 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, and provided further that if any Indemnified Party reasonably
determines that a conflict of interest exists with respect to the representation
by such counsel of such Indemnified Party, the Company shall pay the fees and
expenses of counsel selected by such Indemnified Party. In any event, if the
Company fails to assume the defense within a reasonable time after any such
request, the Indemnified Party may assume such defense or other indemnification
obligation and the fees and expenses of its attorney will be paid by the
Company. The obligations of the Company 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 10.54% per annum from the date of such demand. In the event that the Company
shall be required to pay any indemnity under this Section 16, the Company 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 (but not for any taxes payable with
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respect to amounts received for the payment of income taxes), shall be equal to
the amount of such indemnity.
(c) In connection with the Closing, the General Partner and the Company
are requesting that you make available for funding an amount equal to the
principal amount specified opposite your name in Schedule A. If, for any reason,
on the date scheduled by the General Partners and the Company 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 Partners and the Company 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 Partners
and the Company will protect, indemnify and hold you harmless from and against
any and all losses resulting from your failure or inability to invest on the
scheduled date for the Closing the purchase price of the Initial Notes to be
purchased by you, 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 the Initial
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 either General
Partner, the Company, any Restricted Subsidiary 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 you or
on your behalf, the purchase of the Initial Notes or acceptance of the Notes in
exchange for the Initial Notes by you under this Agreement and any disposition
or payment of the Initial Notes or the Notes. All statements contained in any
certificate or other instrument delivered by or on behalf of the General
Partners, the Company, any Restricted Subsidiary or the general partner of the
Company pursuant to this Agreement and/or the other Operative Agreements or in
connection with any amendment, waiver or modification of this Agreement or any
of the other Operative Agreements shall be deemed representations and warranties
of the Company 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
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with the written consent of the Company 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 or premium payable on any prepayment of, any Note, (b),
subject to other requirements set forth in the Trust Agreement, 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 of a Note 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 of a Note 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, each General Partner and the Company.
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 you, at the address set
forth in Schedule A or at such other address as you shall have furnished to the
Company in writing, except as otherwise provided in Section 15.2 with respect to
payments on Notes held by you or your nominee, or (b) if to any other holder of
any Note, at such address as such other holder shall have furnished to the
Company in writing, or, until any such other holder so furnishes to the Company
an address, then to and at the address of the last holder of such Note who has
furnished an address to the Company, or (c) if to the Company or either General
Partner, at the address set forth at the beginning of this Agreement to the
attention of Senior Vice President and Chief Financial Officer, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to you and each such other holder in writing.
SECTION 20. REPRODUCTION OF DOCUMENTS.
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This Agreement, each Operative Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and notifications
which may hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original document
so reproduced. Each General Partner and the Company 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 you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 21. 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 among you, the General Partners and the Company 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 22. SUBMISSION TO JURISDICTION.
For the purpose of assuring that any holder of Notes may enforce its
rights under this Agreement, the Initial Notes, the Notes and the other
Operative Agreements, each General Partner and the Company, 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, any
other Operative Agreement and the Initial Notes, 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
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Borough of Manhattan 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 Borough of Manhattan 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 Borough of Manhattan 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 23. 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, THE INITIAL NOTES, THE NOTES OR
ANY OTHER OPERATIVE AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY
OR THE SUBJECT MATTER OF ANY OF THE FOREGOING.
SECTION 24. GOVERNING LAW.
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE CITY OF NEW YORK,
STATE OF NEW YORK, UNITED STATES OF AMERICA. THIS AGREEMENT AND (UNLESS
OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND 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.
SECTION 25. CONFIDENTIAL INFORMATION.
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For the purposes of this Section 25, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Restricted
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Restricted Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Restricted Subsidiary or (d) constitutes financial statements
delivered to you under Section 7 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 25, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 25), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 25),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 25 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information
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required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying
the provisions of this Section 25.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this Agreement and return the same to
the undersigned, whereupon this Agreement shall become a binding agreement
between you and the undersigned.
Very truly yours,
NATIONAL PROPANE, L.P.
By: NATIONAL PROPANE CORPORATION,
a General Partner
By______________________________________
Name:
Title:
By: NATIONAL PROPANE SGP, INC.,
a General Partner
By______________________________________
Name:
Title:
NATIONAL PROPANE SGP, INC.
By______________________________________
Name:
Title:
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NATIONAL PROPANE CORPORATION
By______________________________________
Name:
Title:
The foregoing Agreement is
hereby accepted and agreed
to as of the date first
above written.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By______________________________________
Name:
Title:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By______________________________________
Name:
Title:
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CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA INVESTMENTS, INC.
By______________________________________
Name:
Title:
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY, on behalf of its Separate Account 66
By: CIGNA INVESTMENTS, INC.
By______________________________________
Name:
Title:
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA INVESTMENTS, INC.
By______________________________________
Name:
Title:
115
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SECURITY LIFE OF DENVER INSURANCE COMPANY
By: ING Investment Management, Inc.
By______________________________________
Its: Senior Vice President
and Managing Director
MIDWESTERN UNITED LIFE INSURANCE COMPANY
By: ING Investment Management, Inc.
By______________________________________
Its: Senior Vice President
and Managing Director
PEERLESS INSURANCE COMPANY
By: ING Investment Management, Inc.
By______________________________________
Its: Senior Vice President
and Managing Director
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<PAGE>
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By______________________________________
Name:
Title:
GENERAL AMERICAN LIFE INSURANCE COMPANY
By______________________________________
Name:
Title:
KEYPORT LIFE INSURANCE COMPANY
By Stein Roe & Farnham Incorporated, as agent
By______________________________________
Name:
Title: Senior Vice President
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PACIFIC MUTUAL LIFE INSURANCE COMPANY
By______________________________________
Name:
Title:
By______________________________________
Name:
Title:
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By______________________________________
Name:
Title:
By______________________________________
Name:
Title:
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TMG LIFE INSURANCE COMPANY
by The Mutual Group (U.S.),
Inc., its agent
By______________________________________
Name: Robert R. Lapointe
Title: Vice President
By______________________________________
Name: Michael J. Carew
Title: Assistant Vice President
NORTHERN LIFE INSURANCE COMPANY
By______________________________________
Name:
Title:
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
By______________________________________
Name:
Title:
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PWRW&G DRAFT
6/24/96
--------------------------------------------------
CONVEYANCE, CONTRIBUTION AND ASSUMPTION
AGREEMENT
by and among
NATIONAL PROPANE PARTNERS, L.P.,
NATIONAL PROPANE, L.P.,
NATIONAL PROPANE CORPORATION,
and
NATIONAL PROPANE SGP, INC.
Dated as of July [ ], 1996
--------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions................................................... 2
2. Contribution Transactions..................................... 6
2.1 Contribution to the Master Partnership.................. 6
2.2 Contribution to the Operating Partnership............... 7
2.3 Overallotment Option.................................... 8
2.4 Effect of Contributions................................. 8
2.5 Order of Contributions.................................. 9
3. Matters Relating to Debt...................................... 9
3.1 Issuance of Notes....................................... 9
3.2 Repayment of the Assumed Existing Bank Debt............. 9
3.3 The Bank Credit Facility................................ 9
4. Miscellaneous................................................. 9
4.1 Costs................................................... 9
4.2 Headings; References; Interpretation..................... 10
4.3 Successors and Assigns................................... 10
4.4 No Third Party Rights.................................... 10
4.5 Counterparts............................................. 10
4.6 Governing Law............................................ 10
4.7 Severability............................................. 11
4.8 Deed; Bill of Sale; Assignment........................... 11
4.9 Amendment or Modification................................ 11
4.10 Integration.............................................. 11
<PAGE>
<PAGE>
This CONVEYANCE, CONTRIBUTION AND ASSUMPTION AGREEMENT, dated as of July
__, 1996, is entered into by and among NATIONAL PROPANE PARTNERS, L.P., a
Delaware limited partnership (the "Master Partnership"), NATIONAL PROPANE, L.P.,
a Delaware limited partnership (the "Operating Partnership"), NATIONAL PROPANE
CORPORATION, a Delaware corporation (the "Managing General Partner"), and
NATIONAL PROPANE SGP, INC., a Delaware corporation and formerly known as All
Seasons Acquisition Corp. (the "Special General Partner").
RECITALS
WHEREAS, the Managing General Partner and the Special General Partner, as
the general partners, and Triarc Companies, Inc., a Delaware corporation
("Triarc"), as the organizational limited partner, have heretofore formed the
Master Partnership pursuant to the Delaware Revised Uniform Limited Partnership
Act (the "Delaware Act");
WHEREAS, the Managing General Partner and the Special General Partner each
has heretofore contributed $10.00 to the Master Partnership in exchange for a
1.0% general partner interest issued to each in the Master Partnership; and
Triarc has heretofore contributed $980.00 to the Master Partnership in exchange
for a 98.0% organizational limited partner interest in the Master Partnership;
WHEREAS, the Managing General Partner and the Special General Partner, as
the general partners and limited partners, and the Master Partnership, as
limited partner, have heretofore formed the Operating Partnership pursuant to
the Delaware Act for the purpose of acquiring, owning and operating the Assets
and the Business (as hereinafter defined);
WHEREAS, the Managing General Partner has heretofore contributed $[ ] and
the Special General Partner has heretofore contributed $[ ] to the Operating
Partnership in exchange for a 2.0956% general partner interest therein issued to
each, a __% limited partner interest therein issued to the Managing General
Partner and a __% limited partner interest therein issued to the Special General
Partner, and the Master Partnership has heretofore contributed $[ ] to the
Operating Partnership in exchange for a 0.0001% limited partner interest
therein;
WHEREAS, as of June ___, 1996, the Underwriting Agreement (as hereinafter
defined) was entered into by the parties thereto;
WHEREAS, as of the date hereof, the Public Offering was consummated and the
Master Partnership issued [ ] Common Units for total Gross Public Offering
Proceeds of $___ million;
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2
WHEREAS, as of the date hereof, the Managing General Partner and the
Special General Partner, as the general partners, and Triarc, as the
organizational limited partner, have entered into that certain Amended and
Restated Agreement of Limited Partnership of the Master Partnership (as it may
be amended, supplemented or restated from time to time, the "Master Partnership
Agreement");
WHEREAS, as of the date hereof, the Managing General Partner and the
Special General Partner, as the general partners and the limited partners, and
the Master Partnership, as the limited partner, have entered into that certain
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (as it may be amended, supplemented or restated from time to time,
the "Operating Partnership Agreement"); and
NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, the parties to this Agreement undertake and agree as
follows:
1. Definitions.
The following capitalized terms shall have the meanings given below.
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise. Notwithstanding anything contained in this definition to the
contrary, the term Affiliate, (i) with respect to the Operating Partnership and
the Master Partnership, shall not include the Managing General Partner, the
Special General Partner or Triarc (or their respective Affiliates determined
without regard to the Operating Partnership or the Master Partnership), and (ii)
with respect to the Managing General Partner, the Special General Partner or
Triarc, shall not include the Operating Partnership or the Master Partnership
(or their respective Affiliates determined without regard to the Managing
General Partner, the Special General Partner or Triarc).
"Agreement" means this Conveyance, Contribution and Assumption Agreement,
as it may be amended, supplemented or restated from time to time.
"Assumed Existing Bank Debt" means the aggregate principal amount, accrued
interest and other amounts, fees and expenses payable under the Existing Credit
Facility.
"Bank Credit Facility" means the Credit Agreement, dated as of June __,
1996, by and among the Operating Partnership and The First National Bank
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3
of Boston, as administrative agent, BA Securities, Inc., as syndication agent,
and the financial institutions listed therein, providing for borrowings under
the working capital facility in an aggregate principal amount of up to $15
million and borrowings under the acquisition and expansion facility in an
aggregate principal amount of up to $40 million.
"Bank Credit Facility Expenses" means all commissions, fees and other
out-of-pocket expenses (including fees and expenses of accountants, attorneys,
consultants or other agents) incurred, paid or payable by the Operating
Partnership to the administrative agent, co-agent, syndication agent, lenders or
other Persons in connection with the Bank Credit Facility.
"Business" means the businesses currently or previously conducted by the
Managing General Partner or the Special General Partner (including any
businesses conducted by any predecessor of the Managing General Partner or the
Special General Partner).
"Common Units" means an LP Interest having the rights and obligations
specified with respect to Common Units in the Master Partnership Agreement.
"Delaware Act" has the meaning assigned to such term in the Recitals to
this Agreement.
"Effective Time" means a time mutually agreed upon among the Master
Partnership, Operating Partnership, the Special General Partner and Managing
General Partner, but not later than the effective date of the Public Offering.
"Existing Credit Facility" means the Revolving Credit and Term Loan
Agreement, dated as of October 7, 1994, as amended, among the Managing General
Partner, the Bank of New York, as Administrative Agent, certain co-agents and
the several lending institutions party thereto.
"General Partner Interest" shall mean, with respect to the Operating
Partnership or the Master Partnership, an interest in the profits, losses and
capital of the Operating Partnership or the Master Partnership, as the case may
be, that provides the holder thereof with the rights and obligations of a
general partner in accordance with the Operating Partnership Agreement or the
Master Partnership Agreement, as the case may be.
"General Partner Parties" means the Managing General Partner, the Special
General Partner and any of their Affiliates (including, without limitation,
Triarc), and (unless such Persons are Operating Partnership Parties) any of
their respective directors, shareholders, partners, members, officers,
employees, agents, consultants, customers, representatives, successors,
transferees or assignees.
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4
"Gross Overallotment Proceeds" means the gross proceeds received by the
Master Partnership in connection with the exercise of the Overallotment Option.
"Gross Public Offering Proceeds" means the gross proceeds received by the
Master Partnership in connection with the Public Offering (excluding any
proceeds in respect of the exercise of the Overallotment Option).
"Incentive Distribution Rights" has the meaning assigned to such term in
the Master Partnership Agreement.
"LP Interest" shall mean, with respect to the Operating Partnership or the
Master Partnership, an interest in the profits, losses and capital of the
Operating Partnership or the Master Partnership, as the case may be, that
provides the holder thereof with the rights and obligations of a limited partner
in accordance with the Operating Partnership Agreement or the Master Partnership
Agreement, as the case may be.
"Managing General Partner" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Master Partnership" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"Master Partnership Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Net Note Proceeds" means the $125 million in gross proceeds received by
the Managing General Partner in connection with the Note Offering, less the Note
Offering Expenses and less $59.3 million that is distributed by the Managing
General Partner to its shareholder.
"Note Offering" means the offer and sale of the Notes pursuant to the Note
Purchase Agreements.
"Note Offering Expenses" means all commissions, fees and other
out-of-pocket expenses (including fees and expenses of accountants, attorneys,
consultants or other agents) incurred, paid or payable by the Managing General
Partner or the Operating Partnership to the placement agent or other Persons in
connection with the Note Offering.
"Note Purchase Agreement(s)" means the note purchase agreements, each dated
as of June ___, 1996, between the Managing General Partner and the lenders named
therein, relating to the Note Offering, as assigned to and assumed by the
Operating Partnership.
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<PAGE>
5
"Notes" means the First Mortgage Notes issued by the Managing General
Partner in the Note Offering pursuant to the Note Purchase Agreements.
"OLP Contribution and Assumption Agreement" means the OLP Contribution and
Assumption Agreement, dated as of the date hereof, among the Managing General
Partner, the Special General Partner, the Operating Partnership and National
Sales and Service, Inc. (the "Operating Partnership Subsidiary"), pursuant to
which the Managing General Partner and the Special General Partner shall convey
substantially all of their assets to the Operating Partnership and the Operating
Partnership Subsidiary.
"Operating Partnership" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Operating Partnership Agreement" has the meaning assigned to such term in
the Recitals to this Agreement.
"Operating Partnership Parties" means the Operating Partnership and any
direct or indirect subsidiary or Affiliate of the Operating Partnership, and any
of their respective directors, shareholders, partners, members, officers,
employees, agents, consultants, customers, representatives, successors,
transferees or assignees.
"Overallotment Option" means the overallotment option granted to the
Underwriters under the Underwriting Agreement.
"Party" means each of the Persons who are signatories to this Agreement.
"Percentage Interest" has, with respect to the Operating Partnership, the
meaning assigned to such term in the Operating Partnership Agreement and, with
respect to the Master Partnership, the meaning assigned to such term in the
Master Partnership Agreement.
"Person" means an individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Public Offering" means the initial public offering by the Master
Partnership of up to [7,119,047] Common Units (including [928,511] Common Units
issuable upon exercise of the Overallotment Option).
"Public Offering Expenses" means all underwriting discounts, commissions,
fees and other out-of-pocket expenses (including fees and expenses of
accountants, attorneys, printers, consultants or other agents) incurred, paid,
payable
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<PAGE>
6
or provided by the Operating Partnership to the Underwriters or other Persons in
connection with the Public Offering.
"Representatives" means Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Jamey Montgomery Scott
Inc., Raucher Pierce Refsnes, Inc. and The Robinson-Humphrey Company, Inc. as
the representatives for the Underwriters.
"Special General Partner" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Subordinated Units" means a General Partner Interest having the rights and
obligations specified with respect to Subordinated Units in the Master
Partnership Agreement.
"Transaction Documents" means this Agreement, the OLP Contribution and
Assumption Agreement, the Underwriting Agreement, the Master Partnership
Agreement, the Operating Partnership Agreement, the Subsidiary Services
Agreement, the Note Purchase Agreements and the Bank Credit Facility.
"Underwriters" means the several Underwriters listed in Schedule I to the
Underwriting Agreement.
"Underwriting Agreement" means the Purchase Agreement dated as of June [ ],
1996, by and among the Master Partnership, the Operating Partnership, the
Managing General Partner, the Special General Partner, and each of the
Representatives, as representatives of the Underwriters, relating to the Public
Offering.
2. Contribution Transactions.
2.1 Contribution to the Master Partnership. Immediately after the
completion of the transactions provided for in OLP Contribution and Assumption
Agreement,
(a) the Managing General Partner hereby grants, contributes,
bargains, sells, conveys, assigns, transfers, sets over and delivers to the
Master Partnership, its successors and assigns, for its and their own use
forever, all of its right, title and interest in and to its LP Interest in the
Operating Partnership with a Percentage Interest in the Operating Partnership
equal to ____%, in exchange for (i) maintaining its unsubordinated General
Partner Interest in the Master Partnership with a Percentage Interest of 1.0%,
(ii) 4,533,638 Subordinated Units, (iii) the Incentive Distribution Rights and
(iv) other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged; and
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<PAGE>
7
(b) the Special General Partner hereby grants, contributes,
bargains, sells, conveys, assigns, transfers, sets over and delivers to the
Master Partnership, its successors and assigns, for its and their own use
forever, all of its right, title and interest in and to its LP interest in the
Operating Partnership with a Percentage Interest in the Operating Partnership
equal to ____%, in exchange for maintaining its unsubordinated General Partner
Interest in the Master Partnership with a Percentage Interest of 1.0% and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
TO HAVE AND TO HOLD the LP Interests in the Operating Partnership unto the
Master Partnership, its successors and assigns, together with all and singular
the rights and appurtenances thereto in any way belonging, subject, however, to
the terms and conditions stated in this Agreement, forever.
2.2 Contribution to the Operating Partnership.
(a) Immediately after the completion of the transactions
provided for in Section 2.1 and the Public Offering, the Master Partnership
hereby grants, contributes, bargains, sells, conveys, assigns, transfers, sets
over and delivers to the Operating Partnership, its successors and assigns, for
its and their own use forever, all of its right, title and interest in and to
the Gross Public Offering Proceeds in exchange for (A) the consideration stated
in Section 2.2(b) and (B) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and
TO HAVE AND TO HOLD the Gross Public Offering Proceeds unto the Operating
Partnership, its successors and assigns, together with all and singular the
rights and appurtenances thereto in any way belonging, subject, however, to the
terms and conditions stated in this Agreement, forever.
(b) In consideration for the contribution of the Gross Public
Offering Proceeds to the Operating Partnership, the Operating Partnership (i)
hereby increases the Percentage Interest of the LP Interest in the Operating
Partnership held by the Master Partnership to 97.9798% and (ii) agrees to duly
and timely pay, perform and discharge the Public Offering Expenses.
(c) Upon completion of the contributions referred to in paragraph
(a) above, Triarc shall withdraw as organizational limited partner of the
Operating Partnership and (i) the Percentage Interest of the Master
Partnership's LP Interest in the Operating Partnership shall equal 97.9798%,
(ii) the Percentage Interest of the Managing General Partner's General Partner
Interest in the Operating Partnership shall equal 1.0101% and (iii) the
Percentage Interest of the Special General Partner's General Partner Interest in
the Operating Partnership shall equal 1.0101%.
<PAGE>
<PAGE>
8
2.3 Overallotment Option.
(a) Upon exercise of the Overallotment Option, each Underwriter
shall contribute to the Master Partnership cash in an amount equal to the
purchase price for the Common Units so purchased in exchange for the issuance by
the Master Partnership of such Common Units, as more fully provided in and
pursuant to the Master Partnership Agreement; provided however, that the
Percentage Interest of the unsubordinated General Partner Interest in the Master
Partnership held by each of the Managing General Partner and the Special General
Partner shall nonetheless immediately thereafter remain 1.0%.
(b) Upon exercise of the Overallotment Option, the Master
Partnership shall contribute to the Operating Partnership the Gross
Overallotment Proceeds in exchange for the assumption by the Operating
Partnership of the obligation to duly and timely pay, perform and discharge the
Public Offering Expenses related thereto and for other good and valuable
consideration, the receipt and sufficiency are hereby acknowledged; provided
however, that the Percentage Interest of the General Partner Interest in the
Operating Partnership held by each of the Managing General Partner and the
Special General Partner shall nonetheless immediately thereafter remain 1.0101%
and the Percentage Interest of the Master Partnership's LP Interest in the
Operating Partnership shall nonetheless immediately thereafter remain 97.9798%.
2.4 Effect of Contributions. The contributions provided for in this
Section 2 and in the OLP Contribution and Assumption Agreement shall be
effective for all purposes as of the Effective Time in the order described in
Section 2.5. At the Effective Time, and after giving effect to all of the
transactions contemplated by this Section 2, the OLP Contribution and Assumption
Agreement and the other Transaction Documents, (a) the Managing General Partner
shall own (i) a General Partner Interest in the Operating Partnership with a
Percentage Interest of 1.0101% and (ii) an unsubordinated General Partner
Interest in the Master Partnership with a Percentage Interest of 1.0%, (iii)
4,533,638 Subordinated Units, and (iv) the Incentive Distribution Rights (b) the
Special General Partner shall own (i) a General Partner Interest in the
Operating Partnership with a Percentage Interest of 1.0101% and (ii) an
unsubordinated General Partner Interest in the Master Partnership with a
Percentage Interest of 1.0% and (c) the Master Partnership shall own an LP
Interest in the Operating Partnership with a Percentage Interest of 97.9798%.
2.5 Order of Contributions. The transactions described in Section 2.1
shall occur immediately after completion of the transactions contemplated in the
OLP Contribution and Assumption Agreement and the Public Offering. The
transactions described in Section 2.2 shall occur immediately after completion
of the transactions described in Section 2.1.
<PAGE>
<PAGE>
9
3. Matters Relating to Debt.
3.1 Issuance of Notes. Immediately prior to the transactions provided
for in Section 2.1 and in the OLP Contribution and Assumption Agreement, the
First Mortgage Notes shall have been issued by the Managing General Partner.
3.2 Repayment of the Assumed Existing Bank Debt. Immediately after the
completion of the transactions provided for in the OLP Contribution and
Assumption Agreement and immediately prior to the transactions provided for in
Section 2.2, the Operating Partnership shall repay in full the Assumed Existing
Bank Debt in the following manner: (i) $30 million of the Net Note Proceeds will
be used by the Operating Partnership to repay Assumed Existing Bank Debt
evidenced by the Refunding Notes (as defined in Existing Credit Facility), (ii)
the remainder of such Net Note Proceeds will be used to repay other Assumed
Existing Bank Debt, and (iii) a portion of the Gross Public Offering Proceeds
(net of the Public Offering Expenses) will be used to repay any Assumed Existing
Bank Debt not repaid under clauses (i) and (ii).
3.3 The Bank Credit Facility. Immediately after the completion of the
transactions provided for in Section 2 (other than Section 2.3), the Bank Credit
Facility shall become effective.
4. Miscellaneous.
4.1 Costs.
(a) The Operating Partnership shall be responsible for and shall
pay all Note Offering Expenses incurred prior to, as of or after the Effective
Time. Such payment shall be made by the Operating Partnership directly to any
obligee in respect of such expenses.
(b) The Operating Partnership shall be responsible for and shall
pay all Public Offering Expenses incurred prior to, as of or after the Effective
Time. Such payment shall be made by the Operating Partnership or its
subsidiaries directly to any obligee in respect of such expenses.
(c) The Operating Partnership shall be responsible for and shall
pay all Bank Credit Facility Expenses incurred prior to, as of or after the
Effective Time. Such payment shall be made by the Operating Partnership directly
to any obligee in respect of such expenses.
(d) If the Managing General Partner, the Special General Partner
or any of their Affiliates have paid any expenses, fees, costs or taxes that are
the responsibility of the Operating Partnership pursuant to clauses (a), (b) or
<PAGE>
<PAGE>
10
(c) above, then the Operating Partnership shall reimburse the Managing General
Partner, the Special General Partner or such Affiliate promptly upon request
therefor.
4.2 Headings; References; Interpretation. All Article and Section
headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any of the provisions hereof.
The words "hereof," "herein" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole, including,
without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Sections,
Schedules and Exhibits shall, unless the context requires a different
construction, be deemed to be references to the Sections of this Agreement and
the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits
attached hereto are hereby incorporated herein and made a part hereof for all
purposes. All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders, and the
singular shall include the plural and vice versa. The use herein of the word
"including" following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation," "but
not limited to," or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter. Except as otherwise expressly provided herein, any reference in
this Agreement to any Transaction Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time.
4.3 Successors and Assigns. The Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and assigns.
4.4 No Third Party Rights. The provisions of this Agreement are not
intended to and do not create rights in any other Person or confer upon any
other Person any benefits, rights or remedies and no Person is or is intended to
be a third party beneficiary of any of the provisions of this Agreement.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
4.6 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York without regard to
the conflicts of law principles thereof.
<PAGE>
<PAGE>
11
4.7 Severability. If any of the provisions of this Agreement are held
by any court of competent jurisdiction to contravene, or to be invalid under,
the laws of any political body having jurisdiction over the subject matter
hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provision or provisions held to be invalid, and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the parties as expressed in this Agreement at the time of
execution of this Agreement.
4.8 Deed; Bill of Sale; Assignment. To the extent required by
applicable law, this Agreement shall also constitute a "deed," "bill of sale" or
"assignment" of the Assets.
4.9 Amendment or Modification. This Agreement may be amended or
modified, or any provision waived or rescinded, from time to time only by the
written agreement of the Parties directly bound by, or benefited from, the
provisions in respect of which such amendment, modification, waiver or
rescission is sought.
4.10 Integration. This Agreement supersedes all previous
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This Agreement and the Transaction Documents
constitute an integrated agreement which contain the entire understanding of the
parties. No understanding, representation, promise or agreement, whether oral or
written, is intended to be or shall be included in or form part of this
Agreement or the Transaction Documents unless it is contained in a written
amendment hereto executed by the parties hereto after the date of this
Agreement.
<PAGE>
<PAGE>
12
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
NATIONAL PROPANE PARTNERS, L.P.
By: National Propane Corporation,
its Managing General Partner
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
NATIONAL PROPANE, L.P.
By: National Propane Corporation,
its Managing General Partner
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
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<PAGE>
13
NATIONAL PROPANE CORPORATION
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
NATIONAL PROPANE SGP, INC.
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of NATIONAL
PROPANE CORPORATION, a Delaware corporation, and that the within instrument was
signed in behalf of said corporation and acknowledged said instrument to be the
free act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
_______________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of National
Propane Corporation, the Managing General Partner of NATIONAL PROPANE, L.P., a
Delaware limited partnership, and that the within instrument was signed in
behalf of said corporation and acknowledged said instrument to be the free act
and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
_______________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of National
Propane Corporation, the managing general partner of NATIONAL PROPANE PARTNERS,
L.P., a Delaware limited partnership, and that the within instrument was signed
in behalf of said corporation and acknowledged said instrument to be the free
act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
_______________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of NATIONAL
PROPANE SGP, INC., a Delaware corporation, and that the within instrument was
signed in behalf of said corporation and acknowledged said instrument to be the
free act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
_______________________
<PAGE>
<PAGE>
PWRW&G DRAFT - 6/24/96
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS.
TRIARC COMPANIES, INC.
13.5% SENIOR SECURED NOTE
$40,700,000 New York, New York
July __, 1996
FOR VALUE RECEIVED, the undersigned, Triarc Companies, Inc., a Delaware
corporation (together with its successors and permitted assigns, the
"Borrower"), hereby promises to pay to the order of National Propane, L.P.
(together with its successors and permitted assigns, the "Lender"), at such
place as the Lender shall from time to time designate to the Borrower in
writing, the aggregate principal amount of FORTY MILLION SEVEN HUNDRED THOUSAND
DOLLARS ($40,700,000), in such amounts and on such dates as determined according
to Section 1 hereof, with daily interest on the outstanding principal amount
hereof from the date hereof to (but excluding) the maturity of this Note
(whether by acceleration or otherwise) at the rate set forth in Section 2
hereof, said interest being payable in semi-annual installments in arrears on
the 30th day of June and December in each year and at maturity. The Borrower
shall pay principal, interest and all other amounts due hereunder in immediately
available funds. In the event that any payment due hereunder is required to be
made on a day that is not a Business Day, such payment shall be made on the next
Business Day. In case an Event of Default (as defined in Section 7.1) shall
occur and be continuing, the entire principal amount of this Note may become or
be declared to be due and payable in the manner and with the effect provided
herein. Certain capitalized terms used herein are defined in Section 8.
<PAGE>
<PAGE>
2
Section 1. Principal.
Beginning on June 30, 2003 and on each anniversary thereafter through and
including June 30, 2010, the Borrower will prepay the principal amount of this
Note in eight equal installments of $5,087,500 with the final maturity date of
this Note being June 30, 2010. Any optional prepayment of the principal of this
Note permitted hereunder shall be applied to reduce the mandatory prepayments
otherwise required by this Section 1 in the direct order such prepayments are
due.
Section 2. Interest.
The Borrower will pay interest on the outstanding principal amount hereof,
until the principal amount hereof is paid in full, at a rate of 13.5% per annum.
Interest on this Note will accrue from and including the most recent date on
which interest has been paid (or, if no interest has been paid, from and
including the date of issuance of this Note) to but excluding the date of
payment. Interest will be computed on the basis of a 365-day year and the actual
number of days elapsed. The Borrower shall pay interest on overdue principal and
on overdue interest to the full extent permitted by law at a rate equal to 15.5%
per annum.
Section 3. Collateral.
3.1 Pledge and Grant of Security Interest.
(a) Pledged Interests. To induce the Lender to accept this Note, and
as security for the due and punctual payment and performance of all obligations
of the Borrower now or hereafter existing under this Note, whether for
principal, premium, interest, or any other amount payable under this Note
(collectively, the "Obligations"), the Borrower hereby pledges, assigns,
transfers and grants to the Lender a first priority continuing security interest
in (i) all of the capital stock of the General Partner, now owned or hereafter
acquired by the Borrower (the "Pledged Stock"), (ii) all Permitted Consideration
(the "Pledged Permitted Consideration") received, receivable or otherwise
distributed in exchange for the Pledged Stock in connection with any Permitted
Third Party Sale (as defined below) and (iii) all dividends, distributions,
liquidating dividends, stock dividends, stock or partnership rights, options,
rights to subscribe, cash, instruments and other property and proceeds and
principal, premium and interest payments received, receivable or otherwise
distributable in respect of or exchanged for the Pledged Stock or Pledged
Permitted Consideration (the items listed in clauses (i), (ii) and (iii) being
referred to collectively as the "Pledged Interests").
(b) Pledged Retained Assets. To induce the Lender to accept this Note,
and as security for the due and punctual payment and performance of the
Obligations, the Borrower hereby pledges, assigns, transfers and grants to the
Lender a first priority continuing security interest in the Retained Assets
owned by the
<PAGE>
<PAGE>
3
Borrower upon the occurrence of the General Partner Merger in an amount equal to
the lesser of (A) all of the Retained Assets held by the General Partner
immediately prior to the General Partner Merger or (B) Retained Assets having an
aggregate Value equal to the then outstanding principal amount of this Note
(such lesser amount being referred to as the "Pledged Retained Assets").
(c) Delivery of Collateral.
(i) In furtherance of the pledge, assignment, transfer and grant
of the security interests provided for in Section 3.1(a) and (b), the Borrower
herewith delivers to the Lender a certificate or certificates representing the
Pledged Stock, together with an instrument of transfer duly executed in blank
relating thereto. In addition, the Borrower hereby agrees to deliver to the
Lender, as soon as possible after receipt thereof, certificates representing any
other securities from time to time included in the Pledged Interests and hereby
agrees to deliver, upon the occurrence of the General Partner Merger, a
certificate or certificates representing any of the Pledged Retained Assets, in
each case together with instruments of transfer duly executed in blank relating
thereto. All securities, rights, interests, cash or other assets pledged
pursuant to this Section 3.1 or otherwise required to be pledged pursuant to the
terms of this Note are referred to herein collectively as the "Collateral."
(ii) The Borrower shall cause to be opened and maintained with
the Trustee (as defined in Section 9.3) reasonably acceptable to the Lender a
non-interest bearing bank account (the "Cash Account"), under the sole dominion
and control of the Lender into which shall be deposited any Permitted
Consideration received by the Borrower that is in the form of cash and, after
the General Partner Merger, any consideration that is received by the Borrower
in connection with the sale of Pledged Retained Assets that is in the form of
cash. Any such amounts received by the Borrower shall be promptly delivered by
it to the Lender for deposit into such account, and until so deposited shall be
held in trust for the Lender and not commingled with any other funds of the
Borrower. Such cash when deposited shall continue to be security for the
Obligations and shall not constitute payment thereof until applied as
hereinafter provided. So long as no Event of Default shall have occurred and be
continuing, the Borrower shall be entitled upon notice delivered to the Lender
to direct that such cash be invested in Cash Equivalents as designated by the
Borrower. If any amounts deposited in such account shall have been identified by
the Borrower for release from the security interest created hereunder as
provided in Section 3.3(c), the Lender shall forthwith return such amounts to
the Borrower.
(d) Filings; Other Actions. The Borrower will, from time to time and
at its own expense, execute, deliver, file or record such financing statements
pursuant to the UCC and such other statements, assignments, instruments,
documents, agreements and other papers as necessary or as the Lender may
reasonably request in
<PAGE>
<PAGE>
4
order to create, preserve, perfect, confirm or validate the security interests
in the Collateral.
3.2 Voting Rights; Dividends; Transfers; etc.
(a) Voting Rights; Dividends. So long as no Event of Default shall
have occurred and be continuing, the Borrower shall be entitled to (i) exercise
any and all voting and other consensual rights pertaining to the Collateral or
any part thereof and (ii) receive, retain, dispose of, or otherwise use or deal
with in its sole discretion any and all dividends, distributions and interest
payments paid in respect of the Collateral.
(b) Transfer or Pledge of Pledged Retained Assets. So long as no Event
of Default shall have occurred and be continuing, the Borrower shall be entitled
to sell, assign, transfer, convey, grant a security interest in, hypothecate or
pledge (collectively, "Transfer") or permit the Transfer in an arms'-length
transaction with an independent, unrelated third party of any of the Pledged
Retained Assets (including without limitation any assets that may become Pledged
Retained Assets upon the occurrence of the General Partner Merger pursuant to
Section 6.6(a) or pursuant to Section 9.2 (collectively, "Potential Pledged
Retained Assets")) provided that (except as otherwise permitted by the proviso
in Section 6.6(b)) immediately after giving effect to such transaction, the
General Partner continues to hold Pledged Retained Assets (including without
limitation any Potential Pledged Retained Assets but excluding any Pledged
Retained Assets hypothecated, pledged or in which a security interest has been
granted to any Person other than the Lender) and/or Cash or Cash Equivalents
that are designated by the General Partner as Pledged Retained Assets (or
Potential Pledged Retained Assets), as provided in the last sentence of this
Section 3.2(b), with a Value equal to not less than the outstanding principal
amount of this Note at such time. Upon the occurrence and the Continuance of an
Event of Default, the Borrower shall not Transfer any of the Pledged Retained
Assets. For purposes of satisfying the foregoing condition, the General Partner
may designate any of its cash or Cash Equivalents as Pledged Retained Assets (or
Potential Pledged Retained Assets) and, thereafter, such assets shall be deemed
to be Pledged Retained Assets (or Potential Pledged Retained Assets ) for all
purposes of this Note, including, without limitation, Section 3.1(b).
(c) Transfer of Pledged Interests. The Borrower shall not be entitled
to Transfer all or any portion of the Pledged Interests, except in an
arms'-length transaction with an independent, unrelated third party that
satisfies the following conditions (each Transfer permitted hereunder being
referred to as a "Permitted Third Party Sale"):
(i) in any such Transfer (other than a sale, assignment, transfer
or conveyance to any Person that assumes the Borrowers obligations under this
Note as provided in Section 9.2 and pledges the Pledged Interests so acquired as
<PAGE>
<PAGE>
5
security for the performance of the Obligations, in which case the condition
contained in this clause (i) shall not be applicable), the consideration
received by the Borrower shall be at least equal to the fair market value of the
Pledged Interest that is Transferred, as determined by the Borrower in good
faith, and shall be in the form of Permitted Consideration,
(ii) the Borrower shall not effect any such Transfer if, after
giving effect to such Transfer, the Borrower shall own Pledged Stock (excluding
Pledged Stock that the Borrower has hypothecated, pledged or granted a security
interest in to any Person other than the Lender) constituting less than a
majority of the voting common stock and voting power of the General Partner then
outstanding (other than in connection with a sale, assignment, transfer or
conveyance of all of the Pledged Stock) unless the Borrower grants to the Lender
a first priority security interest in cash or Cash Equivalents with an aggregate
Value at least equal to the then outstanding principal amount of the Note, and
(iii) no Event of Default shall have occurred and be continuing.
In connection with any Permitted Third Party Sale, the Pledged Interests
transferred shall be released from the security interest created hereunder. In
addition, in connection with a Permitted Third Party Sale under clause (ii)
above that results in the Pledged Stock constituting less than a majority of the
voting common stock of the General Partner and in which the Borrower grants to
the Lender a security interest in the substitute collateral identified in such
clause, all shares of Pledged Stock shall be released from the security interest
created hereunder.
(d) Lender's Rights During Event of Default. If an Event of Default
shall have occurred and be continuing and any amounts shall be due and payable
(whether by maturity or otherwise) under any of the Obligations, all rights of
the Borrower to (i) exercise the voting and other consensual rights which the
Borrower would otherwise be entitled to exercise pursuant to Section 3.2(a),
(ii) Transfer or permit the Transfer of any Pledged Retained Assets as provided
in Section 3.2(b) and (iii) receive and retain any and all dividends,
distributions and interest paid in respect of the Pledged Interests as provided
in Section 3.2(a), shall cease and all such rights shall, to the extent
permitted by law, thereupon become vested in the Lender, and the Lender shall
thereupon have the sole right to exercise such voting and other consensual
rights as provided in Section 3.2(a), to Transfer or permit the Transfer of
Pledged Retained Assets as provided in Section 3.4 and to receive and hold as
Collateral such dividends, distributions and interest payments as provided in
Section 3.2(a); and all such dividends, distributions and interest payments that
are received by the Borrower contrary to the provisions of this Section 3.2(d)
shall be received in trust for the benefit of the Lender, shall be segregated
from other funds of the Borrower and shall forthwith be paid over to the Lender
as Collateral in the same form as so received (with any necessary endorsements).
<PAGE>
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6
3.3 Releases of Collateral.
(a) If the Value of the Pledged Permitted Consideration received from
any Permitted Third Party Sale that is required to be pledged by the Borrower
pursuant to Section 3.1(a)(ii) (together with the Pledged Permitted
Consideration received from all previous Permitted Third Party Sales that are so
pledged) at any time of determination, exceeds the then outstanding principal
amount of this Note (after giving effect to any repayment of this Note being
made at the time of such determination), any Collateral in excess of such Value
shall be released from the security interest granted hereunder. The Value of
such Pledged Permitted Consideration shall be determined at the time of each
bona fide Permitted Third Party Sale and at the time of each repayment of any
portion of the principal amount of this Note.
(b) If the Value of the Pledged Retained Assets, if any, exceeds the
outstanding principal amount of this Note (after giving effect to any repayment
of this Note being made at the time of such determination) at any time of
determination, any Pledged Retained Assets in excess of such Value shall be
released from the security interest granted hereunder. The Value of such Pledged
Retained Assets shall be determined at the time of each bona fide sale of
Pledged Retained Assets to a Person that is not an Affiliate of the Borrower and
upon each repayment of any portion of the principal amount of this Note.
(c) In the event that any Collateral is required, pursuant to clause
(a) or clause (b) above, to be released from the security interest granted
hereunder, the Borrower may select which of the Collateral shall be so released.
(d) Upon the payment in full in cash of the Obligations, the security
interest granted under this Note shall automatically terminate and cease to be
of any force and effect, the Collateral shall be released from the security
interest created under this Note and the Collateral and the Retained Assets
shall no longer be subject to any restrictions imposed under this Note.
(e) The Lender agrees that it shall execute and deliver such documents
and instruments and take all such other action, as the Borrower may reasonably
request (and at the expense of the Borrower), to evidence the termination of the
security interest, and the release of the Collateral and the Retained Assets, as
provided in this Section 3.3 or otherwise in this Note.
3.4 Remedies Upon Default. Upon the occurrence and during the continuance
of an Event of Default, the Lender shall have, in addition to any other rights
given by law, including, without limitation, under the UCC, or the rights
hereunder, all of the rights and remedies of a secured party with respect to the
Collateral. In addition, if any Event of Default shall occur and be continuing,
the
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7
Lender may apply against the Obligations then due and owing any amounts on
deposit in the Cash Account and upon fifteen (15) days prior written notice to
the Borrower (the "Sale Notice") sell all or any portion of the Collateral at
any public or private sale at such price and on such terms as the Lender
reasonably may determine, and the purchaser of the Collateral or portion thereof
so sold shall thereafter hold the same absolutely, free from any claim,
encumbrance or right of any kind whatsoever. The Sale Notice shall, in the case
of a public sale, state the time and place fixed for such sale or in the case of
a private sale, state the day after which such sale may be consummated. Neither
the Lender nor the Partnership may be a purchaser of any of the Pledged Stock at
such sale or otherwise acquire the Pledged Stock at any time when the General
Partner holds the Unsubordinated General Partner Interest; provided that, the
Lender may assign its rights hereunder to be a purchaser at such sale to any
Person, other than a Subsidiary of the Partnership, and such assignee shall not
be so restricted. The Borrower hereby agrees that, if so requested by the Lender
in the Sale Notice, the Borrower shall use its best efforts to cause the General
Partner to transfer the Unsubordinated General Partner Interest to a third party
(which may be an Affiliate of the Borrower other than a subsidiary of the
General Partner) no later than immediately prior to the consummation of the sale
provided for in the Sale Notice. The Borrower hereby agrees that any transfer or
sale of all or any portion of the Collateral conducted in conformity with
reasonable commercial practices of banks, insurance companies, or other
financial institutions disposing of property similar to the Collateral shall be
deemed to be commercially reasonable.
3.5 Further Assurances. The Borrower agrees that it will cooperate
with the Lender and will execute and deliver, or cause to be executed and
delivered, instruments of transfer, proxies and such other documents, and will
take all such other action, as the Lender may reasonably request from time to
time in order to carry out the provisions and the purposes hereof.
Section 4. Optional Prepayment.
4.1 Prepayment by Borrower.
(a) Except as otherwise provided herein, the Borrower shall not have
any right to prepay or redeem this Note prior to June 30, 2001.
(b) At any time after June 30, 2001 but prior to June 30, 2002, the
Borrower shall have the right, at any time and from time to time, at its sole
option and election, to prepay the outstanding principal amount of this Note, in
whole or in part, at a redemption price equal to 103% of the principal amount
prepaid together with accrued interest on the portion prepaid.
(c) At any time after June 30, 2002 but prior to June 30, 2003, the
Borrower shall have the right, at any time and from time to time, at its sole
option and election, to prepay the outstanding principal amount of this Note, in
whole
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8
or in part, at a redemption price equal to 101.5% of the principal amount
prepaid, together with accrued interest on the portion prepaid.
(d) At any time on and after June 30, 2003, the Borrower shall have
the right, at any time and from time to time, at its sole option and election,
to prepay the outstanding principal amount of this Note without premium or
penalty, in whole or in part, together with accrued interest on the portion
prepaid.
(e) Notwithstanding anything to the contrary contained in this Section
4.1, the Borrower shall have the right, but not the obligation, to prepay the
outstanding principal amount of this Note without premium or penalty, (i) in
whole or in part, within 180 days after the consummation of an Acquisition (as
defined in the Partnership Agreement), in an amount not to exceed the sum of (x)
the total amount of any indebtedness (including refinancing indebtedness)
incurred by the Lender or the Partnership in connection with such Acquisition
that is repaid using the proceeds of the prepayment of this Note and (y) the
total amount of other cash (not resulting from proceeds of the indebtedness
referred to in clause (x)) paid by the Lender or the Partnership in connection
with such Acquisition; or (ii) in whole, but not in part, within 180 days of any
transaction (A) that results in either the General Partner no longer being an
Affiliate of the Borrower or the General Partner no longer being an Affiliate of
the Lender and (B) in which (x) the total consideration received by the General
Partner for each Subordinated Unit (or Common Unit issued upon conversion of a
Subordinated Unit) sold, transferred or assigned by the General Partner in such
transaction, if any, is not less than an amount (the "Threshold Price") equal to
the Initial Unit Price (as such Initial Unit Price may be adjusted for splits,
distributions of capital surplus or other reclassifications of the Units) or (y)
if such transaction does not involve the sale of Units by the General Partner
but rather involves the merger or sale of stock of the General Partner, in which
the total consideration received by the Borrower in such transaction implies a
value, determined by the Borrower in good faith, for each Subordinated Unit (or
Common Unit issued upon conversion of a Subordinated Unit) of not less than the
Threshold Price.
4.2 Notice. Notice of any optional prepayment by the Borrower of this Note
pursuant to Section 4.1 shall be given to the Lender at least 10 days prior to
the date fixed for such prepayment, which must be a Business Day.
Section 5. Representations and Warranties. The Borrower represents and warrants
to the Lender as of the date hereof that:
5.1 Incorporation. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to execute and deliver this Note, to
grant the security interest in the Collateral as provided herein and to perform
its obligations hereunder.
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9
5.2 Authority. This Note has been duly authorized, executed and delivered
by the Borrower and constitutes the valid and legally binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in equity, and
that such enforceability may be subject to the discretion of the court before
which any proceedings therefor may be brought.
5.3 No Conflicts. The execution, delivery and performance by the Borrower
of this Note, including, without limitation, the grant of the security interest
in the Collateral as provided herein, do not (i) violate any provision of any
law, rule or regulation, order, writ, judgment, decree, determination or award
presently in effect having applicability to the Borrower, (ii) conflict with or
result in a breach of or constitute a default under the Certificate of
Incorporation or Bylaws of the Borrower or any indenture or loan or credit
agreement or any other agreement or instrument to which the Borrower is a party
or (iii) except as contemplated by this Note, result in, or require the creation
or imposition of, any lien or encumbrance upon or with respect to any of the
properties now owned by the Borrower, except, in the case of (i), (ii) or (iii),
where such violation, conflict, default or creation or imposition of any lien or
encumbrance would not (individually or in the aggregate) have a material adverse
effect on the business, assets or condition (financial or otherwise) of the
Borrower and its subsidiaries, taken as a whole, or on the value of the
Collateral, taken as a whole.
5.4 Title to Pledged Stock. The Borrower owns beneficially and of record
all of the Pledged Stock, free and clear of all liens and other encumbrances,
except for those created hereunder. The General Partner owns the Retained Assets
beneficially and of record free and clear of all liens and other encumbrances,
except for those created hereunder, and the restrictions contained in the
Partnership Agreement.
Section 6. Covenants.
6.1 Notice of Defaults. The Borrower shall give notice in writing to the
Lender promptly but in any event within five Business Days after becoming aware
of the occurrence of any Event of Default under this Note or an event which with
notice or lapse of time would become an Event of Default.
6.2 Financial Reports. The Borrower shall prepare and furnish to the Lender
(i) as soon as practicable, after the close of each fiscal year of the Borrower,
but not later than ten (10) Business Days after the date such are filed with the
Securities and Exchange Commission, an audited consolidated balance sheet of the
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10
Borrower, and the related consolidated statements of income, additional capital
and cash flows (or similar statements) for such fiscal year and (ii) as soon as
practicable after the close of each fiscal quarter of the Borrower, but not
later than ten (10) Business Days after the date such are filed with the
Securities and Exchange Commission, an unaudited consolidated balance sheet of
the Borrower and the related consolidated statements of income, additional
capital and cash flows (or similar statements) for such fiscal quarter.
6.3 Compliance with Laws. The Borrower shall comply with all applicable
laws or other governmental rules and regulations to which it is subject the
violation of which would have a material adverse affect on the Borrower's
ability to perform its obligations under this Note.
6.4 Payment of Material Obligations. The Borrower shall, and shall cause
the General Partner to, pay and discharge, as the same shall become due and
payable, (i) all taxes, assessments and governmental charges levied or imposed
upon the Borrower or the General Partner, as the case may be, or upon the
income, profits or property of the Borrower or the General Partner, as the case
may be, and (ii) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the property of the Borrower or the
General Partner, as the case may be (including, without limitation, any of the
Collateral); provided that the Borrower and the General Partner shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim the amount, applicability or validity of which is
contested in good faith by appropriate proceedings diligently pursued and for
which the Borrower has established adequate reserves as required by generally
accepted accounting principles or the failure to pay which would not have a
material adverse effect on the Borrower's ability to perform its obligations
under this Note.
6.5 Transfer of Interest in the General Partner. The Borrower shall use its
best efforts to prevent:
(i) SEPSCO from transferring any shares of capital stock of the
General Partner to any Person other than (a) the Borrower, (b) a permitted
assignee of this Note from the Borrower, (c) a wholly owned subsidiary of the
Borrower, (d) any Person that pledges such shares to the Lender to secure the
Borrower's obligations under this Note pursuant to an agreement that contains
provisions substantially similar to those set forth in Section 3 (other than
Section 3.1(b)) of this Note or (e) in connection with any Permitted Third Party
Sale that results in the Pledged Stock no longer constituting Collateral,
(ii) the General Partner from issuing any shares of its capital stock
to any Person other than (a) the Borrower, (b) a permitted assignee under
Section 9.2 of this Note from the Borrower or (c) any Person that pledges such
shares to the Lender to secure the Borrower's obligation under this Note
pursuant to
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11
an agreement that contains provisions substantially similar to those set forth
in Section 3 (other than Section 3.1(b)) of this Note, or
(iii) any shares of the capital stock of SEPSCO from being acquired by
any Person, other than (a) the Borrower, (b) a wholly owned subsidiary of the
Borrower that agrees to be bound by this Section 6.5, or (c) a permitted
assignee of this Note from the Borrower, at any time that SEPSCO owns any shares
of the capital stock of the General Partner. Notwithstanding anything to the
contrary contained in this Note, but subject to Section 3.1(b), the General
Partner and the Borrower may effect the General Partner Merger.
6.6 Actions by the General Partner. Prior to the General Partner Merger,
the Borrower shall prevent the General Partner from (a) incurring any
indebtedness for borrowed money, unless the General Partner grants to the Lender
a first priority continuing security interest in Retained Assets and/or cash and
Cash Equivalents and/or Marketable Securities having an aggregate Value equal to
or greater than the then outstanding principal amount of this Note, in a manner
substantially similar to the security interest to be granted by the Borrower
pursuant to Section 3.1(b) of this Note or (b) Transferring any of the Pledged
Retained Assets (or Potential Pledged Retained Assets) in any manner that does
not comply with Section 3.2(b); provided, however, that the General Partner may
without complying with this Section 6.6(b), (i) consummate the General Partner
Merger and (ii) Transfer any Pledged Retained Assets (or Pledged Potential
Retained Assets) in one or more transactions on an arms'-length basis with an
independent, unrelated third party in which the aggregate net after tax proceeds
(together with the net after tax proceeds from all similar previous
transactions) does not exceed $5 million.
Section 7. Defaults and Remedies.
7.1 Event of Default. An "Event of Default" shall occur if:
(a) the Borrower defaults in the payment of principal or premium of
this Note when the same becomes due and payable;
(b) the Borrower defaults in the payment of interest on this Note when
the same becomes due and payable and such default continues for a period of 5
Business Days;
(c) the Borrower defaults (after notice and the expiration of any
applicable grace period, if any) in the payment of principal or interest under
any indebtedness of the Borrower (other than this Note) or any guarantee by the
Borrower of any indebtedness of any Subsidiary of the Borrower (each a
"Guarantee Obligation") or defaults in the observance or performance of any
other agreement or condition relating to any indebtedness of the Borrower or
Guarantee Obligation (the effect of which covenant default is to cause such
indebtedness to become due prior to
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12
its stated maturity or such Guarantee Obligation to become payable), if the
principal amount of such indebtedness or Guarantee Obligation, together with the
principal amount of all other such indebtedness and Guarantee Obligations with
respect to which a payment default (after notice and the expiration of any
applicable grace period or extension of maturity date, if any) has occurred or
the maturity of which has been so accelerated or become so payable, exceeds $20
million in the aggregate;
(d) the Borrower fails to comply in any material respect with any of
its agreements contained in this Note and such failure is not cured within 30
days after notice thereof;
(e) one or more final judgments of any competent tribunal(s)
aggregating in excess of $5 million shall be rendered against the Borrower,
which judgments are not rescinded, discharged, satisfied, vacated, annulled or
stayed or bonded pending appeal within 90 days of their entry;
(f) this Note (or any other agreement contemplated by Section 6.5 or
6.6 purporting to grant a security interest in property securing this Note)
shall cease to create a valid security interest in any of the Collateral;
(g) the General Partner issues any shares of its capital stock to any
Person other than as permitted under Section 6.5(ii);
(h) SEPSCO transfers any shares of the capital stock of the General
Partner to any Person or any shares of SEPSCO's capital stock are acquired by
any Person, in either case other than as permitted under Section 6.5(i) or
(iii), respectively;
(i) the General Partner takes any action which the Borrower has agreed
to use best efforts to prevent pursuant to Section 6.6;
(j) the Borrower fails to comply in any material respect with Section
3.1(b) or the second sentence of Section 3.1(c)(i) or Section 3.1(c)(ii);
(k) the Borrower:
(i) commences a voluntary case, proceeding or other action under
any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief from debtors (collectively,
"Bankruptcy Laws") seeking to have an order for relief entered with respect
to it;
(ii) consents to the entry of an order for relief against it in
an involuntary case commenced under a Bankruptcy Law;
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13
(iii) consents to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or other similar official (a
"Custodian") of it or for all or substantially all of its property under a
Bankruptcy Law; or
(iv) makes a general assignment for the benefit of its creditors;
(l) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law (which order or decree remains unstayed and in effect for 90
days) that:
(i) is for relief against the Borrower in an involuntary case;
(ii) appoints a Custodian of the Borrower or for all or
substantially all of its property; or
(iii) orders the winding up or liquidation of the Borrower.
7.2 Acceleration. If an Event of Default occurs under clause (k) or (l) of
Section 7.1, then the principal of and the accrued interest on this Note shall
become due and payable immediately without presentment, demand, protest or other
notice of any kind, all of which are expressly waived by the Borrower. If any
other Event of Default specified in Section 7.1 occurs and is continuing, the
Lender, by written notice to the Borrower, may declare the principal of and
accrued interest on this Note to be due and payable and upon such declaration
such principal and interest shall be due and payable immediately without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived by the Borrower.
7.3 Other Remedies. If an Event of Default occurs and is continuing, the
Lender may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of or interest on this Note or to enforce the
performance of any provision of this Note. Except as otherwise provided by law,
a delay or omission by Lender in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
7.4 Waiver of Defaults. The Lender may waive in writing a default and its
consequences. When a default is waived, it is deemed cured, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any consequent right. No right or remedy herein conferred upon or reserved to
the Lender is intended to be exclusive of any other right or remedy, and every
right and
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14
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise.
Section 8. Definitions.
For the purposes of this Note, the following terms shall have the meanings
indicated:
"Affiliate" shall mean, with respect to any Person, another Person that
controls, is controlled by or is under common control with (either directly or
indirectly), such Person (including with respect to the General Partner, without
limitation, the Borrower, DWG Acquisition Group, L.P., Nelson Peltz, Peter W.
May or any of their respective Affiliates). For purposes of this definition
"control" of a Person means the ability to direct the management and policies of
such Person whether through the ownership of voting securities or otherwise.
"Business" shall mean the wholesale and retail sale, distribution and
storage of propane gas and related petroleum derivative products, the leasing of
propane storage tanks and the related retail sale of supplies and equipment,
including home appliances, and such other businesses in which the Lender was
engaged on the date hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York or the State of Iowa are
authorized or required by law to close.
"Cash Equivalents" shall mean (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America, in each case maturing one year or less
from the date of acquisition thereof; (ii) 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 one year or less from
the date of acquisition thereof and, at the time of acquisition, having the
highest ratings obtainable from either Standard & Poor's Rating Group or Moody's
Investors Service, Inc.; (iii) commercial paper maturing no more than 270 days
from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 or the equivalent thereof from Standard & Poor's Rating
Group or P-1 or the equivalent thereof from Moody's Investors Service, Inc.;
(iv) certificates of deposit or bankers' acceptances maturing one year or less
from the date of acquisition thereof issued by any domestic commercial bank
having combined capital and surplus of not less than $250,000,000, 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 changed) by
Standard & Poor's Rating Group or Prime-2 or better (or comparably if the rating
system is
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15
changed) by Moody's Investors Service, Inc. or the long term debt obligations of
which are rated either A- or better (or comparably if the rating system is
changed) by Standard & Poor's Ratings Group or A-3 or better (or comparably if
the rating system is changed) by Moody's Investors Service, Inc.; and (v)
repurchase agreements and reverse repurchase agreements with any bank meeting
the qualifications specified in clause (iv) above relating to securities of the
types described in clauses (i), (ii), or (iv) above, in each case maturing one
year or less from the date of acquisition thereof.
"Closing Price" with respect to any security for any day means the last
sale price for securities of the same class as such security on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case reported
in the principal consolidated transaction reporting system on the principal
National Securities Exchange on which securities of the same class as such
security are listed or admitted to trading or, if securities of the same class
as such securities are not listed or not admitted to trading on any National
Securities Exchange, the last quoted price for securities of the same class as
such security on such day or, if not so quoted, the average of the high bid and
low asked prices for securities of the same class as such security on such day
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then in
use, or, if on any such day securities of the same class as such security are
not quoted by any such organization, the average of the closing bid and asked
prices for securities of the same class as such security on such day as
furnished by a professional market maker making a market in securities of the
same class as such security selected by the Board of Directors of the Borrower
or if on any such day no market maker is making a market in securities of the
same class as such security, the fair value of such security on such day as
determined in good faith by the Board of Directors of the Borrower.
"Common Unit" shall have the meaning ascribed thereto in the Partnership
Agreement and shall also include any security into which such Common Unit is
converted or exchanged in connection with any merger, consolidation or
recapitalization.
"Current Trading Price" with respect to any security means the average of
the daily Closing Prices for securities of the same class as such security for
the 20 consecutive Trading Days immediately prior to such date.
"General Partner" shall mean National Propane Corporation, a Delaware
corporation, or after the General Partner Merger, the Borrower.
"General Partner Merger" shall mean the consolidation or merger of the
General Partner with and into the Borrower.
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16
"Initial Unit Price" shall have the meaning ascribed thereto in the
Partnership Agreement.
"Marketable Securities" shall mean any security issued by a Person
primarily engaged in the Business that (i) can be immediately sold to the
general public without the necessity of any federal, state or local government
consent, approval or filing (other than any notice filings such as those
required pursuant to Rule 144(h) under the Securities Act of 1933, as amended)
and without violation of federal or state securities laws and (ii) is listed on
a National Securities Exchange or a recognized foreign securities exchange,
carried on an established quotation service for over-the-counter securities or
for which market quotations are readily available in either a domestic or
recognized foreign over-the-counter market.
"National Securities Exchange" shall mean an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act of 1934, as amended, supplemented or restated from time to time, and any
successor to such statute, or the Nasdaq Stock Market or any successor thereto.
"Partnership" shall mean National Propane Partners, L.P., a Delaware
limited partnership and its successors.
"Partnership Agreement" shall mean the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of the date hereof, as amended
from time to time.
"Permitted Consideration" shall mean consideration received in connection
with a sale of all or any portion of the Pledged Stock (or any Collateral
permitted hereunder to be substituted therefor) consisting of any combination of
cash, Cash Equivalents, Qualified Marketable Securities and Qualified Public
Company Securities.
"Person" shall mean an individual or a corporation, partnership, limited
liability company, trust, incorporated or unincorporated organization, joint
venture, joint stock company, governmental agency or other entity.
"Public Company Securities" shall mean any equity or debt security issued
by any Person primarily engaged in the Business required by Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, to file periodic
reports with the Securities and Exchange Commission that are of the same class
(or are convertible, exchangeable or exercisable into securities of the same
class) as any class of securities listed on a National Securities Exchange.
"Qualified Marketable Securities" shall mean any Marketable Security
received by the Borrower or the General Partner in connection with a Significant
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17
Transaction and that is issued by the acquiring Person, or such Person's direct
or indirect parent, in connection with such transaction.
"Qualified Public Company Securities" shall mean any Public Company
Security received by the Borrower or the General Partner in connection with a
Significant Transaction and that is issued by the acquiring Person, or such
Person's direct or indirect parent, in connection with such transaction.
"Qualified Transferee" shall mean any Person that has, at the time of
determination (after giving effect to the transactions giving rise to the need
to make such determination), a consolidated net worth (determined in accordance
with generally accepted accounting principles) of not less than the consolidated
net worth of the Borrower immediately prior to such transaction.
"Retained Assets" shall mean any combination of (i) Common Units, (ii)
Subordinated Units, (iii) cash, Cash Equivalents, Qualified Public Company
Securities and Qualified Marketable Securities received on the sale of any of
the foregoing, and (iv) and cash and Cash Equivalents designated by the General
Partner as Pledged Retained Assets (or Potential Pledged Retained Assets)
pursuant to Section 3.2(b).
"SEPSCO" shall mean Southeastern Public Service Company, a Delaware
corporation.
"Significant Transaction" shall mean (i) the merger, consolidation or sale
of all or substantially all of the assets of the Partnership or the Lender, (ii)
the sale of all of the Pledged Stock or (iii) the merger, consolidation or sale
of all or substantially all of the assets of the General Partner, in each case
to a Person that is primarily engaged in the Business.
"Subsidiary" shall mean, with respect to any Person, a corporation or other
entity of which more than 50% of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Subordinated Unit" shall have the meaning ascribed thereto in the
Partnership Agreement and shall also include any security into which such
Subordinated Unit is converted or exchanged in connection with any merger,
consolidation or recapitalization.
"Trading Day" means a day on which the principal National Securities
Exchange on which securities of the same class as the referent security are
listed or admitted to trading is open for the transaction of business or, if
securities of the same class as the referent security are not listed or admitted
to trading on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
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18
"UCC" shall mean the Uniform Commercial Code or similar statute in effect
from time to time in any applicable jurisdiction.
"Unsubordinated General Partner Interest" shall have the meaning ascribed
thereto in the Partnership Agreement.
"Units" shall have the meaning ascribed thereto in the Partnership
Agreement.
"Value" shall mean, with respect to the Pledged Retained Assets, the
Potential Pledged Retained Assets) or the Permitted Consideration as at the date
of determination, the following: (i) with respect to a Common Unit, one-half of
the Current Trading Price of a Common Unit, (ii) with respect to a Subordinated
Unit, one-half of the value (as determined in good faith by the General Partner)
of the consideration received by the General Partner in connection with the most
recent sale, assignment or transfer (including, without limitation, the
transaction which gives rise to the need to make such determination) by the
General Partner to an unaffiliated third party of a Subordinated Unit, or if the
General Partner has not so sold, assigned or transferred any Subordinated Units,
the amount determined in clause (i) above, (iii) with respect to cash or Cash
Equivalents, 100% of the face value thereof, (iv) with respect to any Marketable
Security, 100% of the Current Trading Price therefor, and (v) with respect to
any Public Company Security, one-half of the Current Trading Price therefor.
Section 9. Miscellaneous.
9.1 Amendment. The terms of this Note may be amended only by the written
agreement of the Lender and the Borrower.
9.2 Successors and Assigns. This Note shall inure to the benefit of, and
shall be binding upon, the successors and permitted assigns of the Borrower and
the Lender. The obligations of the Borrower under this Note may not be assigned
without the written consent of the Lender; provided, however, that the Borrower
may, without the consent of the Lender, assign its obligations under this Note
to, and this Note may be assumed by, any Qualified Transferee that directly or
indirectly through any of its Affiliates (i)(a) acquires the General Partner
(whether by merger, consolidation, acquisition of all of the stock of the
General Partner or otherwise) or all or substantially all of the assets of the
General Partner and (b) grants a first priority security interest in the stock
of the General Partner so acquired, or, if no stock of the General Partner is so
acquired, in the lesser of (A) all Retained Assets held by the General Partner
immediately prior to such acquisition and (B) Retained Assets having an
aggregate Value equal to or greater than the then outstanding principal amount
of this Note or (ii)(a) acquires the Partnership or the Lender (whether by
merger, consolidation, acquisition of all of the Units or partnership interests
or otherwise) or all or substantially all of the assets of the Partnership or
the
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19
Lender and (b) grants a first priority security interest in any combination of
cash, Cash Equivalents, Marketable Securities and Public Company Securities
having an aggregate Value equal to or greater than the then outstanding
principal amount of this Note. This Note may not be assigned by the Lender
without the written consent of the Borrower.
9.3 Consent to Assignment. The Borrower hereby:
(i) irrevocably consents to the assignment by the Lender to The Bank
of New York, in its capacity as Trustee (the "Trustee"), appointed under the
Intercreditor and Trust Agreement, dated as of June 26, 1996 (the "Trust
Agreement"), among the Lender, the General Partner, National Propane SGP, Inc.,
the banks listed as parties thereto, the note holders listed as parties thereto
and the other parties thereto, for the benefit of the Note Holders, Bank Lenders
and Parity Lenders (each as defined in the Trust Agreement), pursuant to the
Pledge and Security Agreement, dated as of June 26, 1996 (the "Security
Agreement"), among the grantors named therein and the Trustee, as amended,
modified or supplemented from time to time of all of the Lender's right, title
and interest in, to and under this Note, as collateral security for the Secured
Obligations (as defined in the Security Agreement);
(ii) irrevocably consents to any subsequent assignment by the Trustee
on behalf of the holders of the Secured Obligations made in accordance with the
terms of the Trust Agreement and the Security Agreement, upon and after receipt
by the Borrower of written notice from the Trustee that it desires to and is
permitted under the Trust Agreement and Security Agreement to exercise its
rights and remedies as a secured party under the Trust Agreement and Security
Agreement, including, without limitation, the acquisition of all of the Lender's
existing and future rights under this Note in foreclosure or otherwise, or the
assignment of this Note to any Person who is a transferee and any subsequent
assignment by such transferee;
(iii) agrees that the Trustee and the holders of the Secured
Obligations shall not, prior to becoming a transferee, be subject to any
liability or obligation hereunder; and
(iv) acknowledges the right of the Trustee, following the occurrence
of an Event of Default (as defined in the Trust Agreement), to exercise in
accordance with the terms of the Security Agreement and the Trust Agreement its
rights under the Security Agreement as a secured creditor and collateral
assignee of this Note, to make all demands, give all notices, take all actions
and exercise all rights of the Lender under this Note.
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20
9.4 GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO INSTRUMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
TRIARC COMPANIES, INC.
By:__________________________
Name:
Title:
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Draft: 6/24/96
NATIONAL PROPANE CORPORATION 1996 UNIT OPTION PLAN
1. PURPOSE. The purposes of this National Propane Corporation 1996 Unit
Option Plan (the "Plan") are to encourage selected Employees of National Propane
Corporation (the "Company") and its Affiliates to develop a proprietary interest
in the growth and performance of National Propane Partners, L.P. (the
"Partnership"), to generate an increased incentive to contribute to the
Partnership's future success and prosperity, thus enhancing the value of the
Partnership for the benefit of its Unitholders, and to enhance the ability of
the Company and its Affiliates to attract and retain key individuals who are
essential to the progress, growth and profitability of the Partnership, by
giving such Employees the opportunity to acquire Units through the exercise of
Options and/or Unit appreciation rights ("UARs").
2. ADMINISTRATION.
2.1 COMMITTEE. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") or such other committee as may be designated by the Board to administer
the Plan and composed of not less than two Directors of the Board, each of whom
shall be intended to be a "disinterested person" within the meaning of Rule
16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), as in effect
on the Effective Date of the Plan, to the extent required by Rule 16b-3. A
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all members of the Committee, shall be
deemed the acts of the Committee.
2.2 POWERS. Subject to the terms of the Plan and applicable law, the
Committee shall have the sole power, authority and discretion to: (i) designate
the Employees who shall be Participants; (ii) determine the number of Options
and UARs to be granted to Participants; (iii) determine the terms and
conditions, consistent with the provisions of the Plan, of any Option or UAR;
(iv) interpret, construe and administer the Plan and any instrument or agreement
relating to an Option or UAR granted under the Plan; (v) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; (vi) make any
determinations as to the right of any Person to receive payment of (or with
respect to) an Option or UAR; (vii) make any other determinations and take any
other actions that the Committee deems necessary or desirable for the
administration of the Plan; (viii) accelerate the exercisability of any Option
and/or UAR and (ix) correct any defect, supply any omission or reconcile any
inconsistency in the Plan, any Option or
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2
UAR in the manner and to the extent it shall deem desirable in the establishment
or administration of the Plan.
2.3 BINDING EFFECT. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions with
respect to the Plan, any Option or UAR granted hereunder shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons.
3. UNITS AVAILABLE.
3.1 NUMBER OF UNITS AVAILABLE. A total of 1,250,000 Units, plus a
number of Units equal to an additional 1% of the number of Units outstanding as
of each December 31 following the Plan's effective date, shall be available for
issuance pursuant to Options and UARs granted under the Plan, subject to
adjustment as provided in this Section 3.1 and in Section 3.3. The number of
Units available for issuance under the Plan shall be increased by the number of
Units received by the Company as payment of the exercise price of Options, and
by the number of Units purchased by the Company (in the open market or for Fair
Market Value in private transactions) from an amount equal to the cash proceeds
received by the Company on the exercise of Options under the Plan. Units may be
Common Units and/or Subordinated Units, as may be determined by the Committee in
its sole discretion. If any Option or UAR granted under the Plan is forfeited,
canceled, surrendered or otherwise terminates or expires without the delivery of
unrestricted Units or other consideration, the Units subject to such Option or
UAR, as the case may be, shall again be available for issuance pursuant to
Options and UARs under the Plan.
3.2 SOURCES OF UNITS DELIVERABLE UNDER PLAN. Units delivered by the
Company on exercise of an Option or UAR may consist, in whole or in part, of
Units acquired in the open market or from any Person (including the Partnership)
and (upon consideration of the tax consequences to the Company thereof) Units
that are originally issued by the Partnership to the Company in connection with
the organizational transactions effected concurrently with the closing of the
Partnership's initial public offering of Common Units ("IPO") under the
Securities Act of 1933, as amended (the "1933 Act"), or any combination of the
foregoing.
(i) REIMBURSEMENT BY PARTNERSHIP. With respect to each Unit
delivered to a Participant upon the exercise of an Option, the Company shall be
entitled to reimbursement by the Partnership for the excess, if any, of (i) the
Fair Market Value of each such Unit (as of the date of exercise of such Option
or, in the case of Units purchased in the open market or from any Person, the
price actually paid by the Company therefor over (ii) the exercise price of the
Option relating to such Unit. With respect to each payment made by the Company
upon
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3
exercise of a UAR, the Company shall be entitled to reimbursement by the
Partnership in an amount equal to the Spread (as hereinafter defined).
3.3 ADJUSTMENTS. The number of Units available for issuance under the
Plan and/or covered by a Participant's Options or UARs shall be adjusted as
appropriate in connection with any distribution to Unitholders, split,
recapitalization, extraordinary distribution, merger consolidation, combination
or exchange of Units or similar change or upon the occurrence of any other event
that the Committee deems appropriate. In the event of any change in the number
of Units outstanding by reason of any other transaction, the Committee may, but
need not, make such adjustments in the number of Units available for issuance
under the Plan and/or pertaining to each Option or UAR. No adjustment shall be
made to Options or UARs relating to Subordinated Units on account of the
expiration of the Subordination Period, as defined in the Partnership Agreement,
relating to such Units. The adjustments determined by the Committee shall be
final, binding and conclusive.
4. ELIGIBILITY. All Employees shall be eligible to be Participants, and to
be selected to receive Options under Section 5.1 hereof and UARs under Section
5.2 hereof. Grants may be made to the same Employee on more than one occasion.
5. TERMS OF OPTIONS AND UARS.
5.1 TERMS OF OPTIONS. The Committee is hereby authorized to grant
Options shall determine. Options granted under this Section 5.1 shall be
referred to as "Options."
(i) OPTION EXERCISE PRICE. The per Unit exercise price of any
Option shall be determined by the Committee at the date of grant.
(ii) TERM. The term of each Option shall be for such period as
may be determined by the Committee; provided, that in no event shall the term of
any Option exceed a period of 10 years from the date of its grant.
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part, and
may in its discretion accelerate the time at which any outstanding Option
becomes exercisable; provided that no Option to purchase Subordinated Units may
be exercisable before the end of the Subordination Period, as defined in the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"). Subject to any limitations in the Plan Agreement, a
Participant may purchase Units subject to the exercisable portion of an Option
in whole at any time, or in part from time to time, by delivering to the
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4
Secretary of the Company written notice specifying the number of Units with
respect to which the Option is being exercised, together with payment in full of
the purchase price of such Units plus any applicable federal, state or local
taxes for which the Company or any Affiliate has a withholding obligation in
connection with such purchase. Such payment shall be made in full in cash, by
check acceptable to the Company, in Units held by the Participant for such
period as may be required (in the opinion of the Committee) to avoid a charge to
the Company's earnings for financial reporting purposes, such other form of
consideration as may be permitted by the Committee in the applicable Plan
Agreement, or any combination of the foregoing. In lieu of the foregoing, if
permitted by the Committee, payment may be made by the delivery to the Company
of an assignment of a sufficient amount of the proceeds from the sale of Units
acquired upon exercise to pay for all of the Units acquired upon exercise and
any federal, state or local taxes which the Company or any Affiliate has a
withholding obligation, along with an authorization to the broker or selling
agent to pay that amount to the Company, which sale shall be made at the
Participant's direction at the time of exercise, provided that the Committee may
require the Participant to furnish an opinion of counsel acceptable to the
Committee to the effect that such delivery would not result in the Participant
incurring any liability under Section 16 of the Act.
(iv) TERMINATION OF EMPLOYMENT. Unless otherwise provided in a
Plan Agreement, if a Participant ceases to be an Employee for any reason
(including death or Disability): (a) to the extent an Option granted to such
Participant was exercisable immediately prior to the date such Participant
ceased to be an Employee (i) in the case of termination on account of Cause or
Voluntary Termination, such Option may not be exercised following such date of
termination, (ii) in the case of termination on account of death or Disability,
or death or Disability in the period described in (iii), such Option may be
exercised within one year after such date by the Participant (or, in the case of
his death, by the person to whom his rights shall pass by will or the laws of
descent and distribution), but not thereafter, and (iii) in the case of
termination for any reason other than as described in (i) or (ii), such Option
may be exercised within 90 days after such date of termination by the
Participant, but not thereafter; and (b) to the extent such Option was not
exercisable immediately prior to the date the Participant ceases to be an
Employee, such Option shall automatically lapse and be canceled unexercised on
such date; provided, that in no event shall any Option be exercisable after the
expiration date of such Option as set forth in the related Plan Agreement.
5.2 TERMS OF UARs. The Committee is hereby authorized to grant UARs to
Employees selected by the Committee with the terms and conditions described in
this Section 5.2 and in Section 5.3 and with such additional terms and
conditions, which are not inconsistent with the provisions of the Plan, as the
Committee shall determine. UARs may be granted in connection with all or any
part of, or independently of, any Option granted under this Plan. A UAR granted
in connection with an Option may be granted at or after the time of grant of
such Option.
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5
(i) Exercise. The grantee of a UAR shall have the right, subject
to the terms hereof and the applicable Plan Agreement, to receive from the
Company an amount equal to (a) the excess of (i) the Fair Market Value of a Unit
on the date of exercise of the UAR over (ii) the Fair Market Value of a Unit on
the date of grant (or over the Option exercise price if the UAR is granted in
connection with an Option), multiplied by (b) the number of Units with respect
to which the UAR is exercised (the "Spread");
(ii) Payment of Spread. Payment to the grantee upon exercise of a
UAR shall be in cash or in Units (valued at their Fair Market Value on the date
of exercise of the UAR) or both, all as the Committee shall determine in its
sole discretion. Upon the exercise of a UAR granted in connection with an
Option, the number of Units subject to the related Option shall be reduced by
the number of Units with respect to which the UAR is exercised. Upon the
exercise of an Option in connection with which a UAR has been granted, the
number of Units subject to the related UAR shall be reduced by the number of
Units with respect to which the Option is exercised.
(iii) Term of UARs. Each Plan Agreement with respect to a UAR
shall set forth the periods during which the award evidenced thereby shall be
exercisable. Such periods shall be determined by the Committee in its sole
discretion.
5.3 TERMS APPLICABLE TO ALL OPTIONS AND UARs.
(i) LIMITS ON TRANSFER. No Option, UAR or rights thereunder shall
be assignable, alienable, saleable or transferable by a Participant otherwise
than by will or by the laws of descent and distribution. Each Option and UAR
shall be exercisable during that grantee's lifetime only by the grantee or, if
permitted under applicable law, by the grantee's guardian or legal
representative. No Option, UAR or any rights thereunder may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company, the Partnership or any Affiliate.
(ii) UNIT CERTIFICATES. Upon exercise of an Option, or a UAR that
is payable in Units, delivery of a certificate for fully paid and nonassessable
Units shall be made to the Person exercising the Option or UAR, not more than 30
days from the date of receipt of the notice of exercise by the Company or at
such other time, place and manner as may be agreed upon by the Company and such
Person.
(iii) PLAN AGREEMENT. Each Option and UAR shall be evidenced by a
written document (a "Plan Agreement"), which shall have
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6
such terms and provisions, not inconsistent with the Plan, that the Committee
determines.
(iv) FORFEITURE FOR CERTAIN VIOLATIONS. Notwithstanding anything
herein to the contrary, all Options and UARs granted to a Participant hereunder
may be terminated and forfeited without the payment of any consideration if the
Committee determines in good faith that such Participant violated any
noncompetition, confidentiality or similar agreement, contract or policy of the
Company, the Partnership or an Affiliate applicable to such Participant.
6. AMENDMENT AND TERMINATION. The Board in its discretion may terminate the
Plan at any time with respect to any Units for which a grant has not theretofore
been made. The Board may also alter or amend the Plan or any Plan Agreement in
whole or in part from time to time; provided, that no change in the Plan or any
Option or UAR theretofore granted may impair the rights of a Participant without
the consent of such Participant; and provided further, that notwithstanding any
other provision of the Plan or any Plan Agreement, to the extent necessary to
comply with Rule 16b-3, no such amendment or alteration shall be made that
would, without the requisite consent under Rule 16b-3:
(i) materially increase the total number of Units available for
Options and UARs under the Plan, except as provided in Section 3 hereof;
(ii) materially modify the requirements as to eligibility for
participation in the Plan;
(iii) extend the maximum period during which Options or UARs may
be granted under the Plan; or
(iv) materially increase the benefits accruing to Participants
under the Plan.
7. VESTING/TERMINATION UPON THE OCCURRENCE OF A CHANGE IN CONTROL. If there
is a Change of Control, the Committee may in its discretion (i) accelerate the
exercisability of some or all outstanding Options and UARs, in which case the
Committee may also accelerate the date as of which such Options and UARs
terminate to a date at least 30 days following the date such Options and UARs
become exercisable, or (ii) cancel outstanding Options or UARs (whether or not
then exercisable) in exchange for a per Unit cash payment equal to the
difference between the amount being paid in connection with the transactions
effectuating the Change of Control for a Unit, or if none, the Fair Market Value
of a Unit at the effective date of such cancellation, over the per Unit exercise
price of such canceled Option or UAR for each Unit covered by such canceled
Option or UAR.
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7
8. GENERAL PROVISIONS.
8.1 NO RIGHTS TO AWARDS. No Person shall have any claim to be granted
any Option or UAR under the Plan, and there is no obligation for uniformity of
treatment of Persons under the Plan. The terms and conditions of Options and
UARs need not be the same with respect to each Participant.
8.2 WITHHOLDING. The Company or an Affiliate shall take such action as
may be necessary in the opinion of the Company or Affiliate to satisfy all
obligations for the payment of any withholding taxes resulting from any transfer
made with respect to the grant of any Option or UAR, or any cancellation,
exercise or vesting of an Option or UAR (as applicable) under the Plan.
8.3 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company, the Partnership or any Affiliate from
adopting or continuing in effect other or additional compensation arrangements
and such arrangements may be either generally applicable or applicable only in
specific cases.
8.4 NO RIGHT TO EMPLOYMENT. The grant of an Option or UAR shall not be
construed as giving a Participant the right to be retained in the service of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment or other service, free from any liability
or any claim under the Plan unless otherwise expressly provided in the Plan or
in any Plan Agreement.
8.5 GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with applicable Federal law, and to the extent not preempted thereby,
with the laws of the State of Delaware.
8.6 SEVERABILITY. If any provision of the Plan, any Option or any UAR
is or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction, or as to any person, or would disqualify the Plan, any Option or
UAR under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to such applicable law. If it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, Option or UAR, such provision shall
be stricken as to such jurisdiction, Person, Option or UAR and the remainder of
the Plan and any such Option shall remain in full force and effect.
8.7 NO TRUST OR FUND CREATED. Neither the Plan, any Option nor any UAR
shall be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Option or UAR,
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8
such right shall be no greater than the right of an unsecured general creditor
of the Company or an Affiliate.
8.8 NO FRACTIONAL UNITS. No fractional Units shall be issued or
delivered pursuant to the Plan, any Option or any UAR, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Units, or whether such fractional Units or
any rights thereto shall be canceled or otherwise eliminated.
8.9 HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
8.10 NO LIMITATION. The existence of the Plan and the grants of
Options and UARs hereunder shall not affect in any way the right or power of the
Board or the Unitholders of the Partnership (or stockholders or partners of any
Affiliate, as applicable) to make or authorize any adjustment, recapitalization,
reorganization or other change in the capital structure or business of the
Company, the Partnership or any Affiliate, any merger or consolidation of the
Company, the Partnership or any Affiliate, any issue of debt or equity
securities ahead of or affecting Units or the rights thereof or pertaining
thereto, the dissolution or liquidation of the Partnership or any Affiliate or
any sale or transfer of all or any part of the Partnership's or any Affiliate's
assets or business, or any other corporate act or proceeding.
8.11 SECURITIES LAWS. The Subordinated Units that may be subject to
Options or UARs under the Plan are unlisted, unregistered securities. Each
Option and UAR granted under the Plan shall be subject to the requirement that
if at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of the Units subject to such grant upon any
securities exchange or under any state or federal law, or that the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, such grant or the issue or purchase of
Units thereunder, such grant shall be subject to the condition that such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
8.12 RULE 16b-3. It is intended that the Plan and any Option or UAR
granted to a Person subject to Section 16 of the 1934 Act meet all of the
requirements of Rule 16b-3, as in effect from time to time. If any provision of
the Plan or any such Option or UAR would disqualify the Plan, such Option or
such UAR under, or would otherwise not comply with, Rule 16b-3, such provision,
Option or UAR shall be construed or deemed amended to conform to Rule 16b-3.
8.13 INVESTMENT REPRESENTATION. Unless the Units subject to Options
and UARs granted under the Plan have been registered under the
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9
1933 Act (and, in the case of any Participant who may be deemed an affiliate
(for securities law purposes) of the Company or Partnership, such Units have
been registered under the 1933 Act for resale by such Participant), or the
Partnership has determined that an exemption from registration is available, the
Partnership may require prior to and as a condition of the issuance of any Units
pursuant to an Option or UAR exercise that any person exercising such Option or
UAR hereunder furnish the Partnership with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring the
Units solely with a view to investment for his or her own account and not with a
view to the resale or distribution of all or any part thereof, and that such
person will not dispose of any of the Units otherwise than in accordance with
the provisions of Rule 144 under the 1933 Act unless and until either the Units
are registered under the 1933 Act or the Company is satisfied that an exemption
from such registration is available.
8.14 COMPLIANCE WITH SECURITIES LAWS. Anything contained herein to the
contrary notwithstanding, the Partnership shall not be obligated to sell or
issue any Units to the Company under the Plan unless and until the Partnership
is satisfied that such sale or issuance complies with (i) all applicable
requirements of the exchange on which the Units are traded (or the governing
body of the principal market in which such Units are traded, if such Units are
not then listed on an exchange), (ii) all applicable provisions of the 1933 Act
and (iii) all other laws or regulations by which the Partnership is bound or to
which the Partnership is subject. The Company acknowledges that, as general
partner of the Partnership, it is an affiliate of the Partnership under
securities laws and it shall comply with such laws and obligations of the
Partnership relating thereto as if they were directly applicable to the Company.
9. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of the
closing date of the IPO.
10. TERM OF THE PLAN. No Option or UAR shall be granted after ten years
from the effective date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Plan Agreement, any Option or UAR
granted may extend beyond such date, and any authority of the Committee to
amend, alter, suspend, discontinue or terminate any such Option or UAR, or to
waive any condition or rights under any such Option or UAR, shall extend beyond
such date.
11. DEFINITIONS. As used in this Plan, the following terms shall have the
meanings set forth below:
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10
(a) "Affiliate" shall mean the Partnership and any other Person
directly or indirectly controlling, controlled by or under common control with
such Person within the meaning of the 1933 Act.
(b) "Cause" shall mean or any like term, as defined in any
written contract between the Company and the optionee; or if not so defined, (i)
on account of fraud, embezzlement or other unlawful or tortious conduct, whether
or not involving or against the Company or any Affiliate, (ii) for violation of
a policy of the Company or any Affiliate, or (iii) for serious and willful acts
or misconduct detrimental to the business or reputation of the Company or any
Affiliate.
(c) "Change of Control" shall mean any of the following: (i) the
liquidation or dissolution of the Company, (ii) any merger or consolidation of
the Company with or into any person (other than Triarc or any of its Affiliates,
including, without limitation, Nelson Peltz, Peter W. May, DWG Acquisition
Group, L.P. or any of their respective Affiliates (each a "Permitted Holder"))
if the Company is not the surviving entity thereof, or any sale whether direct
or indirect, of substantially all of the assets of the Company to any Person or
"group" (as used in Section 13(d) and 14(d) of the Exchange Act) other than to a
Permitted Holder, (iii) any Person or group (other than a Permitted Holder) is
or becomes, directly or indirectly, the beneficial owner of more than 50% of the
then outstanding total voting power of all classes of stock of the Company, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the Directors of the Company or (iv) during any period of 12
consecutive months after the closing of the IPO, the individuals who at the
beginning of such 12 month period (or persons nominated by such members of the
Board of Directors of the Company to succeed them) constitute the Board of
Directors of the Company cease, for any reason, to constitute a majority
thereof.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Common Units" shall mean the limited partnership interests
in the Partnership represented by Common Units as set forth in the Partnership
Agreement and described in the Registration Statement for the IPO.
(f) "Disability" shall mean such total and permanent disability
as qualifies the Participant for benefits under the long-term or extended
disability plan of the Company or any Affiliate covering the Participant at the
time.
(g) "Employee" shall mean any director, employee or officer of,
or consultant to, the Company or any Affiliate other than any non-employee
director of the Company. In the event that the disinterested administration
requirement of Rule 16b-3 ceases to be applicable to awards granted under all
equity-
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11
based plans maintained by the Company and the Partnership, the term "employee"
as used herein shall include non-employee directors of the Company.
(h) "Fair Market Value" shall mean, at any specified time, with
respect to a Common or Subordinated Unit, if the Common Units are traded on an
exchange, the average of the closing prices of a Common Unit or, if applicable,
the mean of its closing bid and asked prices, on the ten days on which such
Units were traded immediately prior to the date of determination. For this
purpose, an "exchange" shall mean the exchange on which the Common Units were
traded in the greatest volume in the calendar quarter prior to the date of
determination and shall include normal securities trading markets which do not
meet the formal requirements for exchanges, including, for example, the
quotation system of the National Association of Securities Dealers customarily
known an Nasdaq or any recognized over-the-counter market or system maintained
in the United States or any foreign country on which transactions in Common
Units are normally effected. In the absence of a readily ascertainable closing
price or bid and asked price, or in the absence of a formal exchange or trading
market with respect to the Common Units, the market value of a Unit shall mean
its market value as determined by the Committee on a basis consistently applied.
(i) "Option" shall mean a right to purchase Units under the Plan
granted under Section 5.1.
(j) "Participant" shall mean an Employee granted an Option or a
UAR under the Plan.
(k) "Person" shall mean any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or political subdivision thereof.
(l) "Subordinated Units" shall mean the limited partnership
interests in the Partnership represented by Subordinated Units as set forth in
the Partnership Agreement and described in the Registration Statement for the
IPO.
(m) "UAR" shall mean a right granted under the Plan that may be
exercised as provided in Section 5.2.
(n) "Units" shall mean the limited partnership interests in the
Partnership represented by Common Units or Subordinated Units as set forth in
the Partnership Agreement and described in the Registration Statement for the
IPO.
(o) "Voluntary Termination" shall mean termination of service
with the Company and all Affiliates by the Participant for any reason
whatsoever, other than (i) an involuntary termination of the Participant's
employment by the Company or an Affiliate with or without Cause or (ii)
termination by reason of the Participant's retirement at or after age 65,
Disability or death.
<PAGE>
<PAGE>
DRAFT 6/24/96
dated __________, 1996
[Company Letterhead]
Grant of Unit [Options/Appreciation Rights]
___________________________
___________________________
___________________________
___________________________
I am pleased to inform you that the Board of Directors of National Propane
Corporation (the "Company") has granted you [an Option to purchase from the
Company] [appreciation rights with regard to] [Common/Subordinated] Units of
limited partnership interests in National Propane Partners, L.P. as follows:
[Option] Grant # ____________
Grant Date ____________
[Option Price] [appreciation base] per Unit $____________
Number of [Units/Rights] Granted ____________
By signing below, you agree that [this Option is/these rights are] granted under
and governed by the terms and conditions of the Company's 1996 Unit Option Plan,
including the Terms and Conditions attached hereto and incorporated herein by
reference[, and you acknowledge that any Subordinated Units subject to the
Option have not been registered under the Securities Act of 1933]. This grant
shall be void and of no effect unless you execute and return this Agreement to
the Company within 30 days of the above date. The attached copy of this
Agreement is for your records.
NATIONAL PROPANE CORPORATION
By:_____________________________
Title:____________________________
OPTIONEE
___________________________
___________________________
<PAGE>
<PAGE>
DRAFT 6/24/96
NATIONAL PROPANE CORPORATION
1996 UNIT OPTION PLAN
TERMS AND CONDITIONS
OPTION
The terms and conditions set forth below are hereby incorporated by
reference into the attached award agreement ("Agreement") by and between
National Propane Corporation (the "Company") and the employee named therein (the
"Participant"). Terms defined in the Plan are used herein with the same meaning.
1. Participant has agreed to perform services for the Company or its
Affiliates and to accept the grant of the [option/Unit appreciation rights]
provided in the Agreement (["Option"/"Rights") in accordance with, and subject
to, the terms and provisions of the Plan and the Agreement.
2. Except for its earlier termination as provided below, the
[Option/Rights] shall become exercisable [insert vesting schedule].
3. The [Option/Rights] shall not be exercisable following the tenth
anniversary of its Grant Date or the earlier lapse or termination of such
[Option/Rights] as provided herein and in the Plan. To the extent exercisable,
the [Option/Rights] may be exercised in whole or in part from time to time (but
not with respect to the lesser of 1,000 Units or the number of Units then
remaining subject to the [Option/Rights]).
4. Participant agrees that the Company or its Affiliates may withhold any
federal, state or local taxes upon the exercise or cancellation of the
[Option/Rights], at such time and upon such terms and conditions as required by
law. Notwithstanding anything herein to the contrary, the Company shall not be
obligated to deliver any Units pursuant to the exercise of the [Option/Rights]
until Participant has satisfied such withholding obligations or made
arrangements for satisfying such obligations that are acceptable to the Company.
5. To the extent and subject to the foregoing restrictions, the
[Option/Rights] may be exercised from time to time by a notice in writing of
such exercise, which states the [Option/Rights] Grant Number set forth in the
Agreement and the number of Units in respect of which the [Option is/Rights are]
being exercised. Such notice shall be delivered to the Chief Financial Officer
of the Company at the Company's offices, Suite 1700, IES Tower, 200 1st Street,
S.E., P.O. Box 2067, Cedar Rapids, Iowa 52401-2067. An election to exercise
shall be irrevocable. The date of exercise shall be the date the notice is hand
delivered or mailed, whichever is applicable.
<PAGE>
<PAGE>
2
[6. An election to exercise an Option shall be accompanied by the tender of
the full purchase price of the Units for which the election is made. Payment
shall be made in cash, in Units held by the Participant for such period as may
be required (in the opinion of the Committee) to avoid or change to the
Company's earnings for financial reporting purposes, through a brokered cashless
exercise progam described in Section 5.1(iii) of the Plan to be established by
the Committee on such terms and conditions as the Committee may determine or by
any combination of the foregoing.]
7. The [Option is/Rights are] is not transferable by Participant, otherwise
than by will or laws of descent and distribution and may be exercised during the
lifetime of Participant only by Participant (or, in the event of Participant's
incapacity, Participant's legal guardian or representative).
8. In the event Participant's employment with the Company and its
Affiliates is terminated the [Option/Rights] shall not be exercisable except as
permitted by Section 5.1(iv)(a) of the Plan.
9. Notwithstanding any other provision of the Agreement, Participant agrees
that Participant will not exercise any [Option/Rights] and neither the Company
nor the Partnership shall be obligated to deliver any Units or make any cash
payments, if counsel to the Company or the Partnership determines such exercise,
delivery or payment would violate any law or regulation of any governmental
authority or agreement with any national securities exchange upon which the
Units are listed.
10. In the event of a conflict between the terms of this Agreement and the
Plan, the Plan shall be the controlling document. Capitalized terms used herein
and not otherwise defined shall have the meaning ascribed to them in the Plan.
<PAGE>
<PAGE>
PWRW&G DRAFT
6/24/96
--------------------------------------------------
CONTRIBUTION AND ASSUMPTION
AGREEMENT
by and among
NATIONAL PROPANE, L.P.,
NATIONAL PROPANE CORPORATION,
NATIONAL PROPANE SGP, INC.
and
NATIONAL SALES AND SERVICE, INC.
Dated as of July [ ], 1996
--------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions.................................................. 1
2. Contribution Transactions.................................... 8
2.1 Contribution to the Partnership........................ 8
2.2 Contribution to the Partnership Subsidiary.............. 9
2.3 Assumption of Liabilities................................ 10
2.4 Effect of Contributions.................................. 10
2.5 Order of Contributions................................... 11
3. Miscellaneous Provisions Relating to Transfer of Assets........ 11
3.1 Nonassignability of Assets............................... 11
4. Indemnification................................................ 12
4.1 Exculpation and Indemnification by the Transferors....... 12
4.2 Exculpation and Indemnification by the Partnership....... 13
4.3 No Effect on Other Agreements............................ 14
5. Title Matters.................................................. 14
5.1 Encumbrances............................................. 14
5.2 Disclaimer of Warranties; Subrogation; Waiver of Bulk
Sales Laws............................................ 14
6. Miscellaneous.................................................. 15
6.1 Costs.................................................... 15
6.2 Headings; References; Interpretation..................... 16
6.3 Successors and Assigns................................... 16
6.4 No Third Party Rights.................................... 16
6.5 Counterparts............................................. 16
6.6 Governing Law............................................ 16
6.7 Severability............................................. 16
6.8 Deed; Bill of Sale; Assignment........................... 17
6.9 Amendment or Modification................................ 17
6.10 Integration.............................................. 17
Exhibits
A Form of Agency Agreement
i
<PAGE>
<PAGE>
Page
----
B Form of Assignment and Assumption Agreement
C Form of Assignment and Assumption Agreement--Service Assets
D Form of Assignment and Assumption of Leases
E Form of Subsidiary Services Agreement
F Form of Trademark Assignment
G Form of Deed
Schedules
1.1 Assets
1.2 Excluded Assets
1.3 Excluded Liabilities
1.4 Service Assets
ii
<PAGE>
<PAGE>
This CONTRIBUTION AND ASSUMPTION AGREEMENT, dated as of July __, 1996, is
entered into by and among NATIONAL PROPANE, L.P., a Delaware limited partnership
(the "Partnership"), NATIONAL PROPANE CORPORATION, a Delaware corporation (the
"Managing General Partner"), NATIONAL PROPANE SGP, INC., a Delaware corporation
and formerly known as All Seasons Propane, Inc. (the "Special General Partner"),
and NATIONAL SALES AND SERVICE, INC., a Delaware corporation (the "Partnership
Subsidiary").
RECITALS
WHEREAS, the Managing General Partner and the Special General Partner, as
the general partners and limited partners, and National Propane Partners, L.P.
("Nat Pro"), as limited partner, have heretofore formed the Partnership pursuant
to the Revised Uniform Limited Partnership Act (the "Delaware Act") for the
purpose of acquiring, owning and operating the Assets and the Business (as
hereinafter defined);
WHEREAS, the Managing General Partner has heretofore contributed $[ ] and
the Special General Partner has heretofore contributed $[ ] to the Partnership
in exchange for a 2.0956% general partner interest therein issued to each, a __%
limited partner interest therein issued to the Managing General Partner and a
__% limited partner interest therein issued to the Special General Partner, and
Nat Pro has heretofore contributed $[ ] to the Partnership in exchange for a
0.0001% limited partner interest therein;
NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, the parties to this Agreement undertake and agree as
follows:
1. Definitions.
The following capitalized terms shall have the meanings given below.
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise. Notwithstanding anything contained in this definition to the
contrary, the term Affiliate, (i) with respect to the Partnership, shall not
include the Managing General Partner, the Special General Partner or Triarc (or
their respective Affiliates determined without regard to the Partnership), and
(ii) with respect to the Managing General Partner, the Special General Partner
or Triarc, shall not include the Partnership (or its Affiliates determined
without regard to the Managing General Partner, the Special General Partner or
Triarc).
<PAGE>
<PAGE>
2
"Agency Agreement" means the Agency Agreement between the Partnership and
the applicable Transferor, dated as of the Closing Date, relating to the
servicing by the Partnership as an agent of the Managing General Partner of
certain contracts that would (but for Section 3.1) be part of the Assets, in
substantially the form attached hereto as Exhibit A.
"Agreement" means this Contribution and Assumption Agreement, as it may be
amended, supplemented or restated from time to time.
"Assets" has the meaning assigned to such term in Schedule 1.1 to this
Agreement.
"Assignment and Assumption Agreement" means each Bill of Sale, Assignment
and Assumption Agreement, dated as of the Closing Date, between the applicable
Transferor and the Partnership, in substantially the form attached hereto as
Exhibit B.
"Assignment and Assumption Agreement--Service Assets" means the Bill of
Sale, Assignment and Assumption Agreement, dated as of the Closing Date, between
the Partnership or the applicable Transferor and the Partnership Subsidiary, in
substantially the form attached hereto as Exhibit C.
"Assignment and Assumption of Leases" means one or more Agreements of
Assignment and Assumption of Leases with respect to the transfer of leased real
property, in substantially the form attached hereto as Exhibit D.
"Assumed Existing Bank Debt" means the aggregate principal amount, accrued
interest and other amounts, fees and expenses payable under the Existing Credit
Facility.
"Assumed Liabilities" means and includes all of the liabilities or
obligations of the Managing General Partner or the Special General Partner or
their past, present or future Affiliates arising from or relating to the Assets
or the operation of the Business (whether or not in the ordinary course), of
every kind, character and description, (a) whether matured or unmatured, known
or unknown, choate or inchoate, fixed or contingent, or liquidated or
unliquidated, (b) whether arising out of circumstances prior to, on or
subsequent to the Closing Date, (c) whether or not reflected on the books and
records of the Managing General Partner or the Special General Partner as of the
Effective Time, (d) regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by the
Managing General Partner or the Special General Partner or any of their
Affiliates, (e) regardless of where or against whom such obligations or
liabilities are asserted or determined and (f) regardless of whether asserted or
determined prior to, on or subsequent to the Effective Time, excluding, however,
any liabilities or obligations to the extent that they constitute Excluded
Liabilities. For the avoidance
<PAGE>
<PAGE>
3
of doubt, the Assumed Liabilities shall include, without limitation, (i) all
Partnership Liabilities, (ii) the Assumed Existing Bank Debt, (iii) the Notes
and (iv) other than the Excluded Liabilities, all liabilities or obligations
arising out of or relating to any business previously conducted or owned by the
Managing General Partner or the Special General Partner (or any predecessor of
the Managing General Partner or the Special General Partner).
"Bank Credit Facility" means the Credit Agreement, dated as of June __,
1996, by and among the Partnership and The First National Bank of Boston, as
administrative agent, BA Securities, Inc., as syndication agent, and the
financial institutions listed therein, providing for borrowings under the
working capital facility in an aggregate principal amount of up to $15 million
and borrowings under the acquisition and expansion facility in an aggregate
principal amount of up to $40 million.
"Bank Credit Facility Expenses" means all commissions, fees and other
out-of-pocket expenses (including fees and expenses of accountants, attorneys,
consultants or other agents) incurred, paid or payable by the Partnership to the
administrative agent, co-agent, lenders or other Persons in connection with the
Bank Credit Facility.
"Business" means the businesses currently or previously conducted by the
Managing General Partner or the Special General Partner (including any
businesses conducted by any predecessor of the Managing General Partner or the
Special General Partner).
"Commitment" has the meaning assigned to such term in Section 4.1(a) of
this Agreement.
"Delaware Act" has the meaning assigned to such term in the Recitals to
this Agreement.
"Effective Time" means a time mutually agreed upon among the Partnership
and Managing General Partner.
"Excluded Assets" has the meaning assigned to such term in Schedule 1.2 to
this Agreement.
"Excluded Liabilities" has the meaning assigned to such term in Schedule
1.3 to this Agreement.
"Existing Credit Facility" means the Revolving Credit and Term Loan
Agreement, dated as of October 7, 1994, as amended, among the Managing General
Partner, the Bank of New York, as Administrative Agent, certain co-agents and
the several lending institutions party thereto.
<PAGE>
<PAGE>
4
"General Partner Interest" shall mean, with respect to the Partnership, an
interest in the profits, losses and capital of the Partnership that provides the
holder thereof with the rights and obligations of a general partner in
accordance with the Partnership Agreement.
"General Partner Parties" means the Managing General Partner, the Special
General Partner and any of their Affiliates (including, without limitation,
Triarc), and (unless such Persons are Partnership Parties) any of their
respective directors, shareholders, partners, members, officers, employees,
agents, consultants, customers, representatives, successors, transferees or
assignees.
"Interests" has the meaning assigned to such term in Section 3.1(a).
"Laws" means any and all laws, statutes, ordinances, rules or regulations
promulgated by a governmental authority, orders or decrees of a court or other
governmental authority, judicial decisions, decisions of arbitrators or
determinations of any governmental authority or court.
"Litigation and Claims" means litigation pending or threatened or claims
alleged against any of the General Partner Parties or any of the Partnership
Parties, including, without limitation, civil and criminal actions, workers'
compensation proceedings, administrative and regulatory proceedings,
investigations, audits, inquiries, demands, claims (including any title claims
relating to real properties) and threatened actions.
"LP Interest" shall mean, with respect to the Partnership, an interest in
the profits, losses and capital of the Partnership that provides the holder
thereof with the rights and obligations of a limited partner in accordance with
the Partnership Agreement.
"Managing General Partner" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Net Note Proceeds" means the $125 million in gross proceeds received by
the Managing General Partner in connection with the Note Offering, less the Note
Offering Expenses and less $59.3 million that is distributed by the Managing
General Partner to its shareholder.
"New Litigation" has the meaning assigned to such term in clause (b) of the
definition of Partnership Liabilities.
"Note Offering" means the offer and sale of the Notes pursuant to the Note
Purchase Agreements.
<PAGE>
<PAGE>
5
"Note Offering Expenses" means all commissions, fees and other
out-of-pocket expenses (including fees and expenses of accountants, attorneys,
consultants or other agents) incurred, paid or payable by the Managing General
Partner or the Partnership to the placement agent or other Persons in connection
with the Note Offering.
"Note Purchase Agreements" means the note purchase agreements, each dated
as of June __, 1996, between the Managing General Partner and the lenders named
therein, relating to the Note Offering, as assigned to and assumed by the
Partnership.
"Notes" means the First Mortgage Notes issued by the Managing General
Partner in the Note Offering pursuant to the Note Purchase Agreements, and
assumed by the Partnership.
"Partnership" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"Partnership Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Partnership Damages" has the meaning assigned to such term in Section 4.1
of this Agreement.
"Partnership Liabilities" means and includes:
(a) all obligations, liabilities, costs and expenses with respect to
health, safety, environmental conditions of any nature (including indoor
and outdoor air conditions), natural resource damages, personal injury,
property damage, employment, benefits, compensation, pension rights, claims
arising out of contracts, intellectual property rights, product liability,
warranty, merchantability or fitness for any particular purpose of goods,
conformity of goods to contractual requirements, deceptive trade practice,
misrepresentation, fraud or any other alleged or actual breach or violation
of any obligation or requirement arising out of or associated with the
Assets or the operation of the Business, including, without limitation, (A)
all product warranty obligations with respect to products developed,
produced, manufactured, marketed, used, distributed or sold by the Business
("Company Products"), whether shipped prior to, on or subsequent to the
Closing Date, and (B) all liabilities resulting from claims for real or
alleged property damage, personal injury or consequential damage which is
caused or alleged to have been or to be caused by any defect in or breach
of warranty related to any Company Product or otherwise relating to the
Assets;
<PAGE>
<PAGE>
6
(b) all obligations, liabilities, costs and expenses arising out of or
relating to any Litigation and Claims pending as of the Effective Time
against the Managing General Partner, the Special General Partner, the
Partnership and/or any of their respective subsidiaries or Affiliates
("Pending Litigation") and all Litigation and Claims brought, threatened or
alleged against the Managing General Partner, the Special General Partner,
the Partnership or any of their respective subsidiaries or Affiliates after
the Closing Date ("New Litigation"), in each case if and solely to the
extent that such Litigation and Claims (in whole or in part) arise out of
or are associated with, or are alleged (regardless of the Person named in
the allegation or complaint) to arise out of, relate to or be associated
with the Assets or the operation of the Business;
(c) all obligations, liabilities, costs, and expenses (including,
without limitation, all fines or penalties or costs of closure,
investigation and feasibility studies, attorney or consultant fees or
remediation costs) of the Managing General Partner, the Special General
Partner, the Partnership or any of their respective subsidiaries or
Affiliates, arising under any federal, state, local or foreign statutes,
laws (including common law), codes, rules, regulations, policies or
guidelines or any administrative or judicial interpretations thereof
relating to the environment, natural resources and public or employee
health and safety arising out of or relating to, or alleged to arise out of
or relate to, the Assets or the operation of the Business;
(d) all obligations, liabilities, costs and expenses arising out of or
relating to any Litigation and Claims brought after the Closing Date
against the Managing General Partner, the Special General Partner, the
Partnership, or their respective subsidiaries or Affiliates by employees of
the Managing General Partner, the Special General Partner, or the
Partnership or any of their respective subsidiaries or Affiliates, claiming
that they suffered personal injuries of any kind, whether prior to, on or
subsequent to the Closing Date, arising out of, relating to or alleged to
arise out of, or relate to, the Assets or the operation of the Business;
(e) all obligations, liabilities, costs, and expenses of the Managing
General Partner, the Special General Partner or any of their subsidiaries
or Affiliates in any instance where the Partnership is operating as agent,
or subcontractor or in a similar capacity with respect to contracts,
permits, licenses or other Commitments that are associated with the Assets
or the operation of the Business (regardless of whether a third party
consent to assignment or transfer as part of the transactions contemplated
by this Agreement has been sought or obtained); and
(f) all obligations, liabilities, costs and expenses of the Managing
General Partner, the Special General Partner or any of their
<PAGE>
<PAGE>
7
subsidiaries or Affiliates in respect of any letters of credit, guaranties,
surety bonds or other credit enhancement arrangements arising out of or
relating to the Assets or the Business, including, without limitation, any
such arrangements provided in respect of Interests or any permit or
license; and
(g) all liabilities with respect to taxes of any kind whatsoever,
including interest, penalties and additions to tax, with respect thereto,
other than income taxes in excess of the accrued payable.
"Partnership Parties" means the Partnership and any direct or indirect
subsidiary or Affiliate of the Partnership, and any of their respective
directors, shareholders, partners, members, officers, employees, agents,
consultants, customers, representatives, successors, transferees or assignees.
"Partnership Subsidiary" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Party" means each of the Persons who are signatories to this Agreement.
"Pending Litigation" has the meaning assigned to such term in clause (b) of
the definition of Partnership Liabilities.
"Percentage Interests" has, with respect to the Partnership, the meaning
assigned to such term in the Partnership Agreement.
"Person" means an individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Service Assets" means that portion of the Assets that are described in
Schedule 1.4 hereto.
"Special General Partner" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Subsidiary Employees" means those former employees of the Managing General
Partner hired by the Partnership Subsidiary.
"Subsidiary Services Agreement" means the Subsidiary Services Agreement,
dated as of the Closing Date, between the Managing General Partner and the
Partnership Subsidiary, providing for, among other items, the Managing General
Partner to provide certain management and other services to the Partnership
Subsidiary, in substantially the form attached hereto as Exhibit E.
<PAGE>
<PAGE>
8
"Trademark Assignment" means an instrument of transfer with respect to the
trademarks to be transferred pursuant to the terms of this Agreement,
substantially in the form of Exhibit F hereto.
"Transaction Documents" means this Agreement, the Partnership Agreement,
the Subsidiary Services Agreement, the Note Purchase Agreements and the Bank
Credit Facility.
"Transfer Expenses" means all out-of-pocket expenses, fees and costs,
including, without limitation all sales, use and similar taxes and documentary,
filing, recording, transfer, deed or conveyance fees or taxes, in each case,
that are incurred or proposed to be incurred in connection with the
contributions, conveyances and deliveries to be made hereunder.
"Transferor" means the Managing General Partner or the Special General
Partner as transferor of the Assets to the Partnership or the Partnership
Subsidiary.
2. Contribution Transactions.
2.1 Contribution to the Partnership.
(a) (i) the Managing General Partner hereby grants, contributes,
bargains, sells, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and assigns, for its and their own use forever, all
of its right, title and interest in and to the Assets held by it (including,
without limitation, the Net Note Proceeds other than that portion thereof that
is included in the Excluded Assets) in exchange for (A) the consideration stated
in Section 2.1(b), (B) the assumption of the Assumed Liabilities by the
Partnership as provided in Section 2.3(a), and (C) other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged; and
(ii) The Special General Partner hereby grants, contributes,
bargains, sells, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and assigns, for its and their own use forever, all
of its right, title and interest in and to the Assets held by it in exchange for
(A) the consideration stated in Section 2.1(b), (B) the assumption of the
Assumed Liabilities by the Partnership as provided in Section 2.3(a), and (C)
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
TO HAVE AND TO HOLD the Assets unto the Partnership, its successors and
assigns, together with all and singular the rights and appurtenances thereto in
any way belonging, subject, however, to the terms and conditions stated in this
Agreement, forever.
<PAGE>
<PAGE>
9
(b) (i) In consideration for the contribution by the Managing
General Partner of the Assets held by it to the Partnership, the Partnership
hereby maintains the Managing General Partner's LP Interests in the Partnership
with a Percentage Interest of ______% and maintains the Managing General
Partner's General Partner Interest in the Partnership with a Percentage Interest
of 2.0956%.
(ii) In consideration for the contribution by the Special General
Partner of the Assets held by it to the Partnership, the Partnership hereby
maintains the Special General Partner's LP Interests in the Partnership with a
Percentage Interest of __% and maintains the Special General Partner's General
Partner Interest in the Partnership with a Percentage Interest of 2.0956%.
(c) To further evidence the conveyance of the Assets, the General
Partner has executed and delivered to the Partnership (and the Partnership
Subsidiary if the Partnership has directed the Managing General Partner to
transfer the Service Assets directly to the Partnership Subsidiary as provided
in the last sentence of Section 2.2(a)), the Deeds substantially in the form
attached hereto as Exhibit G relating to any owned real property included in the
Assets, the Assignment and Assumption of Leases relating to any leased real
property included in the Assets, the Assignment and Assumption Agreements, and
the Trademark Assignment, all of which are subject to this Agreement.
2.2 Contribution to the Partnership Subsidiary.
(a) Immediately after the completion of the transactions provided
for in Section 2.1, the Partnership hereby grants, contributes, bargains, sells,
conveys, assigns, transfers, sets over and delivers to the Partnership
Subsidiary, its successors and assigns, for its and their own use forever, all
of its right, title and interest in and to the Service Assets in exchange for
(i) the assumption of all liabilities relating thereto as provided in Section
2.3(b) and (ii) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and the Partnership Subsidiary
hereby accepts the Service Assets as a contribution to the capital of the
Partnership Subsidiary. The Partnership may, in its sole discretion, direct the
Managing General Partner to transfer the Service Assets directly to the
Partnership Subsidiary; provided, however, that any such transfer shall not
relieve the Partnership of any of its obligations under this Agreement
(including, without limitation, the obligation to assume the Assumed Liabilities
and to indemnify the General Partner Parties).
TO HAVE AND TO HOLD the Service Assets unto the Partnership Subsidiary, its
successors and assigns, together with all and singular the rights and
appurtenances thereto in any way belonging, subject, however, to the terms and
conditions stated in this Agreement, forever.
<PAGE>
<PAGE>
10
(b) To further evidence the conveyance of the Service Assets, the
Partnership (or the Managing General Partner) has executed and delivered to the
Partnership the Deeds substantially in the form of Exhibit G relating to any
owned real property included in the Service Assets and the Partnership (or the
Managing General Partner) and the Partnership Subsidiary have executed and
delivered the Assignment and Assumption Agreement--Service Assets.
2.3 Assumption of Liabilities.
(a) In connection with the contribution and transfer of the
Assets to the Partnership, the Partnership hereby assumes and agrees to duly and
timely pay, perform and discharge the Assumed Liabilities, including, without
limitation, the Notes and the Assumed Existing Bank Debt, to the full extent
that the Managing General Partner or the Special General Partner has been
heretofore or would have been in the future, were it not for the execution and
delivery of this Agreement, obligated to pay, perform and discharge the Assumed
Liabilities; provided, however, that said assumption and agreement to duly and
timely pay, perform and discharge the Assumed Liabilities shall not increase the
obligation of the Partnership with respect to the Assumed Liabilities beyond
that of the Managing General Partner or the Special General Partner, waive any
valid defense that was or in the future may be available to the Managing General
Partner or the Special General Partner with respect to the Assumed Liabilities
or enlarge any rights or remedies of any third party under any of the Assumed
Liabilities.
(b) In connection with the contribution and transfer of the
Service Assets to the Partnership Subsidiary, the Partnership Subsidiary hereby
assumes and agrees to duly and timely pay, perform and discharge the Assumed
Liabilities arising out of or related to the Service Assets to the full extent
that the Partnership has been heretofore or would have been in the future, were
it not for the execution and delivery of this Agreement, obligated to pay,
perform and discharge such Assumed Liabilities; provided, however, that said
assumption and agreement to duly and timely pay, perform and discharge such
Assumed Liabilities shall not increase the obligation of the Partnership
Subsidiary with respect to the Assumed Liabilities beyond that of the
Partnership, waive any valid defense that was or in the future may be available
to the Partnership with respect to the Assumed Liabilities or enlarge any rights
or remedies of any third party under any of the Assumed Liabilities.
2.4 Effect of Contributions. The contributions provided for in this
Section 2 shall be effective for all purposes as of the Effective Time in the
order described in Section 2.5. At the Effective Time, and after giving effect
to all of the transactions contemplated by this Section 2 and the Transaction
Documents, (a) the Managing General Partner shall continue to own (i) a General
Partner Interest in the Partnership with a Percentage Interest of 2.0956% and
(ii) an LP Interest in the Partnership with a Percentage Interest of ______%,
(b) the Special General Partner
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<PAGE>
11
shall continue to own (i) a General Partner Interest in the Partnership with a
Percentage Interest of 2.0956% and (ii) an LP Interest in the Partnership with a
Percentage Interest of ______% and (c) Nat Pro shall continue to own an LP
Interest in the Partnership with a Percentage Interest of 0.0001%.
2.5 Order of Contributions. The transactions described in Sections 2.1
and 2.3 shall occur simultaneously with one another. The transactions described
in Sections 2.2 and 2.3 shall occur simultaneously with one another and shall
occur immediately after completion of the transactions described in Section 2.1.
3. Miscellaneous Provisions Relating to Transfer of Assets.
3.1 Nonassignability of Assets.
(a) To the extent that any lease, contract, license, permit,
agreement, sales or purchase order, commitment, property interest, qualification
or other assets described in this Agreement as being sold, assigned, transferred
or conveyed to the Partnership (the "Commitments") or any claim, right or
benefit arising thereunder or resulting therefrom (collectively with the
Commitments, the "Interests"), is not capable of being sold, assigned,
transferred or conveyed without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any third person (including a government
or governmental authority), or if such sale, assignment, transfer or conveyance
or attempted sale, assignment, transfer or conveyance would be invalid, would
destroy or eliminate the Interests related thereto, or would constitute a breach
of a Commitment or a violation of any Law, this Agreement shall not constitute a
sale, assignment, transfer or conveyance thereof, or an attempted sale,
assignment, transfer or conveyance thereof in the absence of such approval,
consent or waiver. The obligations of the Partnership and the Transferor with
respect to such Interests will be governed by clause (b) hereof.
(b) The Parties hereto undertake to co-operate in good faith to
ensure that they do such acts and things as may be reasonably necessary to
complete the transfer of the Business. At all times after the date of this
Agreement, the Parties shall do such acts and things as may be reasonably
required for the purpose of giving to the Parties hereto the full benefit of all
the provisions of this Agreement in respect of the Interests, including using
their reasonable best efforts in order that any necessary third party shall
execute such documents and do such acts and things as may be reasonably required
for such purpose. The Transferor and the Partnership will use their reasonable
best efforts to obtain any consent, substitution, approval or amendment required
to novate, reissue or assign all Commitments; provided, however, that neither
the Transferor nor the Partnership shall be obligated to pay any consideration
therefor (except for filing fees and other similar charges) to, or commence
litigation against, the third party from whom such consents, approvals,
substitutions or amendments are requested. If the Transferor or the Partnership
is
<PAGE>
<PAGE>
12
unable to obtain any such required consent, approval, substitution or amendment,
the Transferor (or its Affiliates) shall continue to be bound by such
Commitments and, unless not permitted by Law or the terms thereof, the
Partnership (or its Affiliates) shall, as agent for the Transferor (or its
Affiliates) or as subcontractor, pay, perform and discharge fully all the
obligations of the Transferor (or its Affiliates) thereunder from and after the
Closing and indemnify and hold harmless the Transferor and the General Partner
Parties from and against, all losses, claims, damages, taxes, liabilities and
expenses whatsoever arising out of or in connection with the Partnership's (or
its Affiliates') performance of or omission to perform its obligations
thereunder and hereunder. The Transferor (or its Affiliates) shall, without
further consideration, pay and remit to the Partnership (or its designee)
promptly all money, rights and other consideration received in respect of such
performance after payment of any taxes due from the Transferor (or its
Affiliates) with respect to such receipt. The Transferor (or its Affiliates)
shall exercise their rights and options under all such Commitments only as
reasonably directed by the Partnership and at the Partnership's expense. If and
when any such approval, consent or waiver shall be obtained or such Commitment
shall otherwise become assignable or able to be novated, the assignment of the
Assets and the assumption of the Assumed Liabilities related to such approval,
consent or waiver or restriction on assignment and/or assumption shall become
effective automatically as of the Effective Time, without further action on the
part of the Transferor, the Partnership or any of their respective Affiliates,
and without payment of further consideration. To the extent that the assignment
of any Commitment or the proceeds thereof pursuant to this Section 3.1 is
prohibited by Law, the assignment provisions of this paragraph shall operate to
create a subcontract or agency with the Partnership to perform each relevant,
unassignable Commitment, and the subcontract price shall be equal to the money,
rights and other consideration received by the Transferor (net of any taxes
imposed on the Transferor or any of its Affiliates with respect to such money,
rights or other consideration) in respect of the performance by the Partnership
under such subcontract.
(c) If requested by the Transferor, the Partnership and the
Transferor shall enter into the Agency Agreement as of the Closing Date. To the
extent that a conflict exists between the Agency Agreement and this Agreement,
the Agency Agreement shall control with respect to the subject matter thereof.
(d) The Partnership shall, and the Transferor shall not (except
as a Partner of the Partnership) report, for Federal income tax purposes, the
income, gain, deduction and loss with respect to the Interests.
4. Indemnification.
4.1 Exculpation and Indemnification by the Transferors. The applicable
Transferor shall, without any further responsibility or liability of, or
recourse to, any of the Partnership Parties, absolutely and irrevocably be
solely liable and responsible for the Excluded Liabilities. None of the
Partnership Parties shall be
<PAGE>
<PAGE>
13
liable to any of the General Partner Parties or any third parties for any reason
whatsoever on account of any of the Excluded Liabilities.
The applicable Transferor shall indemnify, defend, save and hold harmless
each of the Partnership Parties from and against all claims, liabilities,
obligations, losses, costs, costs of defense (as and when incurred), including
expenses, fines, charges, penalties, allegations, demands, damages (including
but not limited to actual, punitive or consequential, foreseen or unforeseen,
known or unknown), settlements, awards or judgments of any kind or nature
whatsoever and reasonable outside attorneys' and consultants' fees and expenses
(collectively, "Losses"), to the extent arising out of (a) the Excluded
Liabilities, (b) any failure of an applicable Transferor to comply with any
applicable bulk sales law of any jurisdiction in connection with the
transactions provided for in Section 2.1(a) or (c) the breach by the applicable
Transferor of any of its obligations under this Agreement, all of which are
hereinafter collectively referred to as the "Partnership Damages."
Partnership Damages shall not be the subject of indemnification under this
Agreement to the extent that any proceeds are received by, or on behalf of, Nat
Pro, the Partnership or any of their subsidiaries or Affiliates, from any third
party insurance policy or any insurance policy issued by any captive insurance
company which is an Affiliate of Triarc (and are non-reimbursable by the
Partnership or any of its subsidiaries or Affiliates (other than any such
captive insurance company) under any self insurance policy).
4.2 Exculpation and Indemnification by the Partnership. Upon, from and
after the Effective Time, the Partnership shall, without any further
responsibility or liability of, or recourse to, any of the General Partner
Parties, absolutely and irrevocably assume and be solely liable and responsible
for the Assumed Liabilities. Except with respect to the Notes which shall be
recourse to the Managing General Partner (but not the Special General Partner)
none of the General Partner Parties shall be liable to any of the Partnership
Parties or any third parties for any reason whatsoever on account of any of the
Assumed Liabilities.
The Partnership shall indemnify, defend, save and hold harmless each of the
General Partner Parties from and against all Losses, to the extent arising out
of (a) the Assumed Liabilities or (b) the breach by any of the Partnership
Parties of any of their obligations under this Agreement, all of which are
hereinafter collectively referred to as the "General Partner Damages."
General Partner Damages shall not be the subject of indemnification under
this Agreement to the extent that, any proceeds are received by, or on behalf
of, the Managing General Partner, the Special General Partner or by any of their
subsidiaries or Affiliates, from any third party insurance policy or any
insurance policy issued by any captive insurance company which is an Affiliate
of Triarc (and
<PAGE>
<PAGE>
14
are non-reimbursable by the Managing General Partner, the Special General
Partner or any of their subsidiaries or Affiliates (other than any such captive
insurance company) under any self insurance policy).
4.3 No Effect on Other Agreements. It is acknowledged that after the
Effective Time, the Parties may have arm's length negotiated business
relationships, which relationships will be described in contracts, agreements
and other documents entered into in the normal course of business. Such
documents may include agreements by the Parties and their Affiliates to supply,
after the Effective Time, materials, products, services and leases. Such
business relationships shall not be subject to the indemnity provisions hereof,
unless the parties expressly agree to the contrary in the agreements governing
such relationships.
5. Title Matters.
5.1 Encumbrances. The transactions provided for in Section 2 are made
expressly subject to (a) all recorded and unrecorded liens, encumbrances,
agreements, defects, restrictions, adverse claims and all Laws, rules,
regulations, ordinances, judgments and orders of governmental authorities or
tribunals having or asserting jurisdiction over the Assets or the Business and
operations conducted thereon or therewith, in each case to the extent the same
are valid, enforceable and affect the Assets, including, without limitation, all
matters that a current survey or visual inspection of the Assets would reflect,
(b) the Assumed Liabilities and (c) all matters contained in the Assignment and
Assumption Agreement, the Assignment and Assumption Agreement--Service Assets,
the Assignment and Assumption of Leases, the Trademark Assignment and the Deeds
or other instruments of transfer referred to in this Agreement.
5.2 Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws.
(a) EACH TRANSFEROR IS CONVEYING AND TRANSFERRING THE ASSETS TO
THE PARTNERSHIP AND THE TRANSFERORS OR THE PARTNERSHIP IS CONVEYING AND
TRANSFERRING THE SERVICE ASSETS TO THE PARTNERSHIP SUBSIDIARY "AS IS" WITHOUT
REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY (ALL OF WHICH
THE TRANSFERORS HEREBY DISCLAIM), AS TO (I) TITLE, (II) FITNESS FOR ANY
PARTICULAR PURPOSE OR MERCHANTABILITY OR DESIGN OR QUALITY, OR (III) ANY OTHER
MATTER WHATSOEVER. THE PROVISIONS OF THIS SECTION 5.2 HAVE BEEN NEGOTIATED BY
THE TRANSFEROR, THE PARTNERSHIP AND THE PARTNERSHIP SUBSIDIARY AFTER DUE
CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
REPRESENTATIONS OR WARRANTIES OF THE TRANSFERORS, OR THE PARTNERSHIP AS
TRANSFEROR, WHETHER EXPRESS, IMPLIED OR
<PAGE>
<PAGE>
15
STATUTORY, WITH RESPECT TO THE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR
HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS EXPRESSLY SET FORTH HEREIN.
(b) The transfer of the Assets to the Partnership and of the
Service Assets to the Partnership Subsidiary are made with full rights of
substitution and subrogation of the Partnership and the Partnership Subsidiary,
as the case may be, and all persons claiming by, through and under the
transferee, to the extent assignable, in and to all covenants and warranties by
the predecessors-in-title of the applicable Transferor, and with full
subrogation of all rights accruing under applicable statutes of limitation and
all rights of action of warranty against all former owners of the Assets.
(c) The Parties agree that the disclaimers contained in this
Section are "conspicuous" disclaimers. Any covenants implied by statute or by
the use of the words "grant," "convey," "bargain," "sell," "assign," "transfer,"
"deliver," or "set over" or any of them or any other words used in this
Agreement are hereby expressly disclaimed, waived and negated.
(d) Each of the Parties hereby waives compliance with any
applicable bulk sales law or any similar law in any applicable jurisdiction in
respect of the transactions contemplated by this Agreement. The transferees of
the Assets and the Service Assets hereby forever waive any claim or right of
action which it now or in the future may ever have arising out of or in
connection with any Law concerning the environmental condition of the Assets,
and furthermore, hereby unconditionally releases the General Partner Parties
from any and all liabilities, penalties, losses or other damages, for which the
General Partner Parties may be otherwise responsible to pay pursuant to such
Laws.
6. Miscellaneous.
6.1 Costs.
(a) The Partnership (as transferee from the Transferor) and the
Partnership Subsidiary (as transferee from either the Partnership or the
Transferor) shall be responsible for, and shall pay directly to any designated
third party, all Transfer Expenses.
(b) If the Managing General Partner, the Special General Partner
or any of their Affiliates have paid or in the future are required to pay any
expenses, fees, costs or taxes that are the responsibility of the Partnership
pursuant to clause (a) above, then the Partnership, shall reimburse the Managing
General Partner, the Special General Partner or such Affiliate promptly upon
request therefor.
<PAGE>
<PAGE>
16
6.2 Headings; References; Interpretation. All Article and Section
headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any of the provisions hereof.
The words "hereof," "herein" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole, including,
without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Sections,
Schedules and Exhibits shall, unless the context requires a different
construction, be deemed to be references to the Sections of this Agreement and
the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits
attached hereto are hereby incorporated herein and made a part hereof for all
purposes. All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders, and the
singular shall include the plural and vice versa. The use herein of the word
"including" following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation," "but
not limited to," or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter. Except as otherwise expressly provided herein, any reference in
this Agreement to any Transaction Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time.
6.3 Successors and Assigns. The Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and assigns.
6.4 No Third Party Rights. The provisions of this Agreement are not
intended to and do not create rights in any other Person or confer upon any
other Person any benefits, rights or remedies and no Person is or is intended to
be a third party beneficiary of any of the provisions of this Agreement.
6.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
6.6 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York without regard to
the conflicts of law principles thereof.
6.7 Severability. If any of the provisions of this Agreement are held
by any court of competent jurisdiction to contravene, or to be invalid under,
the laws of any political body having jurisdiction over the subject matter
hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this
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<PAGE>
17
Agreement shall be construed as if it did not contain the particular provision
or provisions held to be invalid, and an equitable adjustment shall be made and
necessary provision added so as to give effect to the intention of the parties
as expressed in this Agreement at the time of execution of this Agreement.
6.8 Deed; Bill of Sale; Assignment. To the extent required by
applicable law, this Agreement shall also constitute a "deed," "bill of sale" or
"assignment" of the Assets.
6.9 Amendment or Modification. This Agreement may be amended or
modified, or any provision waived or rescinded, from time to time only by the
written agreement of the Parties directly bound by, or benefited from, the
provisions in respect of which such amendment, modification, waiver or
rescission is sought.
6.10 Integration. This Agreement supersedes all previous
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This Agreement and the Transaction Documents
constitute an integrated agreement which contain the entire understanding of the
parties. No understanding, representation, promise or agreement, whether oral or
written, is intended to be or shall be included in or form part of this
Agreement or the Transaction Documents unless it is contained in a written
amendment hereto executed by the parties hereto after the date of this
Agreement.
<PAGE>
<PAGE>
18
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
NATIONAL PROPANE, L.P.
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
NATIONAL PROPANE CORPORATION
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
<PAGE>
<PAGE>
19
NATIONAL PROPANE SGP, INC.
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
NATIONAL SALES AND SERVICE, INC.
By:____________________________________
Name:
Title:
ATTEST: By:____________________________________
Name:
Title:
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary
Public in and for said state, personally appeared ________________________, who
being by me duly sworn did say that he is the ____________________________ of
NATIONAL PROPANE CORPORATION, a Delaware corporation, and that the within
instrument was signed in behalf of said corporation and acknowledged said
instrument to be the free act and deed of said corporation for the purposes
therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official
seal, the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
________________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of NATIONAL
PROPANE, L.P., a Delaware limited partnership, and that the within instrument
was signed in behalf of said corporation and acknowledged said instrument to be
the free act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
________________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of NATIONAL
SALES AND SERVICE, INC., a Delaware corporation, and that the within instrument
was signed in behalf of said corporation and acknowledged said instrument to be
the free act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
________________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of _______________, 1996, before me, a Notary Public in
and for said state, personally appeared ________________________, who being by
me duly sworn did say that he is the ____________________________ of NATIONAL
PROPANE SGP, INC., a Delaware corporation, and that the within instrument was
signed in behalf of said corporation and acknowledged said instrument to be the
free act and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal,
the day and year last above written.
______________________________________
Printed Name:_________________________
Notary Public in and for said State
Commissioned in_______________________
County
[SEAL]
My commission expires:
________________________
<PAGE>
<PAGE>
Schedule 1.1 to
Contribution and Assumption Agreement
ASSETS
"Assets" means all of the assets owned, leased or held by the Managing
General Partner or the Special General Partner, as of the Effective Time, of
every kind, character and description, whether tangible or intangible, whether
real, personal or mixed, whether accrued or contingent, and wherever located,
including, without limitation, all of the assets necessary to operate the
Business as currently being operated by the Managing General Partner or the
Special General Partner and all right, title and interest of the Managing
General Partner or the Special General Partner in and to the following assets:
(a) liquefied petroleum gas inventory (including propane and butane);
(b) inventories and supplies of any kind (including appliance and
parts inventories);
(c) storage tanks and containers and propane cylinders (including
those tanks, containers and cylinders located at customer locations);
(d) office furniture, furnishings, computers, equipment, tools and
machinery of any kind;
(e) all real property, wherever located, together with all buildings,
structures, improvements, equipment, appurtenances and fixtures of every
kind or nature located thereon;
(f) all rights in real property or personal property arising under
leases, licenses, easements or other contracts or arrangements;
(g) all motor vehicles, trailers, tanks, railcars and related
equipment, whether owned or leased;
(h) every contract, agreement, arrangement, grant, gift, trust or
other arrangement or understanding of any kind;
(i) any and all rights, claims and causes of action that the Managing
General Partner or the Special General Partner may have under insurance
policies (including policies provided by any captive insurance company that
is an Affiliate of the Managing General Partner or the Special General
Partner [or written self insurance policies of the General Partner]) or
otherwise against any Person or property, whether known or unknown, accrued
or contingent, and whether or not reflected on the books and records
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<PAGE>
2
of the Managing General Partner or the Special General Partner as of the
Effective Time, and such rights, claims or causes of action representing
reimbursement or recovery of amounts actually paid by the Master
Partnership or the Partnership after the Effective Time;
(j) every right to sell or distribute any product or service;
(k) all tradenames, trademarks, service marks, logos, marks and
symbols of any kind, together with all goodwill associated therewith
(including, without limitation, the National Propane(TM) trademark),
patents, copyrights (including approvals for rights to acquire and other
rights with respect to any of the foregoing), computer software and
programs;
(l) all know-how, technology, designs, plans, inventions, discoveries,
formulae, every trade secret, every customer list and all other
confidential information of every kind;
(m) every customer relationship, employee relationship, supplier
relationship and other relationship of any kind;
(n) every business conducted prior to the Effective Time by the
Managing General Partner or the Special General Partner;
(o) every other proprietary right of any kind;
(p) all governmental licenses, franchises, approvals, registrations,
permits and authorizations of every kind;
(q) all deposits, prepayments and prepaid expenses;
(r) all rights under all covenants and warranties pertaining to the
Assets, express or implied, that have heretofore been made by any
predecessors in title of the Managing General Partner or the Special
General Partner or by any third party manufacturers, suppliers and
contractors; and
(s) copies of all books, records, papers and instruments of the
Managing General Partner or the Special General Partner, of whatever nature
and wherever located, including, without limitation, accounting and
financial records, documentation related to the Assets, customer
correspondence/sales records and credit reports;
provided, however, that notwithstanding anything to the contrary contained
herein or in any of the Transaction Documents, the term Assets shall not
include the Excluded Assets and the Excluded Assets shall be specifically
excluded from the transactions contemplated by this Agreement.
<PAGE>
<PAGE>
Schedule 1.2 to
Contribution and Assumption Agreement
EXCLUDED ASSETS
"Excluded Assets" means and includes the following:
(1) Corporate seal, certificate or articles of incorporation, minute books,
stock ledger records, books of account, and other records, papers and
instruments of the Managing General Partner and the Special General Partner
having to do with the corporate organization of the Managing General Partner or
the Special General Partner;
(2) Tax returns of the Managing General Partner and the Special General
Partner;
(3) All books and records which the Managing General Partner or the Special
General Partner is required by law to retain;
(4) All refunds and rights to refunds of taxes relating to the operation of
the Business prior to the Effective Time, including, without limitation, any
rights under any tax sharing agreement and all rights to any tax benefits
attributable to expenses paid or incurred by the Business prior to the Effective
Time but not deductible until after the Effective Time;
(5) Any equipment, software or other assets or properties (tangible or
intangible) which will be provided by the Managing General Partner or the
Special General Partner pursuant to the Subsidiary Services Agreement;
(6) All employee benefit plans and any pension assets arising out of or
related to the employment of the employees or former employees of the Managing
General Partner or the Special General Partner or any of its subsidiaries [other
than Subsidiary Employees];
(7) Furniture, fixtures and equipment located at the executive offices of
the Managing General Partner in Cedar Rapids, Iowa;
(8) $59.3 million of the Net Note Proceeds;
(9) all amounts due from Triarc, including, without limitation, an
intercompany note from Triarc in the aggregate principal amount of $30.0
million;
(10) all employment agreements, collective bargaining agreements and other
understandings, agreements or arrangements relating to employees or
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<PAGE>
2
former employees of the Managing General Partner or any of its Subsidiaries
[(other than any of the foregoing that relates to Subsidiary Employees)];
(11) all rights of the Managing General Partner and the Special General
Partner under this Agreement and any of the other Transaction Documents;
(12) the real property owned by the Managing General Partner located at
Marshfield, Wisconsin and the rights of the Managing General Partner under the
Lease related thereto with the Operating Partnership;
(13) the real property located in Callahan, Florida that is subject to a
contract of sale; and
(14) all shares of capital stock of the Special General Partner owned by
the Managing General Partner.
<PAGE>
<PAGE>
Schedule 1.3 to
Contribution and Assumption Agreement
EXCLUDED LIABILITIES
"Excluded Liabilities" means and includes the following:
(1) The federal, state and local income tax liabilities of the General
Partner and its Affiliates (including all federal, state and local income tax
liabilities attributable to the operation of the Business prior to the Effective
Time), including any such income tax liabilities of the Managing General Partner
and its Affiliates that may result from the consummation of the transactions
contemplated by this Agreement but excluding $______ accrued with respect to
federal income taxes payable by the Managing General Partner to Triarc
Companies, Inc. pursuant to a tax sharing agreement;
(2) Claims, liabilities and obligations of the Managing General Partner
which arise solely out of or from (a) the Excluded Assets or (b) the employees
or former employees of the Managing General Partner or its subsidiaries (other
than Subsidiary Employees).
<PAGE>
<PAGE>
Schedule 1.4 to
Contribution and Assumption Agreement
SERVICE ASSETS
"Service Assets" means all assets used solely in the conduct of the
appliance sales business, parts and fittings sales business and service labor
business (the "Service Business") as currently being operated by the Managing
General Partner or the Special General Partner in relation to its propane
business including, but not limited to:
(a) copies of all the books, records, papers and instruments of the
Managing General Partner and the Special Partner of whatever nature and wherever
located that relate to the Service Assets, including, without limitation,
accounting and financial records, documentation related to the Service Assets,
customer correspondence, sales records, credit reports, and other data relating
to the Service Assets;
(b) all inventory relating to the Service Business, including appliance
accessories and salable L.P. gas parts and fittings;
(c) every right to purchase, sell or distribute any appliances, parts or
fittings or provide service relating to the Service Business;
(d) all motor vehicles, trailers, tanks and related equipment relating to
the Service Business;
(e) all know-how, technology, designs, plans, inventions, discoveries,
formulae, every trade secret, every customer list and all other confidential
information of every kind relating to the Service Business;
(f) every customer relationship, employee relationship, supplier
relationship and other relationship of any kind relating to the Service
Business;
(g) all governmental licenses, franchises, approvals, registrations,
permits and authorizations of every kind relating to the Service Business;
(h) all deposits, prepayments and prepaid expenses relating to the Service
Business; and
[(i) all employment agreements, collective bargaining agreements and other
understandings, agreements or arrangements relating to former employees of the
Managing General Partner and the Special General Partner who will become
employees of the Partnership Subsidiary;] and
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<PAGE>
2
(j) all rights under all covenants and warranties pertaining to the Service
Assets, express or implied, to the extent transferable, that have heretofore
been made by any of the predecessors in title of the Managing General Partner or
the Special General Partner or by any third party manufacturers, suppliers and
contractors.
<PAGE>
<PAGE>
Exhibit 21.1
Subsidiaries of the Partnership
<TABLE>
<CAPTION>
Subsidiary State of Organization
---------- ---------------------
<S> <C>
National Propane, L.P. Delaware
Nation Sales and Service, Inc. Delaware
Carib Gas Corporation of St. Croix Delaware
Carib Gas Corporation of St. Thomas Delaware
</TABLE>
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 4 to Registration Statement No.
333-2768 of National Propane Partners, L.P. of our reports relating to the
financial statements of National Propane Corporation and subsidiaries and of
National Propane Partners, L.P. dated March 13, 1996 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the headings 'Selected Historical and Pro Forma Consolidated
Financial and Operating Data' and 'Experts' in such Prospectus.
DELOITTE & TOUCHE LLP
Cedar Rapids, Iowa
June 24, 1996
<PAGE>
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use
of our report on the financial statements (not included herein) of Public Gas
Company for the ten months ended December 31, 1993 and to all references to our
Firm included in this registration statement of National Propane Partners, L.P.
on Form S-1.
ARTHUR ANDERSEN LLP
Miami, Florida,
June 24, 1996.
<PAGE>
