UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Petroleum Heat and Power Co., Inc.
- -----------------------------------------------------------------------------
(Name of Issuer)
Class A Common Stock, $.10 par value
- -----------------------------------------------------------------------------
(Title of Class of Securities)
716600309
-------------------
(CUSIP Number)
Elizabeth C. Foley
First Reserve Corporation
475 Steamboat Road
Greenwich, Connecticut 06830
(203) 661-6601
- ----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 7, 1994
---------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /x/. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
1
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the Act but shall be subject to all other provisions of the Act (however, see
the Notes.)
2
<PAGE>
SCHEDULE 13D
CUSIP No. 716600309 Page 3 of 19 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Gas & Oil Investors, Limited Partnership
I.R.S. Identification No.: 13-3077100
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) __
(b) __
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES 652,547 (Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE
WITH 652,547 (Item 5)
10 SHARED DISPOSITIVE
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
652,547
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 2.8%
14 TYPE OF REPORTING PERSON
PN
3
<PAGE> SCHEDULE 13D
CUSIP No. 716600309 Page 4 of 19 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AmGO II, Limited Partnership
I.R.S. Identification No.: 13-3149992
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) __
(b) __
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
6 CITIZEN OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES 471,144 (Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE
WITH 471,144 (Item 5)
10 SHARED DISPOSITIVE
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
471,144
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 2.0%
14 TYPE OF REPORTING PERSON
PN
4
<PAGE> SCHEDULE 13D
CUSIP No. 716600309 Page 5 of 19 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AmGO III, Limited Partnership
I.R.S. Identification No.: 06-1176782
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) __
(b) __
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
6 CITIZEN OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES 246,478 (Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE
WITH 246,478 (Item 5)
10 SHARED DISPOSITIVE
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
246,478
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 1.0%
14 TYPE OF REPORTING PERSON
PN
5
<PAGE> SCHEDULE 13D
CUSIP No. 716600309 Page 6 of 19 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Reserve Secured Energy Assets Fund,
Limited Partnership
I.R.S. Identification No.: 06-1232433
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) __
(b) __
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZEN OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 330,614 (Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE
WITH 330,614 (Item 5)
10 SHARED DISPOSITIVE
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
330,614
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 1.4%
14 TYPE OF REPORTING PERSON
PN
6
<PAGE>
SCHEDULE 13D
CUSIP No. 716600309 Page 7 of 19 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Reserve Corporation
I.R.S. Identification No.: 06-1210123
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) __
(b) __
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZEN OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,700,783 (Item 5)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE
WITH 1,700,783 (Item 5)
10 SHARED DISPOSITIVE
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,700,783
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 7.2%
14 TYPE OF REPORTING PERSON
CO
7
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Item 1. Security and Issuer.
This Statement on Schedule 13D (the "Schedule 13D") relates to the
Class A Common Stock, par value $0.10 per share (the "Common Stock"), of
Petroleum Heat and Power Co., Inc., a Minnesota corporation (the "Issuer").
The principal executive offices of the Issuer are located at 2187 Atlantic
Street, Stamford, Connecticut, 06902.
Item 2. Identity and Background.
This Schedule 13D is being filed by American Gas & Oil Investors,
Limited Partnership ("Fund I"), AmGO II, Limited Partnership ("Fund II"), AmGO
III, Limited Partnership ("Fund III") and First Reserve Secured Energy Assets
Fund, Limited Partnership ("Fund IV", and together with Fund I, Fund II and
Fund III, the "Funds"), and by First Reserve Corporation ("First Reserve"), to
report the acquisition by the Funds of (i) Common Stock and (ii) options to
purchase Common Stock. First Reserve is the managing general partner of each
of the Funds. The Funds, in the aggregate, directly beneficially own more than
5% of the issued and outstanding shares of Common Stock (the "Petro Shares").
Fund I, Fund II and Fund III are New York limited partnerships and
Fund IV is a Delaware limited partnership. Their principal purpose is to make
equity and debt investments in companies engaged in various energy and energy
related activities, including, but not limited to, energy production,
processing, transmission, distribution, marketing, equipment manufacturing,
electrical generation, and technical services, and in energy assets such as oil
and gas reserves or processing and transmission facilities.
First Reserve is a Delaware corporation which raises funds for and
manages the Funds. The principal business of First Reserve is to act as
managing general partner and provide investment management services to the
Funds.
The principal business and office address of First Reserve and each
of the Funds (together, the "Reporting Persons") is 475 Steamboat Road,
Greenwich, Connecticut 06830.
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Information with respect to the executive officers and directors of
First Reserve, including name, business address, present principal occupation
or employment and the organization in which such employment is conducted, and
their citizenship is listed on the schedule attached hereto as Schedule I,
which is incorporated into this Schedule 13D by reference.
During the last five years, none of the Reporting Persons nor any
executive officer or director of First Reserve has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding or a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
9
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Item 3. Source and Amount of Funds or Other Consideration.
On December 21, 1993, the Issuer acquired certain equity interests
(the "1993 Acquisition") in Star Gas Corporation ("Star Gas"), the equity
interests of which had been previously held, in their entirety, by the Funds
and FRC Star Gas, Inc., a Delaware corporation ("FRC Star Gas" and together,
with the Funds, the "FRC Shareholders"). The entire capital stock of FRC Star
Gas was beneficially owned by the Funds. In connection with the 1993
Acquisition, (i) the Issuer, the FRC Shareholders, and The Prudential Insurance
Company of America entered into a Shareholder Put/Call Agreement, dated
December 21, 1993 (the "Put/Call Agreement"), pursuant to which, among other
things, the Issuer was granted the right to purchase (the "Call"), until
December 31, 1998, all Star Gas equity interests (including all stock options
issued by Star Gas) not already owned by the Issuer, at a formula-based price
and (ii) Star Gas issued options (collectively, the "Star Gas Options") to
purchase 86,091, 68,095, 59,430, 61,384, and 225,000 shares of Star Gas Class A
Common Stock to Fund I, Fund II, Fund III, Fund IV and FRC Star Gas,
respectively.
On December 7, 1994, in connection with the acquisition of all
remaining equity interests in Star Gas (the "Star Gas Acquisition"), the Issuer
exercised the Call, pursuant to which (i) all Star Gas common and preferred
stock previously held by Fund I, Fund II, Fund III, Fund IV and FRC Star Gas
was converted into 312,450, 202,174, 23,457, 88,158 and 342,071 Petro Shares,
respectively, and (ii) the Star Gas Options were converted into options (the
"Petro Options") to purchase 126,113, 99,756, 87,063, 89,925, and 329,616 Petro
Shares, respectively. The letter from the Issuer to the Funds and FRC Star
Gas, dated December 7, 1994, exercising the Call, is attached as Exhibit 2
hereto.
10
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On December 14, 1994, Fund III sold 3,672, 2,904 and 2,618 Petro
Shares to Fund I, Fund II and Fund IV, respectively, at a price of $8.875 per
Petro Share.
On December 30, 1994, FRC Star Gas dissolved and, in connection
therewith, made a liquidating dividend of 342,071 Petro Shares and 329,616
Petro Options to its shareholders in proportion to their pro rata ownership of
FRC Star Gas, as follows:
Petro Shares Petro Options
Fund I 107,102 103,210
Fund II 84,697 81,613
Fund III 73,922 71,230
Fund IV 76,350 73,563
Total 342,071 329,616
Following the liquidating dividend, (i) Fund I owned 423,224 Petro Shares and
229,323 Petro Options, representing beneficial ownership of 2.8% of the Petro
Shares outstanding as of June 30, 1995, (ii) Fund II owned 289,775 Petro Shares
and 181,369 Petro Options, representing beneficial ownership of 2.0% of the
Petro Shares outstanding as of June 30, 1995, (iii) Fund III owned 88,185 Petro
Shares and 158,293 Petro Options, representing beneficial ownership of 1.0% of
the Petro Shares outstanding as of June 30, 1995 and (iv) Fund IV owned 167,126
Petro Shares and 163,488 Petro Options, representing beneficial ownership of
1.4% of the Petro Shares outstanding as of June 30, 1995.
Item 4. Purpose of Transaction.
The Funds acquired the Petro Shares disclosed in Item 5 of this
Schedule 13D for investment purposes only.
Except as described above, at the present time the Reporting Persons
do not have any plans or proposals that would relate to any transaction, change
or event specified in clauses (a) through (j) of Item 4 of the Schedule 13D
form.
11
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Item 5. Interest in Securities of the Issuer.
(a) and (b) Under the definition of "beneficial ownership" as set
forth in Rule 13d-3 under the Act, First Reserve and the Funds may be deemed to
beneficially own, as a group, 968,310 Petro Shares and the 732,473 Petro
Options, constituting in the aggregate approximately 7.2% of the outstanding
Petro Shares, assuming, for purposes of calculating the foregoing percentage
and all other percentages herein, that the Petro Options had been exercised in
full. Individually, each of the Funds may be deemed under Rule 13d-3 of the
Act to own (i) Petro Shares and (ii) Petro Shares underlying the Petro Options,
representing the percentages of Petro Shares outstanding as of June 30, 1995,
as follows:
Percentage of Petro
Shares Shares Beneficially
Underlying Owned as of
Shares Options October 5, 1995
Fund I 423,224 229,323 2.8%
Fund II 289,775 181,369 2.0%
Fund III 88,185 158,293 1.0%
Fund IV 167,126 163,488 1.4%
None of the Funds has sold, transferred or otherwise disposed of any of the
Petro Shares or Petro Options since the original acquisition of such Petro
Shares or Petro Options, respectively.
Each Fund has the sole power to vote or to direct the vote and
sole power to dispose or direct the disposition of all Petro Shares held by it.
The Funds are limited partnerships, the sole managing general partner of which
is First Reserve, and therefore First Reserve, acting on behalf of the Funds,
has the power to direct the voting of and disposition of any Petro Shares
deemed to be beneficially owned by the Funds and may be deemed to beneficially
own any Petro Shares deemed to be beneficially owned by any of the Funds.
If any or all of the Funds were to exercise the Petro Options,
such exercising Fund(s) would have the sole power to vote and sole power to
dispose of all of the Petro Shares underlying the Petro Options owned by such
12
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Fund, and as sole managing general partner of the Funds, First Reserve, acting
on behalf of the Funds, would have the sole power to direct the voting of and
the disposition of all such Petro Shares underlying the Petro Options, in each
case subject to the terms of each of the Petro Options.
(c) Except as set forth in this Item 5 or in Item 3, none of
the Reporting Persons or, to the best knowledge of each of the Reporting
Persons, no other person named in Item 2, has beneficial ownership of, or has
engaged in any transaction (i) during the past 60 days (ii) during the 60 days
preceding December 7, 1994 or (iii) during the period following December 7,
1994 in, any shares of Issuer Common Stock.
(d) To the best knowledge of the Reporting Persons, no
other person has the right to receive, or the power to direct the receipt of
dividends from, or the power to direct the receipt of proceeds of the sale of
Petro Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements or Understanding with Respect to
Securities of the Issuer
Except as set forth in this Statement, to the best knowledge of
the Reporting Persons, there are no other contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 and between such persons and any person with respect to any securities
of the Issuer, including but not limited to, transfer or voting of any of the
securities of the Issuer, joint ventures, loan or option arrangements, puts or
calls, guarantees or profits, division of profits or loss, or the giving or
withholding of proxies, or a pledge or contingency the occurrence of which
would give another person voting power over the securities of the Issuer.
Upon their original issuance, each of the Petro Options
entitled the holder thereof to, among other things, purchase one Petro Share at
13
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an exercise price of $10.14, subject to certain adjustments. On October 17,
1995, the Issuer and the Funds executed a Letter Agreement (the "Option Letter
Agreement") amending the Petro Options to, among other things, (i) reduce the
exercise price of the Petro Options to $8.77 and (ii) permit the Issuer to
repurchase the Petro Options for $2.23 per Petro Option. The Petro Options
expire on December 20, 1998. The Petro Options are attached hereto as Exhibits
3-6. The Option Letter Agreement is attached hereto as Exhibit 7.
The Funds' are also parties to the Put/Call Agreement, pursuant
to which, among other things, the Funds have registration rights with respect
to any Petro Shares owned by them, subject to certain exceptions and
conditions. The Put/Call Agreement is attached hereto as Exhibit 8.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement, dated as of October 24, 1995, among
American Gas & Oil Investors, Limited Partnership, AmGO II,
Limited Partnership, AmGO III, Limited Partnership, First
Reserve Secured Energy Assets Fund, Limited Partnership and
First Reserve Corporation relating to the filing of a joint
statement on Schedule 13D.
2. Call Exercise Letter, dated December 7, 1994, from Petroleum
Heat and Power Co, Inc. to the FRC Shareholders.
3. Option, dated December 7, 1994, to purchase 229,323 shares of
Class A Common Stock of Petroleum Heat and Power Co, Inc.
4. Option, dated December 7, 1994, to purchase 181,369 shares of
Class A Common Stock of Petroleum Heat and Power Co, Inc.
5. Option, dated December 7, 1994, to purchase 158,293 shares of
Class A Common Stock of Petroleum Heat and Power Co, Inc.
6. Option, dated December 7, 1994, to purchase 163,488 shares of
Class A Common Stock of Petroleum Heat and Power Co, Inc.
7. Letter Agreement, dated October 17, 1995, among the Petroleum
Heat and Power Co, Inc., American Gas and Oil Investors,
Limited Partnership, AmGO II, Limited Partnership, AmGO III,
Limited Partnership and First Reserve Secured Energy Assets
Fund, Limited Partnership.
14
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8. Shareholder Put/Call Agreement, dated as of December 21, 1993,
among Petroleum Heat and Power Co., Inc., American Gas & Oil
Investors, AmGo II, AmGO III, First Reserve Secured Energy
Assets Fund, L.P., FRC Star Gas, Inc. and The Prudential
Insurance Company of America.
15
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
Dated: October 24, 1995
FIRST RESERVE CORPORATION
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary
and Treasurer
AMERICAN GAS AND OIL INVESTORS, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary
and Treasurer
AMGO II, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary
and Treasurer
AMGO III, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary
and Treasurer
16
<PAGE>
FIRST RESERVE SECURED ENERGY ASSETS
FUND, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary
and Treasurer
17
<PAGE>
Schedule I
1. The name, business address, and present principal
occupation or employment of each of the executive officers and directors of the
First Reserve Corporation are set forth below. Unless otherwise indicated, (i)
the business address of each is 475 Steamboat Road, Greenwich, Connecticut
06830, (ii) each such person is a citizen of the United States, and (iii) such
person does not have any other principal occupation:
Name and Position with
First Reserve Corporation
John A. Hill
Chairman, Managing Director and Director
David H. Kennedy
Managing Director and Director
Cathleen M. Ellsworth
Vice President
Bruce M. Rothstein
Vice President
Steven H. Pruett
Vice President
William E. Macaulay
President and Chief Executive
Officer, Managing Director
and Director
Elizabeth C. Foley
Managing Director, Secretary and Treasurer
18
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INDEX TO EXHIBITS
Exhibit Number Description of Exhibits
1. Joint Filing Agreement, dated as of October 24, 1995,
among American Gas & Oil Investors, Limited
Partnership, AmGO II, Limited Partnership, AmGO III,
Limited Partnership, First Reserve Secured Energy
Assets Fund, Limited Partnership and First Reserve
Corporation relating to the filing of a joint
statement on Schedule 13D.
2. Call Exercise Letter, dated December 7, 1994, from
Petroleum Heat and Power Co, Inc. to the FRC
Shareholders.
3. Option, dated December 7, 1994, to purchase 229,323
shares of Class A Common Stock of Petroleum Heat and
Power Co, Inc.
4. Option, dated December 7, 1994, to purchase 181,369
shares of Class A Common Stock of Petroleum Heat and
Power Co, Inc.
5. Option, dated December 7, 1994, to purchase 158,293
shares of Class A Common Stock of Petroleum Heat and
Power Co, Inc.
6. Option, dated December 7, 1994, to purchase 163,488
shares of Class A Common Stock of Petroleum Heat and
Power Co, Inc.
7. Letter Agreement, dated October 17, 1995, among
Petroleum Heat and Power Co, Inc., the American Gas
and Oil Investors, Limited Partnership, AmGO II,
Limited Partnership, AmGO III, Limited Partnership and
First Reserve Secured Energy Assets Fund, Limited
Partnership.
8. Shareholder Put/Call Agreement, dated as of December
21, 1993, among Petroleum Heat and Power Co., Inc.,
American Gas & Oil Investors, AmGo II, AmGO III, First
Reserve Secured Energy Assets Fund, L.P., FRC Star
Gas, Inc. and The Prudential Insurance Company of
America.
19
EXHIBIT 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which
this Agreement is attached, hereby agree that such statement is, and any
amendments thereto filed by any of us will be, filed on behalf of each of us.
FIRST RESERVE CORPORATION
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary and
Treasurer
AMERICAN GAS AND OIL INVESTORS, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary and
Treasurer
AMGO II, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary and
Treasurer
AMGO III, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary and
Treasurer
1
<PAGE>
FIRST RESERVE SECURED ENERGY ASSETS
FUND, LIMITED PARTNERSHIP
By: First Reserve Corporation, its
managing general partner
By: /s/ Elizabeth C. Foley
Name: Elizabeth C. Foley
Title: Managing Director, Secretary and
Treasurer
DATED: October 24, 1995
2
EXHIBIT 2
[Petroleum Heat and Power Co, Inc. Letterhead]
December 7, 1994
VIA FAX (203) 661-6725
FRC Shareholders
c/o First Reserve Corporation
475 Steamboat Road
Greenwich, CT 06830
Attn: William E. Macaulay
Gentlemen:
Please refer to the Shareholder Put/Call Agreement entered into
as of December 21, 1993 among Petroleum Heat and Power Co., Inc., the
Prudential Insurance Company of America and the FRC Shareholders, as defined
therein.
Petro hereby exercises its option to purchase all shares of
common stock and 8% cumulative convertible preferred stock of Star Gas
Corporation owned by the FRC Shareholders. Petro is this date making wire
transfers of $452,317.04 in immediately available funds to accounts previously
designated by you and has instructed Chemical Bank, the transfer agent for its
Class A Common Stock to issue the following shares of Class A Common Stock for
delivery to you today:
American Gas & Oil Investors 312,450 shares
AmGo II 202,174 shares
AmGo III 23,457 shares
First Reserve Secured Energy 88,158 shares
Assets Fund, L.P.
FRC Star Gas Inc. 342,071 shares
Sincerely yours,
PETROLEUM HEAT AND
POWER CO., INC.
By /s/ George Liebowitz
George Leibowitz
Senior Vice President
1
EXHIBIT 3
Neither this Option, nor the shares of Common Stock issuable upon its exercise,
have been registered under the Securities Act of 1933, as amended. This Option
has been, and the shares of Common Stock issuable upon its exercise will be,
acquired for investment. This Option may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
hereof and except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not then required under such Act.
Option
To Purchase 229,323 shares of Class A Common Stock of
PETROLEUM HEAT AND POWER CO., INC.
December 7, 1994
THIS IS TO CERTIFY THAT American Gas & Oil Investors is entitled to
purchase from Star Gas Corporation, a Delaware corporation, (the "Company")
at any time after December 7, 1994, until 5:00 P.M., New York time, on
December 20, 1998 (the "Expiration Date"), two hundred twenty-nine thousand,
three hundred twenty-three (229,323) shares (subject to adjustment as
provided in Article Four hereof) of Class A Common Stock, par value $.10
per share, of the Company, at the Purchase Price (defined below) subject
to exercise of the other appurtent rights, powers and privileges, all on the
terms and conditions hereinafter provided.
1. Certain Definitions
For all purposes of this Option, unless the context otherwise requires:
Act
The term "Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
Affiliate
The term "Affiliate", as it applies to the Optionholder, means an
individual, corporation, partnership or other entity which controls, is
controlled by, or is under common control with, the Optionholder.
Shares of Common Stock
The term "shares of Common Stock" means the Company's shares of Class A
Common Stock, par value $.10 per share, and any capital stock into which such
shares of Common Stock may thereafter have been changed, and for purposes of
Article Four shall also include capital stock of the Company or any class of
the Company's securities thereafter authorized which ranks, or is entitled to a
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participation, as to assets or dividends, substantially on a parity with the
shares of Common Stock.
Company
The term "Company" means Petroleum Heat and Power Co., Inc., a Minnesota
corporation.
Expiration Date
The term "Expiration Date" means 5:00 P.M., New York time, on December 20,
1998, unless terminated at an earlier date pursuant to Section 4.4.6 hereof.
Number of option Shares
The term "number of Option Shares" has the meaning assigned to it in
Article Four hereof.
Optionholder
The term "Optionholder" means FRC Star Gas, Inc.
Options
The term "Options" means this Option and all Options issued in
substitution, combination or subdivision thereof. All Options shall at all
times be identical as to terms and conditions and expiration date, except as to
the number of shares of Common Stock for which they may be exercised and except
as otherwise required by this Option or as otherwise agreed to by the Company
and the Optionholder.
Option Shares
The term "Option Shares" means the shares of Common Stock issuable upon
the exercise of the Options.
Purchase Price
The term "Purchase Price" means $10.14 per share as adjusted pursuant to
Article Four hereof. In lieu of payment of the Purchase Price, the
Optionholder shall have the right to require the Company to convert this
Option, in whole or in part, into shares of Common Stock ("Conversion Right"),
as provided in this Section. Upon exercise of the Conversion Right, the
Company shall deliver to the Optionholder (without payment by the Optionholder
of any of the Purchase Price) that number of shares of Common Stock equal to
the quotient obtained by dividing (x) the Value (as defined below) of the
portion of the Option being converted by (y) the Market Price (as defined
below), immediately prior to the exercise of the Conversion Right. The "Value"
of the portion of the option being converted shall mean the difference between
(a) the Purchase Price multiplied by the number of shares of Common Stock being
converted and (b) the Market Price multiplied by the number of shares of Common
Stock being converted. "Market Price" means the average of the last reported
sales price for the shares of Common Stock for the 10 trading days preceding
the date on which the Option is exercised as reported by the NASDAQ National
Market System, or if a class of stock is not included in the NASDAQ National
Market System, then on the stock exchange or listing service on which such
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class is included, provided, however, that if no such sales prices exist, then
the Conversion Right shall not be available to the Optionholder.
2. Exercise of Option
2.1 Manner of Exercise
Until the Expiration Date, the Optionholder may exercise this Option in
whole at any time or in part from time to time for the purchase of the number
of shares of Common Stock which such Optionholder is then entitled to purchase
hereunder, at the Purchase Price per Common Share determined in accordance with
the provisions hereof.
In order to exercise this Option, in whole or in part, the Optionholder
shall deliver to the Company at its principal office or such other office or
agency designated by it for such purpose, written notice of the Optionholder's
election to exercise this Option, which notice shall specify the number of
shares of Common Stock to be purchased. Ten days thereafter the Optionholder
shall deliver cash or a certified or bank check payable to the order of the
Company in an amount equal to the Purchase Price of the number of shares of
Common Stock being purchased and (b) this Option, against delivery of a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in such notice. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice and shall be registered in the name of the Optionholder or, subject
to Article Three, such other name as shall be designated (together with an
address) in such notice.
Such certificate or certificates shall be deemed to have been issued and
the Optionholder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Common Stock as of
the date such notice and payment is received by the Company as aforesaid if
this Option has been exercised in compliance with the above provisions. If
this Option shall have been exercised only in part, the Company shall, at the
time of delivery of such certificate or certificates, deliver to the
Optionholder a new Option evidencing the rights of the holder to purchase the
remaining shares of Common Stock called for by this Option, which new Option
shall in all other respects, except as provided in Article Three, be identical
with this Option, or, at the request of the Optionholder, appropriate notation
may be made on this Option and the same returned to such holder. The Company
shall pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section,
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionholder, funds sufficient to pay all
share transfer taxes which shall be payable upon issuance of such share
certificate or certificates shall be paid by the Optionholder at the time the
notice of exercise hereinabove mentioned is delivered to the Company.
2.2 Option Shares Fully Paid
All Option Shares shall be, when issued, duly authorized, validly issued,
fully paid and non-assessable.
2.3 Fractional Shares
The Company shall not be required upon the exercise of this Option to
issue a certificate representing any fraction of a share of Common Stock, but,
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at the option of the company, in lieu of issuing such a fractional share, may
pay for such fraction of a share at the Purchase Price in effect on the date of
such exercise of this Option.
3. Transferability; Compliance With Securities Act
3.1 Restrictive Legend
Unless otherwise not required by this Article Three, each certificate for
Option Shares initially issued upon the exercise of this Option, and each
certificate for shares of Common Stock issued to a subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares of Common Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with the terms hereof and except pursuant to an effective
registration statement under such Act and any applicable state securities
laws, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
then required.
3.2 Restriction On Transferability
The Options shall not be transferable except to a person controlled by,
controlling, or under common control with the Option Holder. The Option Shares
shall be freely transferable except to the extent limited by law or by any
agreement among shareholders of the Company.
4. Adjustments To Purchase Price And Number of Option Shares
The Purchase Price and the number of Option Shares purchasable hereunder
(such number, as in effect from time to time, being hereinafter called the
"number of Option Shares"), as specified in this Option, shall be subject to
adjustment from time to time as follows:
4.1 Dividends and Reclassifications. In case the Company shall (i)
declare a dividend, or make a distribution, on its outstanding shares of Common
Stock in shares of its Common Stock, (ii) subdivide or reclassify its
outstanding Common Stock into a greater number of shares or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
number of Option Shares in effect at the time of the record date for such
dividend or distribution or subdivision or combination, or the effective date
thereof if no record date is fixed therefor, shall be proportionately adjusted
so that the holder of any Option surrendered for exercise immediately after the
time of such record date or such effective date (if no record date is fixed)
shall be entitled to receive the number of Option Shares which such holder
would have owned or been entitled to receive had the Option been exercised
immediately prior to such time. Adjustment in the number of Option Shares
shall be made successively whenever any event specified above shall occur.
4.2 Liquidating Dividends. In the event that the Company shall make any
distribution of its assets upon or with respect to its Common Stock, as a
liquidating or partial liquidating dividend, or other than as a cash dividend
payable out of earnings or any surplus legally available for dividends under
the laws of the state of incorporation of the Company, the Optionholder shall,
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upon the exercise of the option after the record date for such distribution or,
in the absence of a record date, after the date of such distribution, receive,
in addition to the Option Shares, the amount of such assets (or, at the option
of the Company, a sum equal to the value thereof at the time of distribution as
determined by the Board of Directors in its sole discretion) which would have
been distributed to the Optionholder if it had exercised the Option immediately
prior to the record date for such distribution, or in the absence of a record
date, immediately prior to the date of such distribution.
4.3 Adjustment of Purchase Price. Upon each adjustment of the number of
Option Shares pursuant to this Article, the Purchase Price shall be adjusted to
equal the amount obtained by multiplying the Purchase Price in effect
immediately prior to such adjustment by a fraction, the numerator of which
equals the number of Option Shares in effect prior to such adjustment and the
denominator of which equals the number of Option Shares in effect after such
adjustment.
4.4 Miscellaneous matters.
4.4.1 No adjustment of the Purchase Price shall be made if the
amount of such adjustment shall be less than one percent of the then Purchase
Price, but in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than one percent of the then Purchase Price.
4.4.2 The certificate of any independent firm of public accountants
of recognized standing selected by the Board of Directors shall be conclusive
of the correctness of any computation made under this Article.
4.4.3 Whenever any adjustment is required in the then Purchase
Price, the Company shall forthwith (i) prepare a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such statement to be mailed to the Optionholder.
4.4.4 The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock the full number of Option Shares into
which all Option from time to time outstanding are exercisable. If at any time
the number of authorized and unissued shares of Common Stock shall not be
sufficient to effect the exercise this option at the Purchase Price then in
effect, the Company shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized Common Stock to such
number of shares as shall be sufficient for such purpose.
4.4.5 In case of any reclassification of or change in the
outstanding shares of Common Stock (other than a change in par value, or a
change from no par to par value or from par value to no par value) or in the
case of any consolidation of the Company with, or, merger of the Company into,
another corporation (other than a consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of or
change in the outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of all or substantially all the assets of the
Company, the Optionholder shall have the right to exercise such option into the
kind and amount of shares and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which the Option could have
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been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. After such reclassification,
change, consolidation, merger, sale or conveyance, adjustments of the Purchase
Price and number of Option Shares (or other securities) shall be as nearly
equivalent as may be practicable to the adjustments of the Purchase Price and
number of Option Shares (or other securities) provided for herein.
The Company and any successor shall not effect any such consolidation,
merger, sale or conveyance of property as an entirety with or to another
corporation unless and until such other corporation shall agree to deliver to
the Optionholder, upon the exercise of the Option, such shares, securities and
property which, in accordance with the foregoing provisions, such Optionholder
shall have the right to receive. Successive reclassifications, changes,
consolidations, mergers, sales or conveyances and adjustments of Purchase Price
and number of Option Shares (or other securities) shall be similarly treated.
Immediately before any such consolidation, merger, sale or conveyance of
property as an entirety with or to another corporation the Company shall pay to
the Optionholder an amount of cash equal to the number of Option Shares
multiplied by the difference between (a) the cash or fair value of any property
or securities to be received by a holder of a share of Common Stock pursuant to
any such consolidation, merger, sale or conveyance of property and (b) the
Purchase Price.
5. Notice Of Certain Events.
In case at any time on or after the date hereof:
(a) there shall be any capital reorganization or reclassification of the
shares of Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock and other than a change in the par value or
the shares of Common Stock, or a change from par value to no par value or from
no par value to par value), or any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or any sale or transfer of all or substantially all the assets of the
Company; or
(b) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be delivered to each Optionholder, as promptly
as possible but in any event at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
6. Limitation of Liability
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No provision hereof, in the absence of affirmative action by the
Optionholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights and privileges of the Optionholder, shall give rise to any
liability of such Optionholder for the Purchase Price or as a shareholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
7. Miscellaneous Provisions
7.1 Notices and Demands on Company and Optionholder. Any notice or
demand which by any provision of this Option is required or permitted to be
given or served may be given or served by being deposited postage prepaid,
registered or certified mail, return receipt requested, in a post office letter
box addressed (until another address of the Company is given by the Company to
the Optionholder) as follows: if to the Company, then to Petroleum Heat and
Power Co., Inc., Davenport Street, Stamford, Connecticut 06094, Attn: George
Leibowitz, Senior Vice President. If to the Optionholder, then to FRC Star Gas
Inc. c/o First Reserve Capital Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06803, Attn: William Macaulay, Managing Director. All notices
shall be deemed to have been given upon delivery or mailing thereof.
7.2 Amendments And Waivers. Any term of this Option may be changed,
waived, discharged or terminated only be a written consent of the Company and
the Optionholder.
7.3 Laws of Delaware To Govern. This option shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of such
State.
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7.4 Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Company has caused this Option to be signed in its
name by a duly authorized officer and attested by its Secretary or Assistant
Secretary.
Dated: December 30, 1994
PETROLEUM HEAT AND POWER CO., INC.
/s/ George Leibowitz
----------------------------------
Name: George Leibowitz
Title: Senior Vice President
ATTEST:
_______________________
Name:
Title:
8
EXHIBIT 4
Neither this Option, nor the shares of Common Stock issuable upon its exercise,
have been registered under the Securities Act of 1933, as amended. This Option
has been, and the shares of Common Stock issuable upon its exercise will be,
acquired for investment. This Option may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
hereof and except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not then required under such Act.
Option
To Purchase 181,369 shares of Class A Common Stock of
PETROLEUM HEAT AND POWER CO., INC.
December 7, 1994
THIS IS TO CERTIFY THAT AmGo II is entitled to purchase from
Star Gas Corporation, a Delaware corporation, (the "Company") at any time after
December 7, 1994, until 5:00 P.M., New York time, on December 20, 1998 (the
"Expiration Date"), one hundred eighty-one thousand, three hundred sixty-nine
(181,369) shares (subject to adjustment as provided in Article Four
hereof) of Class A Common Stock, par value $.10 per share, of the Company, at
the Purchase Price (defined below) subject to exercise of the other appurtent
rights, powers and privileges, all on the terms and conditions hereinafter
provided.
1. Certain Definitions
For all purposes of this Option, unless the context otherwise requires:
Act
The term "Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
Affiliate
The term "Affiliate", as it applies to the Optionholder, means an
individual, corporation, partnership or other entity which controls, is
controlled by, or is under common control with, the Optionholder.
Shares of Common Stock
The term "shares of Common Stock" means the Company's shares of Class A
Common Stock, par value $.10 per share, and any capital stock into which such
shares of Common Stock may thereafter have been changed, and for purposes of
Article Four shall also include capital stock of the Company or any class of
the Company's securities thereafter authorized which ranks, or is entitled to a
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participation, as to assets or dividends, substantially on a parity with the
shares of Common Stock.
Company
The term "Company" means Petroleum Heat and Power Co., Inc., a Minnesota
corporation.
Expiration Date
The term "Expiration Date" means 5:00 P.M., New York time, on December 20,
1998, unless terminated at an earlier date pursuant to Section 4.4.6 hereof.
Number of option Shares
The term "number of Option Shares" has the meaning assigned to it in
Article Four hereof.
Optionholder
The term "Optionholder" means FRC Star Gas, Inc.
Options
The term "Options" means this Option and all Options issued in
substitution, combination or subdivision thereof. All Options shall at all
times be identical as to terms and conditions and expiration date, except as to
the number of shares of Common Stock for which they may be exercised and except
as otherwise required by this Option or as otherwise agreed to by the Company
and the Optionholder.
Option Shares
The term "Option Shares" means the shares of Common Stock issuable upon
the exercise of the Options.
Purchase Price
The term "Purchase Price" means $10.14 per share as adjusted pursuant to
Article Four hereof. In lieu of payment of the Purchase Price, the
Optionholder shall have the right to require the Company to convert this
Option, in whole or in part, into shares of Common Stock ("Conversion Right"),
as provided in this Section. Upon exercise of the Conversion Right, the
Company shall deliver to the Optionholder (without payment by the Optionholder
of any of the Purchase Price) that number of shares of Common Stock equal to
the quotient obtained by dividing (x) the Value (as defined below) of the
portion of the Option being converted by (y) the Market Price (as defined
below), immediately prior to the exercise of the Conversion Right. The "Value"
of the portion of the option being converted shall mean the difference between
(a) the Purchase Price multiplied by the number of shares of Common Stock being
converted and (b) the Market Price multiplied by the number of shares of Common
Stock being converted. "Market Price" means the average of the last reported
sales price for the shares of Common Stock for the 10 trading days preceding
the date on which the Option is exercised as reported by the NASDAQ National
Market System, or if a class of stock is not included in the NASDAQ National
Market System, then on the stock exchange or listing service on which such
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class is included, provided, however, that if no such sales prices exist, then
the Conversion Right shall not be available to the Optionholder.
2. Exercise of Option
2.1 Manner of Exercise
Until the Expiration Date, the Optionholder may exercise this Option in
whole at any time or in part from time to time for the purchase of the number
of shares of Common Stock which such Optionholder is then entitled to purchase
hereunder, at the Purchase Price per Common Share determined in accordance with
the provisions hereof.
In order to exercise this Option, in whole or in part, the Optionholder
shall deliver to the Company at its principal office or such other office or
agency designated by it for such purpose, written notice of the Optionholder's
election to exercise this Option, which notice shall specify the number of
shares of Common Stock to be purchased. Ten days thereafter the Optionholder
shall deliver cash or a certified or bank check payable to the order of the
Company in an amount equal to the Purchase Price of the number of shares of
Common Stock being purchased and (b) this Option, against delivery of a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in such notice. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice and shall be registered in the name of the Optionholder or, subject
to Article Three, such other name as shall be designated (together with an
address) in such notice.
Such certificate or certificates shall be deemed to have been issued and
the Optionholder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Common Stock as of
the date such notice and payment is received by the Company as aforesaid if
this Option has been exercised in compliance with the above provisions. If
this Option shall have been exercised only in part, the Company shall, at the
time of delivery of such certificate or certificates, deliver to the
Optionholder a new Option evidencing the rights of the holder to purchase the
remaining shares of Common Stock called for by this Option, which new Option
shall in all other respects, except as provided in Article Three, be identical
with this Option, or, at the request of the Optionholder, appropriate notation
may be made on this Option and the same returned to such holder. The Company
shall pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section,
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionholder, funds sufficient to pay all
share transfer taxes which shall be payable upon issuance of such share
certificate or certificates shall be paid by the Optionholder at the time the
notice of exercise hereinabove mentioned is delivered to the Company.
2.2 Option Shares Fully Paid
All Option Shares shall be, when issued, duly authorized, validly issued,
fully paid and non-assessable.
2.3 Fractional Shares
The Company shall not be required upon the exercise of this Option to
issue a certificate representing any fraction of a share of Common Stock, but,
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at the option of the company, in lieu of issuing such a fractional share, may
pay for such fraction of a share at the Purchase Price in effect on the date of
such exercise of this Option.
3. Transferability; Compliance With Securities Act
3.1 Restrictive Legend
Unless otherwise not required by this Article Three, each certificate for
Option Shares initially issued upon the exercise of this Option, and each
certificate for shares of Common Stock issued to a subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares of Common Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with the terms hereof and except pursuant to an effective
registration statement under such Act and any applicable state securities
laws, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
then required.
3.2 Restriction On Transferability
The Options shall not be transferable except to a person controlled by,
controlling, or under common control with the Option Holder. The Option Shares
shall be freely transferable except to the extent limited by law or by any
agreement among shareholders of the Company.
4. Adjustments To Purchase Price And Number of Option Shares
The Purchase Price and the number of Option Shares purchasable hereunder
(such number, as in effect from time to time, being hereinafter called the
"number of Option Shares"), as specified in this Option, shall be subject to
adjustment from time to time as follows:
4.1 Dividends and Reclassifications. In case the Company shall (i)
declare a dividend, or make a distribution, on its outstanding shares of Common
Stock in shares of its Common Stock, (ii) subdivide or reclassify its
outstanding Common Stock into a greater number of shares or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
number of Option Shares in effect at the time of the record date for such
dividend or distribution or subdivision or combination, or the effective date
thereof if no record date is fixed therefor, shall be proportionately adjusted
so that the holder of any Option surrendered for exercise immediately after the
time of such record date or such effective date (if no record date is fixed)
shall be entitled to receive the number of Option Shares which such holder
would have owned or been entitled to receive had the Option been exercised
immediately prior to such time. Adjustment in the number of Option Shares
shall be made successively whenever any event specified above shall occur.
4.2 Liquidating Dividends. In the event that the Company shall make any
distribution of its assets upon or with respect to its Common Stock, as a
liquidating or partial liquidating dividend, or other than as a cash dividend
payable out of earnings or any surplus legally available for dividends under
the laws of the state of incorporation of the Company, the Optionholder shall,
4
<PAGE>
upon the exercise of the option after the record date for such distribution or,
in the absence of a record date, after the date of such distribution, receive,
in addition to the Option Shares, the amount of such assets (or, at the option
of the Company, a sum equal to the value thereof at the time of distribution as
determined by the Board of Directors in its sole discretion) which would have
been distributed to the Optionholder if it had exercised the Option immediately
prior to the record date for such distribution, or in the absence of a record
date, immediately prior to the date of such distribution.
4.3 Adjustment of Purchase Price. Upon each adjustment of the number of
Option Shares pursuant to this Article, the Purchase Price shall be adjusted to
equal the amount obtained by multiplying the Purchase Price in effect
immediately prior to such adjustment by a fraction, the numerator of which
equals the number of Option Shares in effect prior to such adjustment and the
denominator of which equals the number of Option Shares in effect after such
adjustment.
4.4 Miscellaneous matters.
4.4.1 No adjustment of the Purchase Price shall be made if the
amount of such adjustment shall be less than one percent of the then Purchase
Price, but in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than one percent of the then Purchase Price.
4.4.2 The certificate of any independent firm of public accountants
of recognized standing selected by the Board of Directors shall be conclusive
of the correctness of any computation made under this Article.
4.4.3 Whenever any adjustment is required in the then Purchase
Price, the Company shall forthwith (i) prepare a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such statement to be mailed to the Optionholder.
4.4.4 The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock the full number of Option Shares into
which all Option from time to time outstanding are exercisable. If at any time
the number of authorized and unissued shares of Common Stock shall not be
sufficient to effect the exercise this option at the Purchase Price then in
effect, the Company shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized Common Stock to such
number of shares as shall be sufficient for such purpose.
4.4.5 In case of any reclassification of or change in the
outstanding shares of Common Stock (other than a change in par value, or a
change from no par to par value or from par value to no par value) or in the
case of any consolidation of the Company with, or, merger of the Company into,
another corporation (other than a consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of or
change in the outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of all or substantially all the assets of the
Company, the Optionholder shall have the right to exercise such option into the
kind and amount of shares and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which the Option could have
5
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been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. After such reclassification,
change, consolidation, merger, sale or conveyance, adjustments of the Purchase
Price and number of Option Shares (or other securities) shall be as nearly
equivalent as may be practicable to the adjustments of the Purchase Price and
number of Option Shares (or other securities) provided for herein.
The Company and any successor shall not effect any such consolidation,
merger, sale or conveyance of property as an entirety with or to another
corporation unless and until such other corporation shall agree to deliver to
the Optionholder, upon the exercise of the Option, such shares, securities and
property which, in accordance with the foregoing provisions, such Optionholder
shall have the right to receive. Successive reclassifications, changes,
consolidations, mergers, sales or conveyances and adjustments of Purchase Price
and number of Option Shares (or other securities) shall be similarly treated.
Immediately before any such consolidation, merger, sale or conveyance of
property as an entirety with or to another corporation the Company shall pay to
the Optionholder an amount of cash equal to the number of Option Shares
multiplied by the difference between (a) the cash or fair value of any property
or securities to be received by a holder of a share of Common Stock pursuant to
any such consolidation, merger, sale or conveyance of property and (b) the
Purchase Price.
5. Notice Of Certain Events.
In case at any time on or after the date hereof:
(a) there shall be any capital reorganization or reclassification of the
shares of Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock and other than a change in the par value or
the shares of Common Stock, or a change from par value to no par value or from
no par value to par value), or any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or any sale or transfer of all or substantially all the assets of the
Company; or
(b) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be delivered to each Optionholder, as promptly
as possible but in any event at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
6. Limitation of Liability
6
<PAGE>
No provision hereof, in the absence of affirmative action by the
Optionholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights and privileges of the Optionholder, shall give rise to any
liability of such Optionholder for the Purchase Price or as a shareholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
7. Miscellaneous Provisions
7.1 Notices and Demands on Company and Optionholder. Any notice or
demand which by any provision of this Option is required or permitted to be
given or served may be given or served by being deposited postage prepaid,
registered or certified mail, return receipt requested, in a post office letter
box addressed (until another address of the Company is given by the Company to
the Optionholder) as follows: if to the Company, then to Petroleum Heat and
Power Co., Inc., Davenport Street, Stamford, Connecticut 06094, Attn: George
Leibowitz, Senior Vice President. If to the Optionholder, then to FRC Star Gas
Inc. c/o First Reserve Capital Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06803, Attn: William Macaulay, Managing Director. All notices
shall be deemed to have been given upon delivery or mailing thereof.
7.2 Amendments And Waivers. Any term of this Option may be changed,
waived, discharged or terminated only be a written consent of the Company and
the Optionholder.
7.3 Laws of Delaware To Govern. This option shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of such
State.
7
<PAGE>
7.4 Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Company has caused this Option to be signed in its
name by a duly authorized officer and attested by its Secretary or Assistant
Secretary.
Dated: December 30, 1994
PETROLEUM HEAT AND POWER CO., INC.
/s/ George Leibowitz
----------------------------------
Name: George Leibowitz
Title: Senior Vice President
ATTEST:
_______________________
Name:
Title:
8
EXHIBIT 5
Neither this Option, nor the shares of Common Stock issuable upon its exercise,
have been registered under the Securities Act of 1933, as amended. This Option
has been, and the shares of Common Stock issuable upon its exercise will be,
acquired for investment. This Option may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
hereof and except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not then required under such Act.
Option
To Purchase 158,293 shares of Class A Common Stock of
PETROLEUM HEAT AND POWER CO., INC.
December 7, 1994
THIS IS TO CERTIFY THAT AmGO III is entitled to purchase from
Star Gas Corporation, a Delaware corporation, (the "Company") at any time after
December 7, 1994, until 5:00 P.M., New York time, on December 20, 1998 (the
"Expiration Date"), one hundred fifty-eight thousand, two hundred ninety-three
(158,293) shares (subject to adjustment as provided in Article Four
hereof) of Class A Common Stock, par value $.10 per share, of the Company, at
the Purchase Price (defined below) subject to exercise of the other appurtent
rights, powers and privileges, all on the terms and conditions hereinafter
provided.
1. Certain Definitions
For all purposes of this Option, unless the context otherwise requires:
Act
The term "Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
Affiliate
The term "Affiliate", as it applies to the Optionholder, means an
individual, corporation, partnership or other entity which controls, is
controlled by, or is under common control with, the Optionholder.
Shares of Common Stock
The term "shares of Common Stock" means the Company's shares of Class A
Common Stock, par value $.10 per share, and any capital stock into which such
shares of Common Stock may thereafter have been changed, and for purposes of
Article Four shall also include capital stock of the Company or any class of
the Company's securities thereafter authorized which ranks, or is entitled to a
1
<PAGE>
participation, as to assets or dividends, substantially on a parity with the
shares of Common Stock.
Company
The term "Company" means Petroleum Heat and Power Co., Inc., a Minnesota
corporation.
Expiration Date
The term "Expiration Date" means 5:00 P.M., New York time, on December 20,
1998, unless terminated at an earlier date pursuant to Section 4.4.6 hereof.
Number of option Shares
The term "number of Option Shares" has the meaning assigned to it in
Article Four hereof.
Optionholder
The term "Optionholder" means FRC Star Gas, Inc.
Options
The term "Options" means this Option and all Options issued in
substitution, combination or subdivision thereof. All Options shall at all
times be identical as to terms and conditions and expiration date, except as to
the number of shares of Common Stock for which they may be exercised and except
as otherwise required by this Option or as otherwise agreed to by the Company
and the Optionholder.
Option Shares
The term "Option Shares" means the shares of Common Stock issuable upon
the exercise of the Options.
Purchase Price
The term "Purchase Price" means $10.14 per share as adjusted pursuant to
Article Four hereof. In lieu of payment of the Purchase Price, the
Optionholder shall have the right to require the Company to convert this
Option, in whole or in part, into shares of Common Stock ("Conversion Right"),
as provided in this Section. Upon exercise of the Conversion Right, the
Company shall deliver to the Optionholder (without payment by the Optionholder
of any of the Purchase Price) that number of shares of Common Stock equal to
the quotient obtained by dividing (x) the Value (as defined below) of the
portion of the Option being converted by (y) the Market Price (as defined
below), immediately prior to the exercise of the Conversion Right. The "Value"
of the portion of the option being converted shall mean the difference between
(a) the Purchase Price multiplied by the number of shares of Common Stock being
converted and (b) the Market Price multiplied by the number of shares of Common
Stock being converted. "Market Price" means the average of the last reported
sales price for the shares of Common Stock for the 10 trading days preceding
the date on which the Option is exercised as reported by the NASDAQ National
Market System, or if a class of stock is not included in the NASDAQ National
Market System, then on the stock exchange or listing service on which such
2
<PAGE>
class is included, provided, however, that if no such sales prices exist, then
the Conversion Right shall not be available to the Optionholder.
2. Exercise of Option
2.1 Manner of Exercise
Until the Expiration Date, the Optionholder may exercise this Option in
whole at any time or in part from time to time for the purchase of the number
of shares of Common Stock which such Optionholder is then entitled to purchase
hereunder, at the Purchase Price per Common Share determined in accordance with
the provisions hereof.
In order to exercise this Option, in whole or in part, the Optionholder
shall deliver to the Company at its principal office or such other office or
agency designated by it for such purpose, written notice of the Optionholder's
election to exercise this Option, which notice shall specify the number of
shares of Common Stock to be purchased. Ten days thereafter the Optionholder
shall deliver cash or a certified or bank check payable to the order of the
Company in an amount equal to the Purchase Price of the number of shares of
Common Stock being purchased and (b) this Option, against delivery of a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in such notice. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice and shall be registered in the name of the Optionholder or, subject
to Article Three, such other name as shall be designated (together with an
address) in such notice.
Such certificate or certificates shall be deemed to have been issued and
the Optionholder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Common Stock as of
the date such notice and payment is received by the Company as aforesaid if
this Option has been exercised in compliance with the above provisions. If
this Option shall have been exercised only in part, the Company shall, at the
time of delivery of such certificate or certificates, deliver to the
Optionholder a new Option evidencing the rights of the holder to purchase the
remaining shares of Common Stock called for by this Option, which new Option
shall in all other respects, except as provided in Article Three, be identical
with this Option, or, at the request of the Optionholder, appropriate notation
may be made on this Option and the same returned to such holder. The Company
shall pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section,
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionholder, funds sufficient to pay all
share transfer taxes which shall be payable upon issuance of such share
certificate or certificates shall be paid by the Optionholder at the time the
notice of exercise hereinabove mentioned is delivered to the Company.
2.2 Option Shares Fully Paid
All Option Shares shall be, when issued, duly authorized, validly issued,
fully paid and non-assessable.
2.3 Fractional Shares
The Company shall not be required upon the exercise of this Option to
issue a certificate representing any fraction of a share of Common Stock, but,
3
<PAGE>
at the option of the company, in lieu of issuing such a fractional share, may
pay for such fraction of a share at the Purchase Price in effect on the date of
such exercise of this Option.
3. Transferability; Compliance With Securities Act
3.1 Restrictive Legend
Unless otherwise not required by this Article Three, each certificate for
Option Shares initially issued upon the exercise of this Option, and each
certificate for shares of Common Stock issued to a subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares of Common Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with the terms hereof and except pursuant to an effective
registration statement under such Act and any applicable state securities
laws, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
then required.
3.2 Restriction On Transferability
The Options shall not be transferable except to a person controlled by,
controlling, or under common control with the Option Holder. The Option Shares
shall be freely transferable except to the extent limited by law or by any
agreement among shareholders of the Company.
4. Adjustments To Purchase Price And Number of Option Shares
The Purchase Price and the number of Option Shares purchasable hereunder
(such number, as in effect from time to time, being hereinafter called the
"number of Option Shares"), as specified in this Option, shall be subject to
adjustment from time to time as follows:
4.1 Dividends and Reclassifications. In case the Company shall (i)
declare a dividend, or make a distribution, on its outstanding shares of Common
Stock in shares of its Common Stock, (ii) subdivide or reclassify its
outstanding Common Stock into a greater number of shares or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
number of Option Shares in effect at the time of the record date for such
dividend or distribution or subdivision or combination, or the effective date
thereof if no record date is fixed therefor, shall be proportionately adjusted
so that the holder of any Option surrendered for exercise immediately after the
time of such record date or such effective date (if no record date is fixed)
shall be entitled to receive the number of Option Shares which such holder
would have owned or been entitled to receive had the Option been exercised
immediately prior to such time. Adjustment in the number of Option Shares
shall be made successively whenever any event specified above shall occur.
4.2 Liquidating Dividends. In the event that the Company shall make any
distribution of its assets upon or with respect to its Common Stock, as a
liquidating or partial liquidating dividend, or other than as a cash dividend
payable out of earnings or any surplus legally available for dividends under
the laws of the state of incorporation of the Company, the Optionholder shall,
4
<PAGE>
upon the exercise of the option after the record date for such distribution or,
in the absence of a record date, after the date of such distribution, receive,
in addition to the Option Shares, the amount of such assets (or, at the option
of the Company, a sum equal to the value thereof at the time of distribution as
determined by the Board of Directors in its sole discretion) which would have
been distributed to the Optionholder if it had exercised the Option immediately
prior to the record date for such distribution, or in the absence of a record
date, immediately prior to the date of such distribution.
4.3 Adjustment of Purchase Price. Upon each adjustment of the number of
Option Shares pursuant to this Article, the Purchase Price shall be adjusted to
equal the amount obtained by multiplying the Purchase Price in effect
immediately prior to such adjustment by a fraction, the numerator of which
equals the number of Option Shares in effect prior to such adjustment and the
denominator of which equals the number of Option Shares in effect after such
adjustment.
4.4 Miscellaneous matters.
4.4.1 No adjustment of the Purchase Price shall be made if the
amount of such adjustment shall be less than one percent of the then Purchase
Price, but in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than one percent of the then Purchase Price.
4.4.2 The certificate of any independent firm of public accountants
of recognized standing selected by the Board of Directors shall be conclusive
of the correctness of any computation made under this Article.
4.4.3 Whenever any adjustment is required in the then Purchase
Price, the Company shall forthwith (i) prepare a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such statement to be mailed to the Optionholder.
4.4.4 The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock the full number of Option Shares into
which all Option from time to time outstanding are exercisable. If at any time
the number of authorized and unissued shares of Common Stock shall not be
sufficient to effect the exercise this option at the Purchase Price then in
effect, the Company shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized Common Stock to such
number of shares as shall be sufficient for such purpose.
4.4.5 In case of any reclassification of or change in the
outstanding shares of Common Stock (other than a change in par value, or a
change from no par to par value or from par value to no par value) or in the
case of any consolidation of the Company with, or, merger of the Company into,
another corporation (other than a consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of or
change in the outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of all or substantially all the assets of the
Company, the Optionholder shall have the right to exercise such option into the
kind and amount of shares and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which the Option could have
5
<PAGE>
been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. After such reclassification,
change, consolidation, merger, sale or conveyance, adjustments of the Purchase
Price and number of Option Shares (or other securities) shall be as nearly
equivalent as may be practicable to the adjustments of the Purchase Price and
number of Option Shares (or other securities) provided for herein.
The Company and any successor shall not effect any such consolidation,
merger, sale or conveyance of property as an entirety with or to another
corporation unless and until such other corporation shall agree to deliver to
the Optionholder, upon the exercise of the Option, such shares, securities and
property which, in accordance with the foregoing provisions, such Optionholder
shall have the right to receive. Successive reclassifications, changes,
consolidations, mergers, sales or conveyances and adjustments of Purchase Price
and number of Option Shares (or other securities) shall be similarly treated.
Immediately before any such consolidation, merger, sale or conveyance of
property as an entirety with or to another corporation the Company shall pay to
the Optionholder an amount of cash equal to the number of Option Shares
multiplied by the difference between (a) the cash or fair value of any property
or securities to be received by a holder of a share of Common Stock pursuant to
any such consolidation, merger, sale or conveyance of property and (b) the
Purchase Price.
5. Notice Of Certain Events.
In case at any time on or after the date hereof:
(a) there shall be any capital reorganization or reclassification of the
shares of Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock and other than a change in the par value or
the shares of Common Stock, or a change from par value to no par value or from
no par value to par value), or any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or any sale or transfer of all or substantially all the assets of the
Company; or
(b) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be delivered to each Optionholder, as promptly
as possible but in any event at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
6. Limitation of Liability
6
<PAGE>
No provision hereof, in the absence of affirmative action by the
Optionholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights and privileges of the Optionholder, shall give rise to any
liability of such Optionholder for the Purchase Price or as a shareholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
7. Miscellaneous Provisions
7.1 Notices and Demands on Company and Optionholder. Any notice or
demand which by any provision of this Option is required or permitted to be
given or served may be given or served by being deposited postage prepaid,
registered or certified mail, return receipt requested, in a post office letter
box addressed (until another address of the Company is given by the Company to
the Optionholder) as follows: if to the Company, then to Petroleum Heat and
Power Co., Inc., Davenport Street, Stamford, Connecticut 06094, Attn: George
Leibowitz, Senior Vice President. If to the Optionholder, then to FRC Star Gas
Inc. c/o First Reserve Capital Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06803, Attn: William Macaulay, Managing Director. All notices
shall be deemed to have been given upon delivery or mailing thereof.
7.2 Amendments And Waivers. Any term of this Option may be changed,
waived, discharged or terminated only be a written consent of the Company and
the Optionholder.
7.3 Laws of Delaware To Govern. This option shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of such
State.
7
<PAGE>
7.4 Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Company has caused this Option to be signed in its
name by a duly authorized officer and attested by its Secretary or Assistant
Secretary.
Dated: December 30, 1994
PETROLEUM HEAT AND POWER CO., INC.
/s/ George Leibowitz
----------------------------------
Name: George Leibowitz
Title: Senior Vice President
ATTEST:
_______________________
Name:
Title:
8
EXHIBIT 6
Neither this Option, nor the shares of Common Stock issuable upon its exercise,
have been registered under the Securities Act of 1933, as amended. This Option
has been, and the shares of Common Stock issuable upon its exercise will be,
acquired for investment. This Option may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms
hereof and except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not then required under such Act.
Option
To Purchase 163,488 shares of Class A Common Stock of
PETROLEUM HEAT AND POWER CO., INC.
December 7, 1994
THIS IS TO CERTIFY THAT First Reserve Secured Energy Assets Fund, L.P.
is entitled to purchase from Star Gas Corporation, a Delaware corporation,
(the "Company") at any time after December 7, 1994, until 5:00 P.M., New
York time, on December 20, 1998 (the "Expiration Date"), one hundred
sixty-three thousand, four hundred eighty-eight (163,488) shares (subject
to adjustment as provided in Article Four hereof) of Class A Common Stock,
par value $.10 per share, of the Company, at the Purchase Price (defined
below) subject to exercise of the other appurtent rights, powers and
privileges, all on the terms and conditions hereinafter provided.
1. Certain Definitions
For all purposes of this Option, unless the context otherwise requires:
Act
The term "Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
Affiliate
The term "Affiliate", as it applies to the Optionholder, means an
individual, corporation, partnership or other entity which controls, is
controlled by, or is under common control with, the Optionholder.
Shares of Common Stock
The term "shares of Common Stock" means the Company's shares of Class A
Common Stock, par value $.10 per share, and any capital stock into which such
shares of Common Stock may thereafter have been changed, and for purposes of
Article Four shall also include capital stock of the Company or any class of
the Company's securities thereafter authorized which ranks, or is entitled to a
1
<PAGE>
participation, as to assets or dividends, substantially on a parity with the
shares of Common Stock.
Company
The term "Company" means Petroleum Heat and Power Co., Inc., a Minnesota
corporation.
Expiration Date
The term "Expiration Date" means 5:00 P.M., New York time, on December 20,
1998, unless terminated at an earlier date pursuant to Section 4.4.6 hereof.
Number of option Shares
The term "number of Option Shares" has the meaning assigned to it in
Article Four hereof.
Optionholder
The term "Optionholder" means FRC Star Gas, Inc.
Options
The term "Options" means this Option and all Options issued in
substitution, combination or subdivision thereof. All Options shall at all
times be identical as to terms and conditions and expiration date, except as to
the number of shares of Common Stock for which they may be exercised and except
as otherwise required by this Option or as otherwise agreed to by the Company
and the Optionholder.
Option Shares
The term "Option Shares" means the shares of Common Stock issuable upon
the exercise of the Options.
Purchase Price
The term "Purchase Price" means $10.14 per share as adjusted pursuant to
Article Four hereof. In lieu of payment of the Purchase Price, the
Optionholder shall have the right to require the Company to convert this
Option, in whole or in part, into shares of Common Stock ("Conversion Right"),
as provided in this Section. Upon exercise of the Conversion Right, the
Company shall deliver to the Optionholder (without payment by the Optionholder
of any of the Purchase Price) that number of shares of Common Stock equal to
the quotient obtained by dividing (x) the Value (as defined below) of the
portion of the Option being converted by (y) the Market Price (as defined
below), immediately prior to the exercise of the Conversion Right. The "Value"
of the portion of the option being converted shall mean the difference between
(a) the Purchase Price multiplied by the number of shares of Common Stock being
converted and (b) the Market Price multiplied by the number of shares of Common
Stock being converted. "Market Price" means the average of the last reported
sales price for the shares of Common Stock for the 10 trading days preceding
the date on which the Option is exercised as reported by the NASDAQ National
Market System, or if a class of stock is not included in the NASDAQ National
Market System, then on the stock exchange or listing service on which such
2
<PAGE>
class is included, provided, however, that if no such sales prices exist, then
the Conversion Right shall not be available to the Optionholder.
2. Exercise of Option
2.1 Manner of Exercise
Until the Expiration Date, the Optionholder may exercise this Option in
whole at any time or in part from time to time for the purchase of the number
of shares of Common Stock which such Optionholder is then entitled to purchase
hereunder, at the Purchase Price per Common Share determined in accordance with
the provisions hereof.
In order to exercise this Option, in whole or in part, the Optionholder
shall deliver to the Company at its principal office or such other office or
agency designated by it for such purpose, written notice of the Optionholder's
election to exercise this Option, which notice shall specify the number of
shares of Common Stock to be purchased. Ten days thereafter the Optionholder
shall deliver cash or a certified or bank check payable to the order of the
Company in an amount equal to the Purchase Price of the number of shares of
Common Stock being purchased and (b) this Option, against delivery of a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in such notice. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice and shall be registered in the name of the Optionholder or, subject
to Article Three, such other name as shall be designated (together with an
address) in such notice.
Such certificate or certificates shall be deemed to have been issued and
the Optionholder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Common Stock as of
the date such notice and payment is received by the Company as aforesaid if
this Option has been exercised in compliance with the above provisions. If
this Option shall have been exercised only in part, the Company shall, at the
time of delivery of such certificate or certificates, deliver to the
Optionholder a new Option evidencing the rights of the holder to purchase the
remaining shares of Common Stock called for by this Option, which new Option
shall in all other respects, except as provided in Article Three, be identical
with this Option, or, at the request of the Optionholder, appropriate notation
may be made on this Option and the same returned to such holder. The Company
shall pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section,
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionholder, funds sufficient to pay all
share transfer taxes which shall be payable upon issuance of such share
certificate or certificates shall be paid by the Optionholder at the time the
notice of exercise hereinabove mentioned is delivered to the Company.
2.2 Option Shares Fully Paid
All Option Shares shall be, when issued, duly authorized, validly issued,
fully paid and non-assessable.
2.3 Fractional Shares
The Company shall not be required upon the exercise of this Option to
issue a certificate representing any fraction of a share of Common Stock, but,
3
<PAGE>
at the option of the company, in lieu of issuing such a fractional share, may
pay for such fraction of a share at the Purchase Price in effect on the date of
such exercise of this Option.
3. Transferability; Compliance With Securities Act
3.1 Restrictive Legend
Unless otherwise not required by this Article Three, each certificate for
Option Shares initially issued upon the exercise of this Option, and each
certificate for shares of Common Stock issued to a subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares of Common Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with the terms hereof and except pursuant to an effective
registration statement under such Act and any applicable state securities
laws, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
then required.
3.2 Restriction On Transferability
The Options shall not be transferable except to a person controlled by,
controlling, or under common control with the Option Holder. The Option Shares
shall be freely transferable except to the extent limited by law or by any
agreement among shareholders of the Company.
4. Adjustments To Purchase Price And Number of Option Shares
The Purchase Price and the number of Option Shares purchasable hereunder
(such number, as in effect from time to time, being hereinafter called the
"number of Option Shares"), as specified in this Option, shall be subject to
adjustment from time to time as follows:
4.1 Dividends and Reclassifications. In case the Company shall (i)
declare a dividend, or make a distribution, on its outstanding shares of Common
Stock in shares of its Common Stock, (ii) subdivide or reclassify its
outstanding Common Stock into a greater number of shares or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
number of Option Shares in effect at the time of the record date for such
dividend or distribution or subdivision or combination, or the effective date
thereof if no record date is fixed therefor, shall be proportionately adjusted
so that the holder of any Option surrendered for exercise immediately after the
time of such record date or such effective date (if no record date is fixed)
shall be entitled to receive the number of Option Shares which such holder
would have owned or been entitled to receive had the Option been exercised
immediately prior to such time. Adjustment in the number of Option Shares
shall be made successively whenever any event specified above shall occur.
4.2 Liquidating Dividends. In the event that the Company shall make any
distribution of its assets upon or with respect to its Common Stock, as a
liquidating or partial liquidating dividend, or other than as a cash dividend
payable out of earnings or any surplus legally available for dividends under
the laws of the state of incorporation of the Company, the Optionholder shall,
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upon the exercise of the option after the record date for such distribution or,
in the absence of a record date, after the date of such distribution, receive,
in addition to the Option Shares, the amount of such assets (or, at the option
of the Company, a sum equal to the value thereof at the time of distribution as
determined by the Board of Directors in its sole discretion) which would have
been distributed to the Optionholder if it had exercised the Option immediately
prior to the record date for such distribution, or in the absence of a record
date, immediately prior to the date of such distribution.
4.3 Adjustment of Purchase Price. Upon each adjustment of the number of
Option Shares pursuant to this Article, the Purchase Price shall be adjusted to
equal the amount obtained by multiplying the Purchase Price in effect
immediately prior to such adjustment by a fraction, the numerator of which
equals the number of Option Shares in effect prior to such adjustment and the
denominator of which equals the number of Option Shares in effect after such
adjustment.
4.4 Miscellaneous matters.
4.4.1 No adjustment of the Purchase Price shall be made if the
amount of such adjustment shall be less than one percent of the then Purchase
Price, but in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than one percent of the then Purchase Price.
4.4.2 The certificate of any independent firm of public accountants
of recognized standing selected by the Board of Directors shall be conclusive
of the correctness of any computation made under this Article.
4.4.3 Whenever any adjustment is required in the then Purchase
Price, the Company shall forthwith (i) prepare a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such statement to be mailed to the Optionholder.
4.4.4 The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock the full number of Option Shares into
which all Option from time to time outstanding are exercisable. If at any time
the number of authorized and unissued shares of Common Stock shall not be
sufficient to effect the exercise this option at the Purchase Price then in
effect, the Company shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized Common Stock to such
number of shares as shall be sufficient for such purpose.
4.4.5 In case of any reclassification of or change in the
outstanding shares of Common Stock (other than a change in par value, or a
change from no par to par value or from par value to no par value) or in the
case of any consolidation of the Company with, or, merger of the Company into,
another corporation (other than a consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of or
change in the outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of all or substantially all the assets of the
Company, the Optionholder shall have the right to exercise such option into the
kind and amount of shares and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which the Option could have
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been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. After such reclassification,
change, consolidation, merger, sale or conveyance, adjustments of the Purchase
Price and number of Option Shares (or other securities) shall be as nearly
equivalent as may be practicable to the adjustments of the Purchase Price and
number of Option Shares (or other securities) provided for herein.
The Company and any successor shall not effect any such consolidation,
merger, sale or conveyance of property as an entirety with or to another
corporation unless and until such other corporation shall agree to deliver to
the Optionholder, upon the exercise of the Option, such shares, securities and
property which, in accordance with the foregoing provisions, such Optionholder
shall have the right to receive. Successive reclassifications, changes,
consolidations, mergers, sales or conveyances and adjustments of Purchase Price
and number of Option Shares (or other securities) shall be similarly treated.
Immediately before any such consolidation, merger, sale or conveyance of
property as an entirety with or to another corporation the Company shall pay to
the Optionholder an amount of cash equal to the number of Option Shares
multiplied by the difference between (a) the cash or fair value of any property
or securities to be received by a holder of a share of Common Stock pursuant to
any such consolidation, merger, sale or conveyance of property and (b) the
Purchase Price.
5. Notice Of Certain Events.
In case at any time on or after the date hereof:
(a) there shall be any capital reorganization or reclassification of the
shares of Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock and other than a change in the par value or
the shares of Common Stock, or a change from par value to no par value or from
no par value to par value), or any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or any sale or transfer of all or substantially all the assets of the
Company; or
(b) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be delivered to each Optionholder, as promptly
as possible but in any event at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
6. Limitation of Liability
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No provision hereof, in the absence of affirmative action by the
Optionholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights and privileges of the Optionholder, shall give rise to any
liability of such Optionholder for the Purchase Price or as a shareholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
7. Miscellaneous Provisions
7.1 Notices and Demands on Company and Optionholder. Any notice or
demand which by any provision of this Option is required or permitted to be
given or served may be given or served by being deposited postage prepaid,
registered or certified mail, return receipt requested, in a post office letter
box addressed (until another address of the Company is given by the Company to
the Optionholder) as follows: if to the Company, then to Petroleum Heat and
Power Co., Inc., Davenport Street, Stamford, Connecticut 06094, Attn: George
Leibowitz, Senior Vice President. If to the Optionholder, then to FRC Star Gas
Inc. c/o First Reserve Capital Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06803, Attn: William Macaulay, Managing Director. All notices
shall be deemed to have been given upon delivery or mailing thereof.
7.2 Amendments And Waivers. Any term of this Option may be changed,
waived, discharged or terminated only be a written consent of the Company and
the Optionholder.
7.3 Laws of Delaware To Govern. This option shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of such
State.
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7.4 Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Company has caused this Option to be signed in its
name by a duly authorized officer and attested by its Secretary or Assistant
Secretary.
Dated: December 30, 1994
PETROLEUM HEAT AND POWER CO., INC.
/s/ George Leibowitz
----------------------------------
Name: George Leibowitz
Title: Senior Vice President
ATTEST:
_______________________
Name:
Title:
8
EXHIBIT 7
Petroleum Heat and Power Co., Inc.
2187 Atlantic Street - 5th Fl.
Stamford, CT 06902
October 17, 1995
The Holders of Options to Purchase
Shares of Petroleum Heat and Power Co.,
Inc. Who Have Signed Below
Gentlemen:
Please refer to certain options (individually an "Option" and
collectively the "Options") to purchase shares of Class A Common Stock of
Petroleum Heat and Power Co., Inc. ("Petro") dated December 7, 1994, as
follows:
Holder No. of Shares
______ _____________
First Reserve Secured Energy Assets 163,488
AmGo III 158,293
AmGo II 181,369
American Gas & Oil Investors 229,323
As used herein "Option Shares" refers to the number of shares of
Class A Common Stock, $.10 per share, of Petro which are at the relevant time
issuable upon exercise of the Options and "Investor" refers to each of the
undersigned and any transferee.
This will confirm our agreement as follows:
1. The definition of "Purchase Price" in Section 1 of the
Options is amended by deleting the first sentence and inserting the
following sentence in lieu thereof:
"The term "Purchase Price" means $8.77 per Share as
adjusted pursuant to Article Four hereof.
2. Petro is hereby granted the option ("Petro Option") to
purchase all or any part of each Option at a purchase price ("Petro Option
Purchase Price") equal to $2.23 ($11-$8.77) time the number of Option Shares on
the date Petro Option is exercised. The Petro Option Purchase Price shall be
adjusted at the same time and in the same manner as the Purchase Price is
adjusted pursuant to Section 4.3 of the Option. The Petro Option shall expire
with the earlier of expiration or exercise of the Options.
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2
3. Each Investor agrees to give Petro at least ten days prior
written notice of such Investor's intention to exercise all or a portion of the
Options owned by such Investor, during which period Petro shall continue to
have the right to excise the Petro Option in accordance with the terms hereof.
4. Petro may exercise the Petro Option in whole or in part from
time to time by delivering written notice ("Petro Notice") of its election to
exercise the Petro Option to each Investor at its address set forth below. As
to the purchase of Options (i) if Petro Purchases less than all of each Option,
then it must exercise the Petro Option on a pro rata basis so that Petro
purchases from each Investor that portion of its Option which its Option Shares
bears to all Option Shares (ii) the Petro Notice shall specify the total Petro
Purchased Price to be paid to each Investor (iii) ten days thereafter, Petro
shall deliver to the Investor cash or a certified or bank check payable to the
order of the Option Holder in an amount equal to his portion of the Petro
Purchase Price against delivery of the option and (iv) if Petro has purchased
less than all of the Option, Petro shall issue a replacement Option for the
balance of the Option Shares in the same form as the Option which was
surrendered for cancellation.
5. The rights and obligations of Petro hereunder may not be
sold, transferred or otherwise assigned without the prior written consent of
the investors, except to a successor by merger or to a wholly owned subsidiary
that remains such.
In consideration of the foregoing, pursuant to paragraph 2.5 of a
certain shareholder put/call agreement dated December 21, 1993 the Investors
consent to the transaction pursuant to which Star Gas Corporation may be
converted into a master limited partnership as described on Exhibit A to this
agreement.
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Kindly acknowledge your agreement with the foregoing by singing
in the space provided below.
Sincerely yours,
PETROLEUM HEAT AND
POWER CO., INC.
By /s/ George Liebowitz
George Leibowitz
Senior Vice President
ACCEPTED AND AGREED:
AMERICAN GAS & OIL INVESTORS AmGO III
By: First Reserve Corporation, By: First Reserve Corporation,
as managing general partner as managing general partner
By: /s/ John A. Hill By: /s/ John A. Hill
Managing Director Managing Director
AmGO II
By: First Reserve Corporation,
as managing general partner,
By: /s/ John A. Hill
Managing Director
FIRST RESERVE SECURED ENERGY
ASSETS FUND, L.P.
By: First Reserve Corporation,
as managing general partner
By: /s/ John A. Hill
Managing Director
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EXHIBIT A
[Petroleum Heat and Power Co, Inc. Letterhead]
To Those Persons Named Below:
Gentlemen, please refer to paragraph 2.5 of a certain shareholder put/call
agreement among us dated December 21, 1993 (the "Put/Call Agreement") which
requires your consent to any offer of sale or transfer by Petro of any common
stock of Star Gas Corporation ("Star Gas") or public offering of Star Gas
Common Stock, in either case during the 12 month period commencing on the
exercise date of the call option referred to in the Star Gas Put Call
Agreement.
We have advised you that Star Gas proposes to make a transfer of substantially
all of its operating assets to a limited partnership subsidiary ("operating
subsidiary") of a master limited partnership, which will in turn offer an
approximately 50% equity interest in the master limited partnership in a public
offering for approximately $60 million. In addition, Star Gas will incur and
the operating subsidiary will assume payment of approximately $85.0 million of
indebtedness. Star Gas will be the general partner of the MLP and will retain
approximately 50% of the equity interests.
This will confirm that by your signatures set forth below, you consent to the
foregoing transaction.
Sincerely yours,
PETROLEUM HEAT AND
POWER CO., INC.
By /s/ George Liebowitz SVP
ACCEPTED AND AGREED:
AMERICAN GAS & OIL INVESTORS AmGO III
By: First Reserve Corporation, By: First Reserve Corporation,
as managing general partner, as managing general partner
By: /s/ John A. Hill By: /s/ John A. Hill
Managing Director Managing Director
AmGO II THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: First Reserve Corporation,
as managing general partner, By:_____________________
Vice President
By: /s/ John A. Hill
Managing Director
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FIRST RESERVE SECURED ENERGY FRC STAR GAS, INC.
ASSETS FUND, L.P.
By: First Reserve Corporation, By:
as managing general partner
By: /s/ John A. Hill
Managing Director
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EXHIBIT 8
SHAREHOLDER PUT/CALL AGREEMENT
AGREEMENT entered into as of this 21st day of December, 1993 among
Petroleum Heat and Power Co., Inc., a Minnesota corporation ("Petro"), American
Gas & Oil Investors, a New York partnership, AmGO II, a New York partnership,
AMGO III, a New York partnership, First Reserve Secured Energy Assets Fund,
L.P., a Delaware partnership, FRC Star Gas, Inc., and The Prudential Insurance
Company of America, a New Jersey corporation ("Prudential").
WHEREAS, American Gas & Oil Investors, First Reserve Secured Energy
Assets Fund, L.P., FRC Star Gas, Inc., AmGO II and AmGO III (collectively, the
"FRC Shareholders") own the outstanding shares of common stock, par value $1.00
per share of Star Gas Corporation, a Delaware corporation ("Star Gas") which,
together with such shares of Common Stock as the Investor Shareholders may
hereafter own, are referred to collectively as "Common Stock"; the FRC
Shareholders together with Prudential are referred to herein as the "Investor
Shareholders";
WHEREAS, the Investor Shareholders also own shares of 8% Cumulative
Convertible Preferred Stock of Star Gas, which together with all shares of such
preferred stock as the Investor Shareholders may hereafter own, are referred to
collectively as "8% Cumulative Convertible Preferred Stock".
WHEREAS, Star Gas has entered into an agreement to sell to Petro, and
Petro has agreed to buy, certain of Star Gas's 8% Cumulative Convertible
Preferred Stock and has further agreed to provide an option to Petro to
purchase shares of Common Stock; and
WHEREAS, as a further inducement to Petro and the FRC Shareholders to
enter into such agreements, the FRC Shareholders wish to grant Petro a call
option to buy all the shares of Common Stock owned by the FRC Shareholders as
well as the 8% Cumulative Convertible Preferred Stock and shares of Common
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Stock issued to them upon the conversion of the 8% Cumulative Convertible
Preferred Stock of Star Gas and the exercise of certain options and Petro
wishes to grant to the FRC Shareholders a put option to require Petro to
purchase all the shares of Common Stock that they own; and
WHEREAS, Prudential is also willing to grant to Petro a call option
to purchase all shares of its 8% Cumulative Convertible Preferred Stock and
shares of Common Stock issued upon the conversion of the 8% Cumulative
Convertible Preferred Stock of Star Gas, subject, however, to the prior rights
of Star Gas and Prudential under the Star Gas Put/Call Agreement of even date
and Petro wishes to grant to Prudential a put option to require Petro to
purchase all the shares of Common Stock and 8% Cumulative Convertible Preferred
Stock owned by Prudential; and
WHEREAS, the parties intend that this Agreement shall be binding upon
and inure to the benefit of any person who may acquire 8% Cumulative
Convertible Preferred Stock and Common Stock from them, so that (a) the term
"FRC Shareholders" shall include FRC and any transferee of an existing FRC
Shareholder, (b) the term "Prudential Shareholders" shall include Prudential
and any transferee of Prudential and (c) the term "Investor Shareholders" shall
include all FRC Shareholders and Prudential Shareholders as defined in this
paragraph; provided, however, that this Agreement shall not be binding upon or
inure to the benefit of any person who may acquire any such shares in a public
offering or in ordinary brokerage transactions pursuant to Rule 144 under the
Securities Act of 1933, as amended ("Rule 144") following a public offering of
the Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is hereby agreed as follows:
1. The Options.
1.1 Call Option. For the period beginning on the date on which Star
Gas' audited financial statements for the fiscal year ending September 30, 1994
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<PAGE>
are first delivered to Petro and the Investor Shareholders and ending December
31, 1998, subject to Section 1.2 hereof, Petro shall have the option ("Call
Option") to acquire all, but not less than all, of the 8% Cumulative
Convertible Preferred Stock and Common Stock from time to time owned by the
Investor Shareholders including without limitation the shares of Common Stock
issuable upon the conversion of the 8% Cumulative Convertible Preferred Stock
of Star Gas and shares issued upon the exercise of the Shareholder Option
Agreement to the extent the Shareholder Option Agreement has been exercised
prior to its Expiration Date (as defined therein), in each case for an
aggregate purchase price ("Call Option Price") computed as follows:
(a) first, by calculating the product of (i) Star Gas' EBITDA
for the 12 months ended with its most recent fiscal quarter completed prior to
the notice of exercise of the Call Option and (ii) the greater of 7 or the
Petro EBITDA Multiple;
(b) next, by taking such product in (a) above and (i)
subtracting from it the amount of Long-Term Obligations of Star Gas as of the
last day of such 12 month period, and (ii) adding to it the amount of net
working capital of Star Gas (i.e. current assets less current liabilities) as
of the last day of such 12 month period in excess of $4,000,000 and (iii)
adding to it the proceeds that would be received by Star Gas upon the exercise
of all options, warrants and similar rights to purchase securities outstanding
on the last day of such 12 month period to the extent the shares issuable upon
exercise are included in Fully Diluted Shares;
(c) next, by taking the result of (b) above and dividing such
result by the number of Fully Diluted Shares;
(d) next, by taking the per share amount calculated in (c)
above and multiplying it by the number of shares of Common Stock of the
Investor Shareholders being purchased pursuant to such Call Option and the
number of shares of Common Stock then issuable upon the conversion of the 8%
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<PAGE>
Cumulative Convertible Preferred Stock of the Investor Shareholders to be
purchased pursuant to the Call Option.
1.2 The Call Option of Petro to acquire shares owned by Prudential
is subject to the Star Gas Put/Call Agreement of even date pursuant to which
Star Gas has a call on the Series D 8% Cumulative Preferred Stock of Star Gas
owned by Prudential and shares of Star Gas Common Stock issued upon conversion
thereof and Prudential has the right to require Star Gas, under certain
circumstances to purchase said shares.
1.3 Put Option. For the period beginning January 1, 1999 or, if
earlier, from the date of a Change of Control with respect to Petro, through
and including December 31, 1999, each of the Investor Shareholders,
individually, will have an option ("Put Option") to require Petro to purchase
all but not less than all of their shares of Common Stock and 8% Cumulative
Convertible Preferred Stock for an aggregate purchase price ("Put Option
Price") computed as follows:
(a) first by calculating the product of (i) Star Gas' EBITDA
for the 12 months ended with its most recent fiscal quarter completed prior to
the notice of exercise of the Put Option and (ii) the greater of (A) 5 or (B)
.85 of Petro EBITDA Multiple;
(b) next, by taking such product in (a) above and (i)
subtracting from it the amount of Long-Term Obligations of Star Gas as of the
last day of such 12 month period, and (ii) adding to it the amount of net
working capital of Star Gas (i.e. current assets less current liabilities) as
of the last day of such 12 month period in excess of $4,000,000 and (iii)
adding to it the proceeds that would be received by Star Gas upon the exercise
of all options, warrants and similar rights to purchase securities outstanding
on the last day of such 12 month period to the extent the shares issuable upon
exercise are included in Fully Diluted Shares;
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<PAGE>
(c) next, by taking the result in (b) above and
dividing such result by the number of Fully Diluted Shares;
(d) next, by taking the per share amount in (c) above and
multiplying such amount by the number of shares of Common Stock of the Investor
Shareholders being purchased pursuant to such Put Option and the number of
shares of Common Stock then issuable upon the conversion of the 8% Cumulative
Convertible Preferred Stock of the Investor Shareholders to be purchased
pursuant to the Put Option.
1.4 Definitions.
"Change of Control" means the occurrence of any event which results
in the number of directors of Petro's Board of Directors who are designated by
the Sevin Group (in an individual or fiduciary capacity) in accordance with a
Shareholders Agreement dated as of July 28, 1992 among Petro and certain
shareholders, constituting less than a majority of the Board. "Sevin Group"
shall mean collectively, the Estate of Malvin P. Sevin, Audrey L. Sevin, Irik
P. Sevin, Thomas J. Edelman, Phillip Ean Cohen and Margot Gordon.
"EBITDA" for a company means consolidated income before interest,
depreciation and amortization and income taxes excluding gains or losses from
the sale of assets other than in the ordinary course of business, non-recurring
gains or losses, extraordinary items and the costs of any restructuring,
calculated in accordance with generally accepted accounting principles
consistently applied, all as reported in that company's financial statements;
provided that consolidated income of any other person (other than a corporation
of which a majority of the capital stock having voting power under ordinary
circumstances to elect a majority of the board of directors is owned by the
company or a subsidiary of such company) will be included only to the extent of
dividends and distributions received by the company. EBITDA shall include
(without duplication) EBITDA (defined as the same manner as in this Agreement)
of each business (on a pro forma basis) which has been acquired during the 12
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<PAGE>
months ended with the most recently completed fiscal quarter of Star Gas or
Petro, as the case may be, using the pro forma adjustments comparable to those
customarily made by Petro in SEC reporting of its acquisitions of businesses
pursuant to the periodic reporting requirements of the Securities Exchange Act
of 1934.
"Fully Diluted Shares" means with respect to Star Gas, as of the date
of determination, the number of shares of Common Stock actually issued and
outstanding, plus the number of shares issuable upon the conversion of the 8%
Cumulative Convertible Preferred Stock, plus the number of shares of Common
Stock issuable pursuant to that certain option dated as of December 21, 1993
granted by Star Gas to Petro, plus the number of shares of Common Stock
issuable pursuant to all other options, warrants and similar rights to purchase
Common Stock, and plus the number of shares of Common Stock issuable upon the
conversion of any other class of convertible securities of the Corporation;
provided, however, that only those options, warrants and similar rights to
purchase shares of Common Stock, that have an exercise price that is less than
(i) the Call Price (determined without including the shares issuable upon
exercise of such options, warrants or similar rights), when "Fully Diluted
Shares" is being used to determine the Call Price, or (ii) the Put Price
(determined without including the shares issuable upon exercise of such
options, warrants or similar rights), when "Fully Diluted Shares" is being used
to determine the Put Price, shall be deemed to be included in this definition.
"Long-Term Obligations" of an entity means the face value of
indebtedness for money borrowed (excluding any discounts, including original
issue discount, or premiums) of such entity that pays cash interest or interest
in the form of instruments representing similar indebtedness plus the
amortization payments of all other debt discounted at an annual rate of 11%
plus the amounts of capitalized lease obligations and minus the current portion
of any such indebtedness and obligations; provided, however, that the amount of
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<PAGE>
any debt security convertible into shares of common stock shall be excluded
from Long-Term Obligations to the extent that such security is deemed converted
for purposes of Fully Diluted Shares.
"Petro's EBITDA Multiple" means the amount determined by dividing (i)
the sum of the amount of Long Term Obligations of Petro other than securities
convertible into common stock and the face value of any preferred stock of
Petro outstanding on the date EBITDA is determined other than securities
convertible into common stock and the product of (a) the number of issued and
outstanding shares of all classes Petro's common stock on a fully diluted
basis, assuming the conversion of all convertible securities, on the date
EBITDA is determined and (b) the average of the last reported sales price for
each respective class of stock (with the sales prices for the Class C Common
Stock deemed to be the same as the sales prices for the Class A Common Stock)
for the 10 trading days preceding the date on which the Put Option or Call
Option is exercised as reported by the NASDAQ National Market System, or if a
class of stock is not included in the NASDAQ National Market System, then on
the stock exchange or listing service on which such class is included, or, if
no such sales prices exist, then the fair value of such class of stock as
determined by an investment banking firm of nationally recognized standing
selected by Petro by (ii) Petro's EBITDA (defined in the same manner as in this
Agreement) for the 12 months ended with its most recently completed fiscal
quarter completed prior to the exercise of the Put Option or the Call Option.
"Shareholder Option Agreement" means the Shareholder Option
Agreements of even date between Star Gas and each of the FRC Shareholders.
1.5 Minimum Prudential Call Option Price. Notwithstanding the
foregoing, if Petro exercises the Call Option to purchase the shares of Common
Stock and 8% Cumulative Convertible Preferred Stock owned by Prudential, the
Call Option Price for such shares shall be no less than $14.1350 per share of
Common Stock or share of Common Stock which would be receivable upon conversion
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<PAGE>
of the 8% Cumulative Convertible Preferred Stock (in each case, as adjusted for
stock splits, stock dividends and the like) plus such additional amount as will
result in a yield to Prudential on the shares so purchased of 12.625% per annum
compounded semi-annually from December 1, 1993 ("Floor Option Price"). The
Floor Option Price shall include, and Prudential shall transfer to Petro for no
additional consideration, all shares of 8% Cumulative Convertible Preferred
Stock issued as a dividend on the shares of 8% Cumulative Convertible Preferred
Stock owned by Prudential to be repurchased pursuant to the Call Option.
1.6 Petro's Special Call Option on the Holdings of the Prudential
Shareholders. If at any time prior to the fifth anniversary of the execution
of this Agreement, any Prudential Shareholder shall vote any Star Gas equity
securities owned by it against any bona fide merger proposal or against the
liquidation or dissolution of Star Gas, then Petro may exercise the Call Option
to purchase the securities of all Prudential Shareholders subject thereto on
the terms set forth above except that (a) the one year waiting period in
Section 1.1 shall not apply (b) the EBITDA multiple of 7 in Section 1.1(a)(ii)
shall be reduced to 6 and (c) notwithstanding Article 2, the entire Call Option
Price would be payable by wire transfer of immediately available funds.
1.7 Option Agreement. Immediately upon the exercise of the Call
Option, Petro shall grant to the FRC Shareholders an option to purchase, on
terms and conditions identical to those set forth in those certain Option
Agreements, dated as of December 21, 1993, from Star Gas Corporation to various
FRC Shareholders (the "Option Agreement"), a total number of shares of Petro
Class A Common Stock equal to the number of shares of Star Gas Common Stock
which could then be purchased under the unexercised portion of the Option
Agreement, multiplied by a fraction, the numerator of which is the Call Price
and the denominator of which is the per share value of the Petro Class A Common
Stock determined pursuant to Clause 1.4(b) and the Purchase Price of such
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option shall be equal to the current Purchase Price under the Option Agreement
divided by the same fraction.
1.8 Minimum FRC Call Option Price. Anything in this Agreement to
the contrary notwithstanding, if Petro exercises the Call Option to purchase
the shares of Series A 8% Cumulative Convertible Preferred Stock owned by the
FRC Shareholders on the date hereof (or shares of Common Stock received on the
conversion thereof), the Call Option Price per share of Common Stock shall be
no less than $10.8368 per share (in each case, as adjusted for stock splits,
stock dividends and the like).
2. Exercise of Option.
2.1 Manner of Exercise.
Until the expiration date of the Call Option or the Put Option, the
holder thereof may exercise such option in accordance with the provisions
hereof.
(a) In order to exercise the Call Option, Petro shall deliver
on the exercise date to the Investor Shareholders, at their respective
principal offices or such other office or agency designated by each of them for
such purpose, written notice of Petro's election to exercise such option and at
Petro's election it shall (i) make a wire transfer in immediately available
funds equal to the Call Option Price to accounts designated by the Investor
Shareholders or (ii) deliver a certificate or certificate for the number of
shares of Petro's Class A Common Stock ("Class A Common Stock") having a value
determined in accordance with Section 2.2 equal to the Call Option Price;
provided, however, that in the case of Prudential, at least twenty percent
(20%) of the Call Option Price shall be paid by wire transfer in immediately
available funds. The certificate or certificates representing Class A Common
Stock so delivered shall be in such denomination or denominations as may be
specified by the applicable Investor Shareholder and shall be registered in the
name of such holder.
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Upon receipt of the materials delivered by Petro upon the exercise of
a Call Option under this section, each Investor Shareholder shall, against
payment, execute and deliver, or cause to be executed and delivered, to Petro a
certificate or certificates representing the aggregate number of shares of
Common Stock or 8% Cumulative Convertible Preferred Stock owned by such
Investor Shareholder together with executed stock transfer powers to Petro or
to any person designated by Petro.
The certificate or certificates representing Common Stock or 8%
Cumulative Convertible Preferred Stock and Class A Common Stock shall be deemed
to have been issued and the holder thereof or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares of Common Stock or 8% Cumulative Convertible Preferred Stock or Class A
Common Stock, as the case may be, as of the date such notice is received by the
Investor Shareholders as aforesaid if such option has been exercised in
compliance with the above provisions. Petro shall pay all expenses, taxes and
other charges payable in connection with the preparation, issuance and delivery
of share certificates under this section.
(b) In order to exercise the Put Option, an Investor Share-
holder shall deliver to Petro, at its principal office or such other office or
agency designated by it for such purpose, written notice of such holder's
election to exercise such option and within three days thereafter such Investor
Shareholder shall deliver to Petro a certificate or certificates representing
the number of shares of Common Stock or 8% Cumulative Convertible Preferred
Stock owned by such Investor Shareholder together with executed stock transfer
powers to Petro or to any person designated by Petro.
Simultaneously with receipt of the materials delivered by the
Investor Shareholders following the exercise of a Put Option, Petro shall, at
its election, either (i) wire transfer the amount of the purchase price in
immediately available funds to an account designated by the Investor
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Shareholder or (ii) execute and deliver, or cause to be executed and delivered,
to each such Investor Shareholder the shares of Petro Class A Common Stock
valued pursuant to Section 2.2 in payment of the Put Option Price. The
certificate or certificates so delivered shall be in such denomination or
denominations as may be specified in such notice and shall be registered in the
name of such holder.
Such certificate or certificates shall be deemed to have been issued
and such holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares of Class A Common
Stock, 8% Cumulative Convertible Preferred Stock or Common Stock, as the case
may be, as of the date such notice is received by Petro as aforesaid if such
option has been exercised in compliance with the above provisions. Petro shall
pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this section.
2.2 Value of the Class A Common Stock. The value of Petro's Class A
Common Stock shall be deemed to be the average of the last reported sales price
for Petro's Class A Common Stock for the 10 trading days preceding the date on
which the option is exercised as reported by the NASDAQ National Market System,
or if the Class A Common Stock is not included in the NASDAQ National Market
System, then on the stock exchange or listing service on which the Class A
Common Stock is included. In the event that Petro's Class A Common Stock is
not listed on any national public securities exchange (including NASDAQ) in the
United States at the date of the exercise of the Call Option or the Put Option,
as the case may be, then the Call Option Price or the Put Option Price shall be
determined without regard to Petro's EBITDA multiple, and shall be paid by wire
transfer of immediately available funds.
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2.3 Option Shares Fully Paid.
All shares of Class A Common Stock issued upon the exercise of an
option shall be, when issued, duly authorized, validly issued, fully paid and
non-assessable.
2.4 Fractional Shares.
Petro shall not be required upon the exercise of an option to issue a
certificate representing any fraction of a share of Class A Common Stock, but,
at the option of Petro, in lieu of issuing such fractional share, may pay for
such fraction of a share in cash at the purchase price in effect on the date of
such exercise of such option.
2.5 Limits on Resale of Common Stock.
In no event shall Petro offer for sale, sell or otherwise transfer,
directly or indirectly, any shares of Common Stock that it owns, without the
prior written consent of all of the Investor Shareholders, during the
twelve-month period commencing on the exercise date of such Call Option;
provided, however, that this paragraph shall not prohibit Petro from selling
substantially all of its assets, merging or consolidating with or into another
entity or selling all its outstanding stock to another entity or person.
Petro agrees that it shall cause Star Gas not to make a public
offering of its Common Stock registered under the Securities Act of 1933,
without the prior written consent of all of the Investor Shareholders, during
the twelve-month period commencing on the exercise date of such Call Option;
provided, however, that such consent shall not be necessary if the number of
shares of Common Stock so offered are no more than an aggregate of twenty
percent (20%) of the number of Fully Diluted Shares.
3. Registration Rights.
3.1 Piggy-Back Registration Rights.
3.1.1 If Petro proposes to file, on its behalf and/or on behalf
of any of its securities holders, a Registration Statement under the Securities
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Act of 1993, as amended (the "Securities Act") other than in connection with a
dividend reinvestment, employee stock purchase, option or similar plan or in
connection with a merger, consolidation or reorganization, Petro shall give
written notice to each Investor Shareholder which acquired Petro Class A Common
Stock at its address set forth herein at least 30 days before the filing with
the Securities and Exchange Commission ("SEC") of such Registration Statement.
Each Investor Shareholder who desires to include any of its shares of Class A
Common Stock in such Registration Statement shall give written notice to Petro
within 20 days after the date of mailing of such offer, and shall deliver to
Petro a letter from counsel selected by such Investor Shareholder to the effect
that registration under the Securities Act is required. Petro shall thereupon
include in such filing the shares of Class A Common Stock designated by such
Investor Shareholder and, subject to its right to withdraw such filing, shall
use its best efforts to effect registration under the Securities Act of such
Shares.
3.1.2 The right of the Investor Shareholders to have shares
included in any Registration Statement in accordance with the provisions of
this Section 3.1 shall be subject to the following conditions:
3.1.2.1 Petro shall have the right to require that
Investor Shareholders participating in such Registration Statement
agree to refrain from offering or selling (other than in a private
sale) any shares of Common Stock that they own which are not included
in any such Registration Statement in accordance with this Section
3.1 for any time period (not to exceed 120 days) specified in writing
by any managing underwriter of the offering to which such
Registration Statement relates;
3.1.2.2 If any managing underwriter of the offering to
which the Registration Statement relates informs Petro in writing
that the total number of shares of Common Stock requested by the
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Investor Shareholders to be included in the Registration Statement is
sufficiently large to affect the success of such offering adversely,
then Petro will include only the number of shares, if any, in the
Registration Statement that such managing underwriter shall advise
Petro will not so affect the offering, and reductions in the number
of shares of Common Stock owned by the Investor Shareholders will be
made proportionate to their respective percentages of ownership of
shares to be included in the Registration Statement;
3.1.2.3 Petro shall furnish Investor Shareholders who have
shares included in a Registration Statement pursuant to this Section
3.1 with such number of copies of the prospectus relating to the
Offering (the "Prospectus") (including any preliminary prospectus or
supplemental or amended prospectus) as such Investor Shareholder may
reasonably request in order to facilitate the sale and distribution
of its shares; and
3.1.3 Notwithstanding the foregoing, Petro in its sole
discretion may determine not to file the registration statement or proceed
with the offering as to which the notice specified herein is given without any
liability to Investor Shareholders.
3.1.4 Each Investor Shareholder shall have the right to
register shares of Common Stock under this Section 3.1 on an unlimited number
of occasions.
3.2 Independent Registration Rights.
3.2.1 If either the FRC Shareholders or Prudential Shareholders
holding in either case a majority of the shares of Petro Class A Common Stock
held by the specific shareholder group (determined by reference to the
Shareholders' Agreement dated as of December 21, 1993 relating to Star Gas),
proposes to offer for sale, sell or transfer their respective shares of Petro
Class A Common Stock which may require registration under the Securities Act
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such shareholder shall give Petro written notice of their desire to sell such
shares, specifying the number of shares proposed to be sold and the plan for
distribution of such shares. Petro will thereafter:
3.2.1.1 Prepare and file with all deliberate speed a
Registration Statement with the SEC on the appropriate form and use
its best efforts to cause such Registration Statement to become
effective in order that such shareholders may sell their shares in
accordance with the proposed plan of distribution;
3.2.1.2 Prepare and file with the SEC such amendments and
supplements to such Registration Statement and Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for up to 120 days and to comply with the
provisions of the Securities Act with respect to the offer of the
shares covered by such Registration Statement during the period
required for distribution of such shares, which period shall not be
in excess of three months from the effective date of such
Registration Statement;
3.2.1.3 Furnish to such shareholders, if such shares have
been included in the Registration Statement pursuant to this Section
3.2, such number of copies of the Prospectus (including any
preliminary prospectus or supplemental or amended prospectus) as such
shareholders may reasonably request in order to facilitate the sale
and distribution of the shares;
3.2.1.4 Use reasonable efforts to register or qualify such
shares covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as the shareholders
shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such
shareholders to consummate the disposition in such jurisdictions of
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the shares owned by such shareholders, except that Petro shall not
for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction where, but for the
requirements of this clause 3.2.1.4, it would not be obligated to be
so qualified, to subject itself to taxation in any such jurisdiction,
or to consent to general service of process in any such jurisdiction;
3.2.1.5 Use reasonable efforts to cause such shares
covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the shareholders to consummate the dispositions
of such shares of Common Stock;
3.2.1.6 Notify promptly the shareholders selling any such
shares covered by such Registration Statement, at any time when a
Prospectus relating thereto is required to be delivered under the
Securities Act, of Petro's becoming aware that the Prospectus
included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and, at the request of any such selling shareholder,
prepare and furnish to such selling shareholder a reasonable number
of copies of an amended or supplemental Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
shares, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
3.2.1.7 Otherwise use reasonable efforts to comply with
all applicable rules and regulations of the SEC, and make available
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to its security holders, as soon as reasonably practicable (but not
more than eighteen months) after the effective date of the
Registration Statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
3.2.1.8 Use reasonable efforts to list or admit for
trading such shares of Common Stock on the National Association of
Securities Dealers, Inc. National Market System ("NASDAQ NMS") or
any securities exchange on which the Common Stock is then listed, if
such shares are not already so listed and if such listing is then
permitted under the rules of the NASDAQ NMS or such exchange, and to
provide a transfer agent and registrar for such shares covered by
such Registration Statement not later than the effective date of such
Registration Statement;
3.2.1.9 Enter into an underwriting agreement with a
managing underwriter or underwriters containing representations,
warranties, indemnities and agreements then customarily included by
an issuer in underwriting agreements with respect to secondary
distributions;
3.2.1.10 Use reasonable efforts to obtain a "cold comfort"
letter or letters from the Petro independent public accountants in
customary form and covering matters of the type customarily covered
by "cold comfort" letters as the shareholders selling such shares
shall reasonably request;
3.2.1.11 Make available for inspection by the shareholders
selling such shares covered by such Registration Statement, by any
underwriter participating in any disposition to be effected pursuant
to such Registration Statement and by any attorney, accountant or
other agent retained by any such shareholders or any such
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underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of Petro, and cause all of Petro's
officers, directors and employees to supply all information
reasonably requested by any such selling shareholders, underwriter,
attorney, accountant or agent in connection with such Registration
Statement; and
3.2.1.12 Obtain for delivery to the underwriters or agent
and to selling shareholders an opinion or opinions from counsel for
Petro in customary form and in form and scope reasonably satisfactory
to such underwriter or agent and their counsel.
3.2.2 The right of the Investor Shareholders to have shares
registered pursuant to the provisions of this Section 3.2 shall be subject to
the following conditions:
3.2.2.1 If a request for registration is made within 60
days prior to the conclusion of Petro's then current fiscal year,
Petro shall have the right to delay the filing of the Registration
Statement for such period of time until Petro receives its audited
financial statements for such fiscal year;
3.2.2.2 If any managing underwriter of the offering to
which the Registration Statement relates informs Petro that total
number of shares of Common Stock requested by the Investor
Shareholders to be included in the Registration Statement is
sufficiently large to affect the success of such offering adversely,
then Petro will include only the number of shares, if any, in the
Registration Statement that such managing underwriter shall advise
Petro will not so affect the offering and reductions in the number of
shares of Common Stock owned by the Investor Shareholders will be
made proportionate to their respective percentages of ownership;
provided, however, that the shareholders requesting such registration
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shall not be required to reduce the number of shares of Common Stock
that such shareholders have requested to be included in the
registration statement without such shareholders' written consent;
3.2.2.3 Each of the Prudential Shareholders and the FRC
Shareholders shall each be entitled to request no more than two (a
total of four) Registration Statements; provided, however, that a
request will be disregarded in determining a shareholder's rights
under this paragraph if a Registration Statement based upon such
request does not actually become effective; and
3.2.2.4 Petro shall not be required to file a Registration
Statement on behalf of Investor Shareholders under this Section
within six months after the effective date of a Registration
Statement in which the Investor Shareholders are offered an
opportunity to include shares pursuant to Section 3.1 hereof.
3.3 Expenses. Petro will bear all the expenses in connection with
any Registration Statement under Section 3.1 or Section 3.2 hereof (including
the reasonable fees and expenses of counsel to any Investor Shareholders),
other than transfer taxes payable on the sale of such shares and fees and
commissions of brokers, dealers and underwriters.
3.4 "No Action" Letter; Opinion of Counsel. No Investor Shareholder
shall have registration rights under this Article with respect to any sales
proposed by them of shares as to which sales (i) a "no action" letter is
received from the SEC or its staff confirming the availability of an exemption
from the requirements of the Securities Act or (ii) an unqualified opinion of
counsel to Petro is rendered to the effect that registration of such shares for
such sales is not required; PROVIDED, FURTHER HOWEVER, that in both cases (i)
and (ii) above, the volume limitations of Rule 144(e) under the Securities Act
shall not limit the amount of shares of Common Stock that the Investor
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Shareholders are entitled to offer and sell without registration under the
Securities Act.
3.5 Recall of Prospectuses, etc. With respect to a Registration
Statement or amendment thereto filed pursuant to this Article, if, at any time,
Petro notifies the selling Investor Shareholders that an amendment or
supplement to such Registration Statement or amendment or the prospectus
included therein is necessary or appropriate, the selling Investor Shareholders
will forthwith cease selling and distributing shares thereunder and will
forthwith redeliver to Petro all copies of such Registration Statement and
prospectuses then in their possession or under their control. Petro will use
its best efforts to cause any such amendment or supplement to become effective
as soon as practicable and will furnish the selling Investor Shareholders with
a reasonable number of copies of such amended or supplemented Prospectus (and
the period during which Petro is required to use its best efforts to maintain
such Registration Statement in effect pursuant to this Agreement will be
increased by the period from the date on which the selling Investor
Shareholders ceased selling and distributing shares thereunder to the date on
which such amendment or supplement becomes effective).
3.6 Cooperation of Investor Shareholders. Petro shall be entitled
to require that each selling Investor Shareholder cooperate with Petro in
connection with a registration of shares of Class A Common Stock pursuant to
this Article and furnish (i) such information regarding such selling Investor
Shareholders and the distribution as may be reasonably required by Petro or as
required by law in connection therewith and (ii) such representations,
undertakings and agreements regarding such selling Investor Shareholders and
the distribution or any other representation required by law in connection
therewith.
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3.7 Indemnification.
3.7.1 In the event of any registration of any securities under
the Securities Act pursuant to this Article, Petro will indemnify and hold
harmless each selling Investor Shareholder, each affiliate of such Investor
Shareholder and their respective directors and officers and general and limited
partners, any underwriter and each other person, if any, who controls such
selling Investor Shareholder or underwriter within the meaning of the
Securities Act, against any losses, claims, damages, expenses or liabilities,
joint or several, to which each such selling Investor Shareholder or
underwriter or controlling person may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement or preliminary prospectus (if used prior to the
effective date of such registration statement) or final or summary prospectus
contained therein (if used during the period the Petro is required to keep the
registration statement effective), or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements made therein not misleading, and will reimburse each such selling
Investor Shareholder, underwriter and controlling person for any legal or any
other expenses reasonably incurred as incurred by him in connection with
investigating or defending any such action or claim, excluding any amounts paid
in settlement of any litigation, commenced or threatened, if such settlement is
effected without the prior written consent of Petro; provided, however, that
Petro will not be liable to a particular selling Investor Shareholder or
underwriter in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
omission or alleged omission made in said registration statement, said
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preliminary prospectus or said final or summary prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to Petro by that selling Investor Shareholder or its controlling
affiliates or representative, or by that underwriter, as the case may be,
specifically for use in the preparation thereof; and provided further that the
indemnity agreement contained in this Section 3.7 with respect to any
preliminary prospectus shall not inure to the benefit of any selling Investor
Shareholder or underwriter or to any person controlling the same in respect of
any loss, claim, damage, liability or action asserted by someone who purchased
shares from such person if a copy of the final prospectus (as the same may be
amended or supplemented) in connection with such registration statement was not
sent or given to such person with or prior to written confirmation of the sale
and if the untrue statement or omission or alleged untrue statement or omission
of a material fact contained in such preliminary prospectus was corrected in
the final prospectus.
3.7.2 In the event of any registration of securities under the
Securities Act pursuant to this Article, each selling Investor Shareholder
shall indemnify and hold harmless Petro, each of its directors and officers,
any underwriter and each other person, if any, who controls Petro or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Petro or any such
director, officer, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement or preliminary prospectus or final or summary
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
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made therein not misleading, and will reimburse Petro, each such director,
officer, underwriter and controlling person for any legal or other expenses
reasonably incurred as incurred by them in connection with investigating or
defending any such action or claim, excluding any amounts paid in settlement of
any litigation, commenced or threatened, if such settlement is effected without
the prior written consent of the Investor Shareholder or his representative,
but in all such cases only if, and to the extent that, any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission therein made in
reliance upon and in conformity with written information furnished to Petro by
the selling Investor Shareholder or its controlling affiliates or
representative specifically for use in the preparation thereof.
3.7.3 Action Commenced. Promptly after receipt by a party
entitled to indemnification under Section 3.7.1 or 3.7.2 hereof of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under either of
such Sections, notify the indemnifying party in writing of the commencement
thereof; provided, however, that the indemnifying party is relieved of its
obligations hereunder by the failure to give such notice only to the extent the
indemnifying party is adversely affected by such failure. In case any such
action is brought against the indemnified party and it shall so notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it so chooses, to assume
the defense thereof with counsel reasonably satisfactory to such indemnified
party; provided that the indemnifying party will not agree to the entry of any
judgment or to any settlement without the prior consent of the indemnified
party (which consent shall not be unreasonably withheld) unless such settlement
requires no more than a monetary payment for which the indemnifying party
agrees to indemnify the indemnified party and includes a full, unconditional
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and complete release of the indemnified party; provided, however, that the
indemnified party shall be entitled to take control of the defense of any claim
as to which, in the reasonable judgment of the indemnifying party's counsel,
representation of both the indemnifying party and the indemnified party would
be inappropriate under the applicable standards of professional conduct due to
actual or potential differing interests between them (except that if the
selling Investor Shareholders are the indemnifying party, such defense may be
assumed only in a manner chosen by the holders of a majority in interest of the
shares of Class A Common Stock included in the registration statement which is
the subject of such action), and, after notice from the indemnifying party that
it so chooses, such indemnifying party shall not be liable for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that if the indemnifying party
fails to take reasonable steps necessary to diligently defend such claim within
20 days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to take such steps, the
indemnified party may assume its own defense and the indemnifying party shall
be liable for any expenses therefor. The indemnity agreements in this Section
shall be in addition to any liabilities which the indemnifying parties may have
pursuant to law. In the event that an indemnifying party assumes the defense
of an action under this Section, then such indemnifying party shall, subject to
the provisions of this Section, indemnify and hold harmless the indemnified
party from any and all losses, claims, damages or liabilities by reason of such
settlement or judgment.
3.7.4 Contribution. If the indemnity provided for in the
foregoing paragraphs of this Section is unavailable or insufficient for any
reason to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, agrees to contribute to the amount
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paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other hand from the sale of securities under such
Registration Statement, (ii) the relative fault of the indemnifying party on
the one hand and the indemnified party on the other hand in connection with the
statements, actions or omissions which resulted in such losses, claims, damages
or liabilities and (iii) any other relevant equitable considerations. The
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other hand (i) in the case of an untrue or alleged untrue
statement of a material fact or an omission or alleged omission to state a
material fact, shall be determined by reference to, among other things, whether
such statement or omission relates to information supplied by the indemnifying
party or by the indemnified party, respectively, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and (ii) in the case of any other action or
omission, shall be determined by reference to, among other things, whether such
action or omission was taken or omitted to be taken by the indemnifying party
or the indemnified party, respectively, and the parties' relative intent,
knowledge, access to information and opportunity to prevent such action or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding sentences. The amount
paid or payable by the indemnified party as a result of the losses, claims,
damages or liabilities referred to in such sentences shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending any such action or claim.
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3.7.5 Non-Exclusivity. The obligations of the parties under
this Section shall be in addition to any liability which any party may
otherwise have to any other party.
4. Rule 144.
For so long as Petro continues to be subject to the requirements of
Section 12 of the Exchange Act, Petro covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations adopted by the SEC thereunder (or, if the Company is
not required to file such reports, it will, upon the request of the holders of
a majority of the shares of the Prudential Shareholders or FRC Shareholders,
make publicly available such information), and it will take such further action
as the holders of a majority of the shares of the Prudential Shareholders or
FRC Shareholders may reasonably request, all to the extent required from time
to time to enable them to sell shares without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time ("Rule 144"), or
(ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of a shareholder, Petro will deliver to such shareholders a written
statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section, Petro may deregister under
Section 12 of the Exchange Act if it then is permitted to do so pursuant to the
Exchange Act and the rules and regulations thereunder.
5. Miscellaneous.
5.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of the
parties hereto.
5.2 Waiver of Compliance. Any failure of Petro, on the one hand, or
Investor Shareholders, on the other, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by a managing
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director, vice president (of any designation) or a duly authorized officer of
each of the Investor Shareholders or Petro, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
5.3 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) If to Petro, to:
Petroleum Heat and Power Co., Inc.
2187 Atlantic Street
Stamford, CT 06902
Attn: George Leibowitz
Senior Vice President
(with a copy to:)
Phillips, Nizer, Benjamin, Krim & Ballon
31 West 52nd Street
New York, NY 10019
Attn: Alan Shapiro, Esq.
(b) If to the FRC Shareholders, to:
First Reserve Corporation
475 Steamboat Road
Greenwich, Connecticut 06830
Attn: William E. Macaulay
(c) If to Prudential, to:
The Prudential Insurance Company of America
c/o Prudential Financial Restructuring Group
4 Gateway Center - 9th Fl.
100 Mulberry Street
Newark, NJ 07102-4069
Attn: Managing Director
Fax: 201-802-2662
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with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
Attn: Duncan Stewart, Esq.
Fax: 212-821-8111
or to such other person or address as shareholders shall furnish to the Company
in writing.
5.4 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that each Investor Shareholder shall be deemed to automatically assign
its rights, interests and obligations hereunder and shall be released from its
obligations hereunder (and no consent will be required) with respect to any
securities that are sold, transferred, assigned or otherwise disposed of by
such Investor Shareholder in accordance with the terms of the Star Gas
Shareholders' Agreement of even date herewith if such transferee agrees to be
bound by the terms hereof or if such transferee is Petro, provided that the
terms of this Agreement shall not be binding upon or inure to the benefit of
any person who may acquire any such shares in a public offering or in ordinary
brokerage transactions pursuant to Rule 144 following an initial public
offering of the Common Stock and the Investor Shareholder will be released from
all obligations hereunder in respect of any shares so transferred.
5.5 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to its conflicts of law doctrine.
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5.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5.7 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
5.8 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto.
5.9 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or corporation other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be affixed hereto, all
as of the day and year first above written.
PETROLEUM HEAT AND POWER CO., INC.
By /s/ George Liebowitz
ACCEPTED AND AGREED:
AMERICAN GAS & OIL INVESTORS AmGO III
By: First Reserve By: First Reserve
Corporation, Corporation
as managing general as managing general
partner, partner,
By: /s/ William E. Macaulay By: /s/ William E. Macaulay
Managing Director Managing Director
AmGO II THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: First Reserve
Corporation, By: /s/
as managing general Vice President
partner,
By: /s/ William E. Macaulay
Managing Director
FIRST RESERVE SECURED ENERGY ASSETS FUND, L.P.
By: First Reserve Corporation,
as managing general partner
By: /s/ William E. Macaulay
Managing Director
FRC STAR GAS, INC.
By: /s/ William E. Macaulay
30
