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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report July 29, 1994
----------------------------------------------
Date of Earliest Event Reported July 5, 1994
-----------------------------
Ferrellgas Partners, L.P.
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-53383 43-1675728
------------------------ ---------------- -------------------
(State or Other Juris- (Commission (IRS Employer
diction of Incorpora- File Number) Identification No.)
tion or Organization)
One Liberty Plaza, Liberty, Missouri 64068
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(Address of principal executive offices) (Zip Code)
(816) 792-1600
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On July 5, 1994, the previously announced offering of 13.1 million
Common Units representing limited partner interests in Ferrellgas Partners,
L.P. (the "Partnership") was consummated. Concurrently, the previously
announced offering by Ferrellgas, L.P. (the "Operating Partnership"), a
subsidiary partnership of the Partnership, and Ferrellgas Finance Corp., a
wholly-owned subsidiary of the Operating Partnership, of 10% Fixed Rate Senior
Notes due 2001 in the aggregate principal amount of $200,000,000 and Floating
Rate Senior Notes due 2001 in the aggregate principal amount of $50,000,000 was
also consummated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) EXHIBITS.
The Exhibits listed in the Index to Exhibits are filed as part of
this Current Report on Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FERRELLGAS PARTNERS, L.P.
By: FERRELLGAS, INC., its general
partner
By: (signature of Danley K. Sheldon
appears here)
_______________________________
Danley K. Sheldon
Vice President and Chief
Financial Officer
Date: July 29, 1994
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EXHIBIT INDEX
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<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
- - ------------- --------------------------------- ----------
<S> <C> <C>
3.1 Agreement of Limited Partnership
of Ferrellgas Partners, L.P.
dated as of July 5, 1994
3.2 Agreement of Limited Partnership
of Ferrellgas, L.P. dated as of
July 5, 1994
10.1 Credit Agreement dated as of
July 5, 1994 among Ferrellgas,
L.P., Stratton Insurance
Company, Inc., Ferrellgas, Inc.,
Bank of America National Trust
and Savings Association, as
agent, and the other financial
institutions party thereto
10.2 Indenture dated as of July 5,
1994 among Ferrellgas, L.P.,
Ferrellgas Finance Corp. and
Norwest Bank Minnesota, National
Association, as trustee,
relating to $200,000 10% Series
A Fixed Rate Senior Notes due
2001 and $50,000,000 Series B
Floating Rate Senior Notes due
2001
</TABLE>
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AGREEMENT
OF
LIMITED PARTNERSHIP
OF
FERRELLGAS PARTNERS, L.P.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I--ORGANIZATIONAL MATTERS............................................... 1
1.1 Formation............................................................... 1
1.2 Name.................................................................... 1
1.3 Registered Office; Principal Office..................................... 1
1.4 Power of Attorney....................................................... 1
1.5 Term.................................................................... 3
1.6 Possible Restrictions on Transfer....................................... 3
ARTICLE II--DEFINITIONS
"Acquisition"................................................................. 3
"Additional Limited Partner".................................................. 3
"Adjusted Capital Account".................................................... 3
"Adjusted Property"........................................................... 4
"Affiliate"................................................................... 4
"Agreed Allocation"........................................................... 4
"Agreed Value"................................................................ 4
"Agreement"................................................................... 4
"Assignee".................................................................... 4
"Associate"................................................................... 4
"Audit Committee"............................................................. 4
"Available Cash".............................................................. 4
"Book-Tax Disparity".......................................................... 5
"Business Day"................................................................ 5
"Capital Account"............................................................. 6
"Capital Additions and Improvements".......................................... 6
"Capital Contribution"........................................................ 6
"Capital Interests"........................................................... 6
"Carrying Value".............................................................. 6
"Cash from Interim Capital Transactions"...................................... 6
"Cash from Operations"........................................................ 6
"Cause"....................................................................... 7
"Certificate"................................................................. 7
"Certificate of Limited Partnership".......................................... 7
"Citizenship Certification"................................................... 7
"Claim"....................................................................... 7
"Closing Date"................................................................ 8
"Closing Price"............................................................... 8
"Code"........................................................................ 8
"Combined Interest"........................................................... 8
"Commission".................................................................. 8
"Common Unit"................................................................. 8
"Common Unit Arrearage"....................................................... 8
"Contributed Property"........................................................ 8
"Contribution Agreement"...................................................... 8
"Cumulative Common Unit Arrearage"............................................ 8
"Curative Allocation"......................................................... 8
"Current Market Price"........................................................ 8
"Delaware Act"................................................................ 8
"Departing Partner"........................................................... 8
"Economic Risk of Loss"....................................................... 8
"Eligible Citizen"............................................................ 8
"Event of Withdrawal"......................................................... 9
"Ferrell"..................................................................... 9
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<TABLE>
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"Ferrellgas"..................................................................................... 9
"First Liquidation Target Amount"................................................................ 9
"First Target Distribution"...................................................................... 9
"General Partner"................................................................................ 9
"Group".......................................................................................... 9
"Holder"......................................................................................... 9
"IDR"............................................................................................ 9
"Incentive Distribution"......................................................................... 9
"Indemnified Persons"............................................................................ 9
"Indemnitee"..................................................................................... 9
"Initial Limited Partners"....................................................................... 9
"Initial Offering"............................................................................... 9
"Initial Unit Price"............................................................................. 9
"Interim Capital Transactions"................................................................... 10
"Issue Price".................................................................................... 10
"Limited Partner"................................................................................ 10
"Liquidation Date"............................................................................... 10
"Liquidator"..................................................................................... 10
"Maintenance Capital Expenditures"............................................................... 10
"Merger Agreement"............................................................................... 10
"Minimum Quarterly Distribution"................................................................. 10
"National Securities Exchange"................................................................... 10
"Net Agreed Value"............................................................................... 11
"Net Income"..................................................................................... 11
"Net Loss"....................................................................................... 11
"Net Termination Gain"........................................................................... 11
"Net Termination Loss"........................................................................... 11
"Non-citizen Assignee"........................................................................... 11
"Nonrecourse Built-in Gain"...................................................................... 11
"Nonrecourse Deductions"......................................................................... 12
"Nonrecourse Liability".......................................................................... 12
"Notice of Election to Purchase"................................................................. 12
"Operating Partnership".......................................................................... 12
"Operating Partnership Agreement"................................................................ 12
"Opinion of Counsel"............................................................................. 12
"Organizational Limited Partner"................................................................. 12
"Outstanding".................................................................................... 12
"Overallotment Option"........................................................................... 12
"Partners"....................................................................................... 12
"Partner Nonrecourse Debt"....................................................................... 12
"Partner Nonrecourse Debt Minimum Gain".......................................................... 12
"Partner Nonrecourse Deductions"................................................................. 12
"Partnership".................................................................................... 12
"Partnership Interest"........................................................................... 12
"Partnership Minimum Gain"....................................................................... 12
"Partnership Securities"......................................................................... 13
"Per Unit Capital Amount"........................................................................ 13
"Percentage Interest"............................................................................ 13
"Person"......................................................................................... 13
"Purchase Date".................................................................................. 13
"Quarter"........................................................................................ 13
"Recapture Income"............................................................................... 13
"Record Date".................................................................................... 13
"Record Holder".................................................................................. 13
"Redeemable Units"............................................................................... 13
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<TABLE>
<S> <C>
"Registration Statement"...................................................... 13
"Required Allocations"........................................................ 13
"Residual Gain"............................................................... 14
"Residual Loss"............................................................... 14
"Restricted Activities"....................................................... 14
"Second Liquidation Target Amount"............................................ 14
"Second Target Distribution".................................................. 14
"Securities Act".............................................................. 14
"Special Approval"............................................................ 14
"Special Limited Partner"..................................................... 14
"Special Limited Partners Book Capital"....................................... 14
"Subordinated Unit"........................................................... 14
"Subordination Period"........................................................ 14
"Subsidiary".................................................................. 15
"Substituted Limited Partner"................................................. 15
"Surviving Business Entity"................................................... 15
"Termination Capital Transactions"............................................ 15
"Third Target Distribution"................................................... 15
"Trading Day"................................................................. 15
"Transfer".................................................................... 15
"Transfer Agent".............................................................. 15
"Transfer Application"........................................................ 15
"Underwriter"................................................................. 15
"Underwriting Agreement"...................................................... 15
"Unit"........................................................................ 15
"Unpaid MQD".................................................................. 15
"Unrealized Gain"............................................................. 16
"Unrealized Loss"............................................................. 16
"Unrecovered Initial Unit Price".............................................. 16
"Unrecovered Subordinated Unit Capital"....................................... 16
"Withdrawal Opinion of Counsel"............................................... 16
ARTICLE III--PURPOSE............................................................ 16
3.1 Purpose and Business.................................................. 16
3.2 Powers................................................................ 17
ARTICLE IV--CAPITAL CONTRIBUTIONS............................................... 17
4.1 Initial Contributions; Return of Initial Contributions................ 17
4.2 Contributions by the General Partner and the Initial Limited Partners. 17
4.3 Issuances of Additional Units and Other Securites..................... 17
4.4 Limited Preemptive Rights............................................. 19
4.5 Capital Accounts...................................................... 19
4.6 Interest.............................................................. 22
4.7 No Withdrawal......................................................... 22
4.8 Loans from Partners................................................... 22
4.9 No Fractional Units................................................... 22
4.10 Splits and Combinations............................................... 22
ARTICLE V--ALLOCATIONS AND DISTRIBUTIONS........................................ 23
5.1 Allocations for Capital Account Purposes.............................. 23
(a) Net Income........................................................ 23
(b) Net Losses........................................................ 23
(c) Net Termination Gains and Losses.................................. 23
(d) Special Allocations............................................... 25
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(i) Partnership Minimum Gain Chargeback........................ 25
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain........ 25
(iii) Priority Allocations....................................... 26
(iv) Qualified Income Offset.................................... 26
(v) Gross Income Allocations................................... 26
(vi) Nonrecourse Deductions..................................... 26
(vii) Partner Nonrecourse Deductions............................. 26
(viii) Nonrecourse Liabilities.................................... 27
(ix) Code Section 754 Adjustments............................... 27
(x) Economic Uniformity........................................ 27
(xi) Curative Allocation........................................ 27
(xii) Retirement of Assumed Indebtedness......................... 28
(xiii) First Year Allocation...................................... 28
5.2 Allocations for Tax Purposes.......................................... 28
5.3 Requirement and Characterization of Distributions..................... 30
5.4 Distributions of Cash from Operations................................. 30
(a) During Subordination Period........................................ 30
(b) After Subordination Period......................................... 31
5.5 Distributions of Cash from Interim Capital Transactions................ 31
5.6 Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels............................................................... 32
5.7 Special Provisions Relating to the Subordinated Units.................. 32
5.8 Special Provisions Relating to the Special Limited Partners............ 33
ARTICLE VI--MANAGEMENT AND OPERATION OF BUSINESS................................ 33
6.1 Management............................................................. 33
6.2 Certificate of Limited Partnership..................................... 35
6.3 Restrictions on General Partner's Authority............................ 35
6.4 Reimbursement of the General Partner................................... 36
6.5 Outside Activities..................................................... 36
6.6 Loans to and from the General Partner; Contracts with Affiliates....... 37
6.7 Indemnification........................................................ 39
6.8 Liability of Indemnitees............................................... 40
6.9 Resolution of Conflicts of Interest.................................... 40
6.10 Other Matters Concerning the General Partner........................... 42
6.11 Title to Partnership Assets............................................ 42
6.12 Purchase or Sale of Units.............................................. 42
6.13 Registration Rights of Ferrellgas and its Affiliates................... 43
6.14 Reliance by Third Parties.............................................. 44
ARTICLE VII--RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS......................... 45
7.1 Limitation of Liability................................................ 45
7.2 Management of Business................................................. 45
7.3 Outside Activities..................................................... 45
7.4 Return of Capital...................................................... 45
7.5 Rights of Limited Partners Relating to the Partnership................. 45
ARTICLE VIII--BOOKS, RECORDS, ACCOUNTING AND REPORTS............................ 46
8.1 Records and Accounting................................................. 46
8.2 Fiscal Year............................................................ 46
8.3 Reports................................................................ 46
ARTICLE IX--TAX MATTERS......................................................... 47
9.1 Preparation of Tax Returns............................................. 47
9.2 Tax Elections.......................................................... 47
9.3 Tax Controversies...................................................... 47
</TABLE>
iv
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9.4 Organizational Expenses................................................ 47
9.5 Withholding............................................................ 47
9.6 Entity-Level Taxation.................................................. 47
9.7 Entity-Level Arrearage Collections..................................... 48
9.8 Opinions of Counsel.................................................... 48
ARTICLE X--CERTIFICATES......................................................... 48
10.1 Certificates........................................................... 48
10.2 Registration, Registration of Transfer and Exchange.................... 49
10.3 Mutilated, Destroyed, Lost or Stolen Certificates...................... 49
10.4 Record Holder.......................................................... 50
ARTICLE XI--TRANSFER OF INTERESTS............................................... 50
11.1 Transfer............................................................... 50
11.2 Transfer of a General Partner's Partnership Interest................... 50
11.3 Transfer of Units...................................................... 51
11.4 Restrictions on Transfers.............................................. 51
11.5 Citizenship Certificates; Non-citizen Assignees........................ 51
11.6 Redemption of Interests................................................ 52
11.7 Transfer of IDRs....................................................... 53
ARTICLE XII--ADMISSION OF PARTNERS.............................................. 53
12.1 Admission of Initial Limited Partners.................................. 53
12.2 Admission of Substituted Limited Partners.............................. 53
12.3 Admission of Successor General Partner................................. 54
12.4 Admission of Additional Limited Partners............................... 54
12.5 Amendment of Agreement and Certificate of Limited Partnership.......... 54
ARTICLE XIII--WITHDRAWAL OR REMOVAL OF PARTNERS................................. 54
13.1 Withdrawal of the General Partner...................................... 54
13.2 Removal of the General Partner......................................... 56
13.3 Interest of Departing Partner and Successor General Partner............ 56
13.4 Withdrawal of Limited Partners......................................... 57
ARTICLE XIV--DISSOLUTION AND LIQUIDATION........................................ 57
14.1 Dissolution............................................................ 57
14.2 Continuation of the Business of the Partnership after Dissolution...... 58
14.3 Liquidation............................................................ 58
14.4 Distributions in Kind.................................................. 59
14.5 Cancellation of Certificate of Limited Partnership..................... 60
14.6 Reasonable Time for Winding Up......................................... 60
14.7 Return of Capital...................................................... 60
14.8 Capital Account Restoration............................................ 60
14.9 Waiver of Partition.................................................... 60
ARTICLE XV--AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 Amendment to be Adopted Solely by General Partner...................... 60
15.2 Amendment Procedures................................................... 61
15.3 Amendment Requirements................................................. 62
15.4 Meetings............................................................... 62
15.5 Notice of a Meeting.................................................... 63
15.6 Record Date............................................................ 63
15.7 Adjournment............................................................ 63
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes............. 63
15.9 Quorum................................................................. 63
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15.10 Conduct of Meeting..................................................... 64
15.11 Action Without a Meeting............................................... 64
15.12 Voting and Other Rights................................................ 64
ARTICLE XVI--MERGER............................................................. 65
16.1 Authority.............................................................. 65
16.2 Procedure for Merger or Consolidation.................................. 65
16.3 Approval by Limited Partners of Merger or Consolidation................ 66
16.4 Certificate of Merger.................................................. 66
16.5 Effect of Merger....................................................... 66
ARTICLE XVII--RIGHT TO ACQUIRE UNITS............................................ 67
17.1 Right to Acquire Units................................................. 67
ARTICLE XVIII--GENERAL PROVISIONS............................................... 68
18.1 Addresses and Notices.................................................. 68
18.2 References............................................................. 68
18.3 Pronouns and Plurals................................................... 69
18.4 Further Action......................................................... 69
18.5 Binding Effect......................................................... 69
18.6 Integration............................................................ 69
18.7 Creditors.............................................................. 69
18.8 Waiver................................................................. 69
18.9 Counterparts........................................................... 69
18.10 Applicable Law......................................................... 69
18.11 Invalidity of Provisions............................................... 69
Exhibit A--Form of Certificate Evidencing Common Unit........................... 71
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF
FERRELLGAS PARTNERS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF FERRELLGAS PARTNERS, L.P., dated
as of July 5, 1994, is entered into by and among Ferrellgas, Inc., a Delaware
corporation, as the General Partner, and Danley K. Sheldon, as the
Organizational Limited Partner, together with any other Persons who become
Partners in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION. (a) The General Partner and the Organizational Limited Partner
have previously formed the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. Except as expressly provided to the contrary in
this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. All Partnership Interests shall constitute personal
property of the owner thereof for all purposes.
(b) In connection with the formation of the Partnership, Ferrellgas has been
admitted as a general partner of the Partnership, and the Organizational Limited
Partner has been admitted as a limited partner of the Partnership. As of the
Closing Date, after giving effect to the transactions contemplated by Section
4.2 and after giving effect to the admission of the Initial Limited Partners as
contemplated by Section 12.1 (but in no event prior to such time), the interest
in the Partnership of the Organizational Limited Partner shall be terminated and
the Organizational Limited Partner shall withdraw as a limited partner of the
Partnership.
1.2 NAME. The name of the Partnership shall be "Ferrellgas Partners, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner, including, without limitation,
the name of the General Partner. The words "Limited Partnership," "L.P.," "Ltd."
or similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole discretion may change the name of
the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until changed by the
General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, Wilmington, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership shall be located at, and the address of the General Partner
shall be, One Liberty Plaza, Liberty, Missouri 64068, or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate.
1.4 POWER OF ATTORNEY. (a) Each Limited Partner and each Assignee hereby
constitutes and appoints each of the General Partner and, if a Liquidator shall
have been selected pursuant to Section 14.3, the Liquidator severally (and any
successor to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, with
full power of substitution, as his true and lawful agent and attorney-in-fact,
with full power and authority in his name, place and stead, to:
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(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
of Limited Partnership and all amendments or restatements thereof) that the
General Partner or the Liquidator deems necessary or appropriate to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the General Partner or the
Liquidator deems necessary or appropriate to reflect, in accordance with its
terms, any amendment, change, modification or restatement of this Agreement;
(C) all certificates, documents and other instruments (including, without
limitation, conveyances and a certificate of cancellation) that the General
Partner or the Liquidator deems necessary or appropriate to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments relating to
the admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article XI, XII, XIII or XIV or the Capital
Contribution of any Partner; (E) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of any class or series of Units or other Partnership Securities
issued pursuant to Section 4.2; and (F) all certificates, documents and other
instruments (including, without limitation, agreements and a certificate of
merger) relating to a merger or consolidation of the Partnership pursuant to
Article XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments
necessary or appropriate, in the sole discretion of the General Partner or the
Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or is necessary or
appropriate, in the sole discretion of the General Partner or the Liquidator,
to effectuate the terms or intent of this Agreement; provided, that when
required by Section 15.3 or any other provision of this Agreement that
establishes a percentage of the Limited Partners or of the Limited Partners of
any class or series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section 1.4(a)(ii)
only after the necessary vote, consent or approval of the Limited Partners or
of the Limited Partners of such class or series, as applicable.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XV or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a
power coupled with an interest, and it shall survive and not be affected by the
subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy
or termination of any Limited Partner or Assignee and the transfer of all or any
portion of such Limited Partner's or Assignee's Partnership Interest and shall
extend to such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee hereby agrees to
be bound by any representation made by the General Partner or the Liquidator
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator
taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the General Partner's or the Liquidator's
request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on July 31, 2084, or until the
earlier dissolution of the Partnership in accordance with the provisions of
Article XIV.
9
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1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership as an
association taxable as a corporation or would otherwise result in the
Partnership's being taxed as an entity for federal income tax purposes, then,
the General Partner may impose such restrictions on the transfer of Units or
Partnership Interests as may be required, in the Opinion of Counsel, to prevent
the Partnership from being taxed as an association taxable as a corporation or
otherwise as an entity for federal income tax purposes, including, without
limitation, making such amendments to this Agreement as the General Partner in
its sole discretion may determine to be necessary or appropriate to impose such
restrictions, provided, that any such amendment to this Agreement that would
result in the delisting or suspension of trading of any class of Units on any
National Securities Exchange on which such class of Units is then traded must be
approved by the holders of at least two-thirds of the Outstanding Units of such
class (excluding the vote in respect of Units held by the General Partner and
its Affiliates).
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.
"ACQUISITION" means any transaction in which the Partnership or the
Operating Partnership acquires (through an asset acquisition, merger, stock
acquisition or other form of investment) control over all or a portion of the
assets, properties or business of another Person for the purpose of increasing
the operating capacity of the Partnership and the Operating Partnership, taken
as a whole, from the operating capacity of the Partnership and the Operating
Partnership, taken as a whole, existing immediately prior to such transaction.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 12.4 and who is shown as such on the
books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set
by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the
end of such fiscal year, are reasonably expected to be allocated to such
Partner in subsequent years under Sections 704(e)(2) and 706(d) of the Code
and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all
distributions that, as of the end of such fiscal year, are reasonably expected
to be made to such Partner in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed offsetting increases to
such Partner's Capital Account that are reasonably expected to occur during
(or prior to) the year in which such distributions are reasonably expected to
be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. The "Adjusted Capital Account" in respect of a Common Unit, a
Subordinated Unit or any other specified interest in the Partnership shall be
the amount which such Adjusted Capital Account would be if such Common Unit,
Subordinated Unit or other interest in the Partnership were the only interest
in the Partnership held by a Limited Partner.
"ADJUSTED PROPERTY" means any property the Carrying Value of which has been
adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii). Once an Adjusted
Property is deemed distributed by, and
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recontributed to, the Partnership for federal income tax purposes upon a
termination thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value of such
property is subsequently adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"AGREED ALLOCATION" means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 5.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term "Agreed Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon
termination and reconstitution thereof pursuant to Section 708 of the Code
shall be determined in accordance with Section 4.5(c)(i). Subject to Section
4.5(c)(i), the General Partner shall, in its sole discretion, use such method
as it deems reasonable and appropriate to allocate the aggregate Agreed Value
of Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
"AGREEMENT" means this Agreement of Limited Partnership of Ferrellgas
Partners, L.P., as it may be amended, supplemented or restated from time to
time.
"ASSIGNEE" means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this
Agreement, but who has not become a Substituted Limited Partner.
"ASSOCIATE" means, when used to indicate a relationship with any Person,
(i) any corporation or organization of which such Person is a director,
officer or partner or is, directly or indirectly, the owner of 20% or more of
any class of voting stock; (ii) any trust or other estate in which such Person
has at least a 20% beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity; and (iii) any relative or spouse
of such Person, or any relative of such spouse, who has the same residence as
such Person.
"AUDIT COMMITTEE" means a committee of the Board of Directors of the
General Partner composed entirely of two or more directors who are neither
officers nor employees of the General Partner or any of its Affiliates.
"AVAILABLE CASH" means, with respect to any Quarter and without
duplication:
(a) the sum of:
(i) all cash receipts of the Partnership during such Quarter from all
sources (including, without limitation, distributions of cash received
from the Operating Partnership and cash proceeds from Interim Capital
Transactions, but excluding cash proceeds from Termination Capital
Transactions), plus, in the case of the Quarter ending October 31, 1994,
the cash balance of the Partnership as of the close of business on the
Closing Date; and
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(ii) any reduction with respect to such Quarter in a cash reserve
previously established pursuant to clause (b)(ii) below (either by
reversal or utilization) from the level of such reserve at the end of the
prior Quarter;
(b) less the sum of:
(i) all cash disbursements of the Partnership during such Quarter,
including, without limitation, disbursements for operating expenses,
taxes, if any, debt service (including, without limitation, the payment
of principal, premium and interest), redemption of Partnership Interests,
capital expenditures, contributions, if any, to the Operating Partnership
and cash distributions to Partners (but only to the extent that such cash
distributions to Partners exceed Available Cash for the immediately
preceding Quarter); and
(ii) any cash reserves established with respect to such Quarter, and
any increase with respect to such Quarter in a cash reserve previously
established pursuant to this clause (b)(ii) from the level of such
reserve at the end of the prior Quarter, in such amounts as the General
Partner determines in its reasonable discretion to be necessary or
appropriate (A) to provide for the proper conduct of the business of the
Partnership or the Operating Partnership (including, without limitation,
reserves for future capital expenditures) or (B) to provide funds for
distributions with respect to Units and any general partner interests in
the Partnership in respect of any one or more of the next four Quarters
or (C) because the distribution of such amounts would be prohibited by
applicable law or by any loan agreement, security agreement, mortgage,
debt instrument or other agreement or obligation to which the Partnership
or the Operating Partnership is a party or by which any of them is bound
or its assets are subject;
provided, however, that for purposes of determining Available Cash for the
Quarter ending October 31, 1994, such Quarter shall be deemed to commence on
the Closing Date. Notwithstanding the foregoing, "Available Cash" with respect
to any Quarter shall not include any cash receipts or reductions in reserves
or take into account any disbursements made or reserves established in each
case after the Liquidation Date. Taxes paid by the Partnership on behalf of,
or amounts withheld with respect to, all or less than all of the Partners
shall not be considered cash disbursements of the Partnership that reduce
Available Cash, but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash to such Partners. Alternatively, in the
discretion of the General Partner, such taxes (if pertaining to all Partners)
may be considered to be cash disbursements of the Partnership which reduce
Available Cash, but the payment or withholding thereof shall not be deemed to
be a distribution of Available Cash to such Partners.
"BOOK-TAX DISPARITY" means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property
and the adjusted basis thereof for federal income tax purposes as of such
date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Section 4.5 and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained strictly in accordance with
federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
states of New York or Missouri shall not be regarded as a Business Day.
"CAPITAL ACCOUNT" means the capital account maintained for a Partner
pursuant to Section 4.5.
"CAPITAL ADDITIONS AND IMPROVEMENTS" means (a) additions or improvements to
the capital assets owned by the Partnership or the Operating Partnership or
(b) the acquisition of existing or
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the construction of new capital assets (including, without limitation, retail
distribution outlets, propane tanks, pipeline systems, storage facilities and
related assets), made to increase the operating capacity of the Partnership
and the Operating Partnership, taken as a whole, from the operating capacity
of the Partnership and the Operating Partnership, taken as a whole, existing
immediately prior to such addition, improvement, acquisition or construction.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to the Contribution Agreement or Sections 4.1, 4.2, 4.3, 4.5(c)(i),
13.3(c) or 14.8.
"CAPITAL INTERESTS" means, with respect to any corporation, any and all
shares, participations, rights or other equivalent interests in the capital of
the corporation, and with respect to any partnership, any and all partnership
interests (whether general or limited) and any other interests or
participations that confer on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"CARRYING VALUE" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all
depreciation, amortization and cost recovery deductions charged to the
Partners' and Assignees' Capital Accounts in respect of such Contributed
Property, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time
to time in accordance with Sections 4.5(d)(i) and 4.5(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the
General Partner.
"CASH FROM INTERIM CAPITAL TRANSACTIONS" means, at any date, such amounts
of Available Cash as are deemed to be Cash from Interim Capital Transactions
pursuant to Section 5.3.
"CASH FROM OPERATIONS" means, at the close of any Quarter but prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of all cash receipts of the Partnership and the Operating
Partnership during the period since the Closing Date through such date
(including, without limitation, the cash balance of the Partnership as of
the close of business on the Closing Date, plus an initial balance of $25
million, excluding any cash proceeds from any Interim Capital Transactions
(except to the extent specified in Section 5.3) and Termination Capital
Transactions),
(b) less the sum of:
(i) all cash operating expenditures of the Partnership and the
Operating Partnership during such period, including, without limitation,
taxes, if any, and amounts owed to the General Partner as reimbursement
pursuant to Section 6.4,
(ii) all cash debt service payments of the Partnership and the
Operating Partnership during such period (other than payments or
prepayments of principal and premium (A) required by reason of loan
agreements (including, without limitation, covenants and default
provisions therein) or by lenders, in each case in connection with sales
or other dispositions of assets or (B) made in connection with
refinancings or refundings of indebtedness with the proceeds from new
indebtedness or from the sale of equity interests, provided, that any
payment or prepayment of principal and premium, whether or not then due,
shall be deemed, at the election and in the discretion of the General
Partner, to be refunded or refinanced by any indebtedness incurred or to
be incurred by the Partnership or the Operating Partnership
simultaneously with or within 180 days prior to or after such
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payment or prepayment to the extent of the principal amount of such
indebtedness so incurred),
(iii) all cash capital expenditures of the Partnership and the
Operating Partnership during such period, including, without limitation,
cash capital expenditures made in respect of Maintenance Capital
Expenditures, but excluding (A) cash capital expenditures made in respect
of Acquisitions and Capital Additions and Improvements and (B) cash
expenditures made in payment of transaction expenses relating to Interim
Capital Transactions,
(iv) any cash reserves of the Partnership or the Operating Partnership
outstanding as of such date that the General Partner deems in its
reasonable discretion to be necessary or appropriate to provide for the
future cash payment of items of the type referred to in clauses (i)
through (iii) of this sentence, and
(v) any cash reserves of the Partnership or the Operating Partnership
outstanding as of such date that the General Partner deems in its
reasonable discretion to be necessary or appropriate to provide funds for
distributions with respect to Units and any general partner interests in
the Partnership in respect of any one or more of the next four Quarters,
all as determined on a consolidated basis and after taking into account the
General Partner's interest therein attributable to its general partner
interest in the Operating Partnership. Where cash capital expenditures are
made in part in respect of Acquisitions or Capital Additions and Improvements
and in part for other purposes, the General Partner's good faith allocation
thereof between the portion made for Acquisitions or Capital Additions and
Improvements and the portion made for other purposes shall be conclusive.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect
to, all or less than all of the Partners shall not be considered cash
operating expenditures of the Partnership that reduce Cash from Operations,
but the payment or withholding thereof shall be deemed to be a distribution of
Available Cash to such Partners. Alternatively, in the discretion of the
General Partner, such taxes (if pertaining to all Partners) may be considered
to be cash operating expenditures of the Partnership which reduce Cash from
Operations, but the payment or withholding thereof shall not be deemed to be a
distribution of Available Cash to such Partners.
"CAUSE" means a court of competent jurisdiction has entered a final, non-
appealable judgment finding the General Partner liable for actual fraud, gross
negligence or willful or wanton misconduct in its capacity as general partner
of the Partnership.
"CERTIFICATE" means a certificate, substantially in the form of Exhibit A
to this Agreement or in such other form as may be adopted by the General
Partner in its sole discretion, issued by the Partnership evidencing ownership
of one or more Common Units, or a certificate, in such form as may be adopted
by the General Partner in its sole discretion, issued by the Partnership
evidencing ownership of one or more other Units.
"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate of Limited Partnership may be
amended, supplemented or restated from time to time.
"CITIZENSHIP CERTIFICATION" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.
"CLAIM" has the meaning assigned to such term in Section 6.13(c).
"CLOSING DATE" means the first date on which Common Units are sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
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"CLOSING PRICE" has the meaning assigned to such term in Section 17.1(a).
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
"COMBINED INTEREST" has the meaning assigned to such term in Section
13.3(a).
"COMMISSION" means the Securities and Exchange Commission.
"COMMON UNIT" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the
rights and obligations specified with respect to Common Units in this
Agreement.
"COMMON UNIT ARREARAGE" means, with respect to any Common Unit, whenever
issued, and as to any Quarter within the Subordination Period, the excess, if
any, of (a) the Minimum Quarterly Distribution with respect to such Common
Unit over (b) the sum of all Available Cash distributed with respect to such
Common Unit in respect of such Quarter pursuant to Section 5.4(a)(i).
"CONTRIBUTED PROPERTY" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 4.5(d), such
property shall no longer constitute a Contributed Property, but shall be
deemed an Adjusted Property.
"CONTRIBUTION AGREEMENT" means that certain Contribution, Conveyance and
Assumption Agreement, dated as of the Closing Date, between Ferrellgas, the
Partnership and the Operating Partnership, together with the additional
conveyance documents and instruments contemplated or referenced thereunder.
"CUMULATIVE COMMON UNIT ARREARAGE" means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if any, of (a)
the sum resulting from adding together the Common Unit Arrearage as to such
Common Unit for each of the Quarters within the Subordination Period ending on
or before the last day of such Quarter over (b) the sum of any distributions
theretofore made pursuant to Section 5.4(a)(ii) with respect to such Common
Unit (including any distributions to be made in respect of the last of such
Quarters).
"CURATIVE ALLOCATION" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(xi).
"CURRENT MARKET PRICE" has the meaning assigned to such term in Section
17.1(a).
"DELAWARE ACT" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. (S) 17-101, et seq., as amended, supplemented or restated from time
to time, and any successor to such statute.
"DEPARTING PARTNER" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 13.1 or 13.2.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"ELIGIBLE CITIZEN" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or the Operating
Partnership does business or proposes to do business from
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time to time, and whose status as a Limited Partner or Assignee does not or
would not subject the Partnership or the Operating Partnership to a
substantial risk of cancellation or forfeiture of any of its properties or any
interest therein.
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in Section
13.1(a).
"FERRELL" means Ferrell Companies, Inc., a Kansas corporation.
"FERRELLGAS" means Ferrellgas, Inc., a Delaware corporation and a wholly
owned subsidiary of Ferrell.
"FIRST LIQUIDATION TARGET AMOUNT" has the meaning assigned to such term in
Section 5.1(c)(i)(D).
"FIRST TARGET DISTRIBUTION" means $0.55 per Unit (or, with respect to the
period commencing on the Closing Date and ending on October 31, 1994, the
product of $0.55 multiplied by a fraction of which the numerator is the number
of days in such period and of which the denominator is 92), subject to
adjustment in accordance with Sections 5.6 and 9.6.
"GENERAL PARTNER" means Ferrellgas, and its successors as general partner
of the Partnership.
"GROUP" means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation
made to 10 or more Persons) or disposing of any Partnership Securities with
any other Person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, Partnership Interests.
"HOLDER" has the meaning assigned to such term in Section 6.13(a).
"IDR" means a Partnership Interest issued to Ferrellgas in connection with
the transfer of its assets to the Partnership pursuant to Section 4.2, which
Partnership Interest shall confer upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to IDRs (and
no other rights otherwise available to holders of a Partnership Interest).
"INCENTIVE DISTRIBUTION" means any amount of cash distributed to the
Special Limited Partners, pursuant to Sections 5.4(a)(v), (vi) or (vii) or
5.4(b)(iii), (iv) or (v).
"INDEMNIFIED PERSONS" has the meaning assigned to such term in Section
6.13(c).
"INDEMNITEE" means the General Partner, any Departing Partner, any Person
who is or was an Affiliate of the General Partner or any Departing Partner,
any Person who is or was an officer, director, employee, partner, agent or
trustee of the General Partner or any Departing Partner or any such Affiliate,
or any Person who is or was serving at the request of the General Partner or
any Departing Partner or any such Affiliate as a director, officer, employee,
partner, agent or trustee of another Person.
"INITIAL LIMITED PARTNERS" means Ferrellgas (with respect to the Common
Units and the Subordinated Units received by it pursuant to Section 4.2) and
the Underwriters, in each case upon being admitted to the Partnership in
accordance with Section 12.1.
"INITIAL OFFERING" means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.
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"INITIAL UNIT PRICE" means (a) the initial public offering price per Common
Unit at which the Underwriters offered the Common Units to the public for sale
as set forth on the cover page of the prospectus first issued at or after the
time the Registration Statement first became effective or (b) with respect to
any other class or series of Units, the price per Unit at which such class or
series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be
appropriate to give effect to any distribution, subdivision or combination of
Units.
"INTERIM CAPITAL TRANSACTIONS" means (a) borrowings, refinancings or
refundings of indebtedness and sales of debt securities (other than for
working capital purposes and other than for items purchased on open account in
the ordinary course of business) by the Partnership or the Operating
Partnership, (b) sales of equity interests (including Common Units sold to the
Underwriters pursuant to the exercise of the Overallotment Option) by the
Partnership or the Operating Partnership and (c) sales or other voluntary or
involuntary dispositions of any assets of the Partnership or the Operating
Partnership (other than (x) sales or other dispositions of inventory in the
ordinary course of business, (y) sales or other dispositions of other current
assets including, without limitation, receivables and accounts and (z) sales
or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution and
liquidation of the Partnership.
"ISSUE PRICE" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership.
"LIMITED PARTNER" means, unless the context otherwise requires, (a) the
Organizational Limited Partner, each Initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner
upon the change of its status from General Partner to Limited Partner pursuant
to Section 13.3, subject to the provisions of Section 5.7, (b) solely for the
purposes of Section 1.4 and Articles VI and VII, each Special Limited Partner
and (c) solely for purposes of Articles IV, V and VI and Sections 14.3 and
14.4, each Assignee.
"LIQUIDATION DATE" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 14.2, the date on which the applicable time
period during which the holders of Outstanding Units have the right to elect
to reconstitute the Partnership and continue its business has expired without
such an election being made, and (b) in the case of any other event giving
rise to the dissolution of the Partnership, the date on which such event
occurs.
"LIQUIDATOR" means the General Partner or other Person approved pursuant to
Section 14.3 who performs the functions described therein.
"MAINTENANCE CAPITAL EXPENDITURES" means cash capital expenditures made to
maintain, up to the level thereof that existed at the time of such
expenditure, the operating capacity of the capital assets of the Partnership
and the Operating Partnership, taken as a whole, as such assets existed at the
time of such expenditure and shall, therefore, not include cash capital
expenditures made in respect of Aquisitions and Capital Additions and
Improvements. Where cash capital expenditures are made in part to maintain the
operating capacity level referred to in the immediately preceding sentence and
in part for other purposes, the General Partner's good faith allocation
thereof between the portion used to maintain such operating capacity level and
the portion used for other purposes shall be conclusive.
"MERGER AGREEMENT" has the meaning assigned to such term in Section 16.1.
"MINIMUM QUARTERLY DISTRIBUTION" means (a) $0.50 per Unit per Quarter (or,
with respect to the period commencing on the Closing Date and ending on
October 31, 1994, the product of $0.50
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multiplied by a fraction of which the numerator is the number of days in such
period and of which the denominator is 92), subject to adjustment in
accordance with Sections 5.6 and 9.6.
"NATIONAL SECURITIES EXCHANGE" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities
Exchange Act of 1934, as amended, supplemented or restated from time to time,
and any successor to such statute.
"NET AGREED VALUE" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 4.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the
time of distribution, in either case, as determined under Section 752 of the
Code.
"NET INCOME" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation
of Net Income shall be determined in accordance with Section 4.5(b) and shall
not include any items specially allocated under Section 5.1(d). Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, Net Income or Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"NET LOSS" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such
taxable period over the Partnership's items of income and gain (other than
those items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation
of Net Loss shall be determined in accordance with Section 4.5(b) and shall
not include any items specially allocated under Section 5.1(d). Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to a Required Allocation or a Curative
Allocation, Net Income, or Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"NET TERMINATION GAIN" means, for any taxable period, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through the Operating
Partnership) from Termination Capital Transactions occurring in such taxable
period. The items included in the determination of Net Termination Gain shall
be determined in accordance with Section 4.5(b) and shall not include any
items of income, gain or loss specially allocated under Section 5.1(d). Once
an item of income, gain or loss that has been included in the initial
computation of Net Termination Gain is subjected to a Required Allocation or a
Curative Allocation, Net Termination Gain or Net Termination Loss, whichever
the case may be, shall be recomputed without regard to such item.
"NET TERMINATION LOSS" means, for any taxable period, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through the Operating
Partnership) from Termination Capital Transactions occurring in such taxable
period. The items included in the determination of Net Termination Loss shall
be determined in accordance with Section 4.5(b) and shall not include any
items of income, gain or loss specially allocated under Section 5.1(d). Once
an item of gain or loss that has been included in the initial computation of
Net Termination Loss is subjected to a Required Allocation or a Curative
Allocation, Net Termination Gain or Net Termination Loss, whichever the case
may be, shall be recomputed without regard to such item.
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"NON-CITIZEN ASSIGNEE" means a Person who the General Partner has determined
in its sole discretion does not constitute an Eligible Citizen and as to whose
Partnership Interest the General Partner has become the Substituted Limited
Partner, pursuant to Section 11.5.
"NONRECOURSE BUILT-IN GAIN" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or
5.2(b)(iii) if such properties were disposed of in a taxable transaction in
full satisfaction of such liabilities and for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-2(b), are
attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
"NOTICE OF ELECTION TO PURCHASE" has the meaning assigned to such term in
Section 17.1(b).
"OPERATING PARTNERSHIP" means Ferrellgas, L.P., a Delaware limited
partnership.
"OPERATING PARTNERSHIP AGREEMENT" means the Agreement of Limited
Partnership of the Operating Partnership, as it may be amended, supplemented
or restated from time to time.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be regular
counsel to Ferrellgas, any Affiliate of Ferrellgas, the Partnership or the
General Partner) acceptable to the General Partner.
"ORGANIZATIONAL LIMITED PARTNER" means Danley K. Sheldon, in his capacity
as the organizational limited partner of the Partnership pursuant to this
Agreement.
"OUTSTANDING" means, with respect to the Units or other Partnership
Securities, all Units or other Partnership Securities that are issued by the
Partnership and reflected as outstanding on the Partnership's books and
records as of the date of determination; provided that, if at any time any
Person or Group (other than Ferrellgas and its Affiliates) owns beneficially
20% or more of all Common Units, such Common Units so owned shall not be voted
on any matter and shall not be considered to be Outstanding when sending
notices of a meeting of Limited Partners (unless otherwise required by law),
calculating required votes, determining the presence of a quorum or for other
similar purposes under this Agreement, except that such Common Units shall be
considered to be Outstanding for purposes of Section 13.1(b)(iv) (such Common
Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement).
"OVERALLOTMENT OPTION" means the overallotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.
"PARTNERS" means the General Partner, the Limited Partners and the Special
Limited Partners.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that,
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in accordance with the principles of Treasury Regulation Section 1.704-2(i),
are attributable to a Partner Nonrecourse Debt.
"PARTNERSHIP" means Ferrellgas Partners, L.P., a Delaware limited
partnership established by the Certificate of Limited Partnership, and any
successors thereto.
"PARTNERSHIP INTEREST" means an interest in the Partnership, which shall
include general partner interests, Common Units, Subordinated Units, IDRs or
other Partnership Securities, or a combination thereof or interest therein, as
the case may be.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"PARTNERSHIP SECURITIES" has the meaning assigned to such term in Section
4.3(a).
"PER UNIT CAPITAL AMOUNT" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General Partner
who holds Units.
"PERCENTAGE INTEREST" means as of the date of such determination (a) as to
the General Partner, 1%, (b) as to any Limited Partner or Assignee holding
Units, the product of (i) 99% multiplied by (ii) the quotient of the number of
Units held by such Limited Partner or Assignee divided by the total number of
all Units then Outstanding; provided, however, that following any issuance of
additional Partnership Securities by the Partnership in accordance with
Section 4.3, proper adjustment shall be made to the Percentage Interest
represented by each Unit to reflect such issuance, and (c) as to the holders
of additional Partnership Securities issued by the Partnership in accordance
with Section 4.3, the percentage established as a part of such issuance.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"PURCHASE DATE" means the date determined by the General Partner as the
date for purchase of all Outstanding Units (other than Units owned by the
General Partner and its Affiliates) pursuant to Article XVII.
"QUARTER" means, unless the context requires otherwise, a three month
period of time ending on October 31, January 31, April 30, or July 31;
provided, however, that the General Partner, in its sole discretion, may amend
such period as it deems necessary or appropriate in connection with a change
in the fiscal year of the Partnership.
"RECAPTURE INCOME" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain
is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"RECORD DATE" means the date established by the General Partner for
determining (a) the identity of the Record Holder entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution.
"RECORD HOLDER" means the Person in whose name a Unit is registered on the
books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to a holder of a general partner interest or an
IDR, the Person in whose name such general partner
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interest or IDR is registered on the books of the General Partner as of the
opening of business on such Business Day.
"REDEEMABLE UNITS" means any Units for which a redemption notice has been
given, and has not been withdrawn, under Section 11.6.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1
(Registration No. 33-53383), as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
"REQUIRED ALLOCATIONS" means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a)
Section 5.1(b)(ii) or (b) Sections 5.1(d)(i), 5.1(d)(ii), 5.1(d)(iv),
5.1(d)(v), 5.1(d)(vi), 5.1(d)(vii) and 5.1(d)(ix), such allocations (or
limitations thereon) being directly or indirectly required by the Treasury
regulations promulgated under Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"RESTRICTED ACTIVITIES" means the retail sale of propane to end users
within the continental United States in the manner engaged in by Ferrellgas
immediately prior to the Closing Date.
"SECOND LIQUIDATION TARGET AMOUNT" has the meaning assigned to such term in
Section 5.1(c)(i)(E).
"SECOND TARGET DISTRIBUTION" means $0.63 per Unit (or, with respect to the
period commencing on the Closing Date and ending on October 31, 1994, the
product of $0.63 multiplied by a fraction of which the numerator is equal to
the number of days in such period and of which the denominator is 92), subject
to adjustment in accordance with Sections 5.6 and 9.6.
"SECURITIES ACT" means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.
"SPECIAL APPROVAL" means approval by the Audit Committee.
"SPECIAL LIMITED PARTNER" means each holder of an IDR.
"SPECIAL LIMITED PARTNERS BOOK CAPITAL" means, as of any date of
determination, the amount equal to the sum of the balances of the Capital
Accounts of all the Special Limited Partners, determined pursuant to Section
4.5 (prior to any adjustment pursuant to Section 4.5(d) arising upon the
present event requiring a valuation of the Partnership's assets).
"SUBORDINATED UNIT" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the
rights and obligations specified with respect to Subordinated Units in this
Agreement.
"SUBORDINATION PERIOD" means the period commencing on the Closing Date and
ending on the first to occur of the following dates:
(a) the first day of any Quarter commencing on or after August 1, 1999,
provided that each of the following two tests have been satisfied:
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(i) the Partnership has, with respect to each of the three
consecutive four-Quarter periods immediately preceding such date, made
distributions of Available Cash constituting Cash from Operations in an
amount equal to or greater than the Minimum Quarterly Distribution on
each Common Unit and Subordinated Unit Outstanding for such periods;
provided, however, that in determining the amount of Available Cash
constituting Cash from Operations distributed in any four-Quarter period
the following amounts shall not be included: (A) any positive balance in
Cash from Operations at the beginning of such four-Quarter period, (B)
any net increase in working capital borrowings in such four-Quarter
period and (C) any net decrease in reserves in such four-Quarter period;
and
(ii) as of such date, the Partnership and the Operating Partnership,
on a combined basis, have made, directly or indirectly, cash capital
expenditures attributable to Acquisitions and Capital Additions and
Improvements since the Closing Date which equal or exceed $50 million;
and
(b) the date on which the General Partner is removed as general partner
of the Partnership upon the requisite vote by Limited Partners under
circumstances where Cause does not exist.
"SUBSIDIARY" means, with respect to any Person, (i) a corporation of which
more than 50% of the voting power of shares of Capital Interests entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors or other governing body of such corporation is owned, directly or
indirectly, by such Person, by one or more Subsidiaries of such Person, or a
combination thereof, (ii) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of
the Capital Interests of such partnership (considering all of the Capital
Interests of the partnership as a single class) is owned or controlled,
directly or indirectly, by such Person, by one or more Subsidiaries of such
Person, or a combination thereof, or (iii) any other Person (other than a
corporation or a partnership) in which such Person, directly or indirectly, at
the date of determination, has (x) at least a majority ownership interest or
(y) the power to elect or direct the election of a majority of the directors
or other governing body of such Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 12.2 in place of and with all
the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term in
Section 16.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer or other
disposition of property of the Partnership or the Operating Partnership
occurring upon or incident to the liquidation and winding up of the
Partnership and the Operating Partnership pursuant to Article XIV.
"THIRD TARGET DISTRIBUTION" means $0.82 per Unit (or, with respect to the
period commencing on the Closing Date and ending on October 31, 1994, the
product of $0.82 multiplied by a fraction of which the numerator is equal to
the number of days in such period and of which the denominator is 92), subject
to adjustment in accordance with Sections 5.6 and 9.6.
"TRADING DAY" has the meaning assigned to such term in Section 17.1(a).
"TRANSFER" has the meaning assigned to such term in Section 11.1(a).
"TRANSFER AGENT" means such bank, trust company or other Person (including,
without limitation, the General Partner or one of its Affiliates) as shall be
appointed from time to time by the Partnership to act as registrar and
transfer agent for the Units.
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"TRANSFER APPLICATION" means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
"UNDERWRITER" means each Person named as an underwriter in Schedule I to
the Underwriting Agreement who purchases Common Units pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated June 27,
1994, among the Underwriters, the Partnership, the General Partner and Ferrell
providing for the purchase of Common Units by such Underwriters.
"UNIT" means a Partnership Interest of a Limited Partner or Assignee in the
Partnership representing a fractional part of the Partnership Interests of all
Limited Partners and Assignees and shall include, without limitation, Common
Units and Subordinated Units; provided, that each Common Unit at any time
Outstanding shall represent the same fractional part of the Partnership
Interests of all Limited Partners and Assignees holding Common Units as each
other Common Unit and each Subordinated Unit at any time Outstanding shall
represent the same fractional part of the Partnership Interests of all Limited
Partners and Assignees holding Subordinated Units as each other Subordinated
Unit.
"UNPAID MQD" has the meaning assigned to such term in Section 5.1(c)(i)(B).
"UNREALIZED GAIN" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 4.5(d))
over (b) the Carrying Value of such property as of such date (prior to any
adjustment to be made pursuant to Section 4.5(d) as of such date).
"UNREALIZED LOSS" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant
to Section 4.5(d) as of such date) over (b) the fair market value of such
property as of such date (as determined under Section 4.5(d)).
"UNRECOVERED INITIAL UNIT PRICE" means, at any time, with respect to a
class or series of Units (other than Subordinated Units), the price per Unit
at which such class or series of Units was initially offered to the public for
sale by the underwriters in respect of such offering, as determined by the
General Partner, less the sum of all distributions theretofore made in respect
of a Unit of such class or series that was sold in the initial offering of
Units of said class or series constituting Cash from Interim Capital
Transactions and any distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and liquidation of
the Partnership theretofore made in respect of a Unit of such class or series
that was sold in the initial offering of Units of such class or series,
adjusted as the General Partner determines to be appropriate to give effect to
any distribution, subdivision or combination of Units.
"UNRECOVERED SUBORDINATED UNIT CAPITAL" means, at any time, with respect to
a Subordinated Unit, prior to its conversion into a Common Unit pursuant to
Sections 5.7(b) and (c), the excess, if any, of (a) the Net Agreed Value (at
the time of conveyance) of the undivided interest in the Contributed Property
conveyed to the Partnership pursuant to Section 4.2 in exchange for such
Subordinated Unit, over (b) any distributions of cash (or the Net Agreed Value
of any distributions in kind) in connection with the dissolution and
liquidation of the Partnership, adjusted as the General Partner determines to
be appropriate to give effect to any distribution, subdivision or combination
of Subordinated Units.
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to such term in
Section 13.1(b).
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ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to serve as a limited partner in the
Operating Partnership and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership as a limited partner in the
Operating Partnership pursuant to the Operating Partnership Agreement or
otherwise, (b) to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage in, any business activity that the Operating Partnership is permitted to
engage in by the Operating Partnership Agreement and, in connection therewith,
to exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity, (c) to engage directly in,
or to enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage in, any business activity that
is approved by the General Partner and which lawfully may be conducted by a
limited partnership organized pursuant to the Delaware Act and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, and
(d) to do anything necessary or appropriate to the foregoing, including, without
limitation, the making of capital contributions or loans to the Operating
Partnership. The General Partner has no obligation or duty to the Partnership,
the Limited Partners, the Special Limited Partners or the Assignees to propose
or approve, and in its sole discretion may decline to propose or approve, the
conduct by the Partnership of any business.
3.2 POWERS. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
Section 3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS; RETURN OF INITIAL CONTRIBUTIONS. (a) In connection
with the formation of the Partnership under the Delaware Act, the General
Partner has made an initial Capital Contribution to the Partnership in the
amount of $10 for an interest in the Partnership and has been admitted as the
general partner of the Partnership, and the Organizational Limited Partner has
made a Capital Contribution to the Partnership in the amount of $990 for an
interest in the Partnership and has been admitted as a limited partner of the
Partnership.
(b) As of the Closing Date, after giving effect to the transactions
contemplated by Section 4.2 and the admission to the Partnership of the Initial
Limited Partners in accordance with this Agreement, the interest of the
Organizational Limited Partner shall be terminated, the $10 Capital Contribution
by the General Partner and the $990 Capital Contribution by the Organizational
Limited Partner as initial Capital Contributions shall be refunded and the
Organizational Limited Partner shall cease to be a Limited Partner of the
Partnership. Ninety-nine percent of any interest or other profit that may have
resulted from the investment or other use of such initial Capital Contributions
shall be allocated and distributed to the Organizational Limited Partner, and
the balance thereof shall be allocated and distributed to the General Partner.
4.2 CONTRIBUTIONS BY THE GENERAL PARTNER AND THE INITIAL LIMITED PARTNERS. (a)
On the Closing Date, the General Partner shall, as set forth in the Contribution
Agreement, contribute, transfer, convey, assign and deliver to the Partnership,
as a Capital Contribution, a limited partner interest in the Operating
Partnership which, together with the Partnership Interest (as defined in the
Operating Partnership Agreement) previously held by the Partnership, will
represent a 98.9899% Percentage Interest (as defined in the Operating
Partnership Agreement) in the Operating Partnership, in exchange for (i) the
continuation of its Partnership Interest as general partner in the Partnership,
subject to all of
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the rights, privileges and duties of the General Partner under this Agreement,
(ii) 1,000,000 Common Units and 16,593,721 Subordinated Units and (iii) the
IDRs.
(b) Subject to completion of the Capital Contributions referred to in Section
4.2(a), on the Closing Date, each Underwriter shall contribute and deliver to
the Partnership cash in an amount equal to the Issue Price per Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement
to be purchased by such Underwriter at the "First Closing Date", as such term is
defined in the Underwriting Agreement. In exchange for such Capital Contribution
by the Underwriters, the Partnership shall issue Common Units to each
Underwriter on whose behalf such Capital Contribution is made in an amount equal
to the quotient obtained by dividing (X) the cash contribution to the
Partnership by or on behalf of such Underwriter by (Y) the Issue Price per
Common Unit.
(c) To the extent that the Underwriters' Overallotment Option is exercised,
each Underwriter exercising such option shall contribute and deliver to the
Partnership cash in an amount equal to the Issue Price per Common Unit
multiplied by the number of Common Units to be purchased by such Underwriter
pursuant to the Overallotment Option at the "SECOND TIME OF DELIVERY" as such
term is used in the Underwriting Agreement. In exchange for such Capital
Contribution, the Partnership shall issue Common Units to each Underwriter on
whose behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (x) the cash contribution to the Partnership by or
on behalf of such Underwriter by (y) the Issue Price per Common Unit.
4.3 ISSUANCES OF ADDITIONAL UNITS AND OTHER SECURITIES. (a) Subject to Section
4.3(c), the General Partner is hereby authorized to cause the Partnership to
issue, in addition to the Partnership Interests and Units issued pursuant to
Sections 4.1 and 4.2, such additional Units, or classes or series thereof, or
options, rights, warrants or appreciation rights relating thereto, or any other
type of equity security that the Partnership may lawfully issue, any unsecured
or secured debt obligations of the Partnership convertible into any class or
series of equity securities of the Partnership (collectively, "PARTNERSHIP
SECURITIES"), for any Partnership purpose, at any time or from time to time, to
the Partners or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners. The General
Partner shall have sole discretion, subject to the guidelines set forth in this
Section 4.3 and the requirements of the Delaware Act, in determining the
consideration and terms and conditions with respect to any future issuance of
Partnership Securities.
(b) Additional Partnership Securities to be issued by the Partnership pursuant
to this Section 4.3 shall be issuable from time to time in one or more classes,
or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including, without limitation, rights, powers and duties
senior to existing classes and series of Partnership Securities (except as
provided in Section 4.3(c)), all as shall be fixed by the General Partner in the
exercise of its sole discretion, subject to Delaware law and Section 4.3(c),
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the rights
of each such class or series of Partnership Securities upon dissolution and
liquidation of the Partnership; (iv) whether such class or series of additional
Partnership Securities is redeemable by the Partnership and, if so, the price at
which, and the terms and conditions upon which, such class or series of
additional Partnership Securities may be redeemed by the Partnership; (v)
whether such class or series of additional Partnership Securities is issued with
the privilege of conversion and, if so, the rate at which, and the terms and
conditions upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities or other
property; (vi) the terms and conditions upon which each such class or series of
Partnership Securities will be issued, evidenced by certificates and assigned or
transferred; and (vii) the right, if any, of each such class or series of
Partnership Securities to vote on Partnership matters, including, without
limitation, matters relating to the relative rights, preferences and privileges
of each such class or series.
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(c) Notwithstanding the terms of Sections 4.3(a) and 4.3(b), the issuance by
the Partnership of any Partnership Securities pursuant to this Section 4.3 shall
be subject to the following restrictions and limitations:
(i) During the Subordination Period, the Partnership shall not issue an
aggregate of more than 7,000,000 additional Common Units (excluding Common
Units issued in connection with the exercise of the Overallotment Option and
Common Units issued upon conversion of Subordinated Units pursuant to Section
5.7(b)) or an equivalent amount of other Units having rights to distributions
or in liquidation ranking on a parity with the Common Units, without the prior
approval of two-thirds of the Outstanding Common Units; provided, however,
that in addition to such Units the Partnership may also issue an unlimited
amount of additional Common Units or other Partnership Securities having
rights to distribution or in liquidation ranking on a parity with the Common
Units prior to the end of the Subordination Period and without the approval of
the Unitholders if (A) such issuance occurs in connection with or (B) within
270 days of, and the net proceeds from the issuance of such Common Units or
other Partnership Securities are used to repay debt incurred in connection
with, an Acquisition or a Capital Addition and Improvement involving
properties and assets that would have, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in which such
Acquisition is to be consummated or such Capital Addition and Improvement is
to be completed, resulted in an increase in (1) the amount of Available Cash
constituting Cash from Operations generated by the Partnership on a per-Unit
basis (for all Outstanding Units) with respect to each of the four most
recently completed Quarters (determined on a pro forma basis assuming that (w)
all of the Common Units or other Partnership Securities to be issued in
connection with or within 270 days of such Acquisition or Capital Addition and
Improvement had been issued and outstanding, and (x) all indebtedness for
borrowed money to be incurred or assumed in connection with such Acquisition
or Capital Addition and Improvement (other than any such indebtedness that is
to be repaid with the proceeds of such offering) had been incurred or assumed,
in each case as of the commencement of such four-Quarter period), and
computing expenses that would have been incurred by the Partnership in the
operation of the assets and properties acquired by including (y) the personnel
expenses for employees to be retained by the Partnership in the operation of
the assets and properties acquired and (z) the non-personnel costs and
expenses on the same basis as those incurred by the Partnership in the
operation of the Partnership's business at similarly situated Partnership
facilities) over (2) the actual amount of Available Cash constituting Cash
from Operations generated by the Partnership on a per-Unit basis (for all
Outstanding Units) with respect to each of such four Quarters; and
(ii) During the Subordination Period, the Partnership shall not issue
additional Partnership Securities having rights to distributions or in
liquidation ranking prior or senior to the Common Units, without the prior
approval of two-thirds of the Outstanding Common Units; and
(iii) Upon the issuance of any Partnership Interests by the Partnership or
the making of any other Capital Contributions to the Partnership, the General
Partner shall be required to make additional Capital Contributions to the
Partnership in an amount equal to 1.01% of the additional Capital Contribution
then made by a Person other than the General Partner.
(d) The General Partner is hereby authorized and directed to take all actions
that it deems necessary or appropriate in connection with each issuance of
Units, IDRs or other Partnership Securities pursuant to Section 4.3(a) and to
amend this Agreement in any manner that it deems necessary or appropriate to
provide for each such issuance, to admit Additional Limited Partners in
connection therewith and to specify the relative rights, powers and duties of
the holders of the Units, IDRs or other Partnership Securities being so issued.
(e) The General Partner shall do all things necessary to comply with the
Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities, including, without limitation, compliance with any statute,
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rule, regulation or guideline of any federal, state or other governmental agency
or any National Securities Exchange on which the Units or other Partnership
Securities are listed for trading.
4.4 LIMITED PREEMPTIVE RIGHTS. Except as provided in this Section 4.4, no
Person shall have any preemptive, preferential or other similar right with
respect to (a) additional Capital Contributions; (b) issuance or sale of any
class or series of Units, IDRs or other Partnership Securities, whether
unissued, held in the treasury or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Units, IDRs or other Partnership
Securities; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Units, IDRs or other
Partnership Securities; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership. The General Partner shall have the right,
which it may from time to time assign in whole or in part to any of its
Affiliates, to purchase Units, IDRs or other Partnership Securities from the
Partnership whenever, and on the same terms that, the Partnership issues Units,
IDRs or other Partnership Securities to Persons other than the General Partner
and its Affiliates, to the extent necessary to maintain the Percentage Interests
of the General Partner and its Affiliates equal to that which existed
immediately prior to the issuance of such Units, IDRs or other Partnership
Securities.
4.5 CAPITAL ACCOUNTS. (a) The Partnership shall maintain for each Partner (or
a beneficial owner of Units held by a nominee in any case in which the nominee
has furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 4.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 5.1, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income, gain, loss or
deduction to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
General Partner based upon the provisions of the Operating Partnership
Agreements) of all property owned by the Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership to promote the
sale of (or to sell) a Partnership Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall, for purposes of
Capital Account maintenance, be treated as an item of deduction at the time
such fees and other expenses are incurred and shall be allocated among the
Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of
the Code which may be made by the Partnership and, as to those items described
in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the
fact that such items are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes.
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(iv) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such
property on the date it was acquired by the Partnership were equal to the
Agreed Value of such property. Upon an adjustment pursuant to Section 4.5(d)
to the Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to the
Carrying Value of such property immediately following such adjustment and (B)
using a rate of depreciation, cost recovery or amortization derived from the
same method and useful life (or, if applicable, the remaining useful life) as
is applied for federal income tax purposes; provided, however, that, if the
asset has a zero adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined using any
reasonable method that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost recovery
property is reduced for federal income tax purposes pursuant to Section
48(q)(1) or 48(q)(3) of the Code, the amount of such reduction shall, solely
for purposes hereof, be deemed to be an additional depreciation or cost
recovery deduction in the year such property is placed in service and shall be
allocated among the Partners pursuant to Section 5.1. Any restoration of such
basis pursuant to Section 48(q)(2) of the Code shall, to the extent possible,
be allocated in the same manner to the Partners to whom such deemed deduction
was allocated.
(c) (i) Except as otherwise provided in Section 4.5(c)(ii), a transferee of a
Partnership Interest shall succeed to a pro rata portion of the Capital Account
of the transferor relating to the Partnership Interest so transferred; provided,
however, that, if the transfer causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, the Partnership's properties shall be deemed
to have been distributed in liquidation of the Partnership to the Partners
(including any transferee of a Partnership Interest that is a party to the
transfer causing such termination) pursuant to Sections 14.3 and 14.4 and
recontributed by such Partners in reconstitution of the Partnership. Any such
deemed distribution shall be treated as an actual distribution for purposes of
this Section 4.5. In such event, the Carrying Values of the Partnership
properties shall be adjusted immediately prior to such deemed distribution
pursuant to Section 4.5(d)(ii) and such Carrying Values shall then constitute
the Agreed Values of such properties upon such deemed contribution to the
reconstituted Partnership. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Section 4.5.
(ii) Immediately prior to the conversion of a Subordinated Unit into a
Common Unit pursuant to Sections 5.7(b) or (c) or the sale, exchange or other
disposition of a Subordinated Unit by a holder thereof, the Capital Account
maintained for such Person with respect to its Subordinated Units will (A)
first, be allocated to the Subordinated Units to be converted or
transferred,as the case may be, in an amount equal to the product of (x) the
number of such Subordinated Units to be converted or transferred,as the case
may be, and (y) the Per Unit Capital Amount for a Common Unit, and (B) second,
any remaining balance in such Capital Account will be retained by the
transferor, regardless of whether it has retained any Subordinated Units.
Following any such allocation, the transferor's Capital Account, if any,
maintained with respect to the retained Subordinated Units, if any, will have
a balance equal to the amount allocated under clause (B) hereinabove, and the
transferee's Capital Account established with respect to the transferred
Subordinated Units will have a balance equal to the amount allocated under
clause (A) hereinabove.
(d) (i) Consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash or
Contributed Property or the conversion of the General Partner's Partnership
Interest to Common Units pursuant to Section 13.3(b), the Capital Account
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of all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately prior to such
issuance and had been allocated to the Partners at such time pursuant to
Sections 5.1(a) and 5.1(b). In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all Partnership
assets (including, without limitation, cash or cash equivalents) immediately
prior to the issuance of additional Units shall be determined by the General
Partner using such reasonable method of valuation as it may adopt; provided,
however, the General Partner, in arriving at such valuation, must take fully
into account the fair market value of the Partnership Interests of all
Partners at such time. The General Partner shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines in its
sole discretion to be reasonable) to arrive at a fair market value for
individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of
all Partners and the Carrying Value of all Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately
prior to such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section 5.1. Any
Unrealized Gain or Unrealized Loss attributable to such property shall be
allocated in the same manner as Net Termination Gain or Net Termination Loss
pursuant to Section 5.1(c); provided, however, that, in making any such
allocation, Net Termination Gain or Net Termination Loss actually realized
shall be allocated first. In determining such Unrealized Gain or Unrealized
Loss the aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to
a distribution shall (A) in the case of a deemed distribution occurring as a
result of a termination of the Partnership pursuant to Section 708 of the
Code, be determined and allocated in the same manner as that provided in
Section 4.5(d)(i) or (B) in the case of a liquidating distribution pursuant to
Section 14.3 or 14.4, be determined and allocated by the Liquidator using such
reasonable method of valuation as it may adopt.
4.6 INTEREST. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.7 NO WITHDRAWAL. No Partner shall be entitled to withdraw any part of its
Capital Contributions or its Capital Account or to receive any distribution from
the Partnership, except as provided in Section 4.1, and Articles V, VII, XIII
and XIV.
4.8 LOANS FROM PARTNERS. Loans by a Partner to the Partnership shall not
constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
assets in accordance with the terms and conditions upon which such advances are
made.
4.9 NO FRACTIONAL UNITS. No fractional Units shall be issued by the
Partnership.
4.10 SPLITS AND COMBINATIONS. (a) Subject to Section 4.10(d), the General
Partner may make a pro rata distribution of Units or other Partnership
Securities to all Record Holders or may effect a subdivision or combination of
Units or other Partnership Securities; provided, however, that after any such
distribution, subdivision or combination, each Partner shall have the same
Percentage Interest in the Partnership as before such distribution, subdivision
or combination.
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(b) Whenever such a distribution, subdivision or combination of Units or other
Partnership Securities is declared, the General Partner shall select a Record
Date as of which the distribution, subdivision or combination shall be effective
and shall send notice of the distribution, subdivision or combination at least
20 days prior to such Record Date to each Record Holder as of the date not less
than 10 days prior to the date of such notice. The General Partner also may
cause a firm of independent public accountants selected by it to calculate the
number of Units to be held by each Record Holder after giving effect to such
distribution, subdivision or combination. The General Partner shall be entitled
to rely on any certificate provided by such firm as conclusive evidence of the
accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or combination, the
General Partner may cause Certificates to be issued to the Record Holders of
Units as of the applicable Record Date representing the new number of Units held
by such Record Holders, or the General Partner may adopt such other procedures
as it may deem appropriate to reflect such distribution, subdivision or
combination; provided, however, if any such distribution, subdivision or
combination results in a smaller total number of Units Outstanding, the General
Partner shall require, as a condition to the delivery to a Record Holder of such
new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution,
subdivision or combination of Units. If a distribution, subdivision or
combination of Units would result in the issuance of fractional Units but for
the provisions of Section 4.9 and this Section 4.10(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to
the next higher Unit).
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of maintaining the
Capital Accounts and in determining the rights of the Partners among themselves,
the Partnership's items of income, gain, loss and deduction (computed in
accordance with Section 4.5(b)) shall be allocated among the Partners in each
taxable year (or portion thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set forth in
Section 5.1(d), Net Income for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Income for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net Income
allocated to the General Partner pursuant to this Section 5.1(a)(i) for the
current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to the General Partner pursuant to Section
5.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Limited Partners, in
accordance with their respective Percentage Interests, until the aggregate
Net Income allocated to such Partners pursuant to this Section 5.1(a)(ii)
for the current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to such Partners pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General Partner and the
Limited Partners in accordance with their respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 5.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Limited Partners, in
accordance with their respective Percentage Interests, until the aggregate
Net Losses allocated pursuant to this
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Section 5.1(b)(i) for the current taxable year and all previous taxable
years is equal to the aggregate Net Income allocated to such Partners
pursuant to Section 5.1(a)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests; provided, that Net
Losses shall not be allocated pursuant to this Section 5.1(b)(ii) to the
extent that such allocation would cause any Limited Partner to have a
deficit balance in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted Capital
Account); and
(iii) Third, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 5.1(d), all items of income gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 5.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this
Section 5.1 and after all distributions of Available Cash provided under
Section 5.4 have been made with respect to the taxable period ending on the
date of the Partnership's liquidation pursuant to Section 14.3.
(i) If a Net Termination Gain is recognized (or deemed recognized
pursuant to Section 4.5(d)) from Termination Capital Transactions, such Net
Termination Gain shall be allocated among the General Partner, the Limited
Partners and the Special Limited Partners in the following manner (and the
Adjusted Capital Accounts of the Partners shall be increased by the amount
so allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its Adjusted
Capital Account, in the proportion that such deficit balance bears to the
total deficit balances in the Adjusted Capital Accounts of all Partners,
until each such Partner has been allocated Net Termination Gain equal to
any such deficit balance in its Adjusted Capital Account;
(B) Second, 99% to all Limited Partners holding Common Units, in
accordance with their relative Percentage Interests, and 1% to the
General Partner until the Adjusted Capital Account in respect of each
Common Unit then Outstanding is equal to the sum of (1) its Unrecovered
Initial Unit Price plus (2) the Minimum Quarterly Distribution for the
Quarter during which such Net Termination Gain is recognized, reduced by
any distribution pursuant to Sections 5.4(a)(i) or (b)(i) with respect to
such Common Unit for such Quarter (the amount determined pursuant to this
clause (2) is hereinafter defined as the "UNPAID MQD") plus (3) any then
existing Cumulative Common Unit Arrearage with respect to a Common Unit
sold by the Underwriters on the Closing Date;
(C) Third, if such Termination Capital Transaction occurs (or is
deemed to occur) prior to the expiration of the Subordination Period, 99%
to the Limited Partners holding Subordinated Units, in the proportion
that the total number of Subordinated Units held by each such Limited
Partner bears to the total number of Subordinated Units then Outstanding,
and 1% to the General Partner, in the amount which will increase the
Adjusted Capital Account of each such Limited Partner maintained with
respect to such Subordinated Units to that amount which equals the sum of
(1) the Unrecovered Subordinated Unit Capital attributable to such
Subordinated Units, determined for the taxable year (or portion thereof)
to which this allocation of gain relates plus (2) the Minimum Quarterly
Distribution for the Quarter during which such Net Termination Gain is
recognized, reduced by any distribution pursuant to Section 5.4(a)(iii)
with respect to such Subordinated Unit for such Quarter;
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(D) Fourth, 99% to all Limited Partners, in accordance with their
relative Percentage Interests, and 1% to the General Partner until the
Adjusted Capital Account in respect of each Common Unit then Outstanding
is equal to the sum of (1) its Unrecovered Initial Unit Price, plus (2)
the Unpaid MQD, if any, for such Common Unit with respect to the Quarter
during which such Net Termination Gain is recognized, plus (3) any then
existing Cumulative Common Unit Arrearage with respect to a Common Unit
sold by the Underwriters on the Closing Date, plus (4) the excess of (aa)
the First Target Distribution less the Minimum Quarterly Distribution for
each Quarter of the Partnership's existence over (bb) the amount of any
distributions of Cash from Operations that was distributed pursuant to
Sections 5.4(a)(iv) or 5.4 (b)(ii) (the sum of (1) plus (2) plus (3) plus
(4) is hereinafter defined as the "FIRST LIQUIDATION TARGET AMOUNT");
(E) Fifth, 85.8673% to all Limited Partners, in accordance with their
relative Percentage Interests, and 13.1327% to the Special Limited
Partners, pro rata, and 1% to the General Partner until the Adjusted
Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) the First Liquidation Target Amount, plus (2) the
excess of (aa) the Second Target Distribution less the First Target
Distribution for each Quarter of the Partnership's existence over (bb)
the amount of any distributions of Cash from Operations that was
distributed pursuant to Section 5.4(a)(v) or 5.4(b)(iii) (the sum of (1)
plus (2) is hereinafter defined as the "SECOND LIQUIDATION TARGET
AMOUNT");
(F) Sixth, 75.7653% to all Limited Partners, in accordance with their
relative Percentage Interests, and 23.2347% to the Special Limited
Partners, pro rata, and 1% to the General Partner until the Adjusted
Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) the Second Liquidation Target Amount, plus (2) the
excess of (aa) the Third Target Distribution less the Second Target
Distribution for each Quarter of the Partnership's existence over (bb)
the amount of any distributions of Cash from Operations that was
distributed pursuant to Section 5.4(a)(vi) or 5.4(b)(iv); and
(G) Finally, any remaining amount 50.5102% to all Limited Partners, in
accordance with their relative Percentage Interests, and 48.4898% to the
Special Limited Partners, pro rata, and 1% to the General Partner.
(ii) If a Net Termination Loss is recognized (or deemed recognized
pursuant to Section 4.5(d)) from Termination Capital Transactions, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) First, if such Termination Capital Transaction occurs (or is
deemed to occur) prior to the conversion of the last outstanding
Subordinated Unit, 99% to the Partners holding Subordinated Units, in
proportion that the total number of Subordinated Units held by each such
Limited Partner bears to the total number of Subordinated Units then
Outstanding, and 1% to the General Partner, until the Adjusted Capital
Account in respect of each Subordinated Unit then Outstanding has been
reduced to zero;
(B) Second, 99% to all Limited Partners holding Common Units, in
accordance with their relative Percentage Interests, and 1% to the
General Partner, until the Adjusted Capital Account in respect of each
Common Unit then Outstanding has been reduced to zero; and
(C) Third, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 5.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 5.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership
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taxable period, each Partner shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 5.1(d), each Partner's Adjusted Capital Account
balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.1(d) with respect to such taxable
period (other than an allocation pursuant to Sections 5.1(d)(vi) and
5.1(d)(vii)). This Section 5.1(d)(i) is intended to comply with the
Partnership Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding
the other provisions of this Section 5.1 (other than Section 5.1(d)(i)),
except as provided in Treasury Regulation Section 1.704-2(i)(4), if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of Partner Nonrecourse
Debt Minimum Gain at the beginning of such taxable period shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any
successor provisions. For purposes of this Section 5.1(d), each Partner's
Adjusted Capital Account balance shall be determined, and the allocation of
income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 5.1(d), other
than Section 5.1(d)(i) and other than an allocation pursuant to Sections
5.1(d)(vi) and 5.1(d)(vii), with respect to such taxable period. This
Section 5.1(d)(ii) is intended to comply with the chargeback of items of
income and gain requirement in Treasury Regulation Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.
(iii) Priority Allocations. If the amount of cash or the Net Agreed Value
of any property distributed (except cash or property distributed pursuant
to Section 14.3 or 14.4) to any Limited Partner with respect to a taxable
year is greater (on a per Unit basis) than the amount of cash or the Net
Agreed Value of property distributed to the other Limited Partners (on a
per Unit basis), then (1) each Limited Partner receiving such greater cash
or property distribution shall be allocated gross income in an amount equal
to the product of (aa) the amount by which the distribution (on a per Unit
basis) to such Limited Partner exceeds the distribution (on a per Unit
basis) to the Limited Partners receiving the smallest distribution and (bb)
the number of Units owned by the Limited Partner receiving the greater
distribution; and (2) the General Partner shall be allocated gross income
in an aggregate amount equal to 1/99 of the sum of the amounts allocated in
clause (1) above. All or a portion of the remaining items of Partnership
gross income or gain for the taxable period, if any, shall be allocated
100% to the Special Limited Partners, pro rata, until the aggregate amount
of such items allocated to the Special Limited Partners, pro rata, under
this paragraph (iii) for the current taxable period and all previous
taxable periods is equal to the cumulative amount of cash distributed to
the Special Limited Partners, pro rata, from the Closing Date through the
end of such taxable period.
(iv) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
and gain shall be specifically allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 5.1(d)(i)
or (ii).
(v) Gross Income Allocations. In the event any Partner has a deficit
balance in its Adjusted Capital Account at the end of any Partnership
taxable period, such Partner shall be specially allocated items of
Partnership gross income and gain in the amount of such excess as quickly
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as possible; provided, that an allocation pursuant to this Section
5.1(d)(v) shall be made only if and to the extent that such Partner would
have a deficit balance in its Adjusted Capital Account after all other
allocations provided for in this Section 5.1 have been tentatively made as
if this Section 5.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its
good faith discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of the Code, the
General Partner is authorized, upon notice to the Limited Partners, to
revise the prescribed ratio to the numerically closest ratio that does
satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulation Section 1.704-2(i). If more than one Partner bears the
Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated
between or among such Partners in accordance with the ratios in which they
share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury regulations.
(x) Economic Uniformity. At the election of the General Partner with
respect to any taxable period ending upon, or after, the termination of the
Subordination Period, all or a portion of the remaining items of
Partnership gross income or gain for such taxable period, if any, shall be
allocated 100% to each Partner holding Subordinated Units in the proportion
of the number of Subordinated Units held by such Partner to the total
number of Subordinated Units then Outstanding, until each such Partner has
been allocated an amount of gross income or gain which increases the
Capital Account maintained with respect to such Subordinated Units to an
amount equal to the product of (A) the number of Subordinated Units held by
such Partner and (B) the Per Unit Capital Amount for a Common Unit. The
purpose of this allocation is to establish uniformity between the Capital
Accounts underlying Subordinated Units and the Capital Accounts underlying
Common Units held by Persons other than the General Partner and its
Affiliates immediately prior to the conversion of such Subordinated Units
into Common Units. This allocation method for establishing such economic
uniformity will only be available to the General Partner if the method for
allocating the Capital Account maintained with respect to the Subordinated
Units between the transferred and retained Subordinated Units pursuant to
Section 4.5(c)(ii) does not otherwise provide such economic uniformity to
the Subordinated Units.
(xi) Curative Allocation.
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(A) Notwithstanding any other provision of this Section 5.1, other
than the Required Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so that, to the extent
possible, the net amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required Allocations and the
Agreed Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under the
Agreed Allocations had the Required Allocations and the related Curative
Allocation not otherwise been provided in this Section 5.1.
Notwithstanding the preceding sentence, Required Allocations relating to
(1) Nonrecourse Deductions shall not be taken into account except to the
extent that there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a decrease in Partner Nonrecourse Debt
Minimum Gain. Allocations pursuant to this Section 5.1(d)(xi)(A) shall
only be made with respect to Required Allocations to the extent the
General Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 5.1(d)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2)
hereof to the extent the General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion, with respect
to each taxable period, to (1) apply the provisions of Section
5.1(d)(xi)(A) in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required Allocations,
and (2) divide all allocations pursuant to Section 5.1(d)(xi)(A) among
the Partners in a manner that is likely to minimize such economic
distortions.
(xii) Retirement of Assumed Indebtedness. All losses or deductions
attributable to premiums, consent fees, or other expenditures incurred by
the Partnership to retire indebtedness assumed from the General Partner
pursuant to the Contribution Agreement shall be allocated to the General
Partner.
(xiii) First Year Allocation. Net Income or Net Loss of the Partnership
for the period beginning on the Closing Date and ending on the last day of
the taxable year of the Partnership that includes the Closing Date shall be
allocated 100% to the General Partner. For the immediately succeeding
taxable year of the Partnership, items of income or gain (if the allocation
in the prior year was an allocation of Net Income) or items of loss and
deduction (if the allocation in the prior year was an allocation of Net
Loss) shall be allocated 100% to the Limited Partners, in accordance with
their Percentage Interests, in an amount equal to 99% of the Net Income or
Net Loss allocated to the General Partner in the prior taxable year.
5.2 ALLOCATIONS FOR TAX PURPOSES. (a) Except as otherwise provided herein, for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between the
Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) except as otherwise provided in Section 5.2(b)(iii), any
item of Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
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(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be
allocated among the Partners in a manner consistent with the principles of
Section 704(c) of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations thereof
pursuant to Section 4.5(d)(i) or (ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated among the
Partners in a manner consistent with Section 5.2(b)(i)(A); and (B) except as
otherwise provided in Section 5.2(b)(iii), any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be allocated among
the Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 5.1.
(iii) The General Partner shall apply the principles of Temporary
Regulation Section 1.704-3T to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the preservation
of uniformity of the Units (or any class or classes thereof), the General
Partner shall have sole discretion to (i) adopt such conventions as it deems
appropriate in determining the amount of depreciation, amortization and cost
recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Units (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the holders
of any class or classes of Units issued and Outstanding or the Partnership, and
if such allocations are consistent with the principles of Section 704 of the
Code.
(d) The General Partner in its sole discretion may determine to depreciate or
amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(6) or the legislative history of Section 197 of
the Code. If the General Partner determines that such reporting position cannot
reasonably be taken, the General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Units in the same month would
receive depreciation and amortization deductions, based upon the same applicable
rate as if they had purchased a direct interest in the Partnership's property.
If the General Partner chooses not to utilize such aggregate method, the General
Partner may use any other reasonable depreciation and amortization conventions
to preserve the uniformity of the intrinsic tax characteristics of any Units
that would not have a material adverse effect on the Limited Partners or the
Record Holders of any class or classes of Units.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
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(g) Each item of Partnership income, gain, loss and deduction attributable to
a transferred Partnership Interest of the General Partner or to transferred
Units shall, for federal income tax purposes, be determined on an annual basis
and prorated on a monthly basis and shall be allocated to the Partners as of the
opening of the New York Stock Exchange on the first Business Day of each month;
provided, however, that (i) if the Underwriter's Overallotment Option is not
exercised, such items for the period beginning on the Closing Date and ending on
the last day of the month in which the Closing Date occurs shall be allocated to
Partners as of the opening of the New York Stock Exchange on the first Business
Day of the next succeeding month or (ii) if the Underwriters' Overallotment
Option is exercised, such items for the period beginning on the Closing Date and
ending on the last day of the month in which the Second Time of Delivery (as
defined in the Underwriting Agreement) occurs shall be allocated to the Partners
as of the opening of the New York Stock Exchange on the first Business Day of
the next succeeding month; and provided, further, that gain or loss on a sale or
other disposition of any assets of the Partnership other than in the ordinary
course of business shall be allocated to the Partners as of the opening of the
New York Stock Exchange on the first Business Day of the month in which such
gain or loss is recognized for federal income tax purposes. The General Partner
may revise, alter or otherwise modify such methods of allocation as it
determines necessary, to the extent permitted or required by Section 706 of the
Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the
provisions of this Article V shall instead be made to the beneficial owner of
Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code or any other method acceptable to the General Partner in its sole
discretion.
5.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS. (a) Within 45 days
following the end of (i) the period beginning on the Closing Date and ending on
October 31, 1994 and (ii) each Quarter commencing with the Quarter beginning on
November 1, 1994, an amount equal to 100% of Available Cash with respect to such
period or Quarter shall be distributed in accordance with this Article V by the
Partnership to the Partners, as of the Record Date selected by the General
Partner in its reasonable discretion. All amounts of Available Cash distributed
by the Partnership on any date from any source shall be deemed to be Cash from
Operations until the sum of all amounts of Available Cash theretofore
distributed by the Partnership to Partners pursuant to Section 5.4 equals the
aggregate amount of all Cash from Operations generated by the Partnership since
the Closing Date through the close of the immediately preceding Quarter. Any
remaining amounts of Available Cash distributed by the Partnership on such date
shall, except as otherwise provided in Section 5.5, be deemed to be Cash from
Interim Capital Transactions.
(b) Notwithstanding the definitions of Available Cash and Cash from Operations
contained herein, disbursements (including, without limitation, contributions to
the Operating Partnership or disbursements on behalf of the Operating
Partnership) made or cash reserves established, increased or reduced after the
end of any Quarter but on or before the date on which the Partnership makes its
distribution of Available Cash in respect of such Quarter pursuant to Section
5.3(a) shall be deemed to have been made, established, increased or reduced for
purposes of determining Available Cash and Cash from Operations, within such
Quarter if the General Partner so determines. Notwithstanding the foregoing, in
the event of the dissolution and liquidation of the Partnership, all proceeds of
such liquidation shall be applied and distributed in accordance with, and
subject to the terms and conditions of, Sections 14.3 and 14.4.
5.4 DISTRIBUTIONS OF CASH FROM OPERATIONS. (a) During Subordination Period.
Available Cash with respect to any Quarter within the Subordination Period that
is deemed to be Cash from Operations pursuant to the provisions of Section 5.3
or 5.5 shall be distributed as follows, except as otherwise required by Section
4.3(b) in respect of additional Partnership Securities issued pursuant thereto:
(i) First, 99% to the Limited Partners holding Common Units, in accordance
with their relative Percentage Interests, and 1% to the General Partner until
there has been distributed in respect of each Common Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution;
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(ii) Second, 99% to the Limited Partners holding Common Units, in
accordance with their relative Percentage Interests, and 1% to the General
Partner until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage, if any,
existing with respect to such Quarter;
(iii) Third, 99% to the Limited Partners holding Subordinated Units, in
accordance with their relative Percentage Interests, and 1% to the General
Partner until there has been distributed in respect of each Subordinated Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution;
(iv) Fourth, 99% to all Limited Partners, in accordance with their relative
Percentage Interests, and 1% to the General Partner until there has been
distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly
Distribution;
(v) Fifth, 85.8673% to all Limited Partners, in accordance with their
relative Percentage Interests, 13.1327% to the Special Limited Partners, pro
rata, and 1% to the General Partner until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of the
Second Target Distribution over the First Target Distribution;
(vi) Sixth, 75.7653% to all Limited Partners, in accordance with their
relative Percentage Interests, 23.2347% to the Special Limited Partners, pro
rata, and 1% to the General Partner until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution; and
(vii) Thereafter, 50.5102% to all Limited Partners, in accordance with
their relative Percentage Interests, 48.4898% to the Special Limited Partners,
pro rata, and 1% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 5.6, the
distributions of Available Cash that is deemed to be Cash from Operations with
respect to any Quarter will be made in accordance with Section 5.4(a)(vii).
(b) After Subordination Period. Available Cash with respect to any Quarter
after the Subordination Period that is deemed to be Cash from Operations
pursuant to the provisions of Section 5.3 or 5.5 shall be distributed as
follows, except as otherwise required by Section 4.2(b) in respect of additional
Partnership Securities issued pursuant thereto:
(i) First, 99% to all Limited Partners, in accordance with their relative
Percentage Interests, and 1% to the General Partner until there has been
distributed in respect of each Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution;
(ii) Second, 99% to all Limited Partners, in accordance with their relative
Percentage Interests, and 1% to the General Partner until there has been
distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly
Distribution;
(iii) Third, 85.8673% to all Limited Partners, in accordance with their
relative Percentage Interests, 13.1327% to the Special Limited Partners, pro
rata, and 1% to the General Partner until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of the
Second Target Distribution over the First Target Distribution;
(iv) Fourth, 75.7653% to all Limited Partners, in accordance with their
relative Percentage Interests, 23.2347% to the Special Limited Partners, pro
rata, and 1% to the General Partner until
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there has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Third Target Distribution over the Second Target
Distribution; and
(v) Thereafter, 50.5102% to all Limited Partners, in accordance with their
relative Percentage Interests, 48.4898% to the Special Limited Partners, pro
rata, and 1% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 5.6, the
distributions of Available Cash that is deemed to be Cash from Operations with
respect to any Quarter will be made in accordance with Section 5.4(b)(v).
5.5 DISTRIBUTIONS OF CASH FROM INTERIM CAPITAL TRANSACTIONS. Available Cash
that constitutes Cash from Interim Capital Transactions shall be distributed,
unless the provisions of Section 5.3 require otherwise, 99% to all Limited
Partners, in accordance with their relative Percentage Interests, and 1% to the
General Partner until a hypothetical holder of a Common Unit acquired on the
Closing Date has received with respect to such Common Unit, during the period
since the Closing Date through such date, distributions of Available Cash that
are deemed to be Cash from Interim Capital Transactions in an aggregate amount
equal to the Initial Unit Price. Thereafter, all Available Cash shall be
distributed as if it were Cash from Operations and shall be distributed in
accordance with Section 5.4.
5.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION
LEVELS. (a) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution shall be
proportionately adjusted in the event of any distribution, combination or
subdivision (whether effected by a distribution payable in Units or otherwise)
of Units or other Partnership Securities in accordance with Section 4.10. In the
event of a distribution of Available Cash that is deemed to be Cash from Interim
Capital Transactions, the Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall be
adjusted proportionately downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, as the
case may be, by a fraction of which the numerator is the Unrecovered Initial
Unit Price of the Common Units immediately after giving effect to such
distribution and of which the denominator is the Unrecovered Initial Unit Price
of the Common Units immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 9.6.
5.7 SPECIAL PROVISIONS RELATING TO THE SUBORDINATED UNITS.
(a) Except with respect to the right to vote on or approve matters requiring
the vote or approval of a percentage of the holders of Outstanding Common Units
and the right to participate in allocations of income, gain, loss and deduction
and distributions of cash made with respect to Common Units pursuant to this
Article V, the holder of a Subordinated Unit shall have all of the rights and
obligations of a Limited Partner holding Common Units hereunder; provided,
however, that immediately upon the end of the Subordination Period or upon the
conversion of Subordinated Units as provided in subparagraph (b) below, the
holder of a Subordinated Unit shall possess all of the rights and obligations of
a Limited Partner holding Common Units hereunder, including, without limitation,
the right to vote as a Common Unitholder, the right to participate in
allocations of income, gain, loss and deduction and distributions of cash made
with respect to Common Units pursuant to this Article V (but such Subordinated
Units shall remain subject to the provisions of Sections 4.5(c)(ii) and
5.1(d)(x)).
(b) A total of 5,531,240 Subordinated Units will convert into Common Units
(subject to paragraph (c) immediately below) on the first day of any Quarter
commencing on or after August 1, 1997, provided that each of the following two
tests have been satisfied:
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(i) the Partnership has, with respect to each of the two consecutive four-
Quarter periods immediately preceding such date, made distributions of
Available Cash constituting Cash from Operations on the Common Units and the
Subordinated Units in an amount equal to or greater than the Minimum Quarterly
Distribution on each Common Unit and Subordinated Unit Outstanding for such
periods; provided, however, that in determining the amount of Available Cash
constituting Cash from Operations distributed in any four-Quarter period the
following amounts shall not be included: (A) any positive balance in Cash from
Operations at the beginning of such four-Quarter period, (B) any net increase
in working capital borrowings in such four-Quarter period and (C) any net
decrease in reserves in such four-Quarter period; and
(ii) the amount of Available Cash constituting Cash from Operations
generated by the Partnership in each of the two consecutive four-Quarter
periods immediately preceding such date, equaled or exceeded 125% of the
Minimum Quarterly Distribution on all Common Units and all Subordinated Units
for such periods; provided, however, that in determining the amount of
Available Cash constituting Cash from Operations generated by the Partnership
in any four-Quarter period (A) the following amounts shall not be included:
(1) any positive balance in Cash from Operations at the beginning of such
four-Quarter period, (2) any net increase in working capital borrowings in
such four-Quarter period and (3) any net decrease in reserves in such four-
Quarter period, and (B) any net increase in reserves in such four-Quarter
period to provide funds for distributions with respect to Units and any
general partner interests in the Partnership shall be included.
(c) After the end of the Subordination Period or upon the occurrence of the
events described in subparagraph (b) of this Section 5.7, once the General
Partner determines, based on advice of counsel, that a Subordinated Unit has, as
a substantive matter, like intrinsic economic and federal income tax
characteristics, in all material respects, to the intrinsic economic and federal
income tax characteristics of a Common Unit then Outstanding, then the
Subordinated Unit shall be converted to a Common Unit (on a one-for-one basis)
and from that time forward (which time shall, except as provided in subparagraph
(b) above, in no event commence before the first day following the end of the
Subordination Period) shall constitute a Common Unit for all purposes under this
Agreement. In connection with the condition set forth above, it is understood
that the General Partner may take whatever reasonable steps are required to
provide economic uniformity to the Subordinated Units in preparation for a
conversion into Common Units, including the application of Sections 4.5(c) and
5.1(d)(x); provided, however, that no such steps may be taken that would have a
material adverse effect on the Limited Partners holding Common Units or the
Record Holders of any class of Units.
5.8 SPECIAL PROVISIONS RELATING TO THE SPECIAL LIMITED PARTNERS.
Notwithstanding anything to the contrary set forth in this Agreement, the
Special Limited Partners (a) shall (i) possess the rights and obligations
provided in this Agreement with respect to a Limited Partner pursuant to
Articles VI and VII and (ii) have a Capital Account as a Partner pursuant to
Section 4.5 and all other provisions related thereto and (b) shall not (i) be
entitled to vote on any matters requiring the approval or vote of the holders of
Outstanding Units, (ii) be entitled to any distributions other than to Partners
pursuant to Sections 5.4(a)(v), (vi) and (vii), 5.4(b)(iii), (iv) and (v), 14.3
and 14.4 or (iii) be allocated items of income, gain, loss or deduction other
than as specified in this Article V.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT. (a) The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited
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partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Section 6.3, shall have full power and authority to do all things and on such
terms as it, in its sole discretion, may deem necessary or appropriate to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 and to effectuate the purposes set forth in Section 3.1, including,
without limitation, (i) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations; (ii) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the Partnership or the merger or
other combination of the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to any prior approval
that may be required by Section 6.3); (iv) the use of the assets of the
Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement, including, without limitation, the
financing of the conduct of the operations of the Partnership or the Operating
Partnership, the lending of funds to other Persons (including, without
limitation, the Operating Partnership, the General Partner and Affiliates of the
General Partner) and the repayment of obligations of the Partnership and the
Operating Partnership and the making of capital contributions to the Operating
Partnership; (v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including, without limitation, instruments
that limit the liability of the Partnership under contractual arrangements to
all or particular assets of the Partnership, with the other party to the
contract to have no recourse against the General Partner or its assets other
than its interest in the Partnership, even if same results in the terms of the
transaction being less favorable to the Partnership than would otherwise be the
case); (vi) the distribution of Partnership cash; (vii) the selection and
dismissal of employees and agents (including, without limitation, employees
having titles such as "president," "vice president," "secretary" and
"treasurer") and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring; (viii) the maintenance of such insurance for the benefit
of the Partnership, the Operating Partnership and the Partners (including,
without limitation, the assets of the Operating Partnership and the Partnership)
as it deems necessary or appropriate; (ix) the formation of, or acquisition of
an interest in, and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations or other
relationships (including, without limitation, the acquisition of interests in,
and the contributions of property to, the Operating Partnership from time to
time); (x) the control of any matters affecting the rights and obligations of
the Partnership, including, without limitation, the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of litigation
and the incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and contingencies to
the extent permitted by law; (xii) the entering into of listing agreements with
The New York Stock Exchange, Inc. and any other securities exchange and the
delisting of some or all of the Units from, or requesting that trading be
suspended on, any such exchange (subject to any prior approval that may be
required under Section 1.6); (xiii) the purchase, sale or other acquisition or
disposition of Units; and (xiv) the undertaking of any action in connection with
the Partnership's participation in the Operating Partnership as the limited
partner (including, without limitation, contributions or loans of funds by the
Partnership to the Operating Partnership).
(b) Notwithstanding any other provision of this Agreement, the Operating
Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in Units hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of the Operating
Partnership Agreement, the Underwriting Agreement, the Contribution Agreement,
the agreements and other documents filed as exhibits to the Registration
Statement, and the other agreements described in or filed as a part of the
Registration Statement, and the engaging by any Affiliate of the General Partner
in business and activities (other than Restricted Activities) that are in direct
competition with the business and activities of the Partnership and the
Operating Partnership; (ii) agrees that the General Partner (on its own or
through any officer of the Partnership) is authorized to execute, deliver and
perform the agreements
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referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Units; and (iii) agrees that the execution, delivery or performance
by the General Partner, the Partnership, the Operating Partnership or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement (including, without limitation, the exercise by
the General Partner or any Affiliate of the General Partner of the rights
accorded pursuant to Article XVII), or the engaging by any Affiliate of the
General Partner in any business and activities (other than Restricted
Activities) that are in direct competition with the business and activities of
the Partnership and the Operating Partnership, shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or the Assignees or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity. The term "Affiliate" when used in this Section 6.1(b) with respect to
the General Partner shall not include the Partnership or any Subsidiary of the
Partnership.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused the
Certificate of Limited Partnership to be filed with the Secretary of State of
the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The General Partner may
not, without written approval of the specific act by all of the Outstanding
Units or by other written instrument executed and delivered by all of the
Outstanding Units subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, without limitation, (i) any act that
would make it impossible to carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement; (ii) possess Partnership
property, or assign any rights in specific Partnership property, for other than
a Partnership purpose; (iii) admit a Person as a Partner, except as otherwise
provided in this Agreement; (iv) amend this Agreement in any manner, except as
otherwise provided in this Agreement; or (v) transfer its interest as general
partner of the Partnership, except as otherwise provided in this Agreement.
(b) Except as provided in Articles XIV and XVI, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
or approve on behalf of the Partnership the sale, exchange or other disposition
of all or substantially all of the assets of the Operating Partnership, without
the approval of at least a majority of the Outstanding Units (other than Units
owned by the General Partner and its Affiliates) during the Subordination Period
and thereafter without the approval of at least a majority of the Outstanding
Units; provided, however, that this provision shall not preclude or limit the
General Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the Partnership's assets and shall not
apply to any forced sale of any or all of the Partnership's assets pursuant to
the foreclosure of, or other realization upon, any such encumbrance. Without the
approval of at least two-thirds of the Outstanding Units, the General Partner
shall not, on behalf of the Partnership, (i) consent to any amendment to the
Operating Partnership Agreement or, except as expressly permitted by Section
6.9(d), take any action permitted to be taken by a partner of the
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Operating Partnership, in either case, that would have a material adverse effect
on the Partnership as a partner of the Operating Partnership or (ii) except as
permitted under Sections 11.2, 13.1 and 13.2 elect or cause the Partnership to
elect a successor general partner of the Operating Partnership.
(c) Unless approved by the affirmative vote of the holders of at least two-
thirds of each class of Outstanding Units, including two-thirds of the Common
Units (excluding for purposes of such determination Common Units owned by the
General Partner and its Affiliates), the General Partner shall not take any
action or refuse to take any reasonable action the effect of which, if taken or
not taken, as the case may be, would be to cause the Partnership or the
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes; provided
that this Section 6.3(c) shall not be construed to apply to amendments to this
Agreement (which are governed by Article XV) or mergers or consolidations of the
Partnership with any Person (which are governed by Article XVI).
(d) At all times while serving as the general partner of the Partnership, the
General Partner shall not (except as provided below) make any dividend or
distribution on, or repurchase any shares of, its stock or take any other action
within its control unless it shall first receive an Opinion of Counsel that the
effect of such dividend, distribution, repurchase or other action would not
reduce its net worth below an amount such that the Partnership will be treated
as an association taxable as a corporation for federal income tax purposes;
provided, however, to the extent the General Partner receives distributions of
cash from the Partnership, the Operating Partnership or any other partnership of
which the Partnership is, directly or indirectly, a partner, the General Partner
shall not use such cash to make any dividend or distribution on, or repurchase
any shares of, its stock or take any other action within its control if the
effect of such dividend, distribution, repurchase or other action would be to
reduce its net worth below an amount necessary to receive an Opinion of Counsel
that the Partnership will be treated as a partnership for federal income tax
purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER. (a) Except as provided in this
Section 6.4 and elsewhere in this Agreement or in the Operating Partnership
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership or the Operating Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole discretion, for (i) all
direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, salary, bonus, incentive
compensation and other amounts paid to any Person to perform services for the
Partnership or for the General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
(c) Subject to Section 4.3(c), the General Partner in its sole discretion and
without the approval of the Limited Partners (who shall have no right to vote in
respect thereof) may propose and adopt on behalf of the Partnership, employee
benefit and incentive plans (including, without limitation, plans involving the
issuance of Units), or issue Partnership Securities pursuant to any employee
benefit or incentive plan maintained or sponsored by the General Partner or one
of its Affiliates, in each case for the benefit of employees of the General
Partner, the Partnership, the Operating Partnership or any Affiliate of any of
them in respect of services performed, directly or indirectly, for the benefit
of the Partnership or the Operating Partnership. The Partnership agrees to issue
and sell to the General Partner any Units or other Partnership Securities that
the General Partner is obligated to provide to any employees pursuant to any
such benefit or incentive plans. Expenses incurred by the General Partner in
connection with any such plans (including the net cost to the General Partner of
Units purchased by the General Partner from the Partnership to fulfill options
or awards under such plans) shall be
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reimbursed in accordance with Section 6.4(b). Any and all obligations of the
General Partner under any employee benefit or incentive plans adopted by the
General Partner as permitted by this Section 6.4(c) shall constitute obligations
of the General Partner hereunder and shall be assumed by any successor General
Partner approved pursuant to Section 13.1 or 13.2 or the transferee of or
successor to all of the General Partner's Partnership Interest as a general
partner in the Partnership pursuant to Section 11.2.
6.5 OUTSIDE ACTIVITIES. (a) After the Closing Date, the General Partner, for
so long as it is the general partner of the Partnership, (i) agrees that its
sole business will be to act as a general partner of the Partnership, the
Operating Partnership and any other partnership of which the Partnership or the
Operating Partnership is, directly or indirectly, a partner and to undertake
activities that are ancillary or related thereto (including being a limited
partner in the Partnership), (ii) shall not enter into or conduct any business
or incur any debts or liabilities except in connection with or incidental to (A)
its performance of the activities required or authorized by this Agreement or
the Operating Partnership Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or disposition of
Partnership Interests in the Partnership or partnership interests in the
Operating Partnership or any other partnership of which the Partnership or the
Operating Partnership is, directly or indirectly, a partner, except that,
notwithstanding the foregoing, employees of the General Partner may perform
services for Ferrell and its Affiliates, and (iii) shall not and shall cause its
Affiliates not to engage in any Restricted Activity.
(b) Except as described in Section 6.5(a), no Indemnitee shall be expressly or
implicitly restricted or proscribed pursuant to this Agreement, the Operating
Partnership Agreement or the partnership relationship established hereby or
thereby from engaging in other activities for profit, whether in the businesses
engaged in by the Partnership or the Operating Partnership or anticipated to be
engaged in by the Partnership, the Operating Partnership or otherwise,
including, without limitation, in the case of any Affiliates of the General
Partner those businesses and activities (other than Restricted Activities) in
direct competition with the business and activities of the Partnership or the
Operating Partnership or otherwise described in or contemplated by the
Registration Statement. Without limitation of and subject to the foregoing each
Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and to engage in and possess an
interest in other business ventures of any and every type or description,
independently or with others, including, without limitation, in the case of any
Affiliates of the General Partner business interests and activities (other than
Restricted Activities) in direct competition with the business and activities of
the Partnership or the Operating Partnership, and none of the same shall
constitute a breach of this Agreement or any duty to the Partnership, the
Operating Partnership or any Partner or Assignee. Neither the Partnership, the
Operating Partnership, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee (subject, in the case of the General Partner, to compliance
with Section 6.5(c)) and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Partnership, the Operating
Partnership, any Limited Partner or any other Person. The General Partner and
any other Persons affiliated with the General Partner may acquire Units or other
Partnership Securities in addition to those acquired by any of such Persons on
the Closing Date, and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of an Assignee or Limited Partner, as
applicable, relating to such Units or Partnership Securities, as the case may
be.
(c) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are hereby
approved by the Partnership and all Partners and (ii) it shall be deemed not to
be a breach of the General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to engage,
in business interests and activities (other than Restricted Activities) in
preference to or to the exclusion of the Partnership.
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(d) The term "Affiliates" when used in this Section 6.5 with respect to the
General Partner shall not include the Partnership or any Subsidiary of the
Partnership.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES. (a) The
General Partner or any Affiliate thereof may lend to the Partnership or the
Operating Partnership, and the Partnership and the Operating Partnership may
borrow, funds needed or desired by the Partnership and the Operating Partnership
for such periods of time as the General Partner may determine and (ii) the
General Partner or any Affiliate thereof may borrow from the Partnership or the
Operating Partnership, and the Partnership and the Operating Partnership may
lend to the General Partner or such Affiliate, excess funds of the Partnership
and the Operating Partnership for such periods of time and in such amounts as
the General Partner may determine; provided, however, that in either such case
the lending party may not charge the borrowing party interest at a rate greater
than the rate that would be charged the borrowing party (without reference to
the lending party's financial abilities or guarantees), by unrelated lenders on
comparable loans. The borrowing party shall reimburse the lending party for any
costs (other than any additional interest costs) incurred by the lending party
in connection with the borrowing of such funds. For purposes of this Section
6.6(a) and Section 6.6(b), the term "Partnership" shall include any Affiliate of
the Partnership that is controlled by the Partnership and the term "Operating
Partnership" shall include any Affiliate of the Operating Partnership that is
controlled by the Operating Partnership.
(b) The Partnership may lend or contribute to the Operating Partnership, and
the Operating Partnership may borrow, funds on terms and conditions established
in the sole discretion of the General Partner; provided, however, that the
Partnership may not charge the Operating Partnership interest at a rate greater
than the rate that would be charged to the Operating Partnership (without
reference to the General Partner's financial abilities or guarantees), by
unrelated lenders on comparable loans. The foregoing authority shall be
exercised by the General Partner in its sole discretion and shall not create any
right or benefit in favor of the Operating Partnership or any other Person.
(c) The General Partner may itself, or may enter into an agreement with any of
its Affiliates to, render services to the Partnership or to the General Partner
in the discharge of its duties as general partner of the Partnership. Any
services rendered to the Partnership by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 6.6(c) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction, the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership. The provisions of Section 6.4 shall apply to the rendering
of services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other partnerships,
corporations, limited liability companies or other business entities in which it
is or thereby becomes a participant upon such terms and subject to such
conditions as are consistent with this Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates shall sell, transfer
or convey any property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are fair and
reasonable to the Partnership; provided, however, that the requirements of this
Section 6.6(e) shall be deemed to be satisfied as to (i) the transactions
effected pursuant to Sections 4.1, 4.2 and 4.3, the Contribution Agreement and
any other transactions described in or contemplated by the Registration
Statement, (ii) any transaction approved by Special Approval, (iii) any
transaction, the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties, or
(iv) any transaction that, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership), is equitable to the
Partnership.
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(f) The General Partner and its Affiliates will have no obligation to permit
the Partnership or the Operating Partnership to use any facilities or assets of
the General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation on the part of the General Partner or its Affiliates to
enter into such contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and notwithstanding
anything to the contrary in this Agreement, the existence of the conflicts of
interest described in the Registration Statement are hereby approved by all
Partners.
6.7 INDEMNIFICATION. (a) To the fullest extent permitted by law but subject to
the limitations expressly provided in this Agreement, the General Partner, any
Departing Partner and any Person who is or was an officer or director of the
General Partner or any Departing Partner and all other Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, legal fees and expenses), judgments, fines, penalties,
interest, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which any Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, by reason of its status as (i) the General
Partner, a Departing Partner or any of their Affiliates, (ii) an officer,
director, employee, partner, agent or trustee of the Partnership, the General
Partner, any Departing Partner or any of their Affiliates or (iii) a Person
serving at the request of the Partnership in another entity in a similar
capacity, provided, that in each case the Indemnitee acted in good faith and in
a manner which such Indemnitee reasonably believed to be in, or not opposed to,
the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful;
provided, further, no indemnification pursuant to this Section 6.7 shall be
available to the General Partner with respect to its obligations incurred
pursuant to the Underwriting Agreement or the Contribution Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership or the
Operating Partnership). The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant to this
Section 6.7 shall be made only out of the assets of the Partnership, it being
agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including, without
limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is
not entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in addition to
any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Units, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the Partnership, the General Partner, any
Departing Partner or an Affiliate thereof or (iii) a Person serving at the
request of the Partnership in another entity in a similar capacity, and as to
actions in any other capacity (including, without limitation, any capacity under
the Underwriting Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Partnership's activities, regardless of
whether the
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Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 6.7(a); and action taken or omitted by it with
respect to an employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any provision
hereof shall in any manner terminate, reduce or impair the right of any past,
present or future Indemnitee to be indemnified by the Partnership, nor the
obligation of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
6.8 LIABILITY OF INDEMNITEES. (a) Notwithstanding anything to the contrary set
forth in this Agreement, no Indemnitee shall be liable for monetary damages to
the Partnership, the Limited Partners, the Assignees or any other Persons who
have acquired interests in the Units, for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in good
faith.
(b) Subject to its obligations and duties as General Partner set forth in
Section 6.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the liability to the Partnership and the Limited Partners of the General
Partner, its directors, officers and employees under this Section 6.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
6.9 RESOLUTION OF CONFLICTS OF INTEREST. (a) Unless otherwise expressly
provided in this Agreement or the Operating Partnership Agreement, whenever a
potential conflict of interest exists or arises between the General Partner or
any of its Affiliates, on the one hand, and the Partnership, the Operating
Partnership, any Partner or any Assignee, on the other, any resolution or course
of action in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not
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constitute a breach of this Agreement, of the Operating Partnership Agreement,
of any agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action is, or by
operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on terms no less favorable
to the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner may also adopt a resolution or course of
action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such interest;
(B) any customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including such Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including such Audit Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or under
the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or under a grant of similar authority or
latitude, the General Partner or such Affiliate shall be entitled to consider
only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership, the Operating Partnership, any Limited Partner or any Assignee,
(ii) it may make such decision in its sole discretion (regardless of whether
there is a reference to "sole discretion" or "discretion") unless another
express standard is provided for, or (iii) in "good faith" or under another
express standard, the General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, the Operating Partnership Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation. In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set forth in
the definitions of Available Cash or Cash from Operations shall not constitute a
breach of any duty of the General Partner to the Partnership or the Limited
Partners. The General Partner shall have no duty, express or implied, to sell or
otherwise dispose of any asset of the Operating Partnership or of the
Partnership, other than in the ordinary course of business. No borrowing by the
Partnership or the Operating Partnership or the approval thereof by the General
Partner shall be deemed to constitute a breach of any duty of the General
Partner to the Partnership or the Limited Partners by reason of the fact that
the purpose or effect of such borrowing is directly or indirectly to (A) enable
Incentive Distributions or (B) hasten the expiration of the Subordination Period
or the conversion of any Subordinated Units into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a conflict
of interest is required under this Agreement to be "fair and reasonable" to any
Person, the fair and reasonable nature of such transaction, arrangement or
resolution shall be considered in the context of all similar or related
transactions.
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(d) The Limited Partners hereby authorize the General Partner, on behalf of
the Partnership as a partner of the Operating Partnership, to approve of actions
by the general partner of the Operating Partnership similar to those actions
permitted to be taken by the General Partner pursuant to this Section 6.9.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER. (a) The General Partner may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including, without limitation, an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its powers
or obligations hereunder, to act through any of its duly authorized officers, a
duly appointed attorney or attorneys-in-fact or the duly authorized officers of
the Partnership. Each such attorney shall, to the extent provided by the General
Partner in the power of attorney, have full power and authority to do and
perform each and every act and duty that is permitted or required to be done by
the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited as required to permit the General Partner to act under this Agreement
or any other agreement contemplated by this Agreement and to make any decision
pursuant to the authority prescribed in this Agreement so long as such action is
reasonably believed by the General Partner to be in, or not inconsistent with,
the best interests of the Partnership.
6.11 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partner or Assignee, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner or one or more of
its Affiliates or one or more nominees shall be held by the General Partner or
such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable; provided that, prior to the withdrawal or
removal of the General Partner or as soon thereafter as practicable, the General
Partner shall use reasonable efforts to effect the transfer of record title to
the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the Partnership. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held. The General Partner covenants and agrees that at the Closing Date, the
Partnership and the Operating Partnership shall have all licenses, permits,
certificates, franchises, or other governmental authorizations or permits
necessary for the ownership of their properties or for the conduct of their
businesses, except for such licenses, permits, certificates, franchises, or
other governmental authorizations or permits, failure to have obtained which
will not, individually or in the aggregate, have a material adverse effect on
the Partnership or the Operating Partnership.
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6.12 PURCHASE OR SALE OF UNITS. The General Partner may cause the Partnership
to purchase or otherwise acquire Units; provided that, except as permitted
pursuant to Section 11.6, the General Partner may not cause the Partnership to
purchase Subordinated Units during the Subordination Period. As long as Units
are held by the Partnership or the Operating Partnership, such Units shall not
be considered Outstanding for any purpose, except as otherwise provided herein.
The General Partner or any Affiliate of the General Partner may also purchase or
otherwise acquire and sell or otherwise dispose of Units for its own account,
subject to the provisions of Articles XI and XII.
6.13 REGISTRATION RIGHTS OF FERRELLGAS AND ITS AFFILIATES. (a) If (i)
Ferrellgas or any Affiliate of Ferrellgas (including, without limitation, for
purposes of this Section 6.13, any Person that is an Affiliate of Ferrellgas at
the date hereof notwithstanding that it may later cease to be an Affiliate of
Ferrellgas) holds Units or other Partnership Securities that it desires to sell
and (ii) Rule 144 of the Securities Act (or any successor rule or regulation to
Rule 144) or another exemption from registration is not available to enable such
holder of Units (the "HOLDER") to dispose of the number of Units or other
securities it desires to sell at the time it desires to do so without
registration under the Securities Act, then upon the request of Ferrellgas or
any of its Affiliates, the Partnership shall file with the Commission as
promptly as practicable after receiving such request, and use all reasonable
efforts to cause to become effective and remain effective for a period of not
more than six months following its effective date, a registration statement
under the Securities Act registering the offering and sale of the number of
Units or other securities specified by the Holder; provided, however, that the
Partnership shall not be required to effect more than three registrations
pursuant to this Section 6.13(a); and provided further, that if the General
Partner or, if at the time a request pursuant to this Section 6.13 is submitted
to the Partnership, Ferrellgas or its Affiliate requesting registration is an
Affiliate of the General Partner, the Audit Committee in connection with Special
Approval determines in its good faith judgment that a postponement of the
requested registration for up to six months would be in the best interests of
the Partnership and its Partners due to a pending transaction, investigation or
other event, the filing of such registration statement or the effectiveness
thereof may be deferred for up to six months, but not thereafter. In connection
with any registration pursuant to the immediately preceding sentence, the
Partnership shall promptly prepare and file (x) such documents as may be
necessary to register or qualify the securities subject to such registration
under the securities laws of such states as the Holder shall reasonably request;
provided, however, that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Partnership would become subject to
general service of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such jurisdiction, and (y)
such documents as may be necessary to apply for listing or to list the
securities subject to such registration on such National Securities Exchange as
the Holder shall reasonably request, and do any and all other acts and things
that may reasonably be necessary or advisable to enable the Holder to consummate
a public sale of such Units in such states. Except as set forth in Section
6.13(c), all costs and expenses of any such registration and offering (other
than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
6.13(b) shall be an underwritten offering, then, in the event that the managing
underwriter of such offering advises the Partnership and the Holder in writing
that in its opinion the inclusion of all or some of the Holder's securities
would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only that number or amount, if any,
of securities held by the Holder which, in the opinion of the managing
underwriter, will not so adversely and materially affect the offering. Except as
set forth in Section 6.13(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
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(c) If underwriters are engaged in connection with any registration referred
to in this Section 6.13, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
6.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, "INDEMNIFIED PERSONS") against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements), resulting to, imposed upon,
or incurred by the Indemnified Persons, directly or indirectly, under the
Securities Act or otherwise (hereinafter referred to in this Section 6.13(c) as
a "CLAIM" and in the plural as "CLAIMS"), based upon, arising out of, or
resulting from any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which any Units were
registered under the Securities Act or any state securities or Blue Sky laws, in
any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out
of, is based upon or results from an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
such preliminary, summary or final prospectus or such amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in
the preparation thereof.
(d) The provisions of Sections 6.13(a) and 6.13(b) shall continue to be
applicable with respect to Ferrellgas (and any of Ferrellgas' Affiliates) after
it ceases to be a Partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so long thereafter as
is required for the Holder to sell all of the Units or other securities of the
Partnership with respect to which it has requested during such two year period
that a registration statement be filed; provided, however, that the Partnership
shall not be required to file successive registration statements covering the
same securities for which registration was demanded during such two-year period.
The provisions of Section 6.13(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this Section
6.13 shall (i) specify the Partnership Securities intended to be offered and
sold by the Person making the request, (ii) express such Person's present intent
to offer such shares for distribution, (iii) describe the nature or method of
the proposed offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and materials and
take all action as may be required in order to permit the Partnership to comply
with all applicable requirements in connection with the registration of such
Partnership Securities.
6.14 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the contrary in
this Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner and any officer of the Partnership authorized by
the General Partner to act on behalf and in the name of the Partnership has full
power and authority to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or any such
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officer shall be conclusive evidence in favor of any and every Person relying
thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 LIMITATION OF LIABILITY. The Limited Partners, the Organizational Limited
Partner and the Assignees shall have no liability under this Agreement except as
expressly provided in this Agreement or the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee (other than the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, if such Person shall also be a Limited Partner or
Assignee) shall participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
7.3 OUTSIDE ACTIVITIES. Subject to the provisions of Section 6.5, which shall
continue to be applicable to the Persons referred to therein, regardless of
whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including, without limitation, business interests and activities in direct
competition with the Partnership or the Operating Partnership. Neither the
Partnership nor any of the other Partners or Assignees shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
7.4 RETURN OF CAPITAL. No Limited Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided by Article V or as
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners and Assignees agree
within the meaning of (S) 17-502(b) of the Delaware Act.
7.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP. (a) In addition to
other rights provided by this Agreement or by applicable law, and except as
limited by Section 7.5(b), each Limited Partner shall have the right, for a
purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at such Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the General Partner, a
current list of the name and last known business, residence or mailing address
of each Partner;
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(iv) to have furnished to him, upon notification to the General Partner, a
copy of this Agreement and the Certificate of Limited Partnership and all
amendments thereto, together with a copy of the executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate of Limited
Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to contribute
in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General Partner
may keep confidential from the Limited Partners and Assignees, for such period
of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or the Operating
Partnership or could damage the Partnership or the Operating Partnership or that
the Partnership or the Operating Partnership are required by law or by
agreements with third parties to keep confidential (other than agreements with
Affiliates the primary purpose of which is to circumvent the obligations set
forth in this Section 7.5).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause to be kept
at the principal office of the Partnership appropriate books and records with
respect to the Partnership's business, including, without limitation, all books
and records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 7.5(a). Any
books and records maintained by or on behalf of the Partnership in the regular
course of its business, including, without limitation, the record of the Record
Holders and Assignees of Units or other Partnership Securities, books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for both tax and financial reporting purposes, on an accrual basis
in accordance with generally accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be August 1 to July
31.
8.3 REPORTS. (a) As soon as practicable, but in no event later than 120 days
after the close of each fiscal year of the Partnership, the General Partner
shall cause to be mailed to each Record Holder of a Unit as of a date selected
by the General Partner in its sole discretion, an annual report containing
financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with generally accepted accounting principles, including
a balance sheet and statements of operations, Partners' equity and cash flows,
such statements to be audited by a firm of independent public accountants
selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close
of each Quarter except the last Quarter of each year, the General Partner shall
cause to be mailed to each Record Holder of a Unit, as of a date selected by the
General Partner in its sole discretion, a report containing unaudited financial
statements of the Partnership and such other information as may be required by
applicable law, regulation or rule of any National Securities Exchange on which
the Units are listed for trading, or as the General Partner determines to be
necessary or appropriate.
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ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall arrange for the
preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each calendar year, the tax information
reasonably required by holders of Outstanding Units for federal and state income
tax reporting purposes. The classification, realization and recognition of
income, gain, losses and deductions and other items shall be on the accrual
method of accounting for federal income tax purposes. The taxable year of the
Partnership shall be August 1 to July 31.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the General Partner
shall, in its sole discretion, determine whether to make any available election
pursuant to the Code; provided, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole discretion that such
revocation is in the best interests of the Limited Partners and Assignees. For
purposes of computing the adjustments under Section 743(b) of the Code, the
General Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of Units will be deemed to be the lowest
quoted closing price of the Units on any National Securities Exchange on which
such Units are traded during the calendar month in which such transfer is deemed
to occur pursuant to Section 5.2(g) without regard to the actual price paid by
such transferee.
9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the General Partner
is designated the Tax Matters Partner (as defined in Section 6231 of the Code),
and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and Assignee
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
9.4 ORGANIZATIONAL EXPENSES. The Partnership shall elect to deduct expenses,
if any, incurred by it in organizing the Partnership ratably over a 60-month
period as provided in Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines in its sole
discretion to be necessary or appropriate to cause the Partnership and the
Operating Partnership to comply with any withholding requirements established
under the Code or any other federal, state or local law including, without
limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the amount withheld shall be treated as a distribution of
cash pursuant to Section 5.3 in the amount of such withholding from such
Partner.
9.6 ENTITY-LEVEL Taxation. If legislation is enacted or the interpretation of
existing language is modified which causes the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation or
otherwise subjects the Partnership or the Operating Partnership to entity-level
taxation for federal income tax purposes, the Minimum Quarterly Distribution,
First Target Distribution, Second Target Distribution or Third Target
Distribution, as the case may be, shall be equal to the product obtained by
multiplying (a) the amount thereof by (b) 1 minus the sum of (i) the highest
marginal federal corporate (or other entity, as applicable) income tax rate of
the Partnership for the taxable year of the Partnership in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the
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Partnership for the calendar year next preceding the calendar year in which such
Quarter occurs (after taking into account the benefit of any deduction allowable
for federal income tax purposes with respect to the payment of state and local
income taxes), but only to the extent of the increase in such rates resulting
from such legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next preceding the
first taxable year during which the Partnership or the Operating Partnership is
taxable for federal income tax purposes as an association taxable as a
corporation or is otherwise subject to entity-level taxation by determining such
rate as if the Partnership or the Operating Partnership had been subject to such
state and local taxes during such preceding taxable year.
9.7 ENTITY-LEVEL ARREARAGE COLLECTIONS. If the Partnership is required by
applicable law to pay any federal, state or local income tax on behalf of, or
withhold such amount with respect to, any Partner or Assignee or any former
Partner or Assignee (a) the General Partner shall cause the Partnership to pay
such tax on behalf of such Partner or Assignee or former Partner or Assignee
from the funds of the Partnership; (b) any amount so paid on behalf of, or
withheld with respect to, any Partner or Assignee shall constitute a
distribution out of Available Cash to such Partner or Assignee pursuant to
Section 5.3; provided, however, in the discretion of the General Partner, such
taxes (if pertaining to all Partners) may be considered to be cash disbursements
of the Partnership which reduce Available Cash, but the payment or withholding
thereof shall not be deemed to be a distribution of Available Cash to such
Partners; and (c) to the extent any such Partner or Assignee (but not a former
Partner or Assignee) is not then entitled to such distribution under this
Agreement, the General Partner shall be authorized, without the approval of any
Partner or Assignee, to amend this Agreement insofar as is necessary to maintain
the uniformity of intrinsic tax characteristics as to all Units and to make
subsequent adjustments to distributions in a manner which, in the reasonable
judgment of the General Partner, will make as little alteration as practicable
in the priority and amount of distributions otherwise applicable under this
Agreement, and will not otherwise alter the distributions to which Partners and
Assignees are entitled under this Agreement. If the Partnership is permitted
(but not required) by applicable law to pay any such tax on behalf of, or
withhold such amount with respect to, any Partner or Assignee or former Partner
or Assignee, the General Partner shall be authorized (but not required) to cause
the Partnership to pay such tax from the funds of the Partnership and to take
any action consistent with this Section 9.7. The General Partner shall be
authorized (but not required) to take all necessary or appropriate actions to
collect all or any portion of a deficiency in the payment of any such tax that
relates to prior periods and that is attributable to Persons who were Limited
Partners or Assignees when such deficiencies arose, from such Persons.
9.8 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership or the Operating Partnership is treated as an
association taxable as a corporation at any time or is otherwise taxable for
federal income tax purposes as an entity at any time and, pursuant to the
provisions of this Agreement, an Opinion of Counsel would otherwise be required
to the effect that an action will not cause the Partnership or the Operating
Partnership to become so treated as an association taxable as a corporation or
otherwise taxable as an entity for federal income tax purposes, such requirement
for an Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
CERTIFICATES
10.1 CERTIFICATES. Upon the Partnership's issuance of Common Units or
Subordinated Units to any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number of such Units
being so issued. Certificates shall be executed on behalf of the Partnership by
the General Partner. No Common Unit Certificate shall be valid for any purpose
until it has been countersigned by the Transfer Agent. The Partners holding
Certificates evidencing Subordinated Units may exchange such Certificates for
Certificates evidencing Common Units on or after the date on which such
Subordinated Units are converted into Common Units pursuant to the terms of
Section 5.7(c).
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10.2 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (a) The General
Partner shall cause to be kept on behalf of the Partnership a register in which,
subject to such reasonable regulations as it may prescribe and subject to the
provisions of Section 10.2(b), the General Partner will provide for the
registration and transfer of Units. The Transfer Agent is hereby appointed
registrar and transfer agent for the purpose of registering Units and transfers
of such Units as herein provided. The Partnership shall not recognize transfers
of Certificates representing Units unless same are effected in the manner
described in this Section 10.2. Upon surrender for registration of transfer of
any Units evidenced by a Certificate, and subject to the provisions of Section
10.2(b), the General Partner on behalf of the Partnership shall execute, and the
Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Certificates evidencing the same aggregate number
of Units as was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership shall not
recognize any transfer of Units until the Certificates evidencing such Units are
surrendered for registration of transfer and such Certificates are accompanied
by a Transfer Application duly executed by the transferee (or the transferee's
attorney-in-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer, provided, that as a condition to the issuance of
any new Certificate under this Section 10.2, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.
10.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) If any mutilated
Certificate is surrendered to the Transfer Agent, the General Partner on behalf
of the Partnership shall execute, and upon its request the Transfer Agent shall
countersign and deliver in exchange therefor, a new Certificate evidencing the
same number of Units as the Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall execute, and upon
its request the Transfer Agent shall countersign and deliver a new Certificate
in place of any Certificate previously issued if the Record Holder of the
Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the
General Partner, that a previously issued Certificate has been lost, destroyed
or stolen;
(ii) requests the issuance of a new Certificate before the Partnership has
notice that the Certificate has been acquired by a purchaser for value in good
faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the Partnership a
bond, in form and substance satisfactory to the General Partner, with surety
or sureties and with fixed or open penalty as the General Partner may
reasonably direct, in its sole discretion, to indemnify the Partnership, the
General Partner and the Transfer Agent against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General
Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this Section
10.3, the General Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including, without limitation, the fees and expenses of the
Transfer Agent) reasonably connected therewith.
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10.4 RECORD HOLDER. In accordance with Section 10.2(b), the Partnership shall
be entitled to recognize the Record Holder as the Limited Partner or Assignee
with respect to any Units and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Units on the part of any other
Person, whether or not the Partnership shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units
are listed for trading. Without limiting the foregoing, when a Person (such as a
broker, dealer, bank, trust company or clearing corporation or an agent of any
of the foregoing) is acting as nominee, agent or in some other representative
capacity for another Person in acquiring and/or holding Units, as between the
Partnership on the one hand, and such other Persons, on the other, such
representative Person (a) shall be the Limited Partner or Assignee (as the case
may be) of record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have the rights
and obligations of a Limited Partner or Assignee (as the case may be) hereunder
and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 TRANSFER. (a) The term "TRANSFER," when used in this Article XI with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner assigns its Partnership Interest as a general partner
in the Partnership to another Person, by which the holder of a Unit assigns such
Unit to another Person who is or becomes an Assignee or by which a Special
Limited Partner holding an IDR assigns such IDR to another Person, and includes
a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part, except
in accordance with the terms and conditions set forth in this Article XI. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article XI shall be null and void.
(c) Nothing contained in this Article XI shall be construed to prevent a
disposition by the parent entity of the General Partner of any or all of the
issued and outstanding capital stock of the General Partner.
(d) Nothing contained in this Article XI, or elsewhere in this Partnership
Agreement, shall preclude the settlement of any transactions involving Common
Units entered into through the facilities of the New York Stock Exchange.
11.2 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP INTEREST. Except for a
transfer by the General Partner of all, but not less than all, of its
Partnership Interest as a general partner in the Partnership to (a) an Affiliate
of the General Partner or (b) another Person in connection with the merger or
consolidation of the General Partner with or into another Person or the transfer
by the General Partner of all or substantially all of its assets to another
Person, the transfer by the General Partner of all or any part of its
Partnership Interest as a general partner in the Partnership to a Person prior
to July 31, 2004 shall be subject to the prior approval of at least a majority
of the Outstanding Units (excluding for purposes of such determination Units
owned by the General Partner and its Affiliates). Notwithstanding anything
herein to the contrary, no transfer by the General Partner of all or any part of
its Partnership Interest as a general partner in the Partnership to another
Person shall be permitted unless (i) the transferee agrees to assume the rights
and duties of the General Partner under this Agreement and the Operating
Partnership Agreement and to be bound by the provisions of this Agreement and
the Operating Partnership Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of
any Limited Partner or of any limited partner of the Operating Partnership or
cause the Partnership or any of the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes and (iii) such transferee also agrees to purchase
all (or the appropriate portion thereof, if applicable) of the partnership
interest of the General Partner as the general partner of the Operating
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Partnership. In the case of a transfer pursuant to and in compliance with this
Section 11.2, the transferee or successor (as the case may be) shall, subject to
compliance with the terms of Section 12.3, be admitted to the Partnership as a
General Partner immediately prior to the transfer of the Partnership Interest,
and the business of the Partnership shall continue without dissolution.
11.3 TRANSFER OF UNITS. (a) Units may be transferred only in the manner
described in Section 10.2. The transfer of any Units and the admission of any
new Partner shall not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to Article XII,
the Record Holder of a Unit shall be an Assignee in respect of such Unit.
Limited Partners may include custodians, nominees, or any other individual or
entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent,
only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of an assignment
or otherwise.
(d) A transferee who has completed and delivered a Transfer Application shall
be deemed to have (i) requested admission as a Substituted Limited Partner, (ii)
agreed to comply with and be bound by and to have executed this Agreement, (iii)
represented and warranted that such transferee has the right, power and
authority and, if an individual, the capacity to enter into this Agreement, (iv)
granted the powers of attorney set forth in this Agreement and (v) given the
consents and approvals and made the waivers contained in this Agreement.
11.4 RESTRICTIONS ON TRANSFERS. Notwithstanding the other provisions of this
Article XI, no transfer of any Unit or interest therein of any Limited Partner,
Special Limited Partner or Assignee shall be made if such transfer would (a)
violate the then applicable federal or state securities laws or rules and
regulations of the Securities and Exchange Commission, any state securities
commission or any other governmental authorities with jurisdiction over such
transfer, (b) result in the taxation of the Partnership or the Operating
Partnership as an association taxable as a corporation or otherwise subject the
Partnership or the Operating Partnership to entity-level taxation for federal
income tax purposes or (c) affect the Partnership's or the Operating
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
11.5 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES. (a) If the Partnership
or the Operating Partnership is or becomes subject to any federal, state or
local law or regulation that, in the reasonable determination of the General
Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Partnership or the Operating Partnership has an interest
based on the nationality, citizenship or other related status of a Limited
Partner or Assignee, the General Partner may request any Limited Partner or
Assignee to furnish to the General Partner, within 30 days after receipt of such
request, an executed Citizenship Certification or such other information
concerning his nationality, citizenship or other related status (or, if the
Limited Partner or Assignee is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such Person) as
the General Partner may request. If a Limited Partner or Assignee fails to
furnish to the General Partner within the aforementioned 30-day period such
Citizenship Certification or other requested information or if upon receipt of
such Citizenship Certification or other requested information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Units owned by such Limited Partner or
Assignee shall be subject to redemption in accordance with the provisions of
Section 11.6. In addition, the General Partner may require that the status of
any such Limited Partner or Assignee be changed to that of a Non-citizen
Assignee, and, thereupon, the General Partner shall be substituted for such Non-
citizen Assignee as the Limited Partner in respect of his Units.
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(b) The General Partner shall, in exercising voting rights in respect of Units
held by it on behalf of Non-citizen Assignees, distribute the votes in the same
ratios as the votes of Limited Partners in respect of Units other than those of
Non-citizen Assignees are cast, either for, against or abstaining as to the
matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no
right to receive a distribution in kind pursuant to Section 14.4 but shall be
entitled to the cash equivalent thereof, and the General Partner shall provide
cash in exchange for an assignment of the Non-citizen Assignee's share of the
distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the General Partner from the Non-citizen
Assignee of his Partnership Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an Eligible
Citizen, a Non-citizen Assignee may, upon application to the General Partner,
request admission as a Substituted Limited Partner with respect to any Units of
such Non-citizen Assignee not redeemed pursuant to Section 11.6, and upon his
admission pursuant to Section 12.2 the General Partner shall cease to be deemed
to be the Limited Partner in respect of the Non-citizen Assignee's Units.
11.6 REDEMPTION OF INTERESTS. (a) If at any time a Limited Partner or Assignee
fails to furnish a Citizenship Certification or other information requested
within the 30-day period specified in Section 11.5(a), or if upon receipt of
such Citizenship Certification or other information the General Partner
determines, with the advice of counsel, that a Limited Partner or Assignee is
not an Eligible Citizen, the Partnership may, unless the Limited Partner or
Assignee establishes to the satisfaction of the General Partner that such
Limited Partner or Assignee is an Eligible Citizen or has transferred his Units
to a Person who furnishes a Citizenship Certification to the General Partner
prior to the date fixed for redemption as provided below, redeem the Partnership
Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day before the date
fixed for redemption, give notice of redemption to the Limited Partner or
Assignee, at his last address designated on the records of the Partnership or
the Transfer Agent, by registered or certified mail, postage prepaid. The
notice shall be deemed to have been given when so mailed. The notice shall
specify the Redeemable Units, the date fixed for redemption, the place of
payment, that payment of the redemption price will be made upon surrender of
the Certificate evidencing the Redeemable Units and that on and after the date
fixed for redemption no further allocations or distributions to which the
Limited Partner or Assignee would otherwise be entitled in respect of the
Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall be an amount
equal to the Current Market Price (the date of determination of which shall be
the date fixed for redemption) of Units of the class to be so redeemed
multiplied by the number of Units of each such class included among the
Redeemable Units. The redemption price shall be paid, in the sole discretion
of the General Partner, in cash or by delivery of a promissory note of the
Partnership in the principal amount of the redemption price, bearing interest
at the rate of 10% annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or Assignee, at
the place specified in the notice of redemption, of the Certificate evidencing
the Redeemable Units, duly endorsed in blank or accompanied by an assignment
duly executed in blank, the Limited Partner or Assignee or his duly authorized
representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no longer constitute
issued and Outstanding Units.
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(b) The provisions of this Section 11.6 shall also be applicable to Units held
by a Limited Partner or Assignee as nominee of a Person determined to be other
than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a notice of
redemption from transferring his Units before the redemption date if such
transfer is otherwise permitted under this Agreement. Upon receipt of notice of
such a transfer, the General Partner shall withdraw the notice of redemption,
provided, the transferee of such Units certifies in the Transfer Application
that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on the
original redemption date.
11.7 TRANSFER OF IDRS. A Special Limited Partner holding IDRs may transfer any
or all of the IDRs held by such Special Limited Partner. The General Partner
shall have the authority (but shall not be required) to adopt such reasonable
restrictions on the transfer of IDRs, consistent with the restrictions on
transfer of Units provided for in this Agreement, and requirements for
registering the transfer of IDRs as the General Partner, in its sole discretion,
shall determine are necessary or appropriate including, without limitation, if
the General Partner shall so determine, in its sole discretion, the right of the
Partnership to redeem IDRs upon terms and conditions similar to those applicable
to Units.
ARTICLE XII
ADMISSION OF PARTNERS
12.1 ADMISSION OF INITIAL LIMITED PARTNERS. Upon the issuance by the
Partnership of Common Units, Subordinated Units and IDRs to the General Partner
as described in Section 4.2, the General Partner shall be deemed to have been
admitted to the Partnership as a Limited Partner in respect of the Common Units
and Subordinated Units issued to it and as a Special Limited Partner in respect
of the IDRs issued to it. Upon the issuance by the Partnership of Common Units
to the Underwriters as described in Section 4.2 in connection with the Initial
Offering and the execution by each Underwriter of a Transfer Application, the
General Partner shall admit the Underwriters to the Partnership as Initial
Limited Partners in respect of the Common Units purchased by them.
12.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. By transfer of a Unit in
accordance with Article XI, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited Partner subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Certificate shall, however, only have the authority to convey to
a purchaser or other transferee who does not execute and deliver a Transfer
Application (a) the right to negotiate such Certificate to a purchaser or other
transferee and (b) the right to transfer the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Units. Each transferee of a Unit (including, without limitation,
any nominee holder or an agent acquiring such Unit for the account of another
Person) who executes and delivers a Transfer Application shall, by virtue of
such execution and delivery, be an Assignee and be deemed to have applied to
become a Substituted Limited Partner with respect to the Units so transferred to
such Person. Such Assignee shall become a Substituted Limited Partner (x) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (y) when any such
admission is shown on the books and records of the Partnership. If such consent
is withheld, such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Units that are held by Assignees, the General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
12.3 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General Partner
approved pursuant to Section 13.1 or 13.2 or the transferee of or successor to
all of the General Partner's Partnership
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Interest as a general partner in the Partnership pursuant to Section 11.2 who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1 or 13.2 or
the transfer of the General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 11.2; provided, however, that no such
successor shall be admitted to the Partnership until compliance with the terms
of Section 11.2 has occurred and such successor has executed and delivered such
other documents or instruments as may be required to effect such admission. Any
such successor shall, subject to the terms hereof, carry on the business of the
Partnership and Operating Partnership without dissolution.
12.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person (other than the
General Partner, an Initial Limited Partner or a Substituted Limited Partner)
who makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited Partner
only upon furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 1.4, and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner's
sole discretion. The admission of any Person as an Additional Limited Partner
shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
12.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP. To effect
the admission to the Partnership of any Partner, the General Partner shall take
all steps necessary and appropriate under the Delaware Act to amend the records
of the Partnership to reflect such admission and, if necessary, to prepare as
soon as practical an amendment of this Agreement and, if required by law, to
prepare and file an amendment to the Certificate of Limited Partnership and may
for this purpose, among others, exercise the power of attorney granted pursuant
to Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 WITHDRAWAL OF THE GENERAL PARTNER. (a) The General Partner shall be
deemed to have withdrawn from the Partnership upon the occurrence of any one of
the following events (each such event herein referred to as an "EVENT OF
WITHDRAWAL");
(i) the General Partner voluntarily withdraws from the Partnership by
giving written notice to the other Partners (and it shall be deemed that the
General Partner has withdrawn pursuant to this Section 13.1(a)(i) if the
General Partner voluntarily withdraws as general partner of the Operating
Partnership);
(ii) the General Partner transfers all of its rights as General Partner
pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for the benefit of
creditors; (B) files a voluntary bankruptcy petition; (C) files a petition or
answer seeking for itself a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any law; (D)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the General Partner in a proceeding of
the type described in clauses (A)-(C) of this
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Section 13.1(a)(iv); or (E) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the General Partner or of
all or any substantial part of its properties;
(v) a final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a
court with appropriate jurisdiction against the General Partner, in each case
under any federal or state bankruptcy or insolvency laws as now or hereafter
in effect; or
(vi) a certificate of dissolution or its equivalent is filed for the
General Partner, or 90 days expire after the date of notice to the General
Partner of revocation of its charter without a reinstatement of its charter,
under the laws of its state of incorporation.
If an Event of Withdrawal specified in Section 13.1(a)(iv), (v) or (vi) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within
30 days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 13.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence
of an Event of Withdrawal shall not constitute a breach of this Agreement under
the following circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Central Standard Time, on July 31,
2004, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners, provided,
that prior to the effective date of such withdrawal the withdrawal is approved
by Limited Partners holding at least two-thirds of the Outstanding Units
(excluding for purposes of such determination Units owned by the General Partner
and its Affiliates) and the General Partner delivers to the Partnership an
Opinion of Counsel ("WITHDRAWAL OPINION OF COUNSEL") that such withdrawal
(following the selection of the successor General Partner) would not result in
the loss of the limited liability of any Limited Partner or of the limited
partner of the Operating Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes; (ii) at any
time after 12:00 midnight, Central Standard Time, on July 31, 2004, the General
Partner voluntarily withdraws by giving at least 90 days' advance notice to the
Limited Partners, such withdrawal to take effect on the date specified in such
notice; (iii) at any time that the General Partner ceases to be a General
Partner pursuant to Section 13.1(a)(ii) or is removed pursuant to Section 13.2;
or (iv) notwithstanding clause (i) of this sentence, at any time that the
General Partner voluntarily withdraws by giving at least 90 days' advance notice
of its intention to withdraw to the Limited Partners, such withdrawal to take
effect on the date specified in the notice, if at the time such notice is given
one Person and its Affiliates (other than the General Partner and its
Affiliates) own beneficially or of record or control at least 50% of the
Outstanding Units. The withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall also constitute the
withdrawal of the General Partner as general partner of the Operating
Partnership. If the General Partner gives a notice of withdrawal pursuant to
Section 13.1(a)(i), holders of at least a majority of the Outstanding Units
(excluding for purposes of such determination Units owned by the General Partner
and its Affiliates) may, prior to the effective date of such withdrawal, elect a
successor General Partner. If, prior to the effective date of the General
Partner's withdrawal, a successor is selected by the Limited Partners as
provided herein, the Partnership, as the limited partner of the Operating
Partnership, shall cause such Person to become the successor general partner of
the Operating Partnership, as provided in the Operating Partnership Agreement.
If, prior to the effective date of the General Partner's withdrawal, a successor
is not selected by the Limited Partners as provided herein or the Partnership
does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 14.1. Any successor General Partner elected
in accordance with the terms of this Section 13.1 shall be subject to the
provisions of Section 12.3.
13.2 REMOVAL OF THE GENERAL PARTNER. The General Partner may be removed if
such removal is approved by Limited Partners holding at least two-thirds of the
Outstanding Units. Any such action by such Limited Partners for removal of the
General Partner must also provide for the election of a
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successor General Partner by Limited Partners holding at least a majority of the
Outstanding Units. Such removal shall be effective immediately following the
admission of a successor General Partner pursuant to Article XII. The removal of
the General Partner shall also automatically constitute the removal of the
General Partner as general partner of the Operating Partnership, as provided in
the Operating Partnership Agreement. If a Person is elected as a successor
General Partner in accordance with the terms of this Section 13.2, the
Partnership, as the limited partner of the Operating Partnership, shall cause
such Person to become the successor general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. The right of
the Limited Partners holding Outstanding Units to remove the General Partner
shall not exist or be exercised unless the Partnership has received an opinion
opining as to the matters covered by a Withdrawal Opinion of Counsel. Any
successor General Partner elected in accordance with the terms of this Section
13.2 shall be subject to the provisions of Section 12.3.
13.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER. (a) In the
event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General
Partner by the Limited Partners under circumstances where Cause does not exist,
if a successor General Partner is elected in accordance with the terms of
Section 13.1 or 13.2, the Departing Partner shall have the option exercisable
prior to the effective date of the departure of such Departing Partner to
require its successor to purchase its Partnership Interest as a general partner
in the Partnership and its partnership interest as the general partner in the
Operating Partnership (collectively, the "COMBINED INTEREST") in exchange for an
amount in cash equal to the fair market value of such Combined Interest, such
amount to be determined and payable as of the effective date of its departure.
If the General Partner is removed by the Limited Partners under circumstances
where Cause exists or if the General Partner withdraws under circumstances where
such withdrawal violates this Agreement or the Operating Partnership Agreement,
and if a successor General Partner is elected in accordance with the terms of
Section 13.1 or 13.2, such successor shall have the option, exercisable prior to
the effective date of the departure of such Departing Partner, to purchase the
Combined Interest of the Departing Partner for such fair market value of such
Combined Interest. In either event, the Departing Partner shall be entitled to
receive all reimbursements due such Departing Partner pursuant to Section 6.4,
including, without limitation, any employee-related liabilities (including,
without limitation, severance liabilities), incurred in connection with the
termination of any employees employed by the General Partner for the benefit of
the Partnership or the Operating Partnership. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its departure, cease to
share in any allocations or distributions with respect to its Partnership
Interest as a general partner in the Partnership and Partnership income, gain,
loss, deduction and credit will be prorated and allocated as set forth in
Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the Departing
Partner's Combined Interest shall be determined by agreement between the
Departing Partner and its successor or, failing agreement within 30 days after
the effective date of such Departing Partner's departure, by an independent
investment banking firm or other independent expert selected by the Departing
Partner and its successor, which, in turn, may rely on other experts and the
determination of which shall be conclusive as to such matter. If such parties
cannot agree upon one independent investment banking firm or other independent
expert within 45 days after the effective date of such departure, then the
Departing Partner shall designate an independent investment banking firm or
other independent expert, the Departing Partner's successor shall designate an
independent investment banking firm or other independent expert, and such firms
or experts shall mutually select a third independent investment banking firm or
independent expert, which shall determine the fair market value of the Combined
Interest. In making its determination, such independent investment banking firm
or other independent expert shall consider the then current trading price of
Units on any National Securities Exchange on which Units are then listed, the
value of the Partnership's assets, the rights and obligations of the General
Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in
Section 13.3(a), the Departing Partner shall become a Limited Partner and the
Combined Interest shall be converted into
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Common Units pursuant to a valuation made by an investment banking firm or other
independent expert selected pursuant to Section 13.3(a), without reduction in
such Partnership Interest (but subject to proportionate dilution by reason of
the admission of its successor). Any successor General Partner shall indemnify
the Departing Partner as to all debts and liabilities of the Partnership arising
on or after the date on which the Departing Partner becomes a Limited Partner.
For purposes of this Agreement, conversion of the General Partner's Combined
Interest to Common Units will be characterized as if the General Partner
contributed its Combined Interest to the Partnership in exchange for the newly
issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of
Section 13.1 or 13.2 and the option described in Section 13.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
capital of the Partnership cash in an amount such that its Capital Account,
after giving effect to such contribution and any adjustments made to the Capital
Accounts of all Partners pursuant to Section 4.4(d)(i), shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. In such event, such successor
General Partner shall, subject to the following sentence, be entitled to such
Percentage Interest of all Partnership allocations and distributions and any
other allocations and distributions to which the Departing Partner was entitled.
In addition, such successor General Partner shall cause this Agreement to be
amended to reflect that, from and after the date of such successor General
Partner's admission, the successor General Partner's interest in all Partnership
distributions and allocations shall be 1%, and that of the holders of
Outstanding Units shall be 99%.
13.4 WITHDRAWAL OF LIMITED PARTNERS. No Limited Partner shall have any right
to withdraw from the Partnership; provided, however, that when a transferee of a
Limited Partner's Units becomes a Record Holder, such transferring Limited
Partner shall cease to be a Limited Partner with respect to the Units so
transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 DISSOLUTION. The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the removal or withdrawal of the General Partner, if a successor General
Partner is elected pursuant to Section 13.1 or 13.2, the Partnership shall not
be dissolved and such successor General Partner shall continue the business of
the Partnership. The Partnership shall dissolve, and (subject to Section 14.2)
its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in Section
13.1(a) (other than Section 13.1(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in Section 13.1(b) or 13.2 and such
successor is admitted to the Partnership pursuant to Section 12.3;
(c) an election to dissolve the Partnership by the General Partner that (i)
during the Subordination Period, is approved by at least a majority of the
Outstanding Units other than Units held by the General Partner or its
Affiliates or (ii) after the expiration of the Subordination Period, is
approved by at least a majority of the Outstanding Units (and all Limited
Partners hereby expressly consent that in either case such approval may be
effected upon written consent of said applicable percentage of the Outstanding
Units);
(d) entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Delaware Act; or
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(e) the sale of all or substantially all of the assets and properties of the
Partnership and the Operating Partnership taken as a whole.
14.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION. Upon
(a) dissolution of the Partnership following an Event of Withdrawal caused by
the withdrawal or removal of the General Partner as provided in Section
13.1(a)(i) or (iii) and the failure of the Partners to select a successor to
such Departing Partner pursuant to Section 13.1 or 13.2, then within 90 days
thereafter or (b) dissolution of the Partnership upon an event constituting an
Event of Withdrawal as defined in Section 13.1(a)(iv), (v) or (vi), then within
180 days thereafter, a majority of the Outstanding Units may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as the successor
general partner a Person approved by a majority of the Outstanding Units. Upon
any such election by a majority of the Outstanding Units, all Partners shall be
bound thereby and shall be deemed to have approved thereof. Unless such an
election is made within the applicable time period as set forth above, the
Partnership shall conduct only activities necessary to wind up its affairs. If
such an election is so made, then:
(i) the reconstituted Partnership shall continue until the end of the term
set forth in Section 1.5 unless earlier dissolved in accordance with this
Article XIV;
(ii) if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be treated thenceforth
as the interest of a Limited Partner and converted into Common Units in the
manner provided in Section 13.3(b); and
(iii) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to
file a new partnership agreement and certificate of limited partnership, and
the successor general partner may for this purpose exercise the powers of
attorney granted the General Partner pursuant to Section 1.4; provided, that
the right of a majority of Outstanding Units to approve a successor General
Partner and to reconstitute and to continue the business of the Partnership
shall not exist and may not be exercised unless the Partnership has received
an Opinion of Counsel that (x) the exercise of the right would not result in
the loss of limited liability of any Limited Partner and (y) neither the
Partnership, the reconstituted limited partnership nor the Operating
Partnership would be treated as an association taxable as a corporation or
otherwise be taxable as an entity for federal income tax purposes upon the
exercise of such right to continue.
14.3 LIQUIDATION. Upon dissolution of the Partnership, unless the Partnership
is continued under an election to reconstitute and continue the Partnership
pursuant to Section 14.2, the General Partner, or in the event the General
Partner has been dissolved or removed, become bankrupt as set forth in Section
13.1 or withdrawn from the Partnership, a liquidator or liquidating committee
approved by a majority of the Outstanding Units, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by a majority of the
Outstanding Units. The Liquidator shall agree not to resign at any time without
15 days' prior notice and (if other than the General Partner) may be removed at
any time, with or without cause, by notice of removal approved by a majority of
the Outstanding Units. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to
all rights, powers and duties of the original Liquidator) shall within 30 days
thereafter be approved by a majority of the Outstanding Units. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article XIV,
the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the General Partner under the terms of this
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation on sale
set forth in Section 6.3(b)) to the extent necessary or desirable in the good
faith judgment of the Liquidator to carry out the duties and functions
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of the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein. The
Liquidator shall liquidate the assets of the Partnership, and apply and
distribute the proceeds of such liquidation in the following order of priority,
unless otherwise required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including, without
limitation, Partners who are creditors, in the order of priority provided by
law; and the creation of a reserve of cash or other assets of the Partnership
for contingent liabilities in an amount, if any, determined by the Liquidator
to be appropriate for such purposes; and
(b) to all Partners in accordance with, and to the extent of, the positive
balances in their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments (other than those made by reason of
this clause) for the taxable year of the Partnership during which the
liquidation of the Partnership occurs (with the date of such occurrence being
determined pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(g)); and
such distribution shall be made by the end of such taxable year (or, if later,
within 90 days after said date of such occurrence).
14.4 DISTRIBUTIONS IN KIND. (a) Notwithstanding the provisions of Section
14.3, which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) and or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 14.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Limited
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
(b) In accordance with Section 704(c)(1)(B) of the Code, in the case of any
deemed distribution occurring as a result of a termination of the Partnership
pursuant to Section 708(b)(1)(B) of the Code, to the maximum extent possible
consistent with the priorities of Section 14.3, the General Partner shall have
sole discretion to treat the deemed distribution of Partnership assets to
Partners as occurring in a manner that will not cause a shift of the Book-Tax
Disparity attributable to a Partnership asset existing immediately prior to
the deemed distribution to another asset upon the deemed contribution of
assets to the reconstituted Partnership, including, without limitation,
deeming the distribution of any Partnership assets to be made either to the
Partner who contributed such assets or to the transferee of such Partner.
14.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the completion
of the distribution of Partnership cash and property as provided in Sections
14.3 and 14.4 in connection with the liquidation of the Partnership, the
Partnership shall be terminated and the Certificate of Limited Partnership and
all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such other
actions as may be necessary to terminate the Partnership shall be taken.
14.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall be allowed for
the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 14.3
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in order to minimize any losses otherwise attendant upon such winding up, and
the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.
14.7 RETURN OF CAPITAL. The General Partner shall not be personally liable
for, and shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate, the return of the Capital
Contributions of the Limited Partners, or any portion thereof, it being
expressly understood that any such return shall be made solely from Partnership
assets.
14.8 CAPITAL ACCOUNT RESTORATION. No Limited Partner shall have any obligation
to restore any negative balance in its Capital Account upon liquidation of the
Partnership. The General Partner shall be obligated to restore any negative
balance in its Capital Account upon liquidation of its interest in the
Partnership by the end of the taxable year of the Partnership during which such
liquidation occurs, or, if later, within 90 days after the date of such
liquidation.
14.9 WAIVER OF PARTITION. Each Partner hereby waives any right to partition of
the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
15.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. Each Limited Partner
agrees that the General Partner (pursuant to its powers of attorney from the
Limited Partners, Special Limited Partners and Assignees), without the approval
of any Limited Partner or Assignee, may amend any provision of this Agreement,
and execute, swear to, acknowledge, deliver, file and record whatever documents
may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership
or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or appropriate to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the limited
partners have limited liability under the laws of any state or that is
necessary or advisable in the opinion of the General Partner to ensure that
the Partnership and the Operating Partnership will not be treated as an
association taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General Partner, does
not adversely affect the Limited Partners in any material respect, (ii) that
is necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any federal
or state statute (including, without limitation, the Delaware Act) or that is
necessary or desirable to facilitate the trading of the Units (including,
without limitation, the division of Outstanding Units into different classes
to facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed for trading,
compliance with any of which the General Partner determines in its sole
discretion to be in the best interests of the Partnership and the Limited
Partners or (iii) that is necessary or desirable to implement certain tax-
related provisions of the Partnership Agreement, or (iv) that is required to
effect the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year and taxable year of the Partnership and any
changes that, in the sole discretion of the General Partner, are necessary or
appropriate as a result of a change in the
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fiscal year and taxable year of the Partnership including, without limitation,
if the General Partner shall so determine, a change in the definition of
"Quarter" and the dates on which distributions are to be made by the
Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent
the Partnership or the General Partner or its directors or officers from in
any manner being subjected to the provisions of the Investment Company Act of
1940, as amended, the Investment Advisers Act of 1940, as amended, or "plan
asset" regulations adopted under the Employee Retirement Income Security Act
of 1974, as amended, whether or not substantially similar to plan asset
regulations currently applied or proposed by the United States Department of
Labor;
(g) subject to the terms of Section 4.3, an amendment that, in the sole
discretion of the General Partner, is necessary or desirable in connection
with the authorization for issuance of any class or series of Partnership
Securities pursuant to Section 4.3;
(h) any amendment expressly permitted in this Agreement to be made by the
General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 16.3;
(j) an amendment that, in the sole discretion of the General Partner, is
necessary or desirable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity other than the Operating Partnership, in connection with the conduct by
the Partnership of activities permitted by the terms of Section 3.1; or
(k) any other amendments substantially similar to the foregoing.
15.2 AMENDMENT PROCEDURES. Except as provided in Sections 15.1 and 15.3, all
amendments to this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed only by or with the
consent of the General Partner. A proposed amendment shall be effective upon its
approval by the holders of at least two-thirds of the Outstanding Units during
the Subordination Period and thereafter upon its approval by the holders of at
least a majority of the Outstanding Units, unless, in either case, a greater or
different percentage is required under this Agreement. Each proposed amendment
that requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the text of the
proposed amendment. If such an amendment is proposed, the General Partner shall
seek the written approval of the requisite percentage of Outstanding Units or
call a meeting of the Limited Partners to consider and vote on such proposed
amendment. The General Partner shall notify all Record Holders upon final
adoption of any such proposed amendments.
15.3 AMENDMENT REQUIREMENTS. (a) Notwithstanding the provisions of Sections
15.1 and 15.2, no provision of this Agreement that establishes a percentage of
Outstanding Units required to take any action shall be amended, altered,
changed, repealed or rescinded in any respect that would have the effect of
reducing such voting requirement unless such amendment is approved by the
written consent or the affirmative vote of holders of Outstanding Units whose
aggregate Outstanding Units constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no amendment
to this Agreement may (i) enlarge the obligations of any Limited Partner
without its consent, (ii) enlarge the obligations of the General Partner
without its consent, which may be given or withheld in its sole discretion,
(iii) modify the amounts distributable, reimbursable or otherwise payable to
the General Partner by the Partnership or the Operating Partnership, (iv)
change Section 14.1(a) or (c), (v) restrict in any way any action by or rights
of the General Partner as set forth in this Agreement or (vi) change the
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term of the Partnership or, except as set forth in Section 14.1(c), give any
Person the right to dissolve the Partnership.
(c) Except as otherwise provided, and without limitation of the General
Partner's authority to adopt amendments to this Agreement as contemplated in
Section 15.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Outstanding Units in relation to other
classes of Units must be approved by the holders of not less than a majority
of the Outstanding Units of the class affected (excluding for purposes of such
determination Units owned by the General Partner and its Affiliates).
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 6.3 or 15.1 and except as otherwise provided by
Section 16.3(b), no amendments shall become effective without the approval of
the holders of at least 95% of the Outstanding Units unless the Partnership
obtains an Opinion of Counsel to the effect that (a) such amendment will not
cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes and (b) such amendment will not affect the limited
liability of any Limited Partner or any limited partner of the Operating
Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval of the
holders of not less than 95% of the Outstanding Units.
15.4 MEETINGS. All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this Article XV. Meetings of
the Limited Partners may be called by the General Partner or by Limited Partners
owning 20% or more of the Outstanding Units of the class or classes for which a
meeting is proposed. Limited Partners shall call a meeting by delivering to the
General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a meeting and indicating the general or specific purposes
for which the meeting is to be called. Within 60 days after receipt of such a
call from Limited Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes, rules, regulations,
listing agreements or similar requirements governing the holding of a meeting or
the solicitation of proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place determined by the General Partner on a date not more than 60 days after
the mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.
15.5 NOTICE OF A MEETING. Notice of a meeting called pursuant to Section 15.4
shall be given to the Record Holders in writing by mail or other means of
written communication in accordance with Section 18.1. The notice shall be
deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
15.6 RECORD DATE. For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to give approvals
without a meeting as provided in Section 15.11, the General Partner may set a
Record Date, which shall not be less than 10 nor more than 60 days before (a)
the date of the meeting (unless such requirement conflicts with any rule,
regulation, guideline or requirement of any National Securities Exchange on
which the Units are listed for trading, in which case the rule, regulation,
guideline or requirement of such exchange shall govern) or (b) in the event that
approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.
15.7 ADJOURNMENT. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting and a new Record Date need not be
fixed, if the time and place thereof are
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announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the
Partnership may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 45 days or if a new Record
Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given in accordance with this Article XV.
15.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES. The
transactions of any meeting of Limited Partners, however called and noticed, and
whenever held, shall be as valid as if had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, Limited Partners representing such quorum
who were present in person or by proxy and entitled to vote, sign a written
waiver of notice or an approval of the holding of the meeting or an approval of
the minutes thereof. All waivers and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. Attendance of
a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner does not approve, at the beginning of
the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
15.9 QUORUM. The holders of two-thirds of the Outstanding Units of the class
or classes for which a meeting has been called represented in person or by proxy
shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by
holders of a majority in interest of such Units, in which case the quorum shall
be a majority (excluding, in either case, if such are to be excluded from the
vote, Outstanding Units owned by the General Partner and its Affiliates). At any
meeting of the Limited Partners duly called and held in accordance with this
Agreement at which a quorum is present, the act of Limited Partners holding
Outstanding Units that in the aggregate represent a majority of the Outstanding
Units entitled to vote and be present in person or by proxy at such meeting
shall be deemed to constitute the act of all Limited Partners, unless a greater
or different percentage is required with respect to such action under the
provisions of this Agreement, in which case the act of the Limited Partners
holding Outstanding Units that in the aggregate represent at least such greater
or different percentage shall be required. The Limited Partners present at a
duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Outstanding Units
specified in this Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of a
majority of the Outstanding Units represented either in person or by proxy, but
no other business may be transacted, except as provided in Section 15.7.
15.10 CONDUCT OF MEETING. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without limitation,
the determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All
minutes shall be kept with the records of the Partnership maintained by the
General Partner. The General Partner may make such other regulations consistent
with applicable law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Limited Partners or solicitation of approvals in
writing, including, without limitation, regulations in regard to the appointment
of proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote,
and the revocation of approvals in writing.
15.11 ACTION WITHOUT A MEETING. Any action that may be taken at a meeting of
the Limited Partners may be taken without a meeting if an approval in writing
setting forth the action so taken is signed by
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Limited Partners owning not less than the minimum percentage of the Outstanding
Units that would be necessary to authorize or take such action at a meeting at
which all the Limited Partners were present and voted. Prompt notice of the
taking of action without a meeting shall be given to the Limited Partners who
have not approved in writing. The General Partner may specify that any written
ballot submitted to Limited Partners for the purpose of taking any action
without a meeting shall be returned to the Partnership within the time period,
which shall be not less than 20 days, specified by the General Partner. If a
ballot returned to the Partnership does not vote all of the Units held by the
Limited Partner, the Partnership shall be deemed to have failed to receive a
ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on
behalf of the General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care of
the General Partner, (b) approvals sufficient to take the action proposed are
dated as of a date not more than 90 days prior to the date sufficient approvals
are deposited with the Partnership and (c) an Opinion of Counsel is delivered to
the General Partner to the effect that the exercise of such right and the action
proposed to be taken with respect to any particular matter (i) will not cause
the Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners' limited liability, (ii) will not jeopardize the status of the
Partnership as a partnership under applicable tax laws and regulations and (iii)
is otherwise permissible under the state statutes then governing the rights,
duties and liabilities of the Partnership and the Partners.
15.12 VOTING AND OTHER RIGHTS. (a) Only those Record Holders of Units on the
Record Date set pursuant to Section 15.6 (and also subject to the limitations
contained in the definition of "Outstanding") shall be entitled to notice of,
and to vote at, a meeting of Limited Partners or to act with respect to matters
as to which the holders of the Outstanding Units have the right to vote or to
act. All references in this Agreement to votes of, or other acts that may be
taken by, the Outstanding Units shall be deemed to be references to the votes or
acts of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account by another
Person (such as a broker, dealer, bank, trust company or clearing corporation,
or an agent of any of the foregoing), in whose name such Units are registered,
such broker, dealer or other agent shall, in exercising the voting rights in
respect of such Units on any matter, and unless the arrangement between such
Persons provides otherwise, vote such Units in favor of, and at the direction
of, the Person who is the beneficial owner, and the Partnership shall be
entitled to assume it is so acting without further inquiry. The provisions of
this Section 15.12(b) (as well as all other provisions of this Agreement) are
subject to the provisions of Section 10.4.
ARTICLE XVI
MERGER
16.1 AUTHORITY. The Partnership may merge or consolidate with one or more
corporations, business trusts or associations, real estate investment trusts,
common law trusts or unincorporated businesses, including, without limitation, a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("MERGER AGREEMENT") in accordance
with this Article XVI.
16.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation of the
Partnership pursuant to this Article XVI requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the "SURVIVING
BUSINESS ENTITY");
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(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partnership interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partnership
interests, securities or rights of any constituent business entity are not to
be exchanged or converted solely for, or into, cash, property or general or
limited partnership interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or general or limited
partnership interests, rights, securities or obligations of any limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partnership
interests, securities or rights are to receive in exchange for, or upon
conversion of, their general or limited partnership interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon
the surrender of such certificates, which cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity or any general or limited partnership, corporation, trust or
other entity (other than the Surviving Business Entity), or evidences thereof,
are to be delivered;
(e) A statement of any changes in the constituent documents or the adoption
of new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 16.4 or a later date
specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, the effective time shall be
fixed no later than the time of the filing of the certificate of merger and
stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
16.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION. (a) The General
Partner of the Partnership, upon its approval of the Merger Agreement, shall
direct that the Merger Agreement be submitted to a vote of Limited Partners
whether at a meeting or by written consent, in either case in accordance with
the requirements of Article XV. A copy or a summary of the Merger Agreement
shall be included in or enclosed with the notice of a meeting or the written
consent.
(b) The Merger Agreement shall be approved upon receiving the affirmative
vote or consent of the holders of at least a majority of the Outstanding Units
(excluding for purposes of such determination Units owned by the General
Parter and its Affiliates) during the Subordination Period and at least a
majority of the Outstanding Units thereafter unless the Merger Agreement
contains any provision which, if contained in an amendment to this Agreement,
the provisions of this Agreement or the Delaware Act would require the vote or
consent of a greater percentage of the Outstanding Units or of any class of
Limited Partners, in which case such greater percentage vote or consent shall
be required for approval of the Merger Agreement; provided that, in the case
of a merger or consolidation in which the surviving entity is a corporation or
other entity intended to be treated as an association taxable as a corporation
or otherwise taxable as an entity for federal income tax purposes, if in the
opinion of the General Partner it is necessary to effect, in contemplation of
such merger or consolidation, an amendment that would otherwise require a vote
pursuant to Section 15.3(d), no such vote pursuant to Section 15.3(d) shall be
required unless such amendment by its terms will be applicable to the
Partnership in the event the merger or consolidation is abandoned or unless
such amendment will be applicable to the Partnership during a period in excess
of ten days prior to the merger or consolidation.
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(c) After such approval by vote or consent of the Limited Partners, and at
any time prior to the filing of the certificate of merger pursuant to Section
16.4, the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
16.4 CERTIFICATE OF MERGER. Upon the required approval by the General Partner
and the Limited Partners of a Merger Agreement, a certificate of merger shall be
executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
16.5 EFFECT OF MERGER. (a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal and
mixed, and all debts due to any of those business entities and all other
things and causes of action belonging to each of those business entities shall
be vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business Entity to the
extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of
those constituent business entities shall not revert and is not in any way
impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be preserved
unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had been
incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another having occurred.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 RIGHT TO ACQUIRE UNITS. (a) Notwithstanding any other provision of this
Agreement, if at any time not more than 20% of the total Units of any class then
Outstanding are held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right, which right it may
assign and transfer to the Partnership or any Affiliate of the General Partner,
exercisable in its sole discretion, to purchase all, but not less than all, of
the Units of such class then Outstanding held by Persons other than the General
Partner and its Affiliates, at the greater of (x) the Current Market Price as of
the date three days prior to the date that the notice described in Section
17.1(b) is mailed, and (y) the highest cash price paid by the General Partner or
any of its Affiliates for any such Unit purchased during the 90-day period
preceding the date that the notice described in Section 17.1(b) is mailed. As
used in this Agreement, (i) "CURRENT MARKET PRICE" as of any date of any class
of Units listed or admitted to trading on any National Securities Exchange means
the average of the daily Closing Prices (as hereinafter defined) per Unit of
such class for the 20 consecutive Trading Days (as hereinafter defined)
immediately prior to such date; (ii) "CLOSING PRICE" for any day means the last
sale price on such day, regular way, or in case no such sale takes place on such
day, the average of the closing bid and asked prices on such day, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal National Securities
Exchange on which the Units of such class are listed or admitted to trading or
if the Units of such class are not listed or admitted to trading on any National
Securities Exchange, the last quoted price on such day or, if not so quoted, the
average of the high bid and low asked prices on such day in the over the counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated
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Quotation System or such other system then in use, or if on any such day the
Units of such class are not quoted by any such organization, the average of the
closing bid and asked prices on such day as furnished by a professional market
maker making a market in the Units of such class selected by the Board of
Directors of the General Partner, or if on any such day no market maker is
making a market in the Units of such class, the fair value of such Units on such
day as determined reasonably and in good faith by the Board of Directors of the
General Partner; and (iii) "TRADING DAY" means a day on which the principal
National Securities Exchange on which the Units of any class are listed or
admitted to trading is open for the transaction of business or, if Units of a
class are not listed or admitted to trading on any National Securities Exchange,
a day on which banking institutions in New York City generally are open.
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Units granted pursuant to
Section 17.1(a), the General Partner shall deliver to the Transfer Agent
notice of such election to purchase (the "NOTICE OF ELECTION TO PURCHASE") and
shall cause the Transfer Agent to mail a copy of such Notice of Election to
Purchase to the Record Holders of Units (as of a Record Date selected by the
General Partner) at least 10, but not more than 60, days prior to the Purchase
Date. Such Notice of Election to Purchase shall also be published for a period
of at least three consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 17.1(a) at
which Units will be purchased and state that the General Partner, its
Affiliate or the Partnership, as the case may be, elects to purchase such
Units, upon surrender of Certificates representing such Units in exchange for
payment, at such office or offices of the Transfer Agent as the Transfer Agent
may specify, or as may be required by any National Securities Exchange on
which the Units are listed or admitted to trading. Any such Notice of Election
to Purchase mailed to a Record Holder of Units at his address as reflected in
the records of the Transfer Agent shall be conclusively presumed to have been
given whether or not the owner receives such notice. On or prior to the
Purchase Date, the General Partner, its Affiliate or the Partnership, as the
case may be, shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all of the Units to be
purchased in accordance with this Section 17.1. If the Notice of Election to
Purchase shall have been duly given as aforesaid at least 10 days prior to the
Purchase Date, and if on or prior to the Purchase Date the deposit described
in the preceding sentence has been made for the benefit of the holders of
Units subject to purchase as provided herein, then from and after the Purchase
Date, notwithstanding that any Certificate shall not have been surrendered for
purchase, all rights of the holders of such Units (including, without
limitation, any rights pursuant to Articles IV, V and XIV) shall thereupon
cease, except the right to receive the purchase price (determined in
accordance with Section 17.1(a)) for Units therefor, without interest, upon
surrender to the Transfer Agent of the Certificates representing such Units,
and such Units shall thereupon be deemed to be transferred to the General
Partner, its Affiliate or the Partnership, as the case may be, on the record
books of the Transfer Agent and the Partnership, and the General Partner or
any Affiliate of the General Partner, or the Partnership, as the case may be,
shall be deemed to be the owner of all such Units from and after the Purchase
Date and shall have all rights as the owner of such Units (including, without
limitation, all rights as owner of such Units pursuant to Articles IV, V and
XIV).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Unit subject to purchase as provided in this Section 17.1 may
surrender his Certificate, as the case may be, evidencing such Unit to the
Transfer Agent in exchange for payment of the amount described in Section
17.1(a), therefor, without interest thereon.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 ADDRESSES AND NOTICES. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and
74
<PAGE>
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address described below. Any notice, payment or
report to be given or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice
or report or to make such payment shall be deemed conclusively to have been
fully satisfied, upon sending of such notice, payment or report to the Record
Holder of such Unit at his address as shown on the records of the Transfer Agent
or as otherwise shown on the records of the Partnership, regardless of any claim
of any Person who may have an interest in such Unit or the Partnership Interest
of a General Partner by reason of any assignment or otherwise. An affidavit or
certificate of making of any notice, payment or report in accordance with the
provisions of this Section 18.1 executed by the General Partner, the Transfer
Agent or the mailing organization shall be prima facie evidence of the giving or
making of such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record Holder appearing on
the books and records of the Transfer Agent or the Partnership is returned by
the United States Post Office marked to indicate that the United States Postal
Service is unable to deliver it, such notice, payment or report and any
subsequent notices, payments and reports shall be deemed to have been duly given
or made without further mailing (until such time as such Record Holder or
another Person notifies the Transfer Agent or the Partnership of a change in his
address) if they are available for the Partner or Assignee at the principal
office of the Partnership for a period of one year from the date of the giving
or making of such notice, payment or report to the other Partners and Assignees.
Any notice to the Partnership shall be deemed given if received by the General
Partner at the principal office of the Partnership designated pursuant to
Section 1.3. The General Partner may rely and shall be protected in relying on
any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.
18.2 REFERENCES. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
18.3 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa.
18.4 FURTHER ACTION. The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this Agreement.
18.5 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
18.6 INTEGRATION. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
18.7 CREDITORS. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
18.8 WAIVER. No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
18.9 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which together shall constitute an agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto or, in the case of a Person acquiring a Unit,
upon
75
<PAGE>
accepting the certificate evidencing such Unit or executing and delivering a
Transfer Application as herein described, independently of the signature of any
other party.
18.10 APPLICABLE LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
18.11 INVALIDITY OF PROVISIONS. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
GENERAL PARTNER:
FERRELLGAS, INC.
By: _______________________________
ORGANIZATIONAL LIMITED PARTNER:
(Signature of Danley K. Sheldon
appears here)
______________________________
Danley K. Sheldon
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted
as limited partners of the Partnership,
pursuant to Powers of Attorney now and
hereafter executed in favor of, and granted and
delivered to, the General Partner.
By: FERRELLGAS, INC.
General Partner, as attorney-in-fact for
all Limited Partners pursuant to the
Powers of Attorney granted pursuant to
Section 1.4.
By: ____________________________________
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<PAGE>
EXHIBIT A
TO THE AGREEMENT OF
LIMITED PARTNERSHIP OF
FERRELLGAS PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
FERRELLGAS PARTNERS, L.P.
No. Common Units
FERRELLGAS, INC., a Delaware corporation, as the General Partner of FERRELLGAS
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), hereby
certifies that (the "Holder") is the registered
owner of Common Units representing limited partner interests in the
Partnership (the "Common Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this
Certificate and the Common Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Agreement of Limited
Partnership of FERRELLGAS PARTNERS, L.P., as amended, supplemented
or restated from time to time (the "Partnership Agreement"). Copies of the
Partnership Agreement are on file at, and will be furnished without charge on
delivery of written request to the Partnership at, the principal office of the
Partnership located at One Liberty Plaza, Liberty, Missouri 64068. Capitalized
terms used herein but not defined shall have the meaning given them in the
Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
Dated: ______________
FERRELLGAS, INC.,
as General Partner
Countersigned and Registered by: By: ______________________________________
President
_________________________________, By: ______________________________________
as Transfer Agent and Registrar Secretary
By: _____________________________
Authorized Signature
78
<PAGE>
[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as follows according to applicable laws or
regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-
TEN ENT- as tenants by the entireties ..........Custodian..........
JT TEN- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act..........................
State
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
IN
FERRELLGAS PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF FERRELLGAS PARTNERS, L.P.
You have acquired an interest in Ferrellgas Partners, L.P., One
Liberty Plaza, Liberty, Missouri 64068, whose taxpayer identification number is
43-1675728. The Internal Revenue Service has issued Ferrellgas Partners, L.P.
the following tax shelter registration number ____________:
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN FERRELLGAS PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of Ferrellgas Partners, L.P. on Form 8271. FORM
8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT
IN FERRELLGAS PARTNERS, L.P.
If you transfer your interest in Ferrellgas Partners, L.P. to another
person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Ferrellgas Partners, L.P. If you do not want
to keep such a list, you must (1) send the information specified above to the
Partnership, which will keep the list for this tax shelter, and (2) give a copy
of this notice to the person to whom you transfer your interest. Your failure to
comply with any of the above-described responsibilities could result in the
imposition of a penalty under Section 6707(b) or 6708(a) of the Internal Revenue
Code of 1986, as amended, unless such failure is shown to be due to reasonable
cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
79
<PAGE>
FOR VALUE RECEIVED, _______________________________ hereby assigns,
conveys, sells and transfers unto ____________________________________________
______________________________________ ____________________________________
(Please print or typewrite name (Please insert Social Security or
and address of Assignee) other identifying number of Assignee)
__________________________________ Common Units representing limited partner
interests evidenced by this Certificate, subject to the Partnership Agreement,
and does hereby irrevocably constitute and appoint ______________________ as its
attorney-in-fact with full power of substitution to transfer the same on the
books of Ferrellgas Partners, L.P.
Date:__________________ NOTE:The signature to any endorsement hereon must
correspond with the name as written upon the
face of this Certificate in every particular,
without alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED
BY A MEMBER FIRM OF THE NATIONAL ____________________________________________
ASSOCIATION OF SECURITIES DEALERS, (Signature)
INC. OR BY A COMMERCIAL BANK OR
TRUST COMPANY ____________________________________________
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
__________________________________________________________________
80
<PAGE>
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Agreement of
Limited Partnership of Ferrellgas Partners, L.P. (the "Partnership"), as
amended, supplemented or restated to the date hereof (the "Partnership
Agreement"), (b) represents and warrants that the Assignee has all right, power
and authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (c) grants the powers of attorney provided for in the
Partnership Agreement and (d) makes the waivers and gives the consents and
approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such terms
in the Partnership Agreement.
Date:
------------------------------- ---------------------------------------
Signature of Assignee
- - ------------------------------------ ---------------------------------------
Social Security or other identifying Name and Address of Assignee
number of Assignee
- - ------------------------------------
Purchase Price
including commissions, if any
Type of Entity (check one)
Individual Partnership Corporation
- - ---------------------- ------------ --------------
Trust Other (specify)
- - ---------------------- ----------------- ---------------------
Nationality (Check One):
U.S. Citizen, Resident or Domestic Entity
- - ---------
Foreign Corporation, or Non-resident alien
- - --------- ----------
If the U.S. Citizen, Resident or Domestic Entity box is checked, the following
certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interest holder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interest holder).
Complete Either A or B:
A. Individual Interest Holder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identifying number (Social Security Number) is.
81
<PAGE>
----------------------------------------------------
3. My home address is
.
---------------------------------------------------
B. Partnership, Corporate or Other Interest-Holder
1. is not a
------ (Name of Interest-Holder)
foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interest-holder's U.S. employer identification number is
.
-----------------------------------------------------------------------
3. The interest-holder's office address and place of incorporation (if
applicable) is
.
-----------------------------------------------------------------------
The interest-holder agrees to notify the Partnership within 60 days of the
date the interest-holder becomes a foreign person.
The interest-holder understands that this certificate may be disclosed to the
Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete and,
if applicable, I further declare that I have authority to sign this document on
behalf of
- - --------------------------------------------------------------------------------
(Name of Interest-Holder)
- - --------------------------------------------------------------------------------
Signature and Date
- - --------------------------------------------------------------------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
82
<PAGE>
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
FERRELLGAS, L.P.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
<TABLE>
<CAPTION>
<C> <S> <C>
1.1 Formation.......................................................... 1
1.2 Name............................................................... 1
1.3 Registered Office; Principal Office................................ 1
1.4 Power of Attorney.................................................. 1
1.5 Term............................................................... 2
1.6 Possible Restrictions on Transfer.................................. 2
</TABLE>
ARTICLE II
DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
"Additional Limited Partner"............................................ 3
"Adjusted Capital Account".............................................. 3
"Adjusted Property"..................................................... 3
"Affiliate"............................................................. 3
"Agreed Allocation"..................................................... 3
"Agreed Value".......................................................... 4
"Agreement"............................................................. 4
"Audit Committee"....................................................... 4
"Available Cash"........................................................ 4
"Book-Tax Disparity".................................................... 5
"Business Day".......................................................... 5
"Capital Account"....................................................... 5
"Capital Contribution".................................................. 5
"Capital Interests"..................................................... 5
"Carrying Value"........................................................ 5
"Certificate of Limited Partnership".................................... 6
"Closing Date".......................................................... 6
"Code".................................................................. 6
"Common Unit"........................................................... 6
"Contributed Property".................................................. 6
"Contribution Agreement"................................................ 6
"Curative Allocation"................................................... 6
"Delaware Act".......................................................... 6
"Departing Partner"..................................................... 6
"Economic Risk of Loss"................................................. 6
"Event of Withdrawal"................................................... 6
"Exchange Act".......................................................... 6
"Ferrell"............................................................... 6
"Ferrellgas"............................................................ 6
"General Partner"....................................................... 6
"IDR"................................................................... 6
"Indemnitee"............................................................ 7
"Initial Limited Partner"............................................... 7
"Limited Partner"....................................................... 7
"Liquidation Date"...................................................... 7
"Liquidator"............................................................ 7
"Merger Agreement"...................................................... 7
"MLP"................................................................... 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"MLP Agreement"........................................................ 7
"MLP Offering"......................................................... 7
"MLP Registration Statement"........................................... 7
"MLP Subsidiary"....................................................... 7
"MLP Underwriting Agreement"........................................... 7
"National Securities Exchange"......................................... 7
"Net Agreed Value"..................................................... 7
"Net Income"........................................................... 8
"Net Loss"............................................................. 8
"Net Termination Gain"................................................. 8
"Net Termination Loss"................................................. 8
"Nonrecourse Built-in Gain"............................................ 8
"Nonrecourse Deductions"............................................... 9
"Nonrecourse Liability"................................................ 9
"OLP Offering"......................................................... 9
"OLP Registration Statement"........................................... 9
"OLP Subsidiary"....................................................... 9
"OLP Underwriting Agreement"........................................... 9
"Opinion of Counsel"................................................... 9
"Partners"............................................................. 9
"Partner Nonrecourse Debt"............................................. 9
"Partner Nonrecourse Debt Minimum Gain"................................ 9
"Partner Nonrecourse Deductions"....................................... 9
"Partnership".......................................................... 9
"Partnership Interest"................................................. 9
"Partnership Minimum Gain"............................................. 9
"Percentage Interest".................................................. 9
"Person"............................................................... 10
"Quarter".............................................................. 10
"Recapture Income"..................................................... 10
"Registration Statements".............................................. 10
"Required Allocations"................................................. 10
"Residual Gain" or "Residual Loss"..................................... 10
"Restricted Activities"................................................ 10
"Securities Act"....................................................... 10
"Senior Notes"......................................................... 10
"Special Approval"..................................................... 10
"Subsidiary"........................................................... 10
"Substituted Limited Partner".......................................... 11
"Surviving Business Entity"............................................ 11
"Termination Capital Transactions"..................................... 11
"Underwriting Agreements".............................................. 11
"Unit"................................................................. 11
"Unrealized Gain"...................................................... 11
"Unrealized Loss"...................................................... 11
"Withdrawal Opinion of Counsel"........................................ 11
</TABLE>
ARTICLE III
PURPOSE
<TABLE>
<S> <C>
3.1 Purpose and Business.............................................. 11
3.2 Powers............................................................ 12
</TABLE>
(ii)
<PAGE>
ARTICLE IV
CAPITAL CONTRIBUTIONS
<TABLE>
<CAPTION>
<C> <S> <C>
4.1 Initial Contributions.............................................. 12
4.2 Contributions by Ferrellgas and the MLP............................ 12
4.3 Additional Capital Contributions................................... 12
4.4 No Preemptive Rights............................................... 12
4.5 Capital Accounts................................................... 13
4.6 Interest........................................................... 15
4.7 No Withdrawal...................................................... 15
4.8 Loans from Partners................................................ 15
</TABLE>
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
<TABLE>
<CAPTION>
<C> <S> <C>
5.1 Allocations for Capital Account Purposes........................... 15
5.2 Allocations for Tax Purposes....................................... 19
5.3 Requirement of Distributions....................................... 20
</TABLE>
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
<TABLE>
<CAPTION>
<C> <S> <C>
6.1 Management........................................................ 20
6.2 Certificate of Limited Partnership................................ 22
6.3 Restrictions on General Partner's Authority....................... 22
6.4 Reimbursement of the General Partner.............................. 23
6.5 Outside Activities................................................ 23
6.6 Loans to and from the General Partner; Contracts with Affiliates.. 24
6.7 Indemnification................................................... 25
6.8 Liability of Indemnitees.......................................... 26
6.9 Resolution of Conflicts of Interest............................... 27
6.10 Other Matters Concerning the General Partner...................... 28
6.11 Title to Partnership Assets....................................... 28
6.12 Reliance by Third Parties......................................... 29
</TABLE>
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
<TABLE>
<CAPTION>
<C> <S> <C>
7.1 Limitation of Liability .......................................... 29
7.2 Management of Business............................................ 29
7.3 Return of Capital................................................. 29
7.4 Rights of the Limited Partner Relating to the Partnership......... 29
</TABLE>
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
<TABLE>
<CAPTION>
<C> <S> <C>
8.1 Records and Accounting............................................ 30
8.2 Fiscal Year....................................................... 30
</TABLE>
(iii)
<PAGE>
ARTICLE IX
TAX MATTERS
<TABLE>
<CAPTION>
<C> <S> <C>
9.1 Preparation of Tax Returns......................................... 30
9.2 Tax Elections...................................................... 31
9.3 Tax Controversies.................................................. 31
9.4 Organizational Expenses............................................ 31
9.5 Withholding........................................................ 31
9.6 Opinions of Counsel................................................ 31
</TABLE>
ARTICLE X
TRANSFER OF INTERESTS
<TABLE>
<CAPTION>
<C> <S> <C>
10.1 Transfer.......................................................... 31
10.2 Transfer of the General Partner's Partnership Interest............ 32
10.3 Transfer of the Limited Partner's Partnership Interest............ 32
</TABLE>
ARTICLE XI
ADMISSION OF PARTNERS
<TABLE>
<CAPTION>
<C> <S> <C>
11.1 Admission of Initial Partners..................................... 32
11.2 Admission of Ferrellgas as a Limited Partner...................... 32
11.3 Admission of Substituted Limited Partners......................... 32
11.4 Admission of Successor General Partner............................ 32
11.5 Amendment of Agreement and Certificate of Limited Partnership..... 33
11.6 Admission of Additional Limited Partners.......................... 33
</TABLE>
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
<TABLE>
<CAPTION>
<C> <S> <C>
12.1 Withdrawal of the General Partner................................. 33
12.2 Removal of the General Partner.................................... 34
12.3 Interest of Departing Partner and Successor General Partner....... 35
12.4 Reimbursement of Departing Partner................................ 35
12.5 Withdrawal of the Limited Partner................................. 35
</TABLE>
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
<TABLE>
<CAPTION>
<C> <S> <C>
13.1 Dissolution........................................................ 35
13.2 Continuation of the Business of the Partnership after Dissolution.. 36
13.3 Liquidation........................................................ 36
13.4 Distributions in Kind.............................................. 37
13.5 Cancellation of Certificate of Limited Partnership................. 37
13.6 Reasonable Time for Winding Up..................................... 38
13.7 Return of Capital.................................................. 38
13.8 Capital Account Restoration........................................ 38
13.9 Waiver of Partition................................................ 38
</TABLE>
(iv)
<PAGE>
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
<TABLE>
<CAPTION>
<C> <S> <C>
14.1 Amendment to be Adopted Solely by General Partner....... 38
14.2 Amendment Procedures.................................... 39
</TABLE>
ARTICLE XV
MERGER
<TABLE>
<CAPTION>
<C> <S> <C>
15.1 Authority............................................... 39
15.2 Procedure for Merger or Consolidation................... 39
15.3 Approval by Limited Partner of Merger or Consolidation.. 40
15.4 Certificate of Merger................................... 41
15.5 Effect of Merger........................................ 41
</TABLE>
ARTICLE XVI
GENERAL PROVISIONS
<TABLE>
<CAPTION>
<C> <S> <C>
16.1 Addresses and Notices.................................. 41
16.2 References............................................. 41
16.3 Pronouns and Plurals................................... 41
16.4 Further Action......................................... 41
16.5 Binding Effect......................................... 41
16.6 Integration............................................ 42
16.7 Creditors.............................................. 42
16.8 Waiver................................................. 42
16.9 Counterparts........................................... 42
16.10 Applicable Law......................................... 42
16.11 Invalidity of Provisions............................... 42
</TABLE>
(v)
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF
FERRELLGAS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF FERRELLGAS, L.P., dated as of
July 5, 1994 1994, is entered into by and among Ferrellgas, Inc., a Delaware
corporation, as the General Partner, and Ferrellgas Partners, L.P., a Delaware
limited partnership, as the Initial Limited Partner, together with any other
Persons who become Partners in the Partnership as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION. (a) The General Partner and the Initial Limited
Partner have previously formed the Partnership as a limited partnership pursuant
to the provisions of the Delaware Act. Except as expressly provided to the
contrary in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. All Partnership Interests shall constitute personal
property of the owner thereof for all purposes.
1.2 NAME. The name of the Partnership shall be, and the business of
the Partnership shall be conducted under the name of, "Ferrellgas, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner, including, without limitation,
the name of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partner of such change in the next regular
communication to the Limited Partner.
1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, Wilmington, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership and the address of the General Partner shall be One Liberty
Plaza, Liberty, Missouri 64068, or such other place as the General Partner may
from time to time designate by notice to the Limited Partner. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems necessary or appropriate.
1.4 POWER OF ATTORNEY. (a) The Limited Partner hereby constitutes
and appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 13.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct business or
own property; (B) all
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certificates, documents and other instruments that the General Partner or
the Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments
(including, without limitation, conveyances and a certificate of
cancellation) that the General Partner or the Liquidator deems necessary or
appropriate to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement; (D) all certificates, documents
and other instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in,
Article X, XI, XII or XIII or the Capital Contribution of any Partner; (E)
all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Partnership Interests; and (F) all certificates, documents and
other instruments (including, without limitation, agreements and a
certificate of merger) relating to a merger or consolidation of the
Partnership pursuant to Article XV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the sole discretion of the General
Partner or the Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or
is necessary or appropriate, in the sole discretion of the General Partner
or the Liquidator, to effectuate the terms or intent of this Agreement;
provided, that when the consent or approval of the Limited Partner is
required by any provision of this Agreement, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary consent or approval of the Limited
Partner is obtained.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of the Limited Partner and the transfer of all or any
portion of the Limited Partner's Partnership Interest and shall extend to the
Limited Partner's heirs, successors, assigns and personal representatives. The
Limited Partner hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and the Limited Partner hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or
the Liquidator taken in good faith under such power of attorney. The Limited
Partner shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the General Partner's or the Liquidator's
request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on July 31, 2084, or until the
earlier termination of the Partnership in accordance with the provisions of
Article XIII.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would
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result in the taxation of the Partnership as an association taxable as a
corporation or would otherwise result in the Partnership being taxed as an
entity for federal income tax purposes, then, the General Partner may impose
such restrictions on the transfer of Partnership Interests as may be required,
in the Opinion of Counsel, to prevent the Partnership from being taxed as an
association taxable as a corporation or otherwise as an entity for federal
income tax purposes, including, without limitation, making any amendments to
this Agreement as the General Partner in its sole discretion may determine to be
necessary or appropriate to impose such restrictions.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 11.6 and who is shown
as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership, (a)
increased by any amounts that such Partner is obligated to restore under
the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or
is deemed obligated to restore under Treasury Regulation Sections 1.704-
2(g) and 1.704-2(i)(5)), and (b) decreased by (i) the amount of all losses
and deductions that, as of the end of such fiscal year, are reasonably
expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-
1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end
of such fiscal year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to)
the year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback pursuant to
Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of Adjusted
Capital Account is intended to comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"ADJUSTED PROPERTY" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii). Once an
Adjusted Property is deemed distributed by, and recontributed to, the
Partnership for federal income tax purposes upon a termination thereof
pursuant to Section 708 of the Code, such property shall thereafter
constitute a Contributed Property until the Carrying Value of such property
is subsequently adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common
control with, the Person in question. As used herein, the term "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"AGREED ALLOCATION" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 5.1, including, without limitation, a Curative
Allocation (if appropriate to the context in which the term "Agreed
Allocation" is used).
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"AGREED VALUE" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation
as it may adopt; provided, however, that the Agreed Value of any property
deemed contributed by the Partnership for federal income tax purposes upon
termination and reconstitution thereof pursuant to Section 708 of the Code
shall be determined in accordance with Section 4.5(c)(i). Subject to
Section 4.5(c)(i), the General Partner shall, in its sole discretion, use
such method as it deems reasonable and appropriate to allocate the
aggregate Agreed Value of Contributed Properties contributed to the
Partnership in a single or integrated transaction among each separate
property on a basis proportional to the fair market value of each
Contributed Property.
"AGREEMENT" means this Agreement of Limited Partnership of Ferrellgas,
L.P., as it may be amended, supplemented or restated from time to time.
"AUDIT COMMITTEE" means a committee of the Board of Directors of the
General Partner composed entirely of two or more directors who are neither
officers nor employees of the General Partner or any of its Affiliates.
"AVAILABLE CASH" means with respect to any period and without
duplication:
(a) the sum of:
(i) all cash receipts of the Partnership during such period
from all sources (including, without limitation, distributions of
cash received by the Partnership from an OLP Subsidiary) plus, in
the case of the Quarter ending October 31, 1994, the cash balance
of the Partnership as of the close of business on the Closing
Date; and
(ii) any reduction with respect to such period in a cash
reserve previously established pursuant to clause (b)(ii) below
(either by reversal or utilization)from the level of such reserve
at the end of the prior period;
(b) less the sum of:
(i) all cash disbursements of the Partnership during such
period, including, without limitation, disbursements for
operating expenses, taxes, if any, debt service (including,
without limitation, the payment of principal, premium and
interest), redemption of Partnership Interests, capital
expenditures, contributions, if any, to an OLP Subsidiary and
cash distributions to Partners(but only to the extent that such
cash distributions to Partners exceed Available Cash for the
immediately preceding Quarter); and
(ii) any cash reserves established with respect to such
period, and any increase with respect to such period in a cash
reserve previously established pursuant to this clause (b)(ii)
from the level of such reserve at the end of the prior period, in
such amounts as the General Partner determines in its reasonable
discretion to be necessary or appropriate (A) to provide for the
proper conduct of the business of the Partnership (including,
without limitation, reserves for future capital expenditures or
capital contributions to an OLP Subsidiary)or (B) to provide
funds for distributions to the Partners in repect of any one or
more of the next four Quarters or (C) because the distribution of
such amounts would be prohibited by applicable law or by any loan
agreement,
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security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party or by which it
is bound or its assets are subject;
provided, however, that for purposes of determining Available Cash for the
Quarter ending October 31, 1994, such Quarter shall be deemed to commence
on the Closing Date. Notwithstanding the foregoing (x) disbursements
(including, without limitation, contributions to an OLP Subsidiary or
disbursements on behalf of an OLP Subsidiary) made or reserves established,
increased or reduced after the end of any Quarter but on or before the date
on which the Partnership makes its distribution of Available Cash in
respect of such Quarter pursuant to Section 5.3(a) shall be deemed to have
been made, established, increased or reduced, for purposes of determining
Available Cash, with respect to such Quarter if the General Partner so
determines and (y) "Available Cash" with respect to any period shall not
include any cash receipts or reductions in reserves or take into account
any disbursements made or reserves established after the Liquidation Date.
"BOOK-TAX DISPARITY" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will
be reflected by the difference between such Partner's Capital Account
balance as maintained pursuant to Section 4.5 and the hypothetical balance
of such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or
the states of New York or Missouri shall not be regarded as a Business Day.
"CAPITAL ACCOUNT" means the capital account maintained for a Partner
pursuant to Section 4.5.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes to the
Partnership pursuant to Section 4.1, 4.2, 4.3, 4.5(c) or 13.8.
"CAPITAL INTERESTS" means, with respect to any corporation, any and
all shares, participations, rights or other equivalent interests in the
capital of the corporation, and with respect to any partnership, any and
all partnership interests (whether general or limited) and any other
interests or participations that confer on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, such
partnership.
"CARRYING VALUE" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all
depreciation, amortization and cost recovery deductions charged to the
Partners' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Sections 4.5(d)(i) and 4.5(d)(ii) and to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
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"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate of Limited Partnership may
be amended, supplemented or restated from time to time.
"CLOSING DATE" means the first date on which Common Units are sold by
the MLP to the Underwriters pursuant to the provisions of the MLP
Underwriting Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision
of future law.
"COMMON UNIT" has the meaning assigned to such term in the MLP
Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in such
form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the
Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"CONTRIBUTION AGREEMENT" has the meaning assigned to such term in the
MLP Agreement.
"CURATIVE ALLOCATION" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(ix).
"DELAWARE ACT" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. (S) 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"DEPARTING PARTNER" means a former General Partner, from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 12.1 or Section 12.2.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in Section
12.1(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
supplemented or restated from time to time, and any successor to such
statute.
"FERRELL" means Ferrell Companies, Inc., a Kansas corporation.
"FERRELLGAS" means Ferrellgas, Inc., a Delaware corporation and a
wholly owned subsidiary of Ferrell.
"GENERAL PARTNER" means Ferrellgas, and its successors as general
partner of the Partnership.
"IDR" has the meaning assigned to such term in the MLP Agreement.
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"INDEMNITEE" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner,
agent or trustee of the General Partner or any Departing Partner or any
such Affiliate, or any Person who is or was serving at the request of the
General Partner or any Departing Partner or any such Affiliate as a
director, officer, employee, partner, agent or trustee of another Person.
"INITIAL LIMITED PARTNER" means the MLP.
"LIMITED PARTNER" means the Initial Limited Partner, Ferrellgas
pursuant to Section 4.2, each Substituted Limited Partner, if any, each
Additional Limited Partner and any Departing Partner upon the change of its
status from General Partner to Limited Partner pursuant to Section 12.3,
but excluding any such Person from and after the time it withdraws from the
Partnership.
"LIQUIDATION DATE" means (a) in the case of an event giving rise to
the dissolution of the Partnership of the type described in clauses (a) and
(b) of the first sentence of Section 13.2, the date on which the applicable
time period during which the Partners have the right to elect to
reconstitute the Partnership and continue its business has expired without
such an election being made, and (b) in the case of any other event giving
rise to the dissolution of the Partnership, the date on which such event
occurs.
"LIQUIDATOR" means the General Partner or other Person approved
pursuant to Section 13.3 who performs the functions described therein.
"MERGER AGREEMENT" has the meaning assigned to such term in Section
15.1.
"MLP" means Ferrellgas Partners, L.P., a Delaware limited partnership.
"MLP AGREEMENT" means the Agreement of Limited Partnership of
Ferrellgas Partners, L.P., as it may be amended, supplemented or restated
from time to time.
"MLP OFFERING" means the initial offering of Common Units to the
public, as described in the MLP Registration Statement.
"MLP REGISTRATION STATEMENT" means the Registration Statement on Form
S-1 (Registration No. 33-53383), as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Securities and
Exchange Commission under the Securities Act to register the offering and
sale of the Common Units in the MLP Offering.
"MLP SUBSIDIARY" means a Subsidiary of the MLP.
"MLP UNDERWRITING AGREEMENT" means the underwriting agreement dated
June 27, 1994, among the MLP, the General Partner, Ferrell and the
Underwriters named in Schedule I thereto providing for the purchase of
Common Units by such Underwriters.
"NATIONAL SECURITIES EXCHANGE" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"NET AGREED VALUE" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed
by the Partnership upon such contribution or to which such property is
subject when contributed, and (b) in the case of any
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property distributed to a Partner by the Partnership, the Partnership's
Carrying Value of such property (as adjusted pursuant to Section
4.5(d)(ii)) at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to
which such property is subject at the time of distribution, in either case,
as determined under Section 752 of the Code.
"NET INCOME" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such
taxable period over the Partnership's items of loss and deduction (other
than those items attributable to dispositions constituting Termination
Capital Transactions) for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section
4.5(b) and shall not include any items specially allocated under Section
5.1(d). Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to a
Required Allocation or a Curative Allocation, Net Income or Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"NET LOSS" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items
attributable to dispositions constituting Termination Capital Transactions)
for such taxable period over the Partnership's items of income and gain
(other than those items attributable to dispositions constituting
Termination Capital Transactions) for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance
with Section 4.5(b) and shall not include any items specially allocated
under Section 5.1(d). Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected to a
Required Allocation or a Curative Allocation, Net Income, or Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"NET TERMINATION GAIN" means, for any taxable period, the sum, if
positive, of all items of income, gain, loss or deduction recognized by the
Partnership (including, without limitation, such amounts recognized through
an OLP Subsidiary, if applicable) from Termination Capital Transactions
occurring in such taxable period. The items included in the determination
of Net Termination Gain shall be determined in accordance with Section
4.5(b) and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of income, gain or loss that
has been included in the initial computation of Net Termination Gain is
subjected to a Required Allocation or a Curative Allocation, Net
Termination Gain or Net Termination Loss, whichever the case may be, shall
be recomputed without regard to such item.
"NET TERMINATION LOSS" means, for any taxable period, the sum, if
negative, of all items of income, gain, loss or deduction recognized by the
Partnership (including, without limitation, such amounts recognized through
an OLP Subsidiary, if applicable) from Termination Capital Transactions
occurring in such taxable period. The items included in the determination
of Net Termination Loss shall be determined in accordance with Section
4.5(b) and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of gain or loss that has been
included in the initial computation of Net Termination Loss is subjected to
a Required Allocation or a Curative Allocation, Net Termination Gain or Net
Termination Loss, whichever the case may be, shall be recomputed without
regard to such item.
"NONRECOURSE BUILT-IN GAIN" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would
be allocated to the Partners pursuant to Sections
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5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iii) if such properties were disposed
of in a taxable transaction in full satisfaction of such liabilities and
for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-(2)(b),
are attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OLP OFFERING" means the initial offering of Senior Notes to the
public, as described in the OLP Registration Statement.
"OLP REGISTRATION STATEMENT" means the Registration Statement on Form
S-1 (Registration No. 33-53379), as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership and Ferrellgas
Finance Corp. with the Securities and Exchange Commission under the
Securities Act to register the offering and sale of the Senior Notes in the
OLP Offering.
"OLP SUBSIDIARY" means a Subsidiary of the Partnership.
"OLP UNDERWRITING AGREEMENT" means the underwriting agreement dated
June 27, 1994, among the Partnership, Ferrellgas Finance Corp., the General
Partner and the Underwriters named in Schedule A thereto providing for the
purchase of Senior Notes by such Underwriters.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
regular counsel to the General Partner, any Affiliate of the General
Partner, or the Partnership) acceptable to the General Partner.
"PARTNERS" means the General Partner and the Limited Partner.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"PARTNERSHIP" means Ferrellgas, L.P., a Delaware limited partnership,
established by the Certificate of Limited Partnership, and any successor
thereto.
"PARTNERSHIP INTEREST" means the interest of a Partner in the
Partnership.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"PERCENTAGE INTEREST" means (a) as to the General Partner, in its
capacity as such, 1.0101% and (b) as to the Limited Partner, 98.9899%.
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"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"QUARTER" means, unless the context requires otherwise, a three-month
period of time ending on October 31, January 31, April 30, or July 31;
provided, however, that the General Partner in its sole discretion may
amend such period as it deems necessary or appropriate in connection with a
change in the fiscal year of the Partnership.
"RECAPTURE INCOME" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or 743
of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to
such property or asset.
"REGISTRATION STATEMENTS" means the MLP Registration Statement and the
OLP Registration Statement.
"REQUIRED ALLOCATIONS" means any allocation (or limitation imposed on
any allocation) of an item of income, gain, deduction or loss pursuant to
(a) Section 5.1(b)(i) or (b) Sections 5.1(d)(i)-(vi) and (viii), such
allocations (or limitations thereon) being directly or indirectly required
by the Treasury regulations promulgated under Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of a
Contributed Property or Adjusted Property, to the extent such item of gain
or loss is not allocated pursuant to Sections 5.2(b)(i)(A) or
5.2(b)(ii)(A), respectively, to eliminate Book-Tax Disparities.
"RESTRICTED ACTIVITIES" means the retail sale of propane to end users
within the continental United States in the manner engaged in by Ferrellgas
immediately prior to the Closing Date.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"SENIOR NOTES" means, collectively, the $200 million in aggregate
principal amount of 10.0% Fixed Rate Senior Notes due 2001 and $50 million
in aggregate principal amount of Floating Rate Senior Notes due 2001 to be
issued by the Partnership and Ferrellgas Finance Corp. and offered and sold
in the OLP Offering.
"SPECIAL APPROVAL" means approval by the Audit Committee.
"SUBSIDIARY" means, with respect to any Person, (i) a corporation of
which more than 50% of the voting power of shares of Capital Interests
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors or other governing body of such corporation is
owned, directly or indirectly, by such Person, by one or more Subsidiaries
of such Person, or a combination thereof, (ii) a partnership (whether
general or limited) in which such Person or a Subsidiary of such Person is,
at the date of determination, a general or limited partner of such
partnership, but only if more than 50% of the Capital Interests of such
partnership (considering all of the Capital Interests of the partnership as
a single class) is owned or controlled, directly or indirectly, by such
Person, by one or more Subsidiaries of such Person, or a combination
thereof, or (iii) any other Person (other than a corporation or a
partnership) in
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which such Person, directly or indirectly, at the date of determination,
has (x) at least a majority ownership interest or (y) the power to elect or
direct the election of a majority of the directors or other governing body
of such Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.3 in place of and
with all the rights of a Limited Partner and who is shown as a Limited
Partner on the books and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term in
Section 15.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer or other
disposition of property of the Partnership occurring upon or incident to
the liquidation and winding up of the Partnership pursuant to Article XIII.
"UNDERWRITING AGREEMENTS" means the MLP Underwriting Agreement and the
OLP Underwriting Agreement.
"UNIT" has the meaning assigned to such term in the MLP Agreement.
"UNREALIZED GAIN" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
4.5(d)) over (b) the Carrying Value of such property as of such date (prior
to any adjustment to be made pursuant to Section 4.5(d) as of such date).
"UNREALIZED LOSS" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the
Carrying Value of such property as of such date (prior to any adjustment to
be made pursuant to Section 4.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section
4.5(d)).
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to such term
in Section 12.1(b).
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to acquire, manage, and operate the
assets described in the Contribution Agreement as being transferred to the
Partnership and any similar assets or properties and to engage directly in, or
to enter into or form any corporation, limited liability company, partnership,
joint venture or other arrangement to engage indirectly in, any type of business
or activity engaged in by Ferrellgas immediately prior to the Closing Date and,
in connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such assets, (b) to
engage directly in, or enter into or form any corporation, limited liability
company, partnership, joint venture or other arrangement to engage indirectly
in, any business activity that is approved by the General Partner and which may
lawfully be conducted by a limited partnership organized pursuant to the
Delaware Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating to
such business activity, and (c) to do anything necessary or appropriate to the
foregoing, including, without limitation, the making of capital contributions to
any OLP Subsidiary or loans to the MLP, an MLP Subsidiary or an OLP Subsidiary
(including, without limitation, those contributions or loans that may be
required in connection with its involvement in the activities referred to in
clause (b) of this sentence). The General Partner has no obligation or duty to
the
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Partnership or the Limited Partner to propose or approve, and in its sole
discretion may decline to propose or approve, the conduct by the Partnership of
any business.
3.2 POWERS. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
Section 3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS. In connection with the formation of the
Partnership under the Delaware Act, the General Partner has made an initial
Capital Contribution to the Partnership in the amount of $10.10 for an interest
in the Partnership and has been admitted as the general partner of the
Partnership, and the Initial Limited Partner has made an initial Capital
Contribution to the Partnership in the amount of $989.90 for an interest in the
Partnership and has been admitted as a limited partner of the Partnership.
4.2 CONTRIBUTIONS BY FERRELLGAS AND THE MLP. (a) On the Closing Date,
Ferrellgas shall, as a Capital Contribution, contribute, transfer, convey,
assign and deliver to the Partnership the property and other rights described in
the Contribution Agreement as being so contributed, transferred, conveyed,
assigned and delivered in exchange for (i) the continuation of its general
partner interest in the Partnership consisting of a Partnership Interest
representing a 1.0101% Percentage Interest, (ii) a limited partner interest in
the Partnership, which shall be contributed, transferred, conveyed, assigned and
delivered by the General Partner to the MLP as set forth in the Contribution
Agreement, and which, together with the Partnership Interest previously held by
the MLP, will represent a 98.9899% Percentage Interest in the Partnership, and
(iii) the Partnership's assumption of, or taking of assets subject to, certain
indebtedness and other liabilities, including, without limitation, the
Partnership's assumption of the payment obligations of certain indebtedness of
Ferrellgas, all as provided for in the Contribution Agreement.
(b) On the Closing Date, the MLP shall contribute in respect of its
Partnership Interest approximately $255 million out of the net proceeds to the
MLP from the issuance of the Common Units pursuant to the MLP Offering.
4.3 ADDITIONAL CAPITAL CONTRIBUTIONS. With the consent of the General
Partner, the Limited Partner may, but shall not be obligated to, make additional
Capital Contributions to the Partnership. Contemporaneously with the making of
any such additional Capital Contributions by the Limited Partner, the General
Partner shall be obligated to make an additional Capital Contribution to the
Partnership in an amount equal to 1.0102% of the additional Capital Contribution
then made by the Limited Partner. Except as set forth in the immediately
preceding sentence and Section 13.8, the General Partner shall not be obligated
to make any additional Capital Contributions to the Partnership.
4.4 NO PREEMPTIVE RIGHTS. Except as provided in Section 4.3, no Person
shall have any preemptive, preferential or other similar right with respect to
(a) additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Interests, whether unissued, held in the treasury or
hereafter created; (c) issuance of any obligations, evidences of indebtedness or
other securities of the Partnership convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
such Partnership Interests; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any such
Partnership Interests; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.
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4.5 CAPITAL ACCOUNTS. (a) The Partnership shall maintain for each
Partner owning a Partnership Interest a separate Capital Account with respect to
such Partnership Interest in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 4.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 5.1, and decreased by
(x) the amount of cash or the Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
General Partner) of all property owned by any OLP Subsidiary that is
classified as a partnership for federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item of deduction
at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
(iv) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code,
any deductions for depreciation, cost recovery or amortization attributable
to any Contributed Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the Partnership were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section
4.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions for
such depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such property
were equal to the Carrying Value of such property immediately following
such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero adjusted basis
for
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federal income tax purposes, depreciation, cost recovery or amortization
deductions shall be determined using any reasonable method that the General
Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to Section
5.1. Any restoration of such basis pursuant to Section 48(q)(2) of the
Code shall, to the extent possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred; provided, however, that, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code, the
Partnership's properties shall be deemed to have been distributed in liquidation
of the Partnership to the Partners (including any transferee of a Partnership
Interest that is a party to the transfer causing such termination) pursuant to
Sections 13.3 and 13.4 and recontributed by such Partners in reconstitution of
the Partnership. Any such deemed distribution shall be treated as an actual
distribution for purposes of this Section 4.5. In such event, the Carrying
Values of the Partnership properties shall be adjusted immediately prior to such
deemed distribution pursuant to Section 4.5(d)(ii) and such Carrying Values
shall then constitute the Agreed Values of such properties upon such deemed
contribution to the reconstituted Partnership. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the principles
of this Section 4.5.
(d) (i) Consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property, the Capital Account of all Partners and
the Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Sections 5.1(a) and
5.1(b). In determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior
to the issuance of additional Partnership Interests shall be determined by
the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the
Partnership Interests of all Partners at such time. The General Partner
shall allocate such aggregate value among the assets of the Partnership (in
such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
Partner of any Partnership property (other than a distribution of cash that
is not in redemption or retirement of a Partnership Interest), the Capital
Accounts of all Partners and the Carrying Value of such Partnership
property shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized in a sale of
such property immediately prior to such distribution for an amount equal to
its fair market value, and had been allocated to the Partners, at such
time, pursuant to Section 5.1. Any Unrealized Gain or Unrealized Loss
attributable to such property shall be allocated in the same manner as Net
Termination Gain or Net Termination Loss pursuant to Section 5.1(c);
provided, however, that, in making any such allocation, Net Termination
Gain or Net Termination
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Loss actually realized shall be allocated first. In determining such
Unrealized Gain or Unrealized Loss the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation, cash
or cash equivalents) immediately prior to a distribution shall (A) in the
case of a deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708 of the Code, be determined and
allocated in the same manner as that provided in Section 4.5(d)(i) or (B)
in the case of a liquidating distribution pursuant to Section 14.3 or 14.4,
be determined and allocated by the Liquidator using such reasonable method
of valuation as it may adopt.
4.6 INTEREST. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.7 NO WITHDRAWAL. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided in Articles V, VII, XII and XIII.
4.8 LOANS FROM PARTNERS. Loans by a Partner to the Partnership shall not
constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner.
The amount of any such excess advances shall be a debt obligation of the
Partnership to such Partner and shall be payable or collectible only out of the
Partnership assets in accordance with the terms and conditions upon which such
advances are made.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of maintaining
the Capital Accounts and in determining the rights of the Partners among
themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.5(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 5.1(d), Net Income for each taxable period and all items
of income, gain, loss and deduction taken into account in computing Net
Income for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net
Income allocated to the General Partner pursuant to this Section
5.1(a)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 5.1(b)(ii) for all previous taxable years; and
(ii) Second, the balance, if any, 100% to the General Partner and
the Limited Partner in accordance with their respective Percentage
Interests.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 5.1(d), Net Losses for each taxable period and all items
of income, gain, loss and deduction taken into account in computing Net
Losses for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Limited Partner in
accordance with their respective Percentage Interests; provided, that
Net Losses shall not be
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allocated pursuant to this Section 5.1(b)(i) to the extent that such
allocation would cause any Limited Partner to have a deficit balance
in its Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in its Adjusted Capital
Account); and
(ii) Second, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1(d), all items of income, gain,
loss and deduction taken into account in computing Net Termination Gain or
Net Termination Loss for such taxable period shall be allocated in the same
manner as such Net Termination Gain or Net Termination Loss is allocated
hereunder. All allocations under this Section 5.1(c) shall be made after
Capital Account balances have been adjusted by all other allocations
provided under this Section 5.1 and after all distributions of Available
Cash provided under Section 5.3 have been made with respect to the taxable
period ending on the date of the Partnership's liquidation pursuant to
Section 13.3.
(i) If a Net Termination Gain is recognized (or deemed recognized
pursuant to Section 4.5(d)) from Termination Capital Transactions,
such Net Termination Gain shall be allocated between the General
Partner and the Limited Partner in the following manner (and the
Adjusted Capital Accounts of the Partners shall be increased by the
amount so allocated in each of the following subclauses, in the order
listed, before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance in its
Adjusted Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Adjusted
Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit
balance in its Adjusted Capital Account; and
(B) Second, 100% to the General Partner and the Limited
Partner in accordance with their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.5(d)) from Termination Capital
Transactions, such Net Termination Loss shall be allocated to the
Partners in the following manner:
(A) First, 100% to the General Partner and the Limited
Partner in proportion to, and to the extent of, the positive
balances in their respective Adjusted Capital Accounts; and
(B) Second, the balance, if any, 100% to the General
Partner.
(d) Specials Allocations. Notwithstanding any other provision of this
Section 5.1, the following special allocations shall be made for such
taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-
2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 5.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the
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allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 5.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 5.1(d)(v) and (vi)). This Section
5.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 5.1 (other than
Section 5.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704-
2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For
purposes of this Section 5.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 5.1(d), other than
Section 5.1(d)(i) and other than an allocation pursuant to Sections
5.1(d)(v) and (vi), with respect to such taxable period. This Section
5.1(d)(ii) is intended to comply with the chargeback of items of
income and gain requirement in Treasury Regulation Section 1.704-
2(i)(4) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible, unless such deficit balance is otherwise
eliminated pursuant to Section 5.1(d)(i) or (ii).
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of any
Partnership taxable period such Partner shall be specially allocated
items of Partnership gross income and gain in the amount of such
excess as quickly as possible; provided, that an allocation pursuant
to this Section 5.1(d)(iv) shall be made only if and to the extent
that such Partner would have a deficit balance in its Adjusted Capital
Account after all other allocations provided in this Section 5.1 have
been tentatively made as if this Section 5.1(d)(iv) were not in this
Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partner, to revise the
prescribed ratio to the numerically closest ratio that does satisfy
such requirements.
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(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section 1.704-
2(i). If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of this Section 5.1,
other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations so
that, to the extent possible, the net amount of items of income,
gain, loss and deduction allocated to each Partner pursuant to
the Required Allocations and the Agreed Allocations, together,
shall be equal to the net amount of such items that would have
been allocated to each such Partner under the Agreed Allocations
had the Required Allocations and the related Curative Allocation
not otherwise been provided in this Section 5.1. Notwithstanding
the preceding sentence, Required Allocations relating to (1)
Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a decrease in Partnership Minimum
Gain and (2) Partner Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease
in Partner Nonrecourse Debt Minimum Gain. Allocations pursuant
to this Section 5.1(d)(ix)(A) shall only be made with respect to
Required Allocations to the extent the General Partner reasonably
determines that such allocations will otherwise be inconsistent
with the economic agreement among the Partners. Further,
allocations pursuant to this Section 5.1(d)(ix)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the General Partner reasonably
determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions
of Section 5.1(d)(ix)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result
from the Required Allocations, and (2)
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divide all allocations pursuant to Section 5.1(d)(ix)(A) among
the Partners in a manner that is likely to minimize such economic
distortions.
5.2 ALLOCATIONS FOR TAX PURPOSES. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between
the Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) except as otherwise provided in Section 5.2(b)(iii),
any item of Residual Gain or Residual Loss attributable to a Contributed
Property shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to Section
5.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
5.2(b)(i)(A); and (B) except as otherwise provided in Section 5.2(b)(iii),
any item of Residual Gain or Residual Loss attributable to an Adjusted
Property shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to Section
5.1.
(iii) The General Partner shall apply the principles of Temporary
Regulation Section 1.704-3T to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of Units of the MLP (or any class or classes
thereof), the General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including, without limitation, gross
income) or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury Regulations
under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve
or achieve uniformity of Units of the MLP (or any class or classes thereof).
The General Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section 5.2(c) only if
such conventions, allocations or amendments would not have a material adverse
effect on the Partners, the holders of any class or classes of Units of the MLP
issued and outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner in its sole discretion may determine to depreciate
or amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(6) or the legislative history of Section 197
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of the Code. If the General Partner determines that such reporting position
cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Units of the MLP
in the same month would receive depreciation and amortization deductions, based
upon the same applicable rate as if they had purchased a direct interest in the
Partnership's property. If the General Partner chooses not to utilize such
aggregate method, the General Partner may use any other reasonable depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax
characteristics of any class or classes of Units of the MLP that would not have
a material adverse effect on the Limited Partner or the holders of any class or
classes of Units of the MLP.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.
5.3 REQUIREMENT OF DISTRIBUTIONS. (a) Within 45 days following the end
of (i) the period beginning on the Closing Date and ending on October 31, 1994
and (ii) each Quarter commencing with the Quarter beginning on November 1, 1994,
an amount equal to 100% of Available Cash with respect to such period or Quarter
shall be distributed in accordance with this Article V by the Partnership to the
Partners in accordance with their respective Percentage Interests. The
immediately preceding sentence shall not require any distribution of cash if and
to the extent such distribution would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject.
(b) Notwithstanding the foregoing, in the event of the dissolution and
liquidation of the Partnership, all proceeds of such liquidation shall be
applied and distributed in accordance with, and subject to the terms and
conditions of, Sections 13.3 and 13.4
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT. (a) The General Partner shall conduct, direct and manage
all activities of the Partnership. Except as otherwise expressly provided in
this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and the Limited
Partner shall have no right of control or management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted
a general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 6.3, shall have full power and authority to
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do all things and on such terms as it, in its sole discretion, may deem
necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including, without limitation, (i) the making of any expenditures,
the lending or borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness and the incurring of any other obligations; (ii) the making of
tax, regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership; (iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person (the matters described in this clause (iii) being subject,
however, to any prior approval that may be required by Section 6.3); (iv) the
use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement, including,
without limitation, the financing of the conduct of the operations of the
Partnership, the lending of funds to other Persons (including, without
limitation, an OLP Subsidiary), the repayment of obligations of the Partnership
and the making of capital contributions to an OLP Subsidiary; (v) the
negotiation, execution and performance of any contracts, conveyances or other
instruments (including, without limitation, instruments that limit the liability
of the Partnership under contractual arrangements to all or particular assets of
the Partnership, with the other party to the contract to have no recourse
against the General Partner or its assets other than its interest in the
Partnership, even if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the case); (vi) the
distribution of Partnership cash; (vii) the selection and dismissal of employees
and agents (including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the determination of
their compensation and other terms of employment or hiring; (viii) the
maintenance of such insurance for the benefit of the Partnership and the
Partners (including, without limitation, the assets of the Partnership) as it
deems necessary or appropriate; (ix) the formation of, or acquisition of an
interest in, and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations, limited
liability companies or other relationships; (x) the control of any matters
affecting the rights and obligations of the Partnership, including, without
limitation, the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation; and (xi) the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners hereby (i) approves, ratifies and confirms the execution, delivery
and performance by the parties thereto of the MLP Agreement, the Underwriting
Agreements, the Contribution Agreement, the agreements and other documents filed
as exhibits to the Registration Statements, and the other agreements described
in or filed as a part of the Registration Statements, and the engaging by any
Affiliate of the General Partner in business and activities (other than
Restricted Activities) that are in direct competition with the business and
activities of the MLP, the Partnership, any OLP Subsidiary and any MLP
Subsidiary; (ii) agrees that the General Partner (on its own or through any
officer of the Partnership) is authorized to execute, deliver and perform the
agreements referred to in clause (i) of this sentence and the other agreements,
acts, transactions and matters described in the Registration Statements on
behalf of the Partnership without any further act, approval or vote of the
Partners; and (iii) agrees that the execution, delivery or performance by the
General Partner, the MLP, the Partnership or any Affiliate of any of them of
this Agreement or any agreement authorized or permitted under this Agreement, or
the engaging by any Affiliate of the General Partner in any business and
activities (other than Restricted Activities) that are in direct competition
with the business and activities of the MLP, the Partnership, any OLP Subsidiary
and any MLP Subsidiary, shall not constitute a breach by the General Partner of
any duty that the General Partner may owe the Partnership or the Limited
Partners or any other Persons under this Agreement (or any other agreements) or
of any duty stated or implied by law or equity. The term
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"Affiliate" when used in this Section 6.1(b) with respect to the General Partner
shall not include the Partnership, the MLP, any OLP Subidiary or any MLP
Subsidiary.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused
the Certificate of Limited Partnership of Ferrellgas, L.P. to be filed with the
Secretary of State of the State of Delaware as required by the Delaware Act and
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the Limited Partner has limited liability) in the State of Delaware or any other
state in which the Partnership may elect to do business or own property. To the
extent that such action is determined by the General Partner in its sole
discretion to be reasonable and necessary or appropriate, the General Partner
shall file amendments to and restatements of the Certificate of Limited
Partnership and do all things to maintain the Partnership as a limited
partnership (or a partnership in which the Limited Partner has limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 7.4(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to the Limited
Partner.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The General Partner
may not, without written approval of the specific act by the Limited Partner or
by other written instrument executed and delivered by the Limited Partner
subsequent to the date of this Agreement, take any action in contravention of
this Agreement, including, without limitation, (i) any act that would make it
impossible to carry on the ordinary business of the Partnership, except as
otherwise provided in this Agreement; (ii) possess Partnership property, or
assign any rights in specific Partnership property, for other than a Partnership
purpose; (iii) admit a Person as a Partner, except as otherwise provided in this
Agreement; (iv) amend this Agreement in any manner, except as otherwise provided
in this Agreement; or (v) transfer its interest as general partner of the
Partnership, except as otherwise provided in this Agreement.
(b) Except as provided in Articles XIII and XV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
without the approval of the Limited Partner; provided, however, that this
provision shall not preclude or limit the General Partner's ability to mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of
the Partnership's assets and shall not apply to any forced sale of any or all of
the Partnership's assets pursuant to the foreclosure of, or other realization
upon, any such encumbrance.
(c) Unless approved by the Limited Partner, the General Partner shall not
take any action or refuse to take any reasonable action the effect of which, if
taken or not taken, as the case may be, would be to cause the Partnership to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes; provided that this Section 6.3(c)
shall not be construed to apply to amendments to this Agreement (which are
governed by Article XIV) or mergers or consolidations of the Partnership with
any Person (which are governed by Article XV).
(d) At all times while serving as the general partner of the Partnership,
the General Partner shall not (except as provided below) make any dividend or
distribution on, or repurchase any shares of, its stock or take any other action
within its control unless it shall first receive an Opinion of Counsel that the
effect of such dividend, distribution, repurchase or other action would not
reduce its net worth below an amount such that the Partnership will be treated
as an association taxable as a corporation for federal income tax purposes;
provided, however, to the extent the General Partner receives distributions of
cash from the Partnership or any other partnership of which the Partnership is,
directly or indirectly,
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a partner, the General Partner shall not use such cash to make any dividend or
distribution on, or repurchase any shares of, its stock or take any other action
within its control if the effect of such dividend, distribution, repurchase or
other action would be to reduce its net worth below an amount necessary to
receive an Opinion of Counsel that the Partnership will be treated as a
partnership for federal income tax purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER. (a) Except as provided in this
Section 6.4 and elsewhere in this Agreement, the General Partner shall not be
compensated for its services as general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole discretion, for (i)
all direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, salary, bonus, incentive
compensation and other amounts paid to any Person to perform services for the
Partnership or for the General Partner in the discharge of its duties to the
Partnership) and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
6.5 OUTSIDE ACTIVITIES. (a) After the Closing Date, the General Partner,
for so long as it is the general partner of the Partnership, (i) agrees that its
sole business will be to act as the general partner of the Partnership, the MLP,
any OLP Subsidiary and any MLP Subsidiary and to undertake activities that are
ancillary or related thereto (including being a limited partner in the MLP),
(ii) shall not enter into or conduct any business or incur any debts or
liabilities except in connection with or incidental to (A) its performance of
the activities required or authorized by this Agreement or the MLP Agreement or
described in or contemplated by the Registration Statements and (B) the
acquisition, ownership or disposition of partnership interests in the
Partnership, the MLP, any OLP Subsidiary and any MLP Subsidiary, except that,
notwithstanding the foregoing, employees of the General Partner may perform
services for Ferrell and its Affiliates and (iii) shall not and shall cause its
Affiliates not to engage in any Restricted Activities.
(b) Except as described or provided for in the MLP Agreement, the
Registration Statements or Section 6.5(a), no Indemnitee shall be expressly or
implicitly restricted or proscribed pursuant to the MLP Agreement or this
Agreement or the partnership relationship established hereby or thereby from
engaging in other activities for profit, whether in the businesses engaged in by
the Partnership, an OLP Subsidiary, the MLP or an MLP Subsidiary or anticipated
to be engaged in by the Partnership, an OLP Subsidiary, the MLP, an MLP
Subsidiary or otherwise, including, without limitation, in the case of any
Affiliates of the General Partner those businesses and activities (other than
Restricted Activities) in direct competition with the business and activities of
the Partnership, the MLP, an OLP Subsidiary or an MLP Subsidiary or otherwise
described in or contemplated by the Registration Statements. Without limitation
of and subject to the foregoing each Indemnitee (other than the General Partner)
shall have the right to engage in businesses of every type and description and
to engage in and possess an interest in other business ventures of any and every
type or description, independently or with others, including, without
limitation, in the case of any Affiliates of the General Partner, business
interests and activities (other than Restricted Activities) in direct
competition with the business and activities of the Partnership, the MLP, an OLP
Subsidiary or an MLP Subsidiary, and none of the same shall constitute a breach
of this Agreement or any duty to the Partnership, the MLP or any Partners.
Neither the Partnership, the MLP, any Limited Partner nor any other Person shall
have any rights by virtue of this Agreement or the MLP Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any
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Indemnitee (subject, in the case of the General Partner, to compliance with
Section 6.5(c)) and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Partnership, the MLP, any Limited
Partner or any other Person.
(c) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are hereby
approved by the Partnership and all Partners and (ii) it shall be deemed not to
be a breach of the General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to engage,
in business interests or activities (other than Restricted Activities) in
preference to or to the exclusion of the Partnership.
(d) The term "Affiliates" when used in this Section 6.5 with respect to the
General Partner shall not include the Partnership, the MLP, an OLP Subsidiary or
an MLP Subsidiary.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES. (a)
(i) The General Partner, the Limited Partner, an OLP Subsidiary or any of their
Affiliates may lend to the Partnership, and the Partnership may borrow, funds
needed or desired by the Partnership for such periods of time as the General
Partner may determine and (ii) the General Partner, the Limited Partner, an OLP
Subsidiary or any Affiliate thereof may borrow from the Partnership, and the
Partnership may lend to such Persons, excess funds of the Partnership for such
periods of time and in such amounts as the General Partner may determine;
provided, however, that in either such case the lending party may not charge the
borrowing party interest at a rate greater than the rate that would be charged
the borrowing party (without reference to the lending party's financial
abilities or guarantees) by unrelated lenders on comparable loans. The
borrowing party shall reimburse the lending party for any costs (other than any
additional interest costs) incurred by the lending party in connection with the
borrowing of such funds. For purposes of this Section 6.6(a) and Section
6.6(b), the term "Partnership" shall include any Affiliate of the Partnership
that is controlled by the Partnership.
(b) The General Partner may itself, or may enter into an agreement with any
of its Affiliates to, render services to the Partnership or to the General
Partner in the discharge of its duties as general partner of the Partnership.
Any service rendered to the Partnership by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 6.6(b) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership. The provisions of Section 6.4 shall apply to the rendering
of services described in this Section 6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(d) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 6.6(d) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 4.2, the Contribution Agreement and
any other transactions described in or contemplated by the Registration
Statements, (ii) any transaction approved by Special Approval, (iii) any
transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or
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available from unrelated third parties or (iv) any transaction that, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership.
(e) The General Partner and its Affiliates will have no obligation to
permit the Partnership, an OLP Subsidiary or the MLP to use any facilities or
assets of the General Partner and its Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing with such use, nor
shall there be any obligation on the part of the General Partner or its
Affiliates to enter into such contracts.
(f) Without limitation of Sections 6.6(a) through 6.6(e), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statements are hereby
approved by all Partners.
6.7 INDEMNIFICATION. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, the General
Partner, any Departing Partner, any Person who is or was an officer or director
of the Partnership, the General Partner or any Departing Partner and all other
Indemnitees shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, legal fees and expenses), judgments,
fines, penalties, interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
(i) the General Partner, a Departing Partner or any of their Affiliates, (ii) an
officer, director, employee, partner, agent or trustee of the Partnership, the
General Partner, any Departing Partner or any of their Affiliates or (iii) a
Person serving at the request of the Partnership in another entity in a similar
capacity, provided, that in each case the Indemnitee acted in good faith and in
a manner which such Indemnitee reasonably believed to be in, or not opposed to,
the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful;
provided, further, no indemnification pursuant to this Section 6.7 shall be
available to the General Partner with respect to its obligations incurred
pursuant to the Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership or the MLP). The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that the Indemnitee acted in a manner contrary to that specified
above. Any indemnification pursuant to this Section 6.7 shall be made only out
of the assets of the Partnership, it being agreed that the General Partner shall
not be personally liable for such indemnification and shall have no obligation
to contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including, without
limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is
not entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise, both as
to actions in the Indemnitee's capacity as (i) the General Partner, a Departing
Partner or an Affiliate thereof, (ii) an officer, director, employee, partner,
agent or trustee of the Partnership, the General Partner, any Departing Partner
or an Affiliate thereof or (iii) a Person serving at the request of the
Partnership in another entity in a similar capacity, and as to actions in any
other capacity (including, without limitation, any capacity under the
Underwriting Agreements), and shall
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continue as to an Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and administrators of the
Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Partnership's activities, regardless of
whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 6.7(a); and action taken or omitted by it with
respect to an employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partner to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligation of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
6.8 LIABILITY OF INDEMNITEES. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for monetary
damages to the Partnership, the Limited Partner, or any other Persons who have
acquired interests in the Partnership, for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in good
faith.
(b) Subject to its obligations and duties as General Partner set forth in
Section 6.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and
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the Limited Partner of the General Partner, its directors, officers and
employees and any other Indemnitees under this Section 6.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
6.9 RESOLUTION OF CONFLICTS OF INTEREST. (a) Unless otherwise expressly
provided in this Agreement or the MLP Agreement, whenever a potential conflict
of interest exists or arises between the General Partner or any of its
Affiliates, on the one hand, and the Partnership, the MLP or the Limited
Partner, on the other hand, any resolution or course of action in respect of
such conflict of interest shall be permitted and deemed approved by the Limited
Partner, and shall not constitute a breach of this Agreement, of the MLP
Agreement or of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on terms no less favorable
to the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner may also adopt a resolution or course of
action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such interest;
(B) any customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting or engineering practices or principles; and (D) such additional
factors as the General Partner (including such Audit Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the General Partner (including such Audit
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement, the MLP Agreement or any
other agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or under the Delaware Act or any other law, rule or
regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or under a grant of similar authority or
latitude, the General Partner or such Affiliate shall be entitled to consider
only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership, the MLP, an OLP Subsidiary, the Limited Partner or any limited
partner in the MLP, (ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in "good
faith" or under another express standard, the General Partner or such Affiliate
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, the MLP Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation. In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set forth in
the definition of Available Cash shall not constitute a breach of any duty of
the General Partner to the Partnership or the Limited Partner. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any
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asset of the Partnership or of an OLP Subsidiary, other than in the ordinary
course of business. No borrowing by the Partnership or the approval thereof by
the General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partner by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable the holders of IDRs to receive distributions under the MLP Agreement or
increase the amount of any such distributions, (B) hasten the termination of the
"Subordination Period" under the MLP Agreement or (C) reduce the "Cumulative
Common Unit Arrearage" under the MLP Agreement in order to hasten the conversion
of the "Subordinated Units" in the MLP into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER. (a) The General
Partner may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including, without limitation, an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform each and every act and duty that
is permitted or required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited as required to permit the General Partner to act under this Agreement
or any other agreement contemplated by this Agreement and to make any decision
pursuant to the authority prescribed in this Agreement so long as such action is
not reasonably believed by the General Partner to be in, or not inconsistent
with, the best interests of the Partnership.
6.11 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner or one or more of
its Affiliates or one or more nominees shall be held by the General Partner or
such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable; provided that, prior to the withdrawal or
removal of the
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General Partner or as soon thereafter as practicable, the General Partner shall
use reasonable efforts to effect the transfer of record title to the Partnership
and, prior to any such transfer, will provide for the use of such assets in a
manner satisfactory to the Partnership. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
6.12 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner has full power and authority to encumber, sell
or otherwise use in any manner any and all assets of the Partnership and to
enter into any contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. The Limited Partner hereby
waives any and all defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (b) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (c) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 LIMITATION OF LIABILITY. The Limited Partner shall have no liability
under this Agreement except as expressly provided in this Agreement or the
Delaware Act.
7.2 MANAGEMENT OF BUSINESS. The Limited Partner, in its capacity as such,
shall not participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
Partnership, the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner or any of
its Affiliates, in its capacity as such, shall not affect, impair or eliminate
the limitations on the liability of the Limited Partner under this Agreement.
7.3 RETURN OF CAPITAL. The Limited Partner shall not be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
7.4 RIGHTS OF THE LIMITED PARTNER RELATING TO THE PARTNERSHIP. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.4(b), the Limited Partner shall have the right,
for a purpose reasonably related to the Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at the Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
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(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, upon notification to the General
Partner, a current list of the name and last known business, residence or
mailing address of each Partner;
(iv) to have furnished to it, upon notification to the General
Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this Agreement,
the Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of cash
and a description and statement of the Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partner for such period of time
as the General Partner deems reasonable, any information that the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or that the Partnership is required by law or by agreements with third parties
to keep confidential (other than agreements with Affiliates of the General
Partner the primary purpose of which is to circumvent the obligations set forth
in this Section 7.4).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause to be
kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partner any information,
lists and copies of documents required to be provided pursuant to Section
7.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be August 1 to
July 31.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall arrange for the
preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
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within 90 days of the close of each calendar year, the tax information
reasonably required by the Partners for federal and state income tax reporting
purposes. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes. The taxable year of the Partnership
shall be August 1 to July 31.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the General
Partner shall, in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partner.
9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. The Limited Partner
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
9.4 ORGANIZATIONAL EXPENSES. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines in its
sole discretion to be necessary or appropriate to cause the Partnership to
comply with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to any Partner (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld shall be
treated as a distribution of cash pursuant to Section 5.3 in the amount of such
withholding from such Partner.
9.6 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership is treated as an association taxable as a
corporation at any time or is otherwise taxable for federal income tax purposes
as an entity at any time and, pursuant to the provisions of this Agreement, an
Opinion of Counsel would otherwise be required to the effect that an action will
not cause the Partnership to become so treated as an association taxable as a
corporation or otherwise taxable as an entity for federal income tax purposes,
such requirement for an Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
TRANSFER OF INTERESTS
10.1 TRANSFER. (a) The term "TRANSFER," when used in this Article X with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which a Partner disposes of its Partnership Interest to another Person and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.
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(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article X.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article X shall be null and void.
(c) Nothing contained in this Article X shall be construed to prevent a
disposition by the parent entity of the General Partner of any or all of the
issued and outstanding capital stock of the General Partner.
10.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST. If the
general partner of the MLP transfers its partnership interest as the general
partner therein to any Person in accordance with the provisions of the MLP
Agreement, the General Partner shall contemporaneously therewith transfer its
Partnership Interest as the general partner of the Partnership to such Person,
and the Limited Partner hereby expressly consents to such transfer. Except as
set forth in the immediately preceding sentence, the General Partner may not
transfer all or any part of its Partnership Interest as the general partner in
the Partnership.
10.3 TRANSFER OF THE LIMITED PARTNER'S PARTNERSHIP INTEREST. If the
Limited Partner merges, consolidates or otherwise combines into any other Person
or transfers all or substantially all of its assets to another Person, such
Person may become a Substituted Limited Partner pursuant to Article XI. Except
as set forth in the immediately preceding sentence and except for the transfer
by Ferrellgas of its Partnership Interest as a limited partner in the
Partnership to the MLP as provided in the Contribution Agreement and
contemplated by Sections 4.2 and 11.2, a Limited Partner may not transfer all or
any part of its Partnership Interest or withdraw from the Partnership.
ARTICLE XI
ADMISSION OF PARTNERS
11.1 ADMISSION OF INITIAL PARTNERS. Upon the formation of the Partnership
pursuant to the filing of the Certificate of Limited Partnership, Ferrellgas was
admitted to the Partnership as the sole general partner and the MLP was admitted
to the Partnership as the sole limited partner.
11.2 ADMISSION OF FERRELLGAS AS A LIMITED PARTNER. Upon the making by
Ferrellgas of the Capital Contributions described in Section 4.2, Ferrellgas
shall be admitted to the Partnership as a limited partner. Upon the transfer by
Ferrellgas of its Partnership Interest as a limited partner to the MLP as
provided in the Contribution Agreement, Ferrellgas shall cease to be a limited
partner of the Partnership.
11.3 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. Any person that is
the successor in interest to a Limited Partner as described in Section 10.3
shall be admitted to the Partnership as a limited partner upon (a) furnishing to
the General Partner (i) acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement and (ii) such other
documents or instruments as may be required to effect its admission as a limited
partner in the Partnership and (b) obtaining the consent of the General Partner,
which consent may be withheld or granted in the sole discretion of the General
Partner. Such Person shall be admitted to the Partnership as a limited partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.4 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General Partner
approved pursuant to Section 12.1 or 12.2 or the transferee of or successor to
all of the General Partner's Partnership Interest as the general partner in the
Partnership pursuant to Section 10.2 who is proposed to be admitted as a
successor General Partner shall, subject to compliance with the terms of Section
12.3, if applicable, be admitted to the Partnership as the successor General
Partner, effective
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immediately prior to the withdrawal or removal of the General Partner pursuant
to Section 12.1 or 12.2 or the transfer of the General Partner's Partnership
Interest as the general partner of the Partnership pursuant to Section 10.2.
Any such successor shall, subject to the terms hereof, carry on the business of
the Partnership without dissolution. In each case, the admission of such
successor General Partner to the Partnership shall, subject to the terms hereof,
be subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect such
admission.
11.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership to reflect such admission and, if necessary, to
prepare as soon as practical an amendment of this Agreement and, if required by
law, to prepare and file an amendment to the Certificate of Limited Partnership
and may for this purpose, among others, exercise the power of attorney granted
pursuant to Section 1.4.
11.6 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person (other than
the General Partner, the Initial Limited Partner or a Substituted Limited
Partner) who makes a Capital Contribution to the Partnership in accordance with
this Agreement shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the General Partner (i) evidence of acceptance
in form satisfactory to the General Partner of all of the terms and conditions
of this Agreement, including, without limitation, the granting of the power of
attorney granted in Section 1.4, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 11.6, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
12.1 WITHDRAWAL OF THE GENERAL PARTNER. (a) The General Partner shall be
deemed to have withdrawn from the Partnership upon the occurrence of any one of
the following events (each such event herein referred to as an "Event of
Withdrawal");
(i) the General Partner voluntarily withdraws from the Partnership by
giving written notice to the Limited Partner;
(ii) the General Partner transfers all of its rights as General
Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section 12.2;
(iv) the general partner of the MLP withdraws from the MLP;
(v) the General Partner (A) makes a general assignment for the benefit
of creditors; (B) files a voluntary bankruptcy petition; (C) files a
petition or answer seeking for itself a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
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under any law; (D) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the General
Partner in a proceeding of the type described in clauses (A)-(C) of this
Section 12.1(a)(v); or (E) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the General Partner or
of all or any substantial part of its properties;
(vi) a final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a
court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect; or
(vii) a certificate of dissolution or its equivalent is filed for the
General Partner, or 90 days expire after the date of notice to the General
Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation.
If an Event of Withdrawal specified in Section 12.1(a)(v), (vi) or (vii) occurs,
the withdrawing General Partner shall give notice to the Limited Partner within
30 days after such occurrence. The Partners hereby agree that only the Events
of Withdrawal described in this Section 12.1 shall result in the withdrawal of
the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Closing Date and
ending at 12:00 Midnight, Central Standard Time, on July 31, 2004 the
General Partner voluntarily withdraws by giving at least 90 days' advance
notice of its intention to withdraw to the Limited Partner, provided, that
prior to the effective date of such withdrawal the Limited Partner approves
such withdrawal and the General Partner delivers to the Partnership an
Opinion of Counsel ("WITHDRAWAL OPINION OF COUNSEL") that such withdrawal
(following the selection of the successor General Partner) would not result
in the loss of the limited liability of the Limited Partner or cause the
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes;
(ii) at any time on or after 12:00 Midnight, Central Standard Time, on
July 31, 2004, the General Partner voluntarily withdraws by giving at least
90 days' advance notice to the Limited Partner, such withdrawal to take
effect on the date specified in such notice; or
(iii) at any time that the General Partner ceases to be the General
Partner pursuant to Section 12.1(a)(ii), (iii) or (iv). If the General
Partner gives a notice of withdrawal pursuant to Section 12.1(a)(i) or
Section 13.1(a)(i) of the MLP Agreement, the Limited Partner may, prior to
the effective date of such withdrawal, elect a successor General Partner,
provided, that such successor shall be the same Person, if any, that is
elected by the limited partners of the MLP pursuant to Section 13.1 of the
MLP Agreement as the successor to the General Partner in its capacity as
general partner of the MLP. If, prior to the effective date of the General
Partner's withdrawal, a successor is not selected by the Limited Partner as
provided herein or the Partnership does not receive a Withdrawal Opinion of
Counsel, the Partnership shall be dissolved in accordance with Section
13.1. Any successor General Partner elected in accordance with the terms
of this Section 12.1 shall be subject to the provisions of Section 11.4.
12.2 REMOVAL OF THE GENERAL PARTNER. The General Partner shall be removed
if such General Partner is removed as a general partner of the MLP pursuant to
Section 13.2 of the MLP Agreement.
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Such removal shall be effective concurrently with the effectiveness of the
removal of such General Partner as the general partner of the MLP pursuant to
the terms of the MLP Agreement. If a successor to the General Partner in its
capacity as general partner of the MLP is elected in connection with the removal
of such General Partner as general partner of the MLP, as provided in the MLP
Agreement, then the Limited Partner shall elect such successor as the successor
General Partner of the Partnership and such successor shall, upon admission
pursuant to Article XI, automatically become a successor General Partner of the
Partnership. The admission of any such successor General Partner to the
Partnership shall be subject to the provisions of Section 11.4.
12.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER. The
Partnership Interest of a Departing Partner departing as a result of withdrawal
or removal pursuant to Section 12.1 or 12.2 shall (unless it is otherwise
required to be converted into Common Units pursuant to Section 13.3(b) of the
MLP Agreement) be purchased by the successor to the Departing Partner for cash
in the manner specified in the MLP Agreement. Such purchase (or conversion into
Common Units, as applicable) shall be a condition to the admission to the
Partnership of the successor as the General Partner. Any successor General
Partner shall indemnify the Departing General Partner as to all debts and
liabilities of the Partnership arising on or after the effective date of the
removal of the Departing Partner.
12.4 REIMBURSEMENT OF DEPARTING PARTNER. The Departing Partner shall be
entitled to receive all reimbursements due such Departing Partner pursuant to
Section 6.4, including, without limitation, any employee-related liabilities
(including, without limitation, severance liabilities), incurred in connection
with the termination of any employees employed by such departing Partner for the
benefit of the Partnership.
12.5 WITHDRAWAL OF THE LIMITED PARTNER. Without the prior consent of the
General Partner, which may be granted or withheld in its sole discretion, the
Limited Partner shall not have the right to withdraw from the Partnership.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 DISSOLUTION. The Partnership shall not be dissolved by the admission
of Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor General Partner in accordance with the terms of this
Agreement. Upon the removal or withdrawal of the General Partner any successor
General Partner shall continue the business of the Partnership. The Partnership
shall dissolve and, subject to Section 13.2, its affairs should be wound up,
upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 12.1(a) (other than Section 12.1(a)(ii)), unless a successor is
elected and an Opinion of Counsel is received as provided in Section
12.1(b) or 12.2 and such successor is admitted to the Partnership pursuant
to Section 11.4;
(c) an election to dissolve the Partnership by the General Partner
that is approved by the Limited Partner;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
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(e) the sale of all or substantially all of the assets and properties
of the Partnership; or
(f) the dissolution of the MLP.
13.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal or removal of the General Partner as provided in Section
12.1(a)(i) or (iii) and following a failure of the Limited Partner to appoint a
successor General Partner as provided in Section 12.1 or 12.2, then within 90
days thereafter or (b) dissolution of the Partnership upon an event constituting
an Event of Withdrawal as defined in Section 12.1(a)(v), (vi) or (vii), then
within 180 days thereafter, the Limited Partner may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as a general partner a Person
approved by the Limited Partner. In addition, upon dissolution of the
Partnership pursuant to Section 13.1(f), if the MLP is reconstituted pursuant to
Section 14.2 of the MLP Agreement, the reconstituted MLP may, within 180 days
after such event of dissolution, as the Limited Partner, elect to reconstitute
the Partnership in accordance with the immediately preceding sentence. Upon any
such election by the Limited Partner, all Partners shall be bound thereby and
shall be deemed to have approved same. Unless such an election is made within
the applicable time period as set forth above, the Partnership shall conduct
only activities necessary to wind up its affairs. If such an election is so
made, then:
(i) the reconstituted Partnership shall continue until the end of the
term set forth in Section 1.5 unless earlier dissolved in accordance with
this Article XIII;
(ii) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be purchased
by the successor General Partner or converted into Common Units of the MLP
as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary,
to file a new partnership agreement and certificate of limited partnership,
and the successor General Partner may for this purpose exercise the powers
of attorney granted the General Partner pursuant to Section 1.4; provided,
that the right to approve a successor General Partner and to reconstitute
and to continue the business of the Partnership shall not exist and may not
be exercised unless the Partnership has received an Opinion of Counsel that
(x) the exercise of the right would not result in the loss of limited
liability of the Limited Partner and (y) neither the Partnership nor the
reconstituted limited partnership would be treated as an association
taxable as a corporation or otherwise be taxable as an entity for federal
income tax purposes upon the exercise of such right to continue.
13.3 LIQUIDATION. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 13.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 12.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the Limited Partner, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by the Limited Partner. The
Liquidator shall agree not to resign at any time without 15 days' prior notice
and (if other than the General Partner) may be removed at any time, with or
without cause, by notice of removal approved by the Limited Partner. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by the Limited Partner. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
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such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XIII, the Liquidator approved in
the manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding-up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership, and apply and distribute the proceeds
of such liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including, without
limitation, Partners who are creditors, in the order of priority provided
by law; and the creation of a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount, if any, determined by
the Liquidator to be appropriate for such purposes; and
(b) to all Partners in accordance with the positive balances in their
respective Capital Accounts, as determined after taking into account all
Capital Account adjustments (other than those made by reason of this
clause) for the taxable year of the Partnership during which the
liquidation of the Partnership occurs (with the date of such occurrence
being determined pursuant to Treasury Regulation Section 1.704-
1(b)(2)(ii)(g)); and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such
occurrence).
13.4 DISTRIBUTIONS IN KIND. (a) Notwithstanding the provisions of Section
13.3, which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) and/or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 13.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Limited
Partner, and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
(b) In accordance with Section 704(c)(1)(B) of the Code, in the case of any
deemed distribution occurring as a result of a termination of the Partnership
pursuant to Section 708(b)(1)(B) of the Code, to the maximum extent possible
consistent with the priorities of Section 13.3, the General Partner shall have
sole discretion to treat the deemed distribution of Partnership assets to
Partners as occurring in a manner that will not cause a shift of the Book-Tax
Disparity attributable to a Partnership asset existing immediately prior to the
deemed distribution to another asset upon the deemed contribution of assets to
the reconstituted Partnership, including, without limitation, deeming the
distribution of any Partnership assets to be made either to the Partner who
contributed such assets or to the transferee of such Partner.
13.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 13.3 and 13.4 in connection with the
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liquidation of the Partnership, the Partnership shall be terminated and the
Certificate of Limited Partnership and all qualifications of the Partnership as
a foreign limited partnership in jurisdictions other than the State of Delaware
shall be cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.
13.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall be allowed
for the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 13.3 in order to minimize any
losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
13.7 RETURN OF CAPITAL. The General Partner shall not be personally liable
for, and shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate, the return of the Capital
Contributions of the Limited Partner, or any portion thereof, it being expressly
understood that any such return shall be made solely from Partnership assets.
13.8 CAPITAL ACCOUNT RESTORATION. No Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
13.9 WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. The Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partner), without the approval of the Limited Partner, may amend any
provision of this Agreement, and execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or appropriate to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the limited
partners have limited liability under the laws of any state or that is
necessary or advisable in the opinion of the General Partner to ensure that
the Partnership will not be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes;
(d) a change (i) that, in the sole discretion of the General Partner,
does not adversely affect the Limited Partner in any material respect, (ii)
that is necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any
federal or state
44
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statute (including, without limitation, the Delaware Act), compliance with
any of which the General Partner determines in its sole discretion to be in
the best interests of the Partnership and the Limited Partner, (iii) that
is required to effect the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement or (iv) that is required to
conform the provisions of this Agreement with the provisions of the MLP
Agreement as the provisions of the MLP Agreement may be amended,
supplemented or restated from time to time;
(e) a change in the fiscal year and taxable year of the Partnership
and any changes that, in the sole discretion of the General Partner, are
necessary or appropriate as a result of a change in the fiscal year and
taxable year of the Partnership including, without limitation, if the
General Partner shall so determine, a change in the definition of "Quarter"
and the dates on which distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, whether or not substantially
similar to plan asset regulations currently applied or proposed by the
United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 15.3;
(i) an amendment that, in the sole discretion of the General Partner,
is necessary or desirable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited
liability company or other entity, in connection with the conduct by the
Partnership of activities permitted by the terms of Section 3.1; or
(j) any other amendments substantially similar to the foregoing.
14.2 AMENDMENT PROCEDURES. Except with respect to amendments of the type
described in Section 14.1, all amendments to this Agreement shall be made in
accordance with the following requirements. Amendments to this Agreement may be
proposed only by or with the consent of the General Partner. Each such proposal
shall contain the text of the proposed amendment. A proposed amendment shall be
effective upon its approval by the Limited Partner.
ARTICLE XV
MERGER
15.1 AUTHORITY. The Partnership may merge or consolidate with one or more
corporations, business trusts or associations, real estate investment trusts,
common law trusts or unincorporated businesses, including, without limitation, a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article.
15.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation of the
Partnership pursuant to this Article requires the prior approval of the General
Partner. If the General Partner shall
45
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determine, in the exercise of its sole discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property
or general or limited partnership interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or
limited partnership interests, securities or rights of any constituent
business entity are not to be exchanged or converted solely for, or into,
cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity, the cash,
property or general or limited partnership interests, rights, securities or
obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such
general or limited partnership interests, securities or rights are to
receive in exchange for, or upon conversion of, their general or limited
partner interests, securities or rights, and (ii) in the case of securities
represented by certificates, upon the surrender of such certificates, which
cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity or any general
or limited partnership, corporation, trust or other entity (other than the
Surviving Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or
agreement of limited partnership or other similar charter or governing
document) of the Surviving Business Entity to be effected by such merger or
consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 15.4 or a later
date specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, the effective time shall
be fixed no later than the time of the filing of the certificate of merger
and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General
Partner.
15.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that a copy or a summary of the Merger Agreement be submitted to
the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the consent of
the Limited Partner. After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to Section 15.4,
the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
46
<PAGE>
15.4 CERTIFICATE OF MERGER. Upon the required approval by the General
Partner and the Limited Partner of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
15.5 EFFECT OF MERGER. (a) At the effective time of the certificate of
merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due to any of those business entities and all
other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any
of those constituent business entities shall not revert and is not in any
way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interest
in property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had
been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another having occurred.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES. Any notice, demand, request or report required
or permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when received by it at the principal
office of the Partnership referred to in Section 1.3.
16.2 REFERENCES. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
16.3 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
16.4 FURTHER ACTION. The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this Agreement.
16.5 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
47
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16.6 INTEGRATION. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
16.7 CREDITORS. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
16.8 WAIVER. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
16.9 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which together shall constitute an agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto, independently of the signature of any other
party.
16.10 APPLICABLE LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
16.11 INVALIDITY OF PROVISIONS. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
FERRELLGAS, INC.
By: (Signature of Danley K. Sheldon)
_____________________________________
Danley K. Sheldon,
Vice President and Chief Financial
Officer
INITIAL LIMITED PARTNER:
FERRELLGAS PARTNERS, L.P.
BY: Ferrellgas, Inc., as general partner
By: (Signature of Danley K. Sheldon)
_____________________________________
Danley K. Sheldon,
Vice President and Chief Financial
Officer
LIMITED PARTNER:
FERRELLGAS, INC.
By: (Signature of Danley K. Sheldon)
_____________________________________
Danley K. Sheldon,
Vice President and Chief Financial
Officer
49
<PAGE>
EXECUTION COPY
================================================================================
- - --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF JULY 5, 1994
AMONG
FERRELLGAS, L.P.,
STRATTON INSURANCE COMPANY, INC.,
FERRELLGAS, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
================================================================================
- - --------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF BOSTON AND
NATIONSBANK, N.A.,
AS CO-AGENTS
================================================================================
- - --------------------------------------------------------------------------------
ARRANGED BY
BA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions. . . . . . . . . . . . . . . . . . . . 31
1.03 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
ARTICLE II
THE CREDITS
<TABLE>
<CAPTION>
<S> <C>
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . 33
(a) Facility A Revolving Loans, Swingline Loans and
Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Facility B Term Loans, Revolving Loans and Takeout
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.02 Loan Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.03 Procedure for Borrowing. . . . . . . . . . . . . . . . . . . . . . . 35
2.04 Conversion and Continuation Elections. . . . . . . . . . . . . . . . 36
2.05 Voluntary Termination or Reduction of Commitments. . . . . . . . . . 37
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 38
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.08 Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Facility A Revolving Loans and Swingline Loans. . . . . . . . . 40
(b) Facility B Term Loans and Facility B Revolving
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Facility B Takeout Loans. . . . . . . . . . . . . . . . . . . . 40
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Arrangement, Agency Fees. . . . . . . . . . . . . . . . . . . . 41
(b) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . 42
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . 42
2.12 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . . . 42
2.13 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . 43
2.14 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . 44
2.15 Discretionary Swingline Loans . . . . . . . . . . . . . . . . . . . 44
</TABLE>
ARTICLE III
THE LETTERS OF CREDIT
<TABLE>
<CAPTION>
<S> <C>
3.01 The Letter of Credit Subfacility . . . . . . . . . . . . . . . . . . 46
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . 47
3.03 Existing Letters of Credit; Risk Participations, Drawings
and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.04 Repayment of Participations. . . . . . . . . . . . . . . . . . . . . 52
3.05 Role of the Issuing Banks. . . . . . . . . . . . . . . . . . . . . . 52
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . 53
3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . 54
3.08 Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . . . 55
3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
i
<PAGE>
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
<TABLE>
<CAPTION>
Section Page
<S> <C>
4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.02 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . 59
4.04 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.05 Inability to Determine Rates. . . . . . . . . . . . . . . . . . . 61
4.06 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
ARTICLE V
CONDITIONS PRECEDENT
<TABLE>
<CAPTION>
<S> <C>
5.01 Conditions of Initial Credit Extensions . . . . . . . . . . . . . 61
(a) Credit Agreement and any Notes . . . . . . . . . . . . . . . 61
(c) Resolutions; Incumbency. . . . . . . . . . . . . . . . . . . 61
(d) Organization Documents; Good Standing. . . . . . . . . . . . 62
(e) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 62
(f) Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . 63
(g) Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 63
(h) Cancellation of Existing Revolving Credit. . . . . . . . . . 63
(i) Due Diligence Review . . . . . . . . . . . . . . . . . . . . 63
(j) No Material Change . . . . . . . . . . . . . . . . . . . . . 64
(k) Insurance Certificate. . . . . . . . . . . . . . . . . . . . 64
(l) Reorganization . . . . . . . . . . . . . . . . . . . . . . . 64
(m) Trading Policies . . . . . . . . . . . . . . . . . . . . . . 64
(n) Other Documents. . . . . . . . . . . . . . . . . . . . . . . 64
5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . 64
(a) Notice, Application. . . . . . . . . . . . . . . . . . . . . 64
(b) Continuation of Representations and Warranties . . . . . . . 65
(c) No Existing Default. . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
<TABLE>
<CAPTION>
<S> <C>
6.01 Corporate or Partnership Existence and Power. . . . . . . . . . . 65
6.02 Corporate or Partnership Authorization; No Contravention. . . . . 66
6.03 Governmental Authorization. . . . . . . . . . . . . . . . . . . . 66
6.04 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.06 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.07 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 68
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 68
6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 68
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 69
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 70
6.13 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . 70
6.14 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . 70
6.15 Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . 70
6.16 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . 70
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
6.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 70
6.18 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . 71
6.19 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . 71
6.20 Fixed Price Supply Contracts . . . . . . . . . . . . . . . 71
6.21 Trading Policies . . . . . . . . . . . . . . . . . . . . . 71
</TABLE>
ARTICLE VII
AFFIRMATIVE COVENANTS
<TABLE>
<CAPTION>
<S> <C>
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . 71
7.02 Certificates; Other Information. . . . . . . . . . . . . . 73
7.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.04 Preservation of Corporate or Partnership Existence, Etc. . 75
7.05 Maintenance of Property. . . . . . . . . . . . . . . . . . 76
7.06 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 76
7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . 76
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . 77
7.09 Inspection of Property and Books and Records . . . . . . . 77
7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . 77
7.11 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 77
7.12 Financial Covenants. . . . . . . . . . . . . . . . . . . . 77
7.13 Trading Policies . . . . . . . . . . . . . . . . . . . . . 78
7.14 Other General Partner Obligations. . . . . . . . . . . . . 78
7.15 Other Stratton Obligations . . . . . . . . . . . . . . . . 79
7.16 Monetary Judgments . . . . . . . . . . . . . . . . . . . . 79
7.17 Maintenance of Subsidiary. . . . . . . . . . . . . . . . . 80
</TABLE>
ARTICLE VIII
NEGATIVE COVENANTS
<TABLE>
<CAPTION>
<S> <C>
8.01 Limitation on Liens. . . . . . . . . . . . . . . . . . . . 80
8.02 Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . 82
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . 83
8.04 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 84
8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . . 85
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . 87
8.07 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 87
8.08 Use of Proceeds - Ineligible Securities. . . . . . . . . . 88
8.09 Contingent Obligations . . . . . . . . . . . . . . . . . . 88
8.10 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . 88
8.11 Lease Obligations. . . . . . . . . . . . . . . . . . . . . 88
8.12 Restricted Payments. . . . . . . . . . . . . . . . . . . . 88
8.13 Dividend and Other Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 91
8.14 Change in Business . . . . . . . . . . . . . . . . . . . . 92
8.15 Accounting Changes . . . . . . . . . . . . . . . . . . . . 92
8.16 Limitation on Sale and Leaseback Transactions. . . . . . . 92
8.17 Restrictions On Nature Of Indebtedness And Activities Of
Finance Corp. . . . . . . . . . . . . . . . . . . . . . . 92
8.18 Amendments of Organization Documents or Indenture. . . . . 92
8.19 Fixed Price Supply Contracts . . . . . . . . . . . . . . . 93
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
8.20 Operations through Subsidiaries . . . . . . . . . . . . . . . . . 93
8.21 Operations of MLP . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
ARTICLE IX
EVENTS OF DEFAULT
<TABLE>
<CAPTION>
<S> <C>
9.01 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . 94
(a) Non-Payment. . . . . . . . . . . . . . . . . . . . . . . . . 94
(b) Representation or Warranty . . . . . . . . . . . . . . . . . 94
(c) Specific Defaults. . . . . . . . . . . . . . . . . . . . . . 94
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . 94
(e) Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . 94
(f) Insolvency; Voluntary Proceedings. . . . . . . . . . . . . . 95
(g) Involuntary Proceedings. . . . . . . . . . . . . . . . . . . 95
(h) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . 96
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . 96
(k) Loss of Licenses . . . . . . . . . . . . . . . . . . . . . . 96
(l) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 96
(m) Indenture Cross-Defaults . . . . . . . . . . . . . . . . . . 96
9.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
9.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . 97
9.04 Certain Financial Covenant Defaults . . . . . . . . . . . . . . . 97
</TABLE>
ARTICLE X
THE AGENT
<TABLE>
<CAPTION>
<S> <C>
10.01 Appointment and Authorization. . . . . . . . . . . . . . . . . . 98
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 98
10.03 Liability of Agent and Issuing Banks . . . . . . . . . . . . . . 99
10.04 Reliance by Agent and Issuing Banks. . . . . . . . . . . . . . . 99
10.05 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . 100
10.06 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . 100
10.07 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 101
10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . 101
10.09 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . 101
10.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . . 102
</TABLE>
ARTICLE XI
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C>
11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 104
11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 105
11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 106
11.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.06 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . 107
11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 107
11.08 Assignments, Participations, Etc. . . . . . . . . . . . . . . . 107
11.09 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.10 Notification of Addresses, Lending Offices, Etc. . . . . . . . . 110
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.13 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 110
11.14 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . 111
11.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 111
11.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 111
</TABLE>
v
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 2.01 Commitments
Schedule 3.03 Existing Letters of Credit
Schedule 6.07 ERISA
Schedule 6.10 Taxes
Schedule 6.16 Subsidiaries and Affiliates
Schedule 8.01 Permitted Liens
Schedule 8.05 Existing Indebtedness
Schedule 10.06 Information to be Provided to Banks by Agent
Schedule 11.02 Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Borrower's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Facility A Revolving Loan Note
Exhibit F-2 Form of Facility B Term Loan Note
Exhibit F-3 Form of Facility B Revolving Loan Note
Exhibit F-4 Form of Facility B Takeout Loan Note
Exhibit G Form of Subsidiary Guaranty
Exhibit H Form of Commercial Letter of Credit
Exhibit I Form of Standby Letter of Credit
Exhibit J Alternate Form of Standby Letter of Credit
Exhibit K Maximum Amount Certificate
vi
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of July 5, 1994,
among FERRELLGAS, L.P., a Delaware limited partnership (the "Borrower"),
STRATTON INSURANCE COMPANY, INC., a Vermont corporation and a Wholly-Owned
Subsidiary of the Borrower ("Stratton"), FERRELLGAS, INC., a Delaware
corporation and the sole general partner of the Borrower (the "General
Partner"), the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as agent for the Banks (in such
capacity, the "Agent"). THE FIRST NATIONAL BANK OF BOSTON and NATIONSBANK,
N.A., are named as co-agents (the "Co-Agents") hereunder.
WHEREAS, the Banks have agreed to make available to the Borrower and
Stratton certain revolving and term loan credit facilities with a letter of
credit subfacility on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a Subsidiary of such
specified Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests or equity of any Person or
otherwise causing any Person, to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that the Borrower or the Subsidiary
is the surviving entity.
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<PAGE>
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agent" has the meaning specified in the introductory clause hereto.
References to the "Agent" shall include BofA in its capacity as agent for
the Banks hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means BofA and any successor Agent arising
under Section 10.09, together with their respective Affiliates (including,
in the case of BofA, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
the signature page hereto in relation to the Agent, or such other address
as the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, for each Type of Loan, effective as of the
first day of each fiscal quarter, the percentage per annum (expressed in
basis points) set forth below opposite the Level of the Leverage Ratio
applicable to such fiscal quarter as set forth herein.
<TABLE>
<CAPTION>
Leverage Ratio Base Rate Loans Eurodollar Loans
- - -------------- --------------- ----------------
<S> <C> <C>
Level 1 0 b.p. 62.5 b.p.
Level 2 0 b.p. 87.5 b.p.
Level 3 12.5 b.p. 112.5 b.p.
Level 4 25 b.p. 125 b.p.
</TABLE>
"Arranger" means BA Securities, Inc., a Wholly-Owned Subsidiary of
BankAmerica Corporation. The Arranger is a registered broker-dealer and
permitted to underwrite and deal in certain Ineligible Securities.
"Asset Sale" has the meaning specified in Section 8.02.
"Assignee" has the meaning specified in subsection 11.08(a).
"Attorney Costs" means and includes all reasonable and itemized fees
and disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all disbursements of internal counsel.
2
<PAGE>
"Attributable Debt" means, in respect of a sale and leaseback
arrangement of any property, as at the time of determination, the present
value (calculated using a discount rate equal to the interest rate of the
Senior Notes and annual compounding) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
arrangement (including any period for which such lease has been extended).
"Available Cash" has the meaning given to such term in the Partnership
Agreement, as amended to the date of this Agreement; provided, that (i)
Available Cash shall not include any amount of Net Proceeds of Asset Sales
until the 270-day period following the consummation of the applicable Asset
Sale, (ii) investments, loans and other contributions to a Non-Recourse
Subsidiary are to be treated as "cash disbursements" when made for purposes
of determining the amount of Available Cash and (iii) cash receipts of a
Non-Recourse Subsidiary shall not constitute cash receipts of the Borrower
for purposes of determining the amount of Available Cash until cash is
actually distributed by such Non-Recourse Subsidiary to the Borrower.
"Bank" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include BofA and any other Bank designated
by the Agent as an Issuing Bank from time to time, including in their
respective capacities as Issuing Banks; for purposes of clarification only,
to the extent that an Issuing Bank may have any rights or obligations in
addition to those of a Bank due to its status as an Issuing Bank, its
status as such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. (S)101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the Federal Funds Rate in effect on such day; and (b) the rate of
interest in effect for such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may
be priced at, above, or below such announced rate.) Any change in the
reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change or
if no day is so specified, on the day of the announcement.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
3
<PAGE>
"BofA" has the meaning specified in the introductory clause hereto.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Borrower on the same day by the Banks (or, in the
case of Swingline Loans, by BofA) and, for Eurodollar Rate Loans, having
the same Interest Period, in either case under Article II.
"Borrowing Date" means any date on which a Borrowing occurs.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco are authorized or required
by law to close and, if the applicable Business Day relates to any
Eurodollar Rate Loan, means such a day on which dealings are carried on in
the London interbank dollar market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Interests" means, with respect to any corporation, any and
all shares, participations, rights or other equivalent interests in the
capital of the corporation, and with respect to any partnership, any and
all partnership interests (whether general or limited) and other interests
or participations that confer on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, such partnership.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Cash Collateralize" means to pledge and deposit with or deliver to
the Agent, for the benefit of the Agent, the Issuing Banks and the Banks,
as collateral for the L/C Obligations or any outstanding Loan, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to the Agent (which documents are hereby consented to by the
Banks). Derivatives of such term shall have corresponding meaning. The
Borrower hereby grants to the Agent, for the benefit of the Agent, the
Issuing Banks and the Banks, a security interest in all such cash and
deposit account balances. Cash collateral shall be maintained in blocked,
non-interest bearing deposit accounts at BofA. Such collateral may be
invested from time to time in short-term money market instruments and other
investments
4
<PAGE>
with the consent of the Agent and the Majority Banks (which consent may be
given or withheld in their sole and absolute discretion) provided that the
Agent, the Issuing Banks and the Banks shall at all times have a first
priority perfected security interest in such collateral and the proceeds
thereof.
"Cash Costs" means, with respect to any Acquisition, the total costs
thereof to the acquiring Person in such Acquisition, excluding the
aggregate amount of Acquired Debt and all financing provided by the selling
Person or Persons in connection therewith.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of
not more than eighteen months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each
case with any Bank or with any other domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (ii)
and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper or
direct obligations of a Person, provided such Person has publicly
outstanding debt having the highest short-term rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and
provided further that such commercial paper or direct obligation matures
within 270 days after the date of acquisition, and (vi) investments in
money market funds all of whose assets consist of securities of the types
described in the foregoing clauses (i) through (v).
"Change of Control" means (i) the sale, lease, conveyance or other
disposition of all or substantially all of the Borrower's assets to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) other than James E. Ferrell, the Related Parties and any Person of
which James E. Ferrell and the Related Parties beneficially own in the
aggregate 51% or more of the voting Capital Interests (or if such Person is
a partnership, 51% or more of the general partner interests), (ii) the
liquidation or dissolution of the Borrower or the General Partner, (iii)
the occurrence of any transaction, the result of which is that James E.
Ferrell and the Related Parties beneficially own in the aggregate, directly
or indirectly, less than 51% of the total voting power entitled to vote for
the election of directors of the General Partner or less than 20% of the
Capital Interests of the Borrower, and
5
<PAGE>
(iv) the occurrence of any transaction, the result of which is that the
General Partner is no longer the sole general partner of the Borrower.
"Class" means, with respect to any Loan, whether such Loan is a
Facility A Revolving Loan, Swingline Loan, Facility B Term Loan, Facility B
Revolving Loan or Facility B Takeout Loan.
"Closing Date" means the first date on which all conditions precedent
set forth in Section 5.01 and Section 5.02 are satisfied or waived by all
Banks (or, in the case of subsection 5.01(f), waived by the Persons
entitled to receive such payments).
"Co-Agent" means The First National Bank of Boston and NationsBank,
N.A.
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Commercial Letters of Credit" means commercial documentary letters of
credit issued by an Issuing Bank pursuant to Article III.
"Commitment Fee Rate" means, as of any date and based upon the Level
of the Leverage Ratio on such date, the percent per annum (expressed in
basis points) set forth below opposite such Level:
Leverage Ratio Commitment Fee Rate
-------------- -------------------
Level 1 27.5 b.p.
Level 2 32.5 b.p.
Level 3 37.5 b.p.
Level 4 37.5 b.p.
"Commitments" means, as to each Bank, collectively, its Facility A
Commitment and its Facility B Commitment.
"Compliance Certificate" means a certificate signed by a Responsible
Officer of the Borrower substantially in the form of Exhibit C,
demonstrating compliance with the covenants contained herein, including
Sections 7.12, 7.13, 7.16 and 8.12 and the 30 day clean-up period contained
in subsection 2.01(a)(ii).
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus
(a) an amount equal to any extraordinary loss plus any net loss realized in
connection with an asset sale, to the extent such losses were deducted in
computing Consolidated Net Income, plus (b) provision for taxes based on
income or profits of such Person for such
6
<PAGE>
period, to the extent such provision for taxes was deducted in computing
Consolidated Net Income, plus (c) Consolidated Interest Expense of such
Person for such period, whether paid or accrued (including amortization of
original issue discount, non-cash interest payments and the interest
component of any payments associated with Capital Lease Obligations and net
payments (if any) pursuant to Hedging Obligations), to the extent such
expense was deducted in computing Consolidated Net Income, plus (d)
depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) of such Person for such period, to the extent such
depreciation and amortization were deducted in computing Consolidated Net
Income, in each case, for such period without duplication on a consolidated
basis and determined in accordance with GAAP.
"Consolidated Interest Expense" means, as of the last day of any
fiscal period, on a consolidated basis, the sum of (a) all interest, fees
(including Letter of Credit fees), charges and related expenses paid or
payable (without duplication) for that fiscal period to the Banks hereunder
or to any other lender in connection with borrowed money or the deferred
purchase price of assets that are considered "interest expense" under GAAP,
plus (b) the portion of rent paid or payable (without duplication) for that
fiscal period under Capital Lease Obligations that should be treated as
interest in accordance with Financial Accounting Standards Board Statement
No. 13, on a consolidated basis.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with
GAAP; provided, that (i) the Net Income of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Wholly-Owned Subsidiary
thereof, (ii) the Net Income of any Person that is a Subsidiary (other than
a Wholly-Owned Subsidiary) shall be included only to the extent of the
amount of dividends or distributions paid to the referent Person or a
Wholly-Owned Subsidiary thereof, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded except to the extent otherwise
includable under clause (i) above and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders or
partners of such Person and its consolidated Subsidiaries as of such date,
plus (ii) the respective amounts reported on such Person's
7
<PAGE>
balance sheet as of such date with respect to any series of preferred stock
(other than Disqualified Interests) that by its terms is not entitled to
the payment of dividends unless such dividends may be declared and paid
only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-
ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the
acquisition of such business) subsequent to the Closing Date in the book
value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (y) all investments as of such date in unconsolidated
Subsidiaries and in Persons that are not Subsidiaries (except, in each
case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
distribution, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire
such primary obligations or any security therefor, (ii) to advance or
provide funds for the payment or discharge of any such primary obligation,
or to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item,
level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a "Guaranty Obligation");
(b) with respect to any Surety Instrument (other than any Letter of Credit)
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered; or (d) in
respect of any Hedging Obligation. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
8
<PAGE>
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.04, the Borrower (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loans
hereunder and (b) the Issuance of any Letters of Credit hereunder.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disqualified Interests" means any Capital Interests which, by their
terms (or by the terms of any security into which they are convertible or
for which they are exchangeable), or upon the happening of any event,
mature or are mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise, or redeemable at the option of the holder thereof, in whole
or in part, on or prior to December 31, 2000.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Effective Amount" means (i) with respect to any Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments of Loans occurring on such
date; and (ii) with respect to any outstanding L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes
in the aggregate amount of the L/C Obligations as of such date, including
as a result of any reimbursements of outstanding unpaid drawings under any
Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date. For purposes
of Section 2.07, the Effective Amount shall be determined
9
<PAGE>
without giving effect to any mandatory prepayments to be made under such
Section 2.07.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $200,000,000, provided that such bank is acting
through a branch or agency located in the United States; and (iii) a Person
that is primarily engaged in the business of commercial banking and that is
(A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is
a Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
"Equity Interests" means Capital Interests and all warrants, options
or other rights to acquire Capital Interests (but excluding any debt
security that is convertible into, or exchangeable for, Capital Interests).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or the General Partner from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Pension Plan subject to Title IV of ERISA; (d) a failure by the
Borrower or the General Partner to make required contributions to a Pension
Plan or other Plan subject to Section 412 of the Code; (e) an event or
condition which might reasonably be expected to constitute
10
<PAGE>
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower or the General Partner; or (g) an application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the
Code with respect to any Pension Plan.
"Eurodollar Rate" shall mean, for each Interest Period in respect of
Eurodollar Rate Loans comprising part of the same Borrowing, an interest
rate per annum (rounded to the nearest 1/16th of 1% or, if there is no
nearest 1/16th of 1%, rounded upward) determined pursuant to the following
formula:
LIBOR
Eurodollar Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Eurodollar Reserve Percentage" shall mean the maximum reserve
percentage (expressed as a decimal, rounded to the nearest 1/100th of 1%
or, if there is no nearest 1/100th of 1%, rounded upward) in effect on the
date LIBOR for such Interest Period is determined (whether or not
applicable to any Bank) under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities") having a term comparable to such Interest
Period. Without limiting the effect of the foregoing, the Eurodollar
Reserve shall include any other reserves required to be maintained by any
Bank with respect to (a) any category of liabilities that includes deposits
by reference to which the Eurodollar Rate is to be determined as provided
in the definition of "Eurodollar Rate" in this Section 1.01 or (b) any
category of extensions of credit or other assets that includes Eurodollar
Rate Loans.
"Event of Default" means any of the events or circumstances specified
in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Fixed Rate Notes" means the Series B and D Fixed Rate Senior
Notes due 1996 of the General Partner.
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<PAGE>
"Existing Floating Rate Notes" means the Series A and C Floating Rate
Senior Notes due 1996 of the General Partner.
"Existing Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries (other than the Obligations) and certain Indebtedness of the
General Partner with respect to which the Borrower has assumed the General
Partner's repayment obligations, in each case in existence on the Closing
Date and as more fully set forth on Schedule 8.05.
"Existing Letters of Credit" means the letters of credit issued and
outstanding on the Closing Date which are described in Schedule 3.03. Each
of the Existing Letters of Credit is designated on such schedule as a
standby letter of credit or a commercial documentary letter of credit.
"Existing Senior Notes" means the Existing Fixed Rate Notes and the
Existing Floating Rate Notes.
"Existing Subordinated Debentures" means the General Partner's 11 5/8%
Senior Subordinated Debentures due December 15, 2003.
"Facility A Commitment", as to each Bank, means the amount set forth
opposite such Bank's name on Schedule 2.01 hereof under the caption
"Facility A Commitment", as the same may be reduced under Section 2.05 or
2.07 or as a result of one or more assignments under Section 11.08;
provided, that the maximum aggregate Facility A Commitment of all Banks
shall not exceed $100,000,000 at any time.
"Facility A Revolving Loan" has the meaning specified in subsection
2.01(a), and may be a Base Rate Loan or a Eurodollar Rate Loan.
"Facility B Commitment", as to each Bank, means the amount set forth
opposite such Bank's name on Schedule 2.01 hereof under the caption
"Facility B Commitment - Total", as such amount may be reduced under
Section 2.05 or 2.07 or as a result of one or more assignments under
Section 11.08; provided, that the maximum aggregate Facility B Commitment
of all Banks shall not exceed $85,000,000 at any time.
"Facility B Loans" means, collectively, the Facility B Revolving Loans
and the Facility B Term Loans and, after the Revolving Termination Date if
made in accordance with the terms hereof, the Facility B Takeout Loans.
"Facility B Maximum Amount" as of any date means the excess, if any,
on such date of (x) the sum of (i) the aggregate Cash Costs of all
Permitted Acquisitions by the Borrower and its Subsidiaries during the
period from the Closing Date through the date of calculation plus (ii) the
aggregate Growth-Related Capital Expenditures by the Borrower and its
Subsidiaries during such period, over
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<PAGE>
(y) the sum of (i) the aggregate Net Proceeds of Asset Sales during the
period from the Closing Date to the date that is 270 days prior to the date
of calculation plus (ii) the aggregate Net Proceeds of MLP New Unit Sales
from the Closing Date through the calculation date.
"Facility B Revolving Loan" has the meaning specified in subsection
2.01(b), and may be a Base Rate Loan or a Eurodollar Rate Loan.
"Facility B Revolving Loan Commitment", as to each Bank, means the sum
of (i) the amount set forth opposite such Bank's name on Schedule 2.01
hereof under the caption "Facility B Commitment - Revolving Loans" plus
(ii) from and after the date 45 days after the Closing Date, the excess, if
any, of such Bank's Facility B Term Loan Commitment over the amount of its
Facility B Term Loan outstanding as of the date 45 days after the Closing
Date, as such sum may be reduced under Section 2.05 or 2.07 or as a result
of one or more assignments under Section 11.08.
"Facility B Takeout Loan" has the meaning specified in subsection
2.01(b).
"Facility B Term Loan" has the meaning specified in subsection
2.01(b).
"Facility B Term Loan Commitment", as to each Bank, means the amount
set forth opposite such Bank's name on Schedule 2.01 hereof under the
caption "Facility B Commitment - Term Loan", as the same may be reduced
under Section 2.05 or 2.07 or as a result of one or more assignments under
Section 11.08.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
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<PAGE>
"Finance Corp." means Ferrellgas Finance Corp., a Delaware corporation
and a Wholly-Owned Subsidiary of the Borrower.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event
that the referent Person or any of its Subsidiaries incurs, assumes,
guarantees, redeems or repays any Indebtedness (other than revolving credit
borrowings including, with respect to the Borrower, Swingline Loans,
Facility A Revolving Loans and Facility B Revolving Loans) subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date of the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee, redemption or
repayment of Indebtedness, as if the same had occurred at the beginning of
the applicable reference period. The foregoing calculation of the Fixed
Charge Coverage Ratio shall also give pro forma effect to Acquisitions
(including all mergers and consolidations), dispositions and
discontinuances of businesses or assets that have been made by the referent
Person or any of its Subsidiaries during the reference period or subsequent
to such reference period and on or prior to the Calculation Date assuming
that all such Acquisitions, dispositions and discontinuances of businesses
or assets had occurred on the first day of the reference period; provided,
however, that with respect to the Borrower, (a) Fixed Charges shall be
reduced by amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the obligations giving
rise to such Fixed Charges would no longer be obligations contributing to
the Fixed Charges of the Borrower subsequent to the Calculation Date and
(b) Consolidated Cash Flow generated by an acquired business or asset shall
be determined by the actual gross profit (revenues minus costs of goods
sold) of such acquired business or asset during the immediately preceding
number of full fiscal quarters as are in the reference period minus the pro
forma expenses that would have been incurred by the Borrower in the
operation of such acquired business or asset during such period computed on
the basis of (i) personnel expenses for employees retained by the Borrower
in the operation of the acquired business or asset and (ii) non-personnel
costs and expenses incurred by the Borrower on a per gallon basis in the
operation of the Borrower's business at similarly situated Borrower
facilities. If the applicable reference period for any calculation of the
Fixed Charge Coverage Ratio with respect to the Borrower shall include a
portion prior to the Closing Date, then such Fixed Charge Coverage Ratio
shall be calculated based upon the Consolidated Cash Flow and the Fixed
Charges of the General
14
<PAGE>
Partner for such portion of the reference period prior to the Closing Date
and the Consolidated Cash Flow and the Fixed Charges of the Borrower for
the remaining portion of the reference period on and after the Closing
Date, giving pro forma effect, as described in the two foregoing sentences,
to all applicable transactions occurring on the date of this Agreement or
otherwise.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (a) consolidated interest expense of such
Person for such period, whether paid or accrued, to the extent such expense
was deducted in computing Consolidated Net Income (including amortization
of original issue discounts, non-cash interest payments, the interest
component of all payments associated with Capital Lease Obligations and net
payments (if any) pursuant to Hedging Obligations permitted hereunder), (b)
commissions, discounts and other fees and charges incurred with respect to
letters of credit, (c) any interest expense on Indebtedness of another
Person that is guaranteed by such Person or secured by a Lien on assets of
such Person, and (d) the product of (i) all cash dividend payments (and
non-cash dividend payments in the case of a Person that is a Subsidiary) on
any series of preferred stock of such Person, times (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the
then current combined federal, state and local statutory tax rate of such
Person, expressed as a decimal, determined, in each case, on a consolidated
basis and in accordance with GAAP.
"Fixed Rate Senior Notes" means the 10% Series A Fixed Rate Senior
Notes, as amended or supplemented from time to time, offered and sold by
the Borrower and Finance Corp., as issuers, pursuant to the Senior Note
Registration Statement and the Indenture.
"Floating Rate Senior Notes" means the Series B Floating Rate Notes,
as amended or supplemented from time to time, offered and sold by the
Borrower and Finance Corp., as issuers, pursuant to the Senior Note
Registration Statement and the Indenture.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"Funded Debt" means all Indebtedness of Borrower, excluding all
Contingent Obligations of Borrower under or in connection with Letters of
Credit outstanding from time to time.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the
15
<PAGE>
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as of the
date of determination.
"General Partner" has the meaning specified in the introductory clause
hereto.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Growth-Related Capital Expenditures" means, with respect to any
Person, all capital expenditures by such Person made to improve or enhance
the existing capital assets or to increase the customer base of such Person
or to acquire or construct new capital assets (but excluding capital
expenditures made to maintain, up to the level thereof that existed at the
time of such expenditure, the operating capacity of the capital assets of
such Person as such assets existed at the time of such expenditure).
"Guarantor" means each Person that executes a Guaranty and its
successors and assigns, and includes Finance Corp.
"Guaranty" means a continuing guaranty of the Obligations in favor of
the Agent on behalf of the Banks, in form and substance satisfactory to the
Agent.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Honor Date" has the meaning specified in subsection 3.03(c).
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of
16
<PAGE>
business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale
of such property); (f) all Capital Lease Obligations; (g) all Hedging
Obligations; (h) all indebtedness referred to in clauses (a) through (g)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses
(a) through (h) above.
"Indemnified Liabilities" has the meaning specified in Section 11.05.
"Indemnified Person" has the meaning specified in Section 11.05.
"Indenture" means the Indenture dated as of July 5, 1994, among the
Borrower, Finance Corp. and Norwest Bank Minnesota, National Association,
pursuant to which the Senior Notes are to be issued, as it may be amended
from time to time.
"Independent Auditor" has the meaning specified in subsection 7.01(a).
"Ineligible Securities" means securities which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16
of the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of a Person's creditors generally or
any substantial portion of a Person's creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
17
<PAGE>
"Interest Payment Date" means, as to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the first Business Day of each fiscal quarter of the
Borrower, provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the date that is three months after the
beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date, provided, that if there is no
numerically corresponding day in the calendar month during which an
Interest Payment Date is to occur, such Interest Payment Date shall occur
on the last Business Day of such calendar month.
"Interest Period" means, as to any Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a Eurodollar Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Borrower in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;
(iii) no Interest Period for any Facility A Revolving Loan,
Facility B Term Loan or Facility B Revolving Loan shall extend beyond
June 30, 1997; and
(iv) no Interest Period applicable to a Facility B Takeout Loan
or portion thereof shall extend beyond any date upon which is due any
scheduled principal payment in respect thereof unless the aggregate
principal amount of Facility B Takeout Loans represented by Base Rate
Loans, or by Eurodollar Rate Loans having Interest Periods that will
expire on or before such date, equals or exceeds the amount of such
principal payment.
18
<PAGE>
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions.
"Issuance Date" has the meaning specified in subsection 3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Banks" means BofA and Banque Paribas in their respective
capacities as issuers of one or more Letters of Credit hereunder.
"Joint Venture" means a single-purpose corporation, partnership, joint
venture or other similar legal arrangement (whether created by contract or
conducted through a separate legal entity) now or hereafter formed by the
Borrower or any of its Subsidiaries with another Person in order to conduct
a common venture or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
outstanding Standby Letters of Credit or Commercial Letters of Credit as
shall at any time be in use at the applicable Issuing Bank, as such Issuing
Bank shall request.
"L/C Application" means an application form for issuances of Standby
Letters of Credit or Commercial Letters of Credit as shall at any time be
in use at the applicable Issuing Bank, as such Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing of Facility A Revolving Loans
under subsection 3.03(c).
"L/C Commitment" means the commitment of the Issuing Banks to Issue,
and the commitment of the Banks severally to participate in, Letters of
Credit from time to time Issued or outstanding under Article III, in an
aggregate amount not to exceed on any date the lesser of $50,000,000 and
the aggregate Facility A Commitment, as such amount may be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.05;
provided that the L/C Commitment is a part of the aggregate Facility A
Commitment, rather than a separate, independent commitment.
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<PAGE>
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings, plus (c) all other Obligations of the
Borrower and Stratton under or in connection with the L/C-Related
Documents, to the extent not included within clauses (a) and (b) hereof.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Banks'
standard form reimbursement agreements and other documents for letter of
credit issuances.
"Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 11.02, or such
other office or offices as such Bank may from time to time notify the
Borrower and the Agent.
"Letters of Credit" means, collectively, Standby Letters of Credit and
Commercial Letters of Credit.
"Level" means, at any time, Level 1, Level 2, Level 3 or Level 4,
based on the amount of the Leverage Ratio at such time. For purposes of
this Agreement, the following "Levels" of Leverage Ratio (LR) shall apply:
<TABLE>
<CAPTION>
Level Leverage Ratio
----- --------------
<S> <C>
Level 1 LR less than 2.0
Level 2 2.0 less than or equal to LR less than 2.5
Level 3 2.5 less than or equal to LR less than 3.25
Level 4 LR greater than or equal to 3.25
</TABLE>
The level of the Leverage Ratio for the period from the Closing Date to the
end of the fiscal quarter of the Borrower during which the Closing Date
occurs shall be equal to Level 3. Any change in the Level of the Leverage
Ratio shall be determined by the Agent based upon the financial information
required to be contained in the Compliance Certificates delivered by the
Borrower to the Agent with respect to each fiscal quarter of the Borrower
and shall become effective as of the first day of the fiscal quarter
following the fiscal quarter for which such Compliance Certificate was
delivered. Upon any failure of the Borrower to deliver a Compliance
Certificate for any fiscal quarter prior to 10 days after the date on which
such Compliance Certificate is required to be delivered to the Agent, and
without limiting the other rights and remedies of the Agent and the Banks
hereunder, the Leverage Ratio shall be deemed to be Level 4 as of the first
day of the fiscal quarter
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<PAGE>
beginning after the fiscal quarter for which such Compliance Certificate
was due.
"Leverage Ratio" means, with respect to any Person for any period, the
ratio of Funded Debt of such Person to Consolidated Cash Flow of such
Person. In the event that the referent Person or any of its Subsidiaries
incurs, assumes, guarantees, redeems or repays any Indebtedness (other than
revolving credit borrowings) subsequent to the commencement of the period
for which the Leverage Ratio is being calculated but prior to the date on
which the calculation of the Leverage Ratio is made (the "Leverage Ratio
Calculation Date"), then the Leverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee, redemption or
repayment of Indebtedness, as if the same had occurred at the beginning of
the applicable reference period. The foregoing calculation of the Leverage
Ratio shall also give pro forma effect to Acquisitions (including all
mergers and consolidations), Asset Sales and other dispositions and
discontinuances of businesses or assets that have been made by the
reference Person or any of its Subsidiaries during the reference period or
subsequent to such reference period and on or prior to the Leverage Ratio
Calculation Date assuming that all such Acquisitions, Asset Sales and other
dispositions and discontinuances of businesses or assets had occurred on
the first day of the reference period; provided, however, that with respect
to the Borrower and its Subsidiaries, (a) Funded Debt shall be reduced by
amounts attributable to businesses or assets that are so disposed of or
discontinued only to the extent that the Indebtedness included within such
Funded Debt would no longer be an obligation of the Borrower or its
Subsidiaries subsequent to the Leverage Ratio Calculation Date and (b)
Consolidated Cash Flow generated by an acquired business or asset shall be
determined by the actual gross profit (revenues minus costs of goods sold)
of such acquired business or asset during the immediately preceding number
of full fiscal quarters as in the reference period minus the pro forma
expenses that would have been incurred by the Borrower and its Subsidiaries
in the operation of such acquired business or asset during such period
computed on the basis of (i) personnel expenses for employees retained by
the Borrower and its Subsidiaries in the operation of the acquired business
or asset and (ii) non-personnel costs and expenses incurred by the Borrower
and its Subsidiaries on a per gallon basis in the operation of the
Borrower's business at similarly situated facilities of the Borrower. If
the applicable reference period for any calculation of the Leverage Ratio
with respect to the Borrower and its Subsidiaries shall include a portion
prior to the Closing Date, then such Leverage Ratio shall be calculated
based upon the Consolidated Cash Flow and Funded Debt of the General
Partner and its Subsidiaries for such portion of the reference period prior
to the Closing Date and the
21
<PAGE>
Consolidated Cash Flow and the Funded Debt of the Borrower for the
remaining portion of the reference period on and after the Closing Date,
giving pro forma effect, as described in the two foregoing sentences, to
all applicable transactions occurring on the Closing Date or otherwise.
"LIBOR" means the rate of interest per annum determined by the Agent
to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of the
rates of interest per annum notified to the Agent by BofA as the rates of
interest at which dollar deposits in the approximate amount of the amount
of the Loan to be made or continued as, or converted into, a Eurodollar
Rate Loan by BofA and having a maturity comparable to such Interest Period
would be offered to major banks in the London interbank market at their
request at approximately 11:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor
under an operating lease.
"Loan" means an extension of credit by a Bank to the Borrower under
Article II or Article III in the form of a Facility A Revolving Loan, L/C
Advance, Facility B Term Loan, Facility B Revolving Loan, Facility B
Takeout Loan or (in the case of BofA) Swingline Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letters, the
L/C-Related Documents, the Guaranties and all other documents delivered to
the Agent or any Bank in connection herewith.
"Majority Banks" means at any time Banks then holding 51% or more of
the then aggregate unpaid principal amount of the Loans (other than the
Swingline Loans), or, if no such principal amount is then outstanding,
Banks then having 51% or more of the aggregate Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the
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operations, business, properties, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of the General Partner, the
Borrower or any Subsidiary to perform under any Loan Document or otherwise
to avoid any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Borrower
or any Subsidiary of any Loan Document.
"Maximum Amount Certificate" means a certificate delivered to the
Agent pursuant to subsection 7.02(c).
"MLP" means Ferrellgas Partners, L.P., a Delaware limited partnership
and the sole limited partner of the Borrower.
"MLP New Units" means any units of limited partner interests of the
MLP sold by the MLP other than those registered pursuant to the MLP
Registration Statement (including the overallotment provisions thereof).
"MLP Registration Statement" means the Ferrellgas Partners, L.P., Form
S-1 Registration Statement No. 33-53383, as amended from time to time.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction
in respect of preferred stock dividends, excluding, however, (a) any gain
(but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (i) any asset sale (including,
without limitation, dispositions pursuant to sale and leaseback
transactions), or (ii) the disposition of any securities or the
extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (b) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not loss),
provided, however, that all costs and expenses with respect to the
retirement of the Existing Senior Notes and the Existing Subordinated
Debentures, including, without limitation, cash premiums, tender offer
premiums, consent payments and all fees and expenses in connection
therewith, shall be added back to the Net Income of the Borrower, the
General Partner or their Subsidiaries to the extent that they were deducted
from such Net Income in accordance with GAAP.
"Net Proceeds from MLP New Unit Sales" means the aggregate amount of
all cash proceeds of the sale of any MLP New Units sold after the Closing
Date net of the direct costs relating to such sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions) and taxes paid or payable as a result thereof to the extent
such net amount is contributed or invested in
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the Borrower, other than the issuance of up to 500,000 MLP New Units (as
adjusted to reflect distributions of equity and similar transactions) upon
the exercise of options to purchase such units granted to employees of the
General Partner from time to time pursuant to an option plan.
"Net Proceeds of Asset Sale" means the aggregate cash proceeds
received by the Borrower or any of its Subsidiaries in respect of any Asset
Sale, net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and
sales commissions) and any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets the subject of such
Asset Sale.
"Non-Recourse Subsidiary" means any Person that would otherwise be a
Subsidiary of the Borrower but is designated as a Non-Recourse Subsidiary
in a resolution of the Board of Directors of the General Partner, so long
as each of the following remains true: (a) no portion of the Indebtedness
or any other obligation (contingent or otherwise) of such Person (i) is a
Contingent Obligation of the Borrower or any of its Subsidiaries, (ii) is
recourse or obligates the Borrower or any of its Subsidiaries in any way or
(iii) subjects any property or asset of the Borrower or any of its
Subsidiaries, directly or indirectly, contingently or otherwise, to
satisfaction thereof, (b) neither the Borrower nor any of its Subsidiaries
has any contract, agreement, arrangement or understanding or is subject to
an obligation of any kind, written or oral, with such Person other than on
terms no less favorable to the Borrower and its Subsidiaries than those
that might be obtained at the time from persons who are not Affiliates of
the Borrower, (c) neither the Borrower nor any of its Subsidiaries has any
obligation with respect to such Person (i) to subscribe for additional
shares of capital stock, Capital Interests or other Equity Interests
therein or (ii) maintain or preserve such Person's financial condition or
to cause such Person to achieve certain levels of operating or other
financial results, (d) such Person has no more than $1,000 of assets at the
time of such designation, (e) such Person is in compliance with the
restrictions applicable to Affiliates of the MLP under Section 8.21 hereof
and (f) such Person takes steps designed to assure that neither the
Borrower nor any of its Subsidiaries will be liable for any portion of the
Indebtedness or other obligations of such Person, including maintenance of
a corporate or limited partnership structure and observance of applicable
formalities such as regular meetings and maintenance of minutes, a
substantial and meaningful capitalization and the use of a corporate or
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partnership name, trade name or trademark not misleadingly similar to those
of the Borrower.
"Note" means a promissory note executed by the Borrower in favor of a
Bank pursuant to subsection 2.02(b), in substantially the form of Exhibit
F-1, F-2, F-3 or F-4.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the Borrower
to any Bank, the Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising including, without
limitation, all Indebtedness of the Borrower to the Banks for the payment
of principal of and interest on all outstanding Loans and all obligations
of the Borrower to the Issuing Banks for reimbursement of drawings under
Letters of Credit from time to time.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation and, for any general or limited partnership, the partnership
agreement of such partnership and all amendments thereto and any
agreements otherwise relating to the rights of the partners thereof.
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"Participant" has the meaning specified in subsection 11.08(d).
"Partners' Equity" means the partners' equity as shown on a balance
sheet prepared in accordance with GAAP for any partnership.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Borrower dated July 5, 1994, as amended from time to
time.
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"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower or the General
Partner sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Acquisitions" means Acquisitions by the Borrower and its
Subsidiaries which comply with the provisions of Section 8.04.
"Permitted Investments" means (a) any Investments in Cash Equivalents;
(b) any Investments in the Borrower or in a Wholly-Owned Subsidiary of the
Borrower that is a Guarantor; (c) Investments by the Borrower or any
Subsidiary of the Borrower in a Person, if as a result of such Investment
(i) such Person becomes a Wholly-Owned Subsidiary of the Borrower and a
Guarantor or (ii) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Borrower or a Wholly-Owned Subsidiary of the Borrower
that is a Guarantor; and (d) other Investments in Non-Recourse Subsidiaries
of the Borrower that do not exceed $30 million in the aggregate.
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any Subsidiary of the Borrower issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Borrower or any of its
Subsidiaries (other than Indebtedness under the Senior Notes) or the
Indebtedness represented by the then outstanding Existing Subordinated
Debentures; provided that (a) the principal amount of such Indebtedness
does not exceed the principal amount of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (the "Prior
Indebtedness") (plus the amount of reasonable expenses incurred in
connection therewith), and the effective interest rate per annum on such
Indebtedness does not or is not likely to exceed the effective interest
rate per annum of the Prior Indebtedness, as determined by the Agent in its
sole discretion; (b) such Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of
the Prior Indebtedness; (c) such Indebtedness is subordinated in right of
payment to the Obligations on terms at least as favorable
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to the Banks as those, if any, contained in the documentation governing the
Prior Indebtedness; and (d) such Indebtedness (other than Indebtedness
incurred to extend, refinance, renew, replace, defease or refund the
Existing Subordinated Debentures) is incurred by the Borrower or the
Subsidiary who is the obligor on the Prior Indebtedness.
"Permitted Senior Debt" means, with respect to any Person, (i) any
Acquired Debt of such Person, (ii) any Indebtedness incurred by such
Person, the proceeds of which are applied solely to finance Growth-Related
Capital Expenditures and (iii) any Indebtedness incurred by such Person,
the proceeds of which are used solely for working capital purposes.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, Joint
Venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower sponsors or maintains or to which the Borrower or
the General Partner makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the percentage set
forth on Schedule 2.01 hereto as its "Pro Rata Share", as such amount may
be adjusted by assignments under Section 11.08.
"Registration Statements" means, collectively, the MLP Registration
Statement and the Senior Note Registration Statement.
"Related Party" means (i) the spouse or any lineal descendant of James
E. Ferrell, (ii) any trust for his benefit or for the benefit of his spouse
or any such lineal descendants or (iii) any corporation, partnership or
other entity in which James E. Ferrell and/or such other Persons referred
to in the foregoing clauses (i) and (ii) are the direct record and
beneficial owners of all of the voting and nonvoting Equity Interests.
"Reorganization" has the meaning specified in subsection 5.01(l).
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental
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Authority, in each case applicable to or binding upon the Person or any of
its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the General Partner or any other officer having substantially
the same authority and responsibility to act for the General Partner on
behalf of the Borrower; or, with respect to actions taken or to be taken
under Articles II and III and compliance with financial covenants, the
chief financial officer or the treasurer of the General Partner or any
other officer having substantially the same authority and responsibility to
act for the General Partner on behalf of the Borrower or any other employee
of the General Partner designated in a certificate of a Responsible Officer
to have authority in such matters.
"Revolving Commitment" means, as to each Bank, collectively, its
Facility A Commitment and its Facility B Revolving Loan Commitment.
"Revolving Termination Date" means the earlier to occur of:
(a) June 30, 1997; and
(b) the date on which the Facility A Commitment and the Facility
B Revolving Loan Commitment terminate in accordance with the
provisions of this Agreement.
"Risk Participation Percentage" means, as of any date and based upon
the Level of the Leverage Ratio on such date, the percent per annum
(expressed in basis points) set forth below opposite such Level:
Leverage Ratio Risk Participation Percentage
-------------- -----------------------------
Level 1 50 b.p.
Level 2 75 b.p.
Level 3 100 b.p.
Level 4 112.5 b.p.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Senior Debt" means, without duplication, (i) the Obligations, (ii)
all other Indebtedness of the Borrower or Finance Corp., unless the
instrument under which such Indebtedness is incurred expressly provides
that it is subordinated in right of payment to the Obligations and (iii)
all Indebtedness of Subsidiaries of the Borrower, other than Finance Corp.
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"Senior Note Registration Statement" means the Ferrellgas, L.P., and
Ferrellgas Finance Corp. Form S-1 Registration Statement No. 33-53379, as
amended from time to time.
"Senior Notes" means the Fixed Rate Senior Notes and the Floating Rate
Senior Notes in an aggregate principal amount of $250 million.
"Significant Subsidiary" means any Subsidiary of the Borrower that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in
effect on the date hereof.
"Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than
the fair value of the liabilities (including, without limitation,
contingent liabilities) of such Person, (b) such Person does not intend to,
and does not believe that it will, incur debts and liabilities beyond such
Person's ability to pay as such debts and liabilities mature and (c) such
Person is not engaged in business or a transaction, and is not about to
engage in a business or a transaction, for which such Person's property
would constitute an unreasonably small capital.
"Standby Letters of Credit" means standby letters of credit Issued by
an Issuing Bank pursuant to Article III.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof (or, in the case of a limited partnership,
more than 50% of either the general partners' Capital Interests or the
limited partners' Capital Interests) is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof. Notwithstanding the
foregoing, any Subsidiary of the Borrower that is designated a Non-Recourse
Subsidiary pursuant to the definition thereof shall, for so long as all of
the statements in the definition thereof remain true, not be deemed a
Subsidiary of the Borrower.
"Subsidiary Note Guarantee" means each guarantee of the Senior Notes
made pursuant to the Indenture.
"Surety Instruments" means all letters of credit (including standby
and commercial), bankers' acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
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"Swingline Loan" has the meaning specified in Section 2.15.
"Tax Audit" means the adjustments and disallowances proposed by the
IRS relating to its audit of the General Partner's 1986 and 1987
consolidated income tax returns.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured
by each Bank's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Bank or the Agent, as the case may
be, is organized or maintains a lending office.
"Type" means, with respect to any Loan, whether such Loan is a Base
Rate Loan or a Eurodollar Rate Loan.
"UCP" has the meaning specified in Section 3.09.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (x) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (y) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (b)
the then outstanding principal amount of such Indebtedness; provided,
however, that with respect to any revolving Indebtedness, the foregoing
calculation of Weighted Average Life to Maturity shall be determined based
upon the total available commitments and the required reductions of
commitments in lieu of the outstanding principal amount and the required
payments of principal, respectively.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the
outstanding Capital Interests or other ownership interests (other than
directors' qualifying shares) or, in the case of a limited partnership, all
of the partners' Capital Interests (other than up to a 1% general partner
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interest), is owned, beneficially and of record, by the Borrower, a Wholly-
Owned Subsidiary of the Borrower or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) Unless otherwise expressly provided herein, financial calculations
applicable to the Borrower shall be made on a consolidated basis.
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(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied. In the event that GAAP changes during the term of
this Agreement such that the covenants contained in Section 7.12 would then be
calculated in a different manner or with different components, (i) the Borrower
and the Banks agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in GAAP and (ii) the Borrower shall be deemed to be in compliance with
the covenants contained in Section 7.12 during the 90-day period following any
such change in GAAP if and to the extent that the Borrower would have been in
compliance therewith under GAAP as in effect immediately prior to such change.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Commitments.
(a) Facility A Revolving Loans, Swingline Loans and Letters of Credit.
(i) Each Bank severally agrees, on the terms and subject to the
conditions set forth herein, to make loans to the Borrower (each such loan,
a "Facility A Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Revolving Termination Date, in an
aggregate principal amount not to exceed at any time outstanding such
Bank's Facility A Commitment as in effect from time to time; provided,
however, that, after giving effect to any Borrowing of Facility A Revolving
Loans, the sum of the Effective Amount of all outstanding Facility A
Revolving Loans plus the Effective Amount of all L/C Obligations plus the
Effective Amount of all Swingline Loans shall not at any time exceed the
combined Facility A Commitments, and the Effective Amount of the Facility A
Revolving Loans of any Bank plus the participation of such Bank in the
Effective Amount of all L/C Obligations plus such Bank's Pro Rata Share of
the Effective Amount of all
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outstanding Swingline Loans shall not at any time exceed such Bank's
Facility A Commitment.
(ii) Within the limits of each Bank's Facility A Commitment and
on the other terms and subject to the other conditions hereof, the Borrower
may borrow under this subsection 2.01(a), prepay under Section 2.06 and
reborrow under this subsection 2.01(a); provided, that the Borrower shall
cause the aggregate outstanding principal amount of Facility A Revolving
Loans and Swingline Loans not to exceed $25,000,000 for at least one period
of 30 consecutive days during each fiscal year of Borrower, commencing with
its fiscal year beginning August 1, 1994.
(iii) As a subfacility of the Banks' Facility A Commitments, the
Borrower and Stratton may request the Issuing Banks to Issue Letters of
Credit from time to time pursuant to Article III.
(iv) In addition, the Borrower may request BofA to make
Swingline Loans to the Borrower from time to time pursuant to Section 2.15.
(b) Facility B Term Loans, Revolving Loans and Takeout Loans.
(i) Tranche I - Facility B Term Loans. Each Bank severally agrees,
on the terms and subject to the conditions set forth herein, to make a single
loan to the Borrower (each such loan, a "Facility B Term Loan") on the Closing
Date in a principal amount not to exceed such Bank's Facility B Term Loan
Commitment. Amounts borrowed as Facility B Term Loans which are repaid or
prepaid by the Borrower may not be reborrowed.
(ii) Tranche II - Facility B Revolving Loans. Each Bank severally
agrees, on the terms and subject to the conditions set forth herein, to make
loans to the Borrower (each such loan, a "Facility B Revolving Loan") from time
to time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate principal amount not to exceed at
any time outstanding the lesser of (x) such Bank's Facility B Revolving Loan
Commitment as in effect at such time, and (y) such Bank's Pro Rata Share of the
Facility B Maximum Amount as in effect at such time; provided, however, that,
after giving effect to any Borrowing of Facility B Revolving Loans, the
Effective Amount of all outstanding Facility B Revolving Loans shall not at any
time exceed the lesser of (a) the aggregate Facility B Revolving Loan
Commitments, and (b) the Facility B Maximum Amount, and the Effective Amount of
all outstanding Facility B Revolving Loans of any Bank shall not at any time
exceed the lesser of (A) such Bank's Facility B Revolving Loan Commitment, and
(B) such Bank's Pro Rata Share of the Facility B Maximum Amount then in effect.
Within the limits of each Bank's Facility B Revolving Loan Commitment, and on
the other terms and subject to the other terms and conditions hereof, the
Borrower
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may borrow under this subsection 2.01(b)(ii), prepay under Section 2.06 and
reborrow under this subsection 2.01(b)(ii).
(iii) Facility B Takeout Loan. Each Bank severally agrees, on the
terms and subject to the conditions set forth herein, to make a single loan to
the Borrower (each such loan, a "Facility B Takeout Loan") on the Revolving
Termination Date in an aggregate amount not to exceed the lesser of (x) the
aggregate outstanding Effective Amount of such Bank's Facility B Loans on the
Revolving Termination Date and (y) such Bank's Facility B Commitment. Amounts
borrowed as Facility B Takeout Loans which are repaid or prepaid by the Borrower
may not be reborrowed.
2.02 Loan Accounts. (a) The Loans made by each Bank and the Letters of
Credit Issued by the Issuing Banks shall be evidenced by one or more accounts or
records maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the Agent,
the Issuing Banks and each Bank shall be conclusive absent manifest error of the
amount of the Loans made by the Banks to the Borrower and the Letters of Credit
Issued for the account of the Borrower, and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note(s)
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Borrower with respect thereto. Each such Bank
is irrevocably authorized by the Borrower to endorse its Note(s) and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of Loans shall be made
upon the Borrower's irrevocable written notice delivered to the Agent in the
form of a Notice of Borrowing (which notice must be received by the Agent prior
to 11:00 a.m. San Francisco time (i) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Rate Loans, and (ii) one Business Day
prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $3,000,000 or any multiple of $1,000,000
in excess thereof for Eurodollar
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Loans, or $1,000,000 or any multiple of $100,000 in excess thereof for
Base Rate Loans;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type and Class of Loans comprising the Borrowing;
and
(D) the duration of the Interest Period applicable to any
Eurodollar Rate Loans included in such notice. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of Eurodollar Rate Loans, such Interest Period
shall be one month.
(b) The Agent will promptly notify each Bank of the Agent's receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Borrower at the Agent's
Payment Office by 11:00 a.m. San Francisco time on the Borrowing Date requested
by the Borrower in funds immediately available to the Agent. The proceeds of
all such Loans will then be made available to the Borrower by the Agent at such
office by crediting the account of the Borrower on the books of BofA with the
aggregate of the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more than
ten different Interest Periods in effect with respect to Eurodollar Rate Loans.
2.04 Conversion and Continuation Elections. (a) The Borrower may, upon
irrevocable written notice to the Agent in accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of Eurodollar Rate Loans, to convert any such Loans (or any part thereof in
an amount not less than $3,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) into Loans of the other Type; or
(ii) elect as of the last day of the applicable Interest Period,
to continue as Eurodollar Rate Loans any Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$3,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof);
provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment,
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prepayment, or conversion of part thereof to be less than $3,000,000, such
Eurodollar Rate Loans shall automatically convert into Base Rate Loans, and on
and after such date the right of the Borrower to continue such Loans as, and
convert such Loans into, Eurodollar Rate Loans shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than 10:00 a.m. San Francisco time at least
(i) three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Eurodollar Rate Loans; and (ii)
one Business Day in advance of the Conversion/Continuation Date, if the Loans
are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount and Class of Loans to be converted
or renewed;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, the Borrower has failed to select a new Interest Period
within the time period specified in subsection 2.04(b) to be applicable to such
Eurodollar Rate Loans, or if any Default or Event of Default then exists, the
Borrower shall be deemed to have elected to convert such Eurodollar Rate Loans
into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no notice is provided by the Borrower
within the time period specified in subsection 2.04(b), the Agent will promptly
notify each Bank of the details of any automatic conversion. All conversions
and continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Bank.
(e) Unless the Majority Banks otherwise agree, during the existence of
a Default or Event of Default, the Borrower may not elect to have a Loan
converted into or continued as a Eurodollar Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than ten different Interest Periods in effect.
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2.05 Voluntary Termination or Reduction of Commitments.
(a) The Borrower may, not later than 11:00 a.m. San Francisco time at
least three Business Days prior to its effective date by notice to the Agent,
terminate or permanently reduce the Facility A Commitments by an aggregate
minimum amount of $5,000,000 or any multiple of $5,000,000 in excess thereof;
unless, after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, (i) the Effective Amount of all Facility A Revolving
Loans, Swingline Loans and L/C Obligations together would exceed the amount of
the combined Facility A Commitments then in effect, or (ii) the Effective Amount
of all L/C Obligations then outstanding would exceed the L/C Commitment.
(b) The Borrower may, not later than 11:00 a.m. San Francisco time at
least three Business Days prior to its effective date by notice to the Agent,
terminate or permanently reduce the Facility B Commitments by an aggregate
minimum amount of $5,000,000 or any multiple of $5,000,000 in excess thereof;
unless, after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the Effective Amount of all Facility B Term Loans and
all Facility B Revolving Loans together would exceed the amount of the combined
Facility B Commitments then in effect.
(c) Once reduced in accordance with this Section, the Commitments may
not be increased. Any reduction of the Facility A Commitments or the Facility B
Commitments shall be applied to each Bank according to its Pro Rata Share.
2.06 Optional Prepayments. (a) Subject to Section 4.04, the Borrower may,
at any time or from time to time, not later than 10:00 a.m. San Francisco time
at least three (3) Business Days prior to its effective date by irrevocable
notice to the Agent, in the case of Eurodollar Rate Loans, and not later than
10:00 a.m. San Francisco time at least one (1) Business Day prior to its
effective date by irrevocable notice to the Agent, in the case of Base Rate
Loans, ratably prepay Loans in whole or in part, in minimum amounts of
$3,000,000 or any multiple of $1,000,000 in excess thereof, for Eurodollar Rate
Loans, and in minimum amounts of $1,000,000 or any multiple of $100,000 in
excess thereof, for Base Rate Loans.
(b) Any such notice of prepayment shall specify the date and amount of
such prepayment and the Type(s) and, with respect to voluntary prepayments
occurring on or prior to the Revolving Termination Date, the Class(es), of Loans
to be prepaid. Prepayments of Base Rate Loans of any Class may be made
hereunder on any Business Day. Prepayments of Eurodollar Rate Loans of any
Class may be made hereunder only on the last day of any applicable Interest
Period; provided, that prepayments of Eurodollar Rate Loans may be made on a day
other than the last day of the applicable Interest Period only with payment by
the Borrower of the aggregate amount of any associated funding losses
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of any affected Banks pursuant to Section 4.04. The Agent will promptly notify
each Bank of its receipt of any such notice, and of such Bank's Pro Rata Share
of such prepayment.
(c) If any such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together, in the case of a
Eurodollar Rate Loan, with accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 4.04. Optional prepayments
occurring after the Revolving Termination Date shall be applied to the Facility
B Takeout Loan in inverse order of maturity.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a)
If on any date the Effective Amount of L/C Obligations exceeds the L/C
Commitment, the Borrower shall Cash Collateralize on such date the outstanding
Letters of Credit in an amount equal to the excess of the aggregate maximum
amount then available to be drawn under the Letters of Credit over the L/C
Commitment. Subject to Section 4.04, if on any date after giving effect to any
Cash Collateralization made on such date pursuant to the preceding sentence, the
Effective Amount of all Swingline Loans and Facility A Revolving Loans then
outstanding plus the Effective Amount of all L/C Obligations exceeds the
combined Facility A Commitments, the Borrower shall immediately, and without
notice or demand, prepay the outstanding principal amount of the Swingline
Loans, Facility A Revolving Loans and any L/C Advances by an aggregate amount
equal to the applicable excess.
(b) Subject to Section 4.04, if on any date on or prior to the
Revolving Termination Date the Effective Amount of the Facility B Revolving
Loans exceeds the lesser of (i) the aggregate Facility B Revolving Loan
Commitment, and (ii) the Facility B Maximum Amount then in effect, then the
Borrower shall immediately, and without notice or demand, prepay the outstanding
principal amount of the Facility B Revolving Loans in an aggregate amount equal
to such excess. If on any date after the Revolving Termination Date, the
Effective Amount of Facility B Takeout Loans exceeds the Facility B Maximum
Amount, then the Borrower shall immediately, and without notice or demand,
prepay the outstanding principal amount of the Facility B Takeout Loans in an
aggregate amount equal to such excess, in the inverse order of maturity.
(c) If on any date, (x) the sum of (i) aggregate Net Proceeds from
MLP New Unit Sales from the Closing Date through such date plus (ii) aggregate
Net Proceeds of Asset Sales during the period from the Closing Date through the
date that is 270 days prior to such date, exceeds (y) the aggregate Cash Costs
of Permitted Acquisitions during the period from the Closing Date through such
date plus aggregate Growth-Related Capital Expenditures of the Borrower and its
Subsidiaries during such period (any such excess being referred to herein as a
"Downsize
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Amount"), then (A) if such date is on or prior to the Revolving Termination Date
and after giving effect to any mandatory Cash Collateralization or prepayment of
outstanding Facility B Revolving Loans under subsection 2.07(b) above, the
Borrower shall immediately, and without notice or demand, prepay the Obligations
in an aggregate amount equal to the Downsize Amount as follows: first, Facility
B Term Loans, second, Swingline Loans, third, Facility A Revolving Loans, and
fourth, L/C Obligations; and (B) if such date is after the Revolving Termination
Date, the Borrower shall immediately, and without notice or demand, prepay
payments due under the Facility B Takeout Loan in an aggregate amount equal to
the Downsize Amount, in the inverse order of maturity.
(d) In the event that prior to the Revolving Termination Date any
portion of the Downsize Amount remains after the Facility B Maximum Amount has
been reduced to zero, the Facility A Commitment shall be automatically reduced
by an aggregate amount equal to such remaining portion of the Downsize Amount.
(e) The Borrower shall immediately, and without notice or demand,
prepay the Obligations in full, including, without limitation, the aggregate
principal amount of all outstanding Loans, all accrued and unpaid interest
thereon and all amounts payable under Section 4.04 hereof, and all of the
Commitments shall be automatically reduced to zero, in each case on the 30th day
after any Change in Control shall have occurred and be continuing.
(f) If and to the extent that the Facility A Commitment and the
Facility B Revolving Commitment are not equal to zero on the Revolving
Termination Date, each such amount shall be automatically reduced to zero on the
Revolving Termination Date.
2.08 Repayment.
(a) Facility A Revolving Loans and Swingline Loans. The Borrower
shall repay to the Banks in full on the Revolving Termination Date the aggregate
principal amount of Facility A Revolving Loans outstanding on such date together
with all accrued and unpaid interest thereon. The Borrower shall repay to BofA
in full on the Revolving Termination Date the aggregate principal amount of
Swingline Loans outstanding on such date, together with all accrued and unpaid
interest thereon.
(b) Facility B Term Loans and Facility B Revolving Loans. Subject to
the provisions of subsection 2.08(c), the Borrower shall repay in full on the
Revolving Termination Date the aggregate principal amount of Facility B Term
Loans and Facility B Revolving Loans outstanding on such date together with all
accrued and unpaid interest thereon.
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(c) Facility B Takeout Loans. At the Borrower's option, to be
exercised by the giving of an appropriate Notice of Borrowing to the Agent in
the manner set forth herein and subject to the conditions set forth in
subsection 2.01(b)(iii), the Borrower may request the Banks to make Facility B
Takeout Loans to the Borrower on the Revolving Termination Date in repayment of
up to all of the aggregate principal amount of Facility B Term Loans and
Facility B Revolving Loans outstanding on such date. If and to the extent that
the Borrower shall have borrowed the Facility B Takeout Loan on the terms and
subject to the conditions set forth herein, the Borrower shall repay the
aggregate principal amount of the Facility B Takeout Loan in twelve (12) equal
quarterly installments commencing on September 30, 1997, and continuing on the
last day of every third calendar month thereafter through June 30, 2000;
provided, that all outstanding principal and accrued and unpaid interest on the
Facility B Takeout Loans shall be repaid in full on or prior to June 30, 2000.
2.09 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Eurodollar Rate (other than with respect to Swingline Loans) or the
Base Rate, as the case may be (and subject to the Borrower's right to convert to
other Types of Loans under Section 2.04), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each applicable
Interest Payment Date. Interest in all cases shall also be paid on the date of
any prepayment of Loans under subsection 2.07(e) and interest on Eurodollar Rate
Loans shall also be paid on the date of prepayment of Loans in all other
circumstances under Section 2.06 or 2.07, in each case for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid on demand
of the Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Obligations, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Obligations not subject to an Applicable Margin,
including, without limitation, all letter of credit and commitment fees provided
herein, at a rate per annum equal to the Base Rate plus the Applicable Margin
plus 2%; provided, however, that, on and after the expiration of any Interest
Period applicable to any Eurodollar Rate Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus the
Applicable Margin plus 2%.
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(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.
2.10 Fees. In addition to certain fees described in Section 3.08:
(a) Arrangement, Agency Fees. The Borrower shall pay an arrangement
fee to the Arranger for the Arranger's own account, and shall pay an agency fee
to the Agent for the Agent's own account, as required by the letter agreement
("Fee Letter") between the Borrower and the Arranger and Agent dated May 11,
1994.
(b) Commitment Fees. The Borrower shall pay to the Agent for the
account of each Bank a commitment fee with respect to such Bank's Facility A
Commitment equal to the Commitment Fee Rate per annum times the daily average
amount by which such Bank's Facility A Commitment exceeded the sum of the
aggregate Effective Amount of its Facility A Revolving Loans plus its Pro Rata
Share of the Effective Amount of L/C Obligations (other than with respect to
Commercial Letters of Credit). The Borrower shall pay to the Agent for the
account of each Bank a commitment fee with respect to such Bank's Facility B
Commitment, equal to the Commitment Fee rate per annum times the daily average
amount by which such Bank's Facility B Revolving Commitment exceeded the
aggregate Effective Amount of its Facility B Revolving Loans. Such commitment
fees shall accrue from the date of this Agreement to the Revolving Termination
Date and shall be due and payable quarterly in arrears on the first Business Day
of each fiscal quarter following the quarter for which payment is to be made,
commencing on August 1, 1994 through the Revolving Termination Date, with the
final payment to be made on the Revolving Termination Date; provided that, in
connection with the full termination of Commitments under Section 2.05 or
Section 2.07, the accrued commitment fees calculated for the period ending on
such date shall also be paid on the date of such termination. The commitment
fees provided in this subsection shall accrue at all times after the above-
mentioned commencement date, including at any time during which one or more
conditions in Article V are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest
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shall be made on the basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrower and the Banks in the absence of manifest
error.
2.12 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 10:00
a.m. (San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 10:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Banks that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Borrower has not
made such payment in full to the Agent, each Bank shall repay to the Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.13 Payments by the Banks to the Agent. (a) Unless the Agent receives
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, by 2:00 p.m. (San Francisco time) on the
Business Day prior to the date of such Borrowing, that such Bank will not make
available as and when required hereunder to the Agent for the account of the
Borrower the amount of that Bank's Pro Rata Share of the Borrowing, the Agent
may assume that each Bank has made such amount available to the Agent in
immediately available funds on
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the Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Bank shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Borrower such amount, that Bank
shall on the Business Day following such Borrowing Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Bank with
respect to amounts owing under this subsection (a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Bank's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Borrowing Date, the Agent will notify the Borrower of
such failure to fund and, upon demand by the Agent, the Borrower shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation. The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error)
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of participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
2.15 Discretionary Swingline Loans.
(a) From time to time, subject to the conditions set forth below, at
the request of the Borrower, made through the Agent as set forth below, BofA in
its sole and absolute discretion may make short-term loans to the Borrower not
to exceed in the aggregate at any one time outstanding the principal sum of
$10,000,000, to be used by the Borrower to cover overdrafts, for cash management
purposes, or for other general working capital needs of the Borrower (each, a
"Swingline Loan"). The availability of Swingline Loans is conditioned on the
satisfaction of each of the following conditions: (i) it shall be in the sole
and absolute discretion of BofA, on each occasion that a Swingline Loan is
requested, whether to make such Swingline Loan; (ii) each Swingline Loan shall
bear interest from the time made until the time repaid, or until the time, if
any, that such Swingline Loan is converted into a Base Rate Loan as provided
below, at the rate(s) from time to time applicable to Base Rate Loans hereunder;
(iii) at the time of making of any Swingline Loan, the aggregate Effective
Amount of all Swingline Loans, together with the aggregate Effective Amount of
all Facility A Revolving Loans and the Effective Amount of all L/C Obligations,
without duplication, shall not exceed the aggregate Facility A Commitment; (iv)
each Swingline Loan, when made, all interest accrued thereon, and all
reimbursable costs and expenses incurred or payable in connection therewith,
shall constitute an Obligation of Borrower hereunder; and (v) each request for a
Swingline Loan from BofA pursuant to this Section 2.15 shall be made by the
Borrower to the Agent, shall be funded by BofA through the Agent, and shall be
repaid by the Borrower through the Agent (in order that the Agent may keep an
accurate record of the outstanding balance at any time of Swingline Loans so as
to monitor compliance with the terms and provisions hereof), and each such
request shall be in writing unless the Agent in its sole discretion accepts an
oral or telephonic request. Each Swingline Loan shall be made upon the
Borrower's irrevocable written notice delivered to the Agent substantially in
the form of a Notice of Borrowing (which notice must be received by the Agent
prior to 1:00 p.m. (San Francisco time) on the requested date of such Swingline
Loan, specifying:
(i) the amount of the Swingline Loan, which shall be in a
minimum amount of $250,000 or any multiple of $100,000 in excess
thereof; and
(ii) the requested date of such Swingline Loan, which shall
be a Business Day;
(b) If any Swingline Loan made pursuant to this Section 2.15, and in
compliance with the conditions set forth in the immediately preceding paragraph
of this Section 2.15, is not repaid by the Borrower on or before the seventh
calendar day
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following the day that it was funded by BofA, BofA shall have the right in
BofA's sole and absolute discretion, by giving notice to the Borrower and the
Banks, to cause such Swingline Loan automatically upon the giving of such notice
to be converted into a Facility A Revolving Loan which is a Base Rate Loan, and
upon receipt of such notice each Bank shall fund to the Agent, for the account
of BofA, such Bank's ratable share of such Facility A Revolving Loan, based on
such Bank's Pro Rata Share; provided, that if any Insolvency Proceeding has been
commenced with respect to the Borrower on or prior to the date on which such
Swingline Loan is due, and in lieu of funding its Pro Rata Share of a Facility A
Revolving Loan, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from BofA a participation in such Swingline
Loan equal to the product of such Bank's Pro Rata Share times the amount of such
Swingline Loan.
(c) Each Bank's obligation in accordance with this Agreement to make
Facility A Revolving Loans upon the failure of a Swingline Loan to be repaid in
full when due, or to purchase participations in such Swingline Loans, shall, in
each case, be absolute and unconditional and without recourse to BofA and shall
not be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against BofA, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.01 The Letter of Credit Subfacility. (a) On the terms and subject to
the conditions set forth herein and as a subfacility of the Facility A
Commitment, (i) the Issuing Banks agree, from time to time on any Business Day
during the period from the Closing Date to the date that is 30 days prior to the
Revolving Termination Date to issue Letters of Credit for the account of the
Borrower and Stratton and to amend or renew Letters of Credit previously issued
by them, in each case in accordance with subsections 3.02(c) and 3.02(d); and
(ii) the Banks severally agree to participate in Letters of Credit Issued for
the account of the Borrower and Stratton; provided, that the Issuing Banks shall
not be obligated to Issue, and no Bank shall be obligated to participate in, any
Letter of Credit if, as of the date of Issuance of such Letter of Credit (the
"Issuance Date"), (1) the Effective Amount of all L/C Obligations plus the
Effective Amount of all Facility A Revolving Loans plus the Effective Amount of
all Swingline Loans exceeds the combined Facility A Commitments, or (2) the
Effective Amount of L/C Obligations exceeds the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
ability of the Borrower and Stratton to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Borrower and
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Stratton may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed.
(b) No Issuing Bank is under any obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain such Issuing
Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which such Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon such Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which such Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank has received written notice from any
Bank, the Agent, the Borrower or Stratton, on or prior to the Business Day
prior to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is not then
satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
with respect to Commercial Letters of Credit supporting the purchase of
inventory by the Borrower, more than (1) 180 days after the date of
Issuance or (2) 30 days prior to the Revolving Termination Date, unless the
Majority Banks have approved such expiry date in writing, or (B) with
respect to any other Letter of Credit, 30 days prior to the Revolving
Termination Date, unless all of the Banks have approved such expiry date in
writing;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts
(unless there is a demand for payment in the documentation required to be
delivered in connection with any drawing), or is not otherwise in form and
substance acceptable to such Issuing Bank, or the Issuance of a Letter of
Credit shall violate any applicable policies of such Issuing Bank;
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(vi) any Standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person other
than with respect to any Existing Letter of Credit so designated in
Schedule 3.03; or
(vii) such Letter of Credit is to be used for a purpose other
than any permitted use of the proceeds of Facility A Revolving Loans as set
forth in Section 7.11.
3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each
Letter of Credit shall be issued upon the irrevocable written request of the
Borrower and, if Stratton is the applicant, Stratton, received by the Issuing
Bank (with a copy sent by the Borrower or Stratton to the Agent) prior to 10:00
a.m. (San Francisco time) on the proposed date of Issuance for Letters of Credit
in the form of Exhibit H, I or J hereto and at least four days prior to the
proposed date of Issuance for other forms of Letters of Credit. Each such
request for issuance of a Letter of Credit shall be by facsimile, confirmed by
telephone, in the form of an L/C Application, and shall specify in form and
detail satisfactory to the applicable Issuing Bank: (i) the proposed date of
issuance of the Letter of Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
the Issuing Bank may require.
(b) Prior to the Issuance of any Letter of Credit, the applicable
Issuing Bank will confirm with the Agent (by telephone or in writing) that the
Agent has received a copy of the L/C Application or L/C Amendment Application
from the Borrower and, if Stratton is the applicant, from Stratton and, if not,
such Issuing Bank will provide the Agent with a copy thereof. Unless such
Issuing Bank has received notice on or before 11:00 a.m. (San Francisco time) on
the date such Issuing Bank is to issue a requested Letter of Credit from the
Agent (A) directing such Issuing Bank not to issue such Letter of Credit because
such issuance is not then permitted under subsection 3.01(a) as a result of the
limitations set forth in clauses (1) or (2) thereof or subsection 3.01(b)(ii);
or (B) that one or more conditions specified in Article V are not then
satisfied; then, subject to the terms and conditions hereof, such Issuing Bank
shall, on the requested date, issue a Letter of Credit in accordance with such
Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, any Issuing Bank will, upon the written
request of the Borrower and, if Stratton is the applicant, Stratton, received by
such Issuing Bank (with a copy sent by the Borrower or Stratton to the Agent) at
least four days (or such shorter time as such Issuing Bank may
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agree in a particular instance in its sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit issued by it. Each such request
for amendment of a Letter of Credit shall be made by facsimile, confirmed by
telephone, made in the form of an L/C Amendment Application and shall specify in
form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to
be amended; (ii) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day); (iii) the nature of the proposed amendment; and (iv)
such other matters as such Issuing Bank may require. The applicable Issuing
Bank shall be under no obligation to amend any Letter of Credit if: (A) such
Issuing Bank would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such letter of Credit does not accept the proposed amendment
to the Letter of Credit. The Agent will promptly notify the Banks of the
receipt by it of any L/C Application or L/C Amendment Application.
(d) The Issuing Banks and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of the Borrower and Stratton and upon the written request of the Borrower and,
if Stratton is the applicant, Stratton, received by the applicable Issuing Bank
(with a copy sent by the Borrower or Stratton to the Agent) at least four days
(or such shorter time as such Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed date of notification of renewal, such
Issuing Bank shall be entitled to authorize the automatic renewal of any Letter
of Credit issued by it. Each such request for renewal of a Letter of Credit
shall be made by facsimile, confirmed by telephone, in the form of an L/C
Amendment Application, and shall specify in form and detail satisfactory to such
Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as such Issuing Bank may require. The applicable Issuing Bank shall be
under no obligation so to renew any Letter of Credit if: (A) such Issuing Bank
would have no obligation at such time to issue or amend such Letter of Credit in
its renewed form under the terms of this Agreement; or (B) the beneficiary of
any such Letter of Credit does not accept the proposed renewal of the Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
applicable Issuing Bank that such Letter of Credit shall not be renewed, and if
at the time of renewal such Issuing Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
3.02(d) upon the request of either or both of the Borrower and Stratton, as
applicable, but such Issuing Bank shall not have received any L/C Amendment
Application with respect to such renewal or other written direction by either or
both of the Borrower and Stratton, as applicable, with respect thereto, such
Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to
renew, and the Borrower and Stratton and the Banks
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hereby authorize such renewal, and, accordingly, such Issuing Bank shall be
deemed to have received an L/C Amendment Application from either or both of the
Borrower and Stratton, as applicable, requesting such renewal.
(e) The Issuing Banks may, at their election (or as required by the
Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Banks will also deliver to the Agent, concurrently or
promptly following delivery of a Letter of Credit, or amendment to or renewal of
a Letter of Credit, to an advising bank or a beneficiary, a true and complete
copy of each such Letter of Credit or amendment to or renewal of a Letter of
Credit.
3.03 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) On and after the Closing Date, the Existing Letters of
Credit shall be deemed for all purposes, including for purposes of the fees to
be collected pursuant to subsections 3.08(a) and 3.08(c), and reimbursement
costs and expenses to the extent provided herein, Letters of Credit outstanding
under this Agreement and entitled to the benefits of this Agreement and the
other Loan Documents, and shall be governed by the applications and agreements
pertaining thereto and by this Agreement. Each Existing Letter of Credit
designated as a "standby letter of credit" on Schedule 3.03 shall be deemed to
be a Standby Letter of Credit, and each Existing Letter of Credit designated as
a "commercial documentary letter of credit" on Schedule 3.03 shall be deemed to
be a Commercial Letter of Credit. Each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Issuing Banks on
the Closing Date a participation in each such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) such Bank's Pro Rata Share
times (ii) the maximum amount available to be drawn under such Letter of Credit
and the amount of such drawing, respectively. For purposes of subsection
2.01(a) and subsection 2.10(b), the Existing Letters of Credit shall be deemed
to utilize the Pro Rata Share of each Bank.
(b) Immediately upon the Issuance of each Letter of Credit in addition
to those described in subsection 3.03(a), each Bank shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the applicable
Issuing Bank a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro Rata
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Share of such Bank, times (ii) the maximum amount available to be drawn under
such Letter of Credit and the amount of such drawing, respectively. For
purposes of subsection 2.01(a), each Issuance of a Letter of Credit shall be
deemed to utilize the Facility A Commitment of each Bank by an amount equal to
the amount of such participation.
(c) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the applicable Issuing Bank will
promptly notify the Borrower and, if Stratton is the applicant, Stratton. The
Borrower or Stratton shall reimburse such Issuing Bank prior to 10:00 a.m. (San
Francisco time), on each date that any amount is paid by such Issuing Bank under
any Letter of Credit (each such date, an "Honor Date"), in an amount equal to
the amount so paid by such Issuing Bank. In the event the Borrower or Stratton
fails to reimburse such Issuing Bank of any Letter of Credit for the full amount
of any drawing under such Letter of Credit by 10:00 a.m. (San Francisco time) on
the Honor Date, such Issuing Bank will promptly notify the Agent and the Agent
will promptly notify each Bank thereof, and the Borrower shall be deemed to have
requested that Base Rate Loans be made by the Banks to be disbursed on the Honor
Date under such Letter of Credit, subject to the conditions set forth in Section
5.02 (including, without limitation, the condition that no Insolvency Proceeding
shall have been commenced by or against the Borrower or Stratton on the Honor
Date). Any notice given by an Issuing Bank or the Agent pursuant to this
subsection 3.03(c) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(d) Each Bank shall upon any notice pursuant to subsection 3.03(c)
make available to the Agent for the account of the applicable Issuing Bank an
amount in Dollars and in immediately available funds equal to its Pro Rata Share
of the amount of the drawing, whereupon the participating Banks shall (subject
to subsection 3.03(e)) each be deemed to have made a Facility A Revolving Loan
consisting of a Base Rate Loan to the Borrower in that amount. If any Bank so
notified fails to make available to the Agent for the account of the applicable
Issuing Bank the amount of such Bank's Pro Rata Share of the amount of the
drawing by no later than 11:00 a.m. (San Francisco time) on the Honor Date, then
interest shall accrue on such Bank's obligation to make such payment, from the
Honor Date to the date such Bank makes such payment, at a rate per annum equal
to the Federal Funds Rate in effect from time to time during such period. The
Agent will promptly give notice of the occurrence of the Honor Date, but failure
of the Agent to give any such notice on the Honor Date or in sufficient time to
enable any Bank to effect such payment on such date shall not relieve such Bank
from its obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing that is not converted
into Facility A Revolving Loans consisting of Base
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Rate Loans to the Borrower in whole or in part, because of the Borrower's
failure to satisfy the conditions set forth in Section 5.02 or for any other
reason, the Borrower and Stratton shall be deemed to have incurred from an
Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing
shall be due and payable on demand (together with interest) and shall bear
interest at a rate per annum equal to the Base Rate plus the Applicable Margin
plus 2% per annum, and each Bank's payment to such Issuing Bank pursuant to
subsection 3.03(d) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Bank in
satisfaction of its participation obligation under this Section 3.03.
(f) Each Bank's obligation in accordance with this Agreement to make
the Facility A Revolving Loans or L/C Advances, as contemplated by this Section
3.03, as a result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Banks (except in circumstances
arising solely as a result of willful misconduct or gross negligence by the
Issuing Banks) and shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which such Bank may
have against any Issuing Bank, the Borrower, Stratton or any other Person for
any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event
of Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the
Agent for the account of an Issuing Bank of immediately available funds from the
Borrower or Stratton (i) in reimbursement of any payment made by such Issuing
Bank under the Letter of Credit with respect to which any Bank has paid the
Agent for the account of such Issuing Bank for such Bank's participation in the
Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest
thereon, the Agent will pay to each Bank, in the same funds as those received by
the Agent for the account of such Issuing Bank, the amount of such Bank's Pro
Rata Share of such funds, and such Issuing Bank shall receive the amount of the
Pro Rata Share of such funds of any Bank that did not so pay the Agent for the
account of such Issuing Bank.
(b) If the Agent or any Issuing Bank is required at any time to return
to the Borrower or Stratton, or to a trustee, receiver, liquidator, custodian,
or any official in any Insolvency Proceeding, any portion of the payments made
by the Borrower or Stratton to the Agent for the account of such Issuing Bank
pursuant to subsection 3.04(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Bank shall, on demand of the
Agent, forthwith return to the Agent or such Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by the Agent or such Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent or such
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Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.05 Role of the Issuing Banks. (a) Each Bank, the Borrower and Stratton
agree that, in paying any drawing under a Letter of Credit, the applicable
Issuing Bank shall not have any responsibility to obtain any document (other
than any sight draft and certificates expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of an Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as applicable); (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Borrower and Stratton hereby assume all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower's or Stratton's pursuing such rights and remedies as
either may have against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of any Issuing Bank, shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary notwithstanding,
that the Borrower and Stratton may have a claim against an Issuing Bank, and an
Issuing Bank may be liable to the Borrower and Stratton, to the extent, but only
to the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower and Stratton which the Borrower and Stratton prove were
caused by an Issuing Bank's willful misconduct or gross negligence or an Issuing
Bank's willful failure to pay under any Letter of Credit after the presentation
to it by the beneficiary of a sight draft and certificate(s) strictly complying
with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) an Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; and (ii)
an Issuing Bank shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Borrower and Stratton
under this Agreement and any L/C-Related Document to
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reimburse the Issuing Banks for drawings under Letters of Credit, and to repay
any L/C Borrowing and any drawings under Letters of Credit converted into
Facility A Revolving Loans, shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement and each such other
L/C-Related Document under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower and
Stratton in respect of any Letter of Credit or any other amendment or
waiver of or any consent to departure from all or any of the L/C-Related
Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower or Stratton may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Person for
whom any such beneficiary or any such transferee may be acting), an Issuing
Bank or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents or any
unrelated transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by an Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by an
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Borrower or
Stratton in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise
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constitute a defense available to, or a discharge of, the Borrower,
Stratton or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if an
Issuing Bank has honored any full or partial drawing request on any Letter of
Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if,
as of the Revolving Termination Date, any Letters of Credit may for any reason
remain outstanding and partially or wholly undrawn, or (ii) the occurrence of
the circumstances described in subsection 2.07(a) requiring the Borrower to Cash
Collateralize Letters of Credit, then, the Borrower shall immediately Cash
Collateralize the L/C Obligations in an amount equal to the L/C Obligations.
3.08 Letter of Credit Fees. (a) The Borrower agrees and, in the case of
Standby Letters of Credit issued for the account of Stratton, the Borrower and
Stratton jointly and severally agree, to pay to the Agent for the account of
each of the Banks based on their respective Pro Rata Shares a letter of credit
fee with respect to the Standby Letters of Credit equal to the Risk
Participation Percentage of the average daily maximum amount available to be
drawn of the outstanding Standby Letters of Credit, computed on a quarterly
basis in arrears on the last Business Day of each fiscal quarter based upon
Standby Letters of Credit outstanding for that quarter as calculated by the
Agent. Such letter of credit fees shall be due and payable quarterly in arrears
on the first Business Day following each fiscal quarter during which Standby
Letters of Credit are outstanding, commencing on the first such quarterly date
to occur after the Closing Date, through the Revolving Termination Date, with
the final payment to be made on the Revolving Termination Date.
(b) The Borrower agrees and, in the case of Standby Letters of Credit
issued for the account of Stratton, the Borrower and Stratton jointly and
severally agree, to pay to the applicable Issuing Bank for its sole account a
letter of credit fronting fee for each Standby Letter of Credit Issued by such
Issuing Bank, equal to 0.15% per annum of the face amount (or increased face
amount, as the case may be) of such Standby Letter of Credit. Such Letter of
Credit fronting fee shall be due and payable quarterly in arrears on the first
Business Day following each fiscal quarter during which such Letter of Credit is
outstanding, commencing on the first such quarterly date to occur after the
Closing Date.
(c) The Borrower agrees and, in the case of Standby Letters of Credit
issued for the account of Stratton, the Borrower and Stratton jointly and
severally agree, to pay to the Issuing Banks from time to time on demand the
normal issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the Issuing Banks relating to Standby Letters of
Credit and Commercial Letters of Credit as from time to time in effect.
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3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce
("UCP") most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to such
Letter of Credit.
3.10 Acknowledgment of Accommodation; Waiver of Defenses. (a) For the
purposes of implementing the provisions of this Article III, the Borrower and
Stratton each irrevocably appoints the other as its agent and attorney-in-fact
for all purposes, including the giving and receiving of notices and other
communications.
(b) Each of the Borrower and Stratton acknowledges and agrees that
Obligations for Letters of Credit issued for the account of Stratton have been
established on a joint and several basis as an accommodation to the Borrower and
Stratton and at their request, and that the Borrower is benefited thereby.
(c) The Borrower shall be absolutely and unconditionally liable for
the repayment of all L/C Obligations, whether incurred by the Borrower or
Stratton, all as if the Borrower was the primary beneficiary of all Letters of
Credit.
(d) Each of the Borrower and Stratton authorizes the Agent and the
Banks, without notice or demand and without affecting the liability of either
hereunder, from time to time, either before or after the termination of this
Agreement, to (i) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the L/C Obligations or any
other Obligation or any part thereof including any increase or decrease of the
rate of interest thereon; (ii) receive and hold security for the payment of the
L/C Obligations or any other Obligation, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security; (iii) apply
such security and direct the order or manner of sale thereof as the Agent in its
discretion may determine; and (iv) release Stratton or any other party and hold
the Borrower liable for all L/C Obligations or other Obligations or other
Obligations of Stratton.
(e) The Borrower waives any right to require the Agent to (i) proceed
against the Borrower or Stratton in any particular order or proceed first or
concurrently against any other party; (ii) proceed against or exhaust any
security held from the Borrower or Stratton or any other party; or (iii) pursue
any other remedy in the Agent's or the Banks' power whatsoever. The Borrower
waives any defense arising by reason of any disability or other defense, or the
cessation from any cause whatsoever of the liability of the Borrower or Stratton
or any other party, or any claim that the obligations of one exceed or are more
burdensome than those of the other including, without limitation, any defense of
the Borrower arising directly or indirectly from the failure of Stratton to
obtain any required consent of any
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Governmental Authority. The Borrower waives any right of subrogation,
reimbursement, indemnification and contribution (contractual, statutory or
otherwise), including without limitation, any claim or right of subrogation
under the Bankruptcy Code (Title 11 of the U.S. Code) or any successor statute,
arising from the existence or performance of its obligations hereunder, and
waives any right to enforce any remedy which the Agent or the Banks now have or
may hereafter have against either of them, and waives any benefit of and any
right to participate in any security now or hereafter held by the Agent or the
Banks. The Borrower waives all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, and
notices of acceptance of this Agreement and of the existence, creation, or
incurrence of new or additional indebtedness.
(f) The Borrower warrants and agrees that the waivers and consents
set forth in this Section 3.10 are made with full knowledge of their
significance and with the understanding that events giving rise to any defense
waived may diminish, destroy or otherwise adversely affect rights which the
Borrower or Stratton may have against each other, the Agent, the Banks or
others.
(g) Stratton shall be liable only with respect to Letters of Credit
issued for its own account, and shall have no liability with respect to Letters
of Credit issued for the account of the Borrower. The parties acknowledge that
this letter of credit subfacility is made available for the activities of the
Borrower and Stratton. The parties further acknowledge that Stratton, as a
regulated insurance company, is prohibited from incurring indebtedness on behalf
of, or guarantying the indebtedness of, the Borrower unless such incurrence or
guaranty is directly related to Stratton's insurance operations. Accordingly,
the parties agree that, notwithstanding any other provision of this Agreement to
the contrary, Stratton shall have no obligation to any party hereunder for any
liability created hereunder except with respect to the issuance, drawing,
reimbursement, repayment, collateralization and payment of interest, fees and
other costs attributable to the Letters of Credit issued for the account of
Stratton for the benefit of persons to whom Stratton has incurred or will incur
liability arising out of the operation of Stratton's insurance activities in the
ordinary course of business.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
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4.01 Taxes. (a) Any and all payments by the Borrower to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of Taxes or Other
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Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Bank or the Agent and any liability
(including interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section)
such Bank or the Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions or withholdings been
made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Borrower shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, all additional
amounts which the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes or Other Taxes
had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any Bank
or the Agent pursuant to subsection (c) of this Section, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is
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unlawful, for any Bank or its applicable Lending Office to make Eurodollar Rate
Loans, then, on notice thereof by the Bank to the Borrower through the Agent,
any obligation of that Bank to make Eurodollar Rate Loans shall be suspended
until the Bank notifies the Agent and the Borrower that the circumstances giving
rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the Borrower shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Agent), prepay in full such
Eurodollar Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Eurodollar Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Eurodollar Rate Loan. If the Borrower is
required to so prepay any Eurodollar Rate Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Eurodollar Rate
Loans has been so terminated or suspended, the Borrower may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Eurodollar Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Eurodollar Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Eurodollar Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation
of any law or regulation or (ii) the compliance by that Bank with any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans
or participating in Letters of Credit, or, in the case of any Issuing Bank, any
increase in the cost to such Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Borrower
shall be liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Agent), pay to the Agent for the account of such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
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(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Borrower through the Agent, the Borrower shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Borrower shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any Eurodollar Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of a Eurodollar Rate Loan on a
day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Borrower to the Banks under this
Section and under subsection 4.03(a), each Eurodollar Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining the
Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable
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amount and for a comparable period, whether or not such Eurodollar Rate Loan is
in fact so funded.
4.05 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Eurodollar
Rate for any requested Interest Period with respect to a proposed Eurodollar
Rate Loan or that the Eurodollar Rate applicable pursuant to subsection 2.09(a)
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to such Banks of funding
such Loan, the Agent will promptly so notify the Borrower and each Bank.
Thereafter, the obligation of the Banks to make or maintain Eurodollar Rate
Loans, hereunder shall be suspended until the Agent upon the instruction of the
Majority Banks revokes such notice in writing. Upon receipt of such notice, the
Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Borrower does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Eurodollar Rate Loans.
4.06 Survival. The agreements and obligations of the Borrower in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.01 Conditions of Initial Credit Extensions. The obligation of each Bank
to make its initial Credit Extension hereunder is subject to the condition that
the Agent have received on or before the Closing Date all of the following, in
form and substance satisfactory to the Agent and, where provided below, each
Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and any Notes. This Agreement and any Notes
requested by the Banks, executed by each party thereto;
(b) Guaranty. A Guaranty in the form of Exhibit G hereto executed by
Finance Corp.;
(c) Resolutions; Incumbency.
(i) Copies of partnership authorizations for the Borrower and
resolutions of the board of directors of the General Partner, Stratton and
Finance Corp. authorizing the transactions contemplated hereby and by the
Guaranties, certified as of the Closing Date by the Secretary or an
Assistant Secretary of the General Partner, Stratton and Finance Corp.;
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(ii) A certificate of the Secretary or Assistant Secretary of
the General Partner certifying the names and true signatures of the
officers of the General Partner authorized to execute, deliver and perform,
as applicable, on behalf of the Borrower and the General Partner, this
Agreement and all other Loan Documents to be delivered by the Borrower and
the General Partner hereunder;
(iii) A certificate of the Secretary or Assistant Secretary of
Stratton certifying the names and true signatures of the officers of
Stratton authorized to execute, deliver and perform, as applicable, on
behalf of Stratton, this Agreement and all other Loan Documents to be
delivered by Stratton hereunder;
(iv) A certificate of the Secretary or Assistant Secretary of
Finance Corp. certifying the names and the signatures of the officers of
Finance Corp. authorized to execute, deliver and perform, as applicable,
the Guaranty and all other Loan Documents required to be delivered by
Finance Corp. hereunder;
(d) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the bylaws
of the General Partner, Stratton and Finance Corp. and the Certificate of
Limited Partnership and the Limited Partnership Agreement of the Borrower,
in each case as in effect on the Closing Date, certified by the Secretary
or Assistant Secretary of the General Partner, Stratton or Finance Corp.,
as applicable, as of the Closing Date;
(ii) a good standing and tax good standing certificate for the
General Partner, Stratton, Finance Corp. and the Borrower from the
Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation or organization, as applicable, and each state where
the General Partner, Stratton, Finance Corp. or the Borrower conducts
significant business as of a recent date, together with bring-down
certificates by facsimile, dated the Closing Date for Delaware and the
Business Day preceding the Closing Date for other jurisdictions;
(e) Legal Opinions.
(i) opinions of Smith, Gill, Fisher & Butts, P.C. and of Andrews
& Kurth L.L.P., counsel to the Borrower, the General Partner, Stratton and
the Guarantor, or of such other counsel as are acceptable to the Agent and
the Banks, addressed to the Agent and the Banks, substantially in the form
of Exhibit D;
(ii) a favorable opinion of Orrick, Herrington & Sutcliffe,
special counsel to the Agent;
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(iii) opinions delivered in connection with the Reorganization, upon
which the Agent and the Banks may rely;
(f) Payment of Fees. Evidence of payment by the Borrower of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of the Agent to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute the Agent's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling of accounts
between the Borrower and the Agent); including any such costs, fees and expenses
arising under or referenced in the Fee Letter or otherwise in Sections 2.10 and
11.04;
(g) Certificate. A certificate signed by a Responsible Officer and an
officer of Stratton, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Default or Event of Default exists or would result from
the Credit Extension;
(iii) there has occurred since April 30, 1994, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect; and
(iv) the Reorganization has been consummated.
(h) Cancellation of Existing Revolving Credit. Evidence that all
outstanding obligations and other liabilities of the General Partner under the
Amended and Restated Loan Agreement dated as of May 10, 1993 among the General
Partner, certain of its subsidiaries, Ferrell Companies, Inc. and One Liberty
Oil Company, as guarantors, the banks listed therein and Wells Fargo Bank,
National Association, as agent, have been paid in full and the obligations of
all parties under each of the documents executed and delivered in connection
therewith have been terminated, except for such provisions as shall by their
terms survive such termination;
(i) Due Diligence Review. The Agent, BA Securities and each of the
Banks shall have completed their normal and customary due diligence for
transactions in the nature contemplated by the Loan Documents, including,
without limitation, review of the terms and conditions of each of the
Organizational Documents of the Borrower and each of its Affiliates, the
Registration Statements, the Indenture and the Senior Notes, and the proposed
capital structure of the Borrower and its Affiliates, and such due diligence
review shall be
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satisfactory to each of them in their sole and absolute discretion;
(j) No Material Change. There shall have been no Material Adverse
Effect between April 30, 1994 and the Closing Date, and there shall have been no
material adverse change in the financial markets since May 12, 1994;
(k) Insurance Certificate. A certificate from the Borrower's
insurance broker, dated the Closing Date, setting forth in such detail as the
Agent shall reasonably request the types, amounts, deductibles, principal
exclusions and other material terms of the insurance then in effect for the
Borrower and its Subsidiaries;
(l) Reorganization. Each of the transactions contemplated by the
Registration Statements to be consummated on the Closing Date has been
consummated and remains in effect according to the terms and conditions
described in the Registration Statements and all applicable laws, including,
without limitation, the contribution by the General Partner to the Borrower of
substantially all of its assets and liabilities in connection with the business
of the General Partner as operated on the Closing Date, and the issuance and
sale of the Senior Notes and the MLP Units in amounts and on such terms and
conditions as are acceptable to the Agent and the Banks in their sole and
absolute discretion (collectively, the "Reorganization").
(m) Trading Policies. The trading position policy and the supply
inventory position policy as in effect on the Closing Date, as evidenced by the
written policies delivered to the Agent, shall be satisfactory to the Agent and
the Majority Banks.
(n) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may request.
5.02 Conditions to All Credit Extensions. The obligation of each Bank to
make any Loan to be made by it (including its initial Loan) or to continue or
convert any Loan under Section 2.04 and the obligation of the Issuing Banks to
Issue any Letters of Credit (including any initial Letters of Credit) is subject
to the satisfaction of the following conditions precedent on the relevant
Borrowing Date, Conversion/Continuation Date or Issuance Date:
(a) Notice, Application. The Agent shall have received (with, in the
case of the initial Loans only, a copy for each Bank) a Notice of Borrowing or a
Notice of Conversion/Continuation, as applicable, or in the case of any Issuance
of any Letter of Credit, the applicable Issuing Bank and the Agent shall have
received an L/C Application or L/C Amendment Application, as required under
Section 3.02;
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(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and as
of such Borrowing Date, Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date, Conversion/Continuation
Date or Issuance Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall exist
or shall result from such Borrowing, continuation or conversion or Issuance; and
(d) Facility B Revolving Loans. With respect only to Borrowings of
Facility B Revolving Loans and in addition to all other terms and conditions set
forth herein, the amount of such Borrowing shall not exceed the excess, if any,
of (i) the sum of the aggregate Cash Costs of Permitted Acquisitions by the
Borrower and its Subsidiaries from the Closing Date through and including the
Borrowing Date plus the aggregate Growth-Related Capital Expenditures by the
Borrower and its Subsidiaries during such period, over (ii) the sum of (x) the
aggregate Net Proceeds of Asset Sales received by the Borrower and its
Subsidiaries during the period from the Closing Date through the Borrowing Date
plus (y) the aggregate Net Proceeds from MLP New Unit Sales from the Closing
Date through the Borrowing Date plus (z) the Effective Amount of Facility B
Revolving Loans outstanding on the Borrowing Date (without regard to such
Borrowing), and the Borrower shall have delivered to the Agent a Maximum Amount
Certificate dated the Borrowing Date which shall demonstrate compliance with the
foregoing test.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
or L/C Amendment Application submitted by the Borrower hereunder shall
constitute a representation and warranty by the Borrower hereunder, as of the
date of each such notice and as of each Borrowing Date, Conversion/Continuation
Date or Issuance Date, as applicable, that the conditions in Section 5.02 are
satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Borrower, the General Partner and Stratton represents and
warrants to the Agent and each Bank that:
6.01 Corporate or Partnership Existence and Power. The General Partner,
Stratton, the MLP, the Borrower and each of its Subsidiaries:
(a) is a corporation or partnership duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation;
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(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
in the manner contemplated by the Registration Statements and to execute,
deliver, and perform its obligations under the Loan Documents and such
additional obligations as are contemplated by the Registration Statements;
(c) is duly qualified as a foreign corporation or partnership and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license or where the failure so to qualify would
not have a Material Adverse Effect; and
(d) is in compliance with all material Requirements of Law.
6.02 Corporate or Partnership Authorization; No Contravention. The
execution, delivery and performance by the Borrower, the General Partner and
Stratton of this Agreement and each other Loan Document to which the General
Partner, the Borrower or any Subsidiary is party, have been duly authorized by
all necessary partnership action on behalf of the Borrower and all necessary
corporate action on behalf of the General Partner and any Subsidiary, and do not
and will not:
(a) contravene the terms of any of the General Partner's, the MLP's,
the Borrower's or any Subsidiary's Organization Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the General Partner, the MLP, the Borrower or any Subsidiary is a party
or any order, injunction, writ or decree of any Governmental Authority to which
such Person or its property is subject where such conflict, breach,
contravention or Lien could reasonably be expected to have a Material Adverse
Effect; or
(c) violate any material Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with (a) the
consummation of the Reorganization according to the terms and conditions
described in the Registration Statements and in accordance with applicable law,
(b) the execution, delivery or performance by, or enforcement against, the
General Partner, the Borrower or any Subsidiary of this Agreement or any other
Loan Document, or (c) the continued operation of Borrower's business as
contemplated to be conducted after the date hereof by the Loan Documents and the
Registration Statements except in each case such approvals, consents,
exemptions, authorizations or other actions, notices or filings (i) as have been
obtained, (ii) as may be required under state
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securities or Blue Sky laws, (iii) as are of a routine or administrative nature
and are either (A) not customarily obtained or made prior to the consummation of
transactions such as the transactions described in clauses (a), (b) or (c) or
(B) expected in the judgment of the Borrower to be obtained in the ordinary
course of business subsequent to the consummation of the transactions described
in clauses (a), (b) or (c), or (iv) that, if not obtained, could reasonably be
expected to have a Material Adverse Effect.
6.04 Binding Effect. This Agreement and each other Loan Document to which
the General Partner, the Borrower or any Subsidiary is a party constitute the
legal, valid and binding obligations of such Person, enforceable against such
Person in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
6.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the General Partner, the MLP, the Borrower or any of its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, the Registration Statements or any of the transactions contemplated
hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document
or any of the transactions contemplated by the Registration Statements, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or would result
from the incurring, continuing or converting of any Obligations by the Borrower.
As of the Closing Date, neither the Borrower nor any Affiliate of the Borrower
is in default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
9.01(e) other than a default under Section 4.09 of the Indenture relating to the
Existing Senior Notes.
6.07 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA,
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the Code and other federal or state law. Each Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
from the IRS and to the best knowledge of the Borrower and the General Partner,
nothing has occurred which would cause the loss of such qualification.
(b) There are no pending, or to the best knowledge of Borrower and the
General Partner, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been
no prohibited transaction or other violation of the fiduciary responsibility
rule with respect to any Plan which could reasonably result in a Material
Adverse Effect.
(c) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Pension Plan.
(d) No Pension Plan has any Unfunded Pension Liability.
(e) The Borrower has not incurred, nor does it reasonably expect to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA).
(f) The Borrower has not transferred any Unfunded Pension Liability to
any Person or otherwise engaged in a transaction that could be subject to
Section 4069 of ERISA.
(g) Except as specifically disclosed in Schedule 6.07, no trade or
business (whether or not incorporated under common control with the Borrower
within the meaning of Section 414(b), (c), (m) or (o) of the Code) maintains or
contributes to any Pension Plan or other Plan subject to Section 412 of the
Code. Except as specifically disclosed in Schedule 6.07, neither the Borrower
nor any Person under common control with the Borrower (as defined in the
preceding sentence) has ever contributed to any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 7.11
and Section 8.07. Neither the Borrower nor any Affiliate of the Borrower is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. Except as provided for in Section 7.05, the
Borrower and each Subsidiary have (or will have within the time period specified
in Section 7.05) good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct their respective businesses, except for such defects in title as could
not, individually or in the aggregate, have a Material
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Adverse Effect. As of the Closing Date and subject to the preceding sentence,
the property of the Borrower and its Subsidiaries is subject to no Liens other
than Permitted Liens.
6.10 Taxes. The General Partner has filed all Federal and other material
tax returns and reports required to be filed, for itself and for the Borrower,
and has paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower that would, if made, have a Material Adverse Effect. The IRS is
conducting the Tax Audit as described in Schedule 6.10 hereof.
6.11 Financial Condition. (a) The audited consolidated financial
statements of the General Partner and its Subsidiaries dated April 30, 1994, and
the pro forma consolidated financial statements of the Borrower dated April 30,
1994, in each case together with the related consolidated statements of income
or operations, shareholders' equity and cash flows for the fiscal periods ended
on those respective dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject to ordinary, good faith year end audit adjustments;
(ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as
of the date thereof, including liabilities for taxes, material commitments
and Contingent Obligations.
(b) Since April 30, 1994, there has been no Material Adverse Effect.
(c) The General Partner, the MLP, the Borrower and each of the other
Subsidiaries of the Borrower are each Solvent, both before and after giving
effect to the consummation of the Reorganization and each of the other
transactions contemplated by the Loan Documents, and any Acquisitions; and each
of such Persons delivered fair consideration for all assets acquired by it in
connection with the Reorganization and such transactions and Acquisitions, in
each case in arm's length transactions.
6.12 Environmental Matters. The Borrower conducts in the ordinary course
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the
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Borrower has reasonably concluded that such Environmental Laws and Environmental
Claims could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.13 Regulated Entities. None of the Borrower or any Affiliate of the
Borrower, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. The Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Borrower nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower or
its Subsidiaries own or are licensed or otherwise has the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrower,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
6.16 Subsidiaries and Affiliates. The Borrower has no Subsidiaries or
other Affiliates other than those specifically disclosed in part (a) of Schedule
6.16 hereto and has no equity investments in any other corporation or entity
other than those Permitted Investments specifically disclosed in part (b) of
Schedule 6.16.
6.17 Insurance. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Borrower, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or such Subsidiary operates.
6.18 Tax Status. The Borrower is subject to taxation under the Code only
as a partnership and not as a corporation.
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6.19 Full Disclosure. None of the representations or warranties made by
the Borrower or any Affiliate of the Borrower in the Loan Documents or any of
the Registration Statements as of the date such representations and warranties
are made or deemed made, and none of the statements contained in any exhibit,
report, statement or certificate furnished by or on behalf of the Borrower or
any Affiliate of the Borrower in connection with the Loan Documents or the
Registration Statements (including the other offering and disclosure materials
delivered by or on behalf of the Borrower to the Banks prior to the Closing
Date), contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.
6.20 Fixed Price Supply Contracts. None of the Borrower and its
Subsidiaries is a party to any contract for the supply of propane or other
product except where (a) the purchase price is set with reference to a spot
index or indices substantially contemporaneously with the delivery of such
product or (b) delivery of such propane or other product is to be made no more
than one year after the purchase price is agreed to.
6.21 Trading Policies. The Borrower has provided to the Agent an accurate
and complete summary of its trading position policy and supply inventory
position policy and the Borrower has complied in all respects with such
policies.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in writing:
7.01 Financial Statements. The Borrower shall deliver to the Agent, in
form and detail satisfactory to the Agent and the Majority Banks and consistent
with the form and detail of financial statements and projections provided to the
Agent by the Borrower and its Affiliates prior to the Closing Date, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 100 days after the end of
each fiscal year (commencing with the fiscal year ended July 31, 1994), a copy
of the audited consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such year and the related consolidated statements of income or
operations, partners' or shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm ("Independent Auditor") which report shall
state that such
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consolidated financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited in any manner,
including on account of any limitation on it because of a restricted or limited
examination by the Independent Auditor of any material portion of the Borrower's
or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended October 31, 1994), a copy of the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, partners' or shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Borrower and the Subsidiaries;
(c) as soon as available, but not later than 100 days after the end
of each fiscal year (commencing with the first fiscal year during all or any
part of which the Borrower had one or more Significant Subsidiaries), a copy of
an unaudited consolidating balance sheet of the Borrower and its Subsidiaries as
at the end of such year and the related consolidating statement of income,
partners' or shareholders' equity and cash flows for such year, certified by a
Responsible Officer as having been developed and used in connection with the
preparation of the financial statements referred to in subsection 7.01(a);
(d) as soon as available, but not later than 45 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with the
first fiscal quarter during all or any part of which the Borrower had one or
more Significant Subsidiaries), a copy of the unaudited consolidating balance
sheets of the Borrower and its Subsidiaries, and the related consolidating
statements of income, partners' or shareholders' equity and cash flows for such
quarter, all certified by a Responsible Officer as having been developed and
used in connection with the preparation of the financial statements referred to
in subsection 7.01(b);
(e) as soon as available, but not later than 60 days after the end of
each fiscal year (commencing with the fiscal year beginning August 1, 1994),
projected consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of each of the current and following two fiscal years and related
projected consolidated statements of income, partners' or shareholders' equity
and cash flows for each such fiscal year, including therein a budget for the
current fiscal year, certified by a Responsible Officer as having been developed
and prepared by the Borrower in good faith and based upon the Borrower's best
estimates and best available information;
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(f) as soon as available, but not later than 100 days after the end
of each fiscal year of the General Partner, commencing with the fiscal year
ended July 31, 1994, a copy of the unaudited (or audited, if available)
consolidated balance sheets of the General Partner as of the end of such fiscal
year and the related consolidated statements of income, shareholders' equity and
cash flows for such fiscal year, certified by a Responsible Officer as fairly
presenting, in accordance with GAAP, the financial position and the results of
operations of the General Partner and its Subsidiaries (or, if available,
accompanied by an opinion of an Independent Auditor as described in subsection
7.01(a)); and
(g) as soon as available, but not later than 45 days after the end of
each fiscal quarter, a trading position report as of the last day of each fiscal
quarter, certified by a Responsible Officer.
7.02 Certificates; Other Information. The Borrower shall furnish to the
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer with respect to the periods covered by such financial
statements together with supporting calculations and such other supporting
detail as the Agent and Majority Banks shall require;
(c) concurrently with the delivery of the financial statements
referred to in subsections 7.01(a) and (b), and at such other times as the Agent
shall request in its sole discretion from time to time or as the Borrower shall
provide in its discretion, a certificate in the form of Exhibit K hereto (a
"Maximum Amount Certificate") executed by a Responsible Officer pursuant to
which the Borrower shall certify to the Agent, for the benefit of the Banks and
in such form and detail as the Agent shall request and in each case, compared to
the applicable amounts set forth in the previously delivered Maximum Amount
Certificate, (i) the aggregate Cash Costs of all Permitted Acquisitions by the
Borrower and its Subsidiaries (together with the aggregate amount of any
Acquired Debt and seller financing associated therewith and the amount of such
Cash Costs which were or could have been financed with Facility B Revolving
Loans) during the periods from the Closing Date to the date that is 270 days
prior to the date of such Maximum Amount Certificate (the "Hold Period Date"),
and from the Hold Period Date through the date of the such Maximum Amount
Certificate, and the total amount; (ii) the aggregate Growth-Related Capital
Expenditures by the Borrower and its Subsidiaries during the period from the
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Closing Date through the date of such Maximum Amount Certificate; (iii) the
aggregate Net Proceeds of Asset Sales during the periods from the Closing Date
through the Hold Period Date and from the Hold Period Date through the date of
such Maximum Amount Certificate, and the total; (iv) the aggregate Net Proceeds
of MLP New Unit Sales during the period from the Closing Date through the date
of such Maximum Amount Certificate; and (v) a calculation of the Facility B
Maximum Amount as of the date of such Maximum Amount Certificate, based on the
information contained therein;
(d) promptly, copies of all financial statements and reports that the
Borrower, the General Partner, the MLP or Finance Corp. or any other Subsidiary
sends to its partners or shareholders, and copies of all financial statements
and regular, periodic or special reports (including Forms 10-K, 10-Q and 8-K)
that the Borrower or any Affiliate of the Borrower, the General Partner, the MLP
or Finance Corp. or any other Subsidiary may make to, or file with, the SEC; and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower, the General Partner, the MLP or
Finance Corp. or any other Subsidiary as the Agent, at the request of any Bank,
may from time to time request.
7.03 Notices. The Borrower shall promptly notify the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or may reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower, the General
Partner, the MLP or Finance Corp. or any other Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Borrower, the
General Partner, the MLP or Finance Corp. or any other Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower, the General
Partner, the MLP or Finance Corp. or any other Subsidiary, including pursuant to
any applicable Environmental Laws;
(c) of any of the following events affecting the Borrower, the
General Partner, the MLP or Finance Corp. or any other Subsidiary, together with
a copy of any notice with respect to such event that may be required to be filed
with a Governmental Authority and any notice delivered by a Governmental
Authority to such Person with respect to such event:
(i) an ERISA Event;
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(ii) if any of the representations and warranties in Section
6.07 ceases to be true and correct;
(iii) the adoption of any new Pension Plan or other Plan subject
to Section 412 of the Code;
(iv) the adoption of any amendment to a Pension Plan or other
Plan subject to Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension Liability; or
(v) the commencement of contributions to any Pension Plan or
other Plan subject to Section 412 of the Code;
(d) of any material change in accounting policies or financial
reporting practices by the Borrower or any of its consolidated Subsidiaries; and
(e) not later than five Business Days after the effective date of a
change in the Borrower's trading position policy or inventory supply position
policy, of any change in either policy.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Borrower or any affected
Affiliate proposes to take with respect thereto and at what time. Each notice
under subsection 7.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
7.04 Preservation of Corporate or Partnership Existence, Etc. The General
Partner and the Borrower shall, and the Borrower shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its partnership or
corporate existence and good standing under the laws of its state or
jurisdiction of organization or incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.03 and sales of assets permitted by Section
8.02;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation
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of which could reasonably be expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Borrower shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear and
tear excepted. The Borrower and each Subsidiary shall use the standard of care
typical in the industry in the operation and maintenance of its facilities. By
December 31, 1994, the Borrower shall have good and marketable title to all
material properties and other assets which by the terms of the Reorganization
are to be transferred to the Borrower.
7.06 Insurance. The Borrower shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
7.07 Payment of Obligations. The Borrower, the General Partner and
Stratton shall, and shall cause each Subsidiary to, pay and discharge as the
same shall become due and payable (except to the extent the failure to so pay
and discharge could not reasonably be expected to have a Material Adverse
Effect), all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property, unless such claims are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Borrower shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.09 Inspection of Property and Books and Records. The Borrower shall
maintain and shall cause each Subsidiary to
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maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Borrower and such Subsidiary. The Borrower shall permit, and shall cause each
Subsidiary to permit, representatives and independent contractors of the Agent
or any Bank to visit and inspect any of their respective properties, to examine
their respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Borrower and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, when an Event
of Default exists the Agent or any Bank may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.
7.10 Environmental Laws. The Borrower shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
7.11 Use of Proceeds. The Borrower (and Stratton, with respect to Letters
of Credit) shall use the proceeds of the Facility A Revolving Loans and Facility
B Revolving Loans for working capital and other general partnership purposes, in
each case not in contravention of any Requirement of Law or of any Loan
Document; the Borrower shall use the proceeds of the Facility B Term Loan for
the purpose of repaying up to $25,000,000 in outstanding amount of Existing Debt
on the Closing Date; and the Borrower shall use the proceeds of all Facility B
Takeout Loans to repay up to all of the aggregate outstanding principal amount
of the Facility B Loans on the Revolving Termination Date.
7.12 Financial Covenants.
-------------------
(a) Leverage Ratio. The Borrower shall maintain as of the last day
of each fiscal quarter a Leverage Ratio for the fiscal period consisting of such
fiscal quarter and the three immediately preceding fiscal quarters, equal to or
less than 4.00 to 1.00; provided, that to the extent the Borrower borrows Loans
to make Restricted Payments within 45 days after the end of any fiscal quarter,
the aggregate amount of Loans so borrowed shall be added to the amount of Funded
Debt outstanding at the end of such quarter for purposes of determining the
Leverage Ratio at the end of such quarter.
(b) Minimum Partners' Equity. The Borrower shall maintain at all
times a minimum Partners' Equity of not less than $50,000,000.
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7.13 Trading Policies. The Borrower and its Affiliates shall comply with
the Borrower's trading position policy and supply inventory position policy as
in effect on the Closing Date, copies of which have been provided to the Agent
on or prior to the Closing Date, provided, however, that the Borrower and its
Affiliates may, during any period of four consecutive fiscal quarters, (a)
increase the stop loss limit specified in either policy by up to 100% of the
amount of such limit on the Closing Date and (b) increase the volume limit
specified in either policy on the number of barrels of a single product or of
all products in the aggregate by up to 100% of each such number on the Closing
Date. If the Borrower proposes to increase any such amounts in excess of the
amounts specified in the preceding sentence, the Borrower shall first obtain the
consent of the Agent and the Majority Banks.
7.14 Other General Partner Obligations.
---------------------------------
(a) The General Partner shall cause the Borrower to pay and perform
each of its Obligations when due. The General Partner acknowledges and agrees
that it is executing this Agreement as a principal as well as the general
partner on behalf of the Borrower, and that its obligations hereunder as general
partner are full recourse obligations to the same extent as those of the
Borrower.
(b) The General Partner represents, warrants and covenants that it is
Solvent, both before and after giving effect to the consummation of the
Reorganization and each of the other transactions contemplated by the Loan
Documents, and that it will remain Solvent until all Obligations hereunder shall
have been repaid in full and all commitments shall have terminated, and will
retain sufficient assets upon the consummation of the transactions contemplated
by the Registration Statements and from time to time thereafter to pay, in full,
the maximum potential liability of the General Partner under or in connection
with the Tax Audits. The General Partner shall advise the Agent in writing from
time to time of all material developments in connection with the Tax Audit,
including, without limitation, any material change in the maximum potential
liability of the General Partner in connection therewith or any material change
in the amount of assets retained by the General Partner regarding such liability
pursuant to this Section 7.14.
(c) The General Partner, for so long as it is the general partner of
the Borrower, (i) agrees that its sole business will be to act as the general
partner of the Borrower, the MLP and any further limited partnership of which
the Borrower or the MLP is, directly or indirectly, a limited partner and to
undertake activities that are ancillary or related thereto (including being a
limited partner in the Borrower), (ii) shall not enter into or conduct any
business or incur any debts or liabilities except in connection with or
incidental to (A) its performance of the activities required or authorized by
the MLP Partnership Agreement or the Borrower's Partnership Agreement or
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described in or contemplated by the MLP Registration Statement and (B) the
acquisition, ownership or disposition of Partnership Interests in the Borrower
or partnership interests in the MLP or any further limited partnership of which
the Borrower or the MLP is, directly or indirectly, a limited partner, except
that, notwithstanding the foregoing, employees of the General Partner may
perform services for Ferrell Companies, Inc. and its Affiliates.
(d) The General Partner agrees that, until all Obligations hereunder
shall have been repaid in full and all commitments shall have terminated, it
will not exercise any rights it may have (at law, in equity, by contract or
otherwise) to terminate, limit or otherwise restrict (whether through repurchase
or otherwise and whether or not the General Partner shall remain a general
partner in the Borrower) the ability of the Borrower to use the name
"Ferrellgas".
(e) The General Partner shall not take any action or refuse to take
any reasonable action the effect of which, if taken or not taken, as the case
may be, would be to cause the Borrower to be treated as an association taxable
as a corporation or otherwise to be taxed as an entity other than a partnership
for federal income tax purposes.
(f) Not later than 45 days after the Closing Date, the General
Partner shall amend its Certificate of Incorporation to delete Article EIGHTH
thereof.
7.15 Other Stratton Obligations. Stratton shall not engage in any
business other than insuring potential general liability and worker's
compensation liabilities of the Borrower and its Affiliates, provided, however,
that the maximum amount of the liabilities insured by Stratton in any policy
year shall not exceed $3 million per occurrence and $8 million in the aggregate.
7.16 Monetary Judgments. If one or more judgments, orders, decrees or
arbitration awards is entered against the Borrower or any Subsidiary involving
in the aggregate a liability (to the extent not covered by independent third-
party insurance as to which the insurer does not dispute coverage other than
through a standard reservation of rights letter) as to any single or related
series of transactions, incidents or conditions, of more than $10 million, then
the Borrower shall reserve for such amount in excess of $10 million, on a
quarterly basis, with each quarterly reserve being at least equal to one-twelfth
of such amount in excess of $10 million. Such amount so reserved shall be
treated as establishment of a reserve for purposes of calculating Available Cash
hereunder.
7.17 Maintenance of Subsidiary. The Borrower agrees at all times to
maintain Stratton as a Wholly-Owned Subsidiary.
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ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in writing:
8.01 Limitation on Liens. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property or
sell any of its accounts receivable, whether now owned or hereafter acquired,
other than the following ("Permitted Liens"):
(a) Liens existing on the Closing Date set forth in Schedule 8.01;
(b) Liens in favor of the Borrower or Liens to secure Indebtedness of
a Subsidiary to the Borrower or a Wholly-Owned Subsidiary;
(c) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Borrower or any Subsidiary, provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Borrower;
(d) Liens on property existing at the time acquired by the Borrower
or any Subsidiary, provided that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any assets other than
those of the Person acquired;
(e) Liens on any property or asset acquired by the Borrower or any
Subsidiary in favor of the seller of such property or asset and construction
mortgages on property, in each case, created within six months after the date of
acquisition, construction or improvement of such property or asset by the
Borrower or such Subsidiary to secure the purchase price or other obligation of
the Borrower or such Subsidiary to the seller of such property or asset or the
construction or improvement cost of such property in an amount up to 80% of the
total cost of the acquisition, construction or improvement of such property or
asset; provided that in each case, such Lien does not extend to any other
property or asset of the Borrower and its Subsidiaries;
(f) Liens incurred or pledges and deposits made in connection with
worker's compensation, unemployment insurance and other social security benefits
and Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature, in each case,
incurred in the ordinary course of business;
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(g) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(h) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good faith in the
ordinary course of business with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made therefor;
(i) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of title
incident thereto that do not, in the aggregate, materially detract from the
value of the property or the assets of the Borrower or any of its Subsidiaries
or impair the use of such property in the operation of the business of the
Borrower or any of its Subsidiaries;
(j) Liens of landlords or mortgages of landlords, arising solely by
operation of law, on fixtures and movable property located on premises leased by
the Borrower or any of its Subsidiaries in the ordinary course of business;
(k) financing statements filed or recorded with respect to personal
property leased by the Borrower and its Subsidiaries in the ordinary course of
business to the owners of such personal property, provided that such financing
statements are filed or recorded solely in connection with such leases and not
the borrowing of money or the obtaining of advances or credit or Capital Lease
Obligations;
(l) judgment Liens to the extent that such judgments do not cause or
constitute a Default or an Event of Default;
(m) Liens incurred in the ordinary course of business of the Borrower
or any Subsidiary with respect to obligations that do not exceed $5,000,000 in
the aggregate at any one time outstanding and that (i) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (ii) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Borrower or such
Subsidiary;
(n) Liens securing Indebtedness incurred to refinance Indebtedness
that has been secured by a Lien otherwise permitted under this Agreement,
provided that (i) any such Lien shall not extend to or cover any assets or
property not securing the Indebtedness so refinanced and (ii) the refinancing
Indebtedness secured by such Lien shall have been permitted to be incurred
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under Section 8.05 hereof and shall not have a principal amount in excess of the
Indebtedness so refinanced;
(o) any extension or renewal, or successive extensions or renewals, in
whole or in part, of Liens permitted pursuant to the foregoing clauses (a)
through (n); provided that no such extension or renewal Lien shall (i) secure
more than the amount of Indebtedness or other obligations secured by the Lien
being so extended or renewed or (ii) extend to any property or assets not
subject to the Lien being so extended or renewed; and
(p) Liens in favor of the Agent, any Issuing Bank and the Banks
relating to the Cash Collateralization of the Borrower's Obligations.
8.02 Asset Sales. The Borrower shall not, and shall not permit any of
its Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any assets
(including by way of a sale-and-leaseback) other than sales of inventory in the
ordinary course of business consistent with past practice (provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Borrower shall be governed by the provisions of Section 8.03
hereof and not by the provisions of this Section 8.02), or (ii) issue or sell
Equity Interests of any of its Subsidiaries, in the case of either clause (i) or
(ii) above, whether in a single transaction or a series of related transactions,
(A) that have a fair market value in excess of $5,000,000, or (B) for net
proceeds in excess of $5,000,000 (each of the foregoing, an "Asset Sale"),
unless (X) the Borrower (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the board of directors of the General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a certificate signed by a Responsible Officer and delivered to the
Agent) of the assets sold or otherwise disposed of and (Y) at least 80% of the
consideration therefor received by the Borrower or such Subsidiary is in the
form of cash; provided, however, that the amount of (1) any liabilities (as
shown on the Borrower's or such Subsidiary's most recent balance sheet or in the
notes thereto), of the Borrower or any Subsidiary (other than liabilities that
are by their terms subordinated in right of payment to the Obligations
hereunder) that are assumed by the transferee of any such assets and (2) any
notes or other obligations received by the Borrower or any such Subsidiary from
such transferee that are immediately converted by the Borrower or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision; and provided, further, that the 80%
limitation referred to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration received therefrom, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation. Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (x) any transfer of
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assets by the Borrower or any of its Subsidiaries to a Subsidiary of the
Borrower that is a Guarantor, (y) any transfer of assets by the Borrower or any
of its Subsidiaries to any Person in exchange for other assets used in a line of
business permitted under Section 8.14 hereof and having a fair market value not
less than that of the assets so transferred and (z) any transfer of assets
pursuant to a Permitted Investment.
8.03 Consolidations and Mergers.
--------------------------
(a) The Borrower shall not consolidate or merge with or into (whether
or not the Borrower is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
Borrower is the surviving Person, or the Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation or partnership organized or existing under the laws of the
United States, any state thereof or the District of Columbia; and (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Borrower) or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the Obligations
of the Borrower pursuant to an assumption agreement in a form reasonably
satisfactory to the Agent, under this Agreement; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) the Borrower or any
Person formed by or surviving any such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (A) shall have Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments resulting from the
transaction) equal to or greater than the Consolidated Net Worth of the Borrower
immediately preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test.
(b) Finance Corp. may not consolidate or merge with or into (whether
or not Finance Corp. is the surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless such
transaction shall be permitted under the terms and conditions of the Indenture.
(c) The Borrower or Finance Corp., as the case may be, shall deliver
to the Agent prior to the consummation of the proposed transaction pursuant to
the foregoing paragraphs (a) and (b) an officers' certificate to the foregoing
effect signed by a Responsible Officer and an opinion of counsel satisfactory to
the
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Agent stating that the proposed transaction complies with this Agreement. The
Agent and the Banks shall be entitled to conclusively rely upon such officer's
certificate and opinion of counsel.
(d) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Borrower in accordance with this Section 8.03, the successor
Person formed by such consolidation or into or with which the Borrower is merged
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Agreement referring to the "Borrower" shall
refer to or include instead the successor Person and not the Borrower), and may
exercise every right and power of the Borrower under this Agreement with the
same effect as if such successor Person had been named as the Borrower herein;
provided, however, that the predecessor Borrower shall not be relieved from the
obligation to pay the principal of, premium, if any, and interest on the
Obligations except in the case of a sale of all of such Borrower's assets that
meets the requirements of Section 8.03 hereof.
8.04 Acquisitions. Without limiting the generality of any other provision
of this Agreement, neither the Borrower nor any Subsidiary shall consummate any
Acquisition unless (i) the acquiree is primarily a retail propane distribution
business; (ii) such Acquisition is undertaken in accordance with all applicable
Requirements of Law; (iii) the prior, effective written consent or approval to
such Acquisition of the board of directors or equivalent governing body of the
acquiree is obtained; and (iv) immediately after giving effect thereto, no
Default or Event of Default will occur or be continuing and each of the
representations and warranties of the Borrower herein is true on and as of the
date of such Acquisition, both before and after giving effect thereto.
8.05 Limitation on Indebtedness. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and the
Borrower shall not issue any Disqualified Interests and shall not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however, that
the Borrower may incur Indebtedness and any Subsidiary of the Borrower may incur
Acquired Debt if:
(a) the Fixed Charge Coverage Ratio for the Borrower's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred would have been at least 2.75 to 1 if such date is
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on or prior to August 1, 1996 and 3.00 to 1 if such date is after August 1,
1996, in each case, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred at the beginning of such four-quarter
period; and
(b) either (x) such Indebtedness shall be subordinated in right of
payment to the Obligations and no principal payment thereon shall be
required prior to July 1, 2000, whether upon stated maturity, mandatory
prepayment, acceleration or otherwise, or (y) such Indebtedness shall be
Permitted Senior Debt and the Senior Debt Ratio Test shall have been met at
the time of incurrence thereof.
The foregoing limitations of this Section 8.05 will not apply to: (i)
the Indebtedness represented by the Senior Notes and any Subsidiary Note
Guarantees; (ii) the Obligations; (iii) the incurrence by the Borrower of
Indebtedness in respect of Capitalized Lease Obligations in an aggregate
principal amount not to exceed $15,000,000; (iv) the Existing Indebtedness set
forth on Schedule 8.05; (v) the incurrence by the Borrower or any of its
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, defease or
refund any then outstanding Indebtedness of the Borrower on such Subsidiary not
incurred in violation of this Agreement; (vi) Hedging Obligations with respect
to any floating rate Indebtedness that is permitted by the terms of this
Agreement to be outstanding; (vii) Indebtedness of any Subsidiary of the
Borrower to the Borrower or any of its Wholly-Owned Subsidiaries; (viii) the
incurrence by the Borrower or Stratton of Indebtedness owing directly to its
insurance carriers (without duplication) in connection with the Borrower's, its
Subsidiaries' or its Affiliates' self-insurance programs or other similar forms
of retained insurable rights for their respective retail propane businesses,
consisting of reinsurance agreements and indemnification agreements (and
guarantees of the foregoing) secured by Letters of Credit, provided that the
Indebtedness evidenced by such reinsurance agreements, indemnification
agreements, guarantees and Letters of Credit shall be counted (without
duplication) for purposes of all calculations pursuant to the Fixed Charge
Coverage Ratio test; (ix) Surety Instruments required in the ordinary course of
business or in connection with the enforcement of rights or claims of the
Borrower or any of its Subsidiaries or in connection with judgments that do not
result in a Default or Event of Default; (x) subject to the provisions of
Section 8.04, the incurrence by the Borrower (or any Subsidiary of the Borrower
that is a Guarantor) of Indebtedness in connection with Acquisitions of retail
propane businesses in favor of the sellers of such businesses in a principal
amount not to exceed $15,000,000 in any fiscal year or $45,000,000 in the
aggregate outstanding at any one time, provided that the principal amount of
such Indebtedness incurred in connection with any such acquisition shall not
exceed the fair market value of the assets
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so acquired, and the Borrower shall deliver an officer's certificate to the
Agent, signed by a Responsible Officer, stating that the acquiring Person is
Solvent, both before and after giving effect to the Acquisition; and (xi) in
addition to the Indebtedness permitted under the foregoing clauses (i) through
(x), the incurrence by the Borrower of Indebtedness in an aggregate principal
amount outstanding not to exceed $15,000,000 at any time, provided that any
Indebtedness incurred pursuant to this clause (xi) shall be subordinated in
right of payment to the Obligations and no principal payment thereon shall be
required prior to July 1, 2000, whether upon stated maturity, mandatory
prepayment, acceleration or otherwise.
The "Senior Debt Ratio Test" will be met with respect to the
incurrence of any Indebtedness by the Borrower or any Subsidiary of the Borrower
if the ratio of (1) the aggregate outstanding principal amount of Senior Debt on
the date of and after giving effect to the incurrence of such Indebtedness (the
"Incurrence Date") to (2) Consolidated Cash Flow for the Borrower's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the Incurrence Date would have been 2.50 to
1 or less. For purposes of the computation in clause (1) of the foregoing
sentence, the outstanding principal amount of Indebtedness under this Agreement
shall be deemed to equal the aggregate amount of the Commitments hereunder. The
foregoing calculation of Consolidated Cash Flow shall give pro forma effect to
Acquisitions (including all mergers and consolidations), Asset Sales and other
dispositions and discontinuances of operations that have been made by the
Borrower or any of its Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to the Incurrence Date in
the manner set forth in the definition of Leverage Ratio.
For purposes of this Section 8.05, any revolving Indebtedness (under
this Agreement or otherwise) shall be deemed to have been incurred only at such
time at which the agreements and instruments (or any amendments thereto that
increase the amount of such revolving Indebtedness) are executed, in an amount
equal to the maximum amount of such revolving Indebtedness permitted to be
borrowed thereunder.
8.06 Transactions with Affiliates. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from, or
enter into any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate, including any Non-Recourse
Subsidiary (each of the foregoing, an "Affiliate Transaction"), unless (a) such
Affiliate Transaction is on terms that are no less favorable to the Borrower or
the relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Borrower or such Subsidiary with an unrelated Person and (b)
with respect to (i) any Affiliate Transaction with an aggregate value in excess
of $500,000, a
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majority of the directors of the General Partner having no direct or indirect
economic interest in such Affiliate Transaction determines by resolution that
such Affiliate Transaction complies with clause (a) above and approves such
Affiliate Transaction and (ii) any Affiliate Transaction involving the purchase
or other acquisition or sale, lease, transfer or other disposition of properties
or assets other than in the ordinary course of business, in each case, having a
fair market value or for net proceeds in excess of $15,000,000, the Borrower
delivers to the Agent an opinion as to the fairness to the Borrower or such
Subsidiary from a financial point of view issued by an investment banking firm
of national standing; provided, however, that (i) any employment agreement or
stock option agreement entered into by the Borrower or any of its Subsidiaries
in the ordinary course of business and consistent with the past practice of the
Borrower (or the General Partner) or such Subsidiary, Restricted Payments
permitted by the provisions of Section 8.12, and transactions entered into by
the Borrower or Stratton in the ordinary course of business in connection with
reinsuring the self-insurance programs or other similar forms of retained
insurable risks of the retail propane businesses operated by the Borrower, its
Subsidiaries and its Affiliates, in each case, shall not be deemed Affiliate
Transactions, and (ii) nothing herein shall authorize the payments by the
Borrower to the General Partner or any other Affiliate of the Borrower for
administrative expenses incurred by such Person other than such out-of-pocket
administrative expenses as such Person shall incur and the Borrower shall pay in
the ordinary course of business.
8.07 Use of Proceeds. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrower or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
8.08 Use of Proceeds - Ineligible Securities. The Borrower shall not,
directly or indirectly, use any portion of the Loan proceeds or any Letter of
Credit (i) knowingly to purchase Ineligible Securities from the Arranger during
any period in which the Arranger makes a market in such Ineligible Securities,
(ii) knowingly to purchase during the underwriting or placement period
Ineligible Securities being underwritten or privately placed by the Arranger, or
(iii) to make payments of principal or interest on Ineligible Securities
underwritten or privately placed by the Arranger and issued by or for the
benefit of the Borrower or any Affiliate of the Borrower.
8.09 Contingent Obligations. The Borrower shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
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(a) endorsements for collection or deposit in the ordinary course of
business;
(b) subject to compliance with the trading policies in effect from
time to time as submitted to the Agent, Hedging Obligations entered into in the
ordinary course of business as bona fide hedging transactions; and
(c) Subsidiary Note Guarantees, under the terms and conditions set
forth in the Indenture and the Guaranties hereunder.
8.10 Joint Ventures. The Borrower shall not, and shall not suffer or
permit any Subsidiary to enter into any Joint Venture.
8.11 Lease Obligations. The aggregate obligations of the Borrower and its
Subsidiaries for the payment of rent for any property under lease or agreement
to lease for any fiscal year shall not exceed the greater of $15 million or 15%
of Consolidated Cash Flow for such fiscal year.
8.12 Restricted Payments. The Borrower shall not and shall not permit any
of its Subsidiaries to, directly or indirectly (i) declare or pay any dividend
or make any distribution on account of the Borrower's or any Subsidiary's Equity
Interests (other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Borrower, (y) dividends or distributions
payable to the Borrower or a Wholly-Owned Subsidiary of the Borrower that is a
Guarantor or (z) distributions or dividends payable pro rata to all holders of
Capital Interests of any such Subsidiary); (ii) purchase, redeem, call or
otherwise acquire or retire for value any Equity Interests of the Borrower or
any Subsidiary or other Affiliate of the Borrower (other than, subject to
compliance with Section 8.20, any such Equity Interests owned by a Wholly-Owned
Subsidiary of the Borrower that is a Guarantor); (iii) purchase, redeem, call or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Obligations; (iv) make any Investment other than a Permitted Investment; or
(v) prepay, purchase, redeem, retire, defease or refinance the Senior Notes,
other than redeeming $5,000,000 principal amount of Floating Rate Senior Notes
on each of August 1, 1999 and August 1, 2000 as provided in paragraph 6 of the
Floating Rate Senior Notes (all payments and other actions set forth in clauses
(i) through (v) above being collectively referred to as "Restricted Payments"),
unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof and each of the
representations and warranties of the Borrower set forth herein is true on
and as of the date of such Restricted Payment both before and after giving
effect thereto; and
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(b) the Fixed Charge Coverage Ratio of the Borrower for the Borrower's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Restricted Payment is made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than 2.25 to 1; and
(c) such Restricted Payment (the amount of any such payment, if other
than cash, to be determined by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution in an officer's
certificate signed by a Responsible Officer and delivered to the Agent),
together with the aggregate of all other Restricted Payments (other than
any Restricted Payments permitted by the provisions of clauses (ii), (iii)
or (iv) of the penultimate paragraph of this Section 8.12) made by the
Borrower and its Subsidiaries in the fiscal quarter during which such
Restricted Payment is made shall not exceed an amount equal to the sum of
(x) Available Cash of the Borrower for the immediately preceding fiscal
quarter (or, with respect to the first fiscal quarter during which
Restricted Payments are made, the amount of Available Cash of the Borrower
for the period commencing on the date of this Agreement and ending on the
last day of the immediately preceding fiscal quarter), plus (y) the lesser
of (i) the amount of any Available Cash of the Borrower during the first 45
days of such fiscal quarter and (ii) the excess of the aggregate amount of
Loans that the Borrower could have borrowed over the actual amount of Loans
outstanding, in each case as of the last day of the immediately preceding
fiscal quarter; and
(d) the Borrower and its Subsidiaries and Non-Recourse Subsidiaries
shall have in the aggregate (i) acquired, improved or repaired property,
plant or equipment that is accounted for as a capital expenditure in
accordance with GAAP or (ii) acquired, through merger or otherwise, all or
substantially all of the outstanding Capital Interests, or all or
substantially all of the assets, of any entity engaged in the business in
which the Borrower is engaged on the date of this Agreement (each of the
transactions referred to in clauses (i) and (ii) above, a "Capital
Investment") for Aggregate Consideration since the date of this Agreement
that, when added to all cash reserves then funded and maintained by the
Borrower (the proceeds of which shall be used solely for Capital
Investments) is no less than the amounts set forth in the table below, if
such Restricted Payment is made in the 12-month period beginning August 1
of the years indicated:
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Year Amount
---- ------
1994 . . . . . . $0
1995 . . . . . . $15 million
1996 . . . . . . $30 million
1997 . . . . . . $45 million
1998 . . . . . . $70 million
1999 . . . . . . $95 million
2000 . . . . . . $120 million
For purposes of the foregoing, "Aggregate Consideration" at any date shall
mean all cash paid in connection with all Capital Investments consummated
on or prior to such date, the fair market value of all Capital Interests of
the MLP or the Borrower (determined by the General Partner in good faith
with reference to, among other things, the trading price of such Capital
Interests, if then traded on any national securities exchange or automated
quotation system) constituting all or a portion of the purchase price of
all Capital Investments consummated on or prior to such date and the
aggregate principal amount of all Indebtedness incurred or assumed by the
Borrower in connection with all Capital Investments consummated on or prior
to such date.
The foregoing provisions will not prohibit (i) the payment of any
distribution within 60 days after the date on which the Borrower becomes
committed to make such distribution, if at said date of commitment such payment
would have complied with the provisions of this Agreement; (ii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Borrower in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Borrower) of other Equity
Interests of the Borrower (other than any Disqualified Interests); (iii) the
defeasance, redemption or repurchase of subordinated Indebtedness with the
proceeds of Permitted Refinancing Indebtedness; and (iv) the defeasance,
redemption or repurchase of any Existing Subordinated Debentures of the General
Partner outstanding on the date of this Agreement and the payment of all costs
and expenses in connection therewith.
Not later than the date of making any Restricted Payment, the General
Partner shall deliver to the Agent an officer's certificate signed by a
Responsible Officer stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
8.12 were computed, which calculations may be based upon the Borrower's latest
available financial statements.
8.13 Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends
or make any other distributions to the Borrower
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or any of its Subsidiaries (1) on its Capital Interests or (2) with respect to
any other interest or participation in, or interest measured by, its profits,
(b) pay any indebtedness owed to the Borrower or any of its Subsidiaries, (c)
make loans or advances to the Borrower or any of its Subsidiaries or (d)
transfer any of its properties or assets to the Borrower or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) Existing Indebtedness, (ii) this Agreement, the Indenture, the
Subsidiary Note Guarantees and the Senior Notes, (iii) applicable law, (iv) any
instrument governing Indebtedness or Capital Interests of a Person acquired by
the Borrower or any of its Subsidiaries as in effect at the time of such
Acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such Acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that the Consolidated Cash Flow of such Person to the extent that
dividends, distributions, loans, advances or transfers thereof is limited by
such encumbrance or restriction on the date of acquisition is not taken into
account in determining whether such acquisition was permitted by the terms of
this Agreement, (v) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices, (vi)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (d) above on
the property so acquired, or (vii) Permitted Refinancing Indebtedness of any
Existing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced.
8.14 Change in Business. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Borrower and its
Subsidiaries on the date hereof.
8.15 Accounting Changes. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower or of any Subsidiary except as required by the Code.
8.16 Limitation on Sale and Leaseback Transactions. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any arrangement
with any Person providing for the leasing by the Borrower or such Subsidiary of
any property that has been or is to be sold or transferred by the Borrower or
such Subsidiary to such Person in contemplation of such leasing; provided,
however, that the Borrower or such Subsidiary may enter into such sale and
leaseback transaction if (i) the Borrower could have (A) incurred Indebtedness
in an amount equal to the
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Attributable Debt relating to such sale and leaseback transaction pursuant to
the Fixed Charge Coverage Ratio Test set forth in paragraph (a) of Section 8.05
and (B) secured a Lien on such Indebtedness pursuant to Section 8.01 or (ii) the
lease in such sale and leaseback transaction is for a term not in excess of the
lesser of (A) three years and (B) 60% of the remaining useful life of such
property.
8.17 Restrictions On Nature Of Indebtedness And Activities Of Finance
Corp. Notwithstanding the provisions of Section 8.05 hereof, Finance Corp.
shall not incur any Indebtedness unless (a) the Borrower is a co-obligor or
guarantor of such Indebtedness or (b) the net proceeds of such Indebtedness are
lent to the Borrower, used to acquire outstanding debt securities issued by the
Borrower or used directly or indirectly to refinance or discharge Indebtedness
permitted under the limitations of this paragraph. Finance Corp. shall not
engage in any business not related directly or indirectly to obtaining money or
arranging financing for the Borrower.
8.18 Amendments of Organization Documents or Indenture. Except as
required by subsection 7.14(f), the Borrower shall not modify, amend, supplement
or replace, nor permit any modification, amendment, supplement or replacement of
the Organization Documents of the General Partner, Borrower or any Subsidiary of
the Borrower, the Indenture, any Senior Note, any Existing Subordinated
Debenture or any document executed and delivered in connection with any of the
foregoing, in each case without the prior written consent of the Agent and the
Majority Banks. Furthermore, the Borrower shall not permit any modification,
amendment, supplement or replacement of the Organization Documents of the MLP
that would have a material effect on the Borrower without the prior written
consent of the Agent and the Majority Banks.
8.19 Fixed Price Supply Contracts. None of the Borrower and its
Subsidiaries shall at any time be a party or subject to any contract for the
supply of propane or other product except where (a) the purchase price is set
with reference to a spot index or indices substantially contemporaneously with
the delivery of such product or (b) delivery of such propane or other product is
to be made no more than one year after the purchase price is agreed to.
8.20 Operations through Subsidiaries. The Borrower shall not conduct any
of its operations through Subsidiaries unless: (a) such Subsidiary executes a
Guaranty substantially in the form of Exhibit G guaranteeing payment of the
Obligations, accompanied by an opinion of counsel to the Subsidiary addressed to
the Agent and the Banks as to the due authorization, execution, delivery and
enforceability of the Guaranty; (b) such Subsidiary agrees not to incur any
Indebtedness other than (i) trade debt and (ii) Acquired Debt permitted by
Section 8.05; (c) the Consolidated Cash Flow of such Subsidiary, when added to
Consolidated Cash Flow of all other Subsidiaries for any fiscal
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year, shall not exceed 10% of the Consolidated Cash Flow of the Borrower and its
Subsidiaries for such fiscal year; and (d) the value of the assets of such
Subsidiary, when added to the value of the assets of all other Subsidiaries for
any fiscal year, shall not exceed 10% of the consolidated value of the assets of
the Borrower and its Subsidiaries for such fiscal year, as determined in
accordance with GAAP.
8.21 Operations of MLP. The General Partner and the Borrower shall not
permit the MLP or any of its Affiliates (including any Non-Recourse Subsidiary)
to operate or conduct any business substantially similar to that conducted by
the Borrower and its Subsidiaries within a 25 mile radius of any business
conducted by the Borrower and its Subsidiaries. In order to comply with this
Section 8.21, the Borrower may enter into one or more transactions by which its
assets and properties are "swapped" or "exchanged" for assets and properties of
another Person prior to or concurrently with another transaction which, but for
such swap or exchange would violate this Section, provided that (i) if the value
of the MLP's assets or units to be so swapped or exchanged exceeds $15 million,
as determined by the audit committee of the Board of Directors of the General
Partner, the Borrower shall have first obtained at its expense an opinion from a
nationally recognized investment banking firm, addressed to it, the Agent and
the Banks and opining without material qualification and based on assumptions
that are realistic at the time, that the exchange or swap transactions are fair
to the Borrower and its Subsidiaries, and (ii) if the value of the MLP's assets
or units to be so swapped or exchanged exceeds $50 million, as determined by the
audit committee of the Board of Directors of the General Partner, at the option
of the Majority Banks, the Agent shall have first retained, at the Borrower's
expense, an investment banking firm on behalf of the Banks who shall also have
rendered an opinion containing the statements and content referred to in clause
(i).
ARTICLE IX
EVENTS OF DEFAULT
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9.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Borrower, the General Partner or Stratton fails
to pay, (i) when and as required to be paid herein, any amount of principal of
any Loan or of any L/C Obligation, or (ii) within 5 days after the same becomes
due, any interest, fee or any other amount payable hereunder or under any other
Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Borrower, the General Partner or any Subsidiary made or deemed made herein, in
any other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Borrower, the General Partner, any
Subsidiary,
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or any Responsible Officer, furnished at any time under this Agreement, or in or
under any other Loan Document, is incorrect in any material respect on or as of
the date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Sections 2.01(a)(ii), 7.01,
7.02, 7.03, 7.04, 7.06, 7.09, 7.12, 7.13, 7.16 or in any Section in Article
VIII; or
(d) Other Defaults. The Borrower, the General Partner or any
Subsidiary fails to perform or observe any other term or covenant contained in
this Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 20 days after the earlier of (i) the date upon which
a Responsible Officer knew or reasonably should have known of such failure or
(ii) the date upon which written notice thereof is given to the Borrower by the
Agent or any Bank; or
(e) Cross-Default. The Borrower, the General Partner or any
Subsidiary (i) fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure; or (ii) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity or to cause such Indebtedness or Contingent
Obligation to be prepaid, purchased or redeemed by the Borrower, the MLP, the
General Partner or any Subsidiary, or such Contingent Obligation to become
payable or cash collateral in respect thereof to be demanded, excluding any
acceleration of maturity of Indebtedness represented by the Existing Senior
Notes to the extent that such Indebtedness shall be redeemed on or prior to the
40th day after the Closing Date; or
(f) Insolvency; Voluntary Proceedings. The General Partner, the MLP,
the Borrower or any Subsidiary (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its
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business in the ordinary course; (iii) commences any Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or authorize any of
the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the General Partner, the MLP, the
Borrower or any Subsidiary, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a substantial part of
any such Person's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the General Partner, the MLP, the Borrower or
any Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the General Partner, the
MLP, the Borrower or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan
which has resulted or could reasonably be expected to result in liability of the
Borrower or the General Partner under Title IV of ERISA to the Pension Plan or
the PBGC in an aggregate amount in excess of $5 million; or (ii) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Pension Plan by the Borrower, the General Partner or any of their
Affiliates which has resulted or could reasonably be expected to result in an
increase in Unfunded Pension Liability among all Pension Plans in an aggregate
amount in excess of $5 million.
(i) Monetary Judgments. One or more judgments, orders, decrees or
arbitration awards is entered against the Borrower, the General Partner or any
Subsidiary involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of more than $40,000,000; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Borrower, the General Partner or any Subsidiary
which does or would reasonably be expected to have a Material Adverse Effect,
and there shall be any period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Loss of Licenses. Any Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Borrower or any
Subsidiary, or the Borrower or any Subsidiary for any reason loses any material
license, permit
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or franchise, or the Borrower or any Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection with any
proceeding (judicial or administrative) with respect to any material license,
permit or franchise; or
(l) Adverse Change. There occurs a Material Adverse Effect; or
(m) Indenture Cross-Defaults. To the extent not otherwise within the
scope of subsection 9.01(e) above, any "Event of Default" shall occur and be
continuing under and as defined in the Indenture; or
(n) Guarantor Defaults. Any Guarantor fails in any material respect
to perform or observe any term, covenant or agreement in its Guaranty; or any
Guaranty is for any reason partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise ceases to be in full force and
effect, or any Guarantor or any other Person contests in any manner the validity
or enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described at subsections (f) or (g) of this
Section occurs with respect to the Guarantor.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and any
obligation of an Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or
at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable;
(c) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable
(including, without limitation, amounts due under Section 4.04), without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
(d) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
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provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Banks to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable without further act of the Agent, any Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
9.04 Certain Financial Covenant Defaults. In the event that, after taking
into account any extraordinary charge to earnings taken or to be taken as of the
end of any fiscal period of the Borrower (a "Charge"), and if solely by virtue
of such Charge, there would exist an Event of Default due to the breach of any
of subsections 7.12(a) or 7.12(b) as of such fiscal period end date, such Event
of Default shall be deemed to arise upon the earlier of (a) the date after such
fiscal period end date on which the Borrower announces publicly it will take, is
taking or has taken such Charge (including an announcement in the form of a
statement in a report filed with the SEC) or, if such announcement is made prior
to such fiscal period end date, the date that is such fiscal period end date,
and (b) the date the Borrower delivers to the Agent its audited annual or
unaudited quarterly financial statements in respect of such fiscal period
reflecting such Charge as taken.
ARTICLE X
THE AGENT
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10.01 Appointment and Authorization. (a) Each of the Banks and each
Issuing Bank hereby irrevocably appoints, designates and authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank or any
Issuing Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. The Co-Agents shall have no
duties or responsibilities in such capacity under this Agreement.
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(b) Each Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Majority Lenders to act for such Issuing Bank with respect thereto; provided,
however, that such Issuing Bank shall have all of the benefits and immunities
(i) provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by such Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Article X, included such Issuing Bank with respect
to such acts or omissions, and (ii) as additionally provided in this Agreement
with respect to such Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent and Issuing Banks. None of the Agent-Related
Persons and Issuing Banks shall (i) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Borrower or any Subsidiary or Affiliate of the Borrower, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower or any of the Borrower's Subsidiaries or Affiliates.
10.04 Reliance by Agent and Issuing Banks. (a) The Agent and each Issuing
Bank shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and
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upon advice and statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the Agent or applicable
Issuing Bank. The Agent and each Issuing Bank shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent and each Issuing Bank shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent or an Issuing Bank to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
IX; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the Agent-
Related Persons or any Issuing Bank has made any representation or warranty to
it, and that no act by the Agent or any Issuing Bank hereinafter taken,
including any review of the affairs of the Borrower and its Subsidiaries, shall
be deemed to constitute any representation or warranty by any Agent-Related
Person or any Issuing Bank to any Bank. Each Bank represents to the Agent and
the Issuing Banks that it has, independently and without reliance upon any
Agent-Related Person or any Issuing Bank and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the
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business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrower
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person or any Issuing Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents to be furnished to the Banks by the Agent or any Issuing Bank as
specified on Schedule 10.06, neither the Agent nor any Issuing Bank shall have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons or any Issuing Bank. The Agent
shall promptly deliver to the Banks the items specified on Schedule 10.6 that
are required to be provided by the Borrower only to the extent such items are
actually provided by the Borrower.
10.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons and the Issuing Banks (to the extent not reimbursed by or on behalf of
the Borrower and without limiting the obligation of the Borrower to do so), pro
rata in accordance with its Pro Rata Share on the date the Borrower's
reimbursement obligation arises, from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the payment to
the Agent-Related Persons or the Issuing Banks of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent and the Issuing Banks upon demand for their ratable share of
any costs or out-of-pocket expenses (including Attorney Costs) incurred by them
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent or the
applicable Issuing Bank is not reimbursed for such expenses by or on behalf of
the Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent or any
Issuing Bank.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and
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generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Borrower and its Subsidiaries and Affiliates as
though BofA were not the Agent or an Issuing Bank hereunder and without notice
to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans and participations in Letters of
Credit, BofA shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent or an
Issuing Bank.
10.09 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent may appoint,
after consulting with the Banks and the Borrower, a successor agent from among
the Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, BofA may not be removed as the
Agent at the request of the Majority Banks unless BofA shall also simultaneously
be replaced as an "Issuing Bank" hereunder pursuant to documentation in form
and substance reasonably satisfactory to BofA.
10.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
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calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Borrower to
such Bank, such Bank agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed
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to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall
survive the payment of all Obligations and the resignation or replacement of the
Agent.
ARTICLE XI
MISCELLANEOUS
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11.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or the General Partner therefrom, shall be effective
unless the same shall be in writing and signed by the Majority Banks (or by the
Agent at the written request of the Majority Banks) and the Borrower and
acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks, the Borrower, Stratton and the
General Partner and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder;
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) release any of the Guaranties;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Banks in addition to the Majority Banks or all
the Banks, as the case may
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be, affect the rights or duties of the Issuing Banks under this Agreement or any
L/C-Related Document relating to any Letter of Credit Issued or to be Issued by
any such Issuing Bank, (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (iii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed solely by the
parties thereto.
11.02 Notices. (a) Except as otherwise specifically provided in Section
3.02, all notices, requests and other communications shall be in writing
(including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the Borrower by facsimile
(i) shall be immediately confirmed by a telephone call to the recipient at the
number specified on Schedule 11.02, and (ii) shall be followed promptly by
delivery of a hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on Schedule 11.02; or, as
directed to the Borrower or the Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X shall not be effective until actually
received by the Agent, and notices pursuant to Article III to any Issuing Bank
shall not be effective until actually received by such Issuing Bank at the
address specified for the "Issuing Banks" on the applicable signature page
hereof.
(c) Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Borrower. The Agent and the Banks shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by the Borrower
to give such notice and the Agent and the Banks shall not have any liability to
the Borrower or other Person on account of any action taken or not taken by the
Agent or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans and L/C Obligations shall not be
affected in any way or to any extent by any failure by the Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at variance with
the terms understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.
103
<PAGE>
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
11.04 Costs and Expenses. The Borrower shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and an
Issuing Bank) within five Business Days after demand (subject to subsection
5.01(f)) for all costs and expenses incurred by BofA (including in its capacity
as Agent and an Issuing Bank) in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement, waiver
or modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable (giving due regard to the prevailing
circumstances) Attorney Costs incurred by BofA (including in its capacity as
Agent and an Issuing Bank) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger, each Issuing Bank and
each Bank within five Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).
11.05 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Borrower shall indemnify and hold the Agent-Related Persons,
the Issuing Banks, and each Bank and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and
reasonable (giving due regard to the prevailing circumstances) costs, charges,
expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following repayment of
the Loans, the termination of the Letters of Credit and the termination,
resignation or replacement of the Agent or replacement of any Bank or Issuing
Bank) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to
104
<PAGE>
any investigation, litigation or proceeding (including any Insolvency Proceeding
or appellate proceeding) related to or arising out of this Agreement or the
Loans or Letters of Credit or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
11.06 Payments Set Aside. To the extent that the Borrower makes a payment
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank. Any attempted or purported assignment in
contravention of the preceding sentence shall be null and void.
11.08 Assignments, Participations, Etc. (a) Any Bank may, with the
written consent of the Borrower (at all times other than during the existence of
an Event of Default), the Agent and the applicable Issuing Bank(s), which
consents shall not be unreasonably withheld, at any time assign and delegate to
one or more Eligible Assignees (provided that no written consent of the
Borrower, the Agent or an Issuing Bank shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate
of such Bank) (each an "Assignee") all, or any ratable part of all, of the
Loans, the Commitments, the L/C Obligations and the other rights and obligations
of such Bank hereunder with respect to Facility A and Facility B, in an
aggregate minimum amount of $10,000,000, pro-rated between Facility A and
Facility B; provided that such Bank shall retain an aggregate amount of not less
than $10,000,000 in respect thereof, unless such Bank assigns and delegates all
of its rights and obligations hereunder to one or more Eligible Assignees on the
time and subject to the conditions set forth
105
<PAGE>
herein; and provided, further, however, that the Borrower and the Agent may
continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and the Agent by
such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered
to the Borrower and the Agent an Assignment and Acceptance in the form of
Exhibit E ("Assignment and Acceptance"), together with any Note or Notes subject
to such assignment; and (iii) the assignor Bank or Assignee has paid to the
Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee (and provided that it consents to such assignment in accordance
with subsection 11.08(a)), if the Assignee so requests, the Borrower shall
execute and deliver to the Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Bank has retained a portion of its
Loans and its Commitment and so requests, replacement Notes in the principal
amount or amounts of the Loans retained by the assignor Bank (such Notes to be
in exchange for, but not in payment of, the Notes held by such Bank).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Bank pro tanto and the Agent shall promptly prepare and distribute a
new Schedule 2.01 reflecting the new commitments.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating
106
<PAGE>
Bank shall remain solely responsible for the performance of such obligations,
(iii) the Borrower, the Issuing Banks and the Agent shall continue to deal
solely and directly with the originating Bank in connection with the originating
Bank's rights and obligations under this Agreement and the other Loan Documents,
and (iv) no Bank shall transfer or grant any participating interest under which
the Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Banks
as described in the first proviso to Section 11.01. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections
4.01, 4.03 and 11.05 as though it were also a Bank hereunder, and if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Borrower and provided to it by the
Borrower or any Subsidiary, or by the Agent on such Borrower's or Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither it nor any
of its Affiliates shall use any such information other than in connection with
or in enforcement of this Agreement and the other Loan Documents; except to the
extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Affiliate of such Bank, or to any Participant
or Assignee, actual or potential, provided that such Affiliate, Participant or
Assignee agrees to keep such information confidential to the same extent
required of the Banks hereunder, and (H) as to any Bank, as expressly permitted
under the terms of any other document or agreement regarding
107
<PAGE>
confidentiality to which the Borrower is party or is deemed party with such
Bank.
(f) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and any Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
11.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrower, any such notice being waived by the Borrower to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Borrower against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Borrower and the Agent after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
11.10 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
11.11 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.12 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.13 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Borrower, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct
108
<PAGE>
or indirect cause of action or claim in connection with, this Agreement or any
of the other Loan Documents.
11.14 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ALL NOTES
ISSUED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE GENERAL PARTNER, STRATTON,
THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE
GENERAL PARTNER, STRATTON, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER, THE GENERAL PARTNER,
STRATTON, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
11.15 Waiver of Jury Trial. THE BORROWER, THE GENERAL PARTNER, STRATTON,
THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE BORROWER, THE GENERAL PARTNER, STRATTON, THE BANKS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.16 Entire Agreement. From and after the Closing Date (if it shall
occur), this Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding between and among the Borrower, the General
Partner, Stratton, the Banks and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons,
109
<PAGE>
verbal or written, relating to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
FERRELLGAS, L.P.
By: Ferrellgas, Inc.,
General Partner
By: ______________________
Danley K. Sheldon
Vice President and Chief
Financial Officer/Treasurer
FERRELLGAS, INC.
By: ______________________
Danley K. Sheldon
Vice President and Chief
Financial Officer/Treasurer
STRATTON INSURANCE COMPANY, INC.
By: ______________________
Danley K. Sheldon
Vice President and Chief
Financial Officer/Treasurer
Address for Notices for each of the
Borrower, the General Partner and
Stratton:
One Liberty Plaza
Liberty, Missouri 64068
Attention: Danley K. Sheldon
Telephone: (816) 792-6828
Facsimile: (816) 792-6979
110
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: _________________________
James D. Hinson
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: _________________________
Mark F. Milner
Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Bank
By: _________________________
H. Louis Bailey
Managing Director
NATIONSBANK, N.A.,
as a Bank
By: _________________________
Perry Stephenson
Senior Vice President
THE BANK OF NOVA SCOTIA,
as a Bank
By: _________________________
F.C.H. Ashby
Senior Manager,
Loan Operations
WELLS FARGO BANK, N.A.,
as a Bank
By: _________________________
Charles D. Kirkham III
Vice President
111
<PAGE>
CAISSE NATIONALE DE CREDIT
AGRICOLE, as a Bank
By: _________________________
Name:
Title:
BANQUE PARIBAS, as a Bank
By: _________________________
Chris Goodwin
Vice President
112
<PAGE>
SCHEDULE 2.01
-------------
<TABLE>
<CAPTION>
Facility B Commitment
--------------------------------
Facility A Tranche I Tranche II Pro Rata
Bank Commitment Term Loan Revolving Loans* Total Share
- - ---- --------------- -------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Bank of
America NT&SA $ 21,621,621.62 $ 5,405,405.42 $12,972,972.98 $ 40,000,000.00 21.62162162%
The First National
Bank of Boston 18,378,378.38 4,594,594.59 11,027,027.03 34,000,000.00 18.37837838%
NationsBank, N.A. 18,378,378.38 4,594,594.59 11,027,027.03 34,000,000.00 18.37837838%
The Bank of
Nova Scotia 12,972,972.97 3,243,243.24 7,783,783.78 24,000,000.00 12.97297297%
Wells Fargo
Bank, N.A. 12,972,972.97 3,243,243.24 7,783,783.78 24,000,000.00 12.97297297%
Caisse National
de Credit Agricole 7,837,837.84 1,959,459.46 4,702,702.70 14,500,000.00 7.83783784%
Banque Paribas 7,837,837.84 1,959,459.46 4,702,702.70 14,500,000.00 7.83783784%
--------------- -------------- -------------- --------------- ------------
Total: $100,000,000.00 $25,000,000.00 $60,000,000.00 $185,000,000.00 100.00000000%
</TABLE>
* On the 45th day after the Closing Date, each Bank's Facility B Revolving
Loan Commitment set forth on this Schedule 2.01 shall be increased by the
excess, if any, of each Bank's Facility B Term Loan Commitment over the
amount of its Facility B Term Loan outstanding as of such date.
<PAGE>
SCHEDULE 3.03
OUTSTANDING LETTERS OF CREDIT
ISSUED BY BANQUE PARIBAS
<TABLE>
<CAPTION>
1. STAND-BY LETTERS OF CREDIT
Unpaid
Beneficiary L/C NUMBER Stated Amount
- - ----------- ---------- -------------
<S> <C> <C>
GECC BPH-4046 $ 3,083,100.00
National Union Fire Ins. Co. BPH-4054 2,000,000.00
National Union Fire Ins. Co. BPH-4614 2,154,892.00
St. Paul Fire/Marine Ins. BPH-5653 1,588,848.00
National Union Fire Ins. Co. BPH-5836 2,000,000.00
Murphy Oil BPH-6960 900,000.00
Reliance National Insurance Co. BPH-8348 12,948,885.00
Stratton
Reliance BPH-12652 4,459,000.00
Ashland 19476 300,000.00
Exxon Co. USA 20272 1,883,517.50
United Pacific Insurance 21106 100,000.00
Coastal 25140 235,200.00
Shell 24671 460,425.00
Exxon Chemical 24967 1,308,900.00
--------------
</TABLE>
As of 7/1/94 $33,422,747.50
==============
2. COMMERCIAL LETTERS OF CREDIT
None
<PAGE>
Schedule 6.07
ERISA
Ferrellgas, Inc. Single Employer Defined Benefit Plan. The
Ferrellgas, Inc. Single Employer Defined Benefit Plan has a projected benefit
obligation of no more than $5,500,000. The Ferrellgas, Inc. Single Employer
Defined Benefit Plan is currently being funded in accordance with ERISA.
The company makes annual contributions of approximately $135,000 to
Central States Pension Fund and the Western Conference of Teamsters Fund on
behalf of approximately 64 employees covered by nine collective bargaining
arrangements.
<PAGE>
Schedule 6.10
Federal Examination
- - -------------------
The Internal Revenue Service (IRS) has examined the Borrower's and Parent's
consolidated income tax returns for years ended July 31, 1987 and 1986 and has
proposed certain adjustments which relate principally to the purchase price
allocations for an acquisition made during 1987. As a result, the IRS has
proposed the following:
- - - To disallow $90 million of deductions for amortization of customer
relationships taken or to be taken on the Borrower's and Parent's
consolidated income tax returns.
On April 20, 1993, the United States Supreme Court held in Newark
Morning Ledger v. United States that a taxpayer may amortize customer
based intangibles if that taxpayer can prove such intangibles are
capable of being valued and whether that value diminishes over time.
The Borrower and Parent strongly contend they have met this burden of
proof and feel this recent landmark Supreme Court decision provides
definite authority for the positions taken during the Borrower's
allocation of purchase price to customer relationships. The valuation
of the customer relationships was prepared by Deloitte and Touche, a
national firm.
- - - To disallow $61 million of deductions taken for depreciation of customer
tanks. The Borrower and Parent assert the methods and principals used
during the valuation of the customer tanks are defensible. This valuation
was prepared by the American Appraisal Associates, a national firm.
The Borrower and Parent intend to vigorously defend against these proposed
adjustments and are in the process of protesting these adjustments through the
appeals process of the IRS. At this time, it is not possible to determine the
ultimate resolution of this matter.
<PAGE>
SCHEDULE 6.16
-------------
SUBSIDIARIES AND AFFILIATES
(a) Subsidiaries
. Ferrellgas Finance Corp., a wholly-owned subsidiary of Ferrellgas, L.P.
. Stratton Insurance Company, Inc.
(b) Affiliates
. Ferrellgas Partners, L.P. - Limited Partner of Ferrellgas, L.P.
. Ferrellgas, Inc. - General Partner of Ferrellgas, L.P.
. Ferrell Propane Gas Company of Missouri
. Ferrell Companies, Inc.
. Propane Industrial, Inc.
. Sentry Underground Storage Company
. One Liberty Oil Company
. Ferrell Properties, inc.
. Ferrell International
. Marshall Evergreens, Inc.
. FRE, Inc.
(b) None.
<PAGE>
Schedule 8.01
SCHEDULE OF MATERIAL LIENS
Ferrellgas, Inc.
----------------
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
I. Existing Financing Statements
<S> <C> <C> <C> <C>
AL 12/03/87 A264758 GE Credit Corp. Leased vehicles - information filing
CA 08/29/89 89-231023 Stockton Leasing Corp. Assigned Leased telephone equipment - information filing
to Citicorp North America
IA 11/05/85 N327334 Norwest Bank Des Moines Leased telephone equipment - information filing
N3415414 Amendment
MI 05/11/88 A998207997 Old Kent Bank & Trust Leased copier
MO 40 financing statements plus Leased vehicles - information filing
amendments GE Credit Corporation
11/30/87 1529347 GE Capital Corporation Leased vehicles - information filings
08/24/92 2165675 Continuation
01/29/88 1551003 GE Capital Corporation Leased vehicles - information filings
10/11/88 1650170 Amendment - serial no.
01/19/93 2215870 Continuation
02/17/88 1558062 GE Capital Corporation Leased vehicles - information filings
01/19/93 2215871 Continuation
03/14/88 1567330 GE Capital Corporation Leased vehicles - information filings
02/04/93 2222504 Continuation
04/28/88 1588172 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224103 Continuation
04/12/88 1580334 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224102 Continuation
04/12/88 1580335 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224101 Continuation
04/28/88 1588171 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224100 Continuation
04/15/88 1582196 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224099 Continuation
03/29/88 1572859 GE Capital Corporation Leased vehicles - information filings
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
02/29/93 2224098 Continuation
04/15/88 1582195 GE Capital Corporation Leased vehicles - information filings
02/09/93 2224097 Continuation
05/17/88 1595750 GE Capital Corporation Leased vehicles - information filings
04/08/93 2247970 Continuation
05/17/88 1595751 GE Capital Corporation Leased vehicles - information filings
04/08/93 2247969 Continuation
06/06/88 1603160 GE Capital Corporation Leased vehicles - information filings
04/22/93 2253744 Continuation
06/06/88 1603161 GE Capital Corporation Leased vehicles - information filings
04/22/93 2253743 Continuation
06/30/88 1612631 GE Capital Corporation Leased vehicles - information filings
04/20/93 2252752 Continuation
07/05/88 1614404 GE Capital Corporation Leased vehicles - information filings
04/16/93 2251878 Continuation
07/18/88 1618849 GE Capital Corporation Leased vehicles - information filings
10/11/88 1650172 Amendment - serial number
08/10/88 1628076 Amendment - serial number
04/27/93 2256539 Continuation
07/25/88 1621589 GE Capital Corporation Leased vehicles - information filings
08/10/88 1628077 Amendment - delete one vehicle
04/27/93 2256540 Continuation
08/18/88 1630901 GE Capital Corporation Leased vehicles - information filings
05/19/93 2265203 Continuation
09/13/88 1639484 Ge Capital Corporation Leased vehicles - information filings
05/19/93 2265202 Continuation
10/11/88 1649562 GE Capital Corporation Leased vehicles - information filings
06/23/93 2279729 Continuation
10/26/88 1655887 GE Capital Corporation
06/23/93 2279730 Continuation
11/19/88 1664232 GE Capital Corporation Leased vehicles - information filings
08/03/93 2294187 Continuation
01/05/89 1680871 GE Capital Corporation Leased vehicles - information filings
12/28/93 2348612 Continuation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
08/23/89 1769793 GE Capital Corporation Leased vehicles - information filings
09/18/89 1778666 GE Capital Corporation Leased vehicles - information filings
02/25/91 1970324 Amendment - serial number
10/31/89 1794650 GE Capital Corporation Leased vehicles - information filings
11/13/89 1798627 GE Capital Corporation Leased vehicles - information filings
12/18/89 1811621 GE Capital Corporation Leased vehicles - information filings
01/05/90 1817661 GE Capital Corporation Leased vehicles - information filings
01/29/90 1826558 GE Capital Corporation Leased vehicles - information filings
03/02/90 1839496 GE Capital Corporation Leased vehicles - information filings
06/13/90 1880770 Amendment - serial number
03/16/90 1845217 GE Capital Corporation Leased vehicles - information filings
07/20/90 1894226 Clune Equipment Leasing Leased copier
Corporation
08/09/90 1901323 GE Capital Corporation Leased vehicles - information filings
08/29/90 1908182 GE Capital Corporation Leased vehicles - information filings
09/24/90 1916508 GE Capital Corporation Leased vehicles - information filings
10/16/90 1924897 GE Capital Corporation Leased vehicles - information filings
10/31/90 1930157 Amendment
11/07/90 1932428 GE Capital Corporation Leased vehicles - information filings
11/30/90 1939776 GE Capital Corporation Leased vehicles - information filings
12/10/90 1942766 GE Capital Corporation Leased vehicles - information filings
02/15/91 1966802 GE Capital Corporation Leased vehicles - information filings
03/14/91 1977150 GE Capital Corporation Leased vehicles - information filings
05/28/91 2005792 GE Capital Corporation Leased vehicles - information filings
07/08/91 2019718 GE Capital Corporation Leased vehicles - information filings
07/26/91 2026318 Amendment - serial number
07/19/91 2023917 GE Capital Corporation Leased vehicles - information filings
08/23/91 2035939 GE Capital Corporation Leased vehicles - information filings
09/04/91 2039315 GE Capital Corporation Leased vehicles - information filings
09/09/91 2040577 GE Capital Corporation Leased vehicles - information filings
11/08/91 2061272 GE Capital Corporation Leased vehicles - information filings
01/06/92 2079491 GE Capital Corporation Leased vehicles - information filings
08/05/92 2159677 Unionbane Leasing Corporation Leased vehicles - information filings
06/07/93 2274135 Amendment - serial numbers
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
02/16/94 2368953 Unionbane Leasing Corporation
03/21/94 2381781 GE Capital Corporation Leased vehicles - information filings
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
Clay County
- - -----------
MO 13 financing statements & Leased vehicles - information filings
amendments GE Credit Corporation
MS 11/11/87 0278155 GE Credit Corporation Leased vehicles - information filing
11/20/87 0280431 GE Credit Corporation Leased vehicles - information filing
MN 09/16/83 703631 1st Nat'l Bank of VA Assets of former Anchor Gas & Fuel Co.
inventory, A.R., Equipment
07/27/88 1158111 Amendment - Ferrellgas, as
successor to Anchor
09/14/88 1177754 Continuation
09/16/83 703632 1st Nat'l Bank of VA General Intangibles, including Anchor Gas &
Fuel Co. right under Leases on attachment A
06/27/88 1158110 Amendment - Ferrellgas as
successor to Anchor Gas
09/14/88 1177753 Continuation
06/22/84 754784 First Bank Minnesota Equipment and leasehold improvements as on
attachment A formerly Anchor Gas & Fuel Co.
06/27/88 1158109 Amendment - Ferrellgas as
successor to Anchor Gas
05/26/89 1244224 Continuation
06/22/84 754785 First Bank Minnesota Equipment listed on Exhibit A on sale of
United Propane Co. to Anchor Gas & Fuel Co.
06/27/88 1158108 Amendment - Ferrellgas as
successor to Anchor Gas
05/26/89 1244225 Continuation
06/22/84 754786 First Bank Minnesota Equipment on Exhibit A on sale of Nesaba
Propane to Anchor Gas & Fuel Co.
07/27/88 1158106 Amendment - Ferrellgas as
successor to Anchor Gas
05/26/88 1244223 Continuation
12/02/85 853081 First Bank Minnesota Equipment (vehicles, delivery units, RR tank
cars) assets of Anchor Gas & Fuel Co.
10/07/88 1184026 Amendment - Ferrellgas as
successor to Anchor Gas
04/25/86 885023 First Bank Minnesota Equipment on Schedule A (vehicles, etc.)
Anchor Gas & Oil
08/18/88 1171830 Amendment - Ferrellgas successor
to Anchor Gas
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
04/25/86 1330475 Freeport State Bank Leased water cooler - information filing
NC 05/11/89 0567690 Pitney Bowes Credit Corp. Leased office equipment - information filing
05/11/89 0567691 Pitney Bowes Credit Corp. Leased office equipment - information filing
OR 04/04/90 N85369 McKenzie Leasing Co. Leased telephone equipment - information filing
RI 11/30/89 564352 Francis Dupointe & Mildred Propane tanks in connection with asset purchase
Dupointe of Dupane Gas Service
SC 11/23/87 061716 GE Credit Corporation Leased trucks - information filing
TX 03/31/86 098864 Transamerica Commercial Finance Leased telephone equipment in Beaumont, TX -
Commercial Leasing information filing
09/19/88 Amendment
03/31/86 098901 Transamerica Commercial Finance Leased Telephone equipment in EL Compo,
Commercial Leasing TX - information filing
09/19/88 Amendment
03/31/86 098902 Transamerica Commercial Finance Leased telephone equipment in Alice, TX -
Commercial Leasing information filing
09/19/88 Amendment
03/31/86 098994 Transamerica Commercial Finance Leased telephone equipment in San Antonio,
Commercial Leasing TX - information filing
09/18/88 Amendment
04/01/86 101403 Transamerica Commercial Finance Leased telephone equipment in Dayton, TX -
Commercial Leasing information filing
09/19/88 Amendment
12/18/86 360635 Whirlpool Corp. Debtor listed as All of dealer's inventory, goods, etc.
Ferrellgas, Inc. DBA Universal purchased from Whirlpool Corp. pursuant
to floor plan financing arrangements
12/03/87 306890 General Electric Credit Corp. Leased vehicles - information filing
02/28/90 044821 American Network Leasing Leased base station and mobil radios -
Partnership information filing
04/13/90 081818 Advance Acceptance Corp. Leased base station and mobil radios -
information filing
WA 07/13/87 87-194-0455 The CIT Group/Equipment Leased vehicles - information filing
Financing, Inc. - Lessor is
Ferrell, L.P. Gas Co., Tulsa, OK
WI 05/23/90 1131962 Allen F. Schaus Leased propane tanks
James W. Schaus
Thomas A. Schaus
Michael Schaus
One Liberty Oil Company
- - -----------------------
OK 10/31/83 096643 Banquers Leasing Corp. Leased copier - information filing
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE DATE STATEMENT NO. SECURED PARTY COLLATERAL
=====================================================================================================================
<S> <C> <C> <C> <C>
SS/TX 11/12/85; 85-294488 Campbell Oil, Ltd. Oil, gas, minerals, equipment and other assets
07/07/86 relating to drilling contract
SS/TX 02/24/86 86-060759 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 11/02/86 86-318520 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 05/05/87 87-122657 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 06/29/87 87-170143 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 06/29/87 87-170144 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 06/29/87 87-170145 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 10/19/87 87-268618 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 10/19/87 87-268619 Compressor Systems, Inc. Leased oil gas compressor - information filing
SS/TX 10/23/87 87-273466 Compressor Systems, Inc. Leased oil gas compressor - information filing
</TABLE>
<PAGE>
SCHEDULE 8.05
EXISTING INDEBTEDNESS
---------------------
<TABLE>
<CAPTION>
NON-COMPETE NOTES PAYABLE:
DISCOUNT
SELLER DATE TERM % RATE BALANCE
- - ----------------------------- -------- ------ -------- ----------
<S> <C> <C> <C> <C>
R-Gas, Inc. 08/15/85 10 yrs 12.00 4,000.00
Stockton Skelgas 08/23/85 10 yrs 12.00 12,000.00
Reddoch Butane 02/20/86 10 yrs 11.00 155,820.00
Lonoke Butane 07/02/86 10 yrs 12.00 15,000.00
A & E Gas 07/24/86 10 yrs 12.00 15,000.00
Graves Oil 07/31/86 10 yrs 12.00 30,000.00
Harrison Propane Gas #2 08/14/86 10 yrs 12.00 7,000.02
Harrison Propane Gas #1 08/14/86 10 yrs 12.00 14,000.04
Der Petroleum 06/10/88 6 yrs 7.00 30,000.00
Shaws LP 10/19/89 5 yrs 11.75 10,000.00
Augusta Propane 11/14/89 5 yrs 11.75 20,000.00
Dupane Gas 11/30/89 6 yrs 9.00 200,000.00
Wm Schaus & Son (N/C) 03/01/90 5 yrs 11.75 75,000.00
Sun Propane 03/07/90 5 yrs 11.25 10,000.00
Johnstown Suburban 07/01/90 5 yrs 11.25 47,172.75
Stan Harvey 07/20/90 5 yrs 11.25 253,200.00
Century Hardware 07/23/90 5 yrs 11.25 59,520.00
Clayton Bottle Gas 08/03/90 5 yrs 11.25 198,400.00
Gorham (Milltown) 08/21/90 5 yrs 11.25 100,000.00
Forster (Milltown) 08/21/90 5 yrs 11.25 100,000.00
Bofenkamp 09/04/90 5 yrs 11.25 34,720.00
Gas Products 11/07/90 5 yrs 11.25 106,600.00
Littel 12/07/90 5 yrs 11.25 148,000.00
Arrowhead 12/17/90 4 yrs 11.25 31,250.00
Dixie Gas (Kerlin) 10/01/91 5 yrs 9.25 15,000.00
Bardine Bottled Gas 10/07/91 5 yrs 9.25 30,000.00
Modern Gas 12/19/91 5 yrs 8.50 90,000.00
UCG Energy Corp. 04/22/91 5 yrs 10.25 40,000.00
David Scott 04/22/91 5 yrs 10.00 15,000.00
David Chambless 04/22/91 5 yrs 10.00 45,000.00
William F. Lyle 04/22/91 5 yrs 10.00 40,000.00
Eleanor Menough (Progas) 07/29/91 5 yrs 9.75 60,000.00
Baker Oil Co. 09/25/91 5 yrs 9.00 50,000.00
Bass Gas 09/30/91 5 yrs 9.00 119,500.00
</TABLE>
<PAGE>
SCHEDULE 8.05
<TABLE>
<CAPTION>
EXISTING INDEBTEDNESS
NON-COMPETE NOTES PAYABLE (Cont.)
DISCOUNT
SELLER DATE TERM % RATE BALANCE
- - ------------------------------------ -------- ------ -------- -------------
<S> <C> <C> <C> <C>
Country Gas 12/17/91 5 yrs 8.50 60,000.00
Pennsylvania & Southern Gas 02/12/92 5 yrs 7.50 60,000.00
N. East Propane 04/07/92 5 yrs 7.25 60,000.00
Varese C. Kirkpatrick 04/22/92 6 yrs 10.00 15,000.00
Isbell - Wright 06/24/93 5 yrs 7.62 100,000.00
------------
2,476,182.81
Unamortized Discounts (205,983.50)
------------
Total Non-Compete Notes Payable 2,270,199.31
============
</TABLE>
<TABLE>
<CAPTION>
PROPERTY PURCHASE NOTES PAYABLE:
-------------------------------
SELLER DATE TERM BALANCE
- - ----------------------------------------- -------- ------------ ------------
<S> <C> <C> <C>
Rhodes LP 04/29/83 15 yrs 71,890.10
Anchor 04/30/84 15 yrs 124,783.79
Reddoch 02/20/86 15 yrs 1,025,000.00
Oscar & Una Hartfield 11/16/87 7 yrs 95,883.72
Ernie Smith Propane 04/17/89 10 yrs 233,750.00
Allied Services 05/05/89 10 yrs 50,000.00
Century Hardware 07/23/90 5 yrs 20,000.00
------------
1,621,307.61
Unamortized Discounts (2,880.71)
------------
Total Property Purchase Notes Payable 1,618,426.90
============
</TABLE>
<PAGE>
SCHEDULE 10.06
INFORMATION TO BE PROVIDED TO
BANKS BY AGENT
--------------
SECTION DESCRIPTION
- - ------- -----------
2.03(b) Notice of Borrowing
2.04(d) Notice of Conversion/Continuance
2.05(a) & (b) Notice of Voluntary Termination/Reduction of
Commitments
2.06(b) Notice of Optional Repayment
2.07(all) Mandatory Prepayment
2.08(all) Repayment
2.09(all) Interest
2.10(b) Commitment Fees
2.12(c) Non-payment by Borrower
2.14 Sharing of Payments
2.15(b) Notice of Conversion of Swingline Loan to a Base Rate Loan
3.02(a) & (c) L/C Applications or L/C Amendment Application
3.02(d) Automatic L/C renewals
3.03(c) Notification of L/C drawing/non-reimbursement by Borrower
3.04(all) Repayment of L/C advance
3.08 Letter of Credit Fees
4.01(c),(d) & (e) Withholding Taxes
4.02(c) Illegality of Eurodollar Rate Loans
4.03(all) Increased Costs
4.04(all) Funding Losses
4.05 Inability to Determine Rates
5.01 Conditions Precedent
5.02(a) Notices\Applications
6.21 Trading Policies
7.01(all) Financial Statements
7.02(all) Certificates/Other Information
7.03(all) Notices
10.06-1
<PAGE>
Section Description
------- -----------
8.12(c) Restricted Payments - Non-cash accounts
10.05 Notice of Default
10.09 Notice of Resignation of Agent
11.01 Amendments & Waivers
11.06 Payment Set Aside
11.09 Set-off
10.06-2
<PAGE>
SCHEDULE 11.02
--------------
ADDRESSES FOR NOTICES
- - ---------------------
BANK OF AMERICA NATIONAL TRUST
- - ------------------------------
AND SAVINGS ASSOCIATION,
- - -----------------------
as Agent
Notices:
- - -------
Bank of America National Trust
and Savings Association
Global Agency #5596
1455 Market Street, 13th Floor
San Francisco, California 94103
Attention: James Hinson
Vice President
Telephone: (415) 622-6188
Facsimile: (415) 622-4894
Domestic and Eurodollar Lending Office:
- - --------------------------------------
Bank of America National Trust
and Savings Association
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Attention: Cheryl Davidson
Telephone: (510) 675-7154
Facsimile: (510) 675-7531
BANK OF AMERICA NATIONAL TRUST
- - ------------------------------
AND SAVINGS ASSOCIATION,
- - -----------------------
as a Bank
Bank of America National Trust
and Savings Association
555 South Flower Street, 10th Floor
<PAGE>
San Francisco, California 90071
Attention: Mark F. Milner
Vice President
Telephone: (213) 228-6298
Facsimile: (213) 228-2641
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
- - ---------------------------------
as a Bank
The First National Bank of Boston
100 Federal Street, M/S 01-08-02
Boston, MA 02110
Attention: R. Steven Shauer
Assistant Vice President
Telephone: (617) 434-8419
Facsimile: (617) 434-3652
Telex No. 4996527
NATIONSBANK, N.A.,
- - -----------------
as a Bank
NationsBank, N.A.
901 Main, 67th Floor
Dallas, TX 75202
Attention: Perry Stephenson
Senior Vice President
Telephone: (214) 508-0913
Facsimile: (214) 508-0980
THE BANK OF NOVA SCOTIA,
- - -----------------------
as a Bank
The Bank of Nova Scotia
600 Peachtree St., N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Senior Manager Loan Operations
Telephone: (404) 877-1562
Facsimile: (404) 888-8998
Telex No.: 00542319
WELLS FARGO BANK, N.A.,
- - ----------------------
as a Bank
Wells Fargo Bank, N.A.
500 N. Akard, Suite 3535
Dallas, TX 75201
<PAGE>
Attention: Charles D. Kirkham, III
Vice President
Telephone: (214) 740-2882
Facsimile: (214) 740-2815
CAISSE NATIONALE DE CREDIT AGRICOLE,
- - -----------------------------------
as a Bank
Caisse National De Credit Agricole
55 E. Monroe St., Suite 4700
Chicago, IL 60603
Attention: Roger Weis
Vice President
Telephone: (312) 917-7440
Facsimile: (312) 372-3724
Telex No.: 190063
BANQUE PARIBAS,
- - --------------
as a Bank
Banque Paribas, Houston Agency
1200 Smith, Suite 3100
Houston, Texas 77002
Attention: Chris Goodwin
Vice President
Telephone: (713) 659-4811
Facsimile: (713) 659-3832
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
-------------------
TO: Bank of America National Trust
and Savings Association, Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Global Agency #5596
Re: Ferrellgas, L.P.
----------------
Pursuant to Section 2.03(a) of that certain Credit Agreement dated as
of ____________, 1994 (as from time to time amended, extended, restated,
modified or supplemented, the "Credit Agreement", among Ferrellgas, L.P., a
Delaware limited partnership (the "Borrower"), Stratton Insurance Company, Inc.,
a Vermont corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas,
Inc., a Delaware corporation and the sole general partner of Borrower, the
financial institutions from time to time party thereto (the "Banks") and Bank of
America National Trust and Savings Association, as agent for the Banks (in such
capacity, the "Agent") and as Issuing Bank, this represents the Borrower's
request for a Borrowing from the Banks as follows:
1. The amount of the Borrowing shall be $__________.
2. The Borrowing Date shall be _______________.
3. The Loan shall be a [Base Rate] [Eurodollar Rate] Loan. [The
initial Interest Period for such Eurodollar Rate Loan shall be
[one] [two] [three] [six] months.]
4. The Loan shall be a [Facility A Revolving Loan] [Swingline Loan]
[Facility B Term Loan] [Facility B Revolving Loan] [Facility B
Takeout Loan].
The proceeds of such Loan are to be deposited in the Borrower's account at the
Agent.
The undersigned Responsible Officer hereby certifies that:
a. The representations and warranties in Article VI of the Credit
Agreement are true and correct on and as of the date hereof
(except to the extent such representations and warranties
<PAGE>
expressly refer to an earlier date, in which case they were true
and correct as of such earlier date); and
(b) No Default or Event of Default has occurred and is continuing
under the Credit Agreement or will result from the proposed
Borrowing.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Credit Agreement.
DATED: ______________________
FERRELLGAS, L.P.
By: FERRELLGAS, INC., General
Partner
By:______________________________
Title:________________________
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
-------------------
TO: Bank of America National Trust
and Savings Association, Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Global Agency #5596
Re: Ferrellgas, L.P.
----------------
Pursuant to Section 2.03(a) of that certain Credit Agreement dated as
of ____________, 1994 (as from time to time amended, extended, restated,
modified or supplemented, the "Credit Agreement", among Ferrellgas, L.P., a
Delaware limited partnership (the "Borrower"), Stratton Insurance Company, Inc.,
a Vermont corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas,
Inc., a Delaware corporation and the sole general partner of Borrower, the
financial institutions from time to time party thereto (the "Banks") and Bank of
America National Trust and Savings Association, as agent for the Banks (in such
capacity, the "Agent") and as Issuing Bank, this represents the Borrower's
request for a Borrowing from the Banks as follows:
1. The amount of the Borrowing shall be $__________.
2. The Borrowing Date shall be _______________.
3. The Loan shall be a [Base Rate] [Eurodollar Rate] Loan. [The
initial Interest Period for such Eurodollar Rate Loan shall be
[one] [two] [three] [six] months.]
4. The Loan shall be a [Facility A Revolving Loan] [Swingline Loan]
[Facility B Term Loan] [Facility B Revolving Loan] [Facility B
Takeout Loan].
The proceeds of such Loan are to be deposited in the Borrower's account at the
Agent.
The undersigned Responsible Officer hereby certifies that:
a. The representations and warranties in Article VI of the Credit
Agreement are true and correct on and as of the date hereof
(except to the extent such representations and warranties
expressly refer to
<PAGE>
an earlier date, in which case they were true and correct as of
such earlier date); and
(b) No Default or Event of Default has occurred and is continuing
under the Credit Agreement or will result from the proposed
Borrowing.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Credit Agreement.
DATED: ______________________
FERRELLGAS, L.P.
By: FERRELLGAS, INC., General
Partner
By:______________________________
Title:________________________
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
TO: Bank of America National Trust
and Savings Association
Global Agency #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Re: Ferrellgas, L.P.
----------------
Pursuant to Section 2.04(b) of that certain Credit Agreement dated as
of ______________, 1994 (as from time to time amended, extended, restated,
modified or supplemented, the "Credit Agreement"), among Ferrellgas, L.P., a
Delaware limited partnership (the "Borrower"), Stratton Insurance Company, Inc.,
a Vermont corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas,
Inc., a Delaware corporation and the sole general partner of Borrower, the
financial institutions from time to time party thereto (the "Banks") and Bank of
America National Trust and Savings Association, as agent for the Banks (in such
capacity, the "Agent"), this represents Borrower's request to [Convert]
[Continue] certain [Base Rate Loans] [Eurodollar Rate Loans] as follows:
(A) The date of [Conversion] [Continuation] shall be ________, 199_,
(which day is, in the case of Conversion of Base Rate Loans, a Business
Day, or, in the case of Conversion or Continuation of Eurodollar Rate
Loans, the last day of the applicable Interest Period).
(B) An aggregate amount of $______________ of [Facility A Revolving
Loans] [Facility B Revolving Loans] [Facility B Term Loans] are to be
[Converted] [Continued] as of the date set forth in paragraph (A) above
(which amount is $3,000,000, or is an integral multiple of $1,000,000 in
excess thereof).
(C) The Type of Loans resulting from the [Conversion] [Continuation]
shall be [Base Rate Loans] [Eurodollar Rate Loans].
[(D) If the resulting Loan is a Eurodollar Rate Loan, the Interest
Period of such Loan shall be [one][two][three][six] month(s).]
[Borrower represents and warrants, in the case of Conversion or
Continuation of Eurodollar Rate Loans, that no Default or Event of Default
exists on the date hereof and on the date set forth in paragraph (A) above.]
[Notwithstanding that a
<PAGE>
Default or Event of Default exists, Borrower requests the consent of the
Majority Banks to Convert/Continue the Eurodollar Rate Loan as set forth above.]
Borrower represents that, taking into consideration the [Conversion]
[Continuation] of Loans requested hereby, there are not more than ten (10)
Interest Periods in effect.
Capitalized terms used herein shall have the meanings assigned to them
in the Credit Agreement.
DATED: ______________ FERRELLGAS, L.P.
By: FERRELLGAS, INC., General
Partner
By:___________________________
Title:________________________
<PAGE>
EXHIBIT C
COMPLIANCE CERTIFICATE
This compliance certificate is provided pursuant to Section 7.02(b) of the
Credit Agreement dated as of __________, 1994 (as the same may be amended from
time to time, the "Credit Agreement"), by and among Ferrellgas, L.P., a Delaware
limited partnership ("Borrower"), Stratton Insurance Company, Inc., a Vermont
corporation and a wholly-owned subsidiary of Borrower, Ferrellgas, Inc., a
Delaware corporation and the sole general partner of Borrower, Bank of America
National Trust and Savings Association, as agent (in such capacity, "Agent"),
and the financial institutions ("Banks") from time to time party to the Credit
Agreement. Unless otherwise defined herein, capitalized terms used herein are
used with the defined meanings given in the Credit Agreement.
I, _____________________________, the ____________________ of Ferrellgas,
Inc., a Delaware corporation and the sole general partner of Borrower, do hereby
certify that I am familiar with the Credit Agreement and with the assets,
business, financial condition and operations of Borrower and its Subsidiaries
and that during the fiscal quarter ending ______________________, 19__:
Borrower has performed all of its obligations under and is in compliance
with all covenants and agreements contained in the Credit Agreement and under
(i) any instrument or agreement required thereunder, (ii) any other instrument
or agreement to which Borrower is a party or under which Borrower is obligated,
and (iii) any judgment, decree or order of any court or governmental authority
binding on Borrower. Without limiting the generality of the foregoing:
1. As required by Section 7.12 of the Credit Agreement:
(i) Borrower has maintained a Leverage Ratio for the applicable
fiscal period of not greater than 4.0:1. The current Leverage Ratio is:
____________.
Funded Debt
($_________)
---------------------- = Leverage Ratio
Consolidated Cash Flow
($_________)
<PAGE>
Attached as Exhibit A is a calculation of Consolidated Cash Flow,
including such calculation on a pro forma basis for any Acquisitions
consummated during the fiscal period.
(ii) Borrower has a minimum Partners' Equity of not less than
$50,000,0000. The current Partners' Equity is $________________.
2. As required by Section 7.13 of the Credit Agreement, Borrower and
its Affiliates are in compliance, and have at all times during the relevant
fiscal period been in compliance, with Borrower's trading position policy and
supply inventory position policy guidelines as in effect on the Closing Date[,
provided that the stop loss limit in the trading position policy has been
increased from __________ at the beginning of the three quarters preceding the
fiscal quarter that is the subject of this certificate (the "Initial Date") to
__________ at the end of the fiscal quarter that is the subject of this
certificate (the "Final Date"), an aggregate increase of ____%] [the stop loss
limit in the supply inventory position has increased from __________ on the
Initial Date to __________ on the Final Date, an aggregate increase of ____%]
[the volume limit for [describe product] in the trading position policy has been
increased from __________ on the Initial Date to __________ on the Final Date,
an aggregate increase of ____%] [the volume limit for [describe product] in the
supply inventory position policy has been increased from __________ on the
Initial Date to __________ on the Final Date, an aggregate increase of ____%].
3. As required by Section 7.16, Borrower hereby notifies Agent that
[no judgments, orders, decrees or arbitration awards have been entered against
Borrower or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage other than through a standard reservation of rights letter)
as to any single or related series of transactions, incidents or conditions, of
more than $10,000,000] [the following judgments, orders, decrees and/or
arbitration awards have been entered against Borrower or its Subsidiaries:
__________________________. The foregoing involve an aggregate liability (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage other than through a standard reservation of rights
letter) of $______________________. Borrower has reserved for such amount in
excess of $10,000,000, on a quarterly basis, with each quarterly reserve being
at least equal to one-twelfth of such amount in excess of $10,000,000. The
amount of each quarterly reserve is $____________________].
<PAGE>
4. As required by Section 8.12 of the Credit Agreement, during the
applicable fiscal period, Borrower and its Subsidiaries made [no Restricted
Payments] [Restricted Payments in an amount equal to $___________________ and,
at the time of and after giving effect to such Restricted Payments, each of the
following statements was true:
(a) no Default or Event of Default had occurred or was continuing at
the time of such Restricted Payment or occurred as a consequence thereof
and each of the representations and warranties of the Borrower set forth in
the Credit Agreement was true on and as of the date of such Restricted
Payment both before and after giving effect thereto; and
(b) the Fixed Charge Coverage Ratio of the Borrower for the Borrower's
most recently ended four full fiscal quarters for which internal financial
statements were available immediately preceding the date on which such
Restricted Payment was made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, was ____________, which ratio is greater than 2.25 to 1.
Consolidated Cash Flow
($_________)
---------------------- = Fixed Charge Coverage Ratio
Fixed Charges
($_________)
and
(c) (i) the amount of such Restricted Payment, if made other than in
cash, was determined by the Board of Directors and evidenced by a
resolution in an officer's certificate signed by a Responsible Officer and
delivered to the Agent, and (ii) except as otherwise provided in the Credit
Agreement, such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Borrower and its Subsidiaries in the
fiscal quarter during which such Restricted Payment was made, did not
exceed the amount of Available Cash of the Borrower for the immediately
preceding fiscal quarter (or, with respect to the first fiscal quarter
during which Restricted Payments are made, the amount of Available Cash of
the Borrower for the period commencing on the date of the Credit Agreement
and ending on the last day of the immediately preceding fiscal quarter).
Attached as Exhibit B is a calculation of Fixed Charges, including
such calculation on a pro forma basis for any Acquisitions consummated
during the fiscal period.
<PAGE>
5. As required by subsection 2.01(a)(ii) of the Credit Agreement,
the aggregate outstanding principal amount of Facility A Revolving Loans and
Swingline Loans did not exceed $25,000,000 for the consecutive thirty (30) day
period from ____________ to _______________.
IN WITNESS WHEREOF, this Certificate has been executed on behalf of
Borrower as of the ____ day of ________________, 19__.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Title: _______________________
<PAGE>
Exhibit D
__________, 1994
To: The Financial Institutions (the "Banks") from time to time party to the
Credit Agreement referred to below (the "Credit Agreement"), and
Bank of America National Trust and Savings Association, as Agent (in such
capacity, the "Agent")
Ladies and Gentlemen:
This opinion is being delivered in connection with that certain Credit
Agreement, dated as of July 5, 1994 (the "Credit Agreement"), among Ferrellgas,
L.P., a Delaware limited partnership, ("Borrower"), Stratton Insurance Company,
Inc., a Vermont corporation and a Wholly-Owned Subsidiary of the Borrower
("Stratton"), Ferrellgas, Inc , a Delaware corporation and the sole general
partner of Borrower ("General Partner"), the several financial institutions from
time to time party to the Credit Agreement ("Banks"), and Bank of America
National Trust and Savings Association, as agent for the Banks (in such
capacity, the "Agent").
References to Schedules, Sections and subsections are to such parts of
the Credit Agreement unless otherwise noted. Capitalized terms used herein
shall have the meanings given them in the Credit Agreement, unless specifically
defined herein.
We have acted as counsel to the Borrower, Stratton and the General
Partner in connection with the execution and delivery by each of them of the
Credit Agreement and the other Loan Documents to which each is a party. We have
generally acted as counsel to affiliates of the Borrower since 1976.
We have also acted as counsel to Ferrellgas Finance Corp., a Delaware
corporation and a Wholly-Owned Subsidiary of the Borrower, (at all times a
Subsidiary, and sometimes also referred to herein as "Guarantor"), in connection
with the execution and delivery by it of the Continuing Guaranty dated as of
____________, 1994 (the "Guaranty").
<PAGE>
In our capacity as such counsel, we have been furnished with and have
examined originals or copies, certified or otherwise identified to our
satisfaction as being true copies, of such records, agreements, instruments, and
documents as, in our judgment, are necessary or relevant as the basis for the
opinions expressed below.
We have obtained and relied upon such certificates and assurances from
public officials as we have deemed necessary. We have investigated such
questions of law and fact for the purpose of rendering this opinion as we have
deemed necessary.
Certain of the opinions rendered herein are qualified by the
discussion following the numbered paragraphs.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that:
1. The General Partner, Stratton, the Borrower and each of its
Subsidiaries:
(a) is a corporation or partnership duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation;
(b) has the power and authority and all material governmental
licenses, authorizations, consents and approvals to own its assets, carry on its
business in the manner contemplated by the Loan Documents and the Registration
Statements and to execute, deliver, and perform its obligations under the Loan
Documents and such additional obligations as are contemplated by the
Registration Statements;
(c) is duly qualified as a foreign corporation or partnership and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license or where the failure so to qualify would
not have a Material Adverse Effect; and
(d) is in compliance with all material Requirements of Law.
2. The execution, delivery and performance by the Borrower, the
General Partner and Stratton of the Credit Agreement and each other Loan
Document to which the General Partner, the Borrower or any Subsidiary is party,
have been duly authorized by all necessary partnership action on behalf of the
Borrower and all necessary corporate action on behalf of the General Partner and
any Subsidiary, and do not and will not:
(a) contravene the terms of any of the General Partner's, the
Borrower's or any Subsidiary's Organization Documents;
<PAGE>
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
of which we are aware to which the General Partner, the Borrower or any
Subsidiary is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject where
such conflict, breach, contravention or Lien could reasonably be expected to
have a Material Adverse Effect; or
(c) violate any material Requirement of Law.
3. No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority is necessary or
required in connection with (a) the consummation of the Reorganization according
to the terms and conditions described in the Registration Statements and in
accordance with applicable law, (b) the execution, delivery or performance by,
or enforcement against, the General Partner, the Borrower or any Subsidiary of
the Credit Agreement or any other Loan Document, or (c) the continued operation
of Borrower's business as contemplated to be conducted after the date hereof by
the Loan Documents and the Registration Statements except in each case such
approvals, consents, exemptions, authorizations or other actions, notices or
filings (i) as have been obtained, (ii) as may be required under state
securities or Blue Sky laws, (iii) as are of a routine or administrative nature
and are either (A) not customarily obtained or made prior to the consummation of
transactions such as the transactions described in clauses (a), (b) or (c), or
(B) expected to be obtained in the ordinary course of Borrower's business
subsequent to the consummation of the transactions described in clauses (a), (b)
or (c), or (iv) that, if not obtained, could reasonably be expected to have a
Material Adverse Effect.
4. The Credit Agreement and each other Loan Document to which the
General Partner, the Borrower or any Subsidiary is a party constitute the legal,
valid and binding obligations of such Person, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5. Except as specifically disclosed in Schedule 6.05, there are no
actions, suits, proceedings, claims or disputes pending, or to the best of our
knowledge, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the General Partner, the Borrower or
any of its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to the Credit Agreement or any other
Loan Document, the Registration Statements or any of the transactions
contemplated hereby or thereby; or
<PAGE>
(b) if determined adversely to the Borrower or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of the Credit Agreement or any other Loan
Document or any of the transactions contemplated by the Registration Statements,
or directing that the transactions provided for in the Loan Documents or the
Registration Statements not be consummated as therein provided.
6. To the best of our knowledge, no Default or Event of Default
exists or would result from the incurring, continuing or converting of any
Obligations by the Borrower. As of the Closing Date, to the best of our
knowledge neither the Borrower nor any Affiliate of the Borrower is in default
under or with respect to any Contractual Obligation in any respect that,
individually or together with all such defaults, could reasonably be expected to
have a Material Adverse Effect, or that would, if such default had occurred
after the Closing Date, create an Event of Default under subsection 9.01(e)
other than a default under Section 4.09 of the Indenture relating to the
Existing Senior Notes.
7. (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best of our knowledge,
nothing has occurred which would cause the loss of such qualification.
(b) There are no pending, or to the best of our knowledge, threatened
claims, actions or lawsuits, or actions by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect. There has been no prohibited transaction or other
violation of the fiduciary responsibility rule with respect to any Plan which
could reasonably result in a Material Adverse Effect.
(c) To the best of our knowledge, no ERISA Event has occurred or is
reasonably expected to occur with respect to any Pension Plan.
8. Neither the Borrower nor any Affiliate of the Borrower is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
9. To the best of our knowledge, there is no proposed tax assessment
against the Borrower that would, if made, have a Material Adverse Effect except
with respect to the Tax Audit as described in Schedule 6.10.
10. None of the Borrower or any Affiliate of the Borrower, is an
"Investment Company" within the meaning of the Investment Company Act of 1940.
The
<PAGE>
Borrower is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
11. To the best of our knowledge, the Borrower or its Subsidiaries
own or are licensed or otherwise have the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of their respective businesses, without conflict with the rights of any other
Person. To the best of our knowledge, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person. Except as specifically disclosed in
Schedule 6.15, no claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the best of
our knowledge, proposed, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
12. The Borrower has no Subsidiaries or other Affiliates other than
those specifically disclosed in part (a) of Schedule 6.16 and has no equity
investments in any other corporation or entity other than those Permitted
Investments specifically disclosed in part (b) of Schedule 6.16.
13. The Borrower is subject to taxation under the Code only as a
partnership and not as a corporation.
14. To the best of our knowledge, none of the representations or
warranties made by the Borrower or any Affiliate of the Borrower in the Loan
Documents or any of the Registration Statements as of the date hereof, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Borrower or any Affiliate of the Borrower in
connection with the Loan Documents or the Registration Statements (including the
other offering and disclosure materials delivered by or on behalf of the
Borrower to the Banks prior to the Closing Date), contains any untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
<PAGE>
We hereby expressly authorize the Banks and the Agent to rely upon any
and all opinions delivered by us in connection with the Reorganization or the
Registration Statements, all as if such opinions were addressed to the Banks and
the Agent directly.
[Assumptions, Qualifications and Limitations]
The opinions expressed herein are solely for the benefit of the Banks
and the Agent in connection with the above transactions and may not be relied
upon or used in any manner or for any purposes by any other person, other than
counsel to the Banks and the Agent, or as required by law to comply with the
requirements of bank examiners acting under applicable law and regulations from
time to time.
Very truly yours,
<PAGE>
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Agreement") dated as of
________________, 19__ is made with reference to that certain Credit Agreement
dated as of ______________, 1994 (as amended from time to time, the "Credit
Agreement") among Ferrellgas, L.P., a Delaware limited partnership (the
"Borrower"), Stratton Insurance Company, Inc., a Vermont corporation and a
Wholly-Owned Subsidiary of Borrower, Ferrellgas, Inc., a Delaware corporation
and the sole general partner of Borrower, the financial institutions from time
to time party thereto, and Bank of America National Trust and Savings
Association, as an Issuing Bank and agent (in such capacity, the "Agent"), and
is entered into between the "Assignor" described below, in its capacity as a
Bank under the Credit Agreement, and the "Assignee" described below.
The Assignor and the Assignee hereby represent, warrant and agree as
follows;
1. Definitions. Except as otherwise provided herein, capitalized
terms defined in the Credit Agreement are used herein with the meanings set
forth therein. As used in this Agreement, the following capitalized terms shall
have the meanings set forth below:
"Assignee" means _______________________________________________
__________.
"Assigned Pro-Rata Share" means the following percentage of the
Commitment of the Assignor under the Credit Agreement:
Percentage: _______________
Dollar Amount: _______________
"Assignor" means _______________________________________________
__________.
"Effective Date" means _____________________, 199_.
2. Representations and Warranties of the Assignor. The Assignor
represents and warrants to the Assignee as follows:
(a) As of the date hereof, the Commitment of the Assignor under the
Credit Agreement is equal to $_______________ (without giving effect to
assignment thereof which has not yet become effective). The Assignor is the
legal and beneficial
<PAGE>
owner of the Assigned Pro-Rata Share and the Assigned Pro-Rata Share is free and
clear of any adverse claim;
(b) As of the date hereof, [there is no] [the] outstanding principal
balance of Advances made under the Credit Agreement [is ______________];
(c) If required under subsection 11.08(a) of the Credit Agreement, the
Assignor has obtained the consent of the Borrower to the assignment of the
Assigned Pro-Rata Share to the Assignee;
(d) The Assignor has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith; and
(e) This Agreement constitutes the legal, valid and binding obligation
of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance by
the Borrower of its obligations under the Credit Agreement, and assumes no
responsibility with respect to any statements, warranties or representations
made under or in connection with the Credit Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other documents under the Credit Agreement, other than
as expressly set forth above.
3. Representations and Warranties of the Assignee. The Assignee
hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement, and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith;
(b) This Agreements constitutes the legal, valid and binding
obligation of the Assignee;
(c) The Assignee has independently and without reliance upon the
Assignor and based on such information as the Assignee has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. The
Assignee will, independently and without reliance upon the Agent, any Issuing
Bank or any Bank, and
<PAGE>
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement;
(d) If the Assignee is organized under the laws of a jurisdiction
outside the United States of America, attached hereto is Internal Revenue
Service Form 4224 or Internal Revenue Service Form 1001, as applicable (and any
successor forms or additional forms necessary for claiming complete exemption
from United States withholding taxes) certifying the Assignee's exemption from
United States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement; and
(e) Assignee is an Eligible Assignee, as that term is defined in
the Credit Agreement.
4. Assignment. On the terms set forth herein, the Assignor, as of
the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee, without recourse, representation or warranty except as specifically
provided in this Agreement, all of the rights and obligations of the Assignor
under the Credit Agreement and the Assignor's Notes, if any, under the Credit
Agreement, in each case to the extent of the Assigned Pro-Rata Share, and the
Assignee irrevocably accepts such assignment of rights and assumes such
obligations from the Assignor on such terms and effective as of the Effective
Date. As of the Effective Date, the Assignee shall have the rights and
obligations of a "Bank" under the Credit Agreement and the Notes, if any.
Assignee hereby appoints and authorizes the Agent to exercise such powers under
the Credit Agreement and the Notes, if any. Assignee hereby appoints and
authorizes the Agent to exercise such powers under the Credit Agreement as are
delegated to the Agent by Article X of the Credit Agreement.
5. Payment. On the Effective Date, the Assignee shall pay to the
Assignor, in immediately available funds, an amount equal to the purchase price
of the Assigned Pro-Rata Share, as agreed between the Assignor and the Assignee
pursuant to a letter agreement of even date herewith.
The Assignor and the Assignee hereby agree that if either receives any
payment of interest, principal, fees or any other amount under the Credit
Agreement, their respective Notes or any other documents under the Credit
Agreement which is for the account of the other, it shall hold the same in trust
for such party to the extent of such party's interest therein and shall promptly
pay the same to such party.
6. Principal, Interest, Fees, Etc. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Credit Agreement and the Note(s) shall be payable to or for the account of the
Assignor and the Assignee, in accordance
<PAGE>
with their respective interests as adjusted pursuant to this Agreement. Payments
to be made to the Assignee shall be made to its address set forth on the
signature pages hereof, or to such other address as the Assignee may designate.
7. Notes. At Assignee's request, and within five Business Days
after its receipt of notice by the Agent that the Agent has received an executed
copy of this Agreement and payment of the processing fee (and provided that the
Agent, and Borrower, if required, consents to such assignment pursuant to
subsection 11.08(a) of the Credit Agreement), Borrower shall execute and deliver
to the Agent new Notes evidencing the Assignee's Assigned Pro-Rata Share and, if
the Assignor has retained a portion of its Commitment and at Assignor's request,
a replacement Note in the principal amount of the Loans retained by the assignor
Bank (such Note to be in exchange for, but not in payment of, the Note held by
such Bank).
8. Processing Fee. On the Effective Date, the [Assignee] [Assignor]
shall pay to the Agent the processing fee provided for in subsection 11.08(a) of
the Credit Agreement.
9. Further Assurances. The Assignor and the Assignee agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement, and the Assignor specifically agrees to cause
the delivery of two original counterparts of this Agreement to the Agent.
10. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. FOR ANY
DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLE SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK.
11. Notices. All communications among the parties or notices in
connection herewith must be in writing and must be mailed, telegraphed,
telecopied, delivered or sent by telex or cable, addressed to the appropriate
party at its address set forth on the signature pages hereof. All
communications and notices shall, if sent by telegraph, telex or telecopy, be
deemed to have been given when received by the Person to whom addressed; if sent
by overnight courier service, be deemed to have been given one day after the
date when sent; and if sent by mail, be deemed to have been given three days
after the date when sent by registered or certified mail, postage prepaid.
12. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
<PAGE>
13. Interpretation. The headings of the various sections hereof are
for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officials, officers or agents
thereunder duly authorized as of the date first above written.
"Assignor"
By:________________________________
Its:_______________________________
Address:___________________________
___________________________________
___________________________________
Attn:______________________________
Telephone:_________________________
Telecopy:__________________________
Telex:_____________________________
"Assignee"
By:________________________________
Its:_______________________________
Address:___________________________
___________________________________
___________________________________
Attn:______________________________
Telephone:_________________________
Telecopy:__________________________
Telex:_____________________________
ACKNOWLEDGED AND ACCEPTED:
"Agent"
Bank of America National Trust
and Savings Association
By:________________________________
[If Required]
"Borrower"
FERRELLGAS, L.P.
<PAGE>
By: FERRELLGAS, INC., General Partner
By:________________________________
<PAGE>
EXHIBIT F-1
FACILITY A REVOLVING NOTE
-------------------------
$_________________ ___________, 199_
FOR VALUE RECEIVED, the undersigned FERRELLGAS, L.P., a Delaware
limited partnership, and STRATTON INSURANCE COMPANY, INC., a Vermont corporation
(together, "Borrower"), HEREBY PROMISE TO PAY to the order of
_______________________ ("Bank") the principal sum of ______________________
($_________) or, if less, the aggregate principal amount of Facility A Revolving
Loans outstanding on the Revolving Termination Date, made to Borrower by Bank
pursuant to Section 2.01(a) of that certain Credit Agreement dated as of July 5,
1994, 1994 (as the same may be amended from time to time, the "Credit
Agreement"), among Borrower, Stratton Insurance Company, Inc., a Vermont
corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas, Inc., a
Delaware corporation and the sole general partner of Borrower, the financial
institutions from time to time party thereto, and Bank of America National Trust
and Savings Association, as agent for said financial institutions (in such
capacity, "Agent") payable in full on the Revolving Termination Date together
with interest on the unpaid principal balance hereof from time to time
outstanding from the date hereof until paid in full at the rate or rates and in
the manner and at the times specified in the Credit Agreement.
Both the principal hereof and the interest hereon are payable in
lawful money of the United States of America at Bancontrol Account Number 12334-
14282 located at Bank of America National Trust and Savings Association, 1850
Gateway Boulevard, Fourth Floor, Concord, California 94520 (or at such other
Lending Office as may be designated from time to time by Agent), for the account
of Bank, in immediately available funds.
The holder of this Facility A Revolving Note is authorized to record
the date and amount of Facility A Revolving Loans made by the Bank, the amount
of interest accruing from time to time and the date and amount of each payment
or prepayment of principal thereof on the schedule annexed to and constituting a
part hereof, or on a continuation thereof which shall be attached hereto and a
part hereof and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded.
Borrower agrees to pay all costs of collection and enforcement of this
Facility A Revolving Note, whether or not suit is filed, including, without
limitation, reasonable attorneys' fees, as more particularly provided in Section
11.04 of the Credit Agreement.
<PAGE>
This Facility A Revolving Note is one of the "Notes" referred to in,
and is entitled to the benefits of, the Credit Agreement which, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and for prepayment of amounts from time to
time outstanding under this Facility A Revolving Note upon certain terms and
conditions. Unless otherwise defined herein, capitalized terms used herein are
used with the defined meanings given in the Credit Agreement.
THIS FACILITY A REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Danley K. Sheldon
Vice President and Chief
Financial Officer/Treasurer
STRATTON INSURANCE COMPANY, INC.
By:___________________________
Danley K. Sheldon
Vice President and Chief
Financial Officer/Treasurer
<PAGE>
SCHEDULE TO FACILITY A REVOLVING NOTE
-------------------------------------
<TABLE>
<CAPTION>
Unpaid
Principal
Balance of
Amount of Amount of Facility A
Facility A Principal Paid Revolving Notation
Date Revolving Loans or Prepaid Loans Made By
- - -------- ------------------- ------------------ -------------- ------------
<S> <C> <C> <C> <C>
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
</TABLE>
<PAGE>
EXHIBIT F-2
FACILITY B TERM NOTE
--------------------
$______________________ ________________, 199_
FOR VALUE RECEIVED, the undersigned FERRELLGAS, L.P., a Delaware
limited partnership ("Borrower"), HEREBY PROMISES TO PAY to the order of
______________________ ("Bank") the principal sum of __________________________
($____________), payable in full on the Revolving Termination Date together with
interest on the unpaid principal balance hereof from time to time outstanding
from the date hereof until paid in full at the rate or rates and in the manner
and at the times specified in that certain Credit Agreement dated as of
__________, 1994 (as the same may be amended from time to time, the "Credit
Agreement"), among Borrower, Stratton Insurance Company, Inc., a Vermont
corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas, Inc., a
Delaware corporation and the sole general partner of Borrower, the financial
institutions from time to time party thereto, and Bank of America National Trust
and Savings Association, as agent for said financial institutions (in such
capacity, "Agent").
Both the principal hereof and the interest hereon are payable in
lawful money of the United States of America at Bancontrol Account Number 12334-
14282 located at Bank of America National Trust and Savings Association, 1850
Gateway Boulevard, Fourth Floor, Concord, California 94520 (or at such other
Lending Office as may be designated from time to time by Agent), for the account
of Bank, in immediately available funds.
The holder of this Facility B Term Note is authorized to record the
date and amount of each payment or prepayment of principal thereof on the
schedule annexed to and constituting a part hereof, or on a continuation thereof
which shall be attached hereto and a part hereof and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Borrower agrees to pay all costs of collection and enforcement of this
Facility B Term Note, whether or not suit is filed, including, without
limitation, reasonable attorneys' fees, as more particularly provided in Section
11.04 of the Credit Agreement.
This Facility B Term Note is one of the "Notes" referred to in, and is
entitled to the benefits of, the Credit Agreement which, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and for prepayment of amounts from time to time
outstanding under this Facility B Term Note upon certain terms and conditions.
Unless otherwise defined herein, capitalized terms used herein are used with the
defined meanings given in the Credit Agreement.
<PAGE>
THIS FACILITY B TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
SCHEDULE TO FACILITY B TERM NOTE
--------------------------------
<TABLE>
<CAPTION>
Unpaid
Principal
Amount of Amount of Balance of
Facility B Term Principal Paid Facility B Notation
Date Loans or Prepaid Term Loans Made By
- - -------- ------------------- ------------------ -------------- ------------
<S> <C> <C> <C> <C>
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
</TABLE>
<PAGE>
EXHIBIT F-3
FACILITY B REVOLVING NOTE
-------------------------
$______________________ ________________, 199_
FOR VALUE RECEIVED, the undersigned FERRELLGAS, L.P., a Delaware
limited partnership ("Borrower"), HEREBY PROMISES TO PAY to the order of
______________________ ("Bank") the principal sum of __________________________
($____________) or, if less, the aggregate principal amount of Facility B
Revolving Loans outstanding on the Revolving Termination Date, made to Borrower
by Bank pursuant to Section 2.01(b) of that certain Credit Agreement dated as of
__________, 1994 (as the same may be amended from time to time, the "Credit
Agreement"), among Borrower, Stratton Insurance Company, Inc., a Vermont
corporation and a Wholly-Owned Subsidiary of Borrower, Ferrellgas, Inc., a
Delaware corporation and the sole general partner of Borrower, the financial
institutions from time to time party thereto, and Bank of America National Trust
and Savings Association, as agent for said financial institutions (in such
capacity, "Agent") payable in full on the Revolving Termination Date together
with interest on the unpaid principal balance hereof from time to time
outstanding from the date hereof until paid in full at the rate or rates and in
the manner and at the times specified in the Credit Agreement.
Both the principal hereof and the interest hereon are payable in
lawful money of the United States of America at Bancontrol Account Number 12334-
14282 located at Bank of America National Trust and Savings Association, 1850
Gateway Boulevard, Fourth Floor, Concord, California 94520 (or at such other
Lending Office as may be designated from time to time by Agent), for the account
of Bank, in immediately available funds.
The holder of this Facility B Revolving Note is authorized to record
the date and amount of Facility B Revolving Loans made by the Bank, the amount
of interest accruing from time to time and the date and amount of each payment
or prepayment of principal thereof on the schedule annexed to and constituting a
part hereof, or on a continuation thereof which shall be attached hereto and a
part hereof and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded.
Borrower agrees to pay all costs of collection and enforcement of this
Facility B Revolving Note, whether or not suit is filed, including, without
limitation, reasonable attorneys' fees, as more particularly provided in Section
11.04 of the Credit Agreement.
This Facility B Revolving Note is one of the "Notes" referred to in,
and is entitled to the benefits of, the Credit Agreement which, among other
things, contains
<PAGE>
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and for prepayment of amounts from time to time outstanding under
this Facility B Revolving Note upon certain terms and conditions. Unless
otherwise defined herein, capitalized terms used herein are used with the
defined meanings given in the Credit Agreement.
THIS FACILITY B REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
SCHEDULE TO FACILITY B REVOLVING NOTE
-------------------------------------
<TABLE>
<CAPTION>
Unpaid
Principal
Balance of
Amount of Amount of Facility B
Facility B Principal Paid Revolving Notation
Date Revolving Loans or Prepaid Loans Made By
- - -------- ------------------- ------------------ -------------- ------------
<S> <C> <C> <C> <C>
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
</TABLE>
<PAGE>
EXHIBIT F-4
FACILITY B TAKEOUT NOTE
-----------------------
$______________________ ________________, 199_
FOR VALUE RECEIVED, the undersigned FERRELLGAS, L.P., a Delaware
limited partnership ("Borrower"), HEREBY PROMISES TO PAY to the order of
______________________ ("Bank") the principal sum of __________________________
($____________), in twelve (12) equal quarterly installments of $______________
each, commencing on September 30, 1997, and continuing on the last day of every
third calendar month thereafter through June 30, 2000; provided, that all
outstanding principal and accrued and unpaid interest hereon shall be repaid in
full on or prior to June 30, 2000. Borrower further agrees to pay interest on
the unpaid principal balance hereof from time to time outstanding from the date
hereof until paid in full at the rate or rates and in the manner and at the
times specified in that certain Credit Agreement dated as of __________, 1994
(as the same may be amended from time to time, the "Credit Agreement"), among
Borrower, Stratton Insurance Company, Inc., a Vermont corporation and a Wholly-
Owned Subsidiary of Borrower, Ferrellgas, Inc., a Delaware corporation and the
sole general partner of Borrower, the financial institutions from time to time
party thereto, and Bank of America National Trust and Savings Association, as
agent for said financial institutions (in such capacity, "Agent").
Both the principal hereof and the interest hereon are payable in
lawful money of the United States of America at Bancontrol Account Number 12334-
14282 located at Bank of America National Trust and Savings Association, 1850
Gateway Boulevard, Fourth Floor, Concord, California 94520 (or at such other
Lending Office as may be designated from time to time by Agent), for the account
of Bank, in immediately available funds.
The holder of this Facility B Takeout Note is authorized to record the
date and amount of each payment or prepayment of principal thereof on the
schedule annexed to and constituting a part hereof, or on a continuation thereof
which shall be attached hereto and a part hereof and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Borrower agrees to pay all costs of collection and enforcement of this
Facility B Takeout Note, whether or not suit is filed, including, without
limitation, reasonable attorneys' fees, as more particularly provided in Section
11.04 of the Credit Agreement.
This Facility B Takeout Note is one of the "Notes" referred to in, and
is entitled to the benefits of, the Credit Agreement which, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated
<PAGE>
events and for prepayment of amounts from time to time outstanding under this
Facility B Takeout Note upon certain terms and conditions. Unless otherwise
defined herein, capitalized terms used herein are used with the defined meanings
given in the Credit Agreement.
THIS FACILITY B TAKEOUT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
SCHEDULE TO FACILITY B TAKEOUT NOTE
-----------------------------------
<TABLE>
<CAPTION>
Unpaid
Principal
Balance of
Amount of Amount of Facility B
Facility B Principal Paid Takeout Notation
Date Takeout Loans or Prepaid Loans Made By
- - -------- ------------------- ------------------ -------------- ------------
<S> <C> <C> <C> <C>
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
________ ___________________ __________________ ______________ ____________
</TABLE>
<PAGE>
EXHIBIT G
BORROWER: FERRELLGAS, L.P. and
STRATTON INSURANCE
COMPANY, INC.
GUARANTOR:
CONTINUING GUARANTY
-------------------
To: The Financial Institutions (the "Banks") from time to time party to the
Credit Agreement referred to below (the "Credit Agreement"), and
Bank of America National Trust and Savings Association, as Agent (in such
capacity, the "Agent")
(1) For valuable consideration, the undersigned ("Guarantor")
absolutely and unconditionally guarantees to the Agent and the Banks the payment
when due, upon maturity, acceleration or otherwise, of any and all indebtedness
of FERRELLGAS, L.P., a Delaware Limited Partnership, and STRATTON INSURANCE
COMPANY, INC., a Vermont corporation (collectively and severally, "Borrower").
If any or all of the indebtedness of Borrower to the Agent or the Banks becomes
due and payable hereunder, Guarantor absolutely and unconditionally promises to
pay such indebtedness to the Agent (for its account or the account of the Banks,
as the case may be), or order, on demand, in lawful money of the United States
of America. The word "indebtedness" is used herein in its most comprehensive
sense and includes any and all advances, debts, obligations and liabilities of
Borrower or either of them to the Agent and/or the Banks under or pursuant to
that certain Credit Agreement dated as of ______________, among Borrower,
Ferrellgas, Inc., a Delaware corporation, the Banks and the Agent, as the same
may be amended,
<PAGE>
modified, supplemented or renewed from time to time (the "Credit Agreement"),
whether the same is heretofore, now, or hereafter made, incurred or created,
whether voluntary or involuntary and however arising, whether direct or acquired
by Agent or Banks by assignment or succession, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Borrower may
be liable individually or jointly with others, or whether recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations, or
whether such indebtedness may be or hereafter become otherwise unenforceable.
(2) The liability of Guarantor under this Guaranty (exclusive of
liability under any other guaranties executed by Guarantor) shall not exceed at
any one time the total of (a) One Hundred Eighty-Five Million and 00/100 Dollars
($185,000,000.00), for the principal amount of the indebtedness, (b) all
interest, fees, and other costs and expenses relating to or arising out of the
indebtedness or such part of the indebtedness as shall not exceed the foregoing
limitation, and (c) attorneys' fees, costs and expenses as provided in paragraph
13 hereof. Agent and Banks may permit the indebtedness of Borrower to exceed
Guarantor's liability, and may apply any amounts received from any source, other
than from Guarantor, to the unguaranteed portion of Borrower's indebtedness.
This is a continuing guaranty relating to any indebtedness, including that
arising under successive transactions which shall either continue the
indebtedness or from time to time renew it after it has been satisfied. Any
payment by Guarantor shall not reduce Guarantor's maximum obligation hereunder,
unless written notice to that effect be actually received by Agent at or prior
to the time of such payment.
<PAGE>
(3) The obligations hereunder are independent of the obligations of
Borrower, and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or whether Borrower be
joined in any such action or actions; and Guarantor waives the benefit of any
statute of limitations affecting Guarantor's liability hereunder.
(4) Guarantor authorizes Agent and Banks, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time, either
before or after revocation hereof, to (a) renew, compromise, extend, accelerate
or otherwise change the time for payment of, or otherwise change the terms of
the indebtedness or any part thereof, including increase or decrease of the rate
of interest thereon; (b) receive and hold security for the payment of this
Guaranty or the indebtedness guaranteed, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security; (c) apply such
security and direct the order or manner of sale thereof as Agent in its
discretion may determine; and (d) release or substitute any one or more of the
endorsers or guarantors.
(5) Guarantor waives any right to require Agent or Banks to (a)
proceed against Borrower; (b) proceed against or exhaust any security held from
Borrower; or (c) pursue any other remedy in Agent's or Banks's power whatsoever.
Guarantor waives any defense arising by reason of any disability or other
defense of Borrower, or the cessation from any cause whatsoever of the liability
of Borrower, or any claim that Guarantor's obligations exceed or are more
burdensome than those of Borrower. Guarantor waives all presentments, demands
for performance, notices of nonperformance, protests, notices
<PAGE>
of protest, notices of dishonor, and notices of acceptance of this Guaranty and
of the existence, creation, or incurring of new or additional indebtedness.
(6) Guarantor understands and acknowledges that if Agent forecloses
(for itself or on behalf of Banks), either by judicial foreclosure or by
exercise of power of sale, any deed of trust securing the indebtedness, that
foreclosure could impair or destroy any ability that Guarantor may have to seek
reimbursement, contribution or indemnification from Borrower or others based on
any right Guarantor may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by Guarantor under this Guaranty.
Guarantor further understands and acknowledges that in the absence of this
paragraph, such potential impairment or destruction of Guarantor's rights, if
any, may entitle Guarantor to assert a defense to this Guaranty. By executing
this Guaranty, Guarantor freely, irrevocably and unconditionally: (i) waives
and relinquishes that defense and agrees that Guarantor will be fully liable
under this Guaranty even though Agent may foreclose (for itself or on behalf of
Banks), either by judicial foreclosure or by exercise of power of sale, any deed
of trust securing the indebtedness; (ii) agrees that Guarantor will not assert
that defense in any action or proceeding which Agent or Banks may commence to
enforce this Guaranty; (iii) acknowledges and agrees that the rights and
defenses waived by Guarantor in this Guaranty include any right or defense that
Guarantor may have or be entitled to assert; and (iv) acknowledges and agrees
that Agent and Banks are relying on this waiver in creating the indebtedness,
and that this waiver is a material part of the consideration which Agent and
Banks are receiving for creating the indebtedness.
<PAGE>
(7) Guarantor acknowledges and agrees that Guarantor shall have the
sole responsibility for obtaining from Borrower such information concerning
Borrower's financial condition or business operations as Guarantor may require,
and that neither Agent nor Banks has any duty at any time to disclose to
Guarantor any information relating to the business operations or financial
conditions of Borrower.
(8) To secure all of Guarantor's obligations hereunder, Guarantor
assigns and grants to Agent (for the benefit of itself and the Banks) a security
interest in all moneys, securities and other property of Guarantor now or
hereafter in the possession of Agent, and all deposit accounts of Guarantor
maintained with Agent, and all proceeds thereof. Upon default or breach of any
of Guarantor's obligations to Agent or Banks, Agent or Banks may apply any
deposit account to reduce the indebtedness, and may foreclose any collateral as
provided in the Uniform Commercial Code and in any security agreements between
Agent or Banks and Guarantor.
(9) Any obligations of Borrower to Guarantor, now or hereafter
existing, including but not limited to, any obligations to Guarantor as
subrogees of Agent or Banks or resulting from Guarantor's performance under this
Guaranty, are hereby subordinated to the indebtedness. Such obligations of
Borrower to Guarantor if Agent so requests shall be enforced and performance
received by Guarantor as trustee for Agent and Banks and the proceeds thereof
shall be paid over to Agent on account of the indebtedness of Borrower to Agent
and Banks, but without reducing or affecting in any manner the liability of
Guarantor under the other provisions of this Guaranty.
<PAGE>
(10) This Guaranty may be revoked at any time by Guarantor in respect
to future transactions, unless there is a continuing consideration as to such
transactions which Guarantor does not renounce. Such revocation shall be
effective upon actual receipt by Agent at the address shown below of written
notice of revocation. Revocation shall not affect any of Guarantor's
obligations or Agent's or Banks's rights with respect to transactions which
precede Agent's receipt of such notice, regardless of whether or not the
indebtedness related to such transactions, before or after revocation, has been
renewed, compromised, extended, accelerated, or otherwise changed as to any of
its terms, including time for payment or increase or decrease of the rate of
interest thereon. Revocation by any other guarantor of Borrower's indebtedness
shall not affect any obligations of Guarantor. If this Guaranty is revoked,
returned, or canceled, and subsequently any payment or transfer of any interest
in property by Borrower to Agent or Banks is rescinded or must be returned by
Agent or Banks to Borrower, this Guaranty shall be reinstated with respect to
any such payment or transfer, regardless of any such prior revocation, return,
or cancellation.
(11) It is not necessary for Agent or Banks to inquire into the powers
of Borrower or of the officers, directors, partners or agents acting or
purporting to act on Borrower's behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
(12) Agent and Banks may, without notice to Guarantor and without
affecting Guarantor's obligations hereunder, assign the indebtedness and this
Guaranty, in whole or in part. Guarantor agrees that Agent and Banks may
disclose to any
<PAGE>
prospective purchaser and any purchaser of all or part of the indebtedness any
and all information in Agent's or Banks' possession concerning Guarantor, this
Guaranty and any security for this Guaranty.
(13) Guarantor agrees to pay to Agent, on demand, all out-of-pocket
expenses and attorneys' fees (including allocated costs for in-house legal
services) incurred by Agent or Banks prior to the commencement of any legal
action or arbitration proceeding in connection with the enforcement of this
Guaranty and any instrument or agreement required under this Guaranty. In the
event of a legal action or arbitration proceeding, the prevailing party shall be
entitled to reasonable attorneys' fees (including allocated costs for in-house
legal services), costs and necessary disbursements incurred in connection with
such action or proceeding, as determined by the court or arbitrator.
(14) (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND
THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
GUARANTY, GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. GUARANTOR IRREVOCABLY WAIVES ANY
OBJECTION,
<PAGE>
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT
RELATED HERETO. GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(15) GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
GUARANTY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. GUARANTOR AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, GUARANTOR AGREES THAT ITS RIGHT TO A
TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
<PAGE>
Executed this ______ day of __________________, 1994.
"Guarantor"
By:________________________________
Title:_____________________________
___________________________________
Address
___________________________________
Federal Tax I.D. No.
Address for Notices to Agent: Address for Notices to Guarantor:
1455 Market Street ________________________
12th Floor ________________________
San Francisco, CA 94103 ________________________
<PAGE>
EXHIBIT H
[FORM OF COMMERCIAL LETTER OF CREDIT]
[ISSUING BANK]
_______________(1)_________________
Irrevocable Letter of Credit Number (2)
(3)
Ladies and Gentlemen:
We hereby open our irrevocable documentary letter of credit number (2)
in your favor and authorize you to draw at sight on [Issuing Bank] [location],
(4)(5)(6) for the account of (7).
Drafts are to be accompanied by:
1. This Letter of Credit.
2. Original of (8).
Partial drawings and/or shipments are permitted.
This Letter of Credit expires (9) at our counters.
Drafts under this Letter of Credit must bear on their face the clause
"Drawn under the [Issuing Bank] Letter of Credit Number (2) dated (1)".
We hereby agree with bona fide holders that all drafts under and in
compliance with the terms of this credit will be duly honored upon compliance if
presented on or before the expiry date.
This credit is subject to the Uniform Customs and Practice for
Documentary Credit (1993 Revision in force as of January 1, 1994) International
Chamber of Commerce Publication No. 500.
Best Regards,
[ISSUING BANK]
By: ___________________________________
H-1
<PAGE>
Title: ________________________________
______________________________
(1) Date of Letter of Credit.
(2) Letter of Credit Number.
(3) Name and address of Beneficiary.
(4) Insert one of the phrases identified in clauses (a) through (d):
a. an amount
b. up to an amount of US$ (5)(6)
c. approximately US$ (5)(6)
d. US$ (5)(6), plus or minus [insert number]%
(5) Aggregate initial stated amount of Letter of Credit.
(6) Aggregate initial stated amount of Letter of Credit stated in words.
(7) Ferrellgas, L.P.
(8) Description of applicable invoice and/or product movement documentation.
(9) Insert a date not later than 90 days from the date of issuance.
H-2
<PAGE>
EXHIBIT I
[FORM OF STANDBY LETTER OF CREDIT]
[ISSUING BANK]
_______________(1)_________________
Irrevocable Letter of Credit Number (2)
(3)
Ladies and Gentlemen:
We hereby open our irrevocable standby letter of credit number (2) in
your favor and authorize you to draw at sight on [Issuing Bank] [location],
(4)(5)(6) for the account of (7).
Drafts are to be accompanied by:
1. This Letter of Credit.
OPTIONAL: 2. Copy of (8).
3. A signed statement by an authorized officer of (3) certifying
that the product has been delivered and that although the invoice(s) presented
under this Letter of Credit was (were) due according to contract terms, (7)
failed to make payment and payment remains outstanding at time of drawing.
Partial drawings and/or shipments are permitted.
This Letter of Credit expires (9) at our counters.
Drafts drawn under this Letter of Credit must bear on their face the
clause "Drawn under the [Issuing Bank] Letter of Credit Number (2) dated (1)".
OPTIONAL: The amount available for drawing under this letter of credit will be
reduced by the amount of any payments made outside the letter of
credit to _______________ for this product if such payments are made
by [Issuing Bank], [location] and make reference to this letter of
credit number.
We hereby agree with bona fide holders that all drafts drawn under and
in compliance with the terms of this credit will be duly honored upon compliance
if
I-1
<PAGE>
presented on or before the expiry date. Documents presented more than 21 days
after transport date but on or before the expiry date are acceptable.
This credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision in force as of January 1, 1994) International
Chamber of Commerce Publication NO. 500.
Best Regards,
[ISSUING BANK]
By: _______________________________
Title:___________________________
______________________________
(1) Date of Letter of Credit.
(2) Letter of Credit Number.
(3) Name and address of Beneficiary.
(4) Insert one of the phrases identified in clauses (a) through (d):
a. an amount of US$ (5)(6)
b. up to an amount of US$ (5)(6)
c. approximately US$ (5)(6)
d. US$ (5)(6), plus or minus [insert number]%
(5) Aggregate initial stated amount of Letter of Credit.
(6) Aggregate initial stated amount of Letter of Credit stated in words.
(7) Ferrellgas, L.P. or Stratton Insurance Company, Inc. (as the case may be).
(8) Description of applicable invoice and/or product movement documentation.
(9) Insert a date not later than 180 days from the date of issuance.
I-2
<PAGE>
EXHIBIT J
[ALTERNATIVE FORM OF STANDBY LETTER OF CREDIT]
_______________(1)_________________
Irrevocable Letter of Credit Number (2)
(3)
Ladies and Gentlemen:
We hereby establish our irrevocable standby Letter of Credit Number
(2) in your favor by order and for the account of Ferrellgas, L.P. for (4)(5)(6)
available at [Issuing Bank] [Location] by payment against your drafts at sight
to be accompanied by:
1. Signed statement by a representative of (3) that the amount drawn
under this letter of credit (2) represents an amount due and owing to (3) and
unpaid or defaulted by Ferrellgas, L.P.
Drafts must be presented no later than (7).
Special Conditions:
A. Partial drawings are permitted.
B. Notwithstanding the above, this letter of credit shall also be
available at [Issuing Bank] [Location] by payment against drafts of (3) at sight
accompanied by:
Signed statement by a representative of (3) that:
(i) as a result of pending or possible bankruptcy, reorganization
or insolvency proceedings involving Ferrellgas, L.P. (3) has tendered to an
escrow agent designated by (3) payments or deliveries (3) reasonably
believes are or may be subject to the aforementioned proceedings;
(ii) the amount drawn under this letter of credit represents or
corresponds to such payments or deliveries; and
(iii) the escrow agent designated by (3) has been instructed to
release such payments or deliveries to Ferrellgas, L.P. upon receipt by (3)
of the amount drawn under this letter of credit.
J-1
<PAGE>
We hereby engage with you that all drawings made under and in
conformity with the terms of this letter of credit will be duly honored upon
presentation to us as specified.
This letter of credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision) International Chamber of Commerce
Publication No. 500.
Very truly yours,
[ISSUING BANK]
By: _____________________________________________
Title: __________________________________________
______________________________
(1) Date of Letter of Credit,
(2) Letter of Credit Number.
(3) Insert either (a) Exxon Company USA [and its address the first time its
name appears], or (b) Exxon Supply Company [and its address the first time
its name appears], as the case may be.
(4) Insert one of the phrases identified in clauses (a) through (d):
a. an amount of US$ (5)(6)
b. up to an amount of US$ (5)(6)
c. approximately US$ (5)(6)
d. US$ (5)(6), plus or minus [insert number]%.
(5) Aggregate initial stated amount of Letter of Credit.
(6) Aggregate initial stated amount of Letter of Credit stated in words.
(7) Date by which drafts must be presented.
J-2
<PAGE>
EXHIBIT K
MAXIMUM AMOUNT CERTIFICATE
This Maximum Amount Certificate is provided pursuant to Section
7.02(c) of the Credit Agreement dated as of __________, 1994 (as the same may be
amended from time to time, the "Credit Agreement"), by and among Ferrellgas,
L.P., a Delaware limited partnership (the "Borrower"), Stratton Insurance
Company, Inc., a Vermont corporation and a wholly-owned subsidiary of the
Borrower, Ferrellgas, Inc., a Delaware corporation and the sole general partner
of Borrower, Bank of America National Trust and Savings Association, as agent
(in such capacity, "Agent"), and the financial institutions ("Banks") from time
to time party to the Credit Agreement. Unless otherwise defined herein,
capitalized terms used herein are used with the defined meanings given in the
Credit Agreement.
I, _____________________________, the ____________________ of
Ferrellgas, Inc., a Delaware corporation and the sole general partner of the
Borrower, do hereby certify that I am familiar with the Credit Agreement and
with the assets, business, financial condition and operations of the Borrower
and its Subsidiaries and that, as of ________________ (the "Determination
Date"):
(i) The aggregate Cash Costs of all Permitted Acquisitions by the
Borrower and its Subsidiaries (together with the aggregate amount of any
Acquired Debt and seller financing associated therewith and the amount of such
Cash Costs which were or could have been financed with Facility B Revolving
Loans) during the period from the Closing Date to the date that is 270 days
prior to the Determination Date (the "Hold Period Date") is $_________________,
and from the Hold Period Date through the Determination Date is $_____________,
and the total such amount is $__________________, as compared to $__________,
$__________ and $_____________, respectively, reported in the previously
delivered Maximum Amount Certificate delivered pursuant to the Credit Agreement
(the "Previous Certificate").
The components of Cash Costs of all Permitted Acquisitions are as
follows:
Date of Acquisition Assets/Stock Acquired Cash Cost
- - ------------------- --------------------- ---------
(ii) The aggregate Growth-Related Capital Expenditures by the Borrower
and its Subsidiaries during the period from the Closing Date through the
Determination Date is $_______________, as compared to $____________ reported in
the Previous Certificate.
The components of Growth-Related Capital Expenditures are as follows:
Description
<PAGE>
Date of Expenditure of Expenditure Amount
- - ------------------- -------------- ------
(iii) The aggregate Net Proceeds of Asset Sales during the period from
the Closing Date through the Hold Period Date is $____________, from the Hold
Period Date through the Determination Date is $_________, and the total such
amount is $______________, as compared to $__________, $__________ and
$_____________, respectively, reported in the Previous Certificate.
The components of Net Proceeds of Asset Sales are as follows:
Number and Description Aggregate
Date of Sale of Assets Sold Price
- - ------------ ----------------------- ---------
(iv) The aggregate Net Proceeds of MLP New Unit Sales during the
period from the Closing Date through the Determination Date is
$_________________, as compared to $_____________ reported in the Previous
Certificate.
The components of Net Proceeds of MLP New Unit Sales are as follows:
Number and Description Aggregate
Date of Sale of Units Sold Price
- - ------------ ---------------------- ---------
(v) The Facility B Maximum Amount as of the Determination Date, based
on the information contained herein, is as follows:
THE SUM OF:
(a) the aggregate Cash Costs of all
Permitted Acquisitions by the Borrower
and its Subsidiaries during the period
from the Closing Date through the
Determination Date:
$________
plus
<PAGE>
(b) the aggregate Growth-Related Capital
Expenditures by the Borrower and its
Subsidiaries during the period from the
Closing Date through the
Determination Date:
$_________
SUBTOTAL: $________
MINUS THE SUM OF:
-----
(x) the aggregate Net Proceeds of Asset Sales
during the period from the Closing Date
to the Hold Period Date:
$________
plus
(y) the aggregate Net Proceeds of MLP New
Unit Sales from the Closing Date through
the Determination Date:
$________
SUBTOTAL: $________
EQUALS: $
=========
(vi) The Facility B Maximum Amount reported in the Previous
Certificate was $__________________.
<PAGE>
IN WITNESS WHEREOF, this Certificate has been executed on behalf of
the Borrower as of the ____ day of ________________, 19__.
FERRELLGAS, L.P., a Delaware limited partnership
By: FERRELLGAS, INC., General Partner
By:___________________________
Title: _______________________
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
================================================================================
FERRELLGAS, L.P.
FERRELLGAS FINANCE CORP.
$250,000,000
$200,000,000 10% SERIES A FIXED RATE SENIOR NOTES
$50,000,000 SERIES B FLOATING RATE SENIOR NOTES
_________________
INDENTURE
Dated as of July 5, 1994
_________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)................................... 7.10
(a)(2)..................................... 7.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(a)(5)..................................... 7.10
(b)........................................ 7.10
(c)........................................ N.A.
311 (a)...................................... 7.11
(b)........................................ 7.11
(c)........................................ N.A.
312 (a)...................................... 2.05
(b)........................................ 11.03
(c)........................................ 11.03
313 (a)...................................... 7.06
(b)........................................ 7.06
(c)........................................ 7.06;11.02
(d)........................................ 7.06
314 (a)...................................... 4.03;11.05
(b)........................................ 10.02
(c)(1)..................................... 11.04
(c)(2)..................................... 11.04
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 11.05
(f)........................................ N.A.
315 (a)...................................... 7.01
(b)........................................ 7.05,11.02
(c)........................................ 7.01
(d)........................................ 7.01
(e)........................................ 6.11
316 (a)(last sentence)....................... 2.09
(a)(1)(A).................................. 6.05
(a)(1)(B).................................. 6.04
(a)(2)..................................... N.A.
(b)........................................ 6.07
(c)........................................ 2.12
317 (a)(1)................................... 6.08
(a)(2)..................................... 6.09
(b)........................................ 2.04
318 (a)...................................... 11.01
(b)........................................ N.A.
(c)........................................ 11.01
N.A. means not applicable
</TABLE>
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions...................................... 1
Section 1.02. Other Definitions................................ 11
Section 1.03. Incorporation by Reference of Trust Indenture Act 12
Section 1.04. Rules of Construction............................ 12
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.................................. 13
Section 2.02. Execution and Authentication..................... 13
Section 2.03. Registrar and Paying Agent....................... 14
Section 2.04. Paying Agent to Hold Money in Trust.............. 14
Section 2.05. Lists of Holders of the Notes.................... 14
Section 2.06. Transfer and Exchange............................ 15
Section 2.07. Replacement Notes................................ 15
Section 2.08. Outstanding Notes................................ 16
Section 2.09. Treasury Notes................................... 16
Section 2.10. Temporary Notes.................................. 16
Section 2.11. Cancellation..................................... 16
Section 2.12. Defaulted Interest............................... 17
Section 2.13. Record Date...................................... 17
Section 2.14. CUSIP Number..................................... 17
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee............................... 17
Section 3.02. Selection of Notes to Be Purchased or Redeemed... 18
Section 3.03. Notice of Redemption............................. 18
Section 3.04. Effect of Notice of Redemption................... 19
Section 3.05. Deposit of Redemption Price...................... 19
Section 3.06. Notes Redeemed in Part........................... 20
Section 3.07. Optional Redemption.............................. 20
Section 3.08. Mandatory Redemption............................. 20
Section 3.09. Asset Sale Offers................................ 20
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes................................. 22
Section 4.02. Maintenance of Office or Agency.................. 22
Section 4.03. Reports.......................................... 23
Section 4.04. Compliance Certificate........................... 23
Section 4.05. Taxes............................................ 24
Section 4.06. Stay, Extension and Usury Laws................... 24
Section 4.07. Restricted Payments.............................. 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries......................... 26
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Interests.......................... 26
Section 4.10. Asset Sales....................................... 28
Section 4.11. Transactions with Affiliates...................... 29
Section 4.12. Liens............................................. 30
Section 4.13. Subsidiary Note Guarantees........................ 30
Section 4.14. Offer to Purchase Upon Change of Control.......... 30
Section 4.15. Partnership or Corporate Existence................ 31
Section 4.16. Line of Business.................................. 32
Section 4.17. Limitation on Sale and Leaseback Transactions..... 32
Section 4.18. Restrictions on Nature of Indebtedness and
Activities of Finance Corp...................... 32
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.......... 32
Section 5.02. Successor Person Substituted...................... 33
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default................................. 34
Section 6.02. Acceleration...................................... 36
Section 6.03. Other Remedies.................................... 36
Section 6.04. Waiver of Past Defaults........................... 36
Section 6.05. Control by Majority............................... 37
Section 6.06. Limitation on Suits............................... 37
Section 6.07. Rights of Holders of Notes to Receive Payment..... 37
Section 6.08. Collection Suit by Trustee........................ 37
Section 6.09. Trustee May File Proofs of Claim.................. 38
Section 6.10. Priorities........................................ 38
Section 6.11. Undertaking for Costs............................. 38
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee................................ 39
Section 7.02. Rights of Trustee................................ 40
Section 7.03. Individual Rights of Trustee..................... 40
Section 7.04. Trustee's Disclaimer............................. 40
Section 7.05. Notice of Defaults............................... 41
Section 7.06. Reports by Trustee to Holders of the Notes....... 41
Section 7.07. Compensation and Indemnity....................... 41
Section 7.08. Replacement of Trustee........................... 42
Section 7.09. Successor Trustee by Merger, etc................. 43
Section 7.10. Eligibility; Disqualification.................... 43
Section 7.11. Preferential Collection of Claims Against Issuers 43
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
<S> <C> <C>
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..................................... 43
Section 8.02. Legal Defeasance and Discharge................... 43
Section 8.03. Covenant Defeasance.............................. 44
Section 8.04. Conditions to Legal or Covenant Defeasance....... 44
Section 8.05. Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous
Provisions..................................... 46
Section 8.06. Repayment to Issuers............................. 46
Section 8.07. Reinstatement.................................... 47
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.............. 47
Section 9.02. With Consent of Holders of Notes................. 48
Section 9.03. Compliance with Trust Indenture Act.............. 49
Section 9.04. Revocation and Effect of Consents................ 49
Section 9.05. Notation on or Exchange of Notes................. 49
Section 9.06. Trustee to Sign Amendments, etc.................. 50
ARTICLE 10
NOTE GUARANTEES
Section 10.01. Note Guarantee................................... 50
Section 10.02. Limitation of Guarantor's Liability.............. 51
Section 10.03. Guarantors May Consolidate, etc., on Certain
Terms.......................................... 52
Section 10.04. Releases Following Sale of Assets................ 52
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls..................... 52
Section 11.02. Notices.......................................... 53
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes............................... 54
Section 11.04. Certificate and Opinion as to Conditions
Precedent...................................... 54
Section 11.05. Statements Required in Certificate or Opinion.... 54
Section 11.06. Rules by Trustee and Agents...................... 54
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders..................... 55
Section 11.08. Governing Law.................................... 55
Section 11.09. No Adverse Interpretation of Other Agreements.... 55
Section 11.10. Successors....................................... 55
Section 11.11. Severability..................................... 55
Section 11.12. Counterpart Originals............................ 55
Section 11.13. Table of Contents, Headings, etc................. 56
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A FORM OF SERIES A FIXED RATE SENIOR NOTE
Exhibit B FORM OF SERIES B FLOATING RATE SENIOR NOTE
Exhibit C FORM OF SUPPLEMENTAL INDENTURE
Exhibit D FORM OF NOTATION ON SENIOR NOTE RELATING TO
NOTE GUARANTEE
iv
<PAGE>
INDENTURE dated as of July 5, 1994 between Ferrellgas, L.P., a Delaware
limited partnership (the "Partnership"), Ferrellgas Finance Corp., a Delaware
corporation ("Finance Corp." and, together with the Partnership, the "Issuers"),
and Norwest Bank Minnesota, National Association, as trustee (the "Trustee").
The Partnership, Finance Corp. and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the Notes (as defined below):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Attributable Debt" means, in respect of a sale and leaseback arrangement
of any property, as at the time of determination, the present value (calculated
using a discount rate equal to the interest rate of the Notes and annual
compounding) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such arrangement (including any
period for which such lease has been extended).
"Available Cash" has the meaning given to such term in the Partnership
Agreement, as amended to the date of the Indenture.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the General Partner,
or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
<PAGE>
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than
eighteen months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500 million and a Keefe Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) entered into with
any financial institution meeting the qualifications specified in clause (iii)
above and (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within nine months after the date of acquisition and (vi) investments
in money market funds all of whose assets consist of securities of the types
described in the foregoing clauses (i) through (v).
"Change of Control" means (i) the sale, lease, conveyance or other
disposition of all or substantially all of the Partnership's assets to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
other than James E. Ferrell, the Related Parties and any Person of which James
E. Ferrell and the Related Parties beneficially own in the aggregate 51% or more
of the voting Capital Interests (or if such Person is a partnership, 51% or more
of the general partner interests), (ii) the liquidation or dissolution of the
Partnership or the General Partner, (iii) the occurrence of any transaction, the
result of which is that James E. Ferrell and the Related Parties beneficially
own in the aggregate, directly or indirectly, less than 51% of the total voting
power entitled to vote for the election of directors of the General Partner and
(iv) the occurrence of any transaction, the result of which is that the General
Partner is no longer the sole general partner of the Partnership.
"Common Units" means the common units, representing limited partner
interests, being offered by the Master Partnership contemporaneously with the
sale of the Notes.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period, plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
asset sale, to the extent such losses were deducted in computing Consolidated
Net Income, plus (b) provision for taxes based on income or profits of such
Person for such period, to the extent such provision for taxes was deducted in
computing Consolidated Net Income, plus (c) Consolidated Interest Expense of
such Person for such period, whether paid or accrued (including amortization of
original issue discount, non-cash interest payments and the interest component
of any payments associated with Capital Lease Obligations and net payments (if
any) pursuant to Hedging Obligations), to the extent such
2
<PAGE>
expense was deducted in computing Consolidated Net Income, plus (d) depreciation
and amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person for such period, to the extent such depreciation and
amortization were deducted in computing Consolidated Net Income, in each case,
for such period without duplication on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any Person
that is a Subsidiary (other than a Wholly Owned Subsidiary) shall be included
only to the extent of the amount of dividends or distributions paid to the
referent Person or a Wholly Owned Subsidiary thereof, (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded (except to the extent
otherwise includable under clause (i) above) and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Interests) that by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Partnership.
"Credit Facility" means the credit facility under that certain Credit
Agreement, dated as of July 5, 1994, by and among the Partnership, the Insurance
Company Subsidiary, the General Partner and Bank of America National Trust and
Savings Association, as agent for the financial institutions listed therein,
providing for up to $185 million of credit borrowings and letters of credit,
including any related notes, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
3
<PAGE>
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Interests" means any Capital Interests which, by their terms
(or by the terms of any security into which they are convertible or for which
they are exchangeable), or upon the happening of any event, mature or are
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to August 1, 2001.
"Distribution" means, for purposes of Article 10, a distribution
consisting of cash, securities or other property, by set off or otherwise.
"Equity Interests" means Capital Interests and all warrants, options or
other rights to acquire Capital Interests (but excluding any debt security that
is convertible into, or exchangeable for, Capital Interests).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Fixed Rate Notes" means the Series B and D Fixed Rate Senior
Notes due 1996 of the General Partner.
"Existing Floating Rate Notes" means the Series A and C Floating Rate
Senior Notes due 1996 of the General Partner.
"Existing Indebtedness" means up to $5 million in aggregate principal
amount of Indebtedness of the Partnership and its Subsidiaries (other than under
the Credit Facility) in existence on the date of this Indenture, until such
amounts are repaid.
"Existing Senior Notes" means the Existing Fixed Rate Notes and the
Existing Floating Rate Notes.
"Existing Subordinated Debentures" means the General Partner's 11 5/8%
Senior Subordinated Debentures due December 15, 2003.
"Finance Corp." means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
reference Person or any of its Subsidiaries incurs, assumes, guarantees, redeems
or repays any Indebtedness (other than revolving credit borrowings) subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date of the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of Indebtedness, as
if the same had occurred at the
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<PAGE>
beginning of the applicable reference period. The foregoing calculation of the
Fixed Charge Coverage Ratio shall also give pro forma effect to acquisitions
(including all mergers and consolidations), dispositions and discontinuance of
businesses or assets that have been made by the reference Person or any of its
Subsidiaries during the reference period or subsequent to such reference period
and on or prior to the Calculation Date assuming that all such acquisitions,
dispositions and discontinuance of businesses or assets had occurred on the
first day of the reference period; provided, however, that (a) Fixed Charges
shall be reduced by amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the obligations giving rise
to such Fixed Charges would no longer be obligations contributing to the
Partnership's Fixed Charges subsequent to the Calculation Date and (b)
Consolidated Cash Flow generated by an acquired business or asset shall be
determined by the actual gross profit (revenues minus cost of goods sold) of
such acquired business or asset during the immediately preceding number of full
fiscal quarters as in the reference period minus the pro forma expenses that
would have been incurred by the Partnership in the operation of such acquired
business or asset during such period computed on the basis of (i) personnel
expenses for employees retained by the Partnership in the operation of the
acquired business or asset and (ii) non-personnel costs and expenses incurred by
the Partnership on a per gallon basis in the operation of the Partnership's
business at similarly situated Partnership facilities. If the applicable
reference period for any calculation of the Fixed Charge Coverage Ratio with
respect to the Partnership shall include a portion prior to the date of this
Indenture, then such Fixed Charge Coverage Ratio shall be calculated based upon
the Consolidated Cash Flow and the Fixed Charges of the General Partner for such
portion of the reference period prior to the date of this Indenture and the
Consolidated Cash Flow and the Fixed Charges of the Partnership for the
remaining portion of the reference period on and after the date of the
Indenture, giving pro forma effect, as described in the two foregoing sentences,
to all applicable transactions occurring on the date of the Indenture or
otherwise.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (a) consolidated interest expense of such person for
such period, whether paid or accrued, to the extent such expense was deducted in
computing Consolidated Net Income (including amortization of original issue
discount, non-cash interest payments, the interest component of all payments
associated with Capital Lease Obligations and net payments (if any) pursuant to
Hedging Obligations), (b) commissions, discounts and other fees and charges
incurred with respect to letters of credit and bankers' acceptances financing,
(c) any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or secured by a Lien on assets of such Person, and (d) the product
of (i) all cash dividend payments (and non-cash dividend payments in the case of
a Person that is a Subsidiary) on any series of preferred stock of such Person,
times (ii) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local statutory
tax rate of such Person, expressed as a decimal, determined, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Rate Senior Notes" means the 10% Series A Fixed Rate Senior Notes,
in the form attached hereto as Exhibit A and as amended or supplemented from
---------
time to time pursuant to the terms hereof, issued by the Issuers pursuant to
this Indenture.
"Floating Rate Senior Notes" means the Series B Floating Rate Senior
Notes, in the form attached hereto as Exhibit B and as amended or supplemented
---------
from time to time pursuant to the terms hereof, issued by the Issuers pursuant
to this Indenture.
5
<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect in the United States on the date of this
Indenture.
"General Partner" means Ferrellgas, Inc., a Delaware corporation and the
sole general partner of the Partnership.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means any Subsidiary of the Partnership that executes a Note
Guarantee in accordance with the provisions of Section 4.13 hereof, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person) and, to the extent not otherwise included, the Guarantee by such Person
of any Indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Insurance Company Subsidiary" means Stratton Insurance Company, a Vermont
corporation, a wholly owned subsidiary of the Partnership.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances to officers and
6
<PAGE>
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Issuers" means the parties named as such in this Indenture until a
successor replaces any such Issuer pursuant to this Indenture and thereafter
means the remaining Issuer and the successor.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Master Partnership" means Ferrellgas Partners, L.P., a Delaware limited
partnership and the sole limited partner of the Partnership.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any asset sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (ii)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries, and (b) any extraordinary gain (but not
loss), together with any related provision for taxes on such extraordinary gain
(but not loss), provided, however, that all costs and expenses with respect to
the retirement of the Existing Senior Notes and the Existing Subordinated
Debentures, including, without limitation, cash premiums, tender offer premiums,
consent payments and all fees and expenses in connection therewith, shall be
added back to the Net Income of the General Partner, the Partnership or their
Subsidiaries to the extent that the same were deducted from such Net Income in
accordance with GAAP.
"Net Proceeds" means the aggregate cash proceeds received by the
Partnership or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets.
"Non-Recourse Subsidiary" means (1) the Insurance Company Subsidiary and
(2) any other Person that would otherwise be a Subsidiary of the Partnership but
is designated as a Non-
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<PAGE>
Recourse Subsidiary in a resolution of the Board of Directors of the General
Partner, so long as (a) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of such Person (i) is guaranteed by the Partnership or
any of its Subsidiaries, (ii) is recourse or obligates the Partnership or any of
its Subsidiaries in any way or (iii) subjects any property or asset of the
Partnership or any of its Subsidiaries, directly or indirectly, contingently or
otherwise, to satisfaction thereof, (b) neither the Partnership nor any of its
Subsidiaries has any contract, agreement, arrangement or understanding or is
subject to an obligation of any kind, written or oral, with such Person other
than on terms no less favorable to the Partnership and its Subsidiaries than
those that might be obtained at the time from persons who are not Affiliates of
the Partnership, (c) neither the Partnership nor any of its Subsidiaries has any
obligation with respect to such Person (i) to subscribe for additional shares of
capital stock, Capital Interests or other Equity Interests therein or (ii)
maintain or preserve such Person's financial condition or to cause such Person
to achieve certain levels of operating or other financial results, and (d) such
Person has no more than $1,000 of assets at the time of such designation.
"Notes" means the Fixed Rate Senior Notes and the Floating Rate Senior
Notes.
"Note Guarantee" means each guarantee of the Notes by a Guarantor pursuant
to Article 10 hereof.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person; provided, however, that any
reference to an Officer with respect to the Partnership shall mean the
respective Officer of the General Partner.
"Officers' Certificate" means a certificate signed on behalf of (i) the
General Partner (acting on behalf of the Partnership) by two Officers of the
General Partner, one of whom must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of the General Partner, or (ii) Finance Corp. by two Officers of Finance Corp.,
one of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of Finance Corp., in
either case that meets the requirements of Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.05 hereof.
The counsel may be an employee of or counsel to the Partnership, the General
Partner, Finance Corp., any of their respective Subsidiaries or the Trustee.
"Partnership Agreement" means the Agreement of Limited Partnership of
Ferrellgas, L.P., dated as of July 5, 1994, between Ferrellgas, Inc. and
Ferrellgas Partners, L.P.
"Partnership" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
8
<PAGE>
"Permitted Investments" means (a) any Investments in Cash Equivalents; (b)
any Investments in the Partnership or in a Wholly Owned Subsidiary of the
Partnership that is a Guarantor; (c) Investments by the Partnership or any
Subsidiary of the Partnership in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary of the Partnership and a Guarantor
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Partnership or a Wholly Owned Subsidiary of the Partnership that is a
Guarantor; and (d) other Investments in Non-Recourse Subsidiaries of the
Partnership that do not exceed $30 million at any time outstanding.
"Permitted Liens" means (a) Liens existing on the date of the Indenture;
(b) Liens in favor of the Issuers or Liens to secure Indebtedness of a
Subsidiary of the Partnership to the Partnership or a Wholly Owned Subsidiary of
the Partnership; (c) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Partnership or any Subsidiary of
the Partnership, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Partnership;
(d) Liens on property existing at the time of acquisition thereof by the
Partnership or any Subsidiary of the Partnership, provided that such Liens were
in existence prior to the contemplation of such acquisition; (e) Liens on any
property or asset acquired by the Partnership or any of its Subsidiaries in
favor of the seller of such property or asset and construction mortgages on
property, in each case, created within six months after the date of acquisition,
construction or improvement of such property or asset by the Partnership or such
Subsidiary to secure the purchase price or other obligation of the Partnership
or such Subsidiary to the seller of such property or asset or the construction
or improvement cost of such property in an amount up to 80% of the total cost of
the acquisition, construction or improvement of such property or asset; provided
that in each case, such Lien does not extend to any other property or asset of
the Partnership and its Subsidiaries; (f) Liens incurred or pledges and deposits
made in connection with worker's compensation, unemployment insurance and other
social security benefits and Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature, in each case, incurred in the ordinary course of business; (g)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (h) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good faith in the
ordinary course of business with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made therefor; (i) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor irregularities
of title incident thereto that do not, in the aggregate, materially detract from
the value of the property or the assets of the Partnership or impair the use of
such property in the operation of the business of the Partnership or any of its
Subsidiaries; (j) Liens of landlords or mortgages of landlords, arising solely
by operation of law, on fixtures and movable property located on premises leased
by the Partnership or any of its Subsidiaries in the ordinary course of
business; (k) financing statements granted with respect to personal property
leased by the Partnership and its Subsidiaries in the ordinary course of
business to the owners of such personal property, provided that such financing
statements are granted solely in connection with such leases and not the
borrowing of money or the obtaining of advances or credit; (l) judgment Liens to
the extent that such judgments do not cause or
9
<PAGE>
constitute a Default or an Event of Default; (m) Liens incurred in the ordinary
course of business of the Partnership or any Subsidiary of the Partnership with
respect to obligations that do not exceed $5 million in the aggregate in any one
time outstanding and that (i) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (ii) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Partnership or such Subsidiary; (n) Liens securing
Indebtedness incurred to refinance Indebtedness that has been secured by a Lien
permitted under the Indenture, provided that (i) any such Lien shall not extend
to or cover any assets or property not securing the Indebtedness so refinanced
and (ii) the refinancing Indebtedness secured by such Lien shall have been
permitted to be incurred under Section 4.09 hereof and shall not have a
principal amount in excess of the Indebtedness so refinanced; and (o) any
extension or renewal, or successive extensions or renewals, in whole or in part,
of Liens permitted pursuant to the foregoing clauses (a) through (n); provided
that no such extension or renewal Lien shall (i) secure more than the amount of
Indebtedness or other obligations secured by the Lien being so extended or
renewed or (ii) extend to any property or assets not subject to the Lien being
so extended or renewed.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Partnership or any Subsidiary of the Partnership issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Partnership or any of its Subsidiaries (other
than Indebtedness under the Credit Facility) or the Indebtedness represented by
the then outstanding Existing Subordinated Debentures of the General Partner;
provided that (a) the principal amount of such Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (b) such Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (c) such Indebtedness is subordinated in right of payment to the Notes
on terms at least as favorable to the Holders of Notes as those, if any,
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (d) such Indebtedness
(other than indebtedness incurred to extend, refinance, renew, replace, defease
or refund the Existing Subordinated Debentures) is incurred by the Partnership
or the Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Permitted Senior Debt" means, with respect to any Person, (i) any
Acquired Debt of such Person, (ii) any Indebtedness incurred by such Person, the
proceeds of which are applied solely to finance capital expenditures made to
improve or enhance the existing capital assets of such Person or to acquire or
construct new capital assets (but excluding capital expenditures necessary to
maintain the existing capital assets of such Person) and (iii) any Indebtedness
incurred by such Person, the proceeds of which are used solely for working
capital purposes.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.
"Related Party" means (i) the spouse or any lineal descendant of James E.
Ferrell, (ii) any trust for his benefit or for the benefit of his spouse or any
such lineal descendants or (iii) any corporation, partnership or other entity in
which James E. Ferrell and/or such other Persons
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referred to in the foregoing clauses (i) and (ii) are the direct record and
beneficial owners of all of the voting and nonvoting Equity Interests.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means, without duplication, (i) the Notes, (ii) all other
Indebtedness of the Partnership or Finance Corp., unless the instrument under
which such Indebtedness is incurred expressly provides that it is subordinated
in right of payment to the Notes and (iii) all Indebtedness of Subsidiaries of
the Partnership, other than Finance Corp.
"Significant Subsidiary" means any Subsidiary of the Partnership that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof or, in the case of a partnership, more than 50% of the partners' Capital
Interests (considering all partners' Capital Interests as a single class), is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person or a combination thereof.
Notwithstanding the foregoing, any Subsidiary of the Partnership that is
designated a Non-Recourse Subsidiary pursuant to the definition thereof shall
not thereafter be deemed a Subsidiary of the Partnership.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness; provided, however, that with respect to any
revolving Indebtedness, the foregoing calculation of
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<PAGE>
Weighted Average Life to Maturity shall be determined based upon the total
available commitments and the required reductions of commitments in lieu of the
outstanding principal amount and the required payments of principal,
respectively.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Interests or other ownership interests or, in the
case of a limited partnership, all of the partners' Capital Interests (other
than up to a 1% general partner interest), of which (other than directors'
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly Owned Subsidiaries of such Person and one or more Wholly Owned
Subsidiaries of such Person.
<TABLE>
<CAPTION>
Section 1.02. Other Definitions.
Defined in
Term Section
<S> <C>
"Affiliate Transaction"............ 4.11
"Aggregate Consideration".......... 4.07
"Asset Sale"....................... 4.10
"Asset Sale Offer"................. 3.09
"Benefitted Party"................. 10.01
"Capital Investment"............... 4.07
"Change of Control Offer".......... 4.14
"Change of Control Payment"........ 4.14
"Change of Control Payment Date"... 4.14
"Covenant Defeasance".............. 8.03
"Commencement Date"................ 3.09
"Event of Default"................. 6.01
"Excess Proceeds".................. 4.10
"incur"............................ 4.09
"Incurrence Date".................. 4.09
"Legal Defeasance"................. 8.02
"Offer Amount"..................... 3.09
"Offer Period"..................... 3.09
"Paying Agent"..................... 2.03
"Payment Default".................. 6.01
"Purchase Date".................... 3.09
"Registrar"........................ 2.03
"Restricted Payments".............. 4.07
"Senior Debt Ratio Test"........... 4.09
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture, other than those
provisions of the TIA that may be excluded herein, which provision shall be
excluded to the extent specifically excluded in this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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"indenture securities" means the Notes and the Note Guarantees, if any;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Issuers, the Guarantors, if any, and any
successor obligor upon the Notes or any Note Guarantee, as the case may be.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule or regulation
promulgated by the SEC under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act or the
Exchange Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Fixed Rate Senior Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A which is part of
---------
this Indenture and shall be in a principal amount of no greater than
$200,000,000. The Floating Rate Senior Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B which is a part
---------
of this Indenture and shall be in a principal amount of no greater than
$50,000,000. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage which will be provided by the Company. Each
Note shall be dated the date of its authentication.
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<PAGE>
The terms and provisions contained in the Notes annexed hereto as
Exhibit A and Exhibit B, and the Guarantees annexed hereto as Exhibit C shall
- - --------- --------- ---------
constitute, and are hereby expressly made, a part of this Indenture. To the
extent applicable, the Company, each Guarantor and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.02. Execution and Authentication.
At least one Officer of each of the General Partner (in the case of the
Partnership) and Finance Corp. shall sign the Notes for the Issuers by manual or
facsimile signature. The seal of each Issuer shall be reproduced on the Notes
and may be in facsimile form.
If an Officer of the General Partner or Finance Corp. whose signature is
on a Note no longer holds that office at the time the Note is authenticated, the
Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Issuers signed by an
Officer of the General Partner and Finance Corp., authenticate Notes for
original issue up to an aggregate principal amount stated in paragraph 4 of the
Notes. The aggregate principal amount of Notes outstanding at any time shall
not exceed the amount set forth herein except as provided in Section 2.07
hereof.
The Trustee may appoint an authenticating agent acceptable to the Issuers
to authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Partnership or Finance Corp. or an Affiliate of the
Partnership or Finance Corp.
Section 2.03. Registrar and Paying Agent.
The Issuers shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange (including any co-
registrar, the "Registrar") and (ii) an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Issuers may appoint one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Issuers may change any Paying
Agent, Registrar or co-registrar without prior notice to any Holder of a Note.
The Issuers shall notify the Trustee and the Trustee shall notify the Holders of
the Notes of the name and address of any Agent not a party to this Indenture.
The Partnership, Finance Corp. or any Guarantor may act as Paying Agent,
Registrar or co-registrar. The Issuers shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall be subject
to any obligations imposed by the provisions of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Issuers shall notify the Trustee of the name and address of any such Agent. If
the Issuers fail to maintain a Registrar or Paying Agent, or fails to give the
foregoing
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notice, the Trustee shall act as such, and shall be entitled to appropriate
compensation in accordance with Section 7.07 hereof.
The Issuers initially appoint the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders of the Notes or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, and interest on the Notes, and
shall notify the Trustee of any Default by the Issuers or any Guarantors in
making any such payment. While any such Default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Issuers
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Partnership, Finance Corp. or a Guarantor) shall have no further liability for
the money delivered to the Trustee. If the Partnership, Finance Corp. or any
Guarantor acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders of the Notes all money held by it as Paying
Agent. Upon any bankruptcy or reorganization proceeding relating to the
Partnership, Finance Corp. or any Guarantor, the Trustee shall serve as Paying
Agent for the Notes.
Section 2.05. Lists of Holders of the Notes.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of the Notes and shall otherwise comply with TIA (S) 312(a). If the
Trustee is not the Registrar, the Issuers and/or any Guarantors shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Holders of the Notes, including the aggregate principal amount of
the Notes held by each thereof, and the Issuers and each Guarantor, if any,
shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
When Notes are presented to the Registrar with a request to register the
transfer or to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; provided, however, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or by his attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Issuers shall issue and the Trustee shall
authenticate Notes at the Registrar's request, subject to such rules as the
Trustee may reasonably require.
Neither the Issuers nor the Registrar shall be required to (i) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof or
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(ii) register the transfer of or exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
No service charge shall be made to any Holder of a Note for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Issuers may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof, which shall be paid by
the Issuers).
Prior to due presentment to the Trustee for registration of the transfer
of any Note, the Trustee, any Agent, the Issuers and each Guarantor, if any, may
deem and treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of the Trustee, any
Agent, the Issuers or any Guarantor shall be affected by notice to the contrary.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Issuers and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Issuers shall issue and the Trustee, upon the written
order of the Issuers signed by (i) two Officers of the General Partner and (ii)
two Officers of Finance Corp., shall authenticate a replacement Note if the
Trustee's requirements for replacements of Notes are met. If required by the
Trustee, the Issuers or the Guarantors, if any, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee, the
Issuers and the Guarantors to protect the Issuers, the Guarantors, the Trustee,
any Agent or any authenticating agent from any loss which any of them may suffer
if a Note is replaced. Each of the Partnership, Finance Corp, each Guarantor
and the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers and the
Guarantors, if any, and shall be entitled to all of the benefits of this
Indenture equally and ratably with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for cancellation
and those described in this Section 2.08 as not outstanding. If a Note is
replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. If the principal amount of any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue. Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Partnership, Finance Corp., any Guarantor, a Subsidiary
of the Partnership, Finance Corp. or any Guarantor or an Affiliate of the
Partnership, Finance Corp. or any Guarantor holds the Note.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Partnership, Finance Corp.,
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any Guarantor, any of their respective Subsidiaries or any Affiliate of the
Partnership, Finance Corp. or any Guarantor shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
which a Responsible Officer knows to be so owned shall be so considered.
Notwithstanding the foregoing, Notes that are to be acquired by the Partnership,
Finance Corp., any Guarantor, any Subsidiary of the Partnership, Finance Corp.
or any Guarantor or an Affiliate of the Partnership, Finance Corp. or any
Guarantor pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by the Partnership, Finance Corp., such Guarantor, a
Subsidiary of the Partnership, Finance Corp. or such Guarantor or an Affiliate
of the Partnership, Finance Corp. or such Guarantor until legal title to such
Notes passes to the Partnership, Finance Corp., such Guarantor, Subsidiary of
the Partnership, Finance Corp. or such Guarantor or Affiliate of the
Partnership, Finance Corp. or such Guarantor, as the case may be.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Issuers may prepare and
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Issuers and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of
the written order of the Issuers signed by (i) two Officers of the General
Partner and (ii) two Officers of Finance Corp., shall authenticate definitive
Notes in exchange for temporary Notes. Until such exchange, temporary Notes
shall be entitled to the same rights, benefits and privileges as definitive
Notes.
Section 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy cancelled Notes
(subject to the record retention requirement of the Exchange Act), unless the
Issuers direct cancelled Notes to be returned to them. The Issuers may not
issue new Notes to replace Notes that they have redeemed or paid or that have
been delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Issuers, unless by a written order, signed by (i) two Officers of the
General Partner and (ii) two Officers of Finance Corp., the Issuers shall direct
that cancelled Notes be returned to them.
Section 2.12. Defaulted Interest.
If the Issuers or any Guarantor defaults in a payment of interest on the
Notes, the Issuers or such Guarantor (to the extent of its obligations under its
Note Guarantees) shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders of the Notes on a subsequent special record date, which date
shall be at the earliest practicable date but in all events at least five
Business Days prior to the payment date, in each case at the rate provided in
the Notes and in Section 4.01 hereof. The Issuers shall fix or cause to be
fixed each such special record date and payment date, and shall, promptly
thereafter, notify the Trustee of any such date. At least 15 days before the
special record date, the Issuers (or the Trustee, in the name of and at the
expense of the Issuers) shall
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mail to Holders of the Notes a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA (S)
316(c).
Section 2.14. CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number and, if they do
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers will
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, they shall furnish to the Trustee, at least
30 days but not more than 75 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
If the Issuers elect to reduce the principal amount of Floating Rate
Senior Notes to be redeemed pursuant to the mandatory redemption provisions of
paragraph 6 of the Floating Rate Senior Notes, it shall notify the Trustee of
the amount of the reduction and the basis for it at least 50 days prior to the
applicable mandatory redemption date. If the Issuers elect to credit against
any such redemption Floating Rate Senior Notes they have not previously
delivered to the Trustee for cancellation, the Issuers shall deliver such
Floating Rate Senior Notes with the notice to the Trustee.
If the Issuers are required to make an offer to purchase Notes pursuant to
the provisions of Sections 4.10 or 4.14 hereof, they shall furnish to the
Trustee, at least 30 days before the scheduled Purchase Date, an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the offer to purchase shall occur, (ii) the terms of the offer, (iii) the
purchase price, (iv) the principal amount of the Notes to be purchased, and (v)
further setting forth a statement to the effect that (a) the Partnership or one
of its Subsidiaries has made an Asset Sale and there are Excess Proceeds
aggregating more than $15 million and the amount of such Excess Proceeds or (b)
a Change of Control has occurred, as applicable.
Section 3.02. Selection of Notes to Be Purchased or Redeemed.
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If the Issuers elect to redeem less than all of either series of Notes
pursuant to the optional redemption provisions of Section 3.07 hereof and
paragraph 5 of the applicable series of Notes, the Trustee shall select the
Notes to be redeemed as follows:
The Trustee shall select the Floating Rate Senior Notes or Fixed Rate
Senior Notes (as applicable) to be redeemed among the Holders of the same series
of Notes on a pro rata basis, by lot or in accordance with any other method the
trustee considers fair and appropriate.
If less than all of the Notes properly tendered in an Asset Sale Offer
pursuant to Sections 3.09 and 4.10 hereof are to be purchased, the Trustee shall
select the Floating Rate Senior Notes and Fixed Rate Senior Notes to be
purchased as follows:
The Trustee shall select the Notes to be purchased between the Floating
Rate Senior Notes and the Fixed Rate Senior Notes on a pro rata basis and then
among the Holders of Floating Rate Senior Notes and Fixed Rate Senior Notes on a
pro rata basis.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
purchase or redemption, the principal amount thereof to be purchased or
redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Notes of a Holder are to be
purchased or redeemed, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be purchased or redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
In the event the Issuers are required to make an Asset Sale Offer pursuant
to Section 4.10 hereof and the amount of Excess Proceeds to be applied to such
purchase would result in the purchase of a principal amount of Notes which is
not evenly divisible by $1,000, the Trustee shall promptly refund to the Issuers
the portion of such Excess Proceeds that is not necessary to purchase the
immediately lesser principal amount of Notes that is so divisible.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date, the
Issuers shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
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The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of redemption
in the Issuers' name and at their expense; provided, however, that the Issuers
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph (which request may be revoked by so notifying the Trustee in
writing on or before the Business Day immediately preceding the date requested
for the mailing of such notice).
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Issuers shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Issuers any money
deposited with the Trustee or the Paying Agent by the Issuers in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
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If the Issuers comply with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Issuers shall issue
and, upon the Issuers' written request, the Trustee shall authenticate for the
Holder at the expense of the Issuers a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
The Issuers may redeem all or any portion of either series of Notes, upon
the terms and at the redemption prices set forth in paragraph 5 of the
applicable series of Notes. Any redemption pursuant to this Section 3.07 shall
be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall redeem $5,000,000 principal amount of the Floating Rate
Senior Notes on each of August 1, 1999 and August 1, 2000, upon the terms and
subject to the conditions set forth in paragraph 6 of the Floating Rate Senior
Notes. Except pursuant to the preceding sentence and as set forth below under
Section 4.10 and Section 4.14 hereof, the Issuers shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.09. Asset Sale Offers.
(a) In the event that, pursuant to Section 4.10 hereof, the Issuers shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified in this Section 3.09.
(b) The Asset Sale Offer shall commence on the date (the "Commencement
Date") specified in Section 4.10 hereof and shall remain open for a period
specified by the Issuers, which shall be in accordance with Section 4.10 hereof
(the "Offer Period"). No later than five Business Days after the termination of
the Offer Period and, in any event, on a Floating Rate Interest Payment Date (as
defined in the Floating Rate Senior Notes) (the "Purchase Date"), the Issuers
shall purchase the principal amount of Notes required to be purchased pursuant
to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount
has been tendered, all Notes tendered in response to such Asset Sale Offer.
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.
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If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest, if
any, shall be paid to the Person in whose name a Note is registered at the close
of business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to such Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to Section 4.10
hereof, the Offer Period, and the expiration date of the Offer Period;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered and accepted for payment shall continue
to accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Issuers, a depositary, if appointed by the Issuers, or a
Paying Agent at the address specified in the notice prior to the close of the
Offer Period;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the depositary or the Paying Agent, as the case may be, receives,
not later than the close of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Notes to be purchased shall be selected
pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes
were purchased only in part shall be issued new Notes (accompanied by a
notation of the Note Guarantees duly endorsed by each Guarantor) equal in
principal amount to the unpurchased portion of the Notes surrendered; and
(i) the circumstances and material facts regarding the Asset Sale or
Asset Sales giving rise to such Asset Sale Offer, including but not limited
to, information with respect to pro forma and historical financial
information if material operations of the Partnership or any Subsidiary were
divested in such Asset Sale or Asset Sales.
On or before the Purchase Date, the Issuers shall, to the extent lawful,
accept for payment, pursuant to the terms of Section 3.02 hereof, the Offer
Amount of Notes or portions
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thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer
Amount has been tendered, all Notes tendered, and shall deliver to the Trustee
an Officers' Certificate stating that such Notes or portions thereof were
accepted for payment by the Issuers in accordance with the terms of this Section
3.09. The Issuers, the depositary or the Paying Agent, as the case may be, shall
promptly (but in any case not later than five days after the Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Issuers for purchase, and the
Issuers shall promptly issue a new Note, and the Trustee, upon written request
from the Issuers shall authenticate and mail or deliver such new Note to such
Holder, in a principal amount equal to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Issuers to the Holder thereof. The Issuers shall publicly announce the
results of such Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof to the extent applicable.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or any Guarantor, holds
as of 10:00 a.m. Eastern Time on the due date money deposited by the Issuers in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.02. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers or any Guarantor in respect of the Notes and this Indenture may
be served. The Issuers shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
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The Issuers may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Issuers
of their obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Issuers shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee as
one such office or agency of the Issuers in accordance with Section 2.03 hereof.
Section 4.03. Reports.
Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Issuers will furnish to the Holders of Notes
(i) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuers were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Issuers' certified independent
accountants and (ii) all reports that would be required to be filed with the SEC
on Form 8-K if the Issuers were required to file such reports. In addition,
whether or not required by the rules and regulations of the SEC, the Issuers
will file a copy of all such information with the SEC for public availability
(unless the SEC will not accept such a filing) and make such information
available to investors who request it in writing. To the extent permissible
under the rules and regulations of the SEC (assuming at all times that the
Issuers were required to file reports with the SEC), such information and
reports with respect to the Master Partnership may be filed and provided in lieu
of such information and reports with respect to the Partnership.
Section 4.04. Compliance Certificate.
(a) Each Issuer shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Partnership and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each Issuer, each Guarantor, if any, and each obligor on the
Notes and this Indenture has kept, observed, performed and fulfilled its
obligations under this Indenture (including with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.07 hereof were computed, which calculations may be based on the
Partnership's latest available financial statements), and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge, each Issuer, each Guarantor, if any, and each such obligor has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action each Issuer, each
Guarantor, if any, or each such obligor, as the case may be, is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action each
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Issuer, each Guarantor, if any, or each such obligor, as the case may be, is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied by a
written statement of the Partnership's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Issuers have violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Each Issuer shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer of such Issuer (or of the
General Partner, in the case of the Partnership) becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action such Issuer is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Issuers shall pay, and shall cause each of their Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
Each of the Issuers and each of the Guarantors, if any, covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and each of the Issuers and each of the Guarantors, if any, (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
Section 4.07. Restricted Payments.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Partnership's or any Subsidiary's Equity
Interests (other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Partnership, (y) dividends or
distributions payable to the Partnership or a Wholly Owned Subsidiary of the
Partnership that is a Guarantor or (z) distributions or dividends payable pro
rata to all holders of Capital Interests of any such Subsidiary); (ii) purchase,
redeem or otherwise acquire or retire for value any Equity Interests of the
Partnership or any Subsidiary or other Affiliate of the Partnership (other than
any such Equity Interests owned by the Partnership or a Wholly Owned Subsidiary
of the Partnership that is a
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Guarantor); (iii) purchase, redeem or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Fixed Charge Coverage Ratio of the Partnership for the
Partnership's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such Restricted Payment is made, calculated on a pro forma basis as if
such Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than 2.25 to 1;
(c) such Restricted Payment (the amount of any such payment, if other
than cash, to be determined by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution in an Officers' Certificate
delivered to the Trustee), together with the aggregate of all other
Restricted Payments (other than any Restricted Payments permitted by the
provisions of clauses (ii), (iii) or (iv) of the penultimate paragraph of
this Section 4.07) made by the Partnership and its Subsidiaries in the fiscal
quarter during which such Restricted Payment is made, shall not exceed an
amount equal to the sum of (i) Available Cash of the Partnership for the
immediately preceding fiscal quarter (or, with respect to the first fiscal
quarter during which Restricted Payments are made, the amount of Available
Cash of the Partnership for the period commencing on the date of this
Indenture and ending on the last day of the immediately preceding fiscal
quarter) plus (ii) the lesser of (x) the amount of Available Cash of the
Partnership for the first 45 days of the fiscal quarter during which such
Restricted Payment is made and (y) the amount of working capital Indebtedness
that the Partnership could have incurred on the last day of the immediately
preceding fiscal quarter under the terms of the agreements and instruments
governing its outstanding Indebtedness on such date; and
(d) the Partnership and its Subsidiaries and Non-Recourse Subsidiaries
shall have, in the aggregate (i) acquired, improved or repaired property,
plant or equipment which is accounted for as a capital expenditure in
accordance with GAAP or (ii) acquired, through merger or otherwise, all or
substantially all of the outstanding Capital Interests, or all or
substantially all of the assets, of any entity engaged in the business in
which the Partnership is engaged on the date of this Indenture (each of the
transactions referred to in clauses (i) and (ii) above, a "Capital
Investment") for Aggregate Consideration since the date of the Indenture
which, when added to all cash reserves then funded and maintained by the
Partnership (the proceeds of which shall be used solely for Capital
Investments) is no less than the amounts set forth in the table below, if
such Restricted Payment is made in the 12-month period beginning August 1 of
the years indicated:
Year Amount
---- ----------
1994........................ $0
1995........................ $15 million
1996........................ $30 million
1997........................ $45 million
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1998........................ $70 million
1999........................ $95 million
2000........................ $120 million
For purposes of the foregoing, "Aggregate Consideration" at any date shall
mean all cash paid in connection with all Capital Investments consummated on or
prior to such date, the fair market value of all Capital Interests of the Master
Partnership or the Partnership (determined by the General Partner in good faith
with reference to, among other things, the trading price of such Capital
Interests, if then traded on any national securities exchange or automated
quotation system) constituting all or a portion of the purchase price of all
Capital Investments consummated on or prior to such date and the aggregate
principal amount of all Indebtedness incurred or assumed by the Partnership in
connection with all Capital Investments consummated on or prior to such date.
The foregoing provisions will not prohibit (i) the payment of any
distribution within 60 days after the date on which the Partnership becomes
committed to make such distribution, if at said date of commitment such payment
would have complied with the provisions of this Indenture; (ii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Partnership in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Partnership) of other Equity
Interests of the Partnership (other than any Disqualified Interests); (iii) the
defeasance, redemption or repurchase of subordinated Indebtedness with the
proceeds of Permitted Refinancing Indebtedness; and (iv) the defeasance,
redemption or repurchase of any Existing Subordinated Debentures of the General
Partner and the payment of all costs and expenses in connection therewith.
Not later than the date of making any Restricted Payment, the General
Partner shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Partnership's latest available financial statements.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make any other distributions to the Partnership or any
of its Subsidiaries (1) on its Capital Interests or (2) with respect to any
other interest or participation in, or interest measured by, its profits, (b)
pay any indebtedness owed to the Partnership or any of its Subsidiaries, (c)
make loans or advances to the Partnership or any of its Subsidiaries or (d)
transfer any of its properties or assets to the Partnership or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) Existing Indebtedness as in effect on the date of this Indenture,
(ii) the Credit Facility, as in effect on the date of this Indenture, this
Indenture, the Notes and the Note Guarantees, (iii) applicable law, (iv) any
instrument governing Indebtedness or Capital Interests of a Person acquired by
the Partnership or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or
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restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Cash Flow of such Person to the extent
that dividends, distributions, loans, advances or transfers thereof is limited
by such encumbrance or restriction on the date of acquisition is not taken into
account in determining whether such acquisition was permitted by the terms of
the Indenture, (v) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (vi)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (d) above on
the property so acquired, (vii) Permitted Refinancing Indebtedness of any
Existing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (viii) agreements governing any Indebtedness that is
permitted to be incurred hereunder and that is incurred to extend, refinance,
renew, replace, defease or refund Indebtedness outstanding pursuant to the
Credit Facility, provided that the restrictions contained in the agreements
governing such refinancing Indebtedness are no more restrictive than those
contained in the Credit Facility as in effect on the date of this Indenture.
Section 4.09. Incurrence of Indebtedness and Issuance of Disqualified
Interests.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and the Partnership shall not issue any
Disqualified Interests and shall not permit any of its Subsidiaries to issue any
shares of preferred stock; provided, however, that the Partnership may incur
Indebtedness and any Subsidiary of the Partnership may incur Acquired Debt if:
(a) the Fixed Charge Coverage Ratio for the Partnership's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred would have been at least 2.75 to 1 if such date is
on or prior to August 1, 1996 and 3.00 to 1 if such date is after August 1,
1996, in each case, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred at the beginning of such four-quarter period; and
(b) either (x) such Indebtedness shall be subordinated in right of
payment to the Notes and shall have a Weighted Average Life to Maturity
greater than the remaining Weighted Average Life to Maturity of the Notes or
(y) such Indebtedness shall be Permitted Senior Debt and the Senior Debt
Ratio Test shall have been met at the time of incurrence thereof.
The foregoing limitations of this Section 4.09 will not apply to: (i) the
Indebtedness represented by the Notes and any Note Guarantees; (ii) the
incurrence by the Partnership of Indebtedness pursuant to the Credit Facility in
an aggregate principal amount at any time outstanding not to exceed $185
million; (iii) revolving Indebtedness incurred solely for working capital
purposes in an aggregate outstanding principal amount not to exceed $20 million
at any time on or prior to August 1, 1996 and $40 million thereafter, provided,
in each case, that the outstanding principal balance of such revolving
Indebtedness (or, if such revolving Indebtedness is incurred as an addition or
extension to the Credit Facility, the outstanding principal balance under the
Credit Facility in excess of the limits set forth in clause (ii) above) shall be
reduced to zero for a period of 30 consecutive days during each fiscal year;
(iv) the incurrence by the Partnership of Indebtedness in respect of Capitalized
Lease Obligations in an aggregate principal amount not to exceed $15 million;
(v) the Existing Indebtedness; (vi) the incurrence by the
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Partnership or any of its Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the proceeds of which are used to extend, refinance, renew,
replace, defease or refund any then outstanding Indebtedness of the Partnership
or such Subsidiary not incurred in violation of the Indenture; (vii) Hedging
Obligations that are incurred for the purpose of fixing or hedging interest rate
risk with respect to any floating rate Indebtedness that is permitted by the
terms of the Indenture to be outstanding; (viii) Indebtedness of any Subsidiary
of the Partnership to the Partnership or any of its Wholly Owned Subsidiaries;
(ix) the incurrence by the Partnership or the Insurance Company Subsidiary of
Indebtedness owing directly to its insurance carriers (without duplication) in
connection with the Partnership's, its Subsidiaries' or its Affiliates' self-
insurance programs or other similar forms of retained insurable rights for their
respective retail propane businesses, consisting of reinsurance agreements and
indemnification agreements (and guarantees of the foregoing) secured by letters
of credit, provided that the Indebtedness evidenced by such reinsurance
agreements, indemnification agreements, guarantees and letters of credit shall
be counted (without duplication) for purposes of all calculations pursuant to
the Fixed Charge Coverage Ratio test above; (x) surety bonds and appeal bonds
required in the ordinary course of business or in connection with the
enforcement of rights or claims of the Partnership or any of its Subsidiaries or
in connection with judgments that do not result in a Default or Event of
Default; (xi) the incurrence by the Partnership (or any Subsidiary of the
Partnership that is a Guarantor) of Indebtedness in connection with acquisitions
of retail propane businesses in favor of the sellers of such businesses in a
principal amount not to exceed $15 million in any fiscal year or $45 million in
the aggregate outstanding at any one time, provided that the principal amount of
such Indebtedness incurred in connection with any such acquisition shall not
exceed the fair market value of the assets so acquired; and (xii) in addition to
the Indebtedness permitted under the foregoing clauses (i) through (xi), the
incurrence by the Partnership of Indebtedness in an aggregate principal amount
outstanding not to exceed $15 million at any time, provided that any
Indebtedness incurred pursuant to this clause (xii) shall be subordinated in
right of payment to the Notes and shall have a Weighted Average Life to Maturity
greater than the remaining Weighted Average Life to Maturity of the Notes.
The "Senior Debt Ratio Test" will be met with respect to the incurrence of
any Indebtedness by the Partnership or any Subsidiary of the Partnership if the
ratio of (1) the aggregate outstanding principal amount of Senior Debt on the
date of and after giving effect to the incurrence of such Indebtedness (the
"Incurrence Date") to (2) the Consolidated Cash Flow for the Partnership's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the Incurrence Date would have been 2.50 to
1 or less. For purposes of the computation in clause (1) of the foregoing
sentence, the outstanding principal amount of Indebtedness under the Credit
Facility shall be deemed to equal the principal amount of such Indebtedness
actually outstanding plus the maximum additional principal amount of such
Indebtedness available thereunder, and letters of credit shall be deemed to have
a principal amount equal to the maximum potential liability of the Partnership
or any of its Subsidiaries thereunder. The foregoing calculation of
Consolidated Cash Flow shall give pro forma effect to acquisitions (including
all mergers and consolidations), dispositions and discontinuance of operations
that have been made by the Partnership or any of its Subsidiaries during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Incurrence Date assuming that all such acquisitions, dispositions
and discontinuance of operations had occurred on the first day of the four-
quarter reference period in the same manner as described in the definition of
"Fixed Charge Coverage Ratio".
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For purposes of this Section 4.09, any revolving Indebtedness (under the
Credit Facility or otherwise) shall be deemed to have been incurred only at such
time at which the agreements and instruments (or any amendments thereto that
increase the amount, reduce the Weighted Average Life to Maturity, change any
subordination provisions or create any additional obligor of such revolving
Indebtedness) are executed, in an amount equal to the maximum amount of such
revolving Indebtedness permitted to be borrowed thereunder, and the
Partnership's ability to borrow or reborrow such revolving Indebtedness up to
such maximum permitted amount shall not thereafter be limited by the provisions
of this Section 4.09 (other than the proviso set forth in clause (iii) of the
second paragraph of this Section 4.09.)
Section 4.10. Asset Sales.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, (i) sell, lease, convey or otherwise dispose of any assets (including by way
of a sale-and-leaseback) other than sales of inventory in the ordinary course of
business consistent with past practice (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Partnership shall be governed by the provisions of Sections 4.14 and/or 5.01
hereof and not by the provisions of this Section 4.10), or (ii) issue or sell
Equity Interests of any of its Subsidiaries, in the case of either clause (i) or
(ii) above, whether in a single transaction or a series of related transactions,
(a) that have a fair market value in excess of $5 million, or (b) for net
proceeds in excess of $5 million (each of the foregoing, an "Asset Sale"),
unless (x) the Partnership (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
disposed of and (y) at least 80% of the consideration therefor received by the
Partnership or such Subsidiary is in the form of cash; provided, however, that
the amount of (A) any liabilities (as shown on the Partnership's or such
Subsidiary's most recent balance sheet or in the notes thereto), of the
Partnership or any Subsidiary (other than liabilities that are by their terms
subordinated in right of payment to the Notes) that are assumed by the
transferee of any such assets and (B) any notes or other obligations received by
the Partnership or any such Subsidiary from such transferee that are immediately
converted by the Partnership or such Subsidiary into cash (to the extent of the
cash received), shall be deemed to be cash for purposes of this provision; and
provided, further, that the 80% limitation referred to in this clause (y) shall
not apply to any Asset Sale in which the cash portion of the consideration
received therefrom, determined in accordance with the foregoing proviso, is
equal to or greater than what the after-tax proceeds would have been had such
Asset Sale complied with the aforementioned 80% limitation. Notwithstanding the
foregoing, Asset Sales shall not be deemed to include (1) any transfer of assets
by the Partnership or any of its Subsidiaries to a Subsidiary of the Partnership
that is a Guarantor, (2) any transfer of assets by the Partnership or any of its
Subsidiaries to any Person in exchange for other assets used in a line of
business permitted under Section 4.16 hereof and having a fair market value not
less than that of the assets so transferred and (3) any transfer of assets
pursuant to a Permitted Investment.
Within 270 days after any Asset Sale, the Partnership may apply the Net
Proceeds from such Asset Sale to (a) permanently reduce Indebtedness outstanding
under the Credit Facility (with a permanent reduction of availability in the
case of revolving Indebtedness) or (b) an investment in capital expenditures or
other long-term tangible assets, in each case, in the same line of business as
the Partnership was engaged in on the date of this Indenture. Pending the final
application of any such Net Proceeds, the Partnership may temporarily reduce
borrowings
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under the Credit Facility or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from the Asset Sale
that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $15 million, the Issuers shall make an Asset
Sale Offer to all Holders of Notes to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase, in accordance with the
procedures set forth in Article 3 hereof. The Issuers shall commence an Asset
Sale Offer with respect to Excess Proceeds within 10 Business Days after the
date that Excess Proceeds exceeds $15 million by mailing the notice required in
Section 3.09 hereof to the Holders. The Offer Period shall be not less than 30
days and not more than 40 days, unless a longer period is required by law. The
Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with such Asset Sale Offer. To the
extent that the aggregate amount of Notes tendered pursuant to such Asset Sale
Offer is less than the Excess Proceeds, the Partnership may use such deficiency
for general business purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Section 4.11. Transactions with Affiliates.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate, including any Non-Recourse Subsidiary (each of the foregoing,
an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms
that are no less favorable to the Partnership or the relevant Subsidiary than
those that would have been obtained in a comparable transaction by the
Partnership or such Subsidiary with an unrelated Person and (b) with respect to
(i) any Affiliate Transaction with an aggregate value in excess of $500,000, a
majority of the directors of the General Partner having no direct or indirect
economic interest in such Affiliate Transaction determines by resolution that
such Affiliate Transaction complies with clause (a) above and approves such
Affiliate Transaction and (ii) any Affiliate Transaction involving the purchase
or other acquisition or sale, lease, transfer or other disposition of properties
or assets other than in the ordinary course of business, in each case, having a
fair market value or for net proceeds in excess of $15 million, the Partnership
delivers to the Trustee an opinion as to the fairness to the Partnership or such
Subsidiary from a financial point of view issued by an investment banking firm
of national standing; provided, however, that (i) any employment agreement or
stock option agreement entered into by the Partnership or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Partnership (or the General Partner) or such Subsidiary, (ii)
Restricted Payments permitted by the provisions of Section 4.07 hereof, and
(iii) transactions entered into by the Partnership or the Insurance Company
Subsidiary in the ordinary course of business in connection with reinsuring the
self-insurance programs or other similar forms of retained insurable risks of
the retail propane businesses operated by the Partnership, its Subsidiaries and
its Affiliates, in each case, shall not be deemed Affiliate Transactions.
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Section 4.12. Liens.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
Section 4.13. Subsidiary Note Guarantees.
The Partnership may, at any time that it transfers or causes to be
transferred to any of its Subsidiaries assets, businesses or properties having a
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of such Board)
of $5 million or more, cause such Subsidiary to unconditionally guarantee,
jointly and severally, the Issuers' payment obligations under the Notes as
provided in Article 10 hereof pursuant to a supplemental indenture in the form
attached hereto as Exhibit B, together with an Opinion of Counsel to the effect
that such supplemental indenture has been duly executed and delivered by such
Subsidiary and is in compliance with the terms of this Indenture.
Section 4.14. Offer to Purchase Upon Change of Control.
Upon the occurrence of a Change of Control, the Issuers shall make an
offer (a "Change of Control Offer") to each Holder to purchase all or any part
of such Holder's Notes on the next succeeding Floating Rate Interest Payment
Date which is at least 40 days after the Change of Control (the "Change of
Control Payment Date") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment"). The Issuers shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with such Change of Control Offer.
The Issuers shall commence such Change of Control Offer within 10 days
following any Change of Control by mailing a notice of such Change of Control to
each Holder at its last registered address with a copy to the Trustee and the
Paying Agent. The Change of Control Offer shall remain open from the time of
mailing until the close of business on the Business Day preceding the Change of
Control Payment Date. The notice, which shall govern the terms of the Change of
Control Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment;
(2) the amount of the Change of Control Payment and the Change of Control
Payment Date;
(3) that any Notes not tendered will continue to accrue interest in
accordance with the terms of the Indenture;
(4) that, unless the Issuers default in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
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(5) that Holders electing to have Notes purchased pursuant to the Change
of Control Offer will be required to surrender their Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day
preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the Business
Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes the Holder delivered for purchase, and a
statement that such Holder is withdrawing its election to have such
Notes purchased;
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof; and
(8) the circumstances and relevant facts regarding such Change of Control
(including, but not limited to, information with respect to pro forma
historical financial information after giving effect to such Change of
Control, information regarding the Person or Persons acquiring control
and such Person's or Persons' business plans going forward).
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers. The Paying Agent shall promptly, but in no
event later than three Business Days following the Change of Control Payment
Date, mail to each Holder of Notes so accepted payment in an amount equal to the
Change of Control Payment for such Notes, and the Issuers shall promptly issue a
new Note, and the Trustee shall authenticate and mail or deliver a new Note to
such Holder equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, that each such new Note shall be in a principal
amount of $1,000 or an integral multiple thereof. The Issuers shall publicly
announce in The Wall Street Journal, or if no longer published, a national
newspaper of general circulation the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
Section 4.15. Partnership or Corporate Existence.
Subject to Article 5 and Article 10 hereof, as the case may be, each
Issuer and each of the Guarantors, if any, shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
or partnership existence, and the corporate or partnership existence of each of
their Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of each Issuer, any such
Guarantor or any such Subsidiary, as the case may be, and (ii) the rights
(charter and statutory), licenses and franchises of each Issuer, the Guarantors
and their respective Subsidiaries; provided, however, that the Issuers and the
Guarantors shall not be required to preserve any such right,
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license or franchise, or the corporate, partnership or other existence of any of
their respective Subsidiaries, if an officer of the General Partner or Finance
Corp., as the case may be, shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Issuers, the Guarantors
and their Subsidiaries, taken as a whole and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.
Section 4.16. Line of Business.
For so long as any Notes are outstanding, the Partnership and its
Subsidiaries will not materially or substantially engage in any business other
than that in which the Partnership and its Subsidiaries were engaged on the date
of this Indenture.
Section 4.17. Limitation on Sale and Leaseback Transactions.
The Partnership will not, and will not permit any of its Subsidiaries to,
enter into any arrangement with any Person providing for the leasing by the
Partnership or such Subsidiary of any property that has been or is to be sold or
transferred by the Partnership or such Subsidiary to such Person in
contemplation of such leasing; provided, however, that the Partnership or such
Subsidiary may enter into such sale and leaseback transaction if (i) the
Partnership could have (A) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Fixed Charge Coverage Ratio Test set forth in paragraph (a) of Section 4.09
and (B) secured a Lien on such Indebtedness pursuant to Section 4.12, or (ii)
the lease in such sale and leaseback transaction is for a term not in excess of
the lesser of (A) three years and (B) 60% of the remaining useful life of such
property.
Section 4.18. Restrictions on Nature of Indebtedness and Activities of Finance
Corp.
Notwithstanding the provisions of Section 4.09 hereof, Finance Corp. shall
not incur any Indebtedness unless (a) the Partnership is a co-obligor or
guarantor of such Indebtedness or (b) the net proceeds of such Indebtedness are
lent to the Partnership, used to acquire outstanding debt securities issued by
the Partnership or used directly or indirectly to refinance or discharge
Indebtedness permitted under the limitations of this Section 4.18. Finance
Corp. shall not engage in any business not related directly or indirectly to
obtaining money or arranging financing for the Partnership.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
(a) The Partnership shall not consolidate or merge with or into (whether
or not the Partnership is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
Partnership is the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Partnership) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made is a corporation or partnership organized or existing under the laws
of the United States, any state thereof or the District of Columbia; (ii) the
Person formed by or surviving any such consolidation
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or merger (if other than the Partnership) or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Partnership pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes and
this Indenture; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) the Partnership or any Person formed by or surviving
any such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of the Partnership immediately preceding
the transaction and (B) shall, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09 hereof.
(b) Finance Corp. may not consolidate or merge with or into (whether or
not Finance Corp. is the surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (i) Finance
Corp. is the surviving Person, or the Person formed by or surviving any such
consolidation or merger (if other than Finance Corp.) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia and a Wholly Owned Subsidiary of
the Partnership; (ii) the Person formed by or surviving any such consolidation
or merger (if other than Finance Corp.) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of Finance Corp., pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes and
the Indenture; and (iii) immediately after such transaction no Default or Event
of Default exists.
(c) The Partnership or Finance Corp., as the case may be, shall deliver to
the Trustee prior to the consummation of the proposed transaction pursuant to
the foregoing paragraphs (a) and (b) an Officers' Certificate to the foregoing
effect and an Opinion of Counsel stating that the proposed transaction and such
supplemental indenture comply with this Indenture. The Trustee shall be
entitled to conclusively rely upon such Officers' Certificate and Opinion of
Counsel.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Partnership or Finance Corp. in accordance with Section 5.01 hereof, the
successor Person formed by such consolidation or into or with which the
Partnership or Finance Corp. is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to the "Partnership," "Finance Corp.," or the "Issuers," as
the case may be shall refer to or include instead the successor Person and not
the Partnership or Finance Corp., as the case may be), and may exercise every
right and power of the Partnership or Finance Corp., as the case may be under
this Indenture with the same effect as if such successor Person had been named
as the Partnership or Finance Corp., as the case may be, herein; provided,
however, that the predecessor Issuer shall not be relieved from the
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obligation to pay the principal of, premium, if any, and interest on the Notes
except in the case of a sale of all of such Issuer's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Issuers or the Guarantors default in the payment of interest on
the Notes when the same becomes due and payable and such default continues
for a period of 30 days;
(b) the Issuers or the Guarantors default in the payment of principal
of or premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase)
or otherwise;
(c) the Issuers fail for a period of 20 days to observe or perform any
covenant, condition or agreement on the part of the Issuers to be observed or
performed pursuant to Sections 4.07, 4.09, 4.10, 4.14 and 5.01 hereof;
(d) the Issuers or any Guarantor fails to comply with any of their
other respective agreements or covenants in, or provisions of, the Notes, the
Note Guarantees or this Indenture and the Default continues for the period
and after the notice specified below;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Partnership or any of its Subsidiaries
(or the payment of which is Guaranteed by the Partnership or any of its
Subsidiaries), whether such Indebtedness or Guarantee now exists or shall be
created hereafter, which default (i) is caused by a failure to pay principal
of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other Indebtedness as
to which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10 million or more, excluding any acceleration of
maturity of the Indebtedness represented by the General Partner's Existing
Floating Rate Notes and Existing Fixed Rate Notes to the extent that such
Indebtedness shall be redeemed on or prior to the 40th day after the date of
this Indenture;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Partnership or any of its Subsidiaries and such judgments are not paid,
discharged or stayed for a period of 60 days, provided that the aggregate of
all such undischarged judgments exceeds $10 million;
(g) except as otherwise permitted hereunder, any Note Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in
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full force and effect or any Guarantor (or its successors or assigns), or any
Person acting on behalf of any Guarantor (or its successors or assigns),
shall deny or disaffirm its obligations under its Note Guarantee;
(h) the Partnership or any of its Subsidiaries pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Partnership or any Subsidiary of the
Partnership in an involuntary case,
(ii) appoints a Custodian of the Partnership or any Subsidiary of
the Partnership or for all or substantially all of the property of the
Partnership or any Subsidiary of the Partnership, or
(iii) orders the liquidation of the Partnership or any Subsidiary
of the Partnership,
and the order or decree remains unstayed and in effect for 60 consecutive
days.
A Default under clause (d) is not an Event of Default until the Trustee
notifies the Issuers, or the Holders of at least 25% in principal amount of the
then outstanding Notes notify the Issuers and the Trustee, of the Default and
the Issuers do not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Issuers with the intention of avoiding payment
of the premium that the Issuers would have had to pay if the Issuers then had
elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to August 1, 1998 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Issuers with the intention of avoiding the prohibition on redemption of
the Notes prior to August 1, 1998 pursuant to Section 3.07 hereof, then the
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premium payable for purposes of this paragraph for each of the years beginning
on August 1 of the years set forth below shall be as set forth in the following
table expressed as a percentage of the amount that would otherwise be due but
for the provisions of this sentence, plus accrued interest, if any, to the date
of payment:
Year Percentage
---- ----------
1994................... 110.00%
1995................... 108.75%
1996................... 107.50%
1997................... 106.25%
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (h) and (i) of Section 6.01 hereof relating to either Issuer, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary) occurs and is continuing, the Trustee by
notice to the Issuers, or the Holders of at least 25% in principal amount of the
then outstanding Notes by written notice to the Issuers and the Trustee may
declare the unpaid principal of and any accrued interest on all the Notes to be
due and payable. Upon such declaration the principal and interest shall be due
and payable immediately (together with the premium referred to in Section 6.01
hereof, if applicable). If an Event of Default specified in clause (h) or (i)
of Section 6.01 hereof relating to either Issuer, any Significant Subsidiary or
any group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary occurs, such an amount shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. The Holders of a majority in principal amount of the then
outstanding Notes by written notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium, if any,
and interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
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(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from either
Issuer;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request; provided, however, that such provision does
not affect the right of a Holder of a Note to sue for enforcement of any
overdue payment thereon.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the Note
(including in connection with an Asset Sale Offer or a Change of Control Offer),
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Issuers for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes, including the Guarantors), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding shall be denied for
any reason, payment of the same shall be secured by a Lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expenses and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and interest, respectively; and
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Third: to the Partnership or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require from
either Issuer an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from either Issuer shall be sufficient if signed by
an Officer of the General Partner (in the case of the Partnership) or by an
Officer of Finance Corp. (in the case of Finance Corp.)
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with either Issuer, any Guarantor or
any Affiliate of either Issuer
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or any Guarantor with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note (including any failure to make any mandatory redemption
payment required hereunder), the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each November 1 beginning with the November 1
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Issuers and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA (S) 313(d). The Issuers shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Issuers and the Guarantors, if any, shall pay to the Trustee from time
to time reasonable compensation for its acceptance of this Indenture and its
services hereunder. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuers and the
Guarantors, if any, shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
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The Issuers and the Guarantors, if any, shall indemnify the Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Issuers and the Guarantors (including this Section 7.07), and
defending itself against any claim (whether asserted by either Issuer, any
Guarantor or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its negligence
or bad faith. The Trustee shall notify the Issuers promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Issuers
shall not relieve the Issuers and the Guarantors, if any, of their obligations
hereunder. The Issuers and the Guarantors, if any, shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Issuers and the Guarantors, if any, shall pay the reasonable
fees and expenses of such counsel. The Issuers and the Guarantors, if any, need
not pay for any settlement made without their consent, which consent shall not
be unreasonably withheld.
The obligations of the Issuers and the Guarantors, if any, under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Issuers' and the Guarantors' payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, any
Guarantor, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Issuers' and the Guarantors' obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Issuers.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Issuers may, at the option of the Board of Directors and the Board of
Directors of Finance Corp. evidenced in each case by a resolution set forth in
an Officers' Certificate, at any time elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, each of the Issuers and each of the Guarantors,
if any, shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be deemed to have been discharged from its obligations with
respect to all outstanding Notes and Note Guarantees on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Issuers shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes,
which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.05 hereof and the other Sections of this Indenture referred to in (a)
and (b) below, and to have satisfied all their other obligations under such
Notes and this Indenture (and the Trustee, on demand of and at the expense of
the Issuers, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (b) the Issuers' and
Guarantors' obligations with respect to such Notes under Article 2 and Section
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Issuers' and the Guarantors' obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8, the
Issuers may exercise their option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, each of the Issuers and each of the Guarantors,
if any, shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be released from its obligations under the covenants
contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16,
4.17, 4.18 and 5.01 hereof with respect to the outstanding Notes and Note
Guarantees on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Issuers may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to
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any other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture, such Notes and
the Note Guarantees, if any, shall be unaffected thereby. In addition, upon the
Issuers' exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(e) and 6.01(f) hereof shall not constitute
Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Notes, (i) cash in U.S.
Dollars in an amount, or (ii) non-callable Government Securities which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, cash in U.S. Dollars in an amount, or (iii) a
combination thereof, in such amounts, as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge (A) the principal of, premium, if any, and
interest on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, of such principal or installment of
principal, premium, if any, or interest and (B) any mandatory sinking fund
payments or analogous payments applicable to the outstanding Notes on the day
on which such payments are due and payable in accordance with the terms of
the Indenture and of such Notes; provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such non-
callable Government Securities to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel (which counsel may
be an employee of either Issuer or any Subsidiary of either Issuer)
reasonably acceptable to the Trustee confirming that (i) the Issuers have
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in
the applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel (which counsel may
be an employee of either Issuer or any Subsidiary of either Issuer)
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal
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income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Event of Default shall have occurred and be continuing on the
date of such deposit or, insofar as Sections 6.01(h) or 6.01(i) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit (or greater period of time in which any such deposit of trust funds
may remain subject to Bankruptcy Law insofar as those apply to the deposit by
the Issuers);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which either Issuer or any of
their Subsidiaries is a party or by which either Issuer or any of their
Subsidiaries is bound;
(f) the Issuers shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the
intent of preferring the Holders over any other creditors of the Issuers or
the Guarantors, if any, or with the intent of defeating, hindering, delaying
or defrauding any other creditors of the Issuers or others; and
(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with as contemplated hereby.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including either Issuer acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Issuers and the Guarantors, if any, shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
cash or non-callable Government Securities deposited pursuant to Section 8.04
hereof or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Notes.
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Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Issuers.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Issuers, in trust for the payment of the principal of, premium, if any, or
interest, if any, on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest, if any, have become due and payable
shall be paid to the Issuers on its request or (if then held by the Issuers)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuers for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuers as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuers cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Issuers.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' and the Guarantors' obligations under this
Indenture, the Notes and the Note Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Issuers and the Guarantors make any payment of principal
of, premium, if any, or interest, if any, on any Note following the
reinstatement of its obligations, the Issuers and the Guarantors shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Issuers, the
Guarantors, if any, and the Trustee may amend or supplement this Indenture or
the Notes without the consent of any Holder of a Note:
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(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Partnership's, Finance Corp.'s
or any Guarantor's obligations to the Holders of the Notes in the case of a
merger or consolidation pursuant to Article 5 or Article 10 hereof, as the
case may be;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes (including providing for Note Guarantees
pursuant to Section 4.13 hereof) or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Issuers accompanied by a resolution of the Board
of Directors of each of the General Partner and Finance Corp. authorizing the
execution of any such amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Issuers and the Guarantors in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and make any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
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Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Issuers, the
Guarantors, if any, and the Trustee may amend or supplement this Indenture or
the Notes with the written consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Upon the request of the Issuers accompanied by a resolution of the Board
of Directors of each of the General Partner and Finance Corp. authorizing the
execution of any such amended or supplemental Indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Issuers and
the Guarantors, if any, in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Issuers or any Guarantor with any
provision of this Indenture, the Note or the Note Guarantees. However, without
the consent of each Holder affected, an amendment or waiver may not (with
respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter any of the provisions with respect to the redemption of the Notes
(other than provisions of Section 4.10 and Section 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
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(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in Section 6.04 or 6.07 hereof or in the provisions
of this Indenture relating to the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or Section 4.14 hereof);
(h) make any change to the subordination provisions of Article 10
hereof that adversely affects Holders;
(i) except pursuant to Article 8 and Article 10 hereof, release any
Guarantor from its obligations under its Note Guarantee, or change any Note
Guarantee in any manner that would adversely affect the Holders; or
(j) make any change in this sentence of this Section 9.02.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Note Guarantees duly endorsed by the
Guarantors) that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Issuers and the Guarantors may not sign an amendment or supplemental Indenture
until the Board of Directors of each of the General Partner and Finance Corp.
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
NOTE GUARANTEES
Section 10.01. Note Guarantee.
Each Subsidiary of the Partnership which in accordance with Section 4.13
hereof has guaranteed the obligations of the Issuers under the Notes, upon
execution of a counterpart of this Indenture, hereby jointly and severally
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee irrespective of the validity or enforceability of this Indenture,
the Notes or the obligations of the Issuers under this Indenture or the Notes,
that: (i) the principal of and interest on the Notes will be paid in full when
due, whether at the maturity or interest payment or mandatory redemption date,
by acceleration, call for redemption or otherwise, and interest on the overdue
principal of and interest, if any, on the Notes and all other obligations of the
Issuers to the Holders or the Trustee under this Indenture or the Notes will be
promptly paid in full or performed, all in accordance with the terms of this
Indenture and the Notes; and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, they will be paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed for whatever reason, each Guarantor will be obligated
to pay the same whether or not such failure to pay has become an Event of
Default which could cause acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment not a guarantee of
collection.
Each Guarantor hereby agrees that its obligations with regard to this Note
Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of the Issuers under
this Indenture, the absence of any action to enforce the same, the recovery of
any judgment against either Issuer or any other obligor with respect to this
Indenture, the Notes or the obligations of the Issuers under this Indenture or
the Notes, any action to enforce the same or any other circumstances (other than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
(a) any right to require the Trustee, the Holders or the Issuers (each, a
"Benefitted Party") to proceed against the Issuers or any other Person or to
proceed against or exhaust any security held by a Benefitted Party at any time
or to pursue any other remedy in any Benefitted Party's power before proceeding
against such Guarantor; (b) the defense of the statute of limitations in any
action hereunder or in any action
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for the collection of any Indebtedness or the performance of any obligation
hereby guaranteed; (c) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other Person or the failure of a
Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person; (d)
demand, protest and notice of any kind including but not limited to notice of
the existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of such Guarantor, either
Issuer, any Benefitted Party, any creditor of such Guarantor, either Issuer or
on the part of any other Person whomsoever in connection with any Indebtedness
or obligations hereby guaranteed; (e) any defense based upon an election of
remedies by a Benefitted Party, including but not limited to an election to
proceed against such Guarantor for reimbursement; (f) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (g) any defense arising because of a Benefitted Party's election, in
any proceeding instituted under the Federal Bankruptcy Code, of the application
of Section 1111(b)(2) of the Federal Bankruptcy Code; or (h) any defense based
on any borrowing or grant of a security interest under Section 364 of the
Federal Bankruptcy Code. Each Guarantor hereby covenants that its Note
Guarantees will not be discharged except by complete performance of the
obligations contained in its Note Guarantees and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Partnership, Finance Corp. or any Guarantor, or any
Custodian acting in relation to any of the Partnership, Finance Corp. or such
Guarantor, any amount paid by the Partnership, Finance Corp. or such Guarantor
to the Trustee or such Holder, the applicable Note Guarantees, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between such Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (i) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Section 6.02
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration as to the Issuers
or any other obligor on the Notes of the obligations guaranteed hereby, and (ii)
in the event of any declaration of acceleration of those obligations as provided
in Section 6.02 hereof, those obligations (whether or not due and payable) will
forthwith become due and payable by such Guarantor for the purpose of this Note
Guarantee.
Section 10.02. Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof, each beneficiary hereof,
hereby confirm that it is its intention that the Note Guarantees by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantees. To effectuate the foregoing intention, each such person hereby
irrevocably agrees that the obligation of such Guarantor under its Note
Guarantees under this Article 10 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from, rights to receive contribution from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor in respect of such
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<PAGE>
maximum amount not constituting a fraudulent conveyance. Each beneficiary under
the Note Guarantees, by accepting the benefits hereof, confirms its intention
that, in the event of a bankruptcy, reorganization or other similar proceeding
of either Issuer or any Guarantor in which concurrent claims are made upon such
Guarantor hereunder, to the extent such claims will not be fully satisfied, each
such claimant with a valid claim against such Issuer shall be entitled to a
ratable share of all payments by such Guarantor in respect of such concurrent
claims.
Section 10.03. Guarantors May Consolidate, etc., on Certain Terms.
No Guarantor shall consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
whether or not it is affiliated with such Guarantor unless (i) subject to the
provisions of the following paragraph and Section 10.4 hereof, the Person formed
by or surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under its Note
Guarantee, the Notes and this Indenture, (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists, and (iii) such
Guarantor, or any Person formed by or surviving any such consolidation or
merger, (A) shall have Consolidated Net Worth (immediately after giving effect
to such transaction), equal to or greater than the Consolidated Net Worth of
such Guarantor immediately preceding the transaction and (B) will be permitted
by virtue of the Partnership pro forma Fixed Charge Coverage Ratio to incur,
immediately after giving effect to such transaction, at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the Section 4.09 hereof. In case of any such consolidation, merger,
sale or conveyance and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Note Guarantee in this Indenture and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Guarantor, such successor corporation
shall succeed to and be substituted for the Guarantor with the same effect as if
it had been named herein as a Guarantor.
Notwithstanding the foregoing, (A) a Guarantor may consolidate with or
merge with or into the Partnership or Finance Corp. (subject to the provisions
of Section 5.01 hereof) and (B) a Guarantor may consolidate with or merge with
or into any other Guarantor.
Section 10.04. Releases Following Sale of Assets.
Upon a sale or other disposition of all or substantially all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Interests of such Guarantor)
or the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and relieved of its obligations under its Note Guarantees; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 hereof. The Trustee will deliver to such Guarantor
a signed acknowledgment of such release.
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ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Issuers, the Guarantors or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Issuers or any Guarantor:
Ferrellgas, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
With a copy to:
Smith, Gill, Fisher, & Butts, P.C.
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105
Telecopier No.: (816) 391-7600
Attention: Kendrick T. Wallace
If to the Trustee:
Norwest Bank Minnesota,
National Association
6th Street & Marquette Ave.
Minneapolis, MN 55479
Telecopier No.: (612) 677-9875
Attention: Ray Haverstock
The Issuers, the Guarantors or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed;
56
<PAGE>
when receipt acknowledged, if telecopied; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the either Issuer or any Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Issuers, the
Guarantors, if any, the Trustee, the Registrar and anyone else shall have the
protection of TIA (S) 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers or the Guarantors, if any,
to the Trustee to take any action under this Indenture, each of the Issuers or
the Guarantors, if any, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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<PAGE>
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether such covenant or condition has been satisfied;
and
(d) a statement as to whether, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of either Issuer or any Guarantor, as such, shall have any liability
for any obligations of the Issuers or any Guarantor under the Notes, the Note
Guarantees, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note and the related Note Guarantees waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Issuers or their Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Issuers and the Guarantors, if any, in this
Indenture and the Notes and the Note Guarantees, as the case may be, shall bind
their respective successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture, in the Notes or in the Note
Guarantees, if any, shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
59
<PAGE>
SIGNATURES
Dated as of July 5, 1994 FERRELLGAS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
-------------------------------------
Name:
Title:
(SEAL)
Dated as of July 5, 1994 FERRELLGAS FINANCE CORP.
By:
-------------------------------------
Name:
Title:
(SEAL)
Dated as of July 5, 1994 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:
-------------------------------------
Name:
Title:
(SEAL)
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<PAGE>
Exhibit A
(Face of Series A Fixed Rate Senior Note)
10% Series A Fixed Rate Senior Note due 2001
No. $__________
FERRELLGAS, L.P.
FERRELLGAS FINANCE CORP.
promise to pay to
or registered assigns,
the principal sum of
Dollars on August 1, 2001.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Dated: July 5, 1994
FERRELLGAS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
-------------------------------
Name:
Title:
FERRELLGAS FINANCE CORP.
By: _____________________________
Name:
Title:
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<PAGE>
This is one of the Notes
referred to in the
within-mentioned Indenture:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------
A-2
<PAGE>
(Back of Note)
10% SERIES A FIXED RATE SENIOR NOTE
DUE AUGUST 1, 2001
Capitalized terms used herein have the meanings assigned to them in
the Indenture (as defined below) unless otherwise indicated.
1. Interest. Ferrellgas, L.P., a Delaware limited partnership (the
"Partnership"), and Ferrellgas Finance Corp., a Delaware corporation ("Finance
Corp." and, together with the Partnership, the "Issuers") promise to pay
interest on the principal amount of this Note at the rate and in the manner
specified below. The Issuers shall pay interest in cash on the principal amount
of this Note at the rate per annum of 10%. The Issuers will pay interest semi-
annually in arrears on February 1 and August 1 of each year, commencing on
February 1, 1995, to Holders of record on the immediately preceding January 15
and July 15, or if any such day is not a Business Day (as defined in the
Indenture), on the next succeeding Business Day (each a "Fixed Rate Interest
Payment Date"). Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Notes. To the extent lawful, the Issuers
shall pay interest on overdue principal at the rate of 1% per annum in excess of
the then applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. Method of Payment. The Issuers will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Fixed Rate
Interest Payment Date, even if such Notes are cancelled after such record date
and on or before such Fixed Rate Interest Payment Date. The Holder hereof must
surrender this Note to a Paying Agent to collect principal payments. The
Issuers will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
The Issuers, however, may pay principal, premium, if any, and interest by check
payable in such money. The Notes will be payable both as to principal and
interest at the office or agency of the Issuers maintained for such purpose
within the City and State of New York or, at the option of the Issuers, payment
of interest may be made by check mailed to the Holders of Notes at their
respective addresses set forth in the register of Holders. Unless otherwise
designated by the Issuers, the Issuers' office or agency in New York, New York
will be the office of the Trustee maintained for such a purpose.
3. Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Issuers may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. Either Issuer or any Guarantor
may act in any such capacity.
4. Indenture. The Issuers issued the Notes under an Indenture dated
as of July 5, 1994 (the "Indenture") between Partnership, Finance Corp. and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture. The
Notes are subject to all such terms, and Holders of the Notes are referred to
the Indenture and such act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
The Notes are unsecured
A-3
<PAGE>
general obligations of the Issuers limited to $250,000,000 in aggregate
principal amount. The Fixed Rate Senior Notes are limited to $200,000,000 in
aggregate principal amount.
5. Optional Redemption. The Issuers shall not have the option to
redeem the Notes pursuant to Section 3.07 of the Indenture prior to August 1,
1998. Thereafter, the Issuers shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of the principal amount) set forth
below, plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the 12 month period beginning on August 1 of the years
indicated below:
YEAR PERCENTAGE
1998.......................... 105.00%
1999.......................... 102.50%
2000.......................... 100.00%
6. Mandatory Redemption. Except as described in paragraph 7 below,
the Issuers shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder. (a) If there is a
Change of Control (as defined in the Indenture), the Issuers shall be required
to offer to purchase all Notes at 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase.
Holders of Notes that are subject to an offer to purchase will receive a notice
therefor from the Issuers prior to any related purchase date, and may elect to
have such Notes purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales (as
defined in the Indenture) exceeds $15 million, the Issuers shall be required to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Notes to be redeemed shall be selected pursuant
to the terms of Section 3.02 of the Indenture (with such adjustments as may be
deemed appropriate by the Issuers so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased). To the extent that the
aggregate amount of Notes tendered by Holders thereof is less than the Excess
Proceeds, the Issuers may use such deficiency for general business purposes.
Holders of Notes which are the subject of an offer to purchase will receive a
notice therefor from the Issuers prior to any related purchase date, and may
elect to have such Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at its registered address. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
A-4
<PAGE>
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed, during the period between a record date and the corresponding Fixed
Rate Interest Payment Date.
10. Persons Deemed Owners. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent, the
Issuers and the Guarantors may deem and treat the Person in whose name this Note
is registered as its absolute owner for the purpose of receiving payment of
principal of and interest on this Note and for all other purposes whatsoever,
whether or not this Note is overdue, and neither the Trustee, any Agent, the
Issuers nor any Guarantor shall be affected by notice to the contrary. The
registered holder of a Note shall be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of any Holder, the Indenture or the Notes may be amended to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for assumption of
the Issuers' or any Guarantor's obligations to Holders in the case of a merger
or consolidation or to make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the rights of any
Holder under the Indenture or to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act. Without the consent of each Holder affected, an amendment
or waiver may not (with respect to any Notes held by a non-consenting Holder of
Notes): (i) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions relating to the covenants
described above under the caption "Redemption or Repurchase at the Option of
Holders"), (iii) reduce the rate of or change the time for payment of interest
on any Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes,
(vii) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption "Redemption
or Repurchase at Option of Holder"), (viii) except as otherwise permitted in the
Indenture, release any Guarantor from its obligations under its Note Guarantee
or change any Note Guarantee in any manner that would adversely affect the
rights of the Holders of Senior Notes or (ix) make any change in the foregoing
amendment and waiver provisions.
A-5
<PAGE>
12. Defaults and Remedies. Events of Default include: default for
30 days in the payment when due of interest on the Notes; default in payment
when due of principal of or premium, if any, on the Notes at maturity, upon
redemption or otherwise; failure for 20 days by the Partnership to comply with
Sections 4.07, 4.09, 4.10, 4.14 or 5.01 of the Indenture; failure by the
Partnership or the Guarantors for 60 days after notice from the Trustee or the
Holder of at least 25% in principal amount of the Notes then outstanding to
comply with any of its other agreements in the Indenture or the Notes; default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Partnership or any of its Subsidiaries (or the payment of which is
guaranteed by the Partnership or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more, excluding any acceleration of maturity of the Indebtedness
represented by the General Partner's Existing Floating Rate Notes and Existing
Fixed Rate Notes to the extent that such Indebtedness shall be redeemed on or
prior to the 40th day after the date of this Indenture; failure by the
Partnership or any of its Subsidiaries to pay final judgments aggregating in
excess of $10 million, which judgments are not paid, discharged or stayed for a
period of 60 days; except as permitted by the Indenture, any Note Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantees; and certain events of bankruptcy or
insolvency with respect to the Partnership or any of its Subsidiaries. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately; except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, relating to the
Partnership, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding, by notice to the Trustee, may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of principal of, premium, if any, and interest
on the Notes. The Issuers are required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Issuers are required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Issuers. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Issuers, any Guarantor or their respective
Affiliates, and may otherwise deal with the Issuers, any Guarantor or their
respective Affiliates, as if it were not Trustee; however, if the
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<PAGE>
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue as Trustee or
resign.
14. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder, as such, of either Issuer or any
Guarantor, as such, shall have any liability for any obligations of the Issuers
or any Guarantor under the Notes, the Note Guarantees or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note and the related Note Guarantees, if
any, waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
18. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE NOTE GUARANTEES,
IF ANY.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
Ferrellgas, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
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<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
_______________________________________________________________________________
Date:________________________
Your Signature:_____________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
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<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Issuers pursuant
to Section 4.10 or 4.14 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.14
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date:_____________________ Your Signature:__________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.:_________________
Signature Guarantee.
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Exhibit B
(Face of Floating Rate Senior Note)
Series B Floating Rate Senior Note due 2001
No. $__________
FERRELLGAS, L.P.
FERRELLGAS FINANCE CORP.
promise to pay to
or registered assigns,
the principal sum of
Dollars on August 1, 2001.
Interest Payment Dates: February 1, May 1, August 1 and November 1.
Record Dates: January 15, April 15, July 15 and October 15.
Dated: July 5, 1994
FERRELLGAS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
----------------------------------------
Name:
Title:
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<PAGE>
FERRELLGAS FINANCE CORP.
By:
---------------------------------------
Name:
Title:
This is one of the Floating Rate Senior
Notes referred to in the
within-mentioned Indenture:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
By:
----------------------------------------
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<PAGE>
(Back of Note)
SERIES B FLOATING RATE SENIOR NOTE
DUE AUGUST 1, 2001
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. Ferrellgas, L.P., a Delaware limited partnership (the
"Partnership"), and Ferrellgas Finance Corp., a Delaware corporation ("Finance
Corp." and, together with the Partnership, the "Issuers") promise to pay
interest on the principal amount of this Note at a rate equal to the Applicable
LIBOR Rate. The Issuers will pay interest quarterly on February 1, May 1,
August 1 and November 1 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each, a "Floating Rate Interest Payment
Date"), commencing on November 1, 1994, to Holders of record on the immediately
preceding January 15, April 15, July 15 and October 15. Interest on this Note
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of this Note.
Interest on this Note shall accrue to, but not include, the date of repayment of
such principal; provided, however, that if such repayment occurs after 12:00
noon, New York City time, interest shall be deemed to accrue until the following
Business Day. To the extent lawful, the Issuers shall pay interest on overdue
principal at the rate of 1% per annum in excess of the then applicable interest
rate on this Note; they shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) at the same rate to the extent
lawful. On each Floating Rate Interest Payment Date, interest on this Note will
be paid for the Initial Quarterly Period or the immediately preceding Quarterly
Period, as applicable. Interest shall be calculated on a formula basis in
respect of the Initial Quarterly Period and each Quarterly Period by multiplying
the principal amount of this Note by the Applicable LIBOR Rate, and multiplying
such product by the LIBOR Fraction. Anything to the contrary in this Note
notwithstanding, the interest rate on this Note shall in no event be in excess
of the maximum rate permitted by the law of any state of applicable
jurisdiction, as the same may be modified by Federal law.
The "Applicable LIBOR Rate" means for each Quarterly Period during which
any Floating Rate Senior Note is outstanding subsequent to the Initial Quarterly
Period, 312.5 basis points over the rate determined by the Partnership (notice
of such rate to be sent to the Trustee by the Company on the date of
determination thereof) equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the offered rates for deposits in U.S. dollars for a
period of three months, as set forth on the Reuters Screen LIBO Page as of 11:00
a.m., London time, on the Interest Rate Determination Date for such Quarterly
Period; provided, however, that if only one such offered rate appears on the
Reuters Screen LIBO Page, the Applicable LIBOR Rate for such Quarterly Period
shall mean such offered rate. If such rate is not available at 11:00 a.m.,
London time, on the Interest Rate Determination Date for such Quarterly Period,
then the Applicable LIBOR Rate for such Quarterly Period shall mean the
arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%) of
the interest rates per annum at which deposits in amounts equal to $1 million in
U.S. dollars are offered by the Reference Banks to leading banks in the London
Interbank Market for a period of six months as of 11:00 a.m., London time, on
the Interest Rate Determination Date for such Quarterly Period. If on any
Interest Rate Determination Date, at least two of the Reference Banks provide
such offered quotations, then the Applicable LIBOR Rate for such Quarterly
Period shall be determined in accordance with the preceding sentence on the
basis of the offered quotation of those Reference Banks providing
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such quotations; provided, however that if fewer than two of the Reference Banks
are so quoting such interest rates as mentioned above, the Applicable LIBOR Rate
for such Quarterly Period shall be deemed to be the Applicable LIBOR Rate for
the next preceding Quarterly Period and in the case of the Quarterly Period next
succeeding the Initial Quarterly Period, the Applicable LIBOR Rate shall be 7
7/8%. Notwithstanding the foregoing, the Applicable LIBOR Rate for the Initial
Quarterly Period shall be 7 7/8%.
"Interest Rate Determination Date" means, with respect to the Initial
Quarterly Period and each Quarterly Period, the second Working Day prior to the
first day of such Initial Quarterly Period or Quarterly Period, as applicable.
"LIBOR Fraction" means the actual number of days in the Initial Quarterly
Period or Quarterly period, as applicable, divided by 360; provided, however,
that the number of days in the Initial Quarterly Period and each Quarterly
Period shall be calculated by including the first day of such Initial Quarterly
Period or Quarterly Period and excluding the last.
"Initial Quarterly Period" means the period from and including July 5,
1994 through and including October 31, 1994.
"Quarterly Period" means the period from and including a scheduled
Floating Rate Interest Payment Date through the day next preceding the following
scheduled Floating Rate Interest Payment Date.
"Reference Banks" means each of Barclays Bank PLC, London Branch, the Bank
of Tokyo, Ltd, London Branch, Bankers Trust Company, London Branch, and National
Westminster Bank PLC, London Branch, and any such replacement bank thereof as
listed on the Reuters Screen LIBO Page and their respective successors, and if
any of such banks are not at the applicable time providing interest rates as
contemplated within the definition of the "Applicable LIBOR Rate," Reference
Banks shall mean the remaining bank or banks so providing such rates. In the
event that less than two of such banks are providing such rates, the Issuers
shall use reasonable efforts to appoint additional Reference Banks so that there
are at least two such banks providing such rates; provided, however, that such
banks appointed by the Issuers shall be London offices of leading banks engaged
in the Eurodollar Market.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London Interbank Offered
Rates of major banks).
"Working Day" means any day which is not a Saturday, Sunday or a day on
which banking institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close.
2. Method of Payment. The Issuers will pay interest on this Note (except
defaulted interest) to the Person who is the registered Holder of such Note at
the close of business on the record date next preceding the Floating Rate
Interest Payment Date, even if such Note is cancelled after such record date and
on or before such Floating Rate Interest Payment Date. The Holder hereof must
surrender this Note to a Paying Agent to collect principal payments. The
Issuers will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
The Issuers, however, may pay principal, premium, if any, and interest by check
payable in such money. The Notes will be payable both
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as to principal and interest at the office or agency of the Issuers maintained
for such purpose within the City and State of New York or, at the option of the
Issuers, payment of interest may be made by check mailed to the Holders of Notes
at their respective addresses set forth in the register of Holders. Unless
otherwise designated by the Issuers, the Issuers' office or agency in New York,
New York will be the office of the Trustee maintained for such a purpose.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Issuers may change any Paying Agent, Registrar or co-
registrar without notice to any Holder. Either Issuer or any Guarantor may act
in any such capacity.
4. Indenture. The Issuers issued the Notes under an Indenture dated as of
July 5, 1994 (the "Indenture") between Partnership, Finance Corp. and the
Trustee. The terms Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture. The Notes
are subject to all such terms, and Holders of the Notes are referred to the
Indenture and such act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
The Notes are unsecured general obligations of the Issuers limited to
$250,000,000 in aggregate principal amount. The Floating Rate Senior Notes are
limited to $50,000,000 in aggregate principal amount.
5. Optional Redemption. The Issuers may redeem all or any portion of the
Floating Rate Senior Notes on any Floating Rate Interest Payment Date on or
after August 1, 1995, on not less than 30 nor more than 60 days' notice to each
Holder, at a redemption price equal to 100% of the outstanding principal amount
then redeemed, plus accrued and unpaid interest to the redemption date.
6. Mandatory Redemption. The Issuers shall redeem $5,000,000 principal
amount of Floating Rate Senior Notes on each of August 1, 1999 and August 1,
2000 at a redemption price equal to 100% of principal amount thereof, plus
accrued and unpaid interest to the redemption date. The Issuers may reduce the
principal amount of Floating Rate Senior Notes to be redeemed pursuant to this
paragraph 6 by subtracting 100% of the principal amount of any Floating Rate
Senior Notes that the Issuers have delivered to the Trustee for cancellation or
that the Issuers have redeemed other than pursuant to this paragraph 6. The
Issuers may so subtract the principal amount of a Floating Rate Senior Note only
once.
Except as described in this paragraph 6 and in paragraph 7 below, the
Issuers shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder. (a) If there is a
Change of Control (as defined in the Indenture), the Issuers shall be required
to offer to purchase all Notes at 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase. Holders of
Notes that are subject to an offer to purchase will receive a notice therefor
from the Issuers prior to any related purchase date, and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales (as
defined in the Indenture) exceeds $15 million, the Issuers shall be required to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds
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<PAGE>
the amount of Excess Proceeds, the Notes to be redeemed shall be selected
pursuant to the terms of Section 3.02 of the Indenture (with such adjustments as
may be deemed appropriate by the Issuers so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased). To the extent that
the aggregate amount of Notes tendered by Holders thereof is less than the
Excess Proceeds, the Issuers may use such deficiency for general business
purposes. Holders of Notes which are the subject of an offer to purchase will
receive a notice therefor from the Issuers prior to any related purchase date,
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at its registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date, interest ceases to accrue
on Notes or portions of them called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed, during the period between a record date and the corresponding Floating
Rate Interest Payment Date.
10. Persons Deemed Owners. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any Agent, the Issuers
and the Guarantors may deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of and interest on this Note and for all other purposes whatsoever,
whether or not this Note is overdue, and neither the Trustee, any Agent, the
Issuers nor any Guarantor shall be affected by notice to the contrary. The
registered holder of a Note shall be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture
or the Notes may be amended with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes), and any
existing default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for Notes). Without the consent of any Holder,
the Indenture or the Notes may be amended to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for assumption of the Issuers' or any Guarantor's
obligations to Holders in the case of a merger or consolidation or to make any
change that would provide any additional rights or benefits to the Holders or
that does not adversely affect the rights of any Holder under the Indenture or
to comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act. Without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Notes held by a non-consenting Holder of Notes): (i) reduce the principal
amount of Notes whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with
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<PAGE>
respect to the redemption of the Notes (other than provisions relating to the
covenants described above under the caption "Redemption or Repurchase at Option
of Holder"), (iii) reduce the rate of or change the time for payment of interest
on any Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes,
(vii) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption "Redemption
or Repurchase at the Option of Holders"), (viii) except as otherwise permitted
in the Indenture, release any Guarantor from its obligations under its Note
Guarantee or change any Note Guarantee in any manner that would adversely affect
the rights of the Holders of Senior Notes or (ix) make any change in the
foregoing amendment and waiver provisions.
12. Defaults and Remedies. Events of Default include: default for 30
days in the payment when due of interest on the Notes; default in payment when
due of principal of or premium, if any, on the Notes at maturity, upon
redemption or otherwise; failure for 20 days by the Partnership to comply with
Sections 4.07, 4.09, 4.10, 4.14 or 5.01 of the Indenture; failure by the
Partnership or the Guarantors for 60 days after notice from the Trustee or the
Holder of at least 25% in principal amount of the Notes then outstanding to
comply with any of its other agreements in the Indenture or the Notes; default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Partnership or any of its Subsidiaries (or the payment of which is
guaranteed by the Partnership or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more, excluding any acceleration of maturity of the Indebtedness
represented by the General Partner's Existing Floating Rate Notes and Existing
Fixed Rate Notes to the extent that such Indebtedness shall be redeemed on or
prior to the 40th day after the date of this Indenture; failure by the
Partnership or any of its Subsidiaries to pay final judgments aggregating in
excess of $10 million, which judgments are not paid, discharged or stayed for a
period of 60 days; except as permitted by the Indenture, any Note Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantees; and certain events of bankruptcy or
insolvency with respect to the Partnership or any of its Subsidiaries. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately; except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, relating to the
Partnership, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust
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or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding, by notice to the Trustee, may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of principal of, premium, if any, and interest
on the Notes. The Issuers are required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Issuers are required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Issuers. The Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Issuers, any Guarantor or their respective
Affiliates, and may otherwise deal with the Issuers, any Guarantor or their
respective Affiliates, as if it were not Trustee; however, if the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue as Trustee or resign.
14. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder, as such, of either Issuer or any
Guarantor, as such, shall have any liability for any obligations of the Issuers
or any Guarantor under the Notes, the Note Guarantees or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note and the related Note Guarantees, if
any, waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
18. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE NOTE GUARANTEES,
IF ANY.
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The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Ferrellgas, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
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Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
_______________________________________________________________________________
Date:__________________
Your Signature:_______________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Issuers pursuant
to Section 4.10 or 4.14 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.14
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date:_____________________ Your Signature:__________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.:__________________
Signature Guarantee.
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EXHIBIT C
Form of Supplemental Indenture to Be Delivered by Future Guarantors
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, between __________________ (the "Guarantor"), a subsidiary of
Ferrellgas, L.P., (or its successor), a Delaware limited partnership (the
"Partnership"), and Norwest Bank Minnesota, National Association, a national
banking association, as trustee under the Indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Partnership and Ferrellgas Finance Corp., a Delaware
corporation ("Finance Corp." and, together with the Partnership, the "Issuers")
have heretofore executed and delivered to the Trustee an indenture (the
"Indenture"), dated as of July 5, 1994, providing for the issuance of an
aggregate principal amount of $200,000,000 of 10% Fixed Rate Senior Notes (the
"Fixed Rate Senior Notes") and an aggregate principal amount of $50,000,000 of
Floating Rate Senior Notes (the "Floating Rate Senior Notes" and, together with
the Fixed Rate Senior Notes, the "Senior Notes";
WHEREAS, Section 4.13 of the Indenture provides that under certain
circumstances the Partnership may cause the Guarantor to execute and deliver to
the Trustee a supplemental indenture pursuant to which the Guarantor shall
unconditionally guarantee all of the Issuers' obligations under the Notes
pursuant to a Note Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guarantor hereby agrees that its obligations
to the Holder and the Trustee pursuant to this Note Guarantee shall be as
expressly set forth in Article 10 of the Indenture and in such other provisions
of the Indenture as are applicable to Guarantors, and reference is made to the
Indenture for the precise terms of this Supplemental Indenture. The terms of
Article 10 of the Indenture and such other provisions of the Indenture as are
applicable to Guarantors are incorporated herein by reference.
3. Execution and Delivery of Note Guarantees.
(a) To evidence its Note Guarantee set forth in this Supplemental
Indenture, the Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form of Exhibit C to the Indenture shall be endorsed by
an Officer of such Guarantor on each Note authenticated and delivered by the
Trustee after the date hereof.
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(b) Notwithstanding the foregoing, the Guarantor hereby agrees that its
Note Guarantee set forth herein shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture or on
the Note Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Note Guarantee is endorsed, the Note
Guarantee shall be valid nevertheless.
(d) The delivery of any Note by the Trustee, after the authentication
thereof under the Indenture, shall constitute due delivery of the Note
Guarantee set forth in this Supplemental Indenture on behalf of the
Guarantor.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Guarantor, as such, shall
have any liability for any obligations of the Issuers or any Guarantor under the
Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.
7. New York Law to Govern. The internal law of the State of New York shall
govern and be used to construe this Supplemental Indenture and the Note
Guarantee.
8. Counterparts The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ____________, ____ [Guarantor]
By: ___________________________
Name:
Title:
Dated: ____________, ____ _________________________________,
as Trustee
By: ___________________________
Name:
Title:
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EXHIBIT D
FORM OF NOTATION ON SENIOR NOTE
RELATING TO NOTE GUARANTEE
Each Guarantor set forth below and each Subsidiary of the Partnership
which in accordance with Section 4.13 of the Indenture has guaranteed the
obligations of the Issuers under the Notes upon execution of a counterpart of
the Indenture, has jointly and severally unconditionally guaranteed (i) the due
and punctual payment of the principal of and interest on the Notes, whether at
the maturity or interest payment or mandatory redemption date, by acceleration,
call for redemption or otherwise, and of interest on the overdue principal of
and interest, if any, on the Notes and all other obligations of the Issuers to
the Holders or the Trustee under the Indenture or the Notes and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at maturity,
by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Note Guarantee and the Indenture are as expressly set forth in
Article 10 of the Indenture and in such other provisions of the Indenture as are
applicable to Guarantors, and reference is hereby made to such Indenture for the
precise terms of this Note Guarantee. The terms of Article 10 of the Indenture
and such other provisions of the Indenture as are applicable to Guarantors are
incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its successors and assigns until
full and final payment of all of the Issuers' obligations under the Notes and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
guarantee of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
By:__________________________________________
Name:
Title:
D-1
