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 Earliest Event Reported: April 26, 1996
Date of Report: May 6, 1996
Ferrellgas Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1-11331 43-1698480
(Commission File Number) (I.R.S. Employer Identification No.)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive office, including zip code)
(816) 792-1600
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 30, 1996, Ferrellgas, Inc. ("Ferrellgas"), the
General Partner of Ferrellgas Partners, L.P. (the "Partnership") and Ferrellgas,
L.P. (the "Operating Partnership"), consummated its previously announced
purchase of all of the stock of Skelgas Propane, Inc. ("Skelgas"), a subsidiary
of Superior Propane, Inc. of Toronto, Canada for a cash purchase price of $89.7
million. Skelgas is the seventh-largest propane supplier in the nation, based on
gallons sold, with 92 retail propane outlets across the United States with sales
of approximately 97 million gallons a year to residential, industrial/commercial
and agricultural customers. Ferrellgas borrowed the funds for such purchase from
Bank of America National Trust & Savings Association ("BofA" and the "BofA
Acquisition Loan").
As of May 1, 1996, Ferrellgas (i) caused Skelgas and each of
its subsidiaries to be merged into Ferrellgas and (ii) transferred all of the
assets of Skelgas and its subsidiaries to the Operating Partnership. In
exchange, the Operating Partnership assumed substantially all of the
liabilities, whether known or unknown, associated with Skelgas and its
subsidiaries and their propane business (excluding income tax liabilities). In
consideration of the retention by Ferrellgas of the Skelgas income tax
liabilities, the Partnership issued 41,203 Common Units to Ferrellgas. The
liabilities assumed by the Operating Partnership included the obligations of
Ferrellgas under the BofA Acquisition Loan. Immediately following the transfer
of assets and related transactions described above, the Operating Partnership
repaid the BofA Acquisition Loan with cash and borrowings under the Operating
Partnership's existing acquisition bank credit line.
ITEM 5. OTHER EVENTS
On April 26, 1996 the Partnership announced that it issued
$160 million of fixed rate 9 3/8% Senior Secured Notes (the "Notes") due 2006 in
a private placement to qualified institutional investors under Rule 144A. Net
proceeds of the offering were contributed by the Partnership to the Operating
Partnership, and were used primarily to repay outstanding indebtedness under the
Operating Partnership's acquisition bank credit lines and to repay the BofA
Acquisition Loan assumed in the transfer of Skelgas and its subsidiaries to the
Operating Partnership as described in Item 2.
In connection with the issuance of the Notes, the issuers of
the Notes entered into a Registration Rights Agreement pursuant to which the
Partnership is obligated to file a registration statement with the Securities
and Exchange Commission with respect to the exchange of the Notes for a series
of registered notes with terms substantially identical to the terms of the
Notes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
The consolidated financial statements of Skelgas Propane, Inc.
as of December 31, 1995 and 1994 and for the fiscal year ended December 31, 1995
(audited), together with the report of Deloitte & Touche with respect thereto,
are filed as Exhibit 99.3 to this Current Report.
It is impracticable to provide the historical financial
statements for the interim periods required by this Item within the time this
Current Report on Form 8-K is required to be filed. Such historical financial
statements will be filed as soon as practicable, but not more than 60 days after
this Current Report on Form 8-K is required to be filed.
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(b) Pro forma financial information.
It is impracticable to provide the pro forma financial
statements required by this Item within the time this Current Report on Form 8-K
is required to be filed. Such pro forma financial statements will be filed as
soon as practicable, but not more than 60 days after this Current Report on Form
8-K is required to be filed.
(c) Exhibits.
The Exhibits listed in the Index to Exhibits are filed as
part of this Current Report on Form 8-K.
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. (General Partner)
By: /s/ Danley K. Sheldon
------------------------------------
Danley K. Sheldon
Senior Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Date: May 6, 1996
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
2 Agreement for Purchase and Sale of Stock, dated
March 23, 1996 between Superior Propane, Inc. and
Ferrellgas, Inc.
3 First Amendment to Agreement of Limited Partnership
of Ferrellgas, L.P. dated as of April 23, 1996
4.1 Indenture dated as of April 26, 1996 among
Ferrellgas Partners, L.P., Ferrellgas Partners
Finance Corp., Ferrellgas, L.P., as guarantor, and
American Bank National Association, as trustee,
relating to $160,000,000 9 3/8% Senior Secured Notes
due 2006.
4.2 Registration Rights Agreement dated as of April, 26,
1996 among Ferrellgas Partners, L.P., Ferrellgas
Partners Finance Corp., Ferrellgas, L.P., Donaldson,
Lufkin & Jenrette Securities Corporation and
Goldman, Sachs & Co.
10.1 Purchase Agreement dated as of April 23, 1996
between Ferrellgas Partners, L.P., Ferrellgas
Partners Finance Corp., Ferrellgas, Inc.,
Ferrellgas, L.P., Donaldson, Lufkin & Jenrette
Securities Corporation and Goldman, Sachs & Co.
10.2 Pledge and Security Agreement dated as of April
26, 1996 among Ferrellgas Partners, L.P.,
Ferrellgas, Inc., and American Bank National
Association, as collateral agent.
99.1 Text of press release issued by Ferrellgas Partners,
L.P. on May 1, 1996
99.2 Text of press release issued by Ferrellgas Partners,
L.P. on April 26, 1996
99.3 Consolidated financial statements of Skelgas
Propane, Inc. as of December 31, 1995 and 1994 and
for the fiscal year ended December 31, 1995
(audited), together with the report of Deloitte &
Touche with respect thereto.
CONFORMED EXECUTION COPY
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AGREEMENT
FOR
PURCHASE AND SALE OF STOCK
BETWEEN
SUPERIOR PROPANE INC.
and
FERRELLGAS, INC.
MARCH 23, 1996
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TABLE OF CONTENTS
ARTICLE I
THE TRANSACTION
1.1. Purchase and Sale of Stock................................... 1
1.2. Purchase Price............................................... 2
1.3. Payment of the Closing Estimated Purchase Price.............. 2
1.4. Excluded Assets.............................................. 2
ARTICLE II
THE CLOSING AND TRANSFER OF STOCK
2.1. Closing...................................................... 3
2.2. Closing Statement of Net Working Capital; Settlement......... 3
2.3. Deliveries by Buyer.......................................... 4
2.4. Deliveries by Seller......................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1. Authority.................................................... 7
3.2. No Conflict.................................................. 7
3.3. Organization................................................. 8
3.4. Capitalization of the Company................................ 8
3.5. Capitalization of the Subsidiaries........................... 8
3.6. Financial Statements......................................... 8
3.7. Subsequent Events. ......................................... 9
3.8. Absence of Undisclosed Liabilities........................... 10
3.9. Banking Relationships........................................ 10
3.10. Insurance.................................................... 10
3.11. Assets....................................................... 11
3.12. Real Estate.................................................. 11
3.13. Personal Property Leases..................................... 12
3.14. Intellectual Property........................................ 12
3.15. Employees.................................................... 12
3.16. Labor Matters................................................ 12
3.17. Employee Benefit Plans....................................... 13
3.18. Licenses and Permits......................................... 14
3.19. Material Contracts........................................... 14
3.20. Taxes........................................................ 14
3.21. Product Warranty............................................. 18
3.22. Legal Proceedings............................................ 18
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3.23. Environmental Matters....................................... 18
3.24. Compliance with Law......................................... 19
3.25. Capital Expenditures........................................ 19
3.26. Brokers..................................................... 19
3.27. No Implied Representation................................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
4.1. Authority.................................................... 20
4.2. No Conflicts................................................. 20
4.3. Due Organization............................................. 20
4.4. Brokers...................................................... 20
4.5. Buyer's Investment Intent.................................... 20
4.6. Buyer's Business Investigation............................... 21
4.7. Financial Capacity........................................... 21
4.8. Disputes or Proceedings...................................... 21
4.9. Solvency of the Company...................................... 21
ARTICLE V
COVENANTS OF SELLER
5.1. HSR Act Compliance........................................... 22
5.2. Liabilities and Other Obligations............................ 22
5.3. Interim Financial Information................................ 22
5.4. Interim Conduct of Business.................................. 23
5.5. Access....................................................... 24
5.6. Seller's Efforts............................................. 24
5.7. No Shop...................................................... 24
5.8. Covenant Not To Compete...................................... 24
5.9. Certificate as to Book Equity................................ 26
ARTICLE VI
COVENANTS OF BUYER
6.1. HSR Act Compliance........................................... 26
6.2. Records and Documents........................................ 26
6.3. Buyer's Efforts.............................................. 27
6.4. WARN Act Compliance.......................................... 27
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
7.1. Accuracy of Warranties and Performance of Covenants.......... 27
7.2. No Pending Action............................................ 28
7.3. Certain Indebtedness......................................... 28
7.4. No Adverse Change............................................ 28
7.5. No Proceeding or Litigation.................................. 28
7.6. No Debt...................................................... 28
7.7. Financing.................................................... 28
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
8.1. Accuracy of Warranties and Performance of Covenants.......... 28
8.2. No Pending Action............................................ 29
8.3. Solvency Certificate......................................... 29
8.4. Financing.................................................... 29
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1. Survival of Representations and Warranties................... 29
9.2. Indemnification of Buyer..................................... 29
9.3. Indemnification of Seller.................................... 30
9.4. Claims....................................................... 30
9.5. Limitation of Liabilities.................................... 31
9.6. Indemnification for Taxes.................................... 32
9.7. Indemnification for Environmental Matters.................... 33
9.8. Insurable Claims............................................. 34
ARTICLE X
TERMINATION BY THE PARTIES
10.1. Events of Termination....................................... 34
10.2. Action Upon Termination..................................... 35
10.3. Effect of Termination....................................... 35
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ARTICLE XI
GENERAL PROVISIONS
11.1. Amendments and Waiver....................................... 35
11.2. Notices..................................................... 36
11.3. Confidentiality............................................. 37
11.4. No Public Announcement...................................... 37
11.5. Expenses.................................................... 37
11.6. Seller's Knowledge.......................................... 37
11.7. Successors and Assigns...................................... 37
11.8. Entire Transaction.......................................... 38
11.9. Applicable Law; Severability................................ 38
11.10. Good Faith Negotiation/Arbitration.......................... 38
11.11. Headings.................................................... 38
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SCHEDULES
1.2 Net Working Capital
1.4 Excluded Claims
3.3 Organization
3.5 Subsidiaries
3.6 Financial Statements
3.7 Subsequent Events
3.8 Undisclosed Liabilities
3.9 Banking Relationships
3.10 Insurance
3.11 Title to Assets
3.12 Real Estate
3.13 Personal Property Leases
3.14 Intellectual Property
3.15 Employees
3.17 Employee Benefit Plans
3.18 Licenses and Permits
3.19 Material Contracts
3.20 Taxes
3.21 Product Warranty
3.22 Legal Proceedings
3.23 Environmental Matters
3.25 Capital Expenditures
5.5 Due Diligence Methodology
9.7 Environmental Matters
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AGREEMENT
FOR
PURCHASE AND SALE OF STOCK
THIS AGREEMENT is made and entered into this _____ day of March, 1996,
by and between Superior Propane Inc., a federally incorporated company of Canada
("Seller"), and Ferrellgas, Inc., a Delaware corporation ("Buyer").
WHEREAS, Seller is the record and beneficial owner of all of the issued
and outstanding capital stock of Skelgas Propane, Inc., a Delaware corporation
(the "Company"), consisting of 155,000 shares of common stock, U.S. $1,000 par
value per share (the "Stock");
WHEREAS, the Company is the record and beneficial owner of all
outstanding capital stock of the corporations listed on Schedule 3.5 attached
hereto (the "Subsidiaries");
WHEREAS, the Company, through its Subsidiaries, is engaged in the
business of selling propane to the residential, commercial, industrial,
agricultural and auto propane markets in Illinois, Indiana, Iowa, Kansas,
Kentucky, Michigan, Minnesota, Missouri, New York, North Dakota, Ohio, Nebraska
and Wisconsin (the "Business"); and
WHEREAS, Buyer desires to purchase and Seller desires to sell all, but
not less than all, of the Stock, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises and promises
herein contained, the parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1. Purchase and Sale of Stock. At the Closing (as hereinafter
defined), Seller shall sell, transfer, assign and deliver to Buyer, and Buyer
shall purchase, accept, assume and receive, all right, title and interest in and
to the Stock, free and clear of any Liens. As used in this Agreement, the term
"Lien" shall mean any mortgage, pledge, deed of trust, hypothecation, claim,
security interest, title defect, encumbrance, burden, tax lien (as used in
Section 6321 of the Code (as hereinafter defined) or as similarly used by any
state, local or foreign tax authority) charge or other similar restriction,
claim, title retention agreement, option, easement, covenant, encroachment or
other adverse claim.
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1.2. Purchase Price. The aggregate purchase price for the Stock shall
be U.S. $84,000,000 (the "Purchase Price"), as finally adjusted pursuant to
Section 2.2 for the difference between U.S. $16,000,000 and the Company's Net
Working Capital (as defined on Schedule 1.2) as of the Closing Date (as
hereinafter defined), all as calculated in accordance with U.S. generally
accepted accounting principles and in accordance with the Company's historical
accounting methods, consistently applied, subject, to the adjustments and
assumptions set forth on Schedule 1.2 attached hereto (the "Accounting
Principles"). The Net Working Capital, excluding cash, is herein referred to as
"Non-Cash Net Working Capital". The Purchase Price shall be adjusted to reflect
the difference between the amount of cash included in Net Working Capital as of
the Closing Date and U.S. $4,000,000, and to reflect the difference between the
aggregate of the Non-Cash Net Working Capital and U.S. $12,000,000. The Purchase
Price shall be subject to a post-closing confirmation pursuant to Section 2.2.
1.3. Payment of the Closing Estimated Purchase Price. Not later than
two (2) business days prior to the Closing Date, Seller shall prepare and
deliver to Buyer a statement setting forth a good faith estimate of the Net
Working Capital as of the Closing Date (the "Estimated Net Working Capital")
prepared in accordance with the Accounting Principles. The "Estimated Purchase
Price" shall mean an amount equal to (i) if the Estimated Net Working Capital is
greater than or equal to $16,000,000, then the Purchase Price plus the excess of
the Estimated Net Working Capital over $16,000,000, and (ii) if the Estimated
Net Working Capital is less than $16,000,000, then the Purchase Price less the
excess of $16,000,000 over the Estimated Net Working Capital. At Closing, Buyer
shall deliver and Seller shall accept the Estimated Purchase Price in
immediately available funds.
1.4. Excluded Assets. Notwithstanding anything to the contrary
contained herein, the following assets (the "Excluded Assets") shall not be sold
or transferred to Buyer, and ownership of the Excluded Assets shall be
transferred from the Company or its Subsidiaries to Seller prior to Closing:
(a) All right, title and interest in and to the trademark and
name ETI Energy Transportation Inc., subject to the grant by Seller of
a transitional license to use the mark for a period of time ending on
or prior to May 1, 1997 to change over the livery of trucks, etc.;
(b) Refunds pertaining to tax obligations of Seller, the
Company or any Subsidiary, which refund amounts are in excess of those
respective amounts stated in Net Working Capital;
(c) Refunds pertaining to insurance premium adjustments,
including those related to general liability and automotive liability,
and property insurance coverage of Seller, the Company or any
Subsidiary;
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(d) Refunds or reimbursements pertaining to environmental
matters and refunds pertaining to insurance premium adjustments related
to workers compensation, which refund amounts are in excess of those
respective amounts stated in Net Working Capital;
(e) Any and all other refunds related to the operation and
conduct of the Business prior to the Closing Date which amounts are not
included in the calculation of Net Working Capital;
(f) Computer hardware and software and related rights
relating to Seller's Enterprise 2000 computer system; and
(g) Furnishings, equipment and materials (excluding stationery
and records) located at the Company's corporate office in Oakbrook,
Illinois and the warehouse in Westmont, Illinois.
In addition, Seller shall pay, settle and discharge the obligations and claims
listed on Schedule 1.4 (the "Excluded Claims"), and shall be entitled to all
reserves related thereto, all of which shall be transferred to Seller prior to
Closing. Excluded Assets and Excluded Claims shall not be taken into account in
any computation of Net Working Capital.
ARTICLE II
THE CLOSING AND TRANSFER OF STOCK
2.1. Closing. The transfer of Stock contemplated by this Agreement (the
"Closing") shall occur at the offices of McDermott, Will & Emery, 227 W. Monroe
Street, Chicago, Illinois 60606 no later than the third business day after the
conditions to Closing (other than those which by their nature are to be
fulfilled at the Closing) are fulfilled or waived, or at such other place or
time as may be mutually agreed upon by the parties (the "Closing Date"). Upon
consummation, the Closing shall be deemed to have taken place as of the close of
business on the Closing Date.
2.2. Closing Statement of Net Working Capital; Settlement.
(a) Immediately following the Closing, Seller, at its expense,
shall prepare a Statement of Net Working Capital for the Company as of
the Closing Date (the "Closing Statement of Net Working Capital") in
accordance with the Accounting Principles and shall deliver it to Buyer
within forty-five (45) days after the Closing Date (the "Delivery
Date"). Seller shall provide Buyer with copies of any and all work
papers used in the preparation of the Closing Statement of Net Working
Capital and shall permit Buyer and its representatives to observe the
procedures as they are
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carried out. Buyer shall render all reasonable assistance in connection
with the preparation of the Closing Statement of Net Working Capital.
The Closing Statement of Net Working Capital shall become final and
binding upon Buyer on the 15th day following the Delivery Date, unless
Buyer gives notice of its disagreement with reasonable detail as to the
nature of such disagreement ("Notice of Disagreement") to Seller on or
prior to such date. Upon receipt of the Notice of Disagreement, the
parties shall each use their best efforts to reach agreement within the
following thirty (30) days, and, if the parties are unable to reach
agreement after such thirty (30) days, they shall submit the disputed
matter to the Chicago office of Ernst & Young (the "Accounting Firm")
for arbitration within ten (10) days thereafter and being bound by the
results thereof in all respects for matters comprising Net Working
Capital. The parties agree to share equally in the cost of such
arbitration. If Buyer delivers to Seller a timely Notice of
Disagreement, then the Closing Statement of Net Working Capital (as
revised in accordance with the procedures set forth below) shall become
final and binding upon Seller and Buyer on the earlier of (x) the date
the parties hereto resolve in writing any differences they have with
respect to any matters specified in the Notice of Disagreement or (y)
the date any matters properly in dispute are finally resolved in
writing by the Accounting Firm. The Closing Statement of Net Working
Capital, as delivered on the Delivery Date or, if a Notice of
Disagreement is delivered, as ultimately resolved pursuant to clause
(x) or (y) of the preceding sentence, shall be referred to as the
"Final Closing Statement of Net Working Capital" and the date upon
which it becomes final and binding shall be the "Final Settlement
Date." Within three (3) days after the Final Settlement Date (the
"Payment Date"), (i) if the Final Closing Statement of Net Working
Capital is greater than the Estimated Net Working Capital, then Buyer
shall pay to Seller in cash the difference thereof, and (ii) if the
Final Closing Statement of Net Working Capital is less than the
Estimated Net Working Capital, then Seller shall pay to Buyer in cash
the difference thereof (the "Net Working Capital Adjustment"). The Net
Working Capital Adjustment shall be an adjustment to the Purchase
Price.
(b) In the event that the Net Working Capital Adjustment is
not paid on the Payment Date the amount owed pursuant to this Section
2.2 shall bear interest at a rate equal to the prime rate as set forth
from time to time in The Wall Street Journal, Midwest edition, from the
date due through the date of actual payment.
(c) The Final Closing Statement of Net Working Capital shall
be final and binding upon both parties and not subject to further
adjustment, arbitration or judicial review and shall be the final
determination of liabilities or obligations, including indemnification
under this Agreement, with respect to the constituent elements included
in Net Working Capital.
2.3. Deliveries by Buyer. At the Closing, Buyer shall deliver the
following:
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(a) A good funds transfer for credit to Seller's account in
the amount equal to the Estimated Purchase Price;
(b) Opinion of counsel to Buyer in form and substance
reasonably acceptable to Seller;
(c) A Certificate of the Secretary of Buyer as to the
resolutions authorizing the transactions contemplated hereby and a
Certificate of an executive officer of Buyer reaffirming, and updating
as necessary, Buyer's representations and warranties contained in
Article IV;
(d) An agreement containing, without limitation, terms and
conditions relating to the provision of transitional, accounting,
administration, information, management and related services at a price
equal to 125% of the base salary of the Seller's employees plus
reasonable out-of-pocket expenses payable semi-monthly; provided, that
if the transition to Buyer has not occurred prior to June 30, 1996, the
Buyer shall pay the Seller an additional U.S. $50,000; and
(e) Such other instruments or documents as may be necessary or
appropriate to carry out the transactions contemplated hereby.
2.4. Deliveries by Seller. At the Closing, except as to item (k)
which Seller shall deliver to Buyer not less than five (5) business
days before Closing, Seller shall deliver the following:
(a) Certificates, with fully executed stock powers, evidencing
the Stock and any other documentation necessary to effect the transfer
of ownership thereof to Buyer;
(b) Certificate of the Secretary of the Company delivering the
minute books, stock records and By-laws of the Company and each of the
Subsidiaries, including certificates evidencing the outstanding capital
stock of each of the Subsidiaries;
(c) Articles of Incorporation of the Company and each of the
Subsidiaries certified as of a recent date by the Secretary of State of
such state in which such entity is incorporated;
(d) Certificate of Good Standing of the Company and each of
the Subsidiaries certified as of a recent date by the Secretary of
State of such state in which such entity is incorporated;
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(e) Resignations from all of the Company's and each of the
Subsidiaries directors and officers requested by Buyer in writing
prior to the Closing Date;
(f) Opinion of counsel to Seller in form and substance
reasonably acceptable to Buyer;
(g) An Affidavit certifying that the Stock does not
constitute a "U.S. real property interest" within the meaning of
Section 897 of the Code;
(h) A Certificate of an executive officer of Seller
reaffirming, and updating as necessary, Seller's representations and
warranties contained in Article III;
(i) The guaranty of Seller's ultimate parent entity, Norcen
Energy Resources Limited, a corporation organized pursuant to the laws
of Canada ("NER"), substantially in the form of Exhibit 2.4(i) attached
hereto, which guaranty will provide for NER's guaranty of Seller's
obligations under Article 9 of this Agreement; provided, however, that
this guaranty shall be a standby guaranty, unless Seller fails to
maintain book equity in excess of $100,000,000 Canadian and, if
provided, shall terminate and be of no further force or effect on the
date two years after the date hereof;
(j) A Certification by the Seller's Chief Financial Officer
that the Seller's book equity exceeds $100,000,000 Canadian as of the
calendar month preceding the Closing;
(k) The audited consolidated balance sheet of the Company and
the Subsidiaries as at December 31, 1995 and 1994 and the statement of
income for the fiscal year ended December 31, 1995 if the Company's
total assets at December 31, 1995 are less than U.S. $100,000,000 (or
the Company's audited consolidated balance sheet as at December 31,
1993, December 31, 1994 and December 31 1995 and its statements of net
income for the fiscal years ended December 31, 1995 and December 31,
1994 if the Company's total assets at December 31, 1995 are equal to or
greater than U.S. $100,000,000) each as prepared by the Seller in
accordance with U.S. generally accepting accounting principles and in
accordance with the Company's historical accounting methods,
consistently applied ("GAAP") and audited by Deloitte & Touche. Buyer
shall pay up to U.S. $50,000 of the cost of auditing such statements.
Upon delivery of such audited financial statements to Buyer, Seller
shall be deemed to represent and warrant to Buyer pursuant to Section
3.6 that such balance sheets and the notes thereto fairly present in
all material respects the financial position of the Company and its
Subsidiaries as of the date thereof, and such statements
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of income and the notes thereto fairly present in all material respects
the results of operations for the period therein referred to, all in
accordance with GAAP. Such audited consolidated balance sheets shall
not be materially different from the balance sheet as of December 31,
1995 set forth in Schedule 3.6;
(l) A Trademark License to use the name ETI Energy
Transportation in substantially the form attached hereto as Exhibit
2.4(l); and
(m) Such other endorsements, instruments or documents as may
be necessary or appropriate to carry out the transactions contemplated
hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as of the date hereof,
and as of the Closing Date (except where otherwise specifically provided), as
set forth below.
3.1. Authority. Seller has full right, power and authority and has
taken all corporate action, including obtaining the approval of its Board of
Directors, necessary to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Seller and constitutes a valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
3.2. No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any Lien or the termination or acceleration of any indebtedness or
other obligation of the Business or the Company or any Subsidiary and are not
prohibited by, do not violate or conflict with any provision of, and do not
constitute a default under or a breach of (a) the Articles of Incorporation or
By-laws of the Company, any Subsidiary or Seller, (b) any Material Contract (as
hereinafter defined), (c) any order, writ, injunction, decree or judgment of any
court or governmental agency, or (d) any law, rule or regulation applicable to
Seller, the Company or any Subsidiary. No approval, authorization, registration,
consent, notice, order or other action of or filing with any person, including
any court, administrative agency or other governmental or regulatory authority
("Governmental Entity"), is required for the execution and delivery by Seller of
this Agreement or the consummation of the transactions contemplated hereby,
other than the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act, as amended (the "HSR Act").
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3.3. Organization. Seller is a corporation validly existing and in good
standing under the laws of Canada. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware
and has full power and authority and all requisite rights, licenses, permits and
franchises to own, lease and operate its assets and to carry on the business in
which it is engaged. Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation. Each of the Company and the Subsidiaries is duly licensed,
registered and qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership, leasing or operation of
its assets or the conduct of its business requires such qualification, except
where the failure to be so licensed, registered or qualified would not have a
material adverse effect upon the Business or its assets. Schedule 3.3 sets forth
each state or other jurisdiction in which the Company and each Subsidiary is
licensed or qualified to do business.
3.4. Capitalization of the Company. The Company's equity capital
consists of 100,000 authorized shares of preferred stock, U.S. $1 par value, of
which no shares are issued and of 200,000 authorized shares of common stock,
U.S. $1,000 par value, of which 155,000 shares are issued, outstanding and owned
beneficially and of record by Seller free and clear of any Liens. All
outstanding shares of Stock are duly authorized, validly issued, fully paid and
nonassessable, and were not issued in violation of any preemptive subscription
or other right of any person to acquire securities. There is no outstanding
subscription, option, convertible or exchangeable security, preemptive right,
warrant, call or agreement (other than this Agreement) relating to the Stock or
other obligation or commitment to issue any shares of Stock. There are no voting
trusts or other agreements, arrangements or understandings applicable to the
exercise of voting or any other rights with respect to any Stock. Seller has
good title to all of the Stock and the absolute right to sell, assign, transfer
and deliver the same to Buyer, free and clear of all Liens and the transfer and
delivery of the Stock by Seller to Buyer as contemplated by this Agreement will
transfer good and marketable title to the Stock to Buyer.
3.5. Capitalization of the Subsidiaries. The equity capital stock of
each Subsidiary is as set forth in Schedule 3.5. All of the issued and
outstanding shares of capital stock of each Subsidiary are owned beneficially
and of record by the Company free and clear of any Liens and have been duly
authorized, validly issued, are fully paid and non-assessable, and have not been
issued in violation of any preemptive rights of stockholders. No options,
warrants or other rights to acquire, sell or issue shares of capital stock of
any of the Subsidiaries, whether upon conversion of other securities or
otherwise, are outstanding. Except for the Company's ownership of the capital
stock of the Subsidiaries, neither the Company nor any Subsidiary, either
directly or indirectly, owns an equity interest in any other corporation,
partnership or other entity.
3.6. Financial Statements. Schedule 3.6 contains the unaudited consolidated
balance sheets of the Company and its Subsidiaries for each of the years ended
December 31, 1995,
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1994 and 1993, and the statements of income for the fiscal years ended December
31, 1995 and 1994. All such balance sheets and the notes thereto fairly present
in all material respects the financial position of the Company and its
Subsidiaries as of the respective dates thereof and such statements of income
and the notes thereto fairly present in all material respects the results of
operation for the periods therein referred to, all in accordance with GAAP. Upon
delivery to Buyer of the audited financial statements referred to in Section
2.4, this representation and warranty with regard to the income statement for
the year ended December 31, 1995 included in Schedule 3.6, and the balance
sheets dated December 31, 1995 and December 31, 1994 included in Schedule 3.6,
shall have no further effect and the representations and warranties set forth in
this Section 3.6 shall apply to, and be deemed to be made by Seller with regard
to, such audited financial statements.
3.7. Subsequent Events. Since December 31, 1995, the Business has been
operated only in the ordinary course of business and there has not been any (i)
material adverse change in the assets, liabilities, financial condition,
earnings, properties, business, customer base or results of operations, (ii)
damage, destruction or condemnation with respect to any material asset or
property owned, leased or otherwise used by the Company or any Subsidiary,
whether or not covered by insurance, (iii) declaration, setting aside or payment
of any dividend whether in cash, stock or property with respect to the Stock or
any redemption or other acquisition of Stock by the Company, (iv) change by the
Company in accounting methods, practices or principles and (v) other material
transaction entered into by the Company or any Subsidiary. Without limiting the
foregoing, except as set forth on Schedule 3.7 and in each case, except in the
ordinary course of business, since December 31, 1995 to the date hereof, neither
the Company nor any Subsidiary has:
(a) sold, leased, transferred or otherwise disposed of any
tangible assets or property related to the Business or canceled,
compromised, released or assigned any debt or claim relating to the
Business, in each case, in an amount individually in excess of
$100,000;
(b) subjected any of the assets of the Company to any Lien;
(c) made (or committed to make) capital expenditures in an
aggregate amount in excess of U.S. $200,000 in any month;
(d) instituted, settled or agreed to settle any litigation,
action or proceeding before any Governmental Entity, except for
settlement of workers' compensation and similar claims or other claims
for personal injury, in each case not in excess of U.S. $50,000;
(e) assumed, guaranteed, endorsed or otherwise become
responsible for the obligations of any person or other entity;
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(f) granted any increase in compensation or fringe benefits;
(g) agreed, undertaken, or committed to carryout any
investigation, assessment, remediation or response action regarding the
presence or possible presence of Hazardous Materials;
(h) except for Material Contracts listed on Schedule 3.19,
entered into any material agreement, contract, license, lease,
arrangement or commitment; or
(i) authorized or entered into any binding commitment (whether
written or oral) to take any of the types of action described in the
foregoing paragraphs (a) through (h).
3.8. Absence of Undisclosed Liabilities. Except (i) as reflected
elsewhere in this Agreement, (ii) as shown in Schedule 3.8, (iii) as reflected
in the balance sheets, (iv) for liabilities which would form the basis for an
Insurable Claim or (v) for liabilities and obligations incurred in the ordinary
course of business consistent with past practices, neither the Company nor any
Subsidiary has any liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise, which individually would subject the Company
or a Subsidiary to a liability in excess of $2,500.
3.9. Banking Relationships. Schedule 3.9 sets forth a correct and
complete list of all banks and financial institutions in which the Company or
any Subsidiary has an account, deposit, safe-deposit box, lock box or line of
credit or other loan facility, and the names of all persons authorized to draw
on those accounts or deposits, or to borrow under such lines of credit or other
loan facilities, or to obtain access to such boxes.
3.10. Insurance. Schedule 3.10 sets forth a correct and complete list
(including the name of the insurer, coverage, self-retention and expiration
date) of all binders and policies of fire, liability, product liability,
workers' compensation, vehicular and other insurance purchased from outside
parties and held by Seller, the Company or any Subsidiary on behalf of the
Company or any Subsidiary in effect as of the date hereof. All policies and
binders listed on Schedule 3.10 are valid and binding in accordance with their
terms, and are in full force and effect as of the date hereof (it being
understood that the Company and the Subsidiaries will cease to participate in or
be covered by the Seller's insurance for events and occurrences which take place
after the Closing). Except for claims set forth on Schedule 3.10, there are, as
of the date hereof, no outstanding unpaid claims under any such policy or
binder, and, except as set forth on Schedule 3.10, neither Seller, the Company
nor any Subsidiary has received any notice of cancellation or non-renewal of any
such policy or binder. Except as set forth on Schedule 3.10, neither Seller, the
Company, nor any Subsidiary has satisfied any legal requirement to maintain
financial assurance pursuant to any Environmental Law through self insurance or
insurance purchased directly or indirectly from any affiliate. Except for
workers' compensation payments made by insurance carriers, the
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Company, its Subsidiaries and its insurance companies have not, in the
aggregate, paid any losses relating to Insurable Claims aggregating more than
U.S. $1,000,000 per year in either of the last two years.
3.11. Assets. Except as set forth on Schedule 3.11, the Company and
each Subsidiary has good title to all of its properties or has possession of all
leased properties necessary for operation of the Business as presently conducted
pursuant to valid and binding leases, and with respect to vehicles, certificated
title, including all of the assets reflected on the December 31, 1995 balance
sheet (but excluding any Real Estate, as to which Section 3.12 applies), free
and clear of any Lien, except for properties disposed of, or subject to purchase
or sales orders, in the ordinary course of business since December 31, 1995; and
Liens securing taxes, assessments, governmental charges or levies, or the claims
of materialmen, carriers, landlords and like persons, all of which are not yet
due and payable or being contested in good faith, so long as such contest does
not involve any substantial danger of the sale, forfeiture or loss of any assets
of the Company and the Subsidiaries necessary for the operation of the Business
as presently conducted.
3.12. Real Estate.
(a) Schedule 3.12 sets forth a correct and complete list of each parcel
of real property owned by the Company or a Subsidiary (the "Real Estate"). The
Company or such Subsidiary is the legal and equitable owner of all right, title
and interest in, has good and marketable title to, and is in possession of, the
Real Estate, free and clear of all tenancies except as set forth on Schedule
3.12 or other possessory interests, security interests, conditional sale or
other title retention agreements, Liens, encumbrances, mortgages, pledges,
assessments, easements, rights of way, covenants, restrictions, options, rights
of first refusal, defects in title, encroachments and other burdens, except
those that will not prohibit the use of the Real Estate immediately after the
Closing in substantially the same manner as such Real Estate is currently used.
(b) Except as set forth on Schedule 3.12, since January 1, 1996, no
portion of any Real Estate has been condemned, requisitioned or otherwise taken
by any public authority, and, to Seller's Knowledge, no such condemnation,
requisition or taking is threatened or contemplated.
(c) As of Closing, Seller has delivered to Buyer correct and complete
copies of all title insurance policies, abstracts, title reports, and existing
surveys, environmental audits and similar reports, if any, with respect to each
parcel of Real Estate.
(d) Schedule 3.12 sets forth a correct and complete list of each parcel
of real property leased by the Company or a Subsidiary other than the Westmont
and Oakbrook, Illinois properties (the "Real Estate Leases"). The Company or a
Subsidiary has been in peaceable possession of the premises covered by each Real
Estate Lease since the commencement of the
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original term of such Lease. Neither the Company nor any Subsidiary is in
default under any Real Estate Lease to which it is a party, where such default
would prohibit the use of such property immediately after the Closing in
substantially the same manner as such property is currently used. As of Closing,
Seller has provided to Buyer correct and complete copies of each Real Estate
Lease.
3.13. Personal Property Leases. To the Seller's knowledge, Schedule
3.13 sets forth a correct and complete list of all leases of personal property
used in the Business other than pressure and dispenser vessels and other than
personal property located at the Westmont and Oakbrook properties (the "Personal
Property Leases"). The Company or a Subsidiary is in peaceable possession of the
property covered by each Personal Property Lease. Neither the Company nor any
Subsidiary is in default under any Personal Property Lease to which it is a
party, where such default would prohibit the use of such property immediately
after the Closing in substantially the same manner as such property is currently
used.
3.14. Intellectual Property. Schedule 3.14 sets forth a correct and
complete list of all material patents, registered trademarks, registered trade
names, registered servicemarks and registered copyrights owned by the Company or
a Subsidiary and applications for any of the foregoing (the "Intellectual
Property"). Schedule 3.14 sets forth a correct and complete list of all licenses
and other agreements relating to any Intellectual Property other than licenses
related to Excluded Assets. Except as set forth in Schedule 3.14, with respect
to the Intellectual Property, (a) no action, suit, proceeding or investigation
is pending or, to Seller's Knowledge, threatened; (b) to Seller's Knowledge,
none of the Intellectual Property interferes with, infringes upon, conflicts
with or otherwise violates the rights of others or is being interfered with or
infringed upon by others, and none is subject to any outstanding order, decree,
judgment, stipulation or charge; and (c) there are no royalties, commissions or
similar arrangements, and no licenses, sublicenses or agreements, pertaining to
any of the Intellectual Property.
3.15. Employees. Schedule 3.15 sets forth a correct and complete list
of all written agreements with employees of the Company or any Subsidiary
regarding services to be rendered, terms and conditions of employment, and
compensation (the "Employment Contracts") as of the date hereof. Except for
employees who are listed on Schedule 1.4, Schedule 3.15 sets forth a correct and
complete list of all employees of the Company, including name, title or
position, the present annual compensation (including bonuses, commissions and
deferred compensation), years of service and any interests in any incentive
compensation plan. Except as set forth on Schedule 3.15, there are no
controversies pending or, to Seller's Knowledge, threatened involving any
employees.
3.16. Labor Matters. Neither the Company nor any Subsidiary has a
collective bargaining, union or labor agreement or other arrangement with any
group of employees, labor union or employee representative(s). The Company and
each Subsidiary is in compliance with all federal, state or other applicable
laws respecting employment and
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employment practices, terms and conditions of employment, including, without
limitation, health and safety, and wages and hours, except where such
noncompliance would not prohibit the Company or any Subsidiary from carrying on
its business as presently conducted or subject the Company or any Subsidiary to
the payment of any fine, penalties or damages in excess of $2,500. No unfair
labor practice complaint is pending against the Company or any Subsidiary before
the National Labor Relations Board or any similar agency. There is no labor
strike, slow down or work stoppage pending or, to Seller's Knowledge, threatened
against the Company or any Subsidiary.
3.17. Employee Benefit Plans.
(a) Schedule 3.17 sets forth a correct and complete list of
each: "employee welfare benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), "employee pension benefit plan" (as defined in Section 3(2)
of ERISA) ("Pension Plans"); bonus, profit sharing, deferred
compensation, incentive or other compensation plan or arrangement; and
other employee fringe benefit plans; whether funded or unfunded,
qualified or unqualified (all the foregoing being herein called
"Benefit Plans"), maintained or contributed to by the Company or a
Subsidiary for the benefit of any of its officers, employees or other
persons. Without limiting the foregoing, Schedule 3.17 specifically
discloses any obligation of the Company or any Subsidiary to provide
post-retirement health benefits to current or former employees of the
Company or any Subsidiary.
(b) Except as set forth in Schedule 3.17, each Benefit Plan
and any related trust agreement or annuity contract or any other
funding instrument complies with the provisions of applicable law,
including ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"), and all necessary governmental approvals for the Benefit Plans
have been obtained. There are no actions, suits, or claims (other than
routine claims for benefits) pending or, to Seller's Knowledge,
threatened, against or with respect to any Benefit Plan or the assets
of any such Benefit Plan, and no facts exist that could give rise to
any actions, suits, or claims (other than routine claims for benefits)
against such Benefit Plans or assets. Each Pension Plan is qualified in
form and operation under Section 401(a) of the Code, the Internal
Revenue Service has issued a favorable determination letter with
respect to each Pension Plan, and no event has occurred that will or
could give rise to a disqualification under Section 401(a) of the Code.
No Pension Plan is subject to the provisions of Title IV of ERISA.
(c) Except as set forth in Schedule 3.17, within five days
after the execution of this Agreement Seller shall furnish to Buyer
correct and complete copies of (i) the plan documents and summary plan
description (including any summaries of material modifications), (ii)
the most recent determination letter received from the Internal Revenue
Service, (iii) the two most recent Form 5500 Series Annual Reports
required to be filed for each such Benefit Plan, (iv) all related trust
agreements, insurance
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contracts or other funding agreements which implement such Benefit
Plan, and (v) all service agreements that affect such Benefit Plan.
3.18. Licenses and Permits. Schedule 3.18 contains a correct and
complete list of each license, permit, certificate, approval, exemption,
franchise, registration or authorization issued to the Company or a Subsidiary
where the failure to have such license or permit would prohibit the Company or
any Subsidiary from carrying on the Business as presently conducted
(collectively, the "Licenses and Permits"). The Licenses and Permits are valid
and in full force and effect and there are not pending nor, to Seller's
Knowledge, threatened, any proceedings which could result in the termination,
revocation, limitation or impairment of any License or Permit.
3.19. Material Contracts. Schedule 3.19 sets forth a correct and
complete list of all instruments, commitments, agreements, arrangements and
understandings in effect as of the date hereof related to the Business to which
the Company or a Subsidiary is a party or bound, or by which any of its assets
are subject or bound and meeting any of the descriptions set forth below (the
"Material Contracts"):
(a) Personal Property Leases, licenses of Intellectual
Property, Employment Contracts, Benefit Plans and Licenses and Permits;
and
(b) Any other contract, commitment, agreement, arrangement or
understanding related to the Business which (i) provides for payment or
performance by either party thereto having an aggregate annual payment
or performance obligation of U.S. $300,000 or more, (ii) is not
terminable without payment or penalty on ninety (90) days (or less)
notice, or (iii) is with any affiliate of the Company or any officers
and directors of the Company.
On or before the Closing Date, correct and complete copies of each Material
Contract identified on Schedule 3.19 shall be delivered to Buyer; provided,
however, that the Seller shall not be required to disclose information with
respect to any individual customer, reseller or other agent or provide any
customer lists to the Buyer. To Seller's Knowledge, each Material Contract is in
full force and effect and is valid, binding and enforceable in accordance with
its terms. No event has occurred which is or, after the giving of notice or
passage of time, or both, would constitute a default under or a breach of any
Material Contract by the Company or any Subsidiary, or, to Seller's Knowledge,
by any other party. There is no Lien on the Company's or any Subsidiary's
interest under any Material Contract.
3.20. Taxes. No representation or warranty set forth in this Section
3.20 shall, with respect to any affiliated, combined, consolidated or unitary
group of which the Company was once a member, relate to any taxable periods of
such group after the Company ceased to be a member.
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(a) Each of the Company and the Subsidiaries and any
affiliated, combined, consolidated or unitary group of which it is or
was a member has paid all federal and state taxes (including, but not
limited to, income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, severance, capital,
production, transfer, withholding, employment, unemployment
compensation, payroll and property taxes) and other governmental
charges and assessments, including any deficiencies, interest,
additions to tax or interest and penalties with respect thereto
(hereinafter "Taxes" or, individually, a "Tax") required to be paid by
it through the date hereof, and shall timely pay any Taxes required to
be paid by it on or prior to the Closing Date for periods ending on or
before the Closing Date. The provisions for Taxes (as opposed to any
reserve for deferred taxes established to reflect timing differences
between book and tax income), including federal and state income taxes
(x) on the December 31, 1995 balance sheet and (y) taken into account
for purposes of calculating Net Working Capital, are sufficient for the
payment of all Taxes due with respect to the conduct of the business of
the Company and the Subsidiaries up to and through December 31, 1995
and the Closing Date, respectively.
(b) Each of the Company, the Subsidiaries and any affiliated,
combined, consolidated or unitary group of which it is or was a member
has timely filed all tax returns required through the date hereof, and
Seller shall prepare and timely file, in a manner consistent with prior
years and applicable law, all tax returns required to be filed on or
before the Closing Date. Each of such tax returns is true, accurate and
complete in all material respects; provided, that the only
representations and warranties made as to the amount of net operating
loss carryovers and net capital loss carryovers ("Loss Carryovers") or
the basis of the Company and the Subsidiaries in their assets shall be
as set forth in subparagraph (r) below.
(c) A consolidated return has been filed for federal income
tax purposes for each taxable year through the taxable year ending on
December 31, 1994, for an "affiliated group" (within the meaning of
Section 1504(a) of the Code), of which each of the Company and the
Subsidiaries was an "includable corporation" (within the meaning of
Section 1504(b) of the Code).
(d) Except as set forth in Schedule 3.20, no penalties or
other charges are or will become due with respect to the late filing of
any tax return of the Company or any Subsidiary or the affiliated,
combined, consolidated or unitary group of which it is or was a member
required to be filed for any period ending on or before the Closing
Date.
(e) With respect to all tax returns of the Company or the
affiliated, combined, consolidated or unitary group of which it is or
was a member, (i) the statute of limitations for the assessment of
Taxes has expired for all periods, other than the periods indicated on
Schedule 3.20; and (ii) except as set forth on Schedule 3.20, no
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audit is in progress and no extension of time is in force with respect
to any date on which any such return for Taxes was or is to be filed
and no waiver or agreement is in force for the extension of time for
the assessment or payment of any Tax.
(f) Schedule 3.20 sets forth the status of federal income tax
audits of the returns of the Company for each fiscal year for which the
statute of limitations has not expired, including the amounts of any
deficiencies and additions to tax, interest and penalties indicated on
any notices of proposed deficiency or statutory notices of deficiency,
and the amounts of any payments made with respect thereto. Each return
filed by the Company for which the federal income tax audit has not
been completed accurately reflects in all material respects the amount
of liability for Taxes for the period covered by such return and makes
all disclosures required by the Code and regulations thereunder and
other applicable law. Neither the Company nor any Subsidiary has agreed
to and or is required to make any adjustments under Section 481(a) of
the Code by reason of a change in accounting method or otherwise.
(g) To Seller's Knowledge, Schedule 3.20 sets forth the status
of state, local and foreign tax audits of the returns of each of the
Company, the Subsidiaries and the affiliated, combined, consolidated or
unitary group of which it is or was a member for each fiscal year for
which the statute of limitations has not expired, including the amounts
of any deficiencies or additions to tax, interest and penalties that
have been made or proposed, and the amounts of any payments made by the
Company or a Subsidiary and the affiliated, combined or unitary group
of which it is or was a member with respect thereto. Each state and
local income tax return filed by the Company or a Subsidiary and the
affiliated, combined or unitary group of which it is or was a member
for which the tax audit has not been completed accurately reflects in
all material respects the amount of its liability for Taxes for the
period covered by such return and makes all material disclosures
required by applicable law.
(h) Except as set forth in Schedule 3.20, there are no federal
tax elections under the Code that are in effect with respect to the
Company, the Subsidiaries or the affiliated, combined, consolidated or
unitary group of which the Company or any Subsidiary is or was a member
(i) for the fiscal year ended December 31, 1995, (ii) the taxable
period or portion thereof ending on the Closing Date or (iii) which
would affect any taxable period of the Company or any Subsidiary after
the Closing Date.
(i) Neither the Company nor any Subsidiary has at any time
consented under Section 341(f)(1) of the Code to have the provisions of
Section 341(f)(2) of the Code apply to any sale of its stock.
(j) Except as set forth on Schedule 3.20, neither the Company
nor any Subsidiary is a party to, nor is bound by or has any obligation
under any tax sharing, tax indemnification or similar agreement.
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(k) Neither the Company nor any Subsidiary has made any
payments, is obligated to make any payments, or is a party to any
agreement that could require it to make any payments, that are not
deductible under Section 280G or 162(m) of the Code.
(l) No asset of the Company or any of the Subsidiaries is tax
exempt use property under Section 168(h) of the Code. No portion of the
cost of any asset of the Company or any of the Subsidiaries is financed
directly or indirectly from the proceeds of any tax exempt state or
local governmental obligation described in Section 103(a) of the Code.
(m) None of the assets of the Company or any of the
Subsidiaries is property that the Company or any of the Subsidiaries is
required to treat as being owned by any other person pursuant to the
safe harbor lease provisions of former Code Section 168(f)(8). None of
the assets of the Company or any of the Subsidiaries is subject to a
lease described in Section 7701(h) of the Code or under any predecessor
provision.
(n) Neither the Company nor any of the Subsidiaries currently
has a permanent establishment in any foreign country or engages or has
previously engaged in a trade or business in any foreign country.
Except for the Seller, neither the Company nor any of the Subsidiaries
is a foreign person within the meaning of Code Section 1445.
(o) The Company and each Subsidiary has maintained such
records in respect of each transaction, event and item (including as
required to support otherwise allowable deductions and losses) as are
required under applicable Law.
(p) Neither the Company nor any Subsidiary has been a United
Stated real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii) and the Seller shall so certify in the manner
provided by applicable Treasury Regulations under Code Section 897.
(q) To Seller's Knowledge, as of the Closing Date, none of the
Company or any of the Subsidiaries is a partner in any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes.
(r) (i) The basis of the Company and the Subsidiaries in their
assets as of December 31, 1994 for federal income tax purposes is not
less than 85% of the amounts set forth on Schedule 3.20; (ii) the
amount of the Loss Carryovers as of December 31, 1994 allocable to the
Company or any of the Subsidiaries is not less than 85% of the amounts
set forth on Schedule 3.20; and (iii) the amount of any Loss
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Carryovers as of December 31, 1994 allocable to the Company or any of
the Subsidiaries for purposes of the Alternative Minimum Tax is not
less than 85% of the amounts set forth on Schedule 3.20; provided, that
Sellers make no representation or warranty as to the utilization of any
Loss Carryovers shown on such tax returns.
3.21. Product Warranty. All products processed, distributed, shipped or
sold by the Company or any Subsidiary conform with all applicable contractual
commitments, except where a failure to conform by the Company or a Subsidiary
would not permit the other party to terminate such contract. No products
heretofore distributed, sold or delivered by the Company or a Subsidiary are now
subject to any guarantee, warranty, claim for product liability, or patent or
other indemnity, other than those set forth in Schedule 3.21. All warranties are
in conformity in all material respects with the labeling and other requirements
of applicable law.
3.22. Legal Proceedings. Except as set forth in Schedule 3.22, neither
the Company nor any Subsidiary is engaged in or a party to or, to Seller's
Knowledge, threatened with any action, suit, proceeding, complaint, charge,
hearing, investigation or arbitration or other method of settling disputes or
disagreements (other than environmental claims as to which Section 3.23
applies). As of the date hereof, neither Seller nor the Company nor any
Subsidiary has received notice of any investigation threatened by any
Governmental Entity. As of the date hereof, except as set forth in Schedule
3.22, neither the Company nor any Subsidiary is subject to any judgment, order,
writ, injunction, stipulation or decree of any court or any Governmental Entity
or any arbitrator.
3.23. Environmental Matters. Except as set forth in Schedule 3.23:
(a) Neither Seller nor the Company nor any Subsidiary has
received written notice from any Governmental Entity that the Company
or any Subsidiary is not in compliance in all material respects with
all applicable federal and state laws and regulations in effect on the
date hereof relating to pollution or the environment under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C.A. ss.ss. 9601 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C.A. ss.ss. 6901 et seq. the Clean Water Act,
33 U.S.C.A. ss.ss. 1251 et seq., the Clean Air Act, 42 U.S.C.A. ss.ss.
7401 et seq., and laws and regulations relating to emissions, spills,
leaks, discharges, releases or threatened releases of any "hazardous
substance," or "hazardous waste," as defined therein, petroleum and
petroleum products, natural gas or synthetic gas, material that is a
source, special nuclear or by-product material, as defined by the
Atomic Energy Act of 1954, 42 U.S.C.A. ss.ss. 3011 et seq., and the
regulations promulgated thereto and "hazardous chemical," as defined in
29 C.F.R. Part 1910 or otherwise relating to the manufacture,
possession, distribution, use, treatment, storage, disposal,
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transport or handling of such material (such laws and regulations being
hereinafter referred to as "Environmental Laws");
(b) All material permits and other governmental authorizations
required under Environmental Laws currently held by the Company or a
Subsidiary are identified on Schedule 3.23, and, as of the date hereof,
the Company and each Subsidiary is in compliance in all material
respects with the terms and conditions of such permits and
authorizations; and
(c) To Seller's Knowledge, Schedule 9.7 lists all of the
violations of Environmental Laws by the Company or its Subsidiaries for
which remediation could be required by a Governmental Entity.
3.24. Compliance with Law. The Company and each Subsidiary complies, in
all material respects, with all statutes, codes, ordinances, licensing
requirements, laws, rules, regulations, decrees, awards or orders applicable to
the Business to the extent necessary to carry on the Business as currently
conducted, including those relating to employment, the production, sale and
distribution of products, and control of foreign exchange, except with respect
to Benefit Plans and Environmental Laws which are covered by Sections 3.17 and
3.23, respectively.
3.25. Capital Expenditures. Each of the Company and the Subsidiaries
has outstanding commitments for capital expenditures as set forth on
Schedule 3.25.
3.26. Brokers. Except for Smith Barney Inc. ("Smith Barney") (whose
fees shall be paid by Seller), neither Seller nor the Company has retained
any broker, finder or agent or incurred any liability or obligation for any
brokerage fees, commissions or finders fees with respect to this Agreement
or the transactions contemplated hereby.
3.27. No Implied Representation. Notwithstanding anything contained in
this Article III or any other provision of this Agreement, SELLER IS NOT MAKING
ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE
EXPRESSLY GIVEN BY SELLER IN THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ANY
IMPLIED WARRANTY OR REPRESENTATION AS TO THE VALUE, CONDITION, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR SUITABILITY OF ANY OF THE ASSETS,
PROPERTIES, RIGHTS OR CLAIMS OF SELLER, THE COMPANY, ANY SUBSIDIARY OR THE
BUSINESS, OR ANY DOCUMENTS MADE AVAILABLE OR MANAGEMENT PRESENTATION TO BUYER OR
ITS REPRESENTATIVES, ALL OF WHICH ARE HEREBY DISCLAIMED.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to Seller as of the date hereof,
and as of the Closing Date, as follows:
4.1. Authority. Buyer has full right, power and authority and has taken
all corporate action, including obtaining approval and consent of its Board of
Directors, necessary to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes a valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4.2. No Conflicts. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any Lien or the acceleration of any indebtedness or other obligation
of Buyer and are not prohibited by, do not violate or conflict with any
provision of, and do not result in a default under or a breach of (a) the
Certificate of Incorporation, By-Laws or any other organizational documents of
Buyer, (b) any contract, agreement, permit, license or other instrument to which
Buyer is a party or by which it is bound, (c) any order, writ, injunction,
decree or judgment of any court or Governmental Entity, or (d) any law, rule or
regulation applicable to Buyer. No approval, authorization, consent or other
order or action of or filing with any Governmental Entity is required for the
execution and delivery of this Agreement or the consummation by Buyer of the
transactions contemplated hereby, other than the expiration of the waiting
period under the HSR Act.
4.3. Due Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
power and authority and all requisite licenses, permits and franchises to own,
lease and operate its assets and to carry on the business in which it is
engaged. Buyer is duly licensed and qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where failure to be so
licensed or qualified would have a material adverse effect upon its business or
assets.
4.4. Brokers. Buyer has not retained any broker, finder, advisor or
intermediary or incurred any liability or obligation for any brokerage
fees, commissions or finders fees with respect to this Agreement or the
transactions contemplated hereby.
4.5. Buyer's Investment Intent. Buyer is purchasing the Stock for its
own account and not with a view to, or present intention of, sale or
distribution thereof in violation of the
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Securities Act of 1933, as amended (the "1933 Act") and such shares will not be
disposed of in contravention of the 1933 Act. Buyer acknowledges that such
shares are not and have not been registered with the Securities and Exchange
Commission or any securities commission or agency of any state, and may not be
transferred or disposed of without registration under the 1933 Act and
applicable state securities laws or an exemption from such registration.
4.6. Buyer's Business Investigation. Buyer has conducted such
investigation of the Business as it has deemed necessary in order to make an
informed decision concerning the transactions contemplated hereby. As of the
date hereof, with respect to information furnished by Seller, Buyer has relied
only upon information set forth herein or in a Schedule attached hereto and has
not relied upon any other information or statement, oral or written, not
described herein or in a Schedule attached hereto, notwithstanding the delivery
or disclosure to Buyer by Seller or any representative or other information with
respect to any of the foregoing. As of the Closing, Buyer acknowledges that, to
the extent permitted on Schedule 5.5, it has been given access to and, to the
extent Buyer deemed necessary and was permitted by Seller pursuant to Schedule
5.5, has visited and examined the premises of the Business and is familiar with
the condition thereof. The Buyer does not know of any breach of any
representation or warranty set forth in Article III hereof.
4.7. Financial Capacity. As of the date hereof, Seller shall has
received from the Buyer a highly-confident letter from Donaldson, Lufkin and
Jenrette ("DLJ") relating to the U.S. $84,000,000 of financing required at
Closing, on terms and conditions acceptable to Buyer in its sole discretion.
Prior to the date hereof, Smith Barney has been given the opportunity to make
appropriate inquiry of DLJ and Buyer concerning such letter.
4.8. Disputes or Proceedings. There is no action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) pending or, to Buyer's knowledge,
threatened that challenges or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, the consummation of the
transactions contemplated thereby.
4.9. Solvency of the Company. After giving effect to the consummation
of the transactions contemplated hereby and any financing of this transaction
arranged by Buyer, the Company and the Subsidiaries will be Solvent (hereinafter
defined). For purposes of this Section 4.9 and for purposes of the condition
precedent set forth in Section 8.3, the term "Solvent" means for the Company and
the Subsidiaries (on a consolidated basis) that (i) the fair value (on a going
concern basis) of their assets exceeds the total amount of their liabilities,
including contingent liabilities, (ii) the present fair salable value of their
assets is not less than the amount that will be required to pay the probable
liability on their debts as they become absolute and matured, (iii) they are
able to realize on their assets and pay their debts and other liabilities,
contingent obligations and other commitments as they mature in the ordinary
course of business, (iv) Buyer does not intend for them to, and does not believe
that they will, incur debts or liabilities beyond their ability to pay as such
debts and liabilities
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mature, and (v) they are not engaged in a businesses or transactions for which
their property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industries in which they are
engaged. For purposes of the preceding sentence, in computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
ARTICLE V
COVENANTS OF SELLER
Seller hereby agrees to keep, perform and fully discharge the following
covenants and agreements.
5.1. HSR Act Compliance. Seller shall file or cause to be filed with
the Federal Trade Commission and the United States Department of Justice within
five (5) days after the date of this Agreement, the notifications required to be
filed by its "ultimate parent" under the HSR Act with respect to the
transactions contemplated herein. Seller will use its best efforts to, or to
cause its affiliates to, make such filings promptly, to respond to any requests
for additional information made by either of such agencies, to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date,
and to resist vigorously any assertion that the transactions contemplated hereby
constitute a violation of the antitrust laws, all to the end of expediting
consummation of the transactions contemplated hereby.
5.2. Liabilities and Other Obligations. Seller agrees that all
Excluded Claims shall be Seller's sole obligation and responsibility and
that Buyer is not assuming any such liability or obligation and Buyer shall
have no responsibility therefor.
5.3. Interim Financial Information. Seller will supply Buyer with
unaudited consolidated monthly financial statements of the Company and its
Subsidiaries within ten (10) days of the end of each month ending between March
31, 1996, and the Closing Date certified by its President and its Chief
Financial Officer as having been prepared in accordance with the procedures
employed by the Company in preparing prior monthly financial statements. All
such financial statements shall be accompanied by a certificate of the Company's
President and its Chief Financial Officer certifying that such financial
statements were prepared on a basis consistent with the unaudited consolidated
financial statements for the preceding months and such unaudited statements
include all adjustments (all of which were normal recurring adjustments)
necessary to fairly present in all material respects the financial position,
results of operations and changes in financial position at and for such period.
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5.4. Interim Conduct of Business. From the date hereof until the
Closing, unless approved by Buyer in writing, Seller shall cause the Company and
each Subsidiary to operate the Business consistent with past practice and in the
ordinary course of business and, except as permitted under Section 5.7 hereof
will not permit the Company or any Subsidiary to:
(a) merge or consolidate with or agree to merge or consolidate
with, nor purchase or agree to purchase all or substantially all of the
assets of, nor sell or agree to sell all or substantially all of the
assets of the Company or any Subsidiary, nor otherwise acquire, any
corporation, partnership, or other business organization or division
thereof;
(b) amend the Certificate of Incorporation or By-Laws of any
such company;
(c) make any changes in its accounting methods, principles or
practices;
(d) sell, consume or otherwise dispose of any assets, except
in the ordinary course of business consistent with past practices;
(e) authorize for issuance, issue, sell or deliver any
additional shares of the Company's capital stock of any class or any
securities or obligations convertible into shares of its capital stock
or issue or grant any option, warrant or other right to purchase any
shares of its capital stock of any class;
(f) declare any dividend on, or make any distribution with
respect to, the capital stock of any such company;
(g) modify, amend or terminate any Benefit Plans, except as
under applicable law, or Material Contracts;
(h) agree, undertake or commit to make any capital
expenditure in required excess of U.S. $200,000 in the aggregate,
except as set forth in Schedule 3.25;
(i) agree, undertake, or commit to carry out any
investigation, assessment, remediation, or response action regarding
the presence or possible presence of any Hazardous Materials, unless
the results are communicated to the Buyer in writing;
(j) take any of the actions specified in (a) through (i) or
cause the Company to incur any liabilities for borrowed money, other
than liabilities incurred in the ordinary course of business consistent
with past practices; or
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(k) authorize or enter into an agreement to do any of the
foregoing.
5.5. Access. Seller shall, and shall cause the Company to, give Buyer
and its representatives reasonable access to all properties, facilities, senior
management, books, contracts, commitments and records as provided on Schedule
5.5. During the periods provided on Schedule 5.5, Seller, the Company and each
Subsidiary shall furnish Buyer with all financial and operating data and other
information as to the Company, the Business and their respective assets,
properties, rights and claims, as Buyer from time to time may reasonably request
in furtherance of the due diligence process. Except as provided on Schedule 5.5
in connection with field due diligence, Buyer agrees not to contact any vendors,
distributors or customers or nonofficer employees of the Company or Seller
without the prior written consent of Seller, such consent to not be unreasonably
withheld. Seller shall consult with Buyer and keep Buyer reasonably apprised of
material developments relating to the Business.
5.6. Seller's Efforts. Seller shall use its best efforts to consummate
the transactions contemplated by this Agreement and shall not take any other
action inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transactions contemplated hereby except as
permitted in Section 5.7. From the date hereof through the Closing Date, Seller
shall use its best efforts to fulfill the conditions precedent to its
obligations hereunder and to assist Buyer in completing the Systems Conversion.
5.7. No Shop. Seller agrees not to actively solicit, initiate or
encourage the submission of inquiries, proposals or offers from any other person
relating to a purchase of either the assets or capital stock of the Company or
to respond to any unsolicited inquiries; provided, however, that Seller shall be
permitted to solicit proposals, inquiries or offers or to respond to any
unsolicited inquiries in the event (a) the transactions contemplated by this
Agreement have not closed prior to May 15, 1996, (b) the Buyer gives written
notice to the Seller (which notice shall be given by Buyer immediately upon its
knowledge thereof) that a problem has surfaced as a result of the Buyer's due
diligence which would reasonably be expected to result in a failure to close the
transactions contemplated hereby and such problem has not been resolved within
two Business Days thereof or (c) the Buyer gives written notice to the Seller
(which notice shall be given by Buyer immediately upon its knowledge thereof)
that a problem has occurred which would reasonably be expected to prohibit the
Buyer from obtaining financing for the transactions contemplated by this
Agreement.
5.8. Covenant Not To Compete. In exchange for an aggregate payment to
Seller of U.S. $1,200,000 payable in three (3) equal annual installments of
U.S. $400,000, commencing on the Closing Date, Seller agrees to the
restrictions contained in this Section 5.8.
(a) In order that Buyer and its affiliates may enjoy the
benefits of the goodwill of the Company and the Subsidiaries and the
confidential information thereof, subject to Section 5.8(b), Seller
agrees that, for a period of five (5) years from the Closing
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Date in the geographical markets in which the Business is currently
conducted, neither Seller nor any affiliate of Seller will, directly or
indirectly, alone or in association with any other person, firm,
corporation or other business organization, engage in activities
competitive with the Business.
(b) Notwithstanding Section 5.8(a), (i) Seller and its
affiliates may own up to 5% of a class of equity securities of a
publicly held company engaged in the Business and (ii) Seller and its
affiliates may acquire an interest in the securities or assets of an
entity engaged in the Business, if such acquisition is part of a larger
acquisition and either the assets engaged in the Business constitute no
more than 20% of the total assets acquired (by means of stock or asset
acquisition) or the revenues from such Business, for the last fiscal
year preceding the acquisition, constitute no more than 20% of the
total revenues from all assets and/or entities acquired and if Seller
disposes of the assets related to the Business which are acquired in
such acquisition within twelve (12) months after the closing of such
acquisition.
(c) For purposes of this Section 5.8, the parties acknowledge
that the term "Business" shall not include (i) the marketing and
selling of propane on a wholesale basis in the State of New York,
including the transporting of liquid petroleum products and by-products
with respect thereto, (ii) Seller's operations at the Marysville,
Michigan Underground Storage Terminal and (iii) the purchase, sale or
exchange of propane at major supply points and pipelines in the United
States, including, but not limited to, the Mt. Belvieu, Conway and
Cochin pipeline and storage systems.
(d) As a separate and independent covenant, Seller agrees
that, for a period of five (5) years from the Closing Date, neither it
nor any of its affiliates will, directly or indirectly, for the purpose
of engaging in the Business, call upon, solicit, advise or otherwise
do, or attempt to do, business with any customer of the Company or any
Subsidiary as of the Closing Date to take away or interfere with the
Business (except that any business or entity of the type described in
(b)(ii) above may continue to compete with the Business to the extent
set forth in (b)(ii) above) or induce or solicit any employees of the
Company, any Subsidiary, or Buyer to leave the employ of the Company,
any Subsidiary or Buyer.
(e) The period of time during which Seller and its affiliates
are prohibited from engaging in certain activities pursuant to the
terms of this Section 5.8 shall be extended by the length of time, if
any, during which Seller or any of its affiliates is in breach of the
terms of this Section 5.8.
(f) Seller acknowledges that the failure of Seller or any of
its affiliates to comply with the provisions of this Section 5.8 will
result in irreparable and continuing damage to Buyer and its affiliates
for which there will be no adequate remedy at law and that, in the
event of a failure of Seller or any of its affiliates so to comply,
Buyer
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and its successors and permitted assigns shall be entitled to
injunctive relief and to such other and further relief as may be proper
and necessary to ensure compliance with the provisions of this Section
5.8.
5.9. Certificate as to Book Equity. Until the thirty-fifth month after
the Closing, within ten (10) days after the end of any calendar month in which
the Seller's book equity falls below $100,000,000 Canadian, Seller shall cause
its Chief Financial Officer to execute and deliver a certificate attesting as to
Seller's book equity as evidenced by Seller's unaudited financial statements.
ARTICLE VI
COVENANTS OF BUYER
Buyer hereby agrees to keep, perform and fully discharge the following
covenants and agreements.
6.1. HSR Act Compliance. Buyer shall file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice within five
(5) days of the date after this Agreement, the notifications required to be
filed by its respective "ultimate parent" under the HSR Act with respect to the
transactions contemplated herein. Buyer will use its best efforts to, or to
cause its affiliates to, make such filings promptly, to respond to any requests
for additional information made by either of such agencies, to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date,
and to resist vigorously any assertion that the transactions contemplated hereby
constitute a violation of the antitrust laws, all to the end of expediting
consummation of the transactions contemplated hereby.
6.2. Records and Documents. For ten (10) years following the Closing
Date, Buyer shall grant to Seller and its representatives, at Seller's written
request, access to and the right to make copies of those Company records and
documents (at Seller's expense) as may be reasonably necessary or useful in
connection with Seller's business and affairs after the Closing, including the
preparation of Tax returns. Buyer shall notify Seller within five (5) days after
receiving notice of any Tax audits of the Company or any Subsidiary for any
period beginning prior to the Closing Date. Buyer shall permit Seller to control
such audits and any related settlements with respect to periods beginning on or
prior to the Closing Date; provided, that Seller is obligated to indemnify Buyer
under Section 9.6. Buyer will cause the Company to promptly forward to Seller
all information and materials regarding Excluded Assets or Excluded Claims,
including endorsement of any checks or instruments related thereto.
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6.3. Buyer's Efforts. Buyer shall use its best efforts to consummate
the transactions contemplated by this Agreement and shall not take any other
action inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transactions contemplated hereby. Buyer shall also
use its best efforts to take or cause to be taken all actions necessary, proper
or advisable to obtain any consent, waiver, approval or authorization relating
to the HSR Act or similar law that is required for the consummation of the
transactions contemplated hereby. From the date hereof through the Closing Date,
Buyer shall use its best efforts to fulfill the conditions to its obligations
hereunder and to cause its representations and warranties to remain true and
correct in all material respects as of the Closing Date. Buyer agrees to
maintain strict confidentiality of all information furnished in connection with
the transactions contemplated hereby, all in accordance with the terms and
conditions of the Confidentiality Agreement, dated August 22, 1995 (the
"Confidentiality Agreement"). In the event that the transactions contemplated
hereby are not consummated, Buyer shall return to Seller all written information
furnished to it (and an executive officer shall certify in writing as to such
return) and will not thereafter use such information for any purpose whatsoever
or permit any such confidential information to be made publicly available.
6.4. WARN Act Compliance. Buyer shall cause the Company to comply with
the WARN Act and be solely responsible for furnishing the required notice of any
"plant closing" or "mass layoff" which may occur after Closing, as applicable;
provided, however, that if prior to the Closing, Buyer desires to effect a
"plant closing" or "mass layoff" within sixty (60) days after the Closing Date
and so notifies Seller and the Company in writing, Buyer may empower the
Company, as its agent, to furnish the required notice, as directed by Buyer,
with the further understanding that Buyer shall indemnify and hold Seller
harmless for any inadequacy of such notice and for any liabilities under the
WARN Act.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Each and all of the obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing of the following conditions:
7.1. Accuracy of Warranties and Performance of Covenants. The
representations and warranties of Seller contained herein shall be true in all
material respects on and (except where they speak of a specific date) as of the
Closing Date, except for failures to be true and correct resulting from
omissions or actions taken with Buyer's written consent. Seller shall have
performed in all material respects all of the obligations and complied with each
and all of the covenants, agreements and conditions required to be performed or
complied with on or prior to the Closing.
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7.2. No Pending Action. The waiting period under the HSR Act shall have
expired or been terminated, and no Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and restrains, enjoins or otherwise
prohibits consummation of the transactions contemplated in this Agreement.
7.3. Certain Indebtedness. Seller shall have caused all indebtedness
of the Company and the Subsidiaries to or from Seller to be satisfied in
full and shall have delivered to Buyer evidence of satisfaction of such
obligations.
7.4. No Adverse Change. There shall have been no material adverse
change since January 1, 1996, in the business, customer base,
financial condition, earnings or operations of the Company or any
Subsidiary.
7.5. No Proceeding or Litigation. No action, suit or proceedings before
any court, arbitrator or Governmental Authority shall have been commenced or
threatened, and no investigation by any Governmental Authority shall have been
commenced or threatened against Seller or Buyer or any of their respective
principals, officers or directors seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
7.6. No Debt. Neither the Company nor any Subsidiary shall have any
liability or obligation at Closing in connection with any (i) capitalized leases
or (ii) borrowed money, except as disclosed on Schedule 3.19.
7.7. Financing. The Buyer shall have borrowed funds sufficient to make
payment of the Purchase Price and any other amounts to be paid by Buyer
hereunder.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Each and all of the obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to fulfillment or waiver
prior to or at the Closing of the following conditions:
8.1. Accuracy of Warranties and Performance of Covenants. The
representations and warranties of Buyer contained herein shall be true in all
material respects as of the Closing Date. Buyer shall have performed in all
material respects all of the obligations and
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complied with each and all of the covenants, agreements and conditions required
to be performed or complied with on or prior to the Closing.
8.2. No Pending Action. The waiting period under the HSR Act shall have
expired or been terminated, and no Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and restrains, enjoins or otherwise
prohibits consummation of the transactions contemplated in this Agreement.
8.3. Solvency Certificate. Simultaneously with the Closing, Buyer shall
have caused to be prepared and delivered to Seller a certificate, duly executed
by an appropriate officer of Buyer and in form and substance reasonably
satisfactory to Seller, to the effect that based upon Seller's representations
and warranties contained in Article III, and after giving effect to the
transactions contemplated by this Agreement and the financing arranged by Buyer,
the Company and the Subsidiaries (on a consolidated basis) are Solvent.
8.4. Financing. The Buyer will have sufficient funds available to make
payment of the Purchase Price and any other amounts to be paid by Buyer
hereunder.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1. Survival of Representations and Warranties. The representations
and warranties of Seller and Buyer included in this Agreement shall survive for
a period of eighteen (18) months after the Closing Date and shall thereafter
expire, except with respect to breaches and violations theretofore specified in
reasonable written detail to Seller by Buyer or to Buyer by Seller, as the case
may be prior to the eighteenth month after the Closing Date and except for the
representations and warranties contained in Sections 3.17 to the extent relating
to Benefit Plans covered by ERISA and 3.20 relating to Taxes which shall survive
for the applicable statute of limitations (and any extension or waiver thereof)
for any tax return covering any tax year ending on or before December 31, 1996
and the representations in Sections 3.1, 3.4, 3.5, 4.1, 4.4 and 4.5
(collectively, the "Excluded Representations"), which shall survive from the
Closing. Notwithstanding anything to the contrary contained herein, all claims
for damages based on intentional or fraudulent actions, or intentional
misrepresentations shall never expire.
9.2. Indemnification of Buyer. Subject to the terms and conditions of
this Article IX and except with respect to Tax matters which are covered by
Section 9.6 hereof and environmental matters which are covered by Section 9.7
hereof, Seller agrees to indemnify and hold harmless Buyer and its affiliates,
and, if applicable, their respective
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directors, officers, shareholders, attorneys, accountants, agents, employees and
financial advisors and their respective successors and permitted assigns against
and in respect of any and all claims, demands, losses, damages, costs and
reasonable expenses, including reasonable legal fees and expenses, other than
any indirect or consequential damages ("Damages"), resulting from or arising out
of (i) any failure of Seller to perform or otherwise fulfill or comply with any
provision of this Agreement and (ii) any breach or violation of any
representation or warranty of Seller hereunder or in any certification or
instrument delivered to Buyer in connection with Closing for the period such
representation and warranty survives hereunder.
9.3. Indemnification of Seller. Subject to the terms and conditions of
this Article IX, Buyer agrees to indemnify and hold harmless Seller and its
affiliates, and, if applicable, their respective directors, officers,
shareholders, attorneys, accountants, agents, employees and financial advisors
and their respective successors and permitted assigns against and in respect of
any and all Damages resulting or arising from (i) any failure by Buyer to
perform or otherwise fulfill or comply with any provision of this Agreement and
(ii) any breach or violation of any representation or warranty of Buyer
hereunder or in any or certificate or instrument delivered to Seller in
connection with Closing for the period such representation and warranty survives
hereunder.
9.4. Claims. Any claim for indemnity under Sections 9.2, 9.3, 9.6, 9.7
or 9.8 shall be made by written notice from the party seeking to be indemnified
(the "Indemnified Party") to the party from which indemnification is sought (the
"Indemnifying Party") specifying in reasonable detail the basis of the claim. In
order to make a claim for indemnification hereunder, the Indemnified Party shall
not settle or compromise any claim which would be covered by indemnification
pursuant to Sections 9.6, 9.7 or 9.8 or any other claim less than U.S. $2,500
without complying with the provisions set forth in this Section 9.4, except as
required under applicable law. When an Indemnified Party seeking indemnification
receives notice of any claims made by third parties ("Third Party Claims") which
is to be the basis for a claim for indemnification hereunder, the Indemnified
Party shall give written notice within a reasonable period thereof to the
Indemnifying Party reasonably indicating the nature of such claims and the basis
thereof. Upon notice from the Indemnified Party, the Indemnifying Party may, but
shall not be required to, assume the defense of any such Third Party Claim,
including its compromise or settlement, and the Indemnifying Party shall pay all
reasonable costs and expenses thereof and shall be fully responsible for the
outcome thereof; provided, however, that (i) the Indemnifying Party shall not
settle or compromise any such claim without the Indemnified Party's prior
written consent (which consent shall not be unreasonably withheld) and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any claim which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to Indemnified Party, a
release from all liability in respect to such claim. In connection with any
claim involving any remedy other than monetary damages, the Indemnified Party
shall have the right to be kept informed and be consulted in connection with the
resolution of such
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claim. The Indemnifying Party shall give notice to the Indemnified Party as to
its intention to assume the defense of any such Third Party Claim within thirty
(30) days after the date of receipt of the Indemnified Party's notice in respect
of such Third Party Claim. If an Indemnifying Party does not, within thirty (30)
days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its assumption of the defense of the Third Party Claim, the
Indemnifying Party shall be deemed to have waived its rights to control the
defense thereof. If the Indemnified Party assumes the defense of any Third Party
Claim because of the failure of the Indemnifying Party to do so in accordance
with this Section 9.4, the Indemnifying Party shall pay all reasonable costs and
expenses of such defense and shall be fully responsible for the outcome thereof;
provided, however, that the Indemnifying Party shall only be responsible for
reasonable fees and expenses of one counsel (in addition to local counsel) for
the Indemnified Parties. The Indemnifying Party shall have no liability with
respect to any compromise or settlement thereof effected without its prior
written consent, which consent shall not be unreasonably withheld.
9.5. Limitation of Liabilities. Each party to this Agreement shall have
as sole and exclusive remedy resulting from the breach of any representation or
warranty made by the other party to this Agreement, a claim for indemnity under
Sections 9.2 or 9.3 of this Agreement; provided, however, that the foregoing
shall not limit any party's right to seek specific performance or injunctive
relief. Any claims by any Indemnified Party for breach of any representation or
warranty hereunder shall be subject to the following limitations and
adjustments:
(a) the provisions for indemnity shall be effective only when
the aggregate amount of all Damages for which Seller is liable under
Section 9.2(ii) hereof (subject to reduction for any amounts paid by
Seller under Section 9.3(ii) hereof) exceeds U.S. $1,000,000 in which
case Seller shall be liable for all such Damages up to U.S.
$25,000,000. It is hereby expressly agreed that Buyer shall be
responsible for all amounts in excess of U.S. $25,000,000; provided,
however, that no individual occurrence resulting in damage in an amount
less than U.S. $2,500 shall be eligible for indemnification payments
hereunder or included in the $1,000,000 threshold; provided, further
that Buyer shall be entitled to indemnification only in excess of the
U.S.
$1,000,000 threshold;
(b) the amount of any claim by Buyer for indemnification under
Section 9.2(ii) shall be reduced by the amount of any reserves provided
for in the Closing Statement of Net Working Capital; provided that the
claim relates to the category or class for which the reserve was
established;
(c) any payments made pursuant to Article IX shall be
treated as an adjustment to the Purchase Price; and
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(d) the amount of any Damages claimed by any Indemnified Party
hereunder shall be reduced to the extent of any insurance proceeds,
indemnification or other reimbursement or payment recoverable by and
paid to the Indemnified Party (or to the extent that the Indemnified
Party reasonably expects to receive insurance proceeds) in connection
with such Damages; provided, however, that the foregoing reduction
shall not be applied, if to do so would excuse any insurer from any
obligation to cover any loss.
Seller shall be subrogated to any and all defenses, claims or setoffs which
Buyer or the Company asserted or could have asserted with respect to any Third
Party Claim. Buyer shall, and shall cause the Company to, execute and deliver to
Seller such documents as may be necessary or appropriate to establish by way of
subrogation the ability and right of Seller to assert such defenses, claims or
setoffs. IN NO EVENT SHALL SELLER BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES, nor shall there be any double counting of any item of Damage.
9.6. Indemnification for Taxes.
(a) Seller shall indemnify Buyer against and agrees to pay all
Taxes imposed and all reasonable costs and expenses, including, without
limitation, litigation costs and attorneys' and accountants' fees and
expenses incurred (all herein referred to as "Tax Losses") as a result
of:
(i) Any liability for or any claim, notice of
deficiency or assessment by any Governmental Entity for any
Taxes that are imposed on or incurred by the Company or any
Subsidiary (for its own Taxes or its liability, if any, for
the Taxes of others) for the taxable period ending on or
before the Closing Date, but only to the extent not reserved
against on the Final Closing Statement of Net Working Capital;
(ii) Any Taxes imposed on or incurred by the Company
or any Subsidiary (for its own Taxes or its liability, if any,
for the Taxes of others) for any taxable period which begins
on or before the Closing Date and ends after the Closing Date,
but only to the extent attributable to operations or
transactions occurring on or prior to the Closing and not
reserved against on the Final Statement of Net Working
Capital; and
(iii) Any misrepresentation or breach of any warranty
or obligation of Seller set forth in Section 3.20 or this
Article IX.
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(b) Buyer hereby indemnifies Seller against all Taxes
resulting from any liability for or any claim, notice of deficiency or
assessment by any Governmental Entity for any Taxes imposed on Seller
that are attributable to the operations or transactions of the Company
or any Subsidiary or transactions occurring after the Closing Date.
(c) Except as otherwise provided in this Article IX, any
amount to which a party is entitled under this Article IX shall be
promptly paid to such party by the party obligated to make such payment
following written notice to the party so obligated that the Taxes to
which such amount relates have been paid or incurred and that provides
details supporting the calculation of such amount.
(d) The indemnification obligations of Seller and Buyer under
this Section 9.6 shall not be subject to the limitations set forth in
Section 9.5.
9.7. Indemnification for Environmental Matters.
(a) Seller shall indemnify Buyer against any and all claims,
demands, losses, damages, costs and reasonable expenses, including
reasonable legal fees and expenses, other than any indirect or
consequential damages, resulting from (i) any failure to comply with
any Environmental Laws for which remediation is required by any
Governmental Entity and (ii) any of the matters set forth in Schedule
9.7 (all herein referred to as "Environmental Claims"); provided,
however, that Seller shall only be obligated to correct or remediate
any Environmental Claim to the extent such correction or remediation is
required by any Governmental Entity; provided, further that Seller's
indemnification obligation pursuant to clause (i) hereof shall only
survive for a period of three years after Closing; provided, further,
Seller's indemnification obligations shall continue to survive after
such three year period until remediation efforts have been completed to
the satisfaction of such Governmental Entity in connection with any
remediation required by any Governmental Entity prior to the end of the
three year period. Notwithstanding anything contained herein, Seller
shall not be responsible for any remediation of Environmental Claims
unless Buyer shall provide Seller with access to the facilities and
sites necessary to make such remediation.
(b) Buyer hereby indemnifies Seller against all violations of
Environmental Laws that are attributable to operations of the Business
after the Closing Date.
(c) Except as otherwise provided in this Article IX, any
amount to which a party is entitled under this Article IX shall be
promptly paid to such party by the party obligated to make such payment
following written notice to the party so obligated that the
Environmental Claim to which such amount relates has been paid or
incurred and that provides details supporting the calculation of such
amount.
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(d) The indemnification obligations of Seller and Buyer under
this Section 9.7 shall not be subject to the limitations set forth in
Section 9.5.
9.8. Insurable Claims.
(a) From and after the Closing Date, the Seller shall
indemnify Buyer against any and all claims, demands, losses, damages,
costs and reasonable expenses, other than any indirect or consequential
damages, resulting from incidents of a type which are customarily
covered by vehicular, product liability or comprehensive general
liability insurance (the "Insurable Claims") to the extent the incident
giving rise to such Insurable Claims occurred on or prior to the
Closing. Any Insurable Claims arising from an incident occurring after
the Closing shall be the responsibility of the Buyer and Buyer hereby
indemnifies Seller against such Insurable Claims. Except for
indemnification under this Section 9.8, Buyer shall not have any other
remedy against Seller hereunder for claims constituting Insurable
Claims.
(b) Except as otherwise provided in this Article IX, any
amount to which a party is entitled under this Article 9.8 shall be
promptly paid to such party by the party obligated to make such payment
following written notice to the obligated party presenting in
reasonable detail a proof of claim. The party entitled to receive
payment or indemnification shall transfer and assign all of its rights
with respect to such Insurable Claim to the obligated party and its
insurer, who shall be subordinated to all such rights. The party
entitled to receive payments shall cooperate fully with the obligated
party in all matters affecting any Insurable Claim.
(c) The indemnification obligations of Seller and Buyer under
this Section 9.8 shall not be subject to the limitations set forth in
Section 9.5.
ARTICLE X
TERMINATION BY THE PARTIES
10.1. Events of Termination. Without prejudice to other remedies which may
be available to the parties by law or under this Agreement, this Agreement may
be terminated and the purchase and sale of the Stock contemplated herein may be
abandoned:
(a) by mutual written consent of the parties hereto;
(b) at the election of Seller, if any one or more of the
conditions to the obligations of Seller to close has not been fulfilled
as of the later of June 30, 1996 or five (5) business days after the
expiration or termination of the applicable waiting periods (including
any extensions thereof) under the HSR Act;
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(c) at the election of Buyer, if any one or more of the
conditions to the obligations of Buyer to close has not been fulfilled
as of the later of June 30, 1996 or five (5) business days after the
expiration or termination of the applicable waiting periods (including
any extensions thereof) under the HSR Act.
10.2. Action Upon Termination. In the event of a termination of this
Agreement pursuant to this Article X, the party so terminating shall give
written notice thereof to the other and the transactions contemplated by this
Agreement shall be terminated without further action by any party. Upon
termination of this Agreement:
(a) Buyer shall return to Seller all documents and copies and
other material received from Seller relating to the transactions
contemplated hereby, the Company or the Business, whether obtained
before or after the execution hereof; and
(b) All confidential information received by Buyer shall be
treated in accordance with the Confidentiality Agreement, which shall
remain in full force and effect notwithstanding the termination of this
Agreement.
10.3. Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are abandoned, this Agreement shall become null
and void and of no further force and effect, except for this Article X, Article
XI and the obligation of Buyer to keep confidential certain information
concerning the Company and the Business. Nothing in this Article X shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by another party of its obligations hereunder.
ARTICLE XI
GENERAL PROVISIONS
11.1. Amendments and Waiver. No amendment, waiver or consent with
respect to any provision of this Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties hereto, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. The failure of any party
at any time or times to require performance of any provisions hereof shall in no
manner affect that party's right at a later time to enforce the same. No waiver
by any party of the breach of any term or covenant contained in this Agreement
in any one or more instances shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
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11.2. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
(i) If to Buyer:
Ferrellgas, Inc.
One Liberty Plaza
Liberty, Missouri 64068
United States of America
Fax: 816-792-7985
Attention: Danley K. Sheldon
with a copy to:
Bryan Cave LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105
United States of America
Fax: 816-391-7600
Attention: Kendrick T. Wallace, Esq.
(ii) If to Seller:
Superior Propane Inc.
75 Tiverton Court
Unionville, Ontario L3R9S3
Canada
Fax: 905-940-7611
Attention: President and CEO
with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
United States of America
Fax: (312) 984-3651
Attention: Wendell H. Adair, Jr., &
Robert A. Schreck, Jr., P.C.
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Any party may change its address for receiving notice by written notice given to
the others named above.
11.3. Confidentiality. All information given by any party hereto to any
other party shall be considered confidential and shall be used only for the
purposes intended. The provisions of the Confidentiality Agreement are
incorporated herein by reference and shall continue to apply for the benefit of
Seller, the Company and the Subsidiaries as if entirely set forth herein, unless
and until the Closing occurs. The provisions of this Section 11.3 and of the
confidentiality agreement referenced in the preceding sentence shall remain in
force and effect notwithstanding any termination of this Agreement under Article
X hereof.
11.4. No Public Announcement. Neither Buyer or any of its affiliates
shall make any public announcement or disclosure concerning the transactions
contemplated by this Agreement without the prior written approval of the other
party, except as required by law or as permitted by the next succeeding
sentences. If any party or any of its parent companies determine upon advice of
counsel that a public announcement or disclosure is required by applicable
securities laws or regulations or stock exchange regulations, such party may
make the announcement or disclosure provided it first consults with the other
party or parties hereto so that the parties may coordinate concurrent public
announcements and/or other disclosures and review the proposed text of such
announcement. In addition, the parties shall jointly prepare press releases
disclosing the sale of the Company to Buyer, for release immediately upon
executing this Agreement and immediately after the Closing.
11.5. Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby. Any sales, transfer or other taxes (other
than income taxes) or fees applicable to the conveyance and transfer from Seller
to Buyer of the Stock shall be borne by Buyer. The provisions of this Section
11.5 shall survive any termination of this Agreement.
11.6. Seller's Knowledge. "Knowledge" means, with respect to Seller and the
Company, the actual knowledge of D.J. Edwards, T.A. Henry, D. J. Austin and D.M.
Carleton after making due inquiry and exercising due diligence with respect
thereto, including making inquiry of all of their direct reports and other
officers having management responsibilities relevant to the subject matter,
including the Senior Market Manager.
11.7. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties named herein and their respective successors and
assigns; provided, however, that neither party shall assign any rights or
delegate any of its obligation created under this Agreement prior to Closing
without the prior written consent of the other party. This Agreement does not
create any rights, claims or benefits inuring to any person that is not a party
hereto nor create or establish any third-party beneficiary hereto.
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11.8. Entire Transaction. This Agreement and the documents referred to
herein contain the entire understanding between the parties with respect to the
transactions contemplated hereby and supersedes all other agreements,
understandings and undertakings among the parties on the subject matter hereof.
All Schedules hereto are hereby incorporated by reference and made a part of
this Agreement.
11.9. Applicable Law; Severability. This Agreement shall be governed by
and construed in accordance with the internal substantive laws of the state of
Illinois applicable to Agreements made and to be performed entirely within such
state. In the event that any provision of this Agreement shall be held to be
invalid or unenforceable by any court of competent jurisdiction, such holding
shall in no way effect, invalidate or render unenforceable any other provision
hereof.
11.10. Good Faith Negotiation/Arbitration. Except as otherwise
specifically provided in Section 2.2, Buyer and Seller will attempt to resolve
any dispute arising out of or relating to this Agreement promptly by good faith
negotiation between senior executives of the parties who will have authority to
settle the dispute. The senior executives for the parties for this purpose are
set forth below except as otherwise designated in writing:
Buyer Seller
Mr. Danley K. Sheldon, Mr. Donald Edwards,
Senior Vice President President and CEO
Any dispute arising out of or relating to this Agreement that cannot be settled
by good faith negotiation between Buyer and Seller within thirty (30) days of
the delivery of a notice of dispute specifying in reasonable detail the nature
and extent of the dispute will be submitted to J-A-M-S/ENDISPUTE for final and
binding arbitration. Such arbitration shall be conducted by an individual with
specific expertise in the propane industry and pursuant to J- A-M-S/ENDISPUTE's
Arbitration Rules and the United States Arbitration Act, 9 U.S.C.
ss.1-16.
Neither Buyer nor Seller shall bring a civil action seeking enforcement
or otherwise founded on this Agreement, except either party may seek injunctive
relief to preserve the status quo pending the completion of arbitration under
this Agreement. Any demand for arbitration seeking enforcement of or otherwise
founded upon this Agreement must be commenced within the survival period
applicable to the underlying claim.
11.11. Headings. The headings in this Agreement are for reference only and
shall not affect the interpretation of this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by a duly authorized officer all as of the date first
written above.
SELLER: BUYER:
SUPERIOR PROPANE INC. FERRELLGAS, INC.
By: /s/ Donald J. Edwards By: /s/ Danley K. Sheldon
Name: Donald J. Edwards Name: Danley K. Sheldon
Title: President and Title: Senior Vice President and
Chief Executive Officer Chief Financial Officer
By: /s/ Tim Henry
Name: Tim Henry
Title: Chief Financial Officer
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FIRST AMENDMENT
TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
FERRELLGAS, L.P.
This FIRST AMENDMENT ("Amendment") to the Agreement of Limited
Partnership dated as of July 5, 1994 (the "Partnership Agreement") of
Ferrellgas, L.P., a Delaware limited partnership (the "Partnership"), is made
and entered into as of April ___, 1996, by and between Ferrellgas Partners,
L.P., a Delaware limited partnership and the sole limited partner of the
Partnership (the "Limited Partner" ) and Ferrellgas, Inc., a Delaware
corporation and the sole general partner of the Partnership and the Limited
Partner (the "General Partner" and, together with the Limited Partner, the
"Partners").
Premises
A. Article 10 of the Partnership Agreement prohibits
the "pledge, encumbrance or hypothecation" of a Partner's
Partnership Interest.
B. Pursuant to the MLP Agreement, the General Partner
of the Limited Partner is authorized, as described therein, to
pledge the Limited Partner's Partnership Interest in the
Partnership.
C. In accordance with the Partnership Agreement, the
Partners wish to amend Article 10 thereof to conform such Article
10 to the provisions of the MLP Agreement.
Agreements
In consideration of the premises, the Partners agree as
follows:
1. Definitions. All capitalized terms used herein
which are not otherwise defined herein shall have the meanings
given to such terms in the Partnership Agreement, except to the
extent that any such term is expressly amended herein.
2. Pledge of Partnership Interest. The definition of
the term "Transfer" in Section 10.1(a) of the Partnership Agreement
is hereby amended by changing the period at the end of such Section
to a semicolon and adding the following clause:
"provided, however, that the term "Transfer" shall not include the
pledge, encumbrance or hypothecation by a Limited Partner of its
Partnership Interest."
3. Transfer of Limited Partner's Partnership Interest.
Section 10.3 of the Partnership Agreement is hereby amended by
deleting the second sentence of such Section in its entirety and
substituting in place thereof the following sentence:
KC01 211561.4
<PAGE>
"A Limited Partner may not transfer all or any part of its Partnership
Interest or withdraw from the Partnership except for (i) a transfer
described in the immediately preceding sentence, (ii) 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, (iii) the forced sale or other
transfer of a Limited Partner's Partnership Interest pursuant to the
foreclosure of, or other realization upon, any lien resulting from the
pledge, encumbrance or hypothecation of such Partnership Interest, or
(iv) any transfer of a Limited Partner's Partnership Interest by a
Person acquiring such Partnership Interest as a result of a sale or
other transfer described in the immediately preceding clause (iii), or
any transfer by a transferee of any such Person."
4. Admission of a Substituted Limited Partner. The
first sentence in Section 11.3 of the Partnership Agreement is
hereby amended by changing the period at the end of such Section to
a semicolon and adding the following clause:
"provided, however, that this clause (b) shall not be applicable in the
case of the admission as a Limited Partner of a Person acquiring a
Limited Partner's Partnership Interest as a result of a transfer
described in clauses (iii) or (iv) of the second sentence of Section
10.3."
5. Withdrawal of the Limited Partner. Section 12.5 of
the Partnership Agreement is hereby amended by deleting such
Section in its entirety and substituting in place thereof the
following Section 12.5:
"12.5 Withdrawal of a Limited Partner. A Limited Partner shall not have
the right to withdraw from the Partnership without the prior consent of
the General Partner, which may be granted or withheld in its sole
discretion, provided, however, that immediately following a transfer of
a Limited Partner's Partnership Interest permitted under Section 11.3,
the transferring Limited Partner shall cease to be a Limited Partner
with respect to the Partnership Interest so transferred."
6. Ratification of Partnership Agreement. As supplemented and
amended by this Amendment, the Partnership Agreement is in all respects ratified
and confirmed and the Partnership Agreement, as supplemented and amended by this
Amendment, shall be read, taken and construed as one and the same instrument.
All references in the Partnership Agreement to the term "Partnership Agreement"
are hereby amended to constitute a reference to the Partnership Agreement, as
supplemented and amended by this Amendment.
KC01 211561.4
2
<PAGE>
7. Governing Law. This Amendment and the rights and
obligations of the parties under this Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of
the State of Delaware.
8. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be deemed an original,
but all of which together shall constitute the whole Amendment.
9. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of the Partners and their respective
successors and assigns.
10. Effective Date. This Amendment shall be effective
as of the date first above written.
KC01 211561.4
3
<PAGE>
IN WITNESS WHEREOF, the Partners have caused this Amendment to
be executed and delivered on the date first above written.
THE GENERAL PARTNER:
FERRELLGAS, INC.
By______________________________
Danley K. Sheldon, Senior
Vice President
THE LIMITED PARTNER:
FERRELLGAS PARTNERS, L.P.
By Ferrellgas, Inc., its
General Partner
By_____________________________
Danley K. Sheldon, Senior
Vice President
KC01 211561.4
4
EXECUTION COPY
FERRELLGAS PARTNERS, L.P.
FERRELLGAS PARTNERS FINANCE CORP.
Obligors
FERRELLGAS, L.P.
Guarantor
$160,000,000 9 3/8% SENIOR SECURED NOTES
-----------------
INDENTURE
Dated as of April 26, 1996
-----------------
AMERICAN BANK NATIONAL ASSOCIATION
Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
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)................................................................. 13.03
(c) ................................................................ 13.03
313 (a) ................................................................. 7.06
(b)(1).............................................................. 10.03
(b)(2).............................................................. 7.06
(c) .......................................................... 7.06;13.02
(d)................................................................. 7.06
314 (a) ............................................................ 4.03;13.05
(b) ................................................................ 10.02
(c)(1) ............................................................ 13.04
(c)(2) ............................................................ 13.04
(c)(3)............................................................. N.A.
(d).......................................................... 10.03-10.05
(e)................................................................ 13.05
(f)................................................................ N.A.
315 (a)................................................................. 7.01
(b).............................................................7.05,13.02
(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) ............................................................... 2.13
317 (a)(1).............................................................. 6.08
(a)(2)............................................................. 6.09
(b) ............................................................... 2.04
318 (a)................................................................. 13.01
(b)................................................................ N.A.
(c)................................................................ 13.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions..................................... 1
Section 1.02. Other Definitions............................... 14
Section 1.03. Incorporation by Reference of Trust Indenture
Act............................................. 14
Section 1.04. Rules of Construction........................... 15
ARTICLE 2
THE SENIOR NOTES
Section 2.01. Form and Dating................................. 15
Section 2.02. Execution and Authentication.................... 16
Section 2.03. Registrar and Paying Agent...................... 16
Section 2.04. Paying Agent to Hold Money in Trust............. 17
Section 2.05. Lists of Holders of the Senior Notes............ 17
Section 2.06. Transfer and Exchange........................... 17
Section 2.07. Replacement Senior Notes........................ 23
Section 2.08. Outstanding Senior Notes........................ 23
Section 2.09. Treasury Senior Notes........................... 23
Section 2.10. Temporary Senior Notes.......................... 24
Section 2.11. Cancellation.................................... 24
Section 2.12. Defaulted Interest.............................. 24
Section 2.13. Record Date..................................... 24
Section 2.14. CUSIP Number.................................... 25
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee.............................. 25
Section 3.02. Selection of Senior Notes to Be Purchased or
Redeemed........................................ 25
Section 3.03. Notice of Redemption............................ 26
Section 3.04. Effect of Notice of Redemption.................. 27
Section 3.05. Deposit of Redemption Price..................... 27
Section 3.06. Senior Notes Redeemed in Part................... 27
Section 3.07. Optional Redemption............................. 27
Section 3.08. Mandatory Redemption............................ 27
Section 3.09. Asset Sale Offers............................... 27
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Notes......................... 29
Section 4.02. Maintenance of Office or Agency................. 29
Section 4.03. Reports......................................... 30
Section 4.04. Compliance Certificate.......................... 30
Section 4.05. Taxes........................................... 31
Section 4.06. Stay, Extension and Usury Laws.................. 31
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Section 4.07. Restricted Payments............................. 31
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.................................... 33
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Interests.......................... 33
Section 4.10. Asset Sales..................................... 35
Section 4.11. Transactions with Affiliates.................... 36
Section 4.12. Liens........................................... 37
Section 4.13. Limitations on Subsidiary Structure............. 37
Section 4.14. Offer to Purchase Upon Change of Control........ 37
Section 4.15. Partnership or Corporate Existence.............. 38
Section 4.16. Line of Business................................ 39
Section 4.17. Limitation on Sale and Leaseback Transactions... 39
Section 4.18. Restrictions on Nature of Indebtedness and
Activities of Finance Corp...................... 39
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets........ 39
Section 5.02. Successor Person Substituted.................... 40
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................... 41
Section 6.02. Acceleration.................................... 43
Section 6.03. Other Remedies.................................. 43
Section 6.04. Waiver of Past Defaults......................... 43
Section 6.05. Control by Majority............................. 44
Section 6.06. Limitation on Suits............................. 44
Section 6.07. Rights of Holders of Senior Notes to Receive
Payment......................................... 44
Section 6.08. Collection Suit by Trustee...................... 45
Section 6.09. Trustee May File Proofs of Claim................ 45
Section 6.10. Priorities...................................... 45
Section 6.11. Undertaking for Costs........................... 46
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................... 46
Section 7.02. Rights of Trustee............................... 47
Section 7.03. Individual Rights of Trustee.................... 47
Section 7.04. Trustee's Disclaimer............................ 48
Section 7.05. Notice of Defaults.............................. 48
Section 7.06. Reports by Trustee to Holders of the Senior
Notes............................................48
Section 7.07. Compensation and Indemnity...................... 48
Section 7.08. Replacement of Trustee.......................... 49
Section 7.09. Successor Trustee by Merger, etc................ 50
Section 7.10. Eligibility; Disqualification................... 50
Section 7.11. Preferential Collection of Claims Against
Issuers......................................... 50
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance...................................... 51
Section 8.02. Legal Defeasance and Discharge.................. 51
Section 8.03. Covenant Defeasance............................. 51
Section 8.04. Conditions to Legal or Covenant Defeasance...... 52
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions... 53
Section 8.06. Repayment to Issuers............................ 54
Section 8.07. Reinstatement................................... 54
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Notes...... 54
Section 9.02. With Consent of Holders of Senior Notes......... 55
Section 9.03. Compliance with Trust Indenture Act............. 56
Section 9.04. Revocation and Effect of Consents............... 56
Section 9.05. Notation on or Exchange of Senior Notes......... 57
Section 9.06. Trustee to Sign Amendments, etc................. 57
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Pledge Agreement................................ 57
Section 10.02. Recording and Opinions.......................... 58
Section 10.03. Release of Collateral........................... 58
Section 10.04. Certificates of the Issuers..................... 59
Section 10.05. Certificates of the Trustee..................... 59
Section 10.06. Authorization of Actions to Be Taken by the
Trustee Under the Pledge Agreement.............. 59
Section 10.07. Authorization of Receipt of Funds by the Trustee
Under the Pledge Agreement...................... 60
Section 10.08. Termination of Security Interest................ 60
ARTICLE 11
SUBORDINATION OF SUBSIDIARY GUARANTEE
Section 11.01. Subsidiary Guarantee Obligations Subordinated to
Senior Operating Partnership Indebtedness....... 60
Section 11.02. Subordination of Subsidiary Guarantee Upon
Insolvency or Liquidation Proceedings........... 60
Section 11.03. No Payment on Subsidiary Guarantee Obligations in
Certain Circumstances........................... 62
Section 11.04. Subrogation to Rights of Holders of Senior
Operating Partnership Indebtedness.............. 63
Section 11.05. Effectuation of Subordination of Subsidiary
Guarantee....................................... 63
Section 11.06. No Waiver of Subordination Provisions........... 64
Section 11.07. Reliance on Court Orders; Evidence of Status.... 65
Section 11.08. Payment......................................... 65
Section 11.09. Relative Rights................................. 65
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Section 11.10. Restrictions on Payments of Principal........... 66
ARTICLE 12
SUBSIDIARY GUARANTEE
Section 12.01. Subsidiary Guarantee............................ 66
Section 12.02. Execution and Delivery of Subsidiary Guarantee.. 67
Section 12.03. Guarantor May Consolidate, etc., on Certain
Terms........................................... 67
Section 12.04. Release of Subsidiary Guarantee................. 68
Section 12.05. Limitation on Guarantor Liability............... 69
Section 12.06. "Trustee" to Include Paying Agent............... 69
Section 12.07. Subordination of Subsidiary Guarantee........... 69
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.................... 70
Section 13.02. Notices......................................... 70
Section 13.03. Communication by Holders of Senior Notes with
Other Holders of Senior Notes................... 71
Section 13.04. Certificate and Opinion as to Conditions
Precedent....................................... 71
Section 13.05. Statements Required in Certificate or Opinion... 71
Section 13.06. Rules by Trustee and Agents..................... 72
Section 13.07. No Personal Liability of Limited Partners,
Directors, Officers, Employees and Stockholders. 72
Section 13.08. Governing Law................................... 72
Section 13.09. No Adverse Interpretation of Other Agreements... 72
Section 13.10. Successors...................................... 72
Section 13.11. Severability.................................... 72
Section 13.12. Counterpart Originals........................... 72
Section 13.13. Table of Contents, Headings, etc................ 72
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<PAGE>
EXHIBITS
Exhibit A FORM OF SENIOR NOTE
Exhibit B CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SENIOR NOTES
Exhibit C FORM OF SUBSIDIARY GUARANTEE
v
<PAGE>
INDENTURE dated as of April 26, 1996, among Ferrellgas Partners,
L.P., a Delaware limited partnership (the "Partnership"), Ferrellgas Partners
Finance Corp., a Delaware corporation ("Finance Corp." and, together with the
Partnership, the "Issuers"), Ferrellgas, L.P., a Delaware limited partnership
(the "Operating Partnership"), and American Bank National Association, as
trustee (the "Trustee").
The Partnership, Finance Corp., the Operating Partnership and the
Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 93/8% Series A Senior Secured Notes due
2006 (the "Series A Senior Notes") and the 93/8% Series B Senior Secured Notes
due 2006 (the "Series B Senior Notes" and, together with the Series A Senior
Notes, the "Senior Notes"):
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 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 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, (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).
"Certificated Securities" shall mean Senior Notes that are in the
form of the Senior Notes attached hereto as Exhibit A, that do not include the
information called for by footnotes 1 and 2 thereof.
"Change of Control" means (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Partnership or the
Operating Partnership 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, the Operating 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, (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 or the Operating Partnership and (v) the
first day on which the Partnership fails to own 100% of the issued and
outstanding Equity Interests of Finance Corp.
"Collateral Agent" shall have the meaning set forth in the Pledge
Agreement.
"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
2
<PAGE>
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 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 13.02 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, as amended, by and among the Operating
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 $205.0 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.
"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.
3
<PAGE>
"Depositary" means, with respect to the Senior Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Senior Notes, until a successor
shall have been appointed and become such pursuant to the applicable provision
of this Indenture, and, thereafter, "Depositary" shall mean or include such
successor.
"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 the maturity date of the Senior Notes.
"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.
"Exchange Offer" means the offer that may be made by the Issuers
pursuant to the Registration Rights Agreement to exchange Series B Senior Notes
for Series A Senior Notes.
"Existing Indebtedness" means the Fixed Rate Notes, the Floating Rate
Notes and up to $5 million in aggregate principal amount of all other
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.
"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.
"Finance Corps." means Finance Corp. and the OLP Finance Corp.
"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 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
4
<PAGE>
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 this Indenture, giving pro forma effect, as described in the two
foregoing sentences, to all applicable transactions occurring on the date of
this 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 Notes" means the $200 million 10% Fixed Rate Senior Notes
due 2001 of the Operating Partnership.
"Floating Rate Notes" means the $50 million Floating Rate Senior
Notes due 2001 of the Operating Partnership.
"Flow-Through Acquisition" means an acquisition by the General
Partner or its parent from a Person that is not an Affiliate of the General
Partner, its parent or the Partnership, of property (real or personal), assets
or equipment (whether through the direct purchase of assets or the Capital
Interests of the Person owning such assets) in the same line of business as the
Partnership and its Subsidiaries are engaged in on the date of this Indenture,
which is promptly sold, transferred or contributed by the General Partner or its
parent to the Partnership or one of its Subsidiaries.
"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 and the Operating Partnership.
5
<PAGE>
"Global Note" means a Senior Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of the Senior Note attached hereto as Exhibit A.
"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.
"Guarantor" means the Operating Partnership and its successors and
assigns, or any other Subsidiary of the Partnership that Guarantees the Issuers'
Obligations under the Senior Notes and the Indenture pursuant to a form of
Guarantee and a supplemental indenture, in form and substance satisfactory to
the Trustee.
"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 Senior 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 other Persons
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 Operating Partnership.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding (including any case under the Bankruptcy Law), or
any receivership, liquidation, reorganization or other similar case or
proceeding, relative to the Operating Partnership, as such, or to its assets, or
(ii) any liquidation, dissolution, reorganization or winding up of the Operating
Partnership, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors
or any other marshalling of assets and liabilities of the Operating Partnership.
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"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 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).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"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).
"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 (other than the Operating Partnership and Finance
Corps.) that would otherwise be a Subsidiary of the Partnership but is
designated as a Non-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
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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.
"Note Custodian" means the Trustee, as custodian with respect to the
Senior Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Senior Notes by the Issuers.
"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 13.05 hereof.
"OLP Finance Corp." means Ferrellgas Finance Corp., a Delaware
corporation.
"Operating Partnership" means the party named as such in this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter means the successor.
"Operating Partnership Indenture" means the indenture among the
Operating Partnership, OLP Finance Corp. and Norwest Bank, Minnesota, National
Association, as trustee, governing the Fixed Rate Notes and the Floating Rate
Notes as in existence from time to time.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Partnership,
the General Partner, Finance Corp., the Operating Partnership, any of their
respective Subsidiaries or the Trustee.
"Partnership Agreement" means the Agreement of Limited Partnership of
Ferrellgas Partners, L.P., dated as of July 5, 1994, as amended, between
Ferrellgas, Inc. and the other parties who are signatories thereto.
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"Partnership" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Permitted Investments" means (a) any Investments in Cash
Equivalents; (b) any Investments in the Partnership or in the Operating
Partnership; (c) Investments by the Partnership or any Subsidiary of the
Partnership in a Person, if as a result of such Investment 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
the Operating Partnership; and (d) other Investments in Non-Recourse
Subsidiaries of the Partnership that do not exceed $30 million at any time
outstanding; provided that in any transfer of assets to a Non-Recourse
Subsidiary by the Partnership or one of its Subsidiaries pursuant to the terms
of this Indenture, which assets were acquired in a Flow-Through Acquisition, the
dollar amount equal to the purchase price paid or Indebtedness assumed by such
Non-Recourse Subsidiary for such assets will not be deemed an Investment by the
Partnership or its Subsidiaries in such Non-Recourse Subsidiary for purposes of
this definition.
"Permitted Liens" means (a) Liens existing on the date of this
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 pursuant to leases considered
operating leases in accordance with GAAP, provided that such financing
statements are granted solely in connection
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with such leases; (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 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 this 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; (o) Liens in favor of the Senior Notes created pursuant to the terms
of the Pledge Agreement; (p) Liens on Capital Interests of the Operating
Partnership securing Indebtedness other than Subordinated Indebtedness that is
permitted to be incurred by the Partnership pursuant to the terms of this
Indenture; and (q) any extension or renewal, or successive extensions or
renewals, in whole or in part, of Liens permitted pursuant to the foregoing
clauses (a) through (p); 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
permitted to be incurred under this Indenture (other than Indebtedness under the
Credit Facility); 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 Senior Notes on terms at least as favorable to the
Holders of Senior Notes as those, if any, contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (d) such Indebtedness 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 Refinancing Indebtedness" means Indebtedness of the
Operating Partnership permitted to be incurred pursuant to the terms of this
Indenture all the proceeds of which are used to repay or prepay the Senior
Operating Partnership Credit Agreement Obligations and other Senior Operating
Partnership Indebtedness.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge and Security Agreement, dated as
of April 26, 1996, by and among the Partnership, the General Partner and
American Bank National Association, as collateral agent, as such agreement may
be amended, modified or supplemented from time to time.
"Pledged Collateral" shall have the meaning set forth in the Pledge
Agreement.
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"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 26, 1996, by and among the Issuers, the Guarantor
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
"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.
"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 Agent" means Bank of America National Trust and Savings
Association, as agent or a lender under the Senior Operating Partnership Credit
Agreement, or any successor agent thereunder or under any agreement governing
Permitted Senior Refinancing Indebtedness or, in the absence of such agent, the
lender holding all or the greatest portion of the Indebtedness thereunder.
"Senior Operating Partnership Credit Agreement" means, collectively,
the Credit Agreement dated as of July 5, 1994, as amended by First Amendment to
Credit Agreement dated as of July 21, 1995 and a Second Amendment to Credit
Agreement dated as of October 20, 1995, in each case among the Operating
Partnership, Stratton Insurance Company, Inc., Ferrellgas, Inc., the lenders
referred to therein, Bank of America National Trust and Savings Association, as
agent for such lenders, and The First National Bank of Boston and Nationsbank of
Texas, N.A., as co-agents, and the other Loan Documents referred to in such
credit agreement, as all such agreements may be amended, restated, supplemented
or otherwise modified from time to time, and includes any agreement extending
the maturity of, or restructuring all or any portion of the Indebtedness of the
Operating Partnership under such agreements.
"Senior Operating Partnership Credit Agreement Notes" means the
Operating Partnership's promissory notes issued pursuant to the Senior Operating
Partnership Credit Agreement.
"Senior Operating Partnership Credit Agreement Obligations" means (i)
the "Obligations" as defined in the Senior Operating Partnership Credit
Agreement and (ii) all Permitted Senior Refinancing
Indebtedness.
"Senior Operating Partnership Indebtedness" means all Indebtedness
(other than Subordinated Indebtedness) and other obligations specified below
payable directly or indirectly by the Operating Partnership from time to time
outstanding, whether now existing or hereafter arising, fixed or contingent, due
or not due, liquidated or not liquidated, determined or undetermined:
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(1) the principal of and interest on all loans, reimbursement
obligations and other extensions of credit under the Senior Operating
Partnership Credit Agreement, the Senior Operating Partnership Credit
Agreement Notes and any other agreement or instrument providing for,
evidencing or securing any Permitted Senior Refinancing Indebtedness or
any other loans, reimbursement obligations or extensions of credit by the
lender or lenders thereunder (including in each case any amendment,
renewal, supplement, extension, refinancing, restructuring, refunding or
other modification thereof) and all premiums, expenses, fees,
reimbursements, indemnities and other amounts owing by the Operating
Partnership pursuant to the Senior Operating Partnership Credit Agreement
and any such other agreement or instrument;
(2) all Indebtedness represented by the existing Fixed Rate
Notes and Floating Rate Notes; and
(3) all Indebtedness (other than Subordinated Indebtedness) of
the Operating Partnership permitted to be incurred under the Credit
Facility and the Operating Partnership Indenture, as each is in effect
from time to time and as the same may be extended, refinanced, renewed,
replaced, defeased or refunded.
All interest accrued on any Senior Operating Partnership Indebtedness, in
accordance with and at the contract rate specified in the agreement or
instrument creating, evidencing or governing such Senior Operating Partnership
Indebtedness, shall constitute Senior Operating Partnership Indebtedness for
periods both before and after the commencement of any Insolvency or Liquidation
Proceeding, even if the claim for such interest is not allowed pursuant to
applicable law. To the extent any payment of Senior Operating Partnership
Indebtedness (whether by or on behalf of the Issuers or the Operating
Partnership, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered by,
or paid over to, such trustee, receiver or other similar party, the Senior
Operating Partnership Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. Notwithstanding anything to the contrary in the foregoing,
Senior Operating Partnership Indebtedness shall not include (i) any liability
for federal, state, local or other taxes owed or owing by the Operating
Partnership (other than indemnities for taxes constituting Senior Operating
Partnership Credit Agreement Obligations), (ii) any Indebtedness of the
Operating Partnership to any of its Subsidiaries or other Affiliates, (iii) any
trade payables, (iv) any Indebtedness that is incurred in violation of this
Indenture, (v) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Operating Partnership, (vi) any Indebtedness, Guarantee or
obligation of the Operating Partnership which is contractually subordinate in
right of payment to any other Indebtedness, Guarantee or obligation of the
Operating Partnership and (vii) Capital Interests.
"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 Securities Act, as such Regulation
is in effect on the date hereof.
"Subordinated Indebtedness" means any Indebtedness of the Partnership
or any of its Subsidiaries which is expressly by its terms subordinated in right
of payment to any other Indebtedness.
"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
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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.
"Subsidiary Guarantee" means, from and after the Subsidiary Guarantee
Effectiveness Date, the Guarantee by the Operating Partnership of the
Obligations under the Indenture and the Senior Notes.
"Subsidiary Guarantee Effectiveness Date" means the first date upon
which the Operating Partnership is permitted pursuant to the Fixed Charge
Coverage Ratio tests contained in the Operating Partnership Indenture and the
Credit Facility and pursuant to the terms of any other Senior Operating
Partnership Indebtedness to Guarantee, on a senior subordinated basis as and to
the extent set forth in Article 11 of this Indenture, the Issuers' total payment
Obligations under all of the then-outstanding Senior Notes.
"Subsidiary Guarantee Obligations" means any and all obligations of
the Operating Partnership after the Subsidiary Guarantee Effectiveness Date for
the payment of principal, premium, if any, interest and Liquidated Damages, if
any, on the Senior Notes and the performance by it of its other agreements,
covenants and undertakings under or in respect of this Indenture, the Senior
Notes and the Subsidiary Guarantee.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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 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 approximately 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 or by such Person and
one or more Wholly Owned Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"........................... 4.11
"Asset Sale"...................................... 4.10
"Asset Sale Offer"................................ 3.09
"Change of Control Offer"......................... 4.14
"Change of Control Payment"....................... 4.14
"Change of Control Payment Date".................. 4.14
"Closing Date".................................... 2.01
"Covenant Defeasance"............................. 8.03
"Commencement Date"............................... 3.09
"Event of Default"................................ 6.01
"Excess Proceeds"................................. 4.10
"Global Note Holder".............................. 2.01
"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
"qualified institutional buyer"................... 2.06
"Registrar"....................................... 2.03
"Restricted Payments"............................. 4.07
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:
"indenture securities" means the Senior Notes and the Subsidiary
Guarantee;
"indenture security holder" means a Holder of a Senior Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Notes means the Issuers, the Guarantor and
any successor obligor upon the Senior Notes or the Subsidiary Guarantee, as the
case may be.
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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 SENIOR NOTES
SECTION 2.01. FORM AND DATING.
The 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 $160,000,000. The Senior
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage which will be provided by the Issuers. Each Senior Note
shall be dated the date of its authentication. The Senior Notes shall be in
denominations of $1,000 and integral multiples thereof.
The Senior Notes shall be issued in the form of one Global Note. The
Global Note shall be deposited on the date of the closing of the sale of the
Senior Notes offered pursuant to the Offering (the "Closing Date") with, or on
behalf of the Depositary (such nominee being referred to herein as the "Global
Note Holder"). Except as set forth in Section 2.06, the Global Note may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
The terms and provisions contained in the Senior Notes annexed hereto
as Exhibit A, and the Subsidiary Guarantee annexed hereto as Exhibit C shall
constitute, and are hereby expressly made, a part of this Indenture. To the
extent applicable, the Issuers, the Operating Partnership and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
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Senior Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the text referred to in footnotes 1 and
2 thereto). Senior Notes issued in certificated form shall be substantially in
the form of Exhibit A attached hereto (but without including the text referred
to in footnotes 1 and 2 thereto). The Global Note shall represent such of the
outstanding Senior Notes as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Senior Notes from
time to time endorsed thereon and that the aggregate amount of outstanding
Senior Notes represented thereby may from time to time be reduced or increased,
as appropriate, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of
outstanding Senior Notes represented thereby shall be made by the Trustee or the
Note Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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 Senior Notes for the Issuers
by manual or facsimile signature. The seal of each Issuer shall be reproduced on
the Senior Notes and may be in facsimile form.
If an Officer of the General Partner or Finance Corp. whose signature
is on a Senior Note no longer holds that office at the time the Senior Note is
authenticated, the Senior Note shall nevertheless be valid.
A Senior 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 Senior Note has been authenticated under this Indenture. The
form of Trustee's certificate of authentication to be borne by the Senior 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 Senior Notes for
original issue up to an aggregate principal amount stated in paragraph 4 of the
Senior Notes. The aggregate principal amount of Senior 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 Senior Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Senior 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 Senior Notes
may be presented for registration of transfer or for exchange (including any
co-registrar, the "Registrar") and (ii) an office or agency where Senior Notes
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Senior 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 Senior Note. The Issuers shall notify the Trustee and the Trustee shall
notify the Holders of the Senior Notes of the name and address of any Agent not
a party to this Indenture. The
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Partnership, Finance Corp. or the 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
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 Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Note.
The Issuers initially appoint the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Global Note.
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 Senior Notes or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any, and interest, including
Liquidated Damages, if any, on the Senior Notes, and shall notify the Trustee of
any Default by the Issuers or the Guarantor 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 the
Guarantor) shall have no further liability for the money delivered to the
Trustee. If the Partnership, Finance Corp. or the Guarantor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders of the Senior Notes all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceeding relating to the Partnership, Finance
Corp. or the Guarantor, the Trustee shall serve as Paying Agent for the Senior
Notes.
SECTION 2.05. LISTS OF HOLDERS OF THE SENIOR 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 Senior Notes and shall otherwise comply with TIA ss. 312(a). If
the Trustee is not the Registrar, the Issuers and/or the Guarantor 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 Senior Notes, including the aggregate principal
amount of the Senior Notes held by each thereof, and the Issuers and the
Guarantor shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to the Registrar with a
request:
(x) to register the transfer of the Certificated Securities; or
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(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other
authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its
requirements for such transactions are met; provided,
however, that the Certificated Securities presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his
attorney, duly authorized in writing; and
(ii) in the case of a Certificated Security that is a
Transfer Restricted Security, such request shall be
accompanied by the following additional information
and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification to that effect from
such Holder (in substantially the form of
Exhibit B hereto);
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities
Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule
904 under the Securities Act or pursuant to an
effective registration statement under the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
Exhibit B hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
Exhibit B hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably
acceptable to the Partnership and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Certificated Security for a Beneficial Interest in
the Global Note. A Certificated Security may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a Certificated Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) if such Certificated Security is a Transfer Restricted Security,
a certification from the Holder thereof (in substantially the
form of Exhibit B hereto) to the effect that such Certificated
Security is being transferred by such Holder to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Certificated Security is a Transfer
Restricted Security, written instructions from the Holder
thereof directing the Trustee to make, or to direct the Note
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Custodian to make, an endorsement on the Global Note to reflect
an increase in the aggregate principal amount of the Senior
Notes represented by the Global Note,
in which case the Trustee shall cancel such Certificated Security in accordance
with Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Senior
Notes represented by the Global Note to be increased accordingly. If no Global
Note is then outstanding, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Note. The transfer and exchange
of the Global Note or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in the Global Note for a
Certificated Security.
(i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a
Certificated Security. Upon receipt by the Trustee of
written instructions or such other form of instructions as
is customary for the Depositary, from the Depositary or
its nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer
Restricted Security, the following additional information
and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depositary as
being the beneficial owner, a certification to
that effect from such Person (in substantially
the form of Exhibit B hereto);
(B) if such beneficial interest is being transferred
to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities
Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule
904 under the Securities Act or pursuant to an
effective registration statement under the
Securities Act, a certification to that effect
from the transferor (in substantially the form
of Exhibit B hereto); or
(C) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act,
a certification to that effect from the
transferor (in substantially the form of Exhibit
B hereto) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable
to the Partnership and to the Registrar to the
effect that such transfer is in compliance with
the Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depositary and the Note Custodian, cause the aggregate
principal amount of the Global Note to be reduced
accordingly and, following such reduction, the Partnership
shall execute and, upon receipt of an authentication order
in accordance with Section
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2.02 hereof, the Trustee shall authenticate and deliver to
the transferee a Certificated Security in the appropriate
principal amount.
(ii) Certificated Securities issued in exchange for a
beneficial interest in a Global Note pursuant to this
Section 2.06(d) shall be registered in such names and in
such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Certificated Securities to the Persons
in whose names such Senior Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Note.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) Authentication of Certificated Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Senior Notes notifies the
Partnership that the Depositary is unwilling or unable to
continue as Depositary for a Global Note and a successor
Depositary for such Global Note is not appointed by the
Partnership within 90 days after delivery of such notice;
or
(ii) the Partnership, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of
Certificated Securities under this Indenture,
then the Issuers shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Securities in an aggregate principal amount equal to the
principal amount of such Global Note in exchange for such Global Note.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Senior Note certificate evidencing the Global
Notes and Certificated Securities (and all Senior Notes
issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
"THE SENIOR NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SENIOR NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SENIOR NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SENIOR NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS
THAT (A) SUCH SENIOR NOTE MAY BE RESOLD,
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PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SENIOR NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Certificated Security, the Registrar shall
permit the Holder thereof to exchange such Transfer
Restricted Security for a Certificated Security that
does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such
Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented by a Global
Note, such Transfer Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect to any request for
an exchange of a Transfer Restricted Security that is represented by a Global
Note for a Certificated Security that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule 144, the Holder thereof shall
certify in writing to the Registrar that such request is being made pursuant to
Rule 144 (such certification to be substantially in the form of Exhibit B
hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Issuers shall issue and, upon receipt
of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate Series B Senior
Notes in exchange for Series A Senior Notes accepted for
exchange in the Exchange Offer, which Series B Senior
Notes shall not bear the legend set forth in (i) above,
and the Registrar shall rescind any restriction on the
transfer of such Series A Senior Notes, in each case
unless the Holder of such Series A Senior Notes is either
(A) a broker-dealer, (B) a Person participating in the
distribution of the Series A Senior Notes or (C) a Person
who is an affiliate (as defined in Rule 144A) of the
Issuers.
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(h) Cancellation and/or Adjustment of Global Note. At such time as
all beneficial interests in a Global Note have been exchanged for Certificated
Securities, redeemed, repurchased or cancelled, such Global Note shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Certificated Securities, redeemed, repurchased
or cancelled, the principal amount of Senior Notes represented by such Global
Note shall be reduced accordingly and an endorsement shall be made on such
Global Note, by the Trustee or the Note Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate
Certificated Securities and the Global Note at the
Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, 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 any such transfer taxes
or similar governmental charge payable upon exchange or
transfer pursuant to Sections 3.07, 4.10, 4.14 and 9.05
hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Senior Note selected for
redemption in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
(iv) All Certificated Securities and the Global Note issued
upon any registration of transfer or exchange of
Certificated Securities or the Global Note shall be the
valid obligations of the Issuers, evidencing the same
debt, and entitled to the same benefits under this
Indenture, as the Certificated Securities or the Global
Note surrendered upon such registration of transfer or
exchange.
(v) The Issuers shall not be required:
(A) to issue, to register the transfer of or to exchange
Senior Notes during a period beginning at the
opening of business 15 days before the day of any
selection of Senior Notes for redemption under
Section 3.02 hereof and ending at the close of
business on the day of selection; or
(B) to register the transfer of or to exchange any
Senior Note so selected for redemption in whole or
in part, except the unredeemed portion of any Senior
Note being redeemed in part; or
(C) to register the transfer of or to exchange a Senior
Note between a record date and the next succeeding
interest payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Senior Note, the Trustee, any Agent and
the Issuers may deem and treat the Person in whose name
any Senior Note is registered as the absolute owner of
such Senior Note for the purpose of receiving payment of
principal of and interest on such Senior Notes, and
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neither the Trustee, any Agent nor the Issuers shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Certificated Securities
and the Global Notes in accordance with the provisions
of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT SENIOR NOTES.
If any mutilated Senior 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 Senior 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 Senior Note if the Trustee's requirements for replacements of Senior
Notes are met. If required by the Trustee, the Issuers or the Guarantor, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee, the Issuers and the Guarantor to protect the Issuers, the
Guarantor, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Senior Note is replaced. Each of the
Partnership, Finance Corp, the Guarantor and the Trustee may charge for its
expenses in replacing a Senior Note.
Every replacement Senior Note is an additional obligation of the
Issuers and the Guarantor and shall be entitled to all of the benefits of this
Indenture equally and ratably with all other Senior Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING SENIOR NOTES.
The Senior Notes outstanding at any time are all the Senior 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 Senior 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 Senior Note is held by a bona fide purchaser. If the principal
amount of any Senior 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 Senior Note does not cease to be outstanding because the
Partnership, Finance Corp., the Guarantor, a Subsidiary of the Partnership,
Finance Corp. or the Guarantor or an Affiliate of the Partnership, Finance Corp.
or the Guarantor holds the Senior Note.
SECTION 2.09. TREASURY SENIOR NOTES.
In determining whether the Holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Partnership, Finance Corp., the Guarantor, any of their respective
Subsidiaries or any Affiliate of the Partnership, Finance Corp. or the 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 Senior Notes which a Responsible Officer
knows to be so owned shall be so considered. Notwithstanding the foregoing,
Senior Notes that are to be acquired by the Partnership, Finance Corp., the
Guarantor, any Subsidiary of the Partnership, Finance Corp. or the Guarantor or
an Affiliate of the Partnership, Finance Corp. or the Guarantor pursuant to an
exchange offer, tender offer or other agreement shall not be deemed to be owned
by the Partnership, Finance Corp., the Guarantor, a Subsidiary of the
Partnership, Finance Corp. or the Guarantor or an Affiliate of the Partnership,
Finance Corp. or the Guarantor until legal title to the Senior Notes passes to
the Partnership, Finance Corp., the Guarantor, Subsidiary of the
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Partnership, Finance Corp. or the Guarantor or Affiliate of the Partnership,
Finance Corp. or the Guarantor, as the case may be.
SECTION 2.10. TEMPORARY SENIOR NOTES.
Until definitive Senior Notes are ready for delivery, the Issuers may
prepare and the Trustee shall authenticate temporary Senior Notes. Temporary
Senior Notes shall be substantially in the form of definitive Senior Notes but
may have variations that the Issuers and the Trustee consider appropriate for
temporary Senior 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 Senior Notes in exchange for temporary Senior
Notes. Until such exchange, temporary Senior Notes shall be entitled to the same
rights, benefits and privileges as definitive Senior Notes.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Senior Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Senior Notes (subject to the record retention requirement of the
Exchange Act), unless the Issuers direct cancelled Senior Notes to be returned
to them. The Issuers may not issue new Senior Notes to replace Senior Notes that
they have redeemed or paid or that have been delivered to the Trustee for
cancellation. All cancelled Senior 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 Senior Notes
be returned to them.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers or the Guarantor defaults in a payment of interest on
the Senior Notes, the Issuers or the Guarantor (to the extent of its obligations
under the Subsidiary Guarantee) 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 Senior 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 Senior 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 mail to Holders of the Senior 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 Senior 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 ss. 316(c).
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SECTION 2.14. CUSIP NUMBER.
The Issuers in issuing the Senior 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 Senior Notes and that reliance may be
placed only on the other identification numbers printed on the Senior 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 Senior 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 Senior Notes to be redeemed and (iv) the redemption price.
If the Issuers are required to make an offer to purchase Senior 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 Senior 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 SENIOR NOTES TO BE PURCHASED OR REDEEMED.
If the Issuers elect to redeem less than all of the Senior Notes
pursuant to the optional redemption provisions of Section 3.07 hereof and
paragraph 5 of the Senior Notes, the Trustee shall select the Senior Notes to be
redeemed as follows:
The Trustee shall select the Senior Notes to be redeemed among the
Holders of the Senior 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 Senior 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 Senior Notes to be purchased on a pro rata basis.
The Trustee shall promptly notify the Issuers in writing of the
Senior Notes selected for redemption and, in the case of any Senior Note
selected for partial purchase or redemption, the principal amount thereof to be
purchased or redeemed. Senior Notes and portions of Senior Notes selected shall
be in amounts of $1,000 or whole multiples of $1,000; except that if all of the
Senior Notes of a Holder are to be purchased or redeemed, the entire outstanding
amount of Senior Notes held by such Holder,
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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
Senior Notes called for redemption also apply to portions of Senior 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 Senior
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 Senior 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 Senior Notes are to be redeemed at its
registered address.
The notice shall identify the Senior Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Note is being redeemed in part, the portion of
the principal amount of such Senior Note to be redeemed and that, after
the redemption date upon surrender of such Senior Note, a new Senior Note
or Senior Notes in principal amount equal to the unredeemed portion shall
be issued upon cancellation of the original Senior Note;
(d) the name and address of the Paying Agent;
(e) that Senior 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 Senior Notes called for redemption ceases to accrue
on and after the redemption date;
(g) the paragraph of the Senior Notes and/or Section of this
Indenture pursuant to which the Senior 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 Senior 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).
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SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior 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 including Liquidated Damages, if any,
on all Senior 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 Senior Notes to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Senior
Notes or the portions of Senior Notes called for redemption. If a Senior 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 Senior Note was registered at the close of business on
such record date. If any Senior 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 Senior Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART.
Upon surrender of a Senior 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 Senior Note
equal in principal amount to the unredeemed portion of the Senior Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Issuers may redeem all or any portion of the Senior Notes, upon
the terms and at the redemption prices set forth in paragraph 5 of the Senior
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.
Except as set forth under Sections 4.10 and 4.14 hereof, the Issuers
shall not be required to make mandatory payments with respect to the Senior
Notes.
SECTION 3.09. ASSET SALE OFFERS.
In the event that, pursuant to Section 4.10 hereof, the Issuers shall
be required to commence an offer to all Holders to purchase Senior Notes (an
"Asset Sale Offer"), it shall follow the procedures specified in this Section
3.09.
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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 (the "Purchase Date"), the Issuers shall purchase the principal
amount of Senior 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
Senior Notes tendered in response to such Asset Sale Offer. Payment for any
Senior Notes so purchased shall be made in the same manner as interest payments
are made.
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 and
Liquidated Damages, if any, shall be paid to the Person in whose name a Senior
Note is registered at the close of business on such record date, and no
additional interest shall be payable to Holders who tender Senior 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 Senior 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 Senior Note not tendered and accepted for payment
shall continue to accrue interest and Liquidated Damages, if any;
(d) that, unless the Issuers default in making such payment, any
Senior Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest and Liquidated Damages, if any, after the
Purchase Date;
(e) that Holders electing to have a Senior Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Senior
Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Senior 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;
(f) 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 Senior Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Senior Note purchased;
(g) that, if the aggregate principal amount of Senior Notes
surrendered by Holders exceeds the Offer Amount, the Senior Notes to be
purchased shall be selected pursuant to the terms of Section 3.02 hereof,
and that Holders whose Senior Notes were purchased only in part shall be
issued new Senior Notes (accompanied by a notation of the Subsidiary
Guarantee duly endorsed by
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the Guarantor) equal in principal amount to the unpurchased portion of
the Senior Notes surrendered; and
(h) 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 Senior Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Senior Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Senior 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) wire, mail or deliver to each
tendering Holder an amount equal to the purchase price of the Senior Notes
tendered by such Holder and accepted by the Issuers for purchase, and the
Issuers shall promptly issue a new Senior Note, and the Trustee, upon written
request from the Issuers shall authenticate and mail or deliver such new Senior
Note to such Holder, in a principal amount equal to any unpurchased portion of
the Senior Note surrendered. Any Senior 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 SENIOR NOTES.
The Issuers shall pay or cause to be paid the principal of, premium,
if any, and interest, including Liquidated Damages, if any, on the Senior Notes
on the dates and in the manner provided in the Senior 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 the Guarantor, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Issuers or the Guarantor in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest, including Liquidated Damages, if any,
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 Senior
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, including Liquidated Damages, if any, (without regard to any
applicable grace period) at the same rate to the extent lawful.
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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 Senior Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers or the Guarantor in respect of the Senior 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.
The Issuers may also from time to time designate one or more other
offices or agencies where the Senior 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 Senior Notes are outstanding, the Issuers will furnish to the
Holders of Senior 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. In addition, for
so long as any Senior Notes remain outstanding, the Issuers shall furnish to all
Holders and to securities analysts and prospective investors, upon their written
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
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, the Guarantor and each obligor on the
Senior 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, the Guarantor and each such obligor has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
the Pledge Agreement and is not
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in default in the performance or observance of any of the terms, provisions and
conditions of this Indenture or the Pledge Agreement (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, the
Guarantor 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, premium, if any, interest or Liquidated Damages, if any, on
the Senior Notes is prohibited or if such event has occurred, a description of
the event and what action each Issuer, the Guarantor 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 and the Guarantor shall, so long as any of the Senior
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 and the
Guarantor) becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action such
Issuer and the Guarantor 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 Senior Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Issuers and the Guarantor 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 the Guarantor (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
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than Disqualified Interests) of the Partnership, (y) dividends or distributions
payable to the Partnership or the Operating Partnership 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
the Operating Partnership); (iii) purchase, redeem or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Senior 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 2.0 to 1.0; 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
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) or (iii) 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.
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); and (iii)
the defeasance, redemption or repurchase of Subordinated Indebtedness with the
proceeds of Permitted Refinancing Indebtedness.
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.
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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 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 Senior Notes, the Subsidiary Guarantee, the Operating Partnership
Indenture as in effect on the date of this Indenture, the Fixed Rate Notes and
the Floating Rate Notes, (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 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 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, (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 or (ix) other Indebtedness permitted to be incurred subsequent
to the date of this Indenture pursuant to the provisions of Section 4.09 hereof;
provided that such restrictions are no more restrictive than those contained in
the Credit Facility and the Operating Partnership Indenture, each as in effect
on the date of this Indenture.
SECTION 4.09.INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED INTERESTS.
The Issuers shall not, and shall not permit any of their 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 Issuers shall not issue any
Disqualified Interests and shall not permit any of their Subsidiaries to issue
any shares of preferred stock; provided, however, that the Issuers may incur
Indebtedness and any Subsidiary of the Issuers may incur Acquired Debt if 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 2.25 to 1.0, 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.
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Notwithstanding the foregoing, the Operating Partnership shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly incur
any Subordinated Indebtedness (including Acquired Debt which constitutes
Subordinated Indebtedness) and that the Operating Partnership shall not issue
any Disqualified Interests and shall not permit any of its Subsidiaries to issue
any shares of preferred stock prior to the Subsidiary Guarantee Effectiveness
Date, irrespective of whether the Partnership's Fixed Charge Coverage Ratio
exceeds 2.25 to 1.0.
The foregoing limitations of this Section 4.09 will not apply to: (i)
the Indebtedness represented by the Senior Notes and the Subsidiary Guarantee;
(ii) the incurrence by the Operating Partnership of Indebtedness pursuant to the
Credit Facility (or any Permitted Senior Refinancing Indebtedness in respect
thereof) in an aggregate principal amount at any time outstanding not to exceed
$205.0 million; (iii) the Indebtedness represented by the existing Fixed Rate
Notes and Floating Rate Notes; (iv) revolving Indebtedness incurred solely for
working capital purposes in an aggregate outstanding principal amount not to
exceed $40.0 million at any time, provided 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; (v) the incurrence by the Partnership or any of its
Subsidiaries of Indebtedness in respect of Capitalized Lease Obligations in an
aggregate principal amount not to exceed $15.0 million; (vi) the Existing
Indebtedness; (vii) the incurrence by the 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 this Indenture; (viii) 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 this Indenture to be
outstanding; (ix) Indebtedness of any Subsidiary of the Partnership to the
Partnership or any of its Wholly Owned Subsidiaries; (x) the incurrence by the
Partnership, the Operating Partnership or the Insurance Company Subsidiary of
Indebtedness owing directly to its insurance carriers (without duplication) in
connection with the Partnership's, the Operating Partnership's, their
Subsidiaries' or their Affiliates' self-insurance programs or other similar
forms of retained insurable risks 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; (xi) 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; (xii) the
incurrence by the Partnership or the Operating Partnership 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 $15.0 million in
any fiscal year or $60.0 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 (xiii) Indebtedness of the Partnership owing from time to time
to the General Partner or an Affiliate of the General Partner that is unsecured
and that is Subordinated Indebtedness; provided that the aggregate principal
amount of such Indebtedness outstanding at any time shall not exceed $50.0
million.
The aggregate amount of Indebtedness permitted to be incurred by
clauses (ii), (iv), (v), (xii) and (xiii) above, shall be reduced by the
aggregate amount of any sale and leaseback transaction entered into by the
Partnership or its Subsidiaries pursuant to the terms of the last sentence of
Section 4.17 of this Indenture.
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For purposes of this Section 4.09, any revolving Indebtedness shall
be deemed to have been incurred only at such time at which the agreements and
instruments (including 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 (iv) of the third 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 Senior 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 Wholly Owned 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, (3) any
transfer of assets pursuant to a Permitted Investment and (4) any transfer of
assets to a Non-Recourse Subsidiary by the Partnership or any of its
Subsidiaries, which assets were acquired in a Flow-Through Acquisition; provided
that no Default or Event of Default has occurred and is continuing or would
occur as a result of such transfer.
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), the Operating Partnership
Indenture or any other Indebtedness permitted to be incurred by the Operating
Partnership under this Indenture 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 and its Subsidiaries were engaged in on the date of this
Indenture. Pending the final application of any such Net Proceeds, the
Partnership may temporarily reduce borrowings under
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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 Senior Notes to purchase the maximum principal amount of Senior 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, unpaid
interest and Liquidated Damages, 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 to the extent such laws and
regulations are applicable in connection with the repurchase of the Senior Notes
in connection with an Asset Sale Offer. To the extent that the aggregate amount
of Senior Notes tendered pursuant to an 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 Senior Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
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 $15.0 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 the General Partner) 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, the Operating
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. Notwithstanding the foregoing, in
any transaction involving a Flow-Through Acquisition, the dollar amount equal to
the purchase price paid by the General Partner or its parent to any third party
that is not an Affiliate for such property, assets or equipment will be excluded
from calculating the value and/or net proceeds set forth in clauses (b)(i) and
(ii) above.
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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. LIMITATIONS ON SUBSIDIARY STRUCTURE.
Each of the Operating Partnership and Finance Corp. shall at all
times continue to be direct Wholly Owned Subsidiaries of the Partnership.
In addition, the Operating Partnership and the Finance Corps. may not at any
time be designated as Non-Recourse Subsidiaries.
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 Senior Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, 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 (as defined below). 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 Senior Notes tendered will be accepted
for payment;
(2) the amount of the Change of Control Payment and the purchase
date, which is a date no earlier than 30 days nor later than 60
days from the date that the Issuers mail notice of the Change of
Control to the Holders (the "Change of Control Payment Date");
(3) that any Senior 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 Senior Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders electing to have Senior Notes purchased pursuant to
the Change of Control Offer will be required to surrender their
Senior Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Note completed, to the
Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change
of Control Payment Date;
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(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on
the second 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
Senior Notes the Holder delivered for purchase, and a statement
that such Holder is withdrawing its election to have such Senior
Notes purchased;
(7) that Holders whose Senior Notes are being purchased only in part
will be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior 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 Senior 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 Senior Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Senior Notes so accepted together with an Officers' Certificate
stating the aggregate amount of the Senior 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, wire or mail to each
Holder of Notes so accepted payment in an amount equal to the Change of Control
Payment for such Senior Notes, and the Issuers shall promptly issue a new Senior
Note, and the Trustee shall authenticate and mail or deliver a new Senior Note
to such Holder equal in principal amount to any unpurchased portion of the
Senior Notes surrendered, if any; provided, that each such new Senior 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 hereof, as the case may be, each Issuer and the
Guarantor 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, the Guarantor or any such Subsidiary, as the case
may be, and (ii) the rights (charter and statutory), licenses and franchises of
each Issuer, the Guarantor and their respective Subsidiaries; provided, however,
that the Issuers and the Guarantor shall not be required to preserve any such
right, 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
Guarantor and their Subsidiaries, taken as a whole and that the loss thereof is
not adverse in any material respect to the Holders of the Senior Notes.
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SECTION 4.16. LINE OF BUSINESS.
For so long as any Senior 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 shall not, and shall 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, unless (a) the Partnership or such
Subsidiary would be permitted under this Indenture to incur Indebtedness secured
by a Lien on such property in an amount equal to the Attributable Debt with
respect to such sale and leaseback transaction or (b) the lease in such sale and
leaseback transaction is for a term not in excess of the lesser of (i) three
years and (ii) 60% of the useful remaining life of such property.
Notwithstanding the foregoing, the Partnership and its Subsidiaries may enter
into sale and leaseback transactions relating to propane tanks up to an
aggregate principal amount of $25 million at any time, provided that such
transaction would not cause a default under Section 4.09 hereof.
SECTION 4.18. RESTRICTIONS ON NATURE OF INDEBTEDNESS AND ACTIVITIES OF FINANCE
CORP.
In addition to 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 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 Senior 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
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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 Senior
Notes and this 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 obligation
to pay the principal of, premium, if any, and interest including Liquidated
Damages, if any, on the Senior Notes except in the case of a sale of all of such
Issuer's assets that meets the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Issuers or the Guarantor default in the payment of
interest and Liquidated Damages, if any, on the Senior Notes when the same
becomes due and payable and such default continues for a period of 30
days;
(b) the Issuers or the Guarantor default in the payment of
principal of or premium, if any, on the Senior 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 the Guarantor fail to comply with any of
their other respective agreements or covenants in, or provisions of, the
Senior Notes, the Subsidiary Guarantee 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;
(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, the Subsidiary
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
the Guarantor (or its successors or assigns), or any Person acting on
behalf of the Guarantor (or its successors or assigns), shall deny or
disaffirm its obligations under the Subsidiary Guarantee;
(h) the Partnership breaches any material representation or
warranty set forth in the Pledge Agreement, or default by the Partnership
in the performance of any covenant set forth in the Pledge Agreement after
applicable grace periods, or repudiation by the Partnership of its
obligations under
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the Pledge Agreement or the unenforceability of any material provision of
the Pledge Agreement for any reason;
(i) 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
(j) 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 Senior 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 Senior 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 Senior Notes to
the contrary notwithstanding. If an Event of Default occurs prior to June 15,
2001 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 Senior Notes prior to June 15, 2001 pursuant to Section 3.07
hereof, then the premium payable for purposes of this paragraph for each of the
years beginning on June 15 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 and
Liquidated Damages, if any, to the date of payment:
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Year......................................Percentage
1996......................................109.3750%
1997......................................108.4375%
1998......................................107.5000%
1999......................................106.5625%
2000......................................105.6250%
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (i) and (j) 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 Senior Notes by written notice to the Issuers and the Trustee
may declare the unpaid principal of, any accrued interest and Liquidated
Damages, if any, on all the Senior Notes to be due and payable. Upon such
declaration the principal, interest and Liquidated Damages, if any, 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 (i) or (j) 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 Senior 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, interest or Liquidated Damages, if any, 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, interest and Liquidated Damages, if any, on the Senior Notes or to enforce
the performance of any provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder of a Senior 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 Senior Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Senior 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, interest or Liquidated
Damages, if any, on the Senior Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Senior Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such
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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
Senior 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 Senior Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Note may pursue a remedy with respect to this
Indenture or the Senior Notes only if:
(a) the Holder of a Senior 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 Senior Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Senior Note or Holders of Senior 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 Senior 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 Senior Note to
sue for enforcement of any overdue payment thereon.
A Holder of a Senior Note may not use this Indenture to prejudice the rights of
another Holder of a Senior Note or to obtain a preference or priority over
another Holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Note to receive payment of principal of, premium, if any,
interest, and Liquidated Damages, if any, on the Senior Note, on or after the
respective due dates expressed in the Senior 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, interest, and Liquidated Damages, if
any, remaining unpaid on the Senior 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 Senior Notes allowed in any judicial proceedings relative to the
Issuers (or any other obligor upon the Senior Notes, including the Guarantor),
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 Senior 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 Senior Notes for amounts due and unpaid on
the Senior Notes for principal, premium, if any, interest, and Liquidated
Damages, if any, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Notes for
principal, premium, if any, interest and Liquidated Damages, if any,
respectively; and
Third: to the Partnership or to such party as a court of
competent jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders of Senior 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
Senior 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
(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.
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(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.
(g) Except with respect to Section 4.01 and 4.04 hereof, the Trustee
shall have no duty to inquire as to the performance of the Issuers' covenants in
Article 4 hereof. In addition, the Trustee shall not be deemed to have knowledge
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Sections 6.01(1), 6.01(2) or 6.01(3) hereof or (ii) any Default or
Event of Default of which the Trustee shall have received written notification
or obtained actual knowledge.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with either Issuer, the
Guarantor or any Affiliate of either Issuer or the 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 Senior Notes, it shall
not be accountable for the Issuers' use of the proceeds from the Senior 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 Senior
Notes or any other document in connection with the sale of the Senior 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 Senior 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 including Liquidated Damages on any Senior 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 Senior Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Notes remain outstanding,
the Trustee shall mail to the Holders of the Senior Notes a brief report dated
as of such reporting date that complies with TIA ss. 313(a) (but if no event
described in TIA ss. 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Senior Notes shall be mailed to the Issuers and filed with the SEC and each
stock exchange on which the Senior Notes are listed in accordance with TIA ss.
313(d). The Issuers shall promptly notify the Trustee when the Senior Notes are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers and the Guarantor 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 Guarantor
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances
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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.
The Issuers and the Guarantor 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 Guarantor (including this Section 7.07), and defending
itself against any claim (whether asserted by either Issuer, the 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 Guarantor of their obligations hereunder. The
Issuers and the Guarantor shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Issuers and the
Guarantor shall pay the reasonable fees and expenses of such counsel. The
Issuers and the Guarantor need not pay for any settlement made without their
consent, which consent shall not be unreasonably withheld.
The obligations of the Issuers and the Guarantor under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Issuers' and the Guarantor's payment obligations in
this Section, the Trustee shall have a Lien prior to the Senior Notes on all
money or property held or collected by the Trustee, except that held in trust to
pay principal and interest on particular Senior 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(i) or (j) 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 ss. 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 Senior
Notes of a majority in principal amount of the then outstanding Senior 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
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(d) the Trustee becomes incapable of acting.
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 Senior 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, the
Guarantor, or the Holders of Senior Notes of at least 10% in principal amount of
the then outstanding Senior 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 Senior Note
who has been a Holder of a Senior Note for at least six months, fails to comply
with Section 7.10 hereof, such Holder of a Senior 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 Senior 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 Guarantor's 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 $50 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 ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 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 Senior 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 the Guarantor 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 Senior Notes and Subsidiary Guarantee 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 Senior 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
Senior 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
Senior 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 including Liquidated Damages, if
any, on such Senior Notes when such payments are due, (b) the Issuers' and
Guarantor's obligations with respect to such Senior 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 Guarantor's 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 the Guarantor 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 Senior Notes and the Subsidiary Guarantee on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Senior 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 Senior Notes shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Senior 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 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
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as specified above, the remainder of this Indenture, such Senior Notes and the
Subsidiary Guarantee 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 Senior Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers or the Guarantor 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 Senior 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,
interest, including Liquidated Damages, if any, on the outstanding Senior
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 including Liquidated Damages, if any, and (B) any
mandatory sinking fund payments or analogous payments applicable to the
outstanding Senior Notes on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such Senior
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 Senior Notes;
(b) in the case of an election under Section 8.02 hereof, the
Issuers or the Guarantor 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
Senior 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 or the Guarantor 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 Senior 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 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;
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(d) no Event of Default shall have occurred and be continuing on
the date of such deposit or, insofar as Sections 6.01(i) or 6.01(j) 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 or the Guarantor 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 or the Guarantor shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was not made by
the Issuers or the Guarantor with the intent of preferring the Holders
over any other creditors of the Issuers or the Guarantor or with the
intent of defeating, hindering, delaying or defrauding any other creditors
of the Issuers or others; and
(h) the Issuers or the Guarantor 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 Senior
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior 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 Senior Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, including Liquidated Damages, if any, but such money need not be
segregated from other funds except to the extent required by law.
The Issuers and the Guarantor 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 Senior Notes.
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.
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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, interest or Liquidated Damages, if any, on any Senior Note and remaining
unclaimed for two years after such principal, and premium, if any, interest or
Liquidated Damages, 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 Senior 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 Guarantor's obligations under this
Indenture, the Senior Notes and the Subsidiary Guarantee 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 Guarantor make any payment of
principal of, premium, if any, interest or Liquidated Damages, if any, on any
Senior Note following the reinstatement of its obligations, the Issuers and the
Guarantor shall be subrogated to the rights of the Holders of such Senior 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 SENIOR NOTES.
Notwithstanding Section 9.02 of this Indenture, the Issuers, the
Guarantor and the Trustee may amend or supplement this Indenture or the Senior
Notes or the Subsidiary Guarantee or the Pledge Agreement without the consent of
any Holder of a Senior Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to
or in place of certificated Senior Notes;
(c) to provide for the assumption of the Partnership's, Finance
Corp.'s or the Guarantor's obligations to the Holders of the Senior Notes
in the case of a merger or consolidation pursuant to Article 5 or Article
12 hereof, as the case may be;
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(d) to make any change that would provide any additional rights
or benefits to the Holders of the Senior Notes or that does not adversely
affect the legal rights hereunder of any Holder of the Senior 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 Guarantor 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.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES.
Except as provided below in this Section 9.02, the Issuers, the
Guarantor and the Trustee may amend or supplement this Indenture or the Senior
Notes or the Subsidiary Guarantee or the Pledge Agreement with the written
consent of the Holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for the Senior 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, interest
or Liquidated Damages, if any, on the Senior Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture or the Senior Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Senior
Notes (including consents obtained in connection with a tender offer or exchange
offer for the Senior 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 Senior 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 Guarantor 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 Senior
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 Senior 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 Senior Notes then
outstanding may waive compliance in a particular instance by the Issuers
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or the Guarantor with any provision of this Indenture, the Senior Note, the
Pledge Agreement or the Subsidiary Guarantee. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Senior
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Senior Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Note or alter any of the provisions with respect to the redemption
of the Senior Notes (other than provisions of Section 4.10 and Section
4.14 hereof);
(c) reduce the rate of or change the time for payment of
interest, including default interest and Liquidated Damages, if any, on
any Senior Note;
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, interest or Liquidated Damages, if any, on
the Senior Notes (except a rescission of acceleration of the Senior Notes
by the Holders of at least a majority in aggregate principal amount of the
then outstanding Senior Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Senior Note payable in money other than that
stated in the Senior 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 Senior
Notes to receive payments of principal of, premium, if any, interest or
Liquidated Damages, if any, on the Senior Notes;
(g) waive a redemption payment with respect to any Senior Note
(other than a payment required by Section 4.10 or Section 4.14 hereof);
(h) except as otherwise permitted in this Indenture, release the
Guarantor from its obligations under the Subsidiary Guarantee or change
the Subsidiary Guarantee in any manner that adversely affects Holders;
(i) release all or substantially all of the Pledged Collateral
from the Lien of the Indenture and the Pledge Agreement; 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 Senior 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 Senior Note is a continuing consent by the Holder of a
Senior Note and every subsequent Holder of a Senior Note or portion of a Senior
Note that evidences the same debt as the consenting Holder's Senior Note, even
if notation of the consent is not made on any Senior Note. However, any such
Holder of a Senior Note or subsequent Holder of a Senior Note may revoke the
consent as to its Senior Note if the
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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 SENIOR NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated. The Issuers in
exchange for all Senior Notes may issue and the Trustee shall authenticate new
Senior Notes (accompanied by a notation of the Subsidiary Guarantee duly
endorsed by the Guarantor) that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
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 Guarantor 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
COLLATERAL AND SECURITY
SECTION 10.01. PLEDGE AGREEMENT.
The due and punctual payment of the principal of, premium, if any,
interest, and Liquidated Damages, if any, on the Senior Notes when and as the
same shall be due and payable, whether at maturity, by acceleration, repurchase
or otherwise, and interest on the overdue principal of, premium, if any,
interest, and Liquidated Damages, if any, on the Senior Notes and performance of
all other obligations of the Issuers to the Holders of Senior Notes or the
Trustee under this Indenture and the Senior Notes, according to the terms
hereunder or thereunder, shall be secured as provided in the Pledge Agreement
that the Partnership and the General Partner have entered into simultaneously
with the execution of this Indenture. Each Holder of Senior Notes, by its
acceptance thereof, consents and agrees to the terms of the Pledge Agreement
(including, without limitation, the provisions providing for foreclosure and
release of Pledged Collateral) as the same may be in effect or may be amended
from time to time in accordance with its terms and authorizes and directs the
Collateral Agent to enter into the Pledge Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith. The
Partnership shall deliver to the Trustee copies of all documents delivered to
the Collateral Agent pursuant to the Pledge Agreement, and shall do or cause to
be done all such acts and things as may be necessary or proper, or as may be
required by the provisions of the Pledge Agreement, to assure and confirm to the
Trustee and the Collateral Agent the security interest in the Pledged Collateral
contemplated hereby, by the Pledge Agreement or any part thereof, as from time
to time constituted, so as to render the same available for the security and
benefit of this Indenture and of the Senior Notes
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secured hereby, according to the intent and purposes herein expressed. The
Partnership shall take, or shall cause its Subsidiaries to take, upon request of
the Trustee, any and all actions reasonably required to cause the Pledge
Agreement to create and maintain, as security for the Obligations of the Issuers
hereunder, a valid and enforceable perfected first priority Lien in and on all
the Pledged Collateral, in favor of the Collateral Agent for the benefit of the
Holders of Senior Notes, superior to and prior to the rights of all third
Persons and subject to no other Liens, other than as permitted by the Pledge
Agreement.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Partnership shall furnish to the Trustee simultaneously with
the execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Pledge Agreement, and reciting with respect to the security
interests in the Pledged Collateral, the details of such action, or (ii) stating
that, in the opinion of such counsel, no such action is necessary to make such
Lien effective.
(b) The Partnership shall furnish to the Collateral Agent and the
Trustee on April 26 in each year beginning with April 26, 1996, an Opinion of
Counsel, dated as of such date, either (i) (A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Pledge
Agreement and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given and (B) stating that, based on relevant laws as
in effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Senior Notes and the Collateral Agent and the Trustee
hereunder and under the Pledge Agreement with respect to the security interests
in the Pledged Collateral, or (ii) stating that, in the opinion of such counsel,
no such action is necessary to maintain such Lien.
(c) The Issuers shall otherwise comply with the provisions of TIA
ss.314(b). SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Pledged Collateral may be released from the Lien and security interest created
by the Pledge Agreement at any time or from time to time in accordance with the
provisions of the Pledge Agreement or as provided hereby.
(b) No Pledged Collateral shall be released from the Lien and
security interest created by the Pledge Agreement pursuant to the provisions of
the Pledge Agreement unless there shall have been delivered to the Collateral
Agent an Officers' Certificate certifying that all conditions precedent
hereunder have been met. Upon receipt of such Officers' Certificate the
Collateral Agent shall execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to evidence the release of
any Pledged Collateral permitted to be released pursuant to this Indenture or
the Pledge Agreement.
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(c) At any time when an Event of Default shall have occurred and be
continuing and the maturity of the Senior Notes shall have been accelerated
(whether by declaration or otherwise) and the Trustee shall have delivered a
notice of acceleration to the Collateral Agent, no release of Pledged Collateral
pursuant to the provisions of the Pledge Agreement shall be effective as against
the Holders of Senior Notes.
(d) The release of any Pledged Collateral from the terms of this
Indenture and the Pledge Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms hereof or of the
Pledge Agreement. To the extent applicable, the Issuers shall cause TIA ss.
313(b), relating to reports, and TIA ss. 314(d), relating to the release of
property or securities from the Lien and security interest of the Pledge
Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement, to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by an Officer of the General Partner, on behalf of the
Partnership, except in cases where TIA ss. 314(d) requires that such certificate
or opinion be made by an independent Person, which Person shall be an
independent engineer, appraiser or other expert selected or approved by the
Trustee and the Collateral Agent in the exercise of reasonable care.
SECTION 10.04. CERTIFICATES OF THE ISSUERS.
The Issuers shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the Pledge
Agreement, (i) all documents required by TIA ss.314(d) and (ii) an Opinion of
Counsel, which may be rendered by internal counsel to the Issuers, to the effect
that such accompanying documents constitute all documents required by TIA
ss.314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02
hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
SECTION 10.05. CERTIFICATES OF THE TRUSTEE.
In the event that the Partnership wishes to release Pledged
Collateral in accordance with the Pledge Agreement and has delivered the
certificates and documents required by the Pledge Agreement and Sections 10.03
and 10.04 hereof, the Trustee shall determine whether it has received all
documentation required by TIA ss.314(d) in connection with such release and,
based on such determination and the Opinion of Counsel delivered pursuant to
Section 10.04, shall deliver a certificate to the Collateral Agent setting forth
such determination.
SECTION 10.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
PLEDGE AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Senior Notes, direct, on behalf of the Holders of Senior Notes, the Collateral
Agent to, take all actions it deems necessary or appropriate in order to (a)
enforce any of the terms of the Pledge Agreement and (b) collect and receive any
and all amounts payable in respect of the Obligations of the Issuers hereunder.
The Trustee shall have power to institute and maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Pledged
Collateral by any acts that may be unlawful or in violation of the Pledge
Agreement or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders of Senior Notes in the Pledged Collateral (including power to institute
and maintain suits
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or proceedings to restrain the enforcement of or compliance with any legislative
or other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of Senior Notes or of the Trustee).
SECTION 10.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
PLEDGE AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Senior Notes distributed under the Pledge Agreement, and to make
further distributions of such funds to the Holders of Senior Notes according to
the provisions of this Indenture.
SECTION 10.08. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Issuers under this
Indenture and the Senior Notes, or upon Legal Defeasance, the Trustee shall, at
the request of the Issuers deliver a certificate to the Collateral Agent stating
that such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Pledge Agreement.
ARTICLE 11
SUBORDINATION OF SUBSIDIARY GUARANTEE
SECTION 11.01.SUBSIDIARY GUARANTEE OBLIGATIONS SUBORDINATED TO SENIOR OPERATING
PARTNERSHIP INDEBTEDNESS.
The Issuers and the Operating Partnership agree and each Holder by
accepting a Senior Note agrees that:
(a) to the extent and in the manner hereinafter set forth in this
Article 11, the Subsidiary Guarantee Obligations are hereby expressly made
subordinate and subject in right of payment to the prior payment in full in cash
or Cash Equivalents of all Senior Operating Partnership Indebtedness;
(b) the subordination set forth in this Indenture is for the benefit
of the lenders under the Senior Operating Partnership Credit Agreement and other
holders of Senior Operating Partnership Indebtedness; and
(c) each holder of Senior Operating Partnership Indebtedness whether
now outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have extended or acquired such Senior Operating Partnership
Indebtedness in reliance upon the covenants and provisions contained in this
Indenture.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE UPON INSOLVENCY OR
LIQUIDATION PROCEEDINGS.
In the event of any Insolvency or Liquidation Proceeding:
(a) Upon any payment or distribution of assets or securities of any
kind or character, whether in cash, securities or other property, all Senior
Operating Partnership Indebtedness shall first be paid in
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full in cash or Cash Equivalents before the Holders of the Senior Notes are
entitled to receive any payment or distribution of any cash, securities or other
property on account of principal of or interest on or other amounts constituting
Subsidiary Guarantee Obligations (except that so long as the Subsidiary
Guarantee Obligations are not treated in any Insolvency or Liquidation
Proceeding as part of the same class of claims as the Senior Operating
Partnership Indebtedness or any class of claim on a parity with or senior to the
Senior Operating Partnership Indebtedness for any payment or distribution, the
Holders of the Senior Notes may receive securities that are (i) subordinated at
least to the same extent as are the Subsidiary Guarantee Obligations to (a)
Senior Operating Partnership Indebtedness and (b) any securities issued in
exchange for Senior Operating Partnership Indebtedness and (ii) authorized by an
order or decree of a court of competent jurisdiction in an Insolvency or
Liquidation Proceeding which gives effect to the subordination of the Subsidiary
Guarantee Obligations to Senior Operating Partnership Indebtedness in a manner
and with an effect which would be required if this parenthetical clause were not
included in this paragraph; provided that the Senior Operating Partnership
Indebtedness is assumed by the new corporation, partnership or other entity, if
any, resulting from any such reorganization or readjustment and issuing such
securities);
(b) The holders of Senior Operating Partnership Indebtedness shall be
entitled to receive directly (pro rata on the basis of the respective amounts of
Senior Operating Partnership Indebtedness held by them), for application to the
payment thereof (to the extent necessary to pay all such Senior Operating
Partnership Indebtedness in full after giving effect to any substantially
concurrent payment to the holders of such Senior Operating Partnership
Indebtedness), any payment or distribution of any kind or character, whether in
cash, securities or other property (including any payment or distribution which
may be payable or deliverable by reason of the payment of any other Indebtedness
of the Operating Partnership being subordinated to the payment of the Subsidiary
Guarantee Obligations) which may be payable or deliverable in respect of the
Subsidiary Guarantee Obligations in any such Insolvency or Liquidation
Proceeding.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 11.02, the Holders of the Senior Notes shall have received any
payment from or distribution of assets or securities of the Operating
Partnership or the estate created by the commencement of any such Insolvency or
Liquidation Proceeding, of any kind or character in respect of the Subsidiary
Guarantee Obligations, whether in cash, securities or other property (including
any payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of the Operating Partnership being
subordinated to the payment of the Subsidiary Guarantee Obligations) before all
Senior Operating Partnership Indebtedness is paid in full, then and in such
event such payment or distribution shall be received and held in trust for and
shall be paid over or delivered to the holders of the Senior Operating
Partnership Indebtedness remaining unpaid (pro rata on the basis of the
respective amounts of such Senior Operating Partnership Indebtedness held by
them), to the extent necessary to pay all such Senior Operating Partnership
Indebtedness in full after giving effect to any substantially concurrent payment
to the holders of such Senior Operating Partnership Indebtedness, for
application to the payment in full of such Senior Operating Partnership
Indebtedness (except that so long as the Subsidiary Guarantee Obligations are
not treated in any Insolvency or Liquidation Proceeding as part of the same
class of claims as the Senior Operating Partnership Indebtedness or any class of
claim on a parity with or senior to the Senior Operating Partnership
Indebtedness for any payment or distribution, the Holders of the Senior Notes
may receive securities that are (i) subordinated at least to the same extent as
are the Subsidiary Guarantee Obligations to (a) Senior Operating Partnership
Indebtedness and (b) any securities issued in exchange for Senior Operating
Partnership Indebtedness and (ii) authorized by an order or decree of a court of
competent jurisdiction in an Insolvency or Liquidation Proceeding which gives
effect to the subordination of the Subsidiary Guarantee Obligations to Senior
Operating Partnership Indebtedness
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in a manner and with an effect which would be required if this parenthetical
clause were not included in this paragraph; provided that the Senior Operating
Partnership Indebtedness is assumed by the new corporation, partnership or other
entity, if any, resulting from any such reorganization or readjustment and
issuing such securities);
SECTION 11.03. NO PAYMENT ON SUBSIDIARY GUARANTEE OBLIGATIONS IN CERTAIN
CIRCUMSTANCES.
(a) Upon the maturity of any Senior Operating Partnership
Indebtedness, by lapse of time, acceleration or otherwise (including the time of
due payment (including any mandatory prepayment) of any principal or interest),
all principal, thereof and interest thereon and other amounts constituting
Senior Operating Partnership Indebtedness shall first be paid in full in cash or
Cash Equivalents before any payment or distribution is made by or on behalf of
the Operating Partnership on account of principal of or interest on or other
amounts constituting Subsidiary Guarantee Obligations (except that Holders of
Senior Notes may receive securities that are subordinated to at least the same
extent as the Subsidiary Guarantee to (a) Senior Operating Partnership
Indebtedness and (b) any securities issued in exchange for Senior Operating
Partnership Indebtedness);
(b) Upon the happening and continuing of any default in respect of
the payment of any Senior Operating Partnership Indebtedness (a "Payment
Default"), no direct or indirect payment or distribution shall be made by the
Operating Partnership on account of the principal of or interest on or other
amounts constituting Subsidiary Guarantee Obligations (other than securities
that are subordinated to at least the same extent as the Subsidiary Guarantee to
(a) Senior Operating Partnership Indebtedness and (b) any securities issued in
exchange for Senior Operating Partnership Indebtedness), unless and until (i)
such Payment Default shall have been cured or waived by the holders of the
respective Senior Operating Partnership Indebtedness or shall have ceased to
exist or (ii) the holder or holders of the respective Senior Operating
Partnership Indebtedness shall have waived in writing the application of this
Section 11.03(b) to such Payment Default.
(c) Without limiting the effect of Section 11.03(b), upon the
happening and continuing of any default or event of default (other than a
Payment Default) with respect to any Senior Operating Partnership Indebtedness,
as such default or event of default is defined in the Senior Operating
Partnership Credit Agreement or in any instrument, agreement or other document
under which such Senior Operating Partnership Indebtedness is outstanding (a
"Non-Payment Default"), then upon written notice thereof given to the Operating
Partnership by the Senior Agent, by holders of a majority in principal amount of
the Indebtedness under the Senior Operating Partnership Credit Agreement or the
agreement governing Permitted Senior Refinancing Indebtedness, or by the holders
of a majority in principal amount of all Senior Operating Partnership
Indebtedness ("Payment Blockage Notice"), no direct or indirect payment or
distribution shall be made by the Operating Partnership on account of the
principal of or interest on or other amounts constituting Subsidiary Guarantee
Obligations (other than securities that are subordinated to at least the same
extent as the Subsidiary Guarantee to (a) Senior Operating Partnership
Indebtedness and (b) any securities issued in exchange for Senior Operating
Partnership Indebtedness) unless and until (i) such Non-Payment Default shall
have been cured or waived by the holder or holders of the respective Senior
Operating Partnership Indebtedness or shall have ceased to exist or (ii) the
holder or holders of the respective Senior Operating Partnership Indebtedness
shall have waived in writing the application of this Section 11.03(c) to such
Non-Payment Default; provided, however, that (A) this Section 11.03(c) shall not
prevent the making of any payment for more than 179 days after a Payment
Blockage Notice shall have been given or deemed to have been given ("Payment
Blockage Period") unless the Senior Operating Partnership Indebtedness in
respect of which such default or event of default exists has been declared due
and payable in its entirety, in which case no payment or
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distribution may be made until such acceleration has been rescinded or annulled
and (B) not more than one effective Payment Blockage Notice shall be given
within a period of 360 consecutive days and there shall be a period of at least
181 consecutive days in each 360-day period when no Payment Blockage Period is
in effect.
(d) In the event that, notwithstanding the foregoing provisions of
Section 11.03 (a), (b) or (c) or Section 11.10, the Holders of the Senior Notes
shall have received any payment or distribution at a time when such payment was
prohibited by the provisions of Section 11.03 (a), (b) or (c) or required to be
paid over to the holders of the Senior Operating Partnership Indebtedness
pursuant to Section 11.10 then and in such event such payment or distribution
shall be received and held in trust for and shall be paid over to the holders of
Senior Operating Partnership Indebtedness (pro rata, on the basis of the
respective amounts of such Senior Operating Partnership Indebtedness held by
them), to the extent necessary to pay all such Senior Operating Partnership
Indebtedness in full after giving effect to any substantially concurrent payment
to the holders of such Senior Operating Partnership Indebtedness, for
application to the payment in full of Senior Operating Partnership Indebtedness.
(e) The provisions of this Section 11.03 shall not modify or limit in
any way the application of Section 11.02 or Section 11.10.
SECTION 11.04. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR OPERATING PARTNERSHIP
INDEBTEDNESS.
After all amounts payable under or in respect of Senior Operating
Partnership Indebtedness are paid in full, the Holders of the Senior Notes shall
be subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, such Senior Operating Partnership
Indebtedness pursuant to the provisions of this Article 11, to the rights of the
holders of such Senior Operating Partnership Indebtedness to receive payments
and distributions of cash, securities and other property applicable to the
Senior Operating Partnership Indebtedness until the principal of, premium, if
any, and interest, including Liquidated Damages, if any, on the Senior Notes,
constituting the Subsidiary Guarantee Obligations shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Operating Partnership Indebtedness of any cash, securities or other
property to which the Holders of the Senior Notes would be entitled except for
the provisions of this Article 11, and no payments over pursuant to the
provisions of this Article 11 to the holders of the Senior Operating Partnership
Indebtedness by the Holders of the Senior Notes shall be deemed to be a payment
or distribution by the Operating Partnership to or on account of the Subsidiary
Guarantee Obligations, it being understood that the provisions of this Article
11, are solely for the purpose of defining the relative rights of the Holders of
the Senior Notes, on the one hand, and the holders of Senior Operating
Partnership Indebtedness on the other hand.
SECTION 11.05. EFFECTUATION OF SUBORDINATION OF SUBSIDIARY GUARANTEE.
In the event of any Insolvency or Liquidation Proceeding, the Senior
Agent is irrevocably authorized and empowered, in its discretion, to make and
present for and on behalf of the Holders of the Senior Notes such proofs of
claims against the Operating Partnership on account of the Subsidiary Guarantee
Obligations or other motions or pleadings as the Senior Agent may deem expedient
or proper; provided, however, the Senior Agent may make and present such proofs
of claims only if the Holders of the Senior Notes have not filed such proofs of
claims by the thirtieth day prior to the date on which such claims are required
to be filed. After such thirty-day period, if the Holders of the Senior Notes
have not filed such proofs of claims, the Holders of the Senior Notes
irrevocably authorizes and empowers the
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Senior Agent to file claims and take such other actions (other than vote such
proof of claims in such proceedings), in the name of the Senior Agent or the
Holders of the Senior Notes or otherwise, as the Senior Agent may deem necessary
or advisable for the enforcement of the Subsidiary Guarantee. In such event, the
Holders of the Senior Notes or Trustee will execute and deliver to the Senior
Agent such powers of attorney, assignments and other instruments or documents as
may be requested by the Senior Agent in order to enable such Senior Agent to
enforce any and all claims upon or with respect to the Subsidiary Guarantee
Obligations.
SECTION 11.06. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of the Senior Agent under the Senior Operating Partnership
Credit Agreement or any other holder of any Senior Operating Partnership
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Issuers or the Operating Partnership or by any act or failure to act by the
Senior Agent under the Senior Operating Partnership Credit Agreement or any such
holder or by any noncompliance by the Issuers or the Operating Partnership with
the terms, provisions and covenants of Article 11 of this Indenture, the
Subsidiary Guarantee or the Senior Operating Partnership Credit Agreement
regardless of any knowledge thereof which the Senior Agent or such other holder
thereof may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the Senior Agent under the Senior Operating Partnership Credit
Agreement and any other holders of Senior Operating Partnership Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Holders of the Senior Notes or the Trustee, without incurring responsibility to
the Holders of the Senior Notes or the Trustee and without impairing or
releasing the subordination benefits provided in this Indenture or the
obligations provided by this Article 11 of the Holders of the Senior Notes to
the holders of Senior Operating Partnership Indebtedness, do any one or more of
the following to the extent permitted by the terms of this Indenture even if any
right to reimbursement or subrogation or other right or remedy of the Holders of
the Senior Notes is affected, impaired or extinguished thereby:
(a) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend or alter, the terms of any
Senior Operating Partnership Indebtedness, any security therefor or guaranty
thereof or any liability of the Operating Partnership or any guarantor to such
holder, or any liability incurred directly or indirectly in respect thereof, or
otherwise amend, renew, exchange, modify or supplement in any manner Senior
Operating Partnership Indebtedness or any instrument evidencing or guaranteeing
or securing the same or any agreement under which Senior Operating Partnership
Indebtedness is outstanding;
(b) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and any order any property pledged, mortgaged
or otherwise securing Senior Operating Partnership Indebtedness or any liability
of the Operating Partnership or any guarantor to such holder, or any liability
incurred directly or indirectly in respect thereof;
(c) settle or compromise any Senior Operating Partnership
Indebtedness or any other liability of the Operating Partnership or any
guarantor of the Senior Operating Partnership Indebtedness to such holder or any
security therefor or any liability incurred directly or indirectly in respect
thereof and apply any sums by whomsoever paid and however realized to any
liability (including, without limitation, Senior Operating Partnership
Indebtedness) in any manner or order; and
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(d) fail to take or to record or otherwise perfect, for any reason or
for no reason, any Lien securing Senior Operating Partnership Indebtedness by
whomsoever granted, exercise or delay in or refrain from exercising any right or
remedy against the Operating Partnership or any security or any guarantor or any
other Person, elect any remedy and otherwise deal freely with the Operating
Partnership and security and any guarantor of the Senior Operating Partnership
Indebtedness or any liability of the Issuers or the Operating Partnership or any
guarantor to such holder or any liability incurred directly or indirectly in
respect thereof.
Each Holder of the Senior Notes by purchasing or accepting the Senior
Notes waives any and all notice of the creation, modification, renewal,
extension or accrual of any Senior Operating Partnership Indebtedness to the
extent permitted by the terms of this Indenture and notice of or proof of
reliance by any holder of Senior Operating Partnership Indebtedness upon this
Indenture and the Senior Operating Partnership Indebtedness shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
Indenture, and all dealings between the Issuers or the Operating Partnership and
the holders of Senior Operating Partnership Indebtedness shall be deemed to have
been consummated in reliance upon this Indenture.
SECTION 11.07. RELIANCE ON COURT ORDERS; EVIDENCE OF STATUS.
Upon any payment or distribution of assets of the Operating
Partnership referred to in Section 11.02, the Holders of the Senior Notes shall
be entitled to rely upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution
delivered to the Trustee or such Holders for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Operating Partnership Indebtedness and other indebtedness of the
Operating Partnership, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or
this Article 11.
SECTION 11.08. PAYMENT.
A payment by the Operating Partnership with respect to principal of
or interest on the Subsidiary Guarantee Obligations shall include, without
limitation, payment by the Operating Partnership of principal of and interest on
the Senior Notes, any depositing by the Operating Partnership of funds for the
defeasance of the Subsidiary Guarantee Obligations, any sinking fund and any
payment by the Operating Partnership on account of mandatory prepayment or
optional redemption provisions.
SECTION 11.09. RELATIVE RIGHTS.
This Article 11 defines the relative rights of Holders of Senior
Notes pursuant to the Subsidiary Guarantee and holders of Senior Operating
Partnership Indebtedness. Nothing in this Article 11 shall:
(1) impair, as between the Operating Partnership and Holders of
Senior Notes, the Subsidiary Guarantee Obligations of the Operating
Partnership, which are absolute and unconditional after the Subsidiary
Guarantee Effectiveness Date;
(2) affect the relative rights of Holders of Senior Notes and
creditors of the Operating Partnership other than their rights in relation
to holders of Senior Operating Partnership Indebtedness; or
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(3) prevent the Trustee or any Holder of Senior Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Operating Partnership Indebtedness
to receive distributions and payments otherwise payable to Holders of
Senior Notes.
If the Operating Partnership fails because of this Article 11 to pay
principal of, premium, if any, interest, or Liquidated Damages, if any, on a
Senior Note on the due date in accordance with the terms of this Indenture and
the Subsidiary Guarantee, the failure is still a Default or Event of Default.
SECTION 11.10. RESTRICTIONS ON PAYMENTS OF PRINCIPAL.
Notwithstanding any other provision of this Indenture (including this
Article 11) or the Subsidiary Guarantee, the Issuers, the Operating Partnership
and the Holders of the Senior Notes agree that no payment shall be made by the
Operating Partnership in respect of the principal of the Senior Notes pursuant
to the Subsidiary Guarantee Obligations prior to July 1, 2000, whether upon
stated maturity, mandatory prepayment, acceleration, by deposit to any
defeasance account or otherwise; provided that, nothing set forth above in this
Section 11.10 shall prohibit the acceleration of the Subsidiary Guarantee
Obligations or the exercise of remedies in respect of the Subsidiary Guarantee
Obligations by the Trustee or the Holders of the Senior Notes in accordance with
the terms of this Indenture so long as (i) the Senior Agent shall have received
from the Trustee at least five (5) days prior written notice of such
acceleration or exercise of remedies, as the case may be, and (ii) any payment
or distribution of cash, securities or other property of any kind or character
to or for the benefit of Holders of the Senior Notes in respect of such
acceleration or the exercise of remedies shall promptly be paid over or
distributed to the holders of the Senior Operating Partnership Indebtedness
until the Senior Operating Partnership Indebtedness shall have been paid in full
in cash or Cash Equivalents (other than securities that are subordinated to at
least the same extent as the Subsidiary Guarantee to (a) Senior Operating
Partnership Indebtedness and (b) any securities issued in exchange for Senior
Operating Partnership Indebtedness) and, in furtherance of the foregoing, (x)
the provisions of Section 11.03(d) shall be applicable in such circumstances and
(y) the provisions of this Section 11.10 shall not modify or limit in any way
the application of Section 11.02 or 11.03.
ARTICLE 12
SUBSIDIARY GUARANTEE
SECTION 12.01. SUBSIDIARY GUARANTEE.
The Guarantor hereby unconditionally guarantees to each Holder of a
Senior Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Senior Notes or the obligations of the Issuers hereunder or
thereunder, that on and after the Subsidiary Guarantee Effectiveness Date: (a)
the principal of and premium, if any, and interest, including Liquidated
Damages, if any, on the Senior Notes shall be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal of, premium, if any, and interest, including Liquidated
Damages, if any, on the Senior Notes, if lawful, and all other obligations of
the Issuers to the Holders or the Trustee hereunder or thereunder shall be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Senior Notes or any of such other obligations, that the same shall be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or
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otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason on and after the Subsidiary
Guarantee Effectiveness Date, the Guarantor shall be obligated to pay the same
immediately. The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder with respect to any provisions hereof or
thereof, the recovery of any judgment against the Issuers, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. The Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Issuers, any right to require a
proceeding first against the Issuers, protest, notice and all demands whatsoever
and covenants that this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Senior Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise to
return to the Issuers or the Guarantor, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Issuers or Guarantor,
any amount paid by either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders of Senior Notes in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. The Guarantor further agrees that, as between the Guarantor,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 6 of this Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 of this Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantor for the purpose of this
Subsidiary Guarantee.
SECTION 12.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 12.01, the
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit C shall be endorsed by an officer of the
General Partner, on behalf of the Guarantor, on each Senior Note authenticated
and delivered by the Trustee, that this Indenture shall be executed on behalf of
the Guarantor by the President or one of the Vice Presidents of the General
Partner and attested to by an Officer and that the Guarantor shall deliver to
the Trustee an Opinion of Counsel that the foregoing have been duly authorized,
executed and delivered by the general partner of the Guarantor and that the
Guarantor's Subsidiary Guarantee is a valid and legally binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms.
The Guarantor hereby agrees that the Subsidiary Guarantee set forth
in Section 12.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Senior Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Note on which the Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantor.
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SECTION 12.03. GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
The Guarantor may not consolidate with or merge with or into (whether
or not the Guarantor is the surviving Person), another corporation, Person or
entity whether or not affiliated with the Guarantor unless:
(a) subject to the provisions of Section 12.04 hereof, the Person
formed by or surviving any such consolidation or merger (if other than the
Guarantor) assumes all the obligations of the Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee in respect of the Senior Notes, this Indenture and the
Guarantor's Subsidiary Guarantee;
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(c) the Guarantor, or any Person formed by or surviving such
consolidation or merger, (i) would have Consolidated Net Worth
(immediately after giving effect to the transaction), equal to or greater
than the Consolidated Net Worth of the Guarantor immediately preceding the
transaction and (ii) would be permitted by virtue of the Guarantor's 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 Credit
Facility and in Section 4.09 of the Operating Partnership Indenture.
Notwithstanding the foregoing, the Guarantor shall not be permitted to
consolidate with or merge with or into (whether or not the Guarantor is the
surviving Person), another corporation, Person or entity pursuant to the
preceding sentence if such consolidation or merger would not be permitted by
Section 5.01 hereof.
In case of any such consolidation or merger 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 Subsidiary
Guarantee endorsed upon the Senior Notes and the due and punctual performance 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. Such successor corporation thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon all of the Senior Notes
issuable hereunder which theretofore shall not have been signed by the Issuers
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantee theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Senior Notes shall prevent any consolidation or
merger of the Guarantor with or into the Partnership, or shall prevent any sale
or conveyance of the property of the Guarantor as an entirety or substantially
as an entirety to the Partnership.
SECTION 12.04. RELEASE OF SUBSIDIARY GUARANTEE.
In the event of a sale or other disposition of all or substantially
all of the assets of the Guarantor to a third party in a transaction that does
not violate any provisions of this Indenture or the Pledge
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Agreement, by way of merger, consolidation or otherwise, or a sale or other
disposition (including, without limitation, by foreclosure) of all of the
Capital Interests of the Guarantor, then the Guarantor (in the event of a sale
or other disposition (including, without limitation, by foreclosure), by way of
such a merger, consolidation or otherwise, of all of the Capital Interests of
the Guarantor) or the corporation or partnership acquiring the property (in the
event of a sale or other disposition of all of the assets of the Guarantor)
shall be released and relieved of any obligations under the Subsidiary
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 hereof. Upon delivery by the General
Partner and Finance Corp. to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Partnership in accordance with the provisions of this Indenture, including
without limitation Section 4.10, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantor from its
obligations under the Subsidiary Guarantee.
SECTION 12.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, the Guarantor's liability shall be that amount
from time to time equal to the aggregate liability of the Guarantor thereunder,
but shall be limited to the lesser of (i) the aggregate amount of the
Obligations of the Issuers under the Senior Notes and this Indenture and (ii)
the amount, if any, which would not have (A) rendered the Guarantor "insolvent"
(as such term is defined in the federal Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left it with unreasonably small
capital at the time the Subsidiary Guarantee of the Senior Notes was entered
into and at the Subsidiary Guarantee Effectiveness Date, after giving effect to
the incurrence of existing Indebtedness immediately prior to such time; provided
that, it shall be a presumption in any lawsuit or other proceeding in which the
Guarantor is a party that the amount guaranteed pursuant to the Subsidiary
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of the Guarantor, or debtor in possession or trustee
in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of the Guarantor is limited to the amount set forth in
clause (ii). In making any determination as to the solvency or sufficiency of
capital of the Guarantor in accordance with the previous sentence, any rights
the Guarantor may have, contractual or otherwise, shall be taken into account.
SECTION 12.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Issuers and be then acting hereunder, the term
"Trustee" as used in this Article 12 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 12 in place of the Trustee.
SECTION 12.07. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The obligations of the Guarantor under the Subsidiary Guarantee
pursuant to this Article 12 shall be junior and subordinated to all Senior
Operating Partnership Indebtedness as set forth in Article 11 of this Indenture.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Issuers, the Guarantor 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 the Guarantor:
Ferrellgas Partners, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
With a copy to:
Bryan Cave LLP
One Kansas City Place
1200 Main Street, Suite 3500
Kansas City, Missouri 64105-2100
Telecopier No.: (816) 374-3300
Attention: Kendrick T. Wallace
If to the Trustee:
American Bank National Association
101 East Fifth Street
St. Paul, MN 55101-1860
Telecopier No.: (612) 229-6415
Attention: Corporate Trust Administration
The Issuers, the Guarantor 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; 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.
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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 ss. 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 either Issuer or the Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER HOLDERS OF
SENIOR NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Senior Notes. The
Issuers, the Guarantor, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers or the Guarantor to
the Trustee to take any action under this Indenture, each of the Issuers or the
Guarantor 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 13.05 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 13.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 13.05. 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 ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 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;
(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
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(d) a statement as to whether, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.06. 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 13.07. NO PERSONAL LIABILITY OF LIMITED PARTNERS, DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No past, present or future limited partner of the Partnership or the
Guarantor or director, officer, employee, incorporator or stockholder of the
General Partner or Finance Corp., as such, shall have any liability for any
obligations of the Issuers or the Guarantor under the Senior Notes, the
Subsidiary Guarantee, the Pledge Agreement, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Senior Notes by accepting a Senior Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Senior Notes.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND THE SUBSIDIARY GUARANTEE.
SECTION 13.09. 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 13.10. SUCCESSORS.
All agreements of the Issuers and the Guarantor in this Indenture and
the Senior Notes and the Subsidiary Guarantee, as the case may be, shall bind
their respective successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture, in the Senior Notes or in
the Subsidiary Guarantee 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 13.12. 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 13.13. 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]
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SIGNATURES
Dated as of April 26, 1996 FERRELLGAS PARTNERS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
Name:
Title:
(SEAL)
Dated as of April 26, 1996 FERRELLGAS PARTNERS FINANCE CORP.
By:
Name:
Title:
(SEAL)
Dated as of April 26, 1996 FERRELLGAS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
Name:
Title:
(SEAL)
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Dated as of April 26, 1996 AMERICAN BANK NATIONAL ASSOCIATION
By:
Name:
Title:
Attest:
(SEAL)
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EXHIBIT A
(Face of Senior Note)
93/8% Senior Secured Note due 2006
No. $160,000,000
FERRELLGAS PARTNERS, L.P.
FERRELLGAS PARTNERS FINANCE CORP.
promise to pay to
or registered assigns,
the principal sum of One Hundred and Sixty Million
Dollars ($160,000,000) on June 15, 2006.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Dated: April 26, 1996
FERRELLGAS PARTNERS, L.P.
[SEAL] By: Ferrellgas, Inc.
General Partner
By:
Name:
Title:
FERRELLGAS PARTNERS FINANCE
CORP.
[SEAL] By: __________________________
Name:
Title:
A-1
<PAGE>
This is one of the Senior Notes referred to in the within-mentioned Indenture:
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Signatory
A-2
<PAGE>
(Back of Note)
93/8% SENIOR SECURED NOTE
DUE 2006
[Unless and until it is exchanged in whole or in part for Senior Notes
in definitive form, this Senior Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
may be requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]1
THE SENIOR NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), AND THE SENIOR NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SENIOR NOTE
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SENIOR NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SENIOR NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SENIOR NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE.
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
- --------
1 This paragraph should be included only for Senior Notes issued in global form.
A-3
<PAGE>
1. Interest. Ferrellgas Partners, L.P., a Delaware limited
partnership (the "Partnership"), and Ferrellgas Partners Finance Corp., a
Delaware corporation ("Finance Corp." and, together with the Partnership, the
"Issuers") promise to pay interest on the principal amount of this Senior Note
at the rate and in the manner specified below. The Issuers shall pay interest in
cash on the principal amount of this Senior Note at the rate per annum of 93/8%.
The Issuers will pay interest semi-annually in arrears on June 15 and December
15 of each year, commencing on December 15, 1996, to Holders of record on the
immediately preceding June 1 and December 1, or if any such day is not a
Business Day (as defined in the Indenture), on the next succeeding Business Day
(each an "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 Senior Notes. To the extent
lawful, the Issuers shall pay interest on overdue principal and premium, if any,
at the rate of 1% per annum in excess of the then applicable interest rate on
the Senior Notes; it shall pay interest on overdue installments of interest and
Liquidated Damages, if any, (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
Senior Notes (except defaulted interest) to the Persons who are registered
Holders of Senior Notes at the close of business on the June 1 and December 1
immediately preceding the Interest Payment Date, even if such Senior Notes are
cancelled after such record date and on or before such Interest Payment Date.
The Holder hereof must surrender this Senior Note to a Paying Agent to collect
principal payments. The Issuers will pay principal, premium, if any, and
interest including Liquidated Damages, if any, in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. The Senior Notes will be payable as to principal, premium, if any, and
interest including Liquidated Damages, if any, 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 Senior Notes at their respective addresses set forth in the
register of Holders provided, however, that all payments with respect to the
Global Note and definitive Senior Notes the Holders of which have given wire
transfer instructions to the Issuers at least 10 Business Days prior to the
applicable payment date shall be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof. 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 the Guarantor may act in any such capacity.
4. Indenture. The Issuers issued the Senior Notes under an
Indenture dated as of April 26, 1996 (the "Indenture") among the Partnership,
Finance Corp., the Guarantor and the Trustee. The terms of the Senior 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 ss.ss. 77aaa-77bbbb)
as in effect on the date of the Indenture. The Senior Notes are subject to all
such terms, and Holders of the Senior 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 Senior Notes. The Senior Notes
are unsecured general obligations of the Issuers limited to $160,000,000 in
aggregate principal amount.
5. Optional Redemption. The Issuers shall not have the option
to redeem the Senior Notes pursuant to Section 3.07 of the Indenture prior to
June 15, 2001. Thereafter, the Issuers shall have the option to redeem the
Senior 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
A-4
<PAGE>
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the 12 month period beginning on
June 15 of the years indicated below:
Year Percentage
2001.............................................. 104.6875%
2002.............................................. 103.1250%
2003.............................................. 101.5625%
2004 and thereafter............................... 100.0000%
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 Senior 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 Senior Notes at 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. Holders of Senior 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 Senior 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 Senior Notes that may be
purchased out of the Excess Proceeds at 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the date
fixed for the closing of such offer. If the aggregate principal amount of Senior
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Senior 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 Senior Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased). To the extent that the aggregate amount
of Senior Notes tendered by Holders thereof is less than the Excess Proceeds,
the Issuers may use such deficiency for general business purposes. Holders of
Senior 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 Senior 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 Senior Notes to be redeemed at its registered address. Senior Notes
may be redeemed in part but only in whole multiples of $1,000, unless all of the
Senior Notes held by a Holder are to be redeemed. On and after the redemption
date, interest ceases to accrue on Senior Notes or portions of them called for
redemption.
9. Denominations, Transfer, Exchange. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
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 Senior Note or portion of a Senior Note selected for
redemption. Also, it need not exchange or register the transfer of any Senior
Notes for a
A-5
<PAGE>
period of 15 days before a selection of Senior Notes to be redeemed, during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Senior Note, the Trustee, any
Agent, the Issuers and the Guarantor may deem and treat the Person in whose name
this Senior Note is registered as its absolute owner for the purpose of
receiving payment of principal of and interest including Liquidated Damages, if
any, on this Senior Note and for all other purposes whatsoever, whether or not
this Senior Note is overdue, and neither the Trustee, any Agent, the Issuers nor
the Guarantor shall be affected by notice to the contrary. The registered holder
of a Senior Note shall be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes or the Pledge Agreement or the Subsidiary
Guarantee may be amended with the consent of the Holders of at least a majority
in principal amount of the then outstanding Senior Notes (including consents
obtained in connection with a tender offer or exchange offer for Senior Notes),
and any existing default or compliance with any provision of the Indenture or
the Senior Notes or the Pledge Agreement or the Subsidiary Guarantee may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for Senior Notes). Without the consent of any
Holder, the Indenture, the Pledge Agreement, the Subsidiary Guarantee or the
Senior Notes may be amended to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Senior Notes in addition to or in place of
certificated Senior Notes, to provide for assumption of the Issuers' or the
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 Senior Notes held by a non-consenting Holder of Senior
Notes): (i) reduce the principal amount of Senior Notes whose Holders must
consent to an amendment, supplement or waiver, (ii) reduce the principal of,
change the fixed maturity of any Senior Note or alter the provisions with
respect to the redemption of the Senior 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 and Liquidated Damages, if any, on any Senior Note, (iv) waive a
Default or Event of Default in the payment of principal of, premium, if any,
interest or Liquidated Damages, if any, on the Senior Notes (except a rescission
of acceleration of the Senior Notes by the Holders of at least a majority in
aggregate principal amount of the Senior Notes and a waiver of the payment
default that resulted from such acceleration), (v) make any Senior Note payable
in money other than that stated in the Senior Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Senior Notes to receive payments of principal of, premium, if any,
interest or Liquidated Damages, if any, on the Senior Notes, (vii) waive a
redemption payment with respect to any Senior 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 the Guarantor from its obligations under the Subsidiary
Guarantee or change the Subsidiary Guarantee in any manner that adversely
affects the Holders, (ix) release all or substantially all of the Pledged
Collateral from the Lien of the Indenture and the Pledge Agreement or (x) 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 and Liquidated Damages, if any,
on the Senior Notes; default in payment when due of principal of or premium, if
any, on the Senior Notes at maturity, upon redemption or otherwise; failure for
20 days by the Issuers to comply with Sections 4.07, 4.09, 4.10, 4.14 or 5.01 of
A-6
<PAGE>
the Indenture; failure by the Issuers or the Guarantor for 60 days after notice
from the Trustee or the Holder of at least 25% in principal amount of the Senior
Notes then outstanding to comply with any of their other agreements in the
Indenture or the Senior 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; 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, the Subsidiary 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 the Guarantor, or any Person
acting on behalf of the Guarantor, shall deny or disaffirm its obligations under
the Subsidiary Guarantee; breach by the Partnership of any material
representation or warranty set forth in the Pledge Agreement, or default by the
Partnership in the performance of any covenant set forth in the Pledge Agreement
after applicable grace periods, or repudiation by the Partnership of its
obligations under the Pledge Agreement or the unenforceability of any material
provision of the Pledge Agreement for any reason; 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 Senior
Notes may declare all the Senior 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 Senior Notes will become due and payable
without further action or notice. Holders of the Senior Notes may not enforce
the Indenture or the Senior Notes except as provided in the Indenture. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Senior Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest or Liquidated Damages, if any) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Senior Notes then outstanding, by
notice to the Trustee, may on behalf of the Holders of all of the Senior 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, interest and Liquidated Damages, if any, on the
Senior 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, the Guarantor or their
respective Affiliates, and may otherwise deal with the Issuers, the 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.
A-7
<PAGE>
14. No Recourse Against Others. No past, present or future
limited partner of the Partnership or the Guarantor or director, officer,
employee, incorporator or stockholder of the General Partner or Finance Corp.,
as such, shall have any liability for any obligations of the Issuers or the
Guarantor under the Senior Notes, the Subsidiary Guarantee, the Pledge
Agreement, 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 Senior Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Notes.
15. Authentication. This Senior 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. Additional Rights of Holders of Transfer Restricted
Securities. In addition to the rights provided to Holders of Senior Notes under
the Indenture, Holders of Transfer Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement, dated as of April 26,
1996 (the "Registration Rights Agreement"), among the Issuers, the Guarantor and
the parties named on the signature pages thereof.
18. 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 Senior 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 Senior Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
19. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE SENIOR NOTES AND
THE SUBSIDIARY GUARANTEE.
The Issuers will furnish to any Holder upon written request
and without charge a copy of the Indenture, the Registration Rights Agreement
and the Pledge Agreement. Request may be made to:
Ferrellgas Partners, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
A-8
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we) assign
and transfer this Senior 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 Senior 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 Senior Note)
Signature Guarantee.
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior 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 Senior 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 Senior Note)
Tax Identification No.:
Signature Guarantee.
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES2
The following exchanges of a part of this Global Note for
Certificated Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global Note authorized officer
Principal Amount Principal Amount following such of Trustee or
of of decreas Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
2 To be included only for Senior Notes issued in global form.
A-11
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SENIOR NOTES
Re: 93/8% Senior Secured Notes due 2006 of Ferrellgas Partners, L.P. and
Ferrellgas Partners Finance Corp. (the "Senior Notes")
This Certificate relates to $_____ principal amount of Senior Notes
held in * ________ book-entry or *_______ definitive form by ________________
(the "Transferor").
The Transferor*:
has requested the Trustee by written order to deliver in exchange for
its beneficial interest in a Global Note held by the Depositary a Senior Note or
Senior Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
has requested the Trustee by written order to exchange or register
the transfer of a Senior Note or Senior Notes.
In connection with such request and in respect of each such Senior
Note, the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Senior Notes and as provided in
Section 2.06 of such Indenture, the transfer of this Senior Note does not
require registration under the Securities Act (as defined below) because:*
Such Senior Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
Such Senior Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
- ---------------
*Check applicable box.
B-1
<PAGE>
Such Senior Note is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
Such Senior Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, 144 or Rule 904 under the Securities Act.
An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
[INSERT NAME OF TRANSFEROR]
By:
Date:
- ---------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
Subsidiary Guarantee
The Guarantor hereby unconditionally guarantees to each Holder of a
Senior Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Senior Notes or the obligations of the Issuers hereunder or
thereunder, that on and after the Subsidiary Guarantee Effectiveness Date: (a)
the principal of, premium, if any, and interest, including Liquidated Damages,
if any, on the Senior Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of, premium, if any, and interest, including Liquidated Damages, if
any, on the Senior Notes, if lawful, and all other obligations of the Issuers to
the Holders or the Trustee hereunder or thereunder shall be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Senior Notes or
any of such other obligations, that same shall be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason on
and after the Subsidiary Guarantee Effectiveness Date, the Guarantor shall be
obligated to pay the same immediately.
The obligations of the Guarantor to the Holders of Senior Notes and
to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are
expressly set forth in Article 12 of the Indenture, and reference is hereby made
to such Indenture for the precise terms of this Subsidiary Guarantee. The terms
of Article 12 of the Indenture are incorporated herein by reference.
The Obligations of the Guarantor under this Subsidiary Guarantee
shall be subordinated and junior in right of payment to all Senior Operating
Partnership Indebtedness as expressly set forth in Article 11 of the Indenture,
and reference is hereby made to such Indenture for the precise terms of
subordination. The terms of Article 11 of the Indenture are incorporated herein
by reference.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon the Guarantor and its respective
successors and assigns to the extent set forth in the Indenture from the
Subsidiary Guarantee Effectiveness Date until full and final payment of all of
the Issuers' Obligations under the Senior Notes and the Indenture and shall
inure to the benefit of the Trustee and the Holders of Senior Notes and their
successors and assigns and, in the event of any transfer or assignment of rights
by any Holder of Senior Notes 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.
Notwithstanding the foregoing, upon satisfaction of the provisions of Section
12.04 of the Indenture, the Guarantor shall be released of its obligations
hereunder. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until (i) the certificate of authentication on the Senior Note upon
which this Subsidiary Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers
and (ii) the Subsidiary Guarantee Effectiveness Date.
For purposes hereof, the Guarantor's liability will be that amount
from time to time equal to the aggregate liability of the Guarantor hereunder,
but shall be limited to the lesser of (i) the aggregate amount of the
obligations of the Issuers under the Senior Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered the Guarantor "insolvent" (as
such term is defined in the federal Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left it with
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unreasonably small capital at the time the Subsidiary Guarantee of the Senior
Notes was entered into and at the Subsidiary Guarantee Effectiveness Date, after
giving effect to the incurrence of existing Indebtedness immediately prior to
such time; provided that, it shall be a presumption in any lawsuit or other
proceeding in which the Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of the Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a
lawsuit that the aggregate liability of the Guarantor is limited to the amount
set forth in clause (ii). The Indenture provides that, in making any
determination as to the solvency or sufficiency of capital of the Guarantor in
accordance with the previous sentence, any rights the Guarantor may have,
contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
FERRELLGAS, L.P.
By: Ferrellgas, Inc.
General Partner
By:
Name:
Title:
C-2
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EXECUTION COPY
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of April 26, 1996
by and among
Ferrellgas Partners, L.P.
Ferrellgas Partners Finance Corp.
Ferrellgas, L.P.
and
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
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<PAGE>
This Registration Rights Agreement is made and entered into as of
April 26, 1996 (this "Agreement") by and among Ferrellgas Partners, L.P., a
Delaware limited partnership (the "Partnership"), Ferrellgas Partners Finance
Corp., a Delaware corporation ("Finance Corp" and, together with the
Partnership, the "Issuers"), Ferrellgas, L.P., a Delaware limited partnership
and a wholly owned subsidiary of the Partnership (the "Guarantor"), and
Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co.
(each an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each
of whom has agreed to purchase the Issuers' 93/8% Senior Secured Notes due 2006
(the "Series A Senior Notes") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated
April 23, 1996 (the "Purchase Agreement"), by and among the Issuers, the
Guarantor, Ferrellgas, Inc., a Delaware corporation ("Ferrellgas"), and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Senior Notes, the Issuers have agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
3 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1.DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Senior Notes to be issued in the Exchange Offer, (ii)
the maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuers
to the Registrar under the Indenture of Series B Senior Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Senior
Notes that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Senior Notes,
each Interest Payment Date.
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Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Issuers under the Act of the
Series B Senior Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Senior Notes in an aggregate principal amount equal
to the aggregate principal amount of the Transfer Restricted Securities tendered
in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Senior Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
institutional "accredited investors," as such term is defined in Rule 501(a)(1),
(2), (3) and (7) of Regulation D under the Act ("Accredited Institutions").
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of April 26, 1996, among the
Issuers, American Bank National Association, as trustee (the "Trustee"), and the
Guarantor, pursuant to which the Senior Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
Initial Purchaser: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Senior
Notes.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Senior Notes, each Person who is a Holder of Senior Notes on the record date
with respect to the Interest Payment Date on which such Damages Payment Date
shall occur.
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Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers
relating to (a) an offering of Series B Senior Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, which is filed pursuant to the
provisions of this Agreement, in each case, including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Senior Notes: The Series A Senior Notes and the Series B Senior
Notes.
Series A Senior Notes: As defined in the preamble hereto.
Series B Senior Notes: The Issuers' 93/8% Senior Secured Notes due
2006 to be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Senior Note, until the earliest
to occur of (a) the date on which such Senior Note is exchanged in the Exchange
Offer and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date on
which such Senior Note has been effectively registered under the Act and
disposed of in accordance with a Shelf Registration Statement and (c) the date
on which such Senior Note is distributed to the public pursuant to Rule 144
under the Act or by a Broker- Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
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SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Issuers and the Guarantor shall (i)
cause to be filed with the Commission as soon as practicable after the Closing
Date, but in no event later than 60 days after the Closing Date, a Registration
Statement under the Act relating to the Series B Senior Notes and the Exchange
Offer, (ii) use their best efforts to cause such Registration Statement to
become effective at the earliest possible time, but in no event later than
November 30, 1996, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B Senior Notes to be made
under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall be
on the appropriate form permitting registration of the Series B Senior Notes to
be offered in exchange for the Transfer Restricted Securities and to permit
resales of Senior Notes held by Broker- Dealers as contemplated by Section 3(c)
below.
(b) The Issuers and the Guarantor shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 business
days. The Issuers and the Guarantor shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Senior Notes shall be included in the Exchange Offer Registration Statement.
The Issuers and the Guarantor shall use their best efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Issuers and the Guarantor shall indicate in a "Plan of
Distribution" section contained in the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Series A Senior
Notes that are Transfer Restricted Securities and that were acquired for its own
account as a result of market-making activities or other trading activities
(other than Transfer Restricted Securities acquired directly from the Issuers),
may exchange such Series A Senior Notes pursuant to the Exchange Offer; however,
such Broker- Dealer may be deemed to be an "underwriter" within the meaning of
the Act and must, therefore, deliver a prospectus meeting the requirements of
the Act in connection with any resales of the Series B Senior Notes received by
such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement
may be satisfied by the delivery by such Broker-Dealer of the Prospectus
contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such resales by
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Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Senior Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Issuers and the Guarantor shall use their best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Senior Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of 180 days from the
date on which the Exchange Offer Registration Statement is declared effective.
The Issuers and the Guarantor shall provide sufficient copies of the
latest version of such Prospectus to Broker-Dealers promptly upon request at any
time during such one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file
an Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Issuers within 20 business days of the Consummation of the Exchange Offer (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Senior Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Senior
Notes acquired directly from the Issuers or one of its affiliates, then the
Issuers and the Guarantor shall
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 30th day after
the date on which the Issuers determine that they are not required to file
the Exchange Offer Registration Statement (but in no event prior to
November 30, 1996), (2) the 30th day after the date on which the Issuers
receive notice from a Holder of Transfer Restricted Securities as
contemplated by clause (ii) above, and (3) December 30, 1996 (such date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the
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Holders of which shall have provided the information required pursuant
to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or before the 90th
day after the Shelf Filing Deadline.
The Issuers and the Guarantor shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Senior Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, until the third anniversary of the Closing Date or
such shorter period that will terminate when all the Senior Notes covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement or become eligible for resale pursuant to Rule 144 without volume or
other restrictions.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuers in writing, within 20 business days after receipt of a request
therefor, such information as the Issuers may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Issuers all information
required to be disclosed in order to make the information previously furnished
to the Issuers by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for the
effectiveness of any of such Registration Statements in this Agreement (the
"Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated
within 30 business days after the Effectiveness Target Date with respect to the
Exchange Offer Registration Statement or (iv) any Registration Statement
required by this Agreement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purpose without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such
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event referred to in clauses (i) through (iv), a "Registration Default"), the
Issuers (and after the Subsidiary Guarantee Effectiveness Date (as defined in
the Indenture), the Guarantor) hereby jointly and severally agree to pay
liquidated damages to each Holder of Transfer Restricted Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued liquidated damages shall
be paid to Record Holders by the Issuers by wire transfer of immediately
available funds or by federal funds check on each Damages Payment Date, as
provided in the Indenture. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Issuers and the Guarantor set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuers and the Guarantor shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Issuers there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Issuers and the Guarantor hereby agree to seek a no-action letter
or other favorable decision from the Commission allowing the Issuers and
the Guarantor to Consummate an Exchange Offer for such Series A Senior
Notes. The Issuers and the Guarantor each hereby agrees to pursue the
issuance of such a decision to the Commission staff level but shall not be
required to take commercially unreasonable action to effect a change of
Commission policy. The Issuers and the Guarantor each hereby agrees,
however, to (A) participate in telephonic conferences with the Commission,
(B) deliver to the Commission staff an analysis prepared by counsel to the
Issuers setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
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(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Issuers,
prior to the Consummation thereof, a written representation to the Issuers
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Issuers, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Senior Notes to be issued
in the Exchange Offer and (C) it is acquiring the Series B Senior Notes in
its ordinary course of business. In addition, all such Holders of Transfer
Restricted Securities shall otherwise cooperate in the Issuers'
preparations for the Exchange Offer. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission enunciated
in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (including any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Senior Notes obtained by
such Holder in exchange for Series A Senior Notes acquired by such Holder
directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Guarantor shall provide a supplemental
letter to the Commission (A) stating that the Issuers and the Guarantor
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Issuers nor the Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Series B Senior Notes to be received in the Exchange Offer
and that, to the best of the Issuers' information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Senior Notes
in its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Series B Senior
Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers and the Guarantor shall comply with all the
provisions of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Issuers will as expeditiously as possible prepare and file
with the Commission a Registration Statement relating to the registration on any
appropriate form under
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the Act, which form shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of distribution
thereof.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Senior Notes
by Broker-Dealers), the Issuers and the Guarantor shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of Ferrellgas and the Guarantor) for the period specified in
Section 3 or 4 of this Agreement, as applicable; upon the occurrence of
any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Issuers shall file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use their best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
Notwithstanding the foregoing, at any time after Consummation of the
Exchange Offer, the Issuers and the Guarantor will not be required to
amend the Shelf Registration Statement for a period not exceeding 30 days
during any consecutive 365-day period of effectiveness if the Partnership
determines that such amendment would (y) have a material adverse effect on
a material acquisition, disposition of assets or stock or a merger, or (z)
require the Issuers to make public disclosure of information the public
disclosure of which would have a material adverse effect upon the Issuers;
provided that the three year period referred to in Section 4(a) hereof
during which the Shelf Registration Statement is required to be effective
and usable shall be extended by the number of days during which such Shelf
Registration Statement was not effective or usable pursuant to the
foregoing provisions;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as applicable, or such shorter
period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
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(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Issuers
and the Guarantor shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or Prospectus
(including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to
the review of such Holders and underwriter(s), if any, for a period of at
least five business days, and the Issuers will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s), if any, shall reasonably object within five business days
after the receipt thereof. A selling Holder or underwriter, if any, shall
be deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains a material misstatement or omission;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers' representatives available (and
representatives of the Guarantor) for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
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(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
the Guarantor and cause the Issuers' and the Guarantor's officers,
directors and employees to supply all information reasonably requested by
any such Holder, underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s),
if any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other terms
of the offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are
notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate principal amount
of Senior Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuers and the
Guarantor hereby consent to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement, all to such
extent as may be requested by any Initial Purchaser or by any Holder of
Transfer Restricted Securities or
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underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement; and whether or not
an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers and the
Guarantor shall:
(A) furnish to each Initial Purchaser, each selling Holder and
each underwriter, if any, in such substance and scope as they may
reasonably request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the date of the
Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (y) the
President or any Vice President and (z) a principal financial or
accounting officer of each of the Issuers and the Guarantor,
confirming, as of the date thereof, the matters set forth in
paragraphs (b), (c), (g), (h) and (j) of Section 10 of the
Purchase Agreement and such other matters as such parties may
reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Issuers and the Guarantor, covering the matters set forth in
paragraph (d) of Section 10 of the Purchase Agreement and such
other matter as such parties may reasonably request, and in any
event including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Issuers and the Guarantor,
representatives of the independent public accountants for the
Issuers and the Guarantor, the Initial Purchasers'
representatives and the Initial Purchasers' counsel in
connection with the preparation of such Registration Statement
and the related Prospectus and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified
the accuracy, completeness or fairness of such statements; and
that such counsel advises that, on the basis of the foregoing
(relying as to materiality to a certain extent upon facts
provided to such counsel by officers and other representatives
of the Issuers and the Guarantor without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the
date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or
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omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from
the Issuers' independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 10(f) of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuers
and the Guarantor pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Issuers and
the Guarantor contemplated in clause (A)(1) above cease to be true and
correct, the Issuers or the Guarantor shall so advise the Initial
Purchasers and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities
or Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s) may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the Shelf Registration
Statement; provided, however, that neither the Issuers nor the Guarantor
shall be required to register or qualify as a foreign partnership or
corporation, as applicable, where it is not now so qualified or to take
any action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
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(xiii) shall issue, upon the request of any Holder of Series A
Senior Notes covered by the Shelf Registration Statement, Series B Senior
Notes, having an aggregate principal amount equal to the aggregate
principal amount of Series A Senior Notes surrendered to the Issuers by
such Holder in exchange therefor or being sold by such Holder; such Series
B Senior Notes to be registered in the name of such Holder or in the name
of the purchaser(s) of such Senior Notes, as the case may be; in return,
the Series A Senior Notes held by such Holder shall be surrendered to the
Issuers for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s),
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to
any sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s),
if any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (xii) above;
(xvi) if any fact or event contemplated by clause (6)(c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that
is required to be retained in accordance with the rules and regulations of
the NASD, and use their best efforts to cause such Registration Statement
to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to their security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
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(which need not be audited) for the twelve-month period (A) commencing at
the end of any fiscal quarter in which Transfer Restricted Securities are
sold to underwriters in a firm or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with the
first month of the Issuers' first fiscal quarter commencing after the
effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement, and, in connection therewith, cooperate with the Trustee
and the Holders of Senior Notes to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance with
the terms of the TIA; and execute and use their best efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Issuers are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A Senior
Notes or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Issuers that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Issuers, each Holder will deliver to the Issuers (at the
Issuers' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Issuers shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Guarantor's
performance of or compliance with this Agreement will be borne by the Issuers or
the Guarantor, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including any filings made by any Initial Purchaser or Holder with the NASD and
reasonable counsel fees and disbursements in connection therewith (and, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws (including all fees and expenses of counsel to the
underwriter(s) in connection with compliance with State Blue Sky or securities
laws); (iii) all expenses of printing (including printing certificates for the
Series B Senior Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuers, the Guarantor and, subject to Section
7(b) below, the Holders of Transfer Restricted Securities; (v) all application
and filing fees in connection with listing Senior Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; (vi)
all fees and expenses of the Trustee under the Indenture to the extent provided
in the Indenture and of any escrow agent, custodian or exchange agent; and (vii)
all fees and disbursements of independent certified public accountants of the
Issuers and the Guarantor (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Issuers and the Guarantor will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Issuers and the Guarantor.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, as may be chosen
by the Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers and the Guarantor, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or
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any controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder"), to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Holder) directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except (i) insofar
as such losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Issuers by any of the Holders expressly for use
therein and (ii) insofar as any such losses, claims, damages, liabilities or
expenses are caused by an untrue statement or omission or alleged untrue
statement or omission contained in any preliminary Prospectus, the foregoing
indemnity shall not inure to the benefit of any Holder which sold Series A
Senior Notes to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus or of the Prospectus
as then amended or supplemented, whichever is most recent, if the Issuers or the
Guarantor have previously furnished copies thereof to such Holder, and if such
Prospectus or Prospectus as amended or supplemented, as the case may be,
completely corrected the untrue statement or alleged untrue statement or
omission or alleged omission giving rise to such losses, claims, damages,
liabilities or expenses.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Issuers or the Guarantor, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Issuers and the
Guarantor in writing (provided, that the failure to give such notice shall not
relieve the Issuers or the Guarantor of their obligations pursuant to this
Agreement). Such Indemnified Holder shall have the right to employ its own
counsel in any such action and the reasonable fees and expenses of such counsel
shall be paid, as incurred, by the Issuers and the Guarantor (regardless of
whether it is ultimately determined that an Indemnified Holder is not entitled
to indemnification hereunder). The Issuers and the Guarantor shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for such Indemnified Holders, which firm shall be
designated by the Holders. The Issuers and the Guarantor shall be liable for any
settlement of any such action or proceeding effected with the Issuers' and the
Guarantor's prior written consent, which consent shall not be unreasonably
withheld, and the Issuers and the Guarantor agree to indemnify and hold harmless
any Indemnified Holder from and against any
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loss, claim, damage, liability or expense by reason of any settlement of any
action effected with the written consent of the Issuers. The Issuers and the
Guarantor shall not, without the prior written consent of each Indemnified
Holder, settle or compromise or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not any Indemnified Holder is a party thereto), unless
such settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Holder from all liability arising out of such
action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Issuers and the Guarantor,
and their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Issuers
and the Guarantor, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Issuers and the Guarantor to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In no event shall the liability
of any selling Holder hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantor on the one hand and the Holders on the other hand from
their sale of Transfer Restricted Securities or (ii) if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefit referred to above but also the relative fault of the
Issuers and the Guarantor on the one hand and of the Indemnified Holder on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Issuers and the Guarantor on
the one hand and of the Indemnified Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or the Guarantor or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuers, the Guarantor and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred
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to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, none of the Holders (and its related Indemnified Holders) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total amount received by such Holder with respect to the Series A
Senior Notes exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Series A Senior Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Issuers and the Guarantor hereby agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make available
to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration for any
Transfer Restricted Securities hereunder unless the Issuers and the Guarantor
shall have consented in writing to such Underwritten Registration which consent
may be unreasonably withheld and such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering upon the prior written consent of the
Issuers and the Guarantor to such Underwritten
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Offering, which consent may be unreasonably withheld. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers and the Guarantor agree that monetary
damages (including the liquidated damages contemplated hereby) would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not, and will cause
the Guarantor not to, on or after the date of this Agreement enter into any
agreement with respect to their securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Issuers nor the Guarantor has previously entered
into any agreement granting any registration rights with respect to their
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Issuers' or the Guarantor's securities under any agreement in
effect on the date hereof.
(c) Adjustments Affecting the Senior Notes. The Issuers and the
Guarantor will not take any action, or permit any change to occur, with respect
to the Senior Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Issuers have obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
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(ii) if to the Issuers and the Guarantor:
Ferrellgas Partners, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Telecopier No.: (816) 792-6985
Attention: Chief Financial Officer
With a copy to:
Bryan Cave, LLP
One Kansas City Place
Kansas City, MO 64105
Telecopier No.: (816) 374-3300
Attention: Kendrick T. Wallace, Esq.
All such notices and communications 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; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
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(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
Operative Agreements (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuers and the
Guarantor with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
FERRELLGAS PARTNERS, L.P.
By: FERRELLGAS, INC., as general partner
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS PARTNERS FINANCE CORP.
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS, L.P.
By: FERRELLGAS, INC., as general partner
By:
Name: Danley K. Sheldon
Title: Senior Vice President
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
Name:
Title:
GOLDMAN, SACHS & CO.
By:
(Goldman, Sachs & Co.)
EXECUTION COPY
FERRELLGAS PARTNERS, L.P.
and
FERRELLGAS PARTNERS FINANCE CORP.
93/8% Senior Secured Notes Due 2006
Unconditionally Guaranteed by Ferrellgas, L.P.
PURCHASE AGREEMENT
April 23, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
1. Issuance of Securities. Ferrellgas Partners, L.P., a Delaware limited
partnership (the "Partnership"), and Ferrellgas Partners Finance Corp., a wholly
owned subsidiary of the Partnership ("Finance Corp." and, together with the
Partnership, the "Issuers"), propose to issue and sell to Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") and Goldman, Sachs & Co. ("Goldman,
Sachs" and, together with DLJ, the "Initial Purchasers") an aggregate of
$160,000,000 principal amount of their 93/8% Senior Secured Notes due 2006 (the
"Series A Senior Notes"), which are to be offered for resale by the Initial
Purchasers to qualified institutional buyers (within the meaning of Rule 144A
("Rule 144A") under the Securities Act of 1933, as amended (the "Act")
("Qualified Institutional Buyers") in reliance upon Rule 144A and to
institutional accredited investors (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Act ("Regulation D"))("Institutional Accredited
Investors"). The Series A Senior Notes are to be issued pursuant to the
provisions of an Indenture, to be dated as of April 26, 1996 (the "Indenture"),
by and among the Issuers, Ferrellgas, L.P., a Delaware limited partnership (the
"Guarantor" or the "Operating Partnership") and American Bank National
Association, as Trustee (the "Trustee"). The Series A Senior Notes together with
the Issuers' 93/8% Senior Secured Notes due 2006 issued in exchange therefore
(the "Series B Senior Notes") are collectively referred to herein as the "Senior
Notes." The Senior Notes will be fully and unconditionally guaranteed (the
"Subsidiary Guarantee") as to payment of principal, interest, liquidated damages
and premium, if any, on an unsecured senior subordinated basis, by the Guarantor
on and after the Subsidiary Guarantee Effectiveness Date (as defined in the
Indenture). The Senior Notes will also be secured by a first priority lien on
all of the Capital Interests (as defined in the Indenture) of the Operating
Partnership held by the Partnership pursuant to a Pledge Agreement, to be dated
April 26, 1996 (the "Pledge Agreement"), among the
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Partnership, Ferrellgas, Inc., a Delaware corporation (the "General Partner"),
and the Trustee, as collateral agent (the "Collateral Agent"). The offering of
the Series A Senior Notes by the Issuers is referred to herein as the
"Offering." Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture and the Registration Rights
Agreement (as defined below), as the case may be.
2. Offering Documents. The Series A Senior Notes will be offered and
sold to the Initial Purchasers pursuant to an exemption from the registration
requirements under the Act. The Issuers have prepared a preliminary offering
memorandum, dated April 10, 1996 (the "Preliminary Offering Memorandum"), and a
final offering memorandum, dated April 23, 1996 (the "Offering Memorandum" and,
together with the Preliminary Offering Memorandum, the "Offering Documents"), in
connection with the Offering.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A
Senior Notes shall bear the following legend:
"THE SENIOR NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SENIOR NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SENIOR NOTE EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SENIOR NOTE EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SENIOR NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE
ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SENIOR NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
3. Agreements to Sell and Purchase. The Issuers agree to issue and
sell to the Initial Purchasers, and on the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
the Initial Purchasers agree, severally and not jointly, to purchase from the
Issuers, Series A Senior Notes in the respective principal amounts set forth
opposite their names
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on Schedule A hereto at a purchase price equal to 97 1/2% of the principal
amount thereof (the "Purchase Price").
4. Terms of Offering. (a) The Initial Purchasers have advised the
Issuers that they will make offers (the "Exempt Resales") of the Series A Senior
Notes purchased by them hereunder on the terms set forth in the Offering
Documents, as amended or supplemented, solely to (i) persons (each, a "144A
Purchaser") whom the Initial Purchasers reasonably believe to be Qualified
Institutional Buyers and (ii) a limited number of Institutional Accredited
Investors who, as purchasers, have executed and delivered to the Initial
Purchasers copies of the letter set forth in Appendix A to the Offering
Memorandum (together with the Qualified Institutional Buyers, the "Eligible
Purchasers"). The Initial Purchasers will offer the Series A Senior Notes to
Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof. Such price may be changed at any time without notice.
(b) Holders (including subsequent transferees) of Series A Senior
Notes will have the registration rights set forth in (i) the registration rights
agreement, to be dated April 26, 1996 (the "Registration Rights Agreement"),
among the Issuers, the Guarantor and the Initial Purchasers relating to the
Series A Senior Notes, pursuant to which Series B Senior Notes will be offered
in exchange for the Series A Senior Notes (the "Exchange Offer").
5. Delivery and Payment. Delivery to the Initial Purchasers of and
payment for the Series A Senior Notes shall be made at 10:00 A.M., New York City
time, on April 26, 1996 (the "Closing Date") at the offices of Latham & Watkins,
885 Third Avenue, New York, New York 10022. The Closing Date and the location of
delivery of the Senior Notes may be varied by agreement among the Initial
Purchasers and the Partnership.
One or more Series A Senior Notes in definitive form registered in
the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), or
such other names as the Initial Purchasers may request upon at least two
business days' notice to the Issuers, having an aggregate amount corresponding
to the aggregate amount of Series A Senior Notes sold pursuant to Eligible
Resales (collectively, the "Global Note") shall be delivered by the Issuers to
the Initial Purchasers, against payment by the Initial Purchasers of the
Purchase Price thereof by certified or official bank check or checks drawn in,
or a wire transfer to an account designated in writing by the Issuers to the
Initial Purchasers of, immediately available funds. The Global Note in
definitive form shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m. on the business day immediately preceding the Closing
Date.
6. Agreements of the Parties. Each of the Partnership,
Finance Corp., the Guarantor and the General Partner agrees with each of the
Initial Purchasers:
a. To prepare the Offering Documents in a form reasonably approved
by the Initial Purchasers;
b. (i) To advise the Initial Purchasers promptly and, if requested by
any of the Initial Purchasers, confirm such advice in writing, of receipt
of any notification with respect to the issuance by any state securities
commission of any stop order suspending the qualification or exemption
from qualification of any of the Senior Notes or the Subsidiary Guarantee
for offering or sale in any jurisdiction designated by the Initial
Purchasers pursuant to clause 6(j) hereof, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, and (ii) to advise the Initial Purchasers promptly
and, if requested by the Initial Purchasers, confirm such advice in
writing, of the happening of any event during such period as in the
Initial Purchasers'
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reasonable judgment the Initial Purchasers are required to deliver a
Preliminary Offering Memorandum or an Offering Memorandum in connection
with sales of the Series A Senior Notes which makes any statement of a
material fact made in the Offering Documents (or any supplement or
amendment thereto) untrue or that requires the making of any additions to
or changes in the Offering Documents (or any supplement or amendment
thereto) in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; to use their best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of the Senior Notes or the Subsidiary Guarantee
under any state securities or Blue Sky laws, and, if at any time, any
state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption of any of the Senior Notes
or the Subsidiary Guarantee under any state securities or Blue Sky laws,
to use every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time;
c. To furnish to the Initial Purchasers, without charge, such number
of copies of the Offering Documents, and any amendments or supplements
thereto, as the Initial Purchasers may reasonably request and consent to
the use of the Offering Documents, and any amendments and supplements
thereto, by the Initial Purchasers in connection with Exempt Resales until
such time as the Exchange Offer is Consummated (as defined below). The
Exchange Offer shall be deemed "Consummated" for purposes of this
Agreement upon the occurrence of (i) the filing and effectiveness of a
registration statement under the Act relating to the Series B Senior Notes
to be issued in the Exchange Offer, (ii) the maintenance of such
registration statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) of the Registration Rights Agreement and (iii)
the delivery by the Issuers to the Registrar under the Indenture of Series
B Senior Notes in the same aggregate principal amount as the aggregate
principal amount of Series A Senior Notes that were tendered by holders
thereof pursuant to the Exchange Offer;
d. Not amend or supplement the Offering Documents prior to the
Closing Date unless the Initial Purchasers shall previously have been
advised thereof and shall not have reasonably objected thereto; and, at
any time prior to the Consummation of the Exchange Offer, to prepare,
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable
in connection with Exempt Resales and furnish without charge to each of
the Initial Purchasers as many copies as the Initial Purchasers may from
time to time reasonably request of such amended Offering Memorandum or a
supplement to the Offering Memorandum;
e. Subject to paragraph (f) below, if, after the date hereof and
prior to the completion of the Exempt Resales of the Series A Senior Notes
by the Initial Purchasers, any event shall occur as a result of which it
becomes necessary to amend or supplement the Offering Documents in order
to make the statements therein, in the light of the circumstances when the
Offering Documents are delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Documents to comply with applicable law, forthwith
to prepare an appropriate amendment or supplement to the Offering
Documents so that the statements therein, as so amended or supplemented,
will not, in the light of the circumstances when the Offering Documents
are so delivered, be misleading, or so that the Offering Documents will
comply with applicable law, and to furnish to the Initial Purchasers such
number of copies thereof as the Initial Purchasers may reasonably request;
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f. Prior to the Consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement if, in the
reasonable judgment of the Initial Purchasers, the Initial Purchasers or
any of their affiliates (as such term is defined in the rules and
regulations under the Act) are required to deliver an offering memorandum
in connection with sales of, or market-making activities with respect to,
the Series A Senior Notes, (A) to periodically amend or supplement the
Offering Documents when necessary in order that the information contained
in the Offering Documents complies with the requirements of Rule 144A of
the Securities Act, (B) to amend or supplement the Offering Documents when
necessary to reflect any material changes in the information provided
therein so that the Offering Documents will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
existing as of the date of the Offering Documents are so delivered, not
misleading and (C) to provide the Initial Purchasers with copies of each
such amended or supplemented Offering Documents, as the Initial Purchasers
may reasonably request.
Following the Consummation of the Exchange Offer or the effectiveness
of an applicable shelf registration statement (pursuant to the
Registration Rights Agreement) and for so long as the Senior Notes are
outstanding if, in the reasonable judgment of the Initial Purchasers, the
Initial Purchasers or any of their affiliates (as such term is defined in
the rules and regulations under the Act) are required to deliver a
prospectus in connection with sales of, or market-making activities with
respect to, such securities, (A) to periodically amend the applicable
registration statement so that the information contained therein complies
with the requirements of Section 10(a) of the Act, (B) to amend the
applicable registration statement or supplement the related prospectus or
the documents incorporated therein when necessary to reflect any material
changes in the information provided therein so that the registration
statement and the prospectus will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances existing as of
the date the prospectus is so delivered, not misleading and (C) to provide
the Initial Purchasers with copies of each such amendment or supplement as
the Initial Purchasers may reasonably request.
g. To comply with their agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of
the Issuers to DTC relating to the approval of the Series A Senior Notes
by DTC for "book-entry" transfer;
h. To cause the Exchange Offer, if available, to be made in the
appropriate form, as contemplated by the Registration Rights Agreement, to
permit registration of the Series B Senior Notes to be offered in exchange
for the Series A Senior Notes, and to comply with all applicable federal
and state securities laws in connection with the Exchange Offer;
i. To use their best efforts to effect the inclusion of the Series
A Senior Notes in the National Association of Securities Dealers, Inc.
Automated Quotation System - PORTAL ("PORTAL");
j. Promptly from time to time to take such action as the Initial
Purchasers may reasonably request to qualify the Series A Senior Notes for
offering and sale by the Initial Purchasers under the state securities or
Blue Sky laws of such jurisdictions as the Initial Purchasers may
reasonably request and to comply with such laws so as to permit Exempt
Resales in such jurisdictions for as long as required, provided that in
connection therewith neither the Issuers, the Guarantor nor the General
Partner shall be required to qualify as a foreign partnership or
corporation or to file a general consent to service of process in any
jurisdiction in which it is not so qualified or has not so filed;
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k. For so long as any of the Senior Notes remain outstanding and
during any period in which neither Issuer is subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, including the
rules and regulations thereunder (the "Exchange Act"), to make available
to any Eligible Purchaser, beneficial owner or holder of Senior Notes in
connection with any sale thereof and any prospective purchaser of such
Senior Notes, the information required by Rule 144A(d)(4) under the Act,
and otherwise fully comply in a timely manner with all provisions of the
Exchange Act, in connection with the registration, if any, of the Senior
Notes and the Subsidiary Guarantee thereunder;
l. To furnish to the holders of Senior Notes within 120 days after
the end of each fiscal year an annual report (including a balance sheet
and statements of income, security holders' equity and cash flow of each
of the Issuers and the Guarantor and the entities consolidated therewith
certified by independent public accountants) and, within 90 days after the
end of each of the first three quarters of each fiscal year, consolidated
summary financial information of each of the Issuers and the Guarantor for
such quarter in reasonable detail;
m. During a period of five years from the date of this Agreement, to
furnish to the Initial Purchasers copies of all reports or other
communications (financial or other) furnished to security holders of each
of the Issuers and the Guarantor, and deliver to the Initial Purchasers
(i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Securities and Exchange
Commission (the "Commission") or any national securities exchange on which
any class of securities of the Issuers or the Guarantor is listed; and
(ii) such additional information concerning the business and financial
condition of each of the Issuers and the Guarantor as the Initial
Purchasers may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of any
Issuer, the Guarantor and the entities consolidated therewith are
consolidated in reports furnished to its security holders generally);
n. Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of any of the Series A Senior Notes in a manner
that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Series A Senior
Notes;
o. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to and in connection with;
(i) the preparation, printing and filing of the Offering Documents
(including, without limitation, financial statements and exhibits) and
amendments and supplements thereto and the mailing and delivering of
copies thereof to the Initial Purchasers and dealers; (ii) the
preparation, printing, producing and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Pledge Agreement, all
Blue Sky Memoranda and any other agreements, memoranda, correspondence and
other documents printed and delivered in connection herewith and with the
Exempt Resales; (iii) the issuance and delivery by the Issuers and the
Guarantor of the Senior Notes and the Subsidiary Guarantee; (iv) the
registration or qualification of the Series A Senior Notes for offering
and sale under state securities laws as provided in paragraph 6(j) above,
including, without limitation, the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection with such qualification
and in connection with the Blue Sky Memoranda; (v) preparing and
delivering certificates representing the Senior Notes (including, without
limitation, printing and engraving thereof); (vi) the rating of the Series
A Senior Notes by rating agencies; (vii) the application for quotation of
the Series A Senior Notes in PORTAL; (viii) furnishing such copies of the
Offering Documents, and all amendments and supplements thereto, as may be
reasonably
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requested for use in connection with the Exempt Resales; (ix) the fees,
disbursements and expenses of the Issuers' and Guarantor's counsel and
accountants incurred in connection with the transactions contemplated by
this Agreement; (x) the reasonable fees, disbursements and expenses of
Latham & Watkins, as counsel to the Initial Purchasers incurred in
connection with the transactions contemplated by this Agreement; (xi)
approval of the Series A Senior Notes by DTC for "book-entry" transfer
(including fees and expenses of counsel of the Issuers and Guarantor); and
(xii) all other costs and expenses incident to the performance of
obligations hereunder which are not otherwise specifically provided for in
this Section;
p. To use the net proceeds from the sale of the Series A Senior
Notes pursuant to this Agreement in the manner specified in the Offering
Documents under the caption "Use of Proceeds";
q. Not to voluntarily claim, and to actively resist any attempts
to claim, the benefit of any usury laws against the holders of Senior
Notes;
r. To use their best efforts to do and perform all things required to
be done and performed under this Agreement by them prior to or after the
Closing Date and to satisfy all conditions precedent on their part to the
delivery of the Series A Senior Notes;
s. Not to distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Series A Senior
Notes other than the Offering Documents;
t. To file with the Commission, not later than 15 days after the
Closing Date, five copies of a notice on Form D under the Act (one of
which will be manually signed by a person duly authorized by the Issuers);
to otherwise comply with the requirements of Rule 503 under the Act; and
to furnish promptly to the Initial Purchasers evidence of each such
required timely filing (including a copy thereof); and
u. Prior to the expiration of the earlier to occur of (i) three years
after the Closing Date and (ii) such time as the Series A Senior Notes are
exchanged for registered Series B Senior Notes pursuant to the Exchange
Offer and the Series A Senior Notes are no longer outstanding, to not
resell any of the Series A Senior Notes which constitute "restricted
securities" under Rule 144 that have been reacquired by any of the
Issuers, the Guarantor or their respective subsidiaries.
7. Representations and Warranties of the Partnership, Finance Corp., the
General Partner and the Guarantor. Each of the Partnership, Finance Corp., the
General Partner and the Guarantor represents and warrants to, and agrees with,
each of the Initial Purchasers that:
a. No stop order preventing or suspending the use of any of the
Offering Documents, or any amendment or supplement thereto, nor any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act have been issued by
the Commission or any other federal or state securities commission or
regulatory authority;
b. The Offering Documents have been prepared in connection with the
Exempt Resales. The Preliminary Offering Memorandum as of its date does
not, and the Offering Memorandum as of its date does not and as of the
Closing Date will not, and any amendment or supplement thereto will not,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
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shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Issuers by the
Initial Purchasers expressly for use therein;
c. Subsequent to the respective dates as of which information is
given in the Preliminary Offering Memorandum, the Offering Memorandum and
any supplement or amendment thereto and up to the Closing Date, (i) none
of the Partnership, Finance Corp., the General Partner or the Guarantor or
any of their respective subsidiaries (collectively, the "Subsidiaries")
has incurred (A) any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Offering Memorandum or (B) any liabilities or obligations, direct or
contingent, which are material to the Partnership, Finance Corp., the
General Partner, the Guarantor and the Subsidiaries, taken as a whole, or
entered into any material transaction not in the ordinary course of
business, and (ii) there has not been any change in the capitalization or
long-term debt or increase in short-term debt of the Partnership, Finance
Corp., the General Partner or the Guarantor or, singly or in the
aggregate, any material adverse change, or any development which may
reasonably be expected to involve a material adverse change, in the
properties, business, general affairs, management, condition (financial or
otherwise), financial position, results of operations or prospects of the
Partnership, Finance Corp., the General Partner, the Guarantor and the
Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Documents;
d. The firm of accountants that has certified or shall certify the
applicable consolidated financial statements and supporting schedules of
the Partnership, its Subsidiaries and Skelgas Propane, Inc., a Delaware
corporation ("Skelgas") to be included in the Offering Documents are
independent public accountants with respect to the Partnership, its
Subsidiaries and Skelgas, as required by the Act. The consolidated
historical and pro forma financial statements, together with related
schedules and notes, set forth in the Offering Memorandum comply as to
form in all material respects with the applicable requirements of the Act;
at April 23, 1996, the Partnership would have had, on the pro forma basis
indicated in the Offering Memorandum, a duly authorized and outstanding
capitalization as set forth therein. The audited balance sheet of the
Partnership included in the Offering Memorandum presents fairly the
financial position of the Partnership as of the date indicated. The
audited historical consolidated financial statements of Skelgas included
in the Offering Memorandum present fairly the consolidated financial
position of Skelgas as of the dates indicated and its results of operation
and cash flows for the periods specified. Such audited and unaudited
historical consolidated financial statements included in the Offering
Documents have been prepared in conformity with generally accepted
accounting principles applied on a substantially consistent basis, except
to the extent disclosed therein; the historical information set forth in
the Offering Documents under the caption "Selected Historical Consolidated
Financial Data" is fairly stated in all material respects in relation to
the audited and unaudited historical consolidated financial statements
from which it has been derived. The pro forma financial information set
forth in the Offering Documents under the caption "Unaudited Pro Forma
Combined Financial Statements" is fairly stated in all material respects
in relation to the pro forma financial statements from which it has been
derived. The pro forma financial statements of the Partnership included in
the Offering Documents have been prepared on a basis consistent with such
historical statements, except for the pro forma adjustments specified
therein, and in accordance with the applicable published rules and
regulations of the Commission, the assumptions used in the preparation of
such pro forma financial statements are reasonable, and the pro forma
entries reflected in such pro forma financial statements have been
properly applied in such pro forma financial statements. The other
financial and statistical information and data included in the Offering
Documents, historical and pro forma, are, in all
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material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the
Partnership, the General Partner, the Guarantor and Skelgas;
e. Each of the Partnership and the Operating Partnership has been
duly formed and is validly existing as a limited partnership under the
Delaware Revised Limited Uniform Partnership Act (the "Delaware Act"),
with partnership power and authority to own or lease its properties and
conduct its business as described in the Offering Memorandum, and has been
duly qualified or registered as a foreign limited partnership for the
transaction of business under the laws of each jurisdiction in which the
failure to so qualify or register would have a material adverse effect
upon the Partnership or the Operating Partnership or subject the
Partnership or the Operating Partnership to any material liability or
disability;
f. The General Partner is the sole general partner of the Partnership
with a general partner interest in the Partnership of 1.0%. Such general
partner interest is duly authorized by the Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement"), and is
validly issued to the General Partner and is fully paid. The General
Partner owns such general partner interest free and clear of all liens,
encumbrances, charges or claims;
g. The General Partner is the sole general partner of the Operating
Partnership with a general partner interest in the Partnership of 1.0101%.
Such general partner interest is duly authorized by the Agreement of
Limited Partnership of the Operating Partnership (the "Operating
Partnership Agreement"), and is validly issued to the General Partner and
is fully paid. The General Partner owns such general partner interest free
and clear of all liens, encumbrances, charges or claims;
h. The Partnership is the sole limited partner of the Operating
Partnership, with a limited partner interest of 98.9899%. Such limited
partner interest is duly authorized by the Operating Partnership
Agreement, is validly issued and is fully paid and non-assessable (except
as such non-assessability may be affected by the Partnership Agreement).
The Partnership owns such limited partner interest free and clear of all
liens, encumbrances, charges or claims except for the liens, encumbrances,
charges or claims created by the Pledge Agreement;
i. Each of the General Partner and Finance Corp. has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its incorporation, with power and authority (corporate and other) to
own or lease its properties, to conduct its business and (in the case of the
General Partner) to act as general partner of the Partnership, in each case as
described in the Offering Documents, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which the failure to so qualify or register
would have a material adverse effect upon the General Partner, the Partnership,
the Operating Partnership or Finance Corp. or subject the General Partner, the
Partnership, the Operating Partnership or Finance Corp. to any material
liability or disability;
j. All of the issued shares of capital stock of the General Partner
have been duly authorized and validly issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of the
General Partner are owned by Ferrell Companies, Inc., a Kansas corporation
("Ferrell"), free and clear of all liens, security interests, mortgages,
pledges, encumbrances, equities or claims (each a "Lien") except as set
forth in the Offering Documents and except for such Liens created pursuant
to the pledge agreement entered into in connection with that certain
Amended and Restated Loan Agreement, dated as of May 10, 1993, among
Ferrellgas, Inc., Stratton Insurance Company, Inc.,
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Ferrell Companies, Inc., One Liberty Oil Company, Ferrellgas International
(F.L.) Establishment, Vaduz and Wells Fargo Bank, National Association, as
agent and the other lenders party thereto (the "Wells Fargo Agreement")
(such pledge agreement is referred to herein as the "Existing Pledge
Agreement");
k. All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Subsidiary of the Partnership, Finance
Corp., the General Partner and the Guarantor have been duly and validly
authorized and issued, and all of the shares of capital stock of, or other
ownership interests in, each such Subsidiary are owned, directly or
through other Subsidiaries, by the Partnership, Finance Corp. or the
General Partner, as the case may be. All such shares of capital stock or
ownership interests are fully paid and nonassessable, and are owned free
and clear of any Liens (except for the Liens created pursuant to the
Pledge Agreement). There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
Liens (except for the Liens created pursuant to the Pledge Agreement)
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, any such
Subsidiary;
l. Each of the Partnership and its Subsidiaries has good and
indefeasible title to all of its real and personal property, free and
clear of all liens, encumbrances, security interests, equities, charges,
claims or defects except such as are described in the Offering Documents
or such as do not materially interfere with the ownership or benefits of
ownership or materially increase the cost of ownership of such properties,
taken as a whole. All of the properties owned by the Partnership and its
Subsidiaries are accurately reflected in the Partnership's consolidated
financial statements at and for the period ended January 31, 1996. All
real property, buildings and equipment held under lease by the Partnership
and its Subsidiaries are held by the Partnership or its Subsidiaries under
valid, subsisting and enforceable leases and, the Partnership and its
Subsidiaries have the right to use all such real such property, buildings
and equipment in a manner consistent with the past business practices of
the Partnership and its Subsidiaries, in each case, except as described in
the Offering Memorandum and except as are not material and do not
interfere with the use made and proposed to be made of such real property,
buildings and equipment by the Partnership and its Subsidiaries;
m. Each of the Partnership, Finance Corp., the General Partner and
the Guarantor has full power and authority to execute, deliver and perform
this Agreement and the Operative Agreements (as defined below), as
applicable; each of the Partnership and Finance Corp. has full power and
authority to authorize, issue, sell and deliver the Senior Notes; and the
Guarantor has full power and authority to authorize, issue and deliver the
Subsidiary Guarantee;
n. This Agreement has been duly authorized, executed and delivered by
each of the Partnership, Finance Corp., the General Partner and the
Guarantor and (assuming the due execution and delivery by the Initial
Purchasers) is a valid and legally binding agreement of each of the
Partnership, Finance Corp., the General Partner and the Guarantor,
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. This Agreement, the
Pledge Agreement, the Registration Rights Agreement, and the Indenture are
herein collectively referred to as the "Operative Agreements";
o. The Series A Senior Notes have been duly authorized by each Issuer
and, when issued and delivered pursuant to this Agreement (and, as to the
Series B Senior Notes, the Registration Rights Agreement) and duly
authenticated by the Trustee under the Indenture, will have been duly
executed
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by each Issuer and will conform in all material respects to the
description thereof in the Offering Documents. When the Series A Senior
Notes are issued, authenticated and delivered in accordance with the
Indenture and paid for in accordance with the terms of this Agreement
(and, as to the Series B Senior Notes, the Registration Rights Agreement),
they will constitute valid and legally binding obligations of each Issuer,
enforceable against each Issuer in accordance with their terms and
entitled to the benefits of the Indenture under which they are to be
issued, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
p. The Indenture has been duly authorized by each of the Issuers and
the Guarantor and, at the Closing Date, will have been duly executed by
each of the Issuers and the Guarantor, will conform in all material
respects to the description thereof in the Offering Documents and will be
in a form which would meet the requirements for qualification under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). When
the Indenture has been duly executed and delivered, the Indenture will be
a valid and legally binding agreement of each of the Issuers and the
Guarantor, enforceable against each of the Issuers and the Guarantor in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles;
q. The Pledge Agreement has been duly authorized, executed and
delivered by the Partnership and the General Partner and (assuming the due
execution and delivery by the Initial Purchasers) is a valid and legally
binding agreement of each of the Partnership and the General Partner,
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; the Pledged Collateral
(as defined in the Pledge Agreement) have not been pledged to any person
other than the Collateral Agent; the Pledge Agreement will conform in all
material respects to the description thereof in the Offering Documents;
r. The Registration Rights Agreement has been duly authorized by each
of the Issuers and the Guarantor and, when the Issuers and the Guarantor
have duly executed and delivered the Registration Rights Agreement
(assuming the due authorization, execution and delivery thereof by the
Initial Purchasers), the Registration Rights Agreement will be the legally
valid and binding obligation of each of the Issuers and the Guarantor,
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; the Registration
Rights Agreement will conform in all material respects to the description
thereof in the Offering Documents;
s. The Subsidiary Guarantee to be issued with the Senior Notes has
been duly authorized by the Guarantor, and, when executed and delivered in
accordance with the terms of the Indenture and when the Senior Notes have
been issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be the valid and legally
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The Subsidiary Guarantee, when issued, will conform in
all material respects to the description thereof in the Offering
Memorandum;
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t. The capitalization of the Partnership is in all material
respects as described in the Offering Documents under the caption
"Capitalization;"
u. The issuance and sale of the Senior Notes by the Partnership and
Finance Corp., the issuance of the Subsidiary Guarantee by the Guarantor
and the execution, delivery and performance by the Partnership, Finance
Corp., the General Partner, and the Guarantor, as the case may be, of the
Operative Agreements to which they are a party will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default or cause an acceleration of any obligation under, or
result in the imposition or creation of (or the obligation to create or
impose) a Lien (other than the Lien incurred pursuant to the Pledge
Agreement) with respect to, any material bond, note, debenture or other
evidence of indebtedness or any material indenture, mortgage, deed of
trust, loan agreement, contract, lease, or other agreement or instrument
to which the Partnership, Finance Corp., the General Partner, the
Guarantor or any of the Subsidiaries is a party or by which the
Partnership, Finance Corp., the General Partner, the Guarantor or any of
the Subsidiaries is bound or to which any of their properties or assets is
subject nor will such action result in any breach or violation of the
provisions of charter, bylaws or partnership agreements of the
Partnership, Finance Corp., the General Partner, the Guarantor or any of
the Subsidiaries or contravene any order of any court or governmental
agency or body having jurisdiction over the Partnership, Finance Corp.,
the General Partner, the Guarantor or any of the Subsidiaries or any of
their respective properties, or violate or conflict with any statute, rule
or regulation or administrative or court decree applicable to the
Partnership, Finance Corp., the General Partner, the Guarantor or any of
the Subsidiaries or any of their respective properties, and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the
execution, delivery and performance by each of the Partnership, Finance
Corp., the General Partner, the Guarantor and the Subsidiaries of the
Operative Agreements, the issuance and sale of the Senior Notes, the
issuance of the Subsidiary Guarantee and the consummation of the
transactions contemplated hereby and thereby, except for (i) the filing of
a registration statement by the Issuers and the Guarantor pursuant to the
Registration Rights Agreement, (ii) the filing of a notice on Form D by
the Issuers with the Commission pursuant to Section 6(t) hereof, (iii)
such consents, approvals, authorizations, orders, registrations or
qualifications (A) as have been, or prior to the Closing Date will be,
obtained or (B) as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Senior Notes by
the Initial Purchasers and (iv) such approvals, authorizations, orders,
registrations and qualifications as may be required under the Act, the
Trust Indenture Act and state securities or Blue Sky laws in connection
with the Exchange Offer or resale registration contemplated by the
Offering Documents and described in the Registration Rights Agreement;
v. No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Senior Notes or the Subsidiary
Guarantee, prevents or suspends the use of the Offering Documents or
suspends the sale of the Senior Notes in any jurisdiction referred to in
Section 6(j) hereof; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued with respect to the Partnership, Finance Corp., the General
Partner, the Guarantor or any of the Subsidiaries which would prevent or
suspend the issuance or sale of the Senior Notes or the use of any
Offering Documents in any jurisdiction referred to in Section 6(j) hereof;
no action, suit or proceeding is pending against or, to the best knowledge
of the Partnership, Finance Corp., the General Partner or the Guarantor,
threatened against or affecting the Partnership, Finance Corp., the
General Partner, the Guarantor or any of the Subsidiaries before any court
or arbitrator or any governmental body, agency or official, domestic or
foreign, which, if adversely
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<PAGE>
determined, would materially interfere with or adversely affect the
issuance of the Senior Notes or the Subsidiary Guarantee or in any manner
draw into question the validity of any of the Operative Agreements, the
Senior Notes and the Subsidiary Guarantee; and every request of the
Commission or any securities authority or agency of any jurisdiction for
additional information (to be included in the Offering Documents or
otherwise) has been complied with in all material respects;
w. The Partnership and its Subsidiaries have, or at or before the
Closing Date will have, all necessary consents, approvals, authorizations,
orders, registrations and qualifications (or the equivalent thereof in all
material respects) of or with any court or governmental agency or body
having jurisdiction over it or any of its properties or of or with any
other person to permit each of the Partnership and its Subsidiaries to
conduct its business substantially in accordance with the past practice of
the Partnership and its Subsidiaries, as applicable, except such consents,
approvals, authorizations, orders, registrations or qualifications which,
if not obtained, would not, individually or in the aggregate, have a
material adverse effect upon the properties, business, general affairs,
management, condition (financial or otherwise), financial position,
results of operations, or prospects of the Partnership, Finance Corp., the
General Partner, the Guarantor and the Subsidiaries taken as a whole, or
upon the holders of Senior Notes;
x. Except as set forth or contemplated in the Offering Documents or
as contemplated by this Agreement, neither the Partnership nor Finance
Corp. has incurred any material liabilities or obligations, direct or
contingent, or entered into any material agreement or engaged in any
material business other than in connection with its formation;
y. Other than as set forth in the Offering Documents, there is no
action, suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, pending against the Partnership, Finance
Corp., the General Partner, the Guarantor or any of the Subsidiaries, or
any of their respective properties, which is required to be disclosed in
the Offering Documents and is not so disclosed, which, if determined
adversely to such person, would individually or in the aggregate have a
material adverse effect upon the properties, business, general affairs,
management, condition (financial or otherwise), financial position,
results of operations or prospects of the Partnership, Finance Corp., the
General Partner, the Guarantor and the Subsidiaries, taken as a whole, or
which could reasonably be expected to materially and adversely affect the
consummation of the Operative Agreements; and to the best of the knowledge
of the Partnership, Finance Corp., the General Partner and the Guarantor,
no such actions, suits or proceedings are threatened or contemplated by
governmental authorities or threatened by others;
z. The statements made in the Offering Documents under the caption
"Description of Senior Notes," insofar as they purport to constitute
summaries of the terms of the Senior Notes and the Indenture, under the
caption "Description of Existing Indebtedness," insofar as they purport to
constitute summaries of the terms of the Operating Partnership Indenture
(as defined in the Indenture) and the Credit Facility (as defined in the
Indenture), and under the caption "The Skelgas and Superior Acquisitions,"
under the caption "The Partnership Agreement," under the caption "Certain
Federal Income Tax Consequences" and under the caption "Plan of
Distribution," insofar as they describe the provisions of the documents
therein, are accurate, complete and fair summaries;
aa. None of the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries is in: (i) breach or violation of its
agreement of limited partnership or of its charter or bylaws, as the case
may be; or (ii) default (and no event has occurred which, with notice or
lapse of time or both, would constitute such a default) in the due
performance or observance of any term,
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<PAGE>
covenant or condition contained in any bond, note, debenture or other
evidence of indebtedness or any indenture, mortgage, deed of trust, loan
agreement, contract, lease or other agreement or instrument to which it is
a party or by which it is bound or to which any of its properties or
assets is subject; or (iii) violation of any statute, rule or regulation
or administrative or court decree applicable to it or any of its
properties, which default or violation described in clause (ii) or (iii),
individually or in the aggregate, could have a material adverse effect
upon the holders of Senior Notes or the properties, business, general
affairs, management, prospects, condition (financial or otherwise),
financial position or results of operations of any of the Partnership,
Finance Corp., the General Partner, the Guarantor and the Subsidiaries
taken as a whole;
ab. Except as described in the Offering Documents, (i) each of the
Partnership, Finance Corp., the General Partner, the Guarantor and the
Subsidiaries has all certificates, consents, exemptions, orders, permits,
licenses, authorizations, or other approvals (each, an "Authorization") of
and from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, necessary or required to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Offering Documents, except to the
extent that the failure to obtain or file would not, singly or in the
aggregate, have a material adverse effect upon the ability of the
Partnership, Finance Corp., the General Partner, the Guarantor or the
Subsidiaries to conduct their businesses in all material respects as
currently conducted and as contemplated by the Offering Documents to be
conducted; (ii) all such Authorizations are valid and in full force and
effect; (iii) the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries are in compliance in all material respects
with the terms and conditions of all such Authorizations and with the
rules and regulations of the regulatory authorities and governing bodies
having jurisdiction with respect thereto; and, (iv) except as described in
the Offering Documents, none of the Partnership, Finance Corp., the
General Partner, the Guarantor and the Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Authorization which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or filing, would be expected to have a
material adverse effect upon the ability of the Partnership, Finance
Corp., the General Partner, the Guarantor and the Subsidiaries to conduct
their businesses in all material respects as currently conducted and as
contemplated by the Offering Documents to be conducted;
ac. None of the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries has violated any environmental safety or
similar law or regulation applicable to their business relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), lacks any permits, licenses or other approvals required of them
under applicable Environmental Laws to own, lease and operate their
respective properties and to conduct their business in the manner
described in the Offering Documents, is violating any terms and conditions
of any such permit, license or approval or has permitted to occur any
event that allows, or after notice or lapse of time would allow,
revocation or termination of any such permit, license or approval or
results in any other impairment of their rights thereunder, which in each
case might result, singly or in the aggregate, in a material adverse
effect on the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries, taken as a whole (a "Material Adverse
Effect"). None of the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries violated any federal, state or local law
relating to discrimination in the hiring, promotion or pay of employees
prior to any applicable wage or hour laws, nor any provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder, nor has the Partnership, Finance
Corp., the General Partner, the Guarantor or any of the Subsidiaries
engaged in any unfair labor practice,
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which in each case might result, singly or in the aggregate, in a Material
Adverse Effect. There is (i) no significant unfair labor practice
complaint pending against the Partnership, Finance Corp., the General
Partner, the Guarantor or the Subsidiaries or, to the best knowledge of
the Partnership, Finance Corp., the General Partner and the Guarantor,
threatened against any of them before the National Labor Relations Board
or any state or local labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Partnership,
Finance Corp., the General Partner, the Guarantor or any of the
Subsidiaries or, to the best knowledge of the Partnership, Finance Corp.,
the General Partner and the Guarantor, threatened against any of them,
(ii) no significant strike, labor dispute, slowdown or stoppage pending
against the Partnership, Finance Corp., the General Partner, the Guarantor
or any of the Subsidiaries or, to the best knowledge of the Partnership,
Finance Corp., the General Partner or the Guarantor, threatened against
the Partnership, Finance Corp., the General Partner, the Guarantor or any
of the Subsidiaries and (iii) to the best knowledge of the Partnership,
Finance Corp., the General Partner and the Guarantor, no union
representation question existing with respect to the employees of the
Partnership, Finance Corp., the General Partner, the Guarantor or any of
the Subsidiaries and, to the best knowledge of the Partnership, Finance
Corp., the General Partner and the Guarantor, no union organizing
activities are taking place, except (with respect to any matter specified
in clause (i), (ii) or (iii) above, singly or in the aggregate) such as
could not have a Material Adverse Effect;
ad. All tax returns required to be filed by the Partnership, Finance
Corp., the General Partner, the Guarantor and the Subsidiaries in any
jurisdiction have been filed, other than those filings being contested in
good faith, and all material taxes, including withholding taxes, penalties
and interest, assessments, fees and other charges due or claimed to be due
from such entities have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest;
ae. Except pursuant to this Agreement, none of the Partnership,
Finance Corp., the General Partner, the Guarantor and the Subsidiaries has
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of any Issuer to facilitate the sale or resale of the Senior
Notes or (ii) since the date of the Preliminary Offering Memorandum (A)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Senior Notes or (B) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities
of the Partnership, Finance Corp. or the Guarantor;
af. None of the Partnership, Finance Corp., the General Partner, the
Guarantor nor any of the Subsidiaries is (i) an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company" or
a "subsidiary company" of a holding company, or an "affiliate" thereof
within the meaning of the Public Utility Holding Company Act of 1935, as
amended;
ag. Except as disclosed in the Offering Documents, no holder of any
security of the Partnership, Finance Corp. or the Guarantor has or will have any
right to require the registration of such security by virtue of any transaction
contemplated by this Agreement;
ah. None of the Partnership, Finance Corp., the General Partner, the
Guarantor or the Subsidiaries does business with the government of Cuba or
with any person or affiliate located in Cuba within the meaning of Section
517.075 of Florida Statutes (Chapter 92-198, Laws of Florida);
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ai. At the Closing Date, the General Partner will have (excluding its
interests in the Partnership and the Operating Partnership and any notes
receivable from or payable to the Partnership or the Operating
Partnership) a net worth of at least $25,000,000;
aj. Each of the Partnership, Finance Corp., the General Partner, the
Guarantor and the Subsidiaries maintains insurance which is adequate in
accordance with customary industry practice; none of the Partnership,
Finance Corp., the General Partner, the Guarantor and the Subsidiaries has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order
to continue such insurance; all such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force at the
Closing Date;
ak. Each certificate signed by any officer of the Partnership,
Finance Corp., the General Partner and the Guarantor and delivered to the
Initial Purchasers or counsel for the Initial Purchasers shall be deemed
to be a joint and several representation and warranty by the Partnership,
Finance Corp., the General Partner and the Guarantor to each Initial
Purchaser as to the matters covered thereby;
al. When the Series A Senior Notes and the Subsidiary Guarantee are
issued and delivered pursuant to this Agreement, such Series A Senior
Notes and Subsidiary Guarantee will not be of the same class (within the
meaning of Rule 144A under the Act) as securities of the Issuers or the
Guarantor that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system;
am. Assuming (i) that the Initial Purchasers' representations and
warranties in Section 8 are true, (ii) that the representations of the
Institutional Accredited Investors set forth in the certificates of such
Institutional Accredited Investors in the form set forth in Appendix A to
the Offering Memorandum are true and (iii) that each of the Eligible
Purchasers is a Qualified Institutional Buyer or an Institutional
Accredited Investor, the purchase and resale of the Series A Senior Notes
and the Subsidiary Guarantee of the Series A Senior Notes pursuant hereto
(including pursuant to the Exempt Resales) is exempt from the registration
requirements of the Act and no registration under the Act of the Series A
Senior Notes and the Subsidiary Guarantee of the Series A Notes is
required. No form of general solicitation or general advertising (as such
terms are defined in Regulation D under the Act) was used by the
Partnership, Finance Corp., the Guarantor, the General Partner or any of
their representatives (other than the Initial Purchasers, as to whom the
Partnership, Finance Corp., the General Partner and the Guarantor make no
representation) in connection with the offer and sale of the Series A
Senior Notes and the Subsidiary Guarantee of the Series A Senior Notes,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising. No securities
of the same class as the Senior Notes or the Subsidiary Guarantee of the
Series A Senior Notes have been issued and sold by any of the Issuers or
the Guarantor within the six-month period immediately prior to the date
hereof;
an. The execution and delivery of the Operative Agreements, the sale
of the Series A Senior Notes to be purchased by the Eligible Purchasers
and the issuance of the Subsidiary Guarantee of the Series A Senior Notes
will not involve any prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code. The representation made by the
Partnership, Finance Corp., the General Partner and the Guarantor in the
preceding sentence is made in reliance upon and
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<PAGE>
subject to the accuracy of, and compliance with, the representations and
covenants made or deemed made by the Eligible Purchasers as set forth in
the Offering Memorandum under the Section entitled "Notice to Investors";
ao. None of the Partnership, Finance Corp., the General Partner, the
Guarantor and any Subsidiary (or any agent thereof acting on the behalf of
any of them) has taken, and none of them will take, any action that might
cause this Agreement, the issuance or sale of the Series A Senior Notes or
the issuance of the Subsidiary Guarantee of the Series A Senior Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System, in each case
as in effect now or as the same may hereafter be in effect on the Closing
Date;
ap. The Indenture is not required to be qualified under the Trust
Indenture Act prior to the first to occur of (i) the Exchange Offer and
(ii) the effectiveness of the Shelf Registration Statement (as such term
is defined in the Registration Rights Agreement); and
aq. Each of the Offering Documents and each amendment or supplement
thereto, as of its date, contains all the information specified in, and
meets the requirements of, Rule 144A(d)(4) under the Act.
8. Initial Purchasers' Representations and Warranties.
The Initial Purchasers represent and warrant as follows:
a. Each of the Initial Purchasers is either a Qualified Institutional
Buyer or an Institutional Accredited Investor, in either case with such
knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in
the Senior Notes;
b. The Initial Purchasers will be reoffering and reselling the Senior
Notes only to persons whom they reasonably believe to be Qualified
Institutional Buyers and to a limited number of persons whom they
reasonably believe to be Institutional Accredited Investors that execute
and deliver a letter containing certain representations and agreements in
the form attached as Appendix A to the Offering Documents, in each case,
in reliance on an exemption from the registration requirements of the Act;
c. No form of general solicitation or general advertising (as such
terms are defined in Regulation D under the Act) has been or will be used
by the Initial Purchasers or any of their representatives in connection
with the offer and sale of any of the Senior Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising;
d. In connection with the Exempt Resales, the Initial Purchasers will
solicit offers to buy the Senior Notes only from, and will offer to sell
the Senior Notes only to, the Eligible Purchasers. It is understood and
agreed that persons who purchase the Senior Notes from the Initial
Purchasers will be deemed to have represented and agreed to the matters
set forth in the Offering Memorandum under "Notice to Investors;" and
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e. The Initial Purchasers understand that the Issuers and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 10 hereof, counsel to the Issuers and counsel to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and the Initial Purchasers hereby consent to such
reliance.
9. Indemnification.
a. The Issuers and the Guarantor jointly and severally, agree to
indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each
person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) any of the Initial Purchasers (any of
the persons referred to in this clause (ii) being hereinafter referred to
as a "controlling person"), and (iii) the respective officers, directors,
partners, employees, representatives and agents of any of the Initial
Purchasers or any controlling person (any person referred to in clause
(i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Person) directly or indirectly
caused by, related to, based upon, arising out of or in connection with
any untrue statement or alleged untrue statement of a material fact
contained in the Offering Documents (including any amendment or supplement
thereto) or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except (i) insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or
alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Initial Purchasers
furnished in writing to the Issuers or the Guarantor by any of the Initial
Purchasers expressly for use in the Offering Documents (or any amendment
or supplement thereto) and (ii) insofar as any such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or
omission or alleged untrue statement or omission contained in any
Preliminary Offering Memorandum, the foregoing indemnity shall not inure
to the benefit of any Initial Purchaser which sold Series A Senior Notes
to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Offering Memorandum or of
the Offering Memorandum as then amended or supplemented, whichever is most
recent, if the Issuers or the Guarantor has previously furnished copies
thereof to such Initial Purchaser, and if such Offering Memorandum or
Offering Memorandum as amended or supplemented, as the case may be,
completely corrected the untrue statement or alleged untrue statement or
omission or alleged omission giving rise to such losses, claims, damages,
liabilities or expenses. The Issuers and the Guarantor shall notify the
Initial Purchasers promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation) or litigation
in connection with the matters addressed by this Agreement which involves
the Issuers, the Guarantor or an Indemnified Person.
b. In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the Indemnified
Persons with respect to which indemnity may be sought against the Issuers
or the Guarantor, such Initial Purchaser (or the Initial Purchaser
controlled by such controlling person) shall promptly notify the
Partnership in writing (provided, that the failure to give such notice
shall not relieve the Issuers or the Guarantor of their obligations
pursuant to this Agreement). Such Indemnified Person shall have the right
to employ its own counsel in any such action and the reasonable fees and
expenses of such counsel shall be paid, as incurred, by the Issuers
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<PAGE>
and the Guarantor (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder). The
Issuers and the Guarantor shall not, in connection with any one such
action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for such Indemnified Persons, which firm
shall be designated by the Initial Purchasers. The Issuers and the
Guarantor shall be liable for any settlement of any such action or
proceeding effected with any Issuer's prior written consent, which consent
will not be unreasonably withheld, and the Issuers and the Guarantor agree
to indemnify and hold harmless any Indemnified Person from and against any
loss, claim, damage, liability or expense by reason of any settlement of
any action effected with the written consent of any Issuer. The Issuers
and the Guarantor shall not, without the prior written consent of each
Indemnified Person, settle or compromise or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not
any Indemnified Person is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release of
each Indemnified Person from all liability arising out of such action,
claim, litigation or proceeding.
c. Each of the Initial Purchasers agrees, severally and not jointly,
to indemnify and hold harmless the Issuers, the Guarantor, their
directors, their officers, any person controlling (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Issuers, the
Guarantor, and the officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Issuers and the Guarantor to each of the
Indemnified Persons, but only with respect to claims and actions based on
information relating to such Initial Purchaser furnished in writing by
such Initial Purchaser expressly for use in the Offering Documents.
d. If the indemnification provided for in this Section 9 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and expenses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other hand from the offering of the Senior Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the indemnifying parties and the indemnified party, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers and the Guarantor, on the one hand, and any of the Initial
Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Issuers and the Guarantor bear to the total underwriting discounts and
commissions received by such Initial Purchaser, in each case as set forth
in the table on the cover page of the Offering Memorandum. The relative
fault of the Issuers and the Guarantor and the Initial Purchasers shall be
determined by reference to, among other things whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact related to information supplied by the
Issuers and the Guarantor or the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The indemnity and
contribution obligations of the Issuers and the Guarantor set forth herein
shall be in addition to any liability or obligation the Issuers and the
Guarantor may otherwise have to any Indemnified Person.
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The Issuers, the Guarantor and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section
9(d) were determined by pro rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, none of
the Initial Purchasers (and its related Indemnified Persons) shall be
required to contribute, in the aggregate, any amount in excess of the
amount by which the total underwriting discount applicable to the Senior
Notes purchased by such Initial Purchaser exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Initial Purchasers' obligations to contribute pursuant to this Section
9(d) are several in proportion to the respective principal amount of
Senior Notes purchased by each of the Initial Purchasers hereunder and not
joint.
10. Conditions of Initial Purchasers' Obligations. The obligations of
the Initial Purchasers hereunder shall be subject, in their discretion, to the
condition that all representations and warranties and other statements on the
part of the Partnership, Finance Corp., the General Partner and the Guarantor
herein are, at and as of the Closing Date, true and correct with the same force
and effect as if made at and as of the Closing Date, the condition that each of
the Partnership, Finance Corp., the General Partner and the Guarantor shall have
performed all of its obligations and agreements hereunder theretofore to be
performed, and the following additional conditions:
a. The Offering Documents shall have been printed and copies
distributed to the Initial Purchasers not later than 9:00 a.m., New York
City time, on April 24, 1996, or at such later date and time as the
Initial Purchasers may approve in writing;
b. No stop order suspending the qualification or exemption from
qualification of the Senior Notes for sale in any jurisdiction designated
by the Initial Purchasers pursuant to Section 6(j) hereof shall have been
issued and no proceeding for that purpose shall have been commenced or be
pending, or, to the knowledge of the Partnership, Finance Corp., the
General Partner and the Guarantor, be threatened;
c. No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of any of
the Senior Notes; and no injunction, restraining order of any nature by a
federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance of the Senior Notes;
d. Bryan Cave LLP, counsel for the Partnership, Finance Corp., the
General Partner and the Guarantor, shall have furnished to the Initial
Purchasers their written opinion, dated the Closing Date, in form and
substance satisfactory to you, substantially in the form set forth on
Appendix A attached hereto;
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<PAGE>
e. The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Latham & Watkins, counsel for the Initial Purchasers, in
form and substance reasonably satisfactory to the Initial Purchasers;
f. On the date of the Offering Memorandum prior to the execution of
this Agreement and also on the Closing Date, Deloitte & Touche shall have
furnished to the Initial Purchasers a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory
to the Initial Purchasers;
g. Since the date hereof or since the dates as of which information
is given in the Offering Memorandum, there shall not have been, singly or
in the aggregate, any change, or any development which may reasonably be
expected to involve a change, in the properties, business, general
affairs, management, condition (financial or otherwise), financial
position, or prospects of the Partnership, Finance Corp., the General
Partner, the Guarantor and the Subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Offering Memorandum, (ii) since
the date as of which information is given in the Offering Memorandum,
there shall not have been any change in the capital stock or long-term
debt, or increase in short-term debt, of the Partnership, Finance Corp.,
the General Partner, the Guarantor or any of the Subsidiaries, and (iii)
each of the Partnership, Finance Corp., the General Partner, the Guarantor
and the Subsidiaries shall not have incurred (A) since the date of the
latest audited financial statements included in the Offering Memorandum,
any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Memorandum or (B) any
liability or obligation, direct or contingent, that is required to be
disclosed on a balance sheet in accordance with generally accepted
accounting principles and is not disclosed on the latest balance sheet
included in the Offering Memorandum, the effect of which, in any such case
described in clause (i), (ii) or (iii), is in the Initial Purchasers'
judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Senior
Notes being delivered at the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum;
h. There shall have been furnished to the Initial Purchasers on the
Closing Date certificates reasonably satisfactory to the Initial
Purchasers, signed on behalf of the General Partner and Finance Corp. by a
President or Vice President thereof and on behalf of the Partnership and
Operating Partnership by the General Partner by an authorized officer
thereof to the effect that:
(i) In the case of the Partnership, the Operating
Partnership and Finance Corp. (A) the representations and warranties
of the Partnership, the Operating Partnership and Finance Corp.
contained in this Agreement are true and correct at and as of the
Closing Date as though made at and as of the Closing Date; (B) each
of the Partnership, Operating Partnership and Finance Corp. has duly
performed all obligations required to be performed by it pursuant to
the terms of this Agreement at or prior to the Closing Date; (C) no
stop order preventing or suspending the use of any of the Offering
Documents, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement
are subject to the registration requirements of the Act have been
initiated or, to the knowledge of the Partnership, Operating
Partnership or Finance Corp., threatened by the Commission or any
other federal or state securities commission or regulatory authority;
and (D) no event contemplated by subsection (g) of this Section 10 in
respect of the Partnership, Operating Partnership or Finance Corp.
shall have occurred;
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(ii) In the case of the General Partner (A) the
representations and warranties of the General Partner contained in
this Agreement are true and correct at and as of the Closing Date as
though made at and as of the Closing Date; (B) the General Partner
has duly performed all obligations required to be performed by it
pursuant to the terms of this Agreement at or prior to the Closing
Date; and (C) no event contemplated by subsection (g) of this Section
10 in respect of the General Partner shall have occurred;
i. The Senior Notes shall have been designated for trading in
PORTAL;
j. Andrews & Kurth L.L.P. shall have delivered an executed opinion
addressed to the Issuers and the Initial Purchasers, in form and substance
satisfactory to the Initial Purchasers, regarding the classification of
the Partnership and the Operating Partnership under current applicable law
as a partnership for federal income tax purposes.
k. The Issuers and the Guarantor shall have entered into the
Indenture and the Initial Purchasers shall have received executed
counterparts thereof;
l. The Issuers and the Guarantor shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have
received executed counterparts thereof;
m. The Partnership and the General Partner shall have entered into
the Pledge Agreement and
the Initial Purchasers shall have received executed counterparts thereof;
and
n. The Partnership and the General Partner shall have prepared the
Financing Statements on the appropriate forms (copies of which shall have been
provided to the Initial Purchasers and their counsel) and shall have filed the
Financing Statements with the Filing Offices along with the payment of all
related filing fees. Oral confirmation of such filings and payments shall be
provided to the Initial Purchasers and their counsel.
11. Defaults. If at the Closing Date, any of the Initial Purchasers
shall fail or refuse to purchase Series A Senior Notes which it has agreed to
purchase hereunder on such date, and the aggregate principal amount of such
Series A Senior Notes that such defaulting Initial Purchaser agreed but failed
or refused to purchase does not exceed 10% of the total principal amount of such
Series A Senior Notes that all of the Initial Purchasers are obligated to
purchase at such Closing Date, each non-defaulting Initial Purchaser shall be
obligated to purchase the amount of the Series A Senior Notes that such
defaulting Initial Purchaser agreed but failed or refused to purchase on such
date. If, at the Closing Date, any of the Initial Purchasers shall fail or
refuse to purchase Series A Senior Notes in an aggregate principal amount that
exceeds 10% of such total principal amount of the Series A Senior Notes and
arrangements satisfactory to the other Initial Purchaser and the Issuers for the
purchase of such Series A Senior Notes are not made within 48 hours after such
default, this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchaser or the Issuers, except as otherwise provided in
this Section 11. In any such case that does not result in termination of this
Agreement, the Initial Purchasers or the Issuers may postpone the Closing Date
for not longer than seven days, in order that the required changes, if any, in
the Offering Memorandum or any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve a defaulting Initial
Purchaser from liability in respect of any default by any such Initial Purchaser
under this Agreement.
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<PAGE>
12. Effective Date of Agreement and Termination.
a. This Agreement shall become effective upon the execution of this
Agreement by the parties hereto;
b. This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by notice to the Partnership if any
of the following has occurred: (i) subsequent to the date of the Offering
Memorandum or the date of this Agreement, singly or in the aggregate, any
material adverse change, or any development which may be expected to
involve a material adverse change, in the properties, business, general
affairs, management, condition (financial or otherwise), financial
position or prospects of the Partnership, Finance Corp., the General
Partner, the Guarantor and the Subsidiaries taken as a whole, which in the
Initial Purchasers' judgment materially impairs the investment quality of
the Senior Notes; (ii) any suspension or limitation of trading generally
in securities on the New York Stock Exchange or in the over-the-counter
markets or any setting of minimum prices for trading on such exchange or
markets; (iii) any suspension or material limitation in trading of the
securities of the Partnership, Finance Corp., the General Partner, the
Guarantor or any of the Subsidiaries on the New York Stock Exchange or in
the over-the-counter markets; (iv) a general moratorium on commercial
banking activities in New York declared by either Federal or New York
State authorities; (v) any outbreak or escalation of hostilities involving
the United States, the declaration by the United States of a national
emergency or war, or any other national or international calamity or
crisis or material adverse change in the financial markets of the United
States or elsewhere, or any other substantial national or international
calamity or emergency if the effect of any such event in the Initial
Purchasers' judgment makes it impracticable or inadvisable to proceed with
the offering or the delivery of the Senior Notes being delivered at the
Closing Date on the terms and in the manner contemplated by the Offering
Memorandum; (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that in
the Initial Purchasers' judgment has a material adverse effect on the
financial markets in the United States and would, in the Initial
Purchasers' judgment, make it impracticable or inadvisable to proceed with
the offering or the delivery of the Senior Notes being delivered at the
Closing Date on the terms and in the manner contemplated by the Offering
Memorandum; (vii) the enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which, in the Initial
Purchasers' judgment, materially and adversely affect the business or
operations of the Partnership, Finance Corp., the General Partner, the
Guarantor or any Subsidiary; or (viii) any downgrading in the rating
accorded the securities of the Partnership, Finance Corp., the General
Partner, the Guarantor or any Subsidiary by any "nationally recognized
statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)-(2) under the Act, or any such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of such
securities;
c. The indemnities and contribution provisions and other agreements,
representations and warranties of the Partnership, Finance Corp., the
Guarantor or their officers and directors and of the Initial Purchasers
set forth in or made pursuant to this Agreement shall remain operative and
in full force and effect, and will survive delivery of and payment for the
Senior Notes, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of any of the Initial Purchasers or
by or on behalf of the Issuers, the Guarantor or the officers or directors
of any Issuer or Guarantor or any controlling person of any Issuer or
Guarantor, (ii) acceptance of the Senior Notes and payment for them
hereunder and (iii) termination of this Agreement;
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<PAGE>
d. If this Agreement shall be terminated by the Initial Purchasers
pursuant to clauses (i) or (viii) of paragraph (b) of this Section 12 or
because of the failure or refusal on the part of the Issuers or the
Guarantor to comply with the terms or to fulfill any of the conditions of
this Agreement, the Issuers and the Guarantor agree, jointly and
severally, to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by the
Initial Purchasers. Notwithstanding any termination of this Agreement, the
Issuers and the Guarantor shall be liable, jointly and severally, for all
expenses which it has agreed to pay pursuant to Section 6(o) hereof; and
e. Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the
Guarantor, the Initial Purchasers, any Indemnified Person referred to
herein and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The terms "successors
and assigns" shall not include a purchaser of any of the Senior Notes from
any of the Initial Purchasers merely because of such purchase.
13. Notices. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Partnership, Operating
Partnership or Finance Corp., to Ferrellgas, L.P., One Liberty Plaza, Liberty,
MO 64068, Attention: Danley K. Sheldon, with a copy to Bryan Cave, LLP, One
Kansas City Place, 1200 Main Street, Kansas City, MO 64105, Attention: Kendrick
T. Wallace, Esq., and (b) if to any Initial Purchaser, to it c/o Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department, with a copy to Latham & Watkins, 885
Third Avenue, New York, New York 10022, Attention: Philip E. Coviello, Esq., or
in any case to such other address as the person to be notified may have
requested in writing.
14. Governing Law.THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED
TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
15. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and other persons referred to in Section 9, and no other person
will have any right or obligation hereunder.
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This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Issuers, the Guarantor and the
Initial Purchasers.
Very truly yours,
FERRELLGAS PARTNERS, L.P.
By: FERRELLGAS, INC., as General Partner
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS PARTNERS FINANCE CORP.
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS, INC.
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS, L.P.
By: FERRELLGAS, INC., as General Partner
By:
Name: Danley K. Sheldon
Title: Senior Vice President
25
<PAGE>
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
Name:
Title:
GOLDMAN, SACHS & CO.
By:
(Goldman, Sachs & Co.)
26
<PAGE>
SCHEDULE A
Principal
Amount
Senior Notes
Donaldson, Lufkin & Jenrette
Securities Corporation $112,000,000
Goldman, Sachs & Co. $48,000,000
Total: $160,000,000
27
<PAGE>
SCHEDULE B
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
District of Columbia
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
28
<PAGE>
APPENDIX A
29
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made and entered into as
of this 26th day of April, 1996 (this "Agreement"), by FERRELLGAS PARTNERS,
L.P., a Delaware limited partnership (the "Pledgor"), having its principal
office at One Liberty Plaza, Liberty, Missouri 64068 and FERRELLGAS, INC., a
Delaware corporation and sole general partner of the Pledgor ("Ferrellgas"),
having its principal office at One Liberty Plaza, Liberty, Missouri 64068, in
favor of AMERICAN BANK NATIONAL ASSOCIATION as collateral agent having an office
at 101 East Fifth Street, St. Paul, Minnesota 55101-1860 (the "Collateral
Agent"), for the ratable benefit of the holders (the "Holders") of the 93/8%
Senior Secured Notes due 2006 of the Pledgor and Ferrellgas Partners Finance
Corp., a Delaware corporation ("Finance Corp." and, together with the Pledgor,
the "Issuers").
W I T N E S S E T H:
WHEREAS, the Pledgor is the legal and beneficial owner of
98.9899% of the outstanding limited partner interests (the "Pledged Interest")
in Ferrellgas, L.P. (the "Operating Partnership"), a Delaware limited
partnership, pursuant to that certain Agreement of Limited Partnership of
Ferrellgas, L.P., dated July 5, 1994 (the "Partnership Agreement");
WHEREAS, Ferrellgas is the sole general partner of the Pledgor
and the Operating Partnership and is the legal and beneficial owner of 1.0101%
of the outstanding general partner interests (the "General Partner Interest") in
the Operating Partnership pursuant to the Partnership Agreement;
WHEREAS, the Pledgor, Finance Corp., the Operating Partnership
and American Bank National Association, as trustee, have entered into that
certain indenture dated as of April 26, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which the Issuers issued $160 million in aggregate principal amount of 93/8%
Senior Secured Notes due 2006 (together with any notes or debentures issued in
replacement thereof or in exchange or substitution therefor, the "Senior
Notes"); and
WHEREAS, the terms of the Indenture require that the Pledgor
pledge to the Collateral Agent for the ratable benefit of the Holders, and grant
to the Collateral Agent for the ratable benefit of the Holders a security
interest in, the Pledged Collateral (as defined below) and execute and deliver
this Agreement in order to secure the payment and performance by the Issuers of
all of their Obligations under the Indenture and the Senior Notes (the
"Obligations").
<PAGE>
AGREEMENT
NOW THEREFORE, in consideration of the above recitals, and in
order to induce the Holders to purchase the Senior Notes, each of the Pledgor
and Ferrellgas hereby agrees with the Collateral Agent for its benefit and the
ratable benefit of the Holders as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the
Collateral Agent for its benefit and for the ratable benefit of the Holders, and
grants to the Collateral Agent for the ratable benefit of the Holders, a
continuing first priority security interest in all of its right, title and
interest in the following (the "Pledged Collateral"):
(a) the Pledged Interest and any certificates that represent
the Pledged Interest (including any rights the Pledgor may now have or
may have in the future to manage, invest, dispose of, liquidate, lease
or otherwise control the Operating Partnership's assets) and, subject
to Section 8.20 hereof, all products and proceeds of any of the Pledged
Interest, including, without limitation, all dividends, distributions,
cash, options, warrants, rights, instruments, subscriptions and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the Pledged Interest or any of the foregoing; and
(b) all additional equity interests and ownership interests in
(whether or not represented by a certificated security or other
investment), and all securities convertible into and all warrants,
options or other rights to purchase equity interests or other ownership
interests in, the Operating Partnership from time to time issued by the
Operating Partnership in any manner, and any certificates that
represent such additional equity interest or ownership interest (any
such additional equity interest, ownership interest and other items
shall constitute part of the Pledged Interest under and as defined in
this Agreement), and all products and proceeds of any of the foregoing,
including, without limitation, all dividends, distributions, cash,
options, warrants, rights, instruments, subscriptions, and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the foregoing.
SECTION 2. Security for Obligations. This Agreement secures
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration, by repurchase or otherwise) of all Obligations of the
Issuers under the Indenture and the Senior Notes (including, without limitation,
the principal of and premium, if any, including Liquidated Damages (as defined
in the Indenture), if any, on the Senior Notes and any other Obligations
accruing after the date of any filing by the Pledgor of any petition in
bankruptcy or the commencement of any bankruptcy, insolvency or similar
proceeding with respect to the Pledgor).
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SECTION 3. Representations and Warranties. The Pledgor hereby makes all
representations and warranties applicable to the Pledgor contained in the
Indenture. The Pledgor and Ferrellgas further represent and warrant that:
(a) The execution, delivery and performance by the Pledgor and
Ferrellgas of this Agreement are within the Pledgor's and Ferrellgas'
powers, have been duly authorized by all necessary partnership and
corporate action, and do not contravene, or constitute a default under,
the charter documents or by-laws of Ferrellgas, any provision of
applicable law, regulation, the Partnership Agreement, the Agreement of
Limited Partnership of Ferrellgas Partners, L.P., dated July 5, 1994
(the "MLP Partnership Agreement"), or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Pledgor,
Ferrellgas or the Operating Partnership, or result in the creation or
imposition of any Lien (as defined in the Indenture) on any assets of
the Pledgor or the Operating Partnership, other than the Lien
contemplated hereby.
(b) A true and correct copy of the Partnership Agreement
(including all amendments to date) is attached hereto as Exhibit A. A
true and correct copy of the MLP Partnership Agreement (including all
amendments to date) is attached hereto as Exhibit B. Pledgor hereby
acknowledges, represents and warrants that the Partnership Agreement
and the MLP Partnership Agreement accurately state the terms of the
respective partnerships, that, except as set forth in Exhibits A and B,
the Partnership Agreement and the Operating Partnership Agreement have
not been amended and are in full force and effect.
(c) The Pledged Interest has been duly authorized and validly
issued and is fully paid and non-assessable (except as such
non-assessability may be affected by the Partnership Agreement).
(d) The Pledged Interest constitutes all of the authorized,
issued and outstanding limited partner interests of the Operating
Partnership and all of the authorized, issued and outstanding equity
interest of the Operating Partnership (other than the General Partner
Interest), and constitutes all of the equity interest (including all
warrants, options and other rights to acquire partnership interests) of
the Operating Partnership beneficially owned by the Pledgor.
(e) There are no instruments, certificates, securities or
other writings or chattel paper evidencing or representing any equity
interest in the Operating Partnership.
(f) The Pledgor is the legal, record and beneficial owner of
the Pledged Collateral, free and clear of any Lien or claims of any
Person (as defined in the Indenture) except for the security interest
created by this Agreement.
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(g) Each of the Pledgor and Ferrellgas has full power and
authority to enter into this Agreement, and the Pledgor has the right
to vote, pledge and grant a security interest in the Pledged Collateral
as provided by this Agreement.
(h) The exercise by the Collateral Agent of any of its rights
and remedies hereunder will not cause, or be deemed to cause, a
dissolution of the Pledgor, Ferrellgas or the Operating Partnership.
(i) This Agreement has been duly executed and delivered by the
Pledgor and Ferrellgas and constitutes a legal, valid and binding
obligation each of the Pledgor and Ferrellgas, enforceable against the
Pledgor and Ferrellgas in accordance with its terms except as the same
may be limited by bankruptcy, insolvency or similar laws affecting
creditor rights generally and by general principles of equity.
(j) On the date hereof, the Collateral Agent's security
interest in the Pledged Interest has been duly registered by and with
the Operating Partnership pursuant to the provisions of Article 8 of
the Uniform Commercial Code as in effect in the State of Delaware on
the date hereof and on or prior to the date hereof, appropriate Uniform
Commercial Code financing statements naming the Collateral Agent as
secured party and the Pledgor as debtor with respect to the Pledged
Collateral have been duly filed with the Secretary of State - Division
of Corporations of the State of Delaware, the Secretary of State of the
State of Missouri and the Recorder of Deeds of Clay County, Missouri.
The pledge of the Pledged Collateral pursuant to this Agreement creates
a valid and perfected first priority security interest in the Pledged
Collateral in favor of the Collateral Agent securing the payment of the
Obligations, enforceable as such against all creditors of the Pledgor
and any persons purporting to purchase any of the Pledged Collateral
from the Pledgor.
(k) No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either
(i) for the pledge by the Pledgor of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of this
Agreement by the Pledgor or (ii) for the exercise by the Collateral
Agent of the voting or other rights provided for in this Agreement or
the remedies in respect of the Pledged Collateral pursuant to this
Agreement (except as may be required in connection with a disposition
of such Pledged Collateral by laws affecting the offering and sale of
securities).
(l) No actions, suits or proceedings of a material nature are
pending, or to the knowledge of the Pledgor or Ferrellgas threatened,
against or affecting the Pledgor, the Operating Partnership or
Ferrellgas that, if adversely determined, would materially and
adversely affect the financial condition of the Pledgor, the Operating
Partnership or Ferrellgas and their Subsidiaries (as defined in the
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Indenture) taken as a whole or involving the validity or enforceability
of this Agreement or the priority of the lien and security interest
created hereby, and no event has occurred (including specifically the
Issuers' and Operating Partnership's execution of the Indenture) which
will result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on the Pledged Collateral other
than the liens and security interests created by or otherwise permitted
by this Agreement.
(m) The pledge of the Pledged Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of
Governors of the Federal Reserve System or other regulatory agency
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System).
(n) All information set forth herein relating to the
Pledged Collateral is accurate and complete in all material respects.
SECTION 4. Covenants of the Pledgor. The Pledgor covenants
that:
(a) The Pledgor will defend the Pledged Collateral against all
claims and demands, immediately upon becoming aware of such claims and
demands, of all persons at any time claiming the same or any interest
therein except as expressly provided or allowed herein.
(b) The Pledgor will, promptly upon request by the Collateral
Agent, procure or execute and deliver any document, give any notices,
execute and file any financing statements, mortgages or other
documents, all in form and substance reasonably satisfactory to the
Collateral Agent, mark any chattel paper, deliver any chattel paper or
instruments to the Collateral Agent and take any other actions which
are necessary or, in the reasonable judgment of the Collateral Agent,
desirable to perfect or continue the perfection and first priority of
the Collateral Agent's security interest in the Pledged Collateral, to
protect the Pledged Collateral against the rights, claims, or interests
of third persons or to effect the purposes of this Agreement, and will
pay all reasonable costs incurred in connection therewith.
(c) The Pledgor shall not sell, transfer, assign, pledge,
exchange or otherwise dispose of the Pledged Collateral other than
pursuant to this Agreement and the Indenture, including, without
limitation, Section 8.22 hereof. If the Pledgor sells, transfers,
assigns, exchanges or otherwise disposes of the Pledged Collateral and
the proceeds of any such sale are notes, instruments or chattel paper,
such proceeds shall be promptly delivered to the Collateral Agent to be
held as Pledged Collateral hereunder. If the Pledged Collateral, or any
part thereof, is sold, transferred, assigned, pledged, exchanged, or
otherwise disposed of in violation of these provisions, the security
interest of the Collateral Agent shall continue in such Pledged
Collateral or part thereof notwithstanding such sale,
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transfer, assignment, pledge, exchange or other disposition, and the
Pledgor will hold the proceeds thereof in a separate account for the
benefit of the Collateral Agent and the Holders and the Pledgor will,
at the Collateral Agent's request, transfer such proceeds to the
Collateral Agent in kind.
(d) The Pledgor will not, and will not permit the Operating
Partnership to, enter into, modify or amend any existing or future
contracts or agreements relating to the sale or disposition of the
Pledged Collateral or any part thereof without the prior written
consent of the Collateral Agent. Upon request of the Collateral Agent,
the Pledgor will provide the Collateral Agent with copies of all such
existing and hereafter created contracts and agreements and of all
amendments and modifications thereto.
(e) The Pledgor will pay and discharge, or cause to be paid
and discharged, all taxes, assessments and governmental charges or
levies against the Pledged Collateral prior to delinquency thereof and
will keep the Pledged Collateral free of all unpaid charges whatsoever,
provided, however, that the Pledgor may withhold payment of any taxes,
assessments and governmental charges or levies which (i) the Pledgor in
good faith disputes, is at its own expense currently and diligently
contesting, is permitted under applicable law to contest without
payment, and (ii) do not aggregate more than $100,000 unless the
Pledgor delivers to the Collateral Agent a surety bond sufficient for
release of such taxes, assessments and governmental charges or levies
or other reasonable security therefor within 30 days of the filing
thereof.
(f) The Pledgor will comply with all laws, statutes and
regulations pertaining to the ownership of the Pledged Collateral where
the absence of such compliance would have an adverse effect on the
Pledged Collateral or on the interests of the Collateral Agent or the
Holders of the Senior Notes. In the event that the absence of such
compliance would not result in such an adverse effect on the Pledged
Collateral or on the Collateral Agent or the Holders of the Senior
Notes, the Pledgor shall be required to comply with such laws, statutes
and regulations within two days after receiving notice that it is not
in compliance with such laws, statutes and regulations.
(g) The Pledgor will, within five days of the Collateral
Agent's reasonable request, deliver to the Collateral Agent records and
schedules which show the status and condition of the Pledged
Collateral, will promptly notify the Collateral Agent in writing of any
event, or change of law, regulation, business practice, or business
condition which materially adversely affects the value of the Pledged
Collateral, and, in accordance with the provisions of the Indenture,
will provide the Collateral Agent with current financial information
concerning the Operating Partnership's business on a fiscal year-end
basis, with detail reasonably satisfactory to the Collateral Agent and
which shall be certified by the Operating Partnership and prepared in
accordance with accounting principles consistently
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applied and consistent with such statements previously supplied to the
Collateral Agent (unless any change in such principles has been
approved by the Collateral Agent which approval shall not be
unreasonably withheld or delayed). The Collateral Agent shall have the
reasonable right to review and verify such records, schedules, notices
and financial information.
(h) The Pledgor waives any claim that the release,
substitution or addition of collateral, endorsers or guarantors affects
the liability of the Pledgor hereunder.
(i) Upon the occurrence of a Default (as defined by Section 6
hereof), the Pledgor shall notify Ferrellgas and the Operating
Partnership that the Collateral Agent has all of the rights, and is
entitled to all of the benefits, of the Pledgor as sole limited partner
of the Operating Partnership under the Partnership Agreement, and has
the right to receive any and all payments, whether as a limited partner
or a creditor, from the Operating Partnership to the Pledgor as a
limited partner or creditor of the Operating Partnership.
(j) The Pledgor (i) shall not agree to any amendment or
modification of the Partnership Agreement or the MLP Partnership
Agreement that would adversely affect the Pledged Collateral or the
rights of the Collateral Agent hereunder and the Holders of the Senior
Notes and (ii) shall not, other than as permitted by Sections 4.10 and
12.03 of the Indenture, permit the liquidation, winding up, or
termination of the Pledgor or the Operating Partnership without the
prior written consent of the Collateral Agent.
(k) At any time after the occurrence and during the pendency
of a Default (as defined by Section 6 hereof), the Collateral Agent
shall have the right to make any payments and do any other acts the
Collateral Agent may deem necessary to protect its security interest in
the Pledged Collateral, including, without limitation, the rights to
pay, purchase, contest or compromise any encumbrance, charge or lien
which in the judgment of the Collateral Agent appears to be prior to or
superior to the security interest granted hereunder, and appear in and
defend any action or proceeding purporting to affect its security
interest in and/or the value of the Pledged Collateral, and in
exercising any such powers or authority, the right to pay all expenses
incurred in connection therewith, including attorneys' fees. The
Pledgor hereby agrees together with Ferrellgas, jointly and severally,
to reimburse the Collateral Agent for all payments made and expenses
incurred, which amounts shall be secured under this Agreement, and
agrees it shall be bound by any payment made or act taken by the
Collateral Agent hereunder. The Collateral Agent shall have no
obligation to make any of the foregoing payments or perform any of the
foregoing acts.
(l) The Pledgor shall not take any action, or permit the taking of any
action by the Operating Partnership, with respect to the Pledged Collateral the
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taking of which would result in a material impairment of the economic
value of the Pledged Collateral as collateral or a violation of the
Indenture or this Agreement, including, without limitation, the
issuance by the Operating Partnership of any additional equity
interests to Persons other than the Pledgor (other than the issuance of
additional equity interests to Ferrellgas or its parent in connection
with a Flow- Through Acquisition (as defined in the Indenture),
provided that such equity interests are immediately transferred to the
Pledgor).
(m) If any exists in the future, the Pledgor will immediately
deliver to the Collateral Agent any certificates, notes or other
evidence of the Pledged Collateral, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the
Collateral Agent.
SECTION 5. Covenants of Ferrellgas. Ferrellgas covenants
that:
(a) Ferrellgas shall not exercise or shall refrain from
exercising any and all voting and consensual rights pertaining to, and
its powers as general partner of, the Operating Partnership if such
action would have a material adverse effect on the value of the Pledged
Collateral or any part thereof or be inconsistent with or violate any
provisions of this Agreement or the Indenture.
(b) Ferrellgas (i) shall not agree to any amendment or
modification of the MLP Partnership Agreement or the Partnership
Agreement that would adversely affect the Pledged Collateral or the
rights of the Collateral Agent hereunder or the Holders of the Senior
Notes and (ii) shall not, other than as permitted by Sections 4.10 and
12.03 of the Indenture, permit the liquidation, winding up, or
termination of the Pledgor or the Operating Partnership without the
prior written consent of the Collateral Agent.
(c) The Collateral Agent shall have at all reasonable times,
with reasonable notice, the right to enter into and upon any premises
of the Pledgor and the Operating Partnership for the purpose of
inspecting the same, making copies of records, or otherwise protecting
its security interest in the Pledged Collateral.
(d) Ferrellgas shall not permit the Operating Partnership to
make any dividends, distributions, loans, or transfer of any kind in
complete or partial liquidation of the Operating Partnership without
the express written consent of the Collateral Agent, other than as
permitted by Sections 4.10 and 12.03 of the Indenture.
(e) Ferrellgas hereby agrees together with the Pledgor,
jointly and severally, to reimburse the Collateral Agent for all
payments made and expenses incurred by the Collateral Agent under
Section 4(k) hereunder which amounts shall
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be secured under this Agreement, and agrees it shall be bound by any
payment made or act taken by the Collateral Agent hereunder.
(f) Ferrellgas shall not take any action, or permit the taking
of any action by the Operating Partnership, with respect to the Pledged
Collateral the taking of which would result in a material impairment of
the economic value of the Pledged Collateral as collateral or a
violation of the Indenture or this Agreement, including, without
limitation, the issuance by the Operating Partnership of any additional
equity interests to Persons other than the Pledgor (other than the
issuance of additional equity interests to Ferrellgas or its parent in
connection with a Flow- Through Acquisition (as defined in the
Indenture), provided that such equity interests are immediately
transferred to the Pledgor).
(g) Ferrellgas shall cause the Operating Partnership to take
any other actions which are necessary or, in the reasonable judgment of
the Collateral Agent, desirable to perfect or continue the perfection
and first priority of the Collateral Agent's security interest in the
Pledged Collateral, to protect the Pledged Collateral against the
rights, claims, or interests of third persons or to effect the purposes
of this Agreement.
SECTION 6. Defaults. The occurrence of any one or more of the following
events or conditions shall constitute a default ("Default") under this
Agreement:
(a) An Event of Default (as defined in the Indenture)
shall occur under the Senior Notes or the Indenture.
(b) Other than those created or permitted by this Agreement,
any Lien or other encumbrance is placed on or any levy is made on the
Pledged Collateral or any portion thereof, or the Pledged Collateral or
any portion thereof is seized or attached pursuant to legal process,
unless such Lien, encumbrance, levy, seizure or attachment is removed
or released within thirty (30) days from the time such lien or
encumbrance was placed thereon or such levy, seizure or attachment was
effected, but in any event not later than five (5) days prior to any
date for sale of such property.
SECTION 7. Remedies. If a Default hereunder shall have
occurred and be continuing, the Collateral Agent may, at its option, without
notice to or demand upon the Pledgor or Ferrellgas, but subject to this Section
7, do any one or more of the following.
(a) Declare the Obligations and all other indebtedness
(pursuant to this Agreement or the Indenture) of the Issuers to the
Collateral Agent to be immediately due and payable, whereupon all
unpaid principal, premium, if any, and interest including liquidated
damages, if any, on said advances and other indebtedness shall become
and be immediately due and payable;
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(b) Exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code, specifically including,
without limitation, the right to recover the reasonable attorneys' fees
and other expenses incurred by the Collateral Agent in the enforcement
of this Agreement or in connection with the Pledgor's redemption of the
Pledged Collateral;
(c) Notify the Pledgor, the Operating Partnership and
Ferrellgas that the Collateral Agent has the right to receive any
payments from the Operating Partnership to the Pledgor, as limited
partner or creditor of the Operating Partnership;
(d) Transfer any Pledged Collateral into the name of its
nominee;
(e) Retain the Pledged Collateral in satisfaction of the
obligations secured hereby, with notice of such retention sent to the
Pledgor as required by law;
(f) Exercise all the rights and receive all the benefits of
the Pledgor as sole Limited Partner (as defined by the Partnership
Agreement) of the Operating Partnership under the Partnership
Agreement.
(g) Enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may
have, and any repossession or retaking or sale of the Pledged
Collateral pursuant to the terms hereof shall not operate to release
the Pledgor until full and final payment of any deficiency has been
made in cash. The Pledgor shall reimburse the Collateral Agent upon
demand for, or the Collateral Agent may apply any proceeds of Pledged
Collateral to, the costs and expenses (including attorneys' fees,
transfer taxes and any other charges) incurred by the Collateral Agent
in connection with any sale, disposition or retention of any Pledged
Collateral hereunder;
(h) The Collateral Agent shall not be required to marshal the
Pledged Collateral or any other security for the obligations secured
hereby or to resort to the Pledged Collateral or any other security for
the obligations secured hereby in any particular order and all of the
Collateral Agent's rights under the various instruments relating to the
Pledged Collateral shall be cumulative. The Pledgor, to the maximum
extent permitted by law, hereby waives every defense (now, theretofore
or hereafter arising) of estoppel, laches, extension or moratorium
applicable to any obligations or liabilities covered by this Agreement
or of the Pledgor under this Agreement. The Pledgor expressly waives
extension of the obligations of this Agreement arising by any reason
whatsoever, including without limitation, by reason of the institution
of proceedings by or against Ferrellgas, the Pledgor or the Operating
Partnership under or pursuant to the Federal Bankruptcy Code, or any
amendment thereto, or any similar state or federal laws relating to
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the relief of debtors. The Collateral Agent may sell the Pledged
Collateral, or any part thereof, at any public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit
or for future delivery, as the Collateral Agent shall deem appropriate.
The Collateral Agent shall be authorized at any such sale, if it deems
it advisable to do so, to restrict the prospective bidders or
purchasers to persons who will provide assurances satisfactory to the
Collateral Agent that they may be offered and sold the Pledged
Collateral without registration under the Securities Act of 1933, as
amended, or any statute then in effect corresponding to the Securities
Act of 1933, as amended (the "Securities Act") or any other applicable
state or federal statute, and upon the consummation of any such sale,
the Collateral Agent shall have the right to assign, transfer and
deliver to purchaser or purchasers thereof the Pledged Collateral so
sold. The Collateral Agent may solicit offers to buy the Pledged
Collateral, or any part of it, from a limited number of investors
deemed by the Collateral Agent, in its reasonable judgment, to meet the
requirements to purchase securities under Regulation D promulgated
under the Securities Act as then in effect (or any other regulation of
similar import). If the Collateral Agent solicits such offers from such
investors, then the acceptance by the Collateral Agent of the highest
offer obtained therefrom shall be deemed to be a commercially
reasonably method of disposition of the Pledged Collateral. If the
Collateral Agent at such sale shall deem it advisable, in its
reasonable judgment, to have the Pledged Collateral, or that portion
thereof to be sold, registered under the provisions of the Securities
Act, the Pledgor and Ferrellgas will cause the Operating Partnership to
(i) execute and deliver, and cause the directors and officers of
Ferrellgas, as general partner of the Operating Partnership, to execute
and deliver, all at the Operating Partnership's expense, all such
instruments and documents, and to do or cause to be done all such other
acts and things as may be necessary or, in the opinion of the
Collateral Agent, advisable, to register such Pledged Collateral under
the provisions of the Securities Act, (ii) cause the registration
statement relating thereto to become effective and remain effective for
a period of 180 days from the date of the first public offering of such
Pledged Collateral, or that portion thereof to be sold and (iii) make
all amendments thereto and/or to the related prospectus that, in the
opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission applicable
thereto. Each of the Pledgor and Ferrellgas agree to cause the
Operating Partnership to comply with the provisions of the securities
or "Blue Sky" laws of any jurisdiction that the Collateral Agent shall
designate for the sale of the Pledged Collateral and to make available
to the Operating Partnership's security holders, as soon as
practicable, an earnings statement (which need not be audited) that
will satisfy the provisions of Section 11(a) of the Securities Act.
Each of the Pledgor and Ferrellgas will cause the Operating Partnership
to furnish to the Collateral Agent such number of copies as the
Collateral Agent may reasonably request of each preliminary and final
prospectus, to notify the Collateral Agent promptly of the happening of
any event as a result of which any then effective prospectus includes
an untrue statement of
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a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of then existing circumstances, and to cause the Collateral
Agent to be furnished with such number of copies as the Collateral
Agent may request of such supplement to or amendment of such
prospectus. The Pledgor and Ferrellgas will cause the Operating
Partnership, to the extent permitted by law, to indemnify, defend and
hold harmless the Collateral Agent and the Holders from and against all
losses, liabilities, expenses or claims (including reasonable legal
expenses and the reasonable costs of investigation) that the Collateral
Agent or the Holders may incur under the Securities Act or otherwise,
insofar as such losses, liabilities expenses or claims arise out of or
are based upon any alleged untrue statement of a material fact
contained in such registration statement (or any amendment thereto) or
in any preliminary or final prospectus (or any amendment or supplement
thereto), or arise out of or are based upon any alleged omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except to the extent that
any such losses, liabilities, expenses or claims arise solely out of or
are based upon any such alleged untrue statement made or such alleged
omission to state a material fact included or excluded on the written
direction of the Collateral Agent. The Pledgor and Ferrellgas will
cause the Operating Partnership to bear all costs and expenses of
carrying out their obligations hereunder.
(i) Proceed by an action or actions at law or in equity to
recover the indebtedness secured hereunder or to foreclose this
Agreement and sell the Pledged Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent
jurisdiction; and
(j) In the event the Collateral Agent recovers possession of
all or any part of the Pledged Collateral pursuant to a writ of
possession or other judicial process, whether prejudgment or otherwise,
the Collateral Agent may thereafter retain, sell or otherwise dispose
of such Pledged Collateral in accordance with this Agreement or the
applicable Uniform Commercial Code, and following such retention, sale
or other disposition, the Collateral Agent may voluntarily dismiss
without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Pledgor hereby consents to
the voluntary dismissal by the Collateral Agent of such judicial
action, and the Pledgor further consents to the exoneration of any bond
which the Collateral Agent filed in such action.
SECTION 8. Miscellaneous Provisions.
8.1 Notices. Any notice or communication by the Collateral
Agent, the Pledgor or Ferrellgas to the others is duly given if in writing and
delivered in person or mailed by first class mail (registered or certified) with
return receipt requested, telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:
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If to the Collateral Agent:
American Bank National Association
101 East Fifth Street
St. Paul, MN 55101-1860
Telecopier No.: (612) 229-6415
Attention: Corporate Trust Department
If to the Pledgor and Ferrellgas:
Ferrellgas Partners, L.P.,
One Liberty Plaza
Liberty, MO 64068
Telecopier No.: (816) 792-6979
Attention: Danley K. Sheldon
With a copy to:
Bryan Cave LLP
One Kansas City Place
1200 Main Street, Suite 3500
Kansas City, Missouri 64105-2100
Telecopier No.: (816) 374-3300
Attention: Kendrick T. Wallace
The Collateral Agent, the Pledgor or Ferrellgas, by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
The Pledgor shall forward to the Collateral Agent, without
delay, any notices, letters or other communications delivered to the Pledgor
naming the Collateral Agent or any similar designation as addressee, or which
could reasonably be deemed to materially and adversely affect the ability of the
Pledgor, the Operating Partnership, or Ferrellgas to perform its obligations to
the Collateral Agent.
All notices and communications 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; 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.
8.2 Headings. The various headings in this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.
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8.3 Governing Law. This Agreement shall be construed in
accordance with and all disputes hereunder shall be governed by the laws of the
State of New York.
8.4 Amendments. This Agreement or any provision hereof may be
changed, waived, or terminated only by a statement in writing signed by the
party against which such change, waiver or termination is sought to be enforced.
8.5 No Waiver. No delay in enforcing or failure to enforce any
right under this Agreement by the Collateral Agent shall constitute a waiver by
the Collateral Agent of such right. No waiver by the Collateral Agent of any
default hereunder shall be effective unless in writing, nor shall any waiver
operate as a waiver of any other default or of the same default on a future
occasion.
8.6 Time of the Essence. Time is of the essence of each
provision of this Agreement of which time is an element.
8.7 Binding Agreement. All rights of the Collateral Agent
hereunder shall inure to the benefit of its successors and assigns. The Pledgor
shall not assign any of its interest under this Agreement without the prior
written consent of the Collateral Agent. Any purported assignment inconsistent
with this provision shall, at the option of the Collateral Agent, be null and
void.
8.8 Definitions. All capitalized terms not defined herein
shall have the meaning set forth in the Indenture or the Uniform Commercial Code
as in effect in the State of New York on the date hereof, except where the
context otherwise requires.
8.9 Entire Agreement. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or acquiescence in
a course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
8.10 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or to seek damages for a breach of any
provision hereof, or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
8.11 Severability. If any provision of this Agreement should
be found to be invalid or unenforceable, all of the other provisions shall
nonetheless remain in full force and effect to the maximum extent permitted by
law.
8.12 Survival of Provisions. All representations, warranties
and covenants of the Pledgor and Ferrellgas contained herein shall survive the
execution and delivery of
14
<PAGE>
this Agreement, and shall terminate only upon the full and final payment by the
Pledgor of its indebtedness secured hereunder.
8.13 Setoff. The Collateral Agent shall have the right, at any
time, to set off any indebtedness or obligation of the Pledgor against any
indebtedness or obligation of the Collateral Agent incurred hereunder, without
notice to or demand upon the Pledgor and whether or not any such indebtedness or
obligations are liquidated or mature at the time of such offset. The Collateral
Agent's right of offset hereunder shall be in addition to and not in limitation
of any other rights or remedies which may exist in favor of the Collateral
Agent.
8.14 Power of Attorney. The Pledgor hereby irrevocably
appoints and constitutes the Collateral Agent as the Pledgor's attorney-in-fact
to exercise all of the following powers upon the occurrence and during the
pendency of a Default (as defined in Section 6 hereof): (i) collection of
proceeds of any Pledged Collateral; (ii) conveyance of any item of Pledged
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
any Liens hereunder; (iv) making of any payments or taking any acts hereunder
and (v) paying or discharging taxes or Liens levied or placed upon or threatened
against the Pledged Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Collateral Agent in its
sole discretion, and such payments made by the Collateral Agent to become the
obligations of the Pledgor to the Collateral Agent, due and payable immediately
without demand. The Collateral Agent's authority hereunder shall include,
without limitation, the authority to endorse and negotiate, for the Collateral
Agent's own account, any checks or instruments in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document,
transfer title to any item of Pledged Collateral, sign the Pledgor's name on all
financing statements or any other documents deemed necessary or appropriate to
preserve, protect or perfect the security interest in the Pledged Collateral and
to file the same, prepare, file and sign the Pledgor's name on any notice of
Lien, and prepare, file and sign the Pledgor's name on a proof of claim in
bankruptcy or similar document against any creditor of the Pledgor, and to take
any other actions arising from or incident to the powers granted to the
Collateral Agent in this Agreement. This power of attorney is coupled with an
interest and is irrevocable by the Pledgor.
8.15 Authority of the Collateral Agent. The Collateral Agent
shall have and be entitled to exercise all powers hereunder which are
specifically delegated to the Collateral Agent by the terms hereof. The
Collateral Agent may perform any of its duties hereunder or in connection with
the Pledged Collateral by or through agents or employees and shall be entitled
to retain counsel and to act in reliance upon the advice of counsel concerning
all such matters. Neither the Collateral Agent nor any director, officer,
employee, attorney or agent of the Collateral Agent shall be liable to the
Pledgor or Ferrellgas for any action taken or omitted to be taken by it or them
hereunder, except for its or their own gross negligence or willful misconduct;
nor shall the Collateral Agent be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto. The
Collateral Agent and the Pledgor each shall be
15
<PAGE>
entitled to rely on any communication, instrument or document believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. The Pledgor and Ferrellgas jointly and severally agree to
indemnify and hold harmless the Collateral Agent and/or any such other person
from and against any and all costs, expenses (including attorneys' fees), claims
or liability incurred by the Collateral Agent or such person hereunder, unless
such claim or liability shall be due to willful misconduct or gross negligence
on the part of the Collateral Agent or such person. If a Default does not then
exist, and delay in commencing or responding to such action or proceeding does
not prejudice the rights of the Collateral Agent or subject the Collateral Agent
to any increased liability, and the Pledgor or any of its affiliates is not a
party to such action or proceeding, the Collateral Agent shall give the Pledgor
notice of its intention to commence, appear in, or defend such action or
proceeding and the Pledgor shall have five (5) days after such notice to propose
to the Collateral Agent the form and nature of the Collateral Agent's
representation in such action or proceeding, which the Collateral Agent may
accept or reject in its reasonable discretion. The foregoing notice and the
Collateral Agent's decision to accept or reject shall not limit or prejudice the
Collateral Agent's rights to payments or indemnification provided in this
Agreement.
8.16 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
8.17 Termination of Agreement. This Agreement shall terminate
upon full and final payment of all Obligations secured hereunder.
8.18 Waiver. To the extent permitted by applicable law, the
Pledgor and Ferrellgas hereby agree to waive, and hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of, and hereby
covenant not to assert against the Collateral Agent any of the following:
(a) All right to require the Collateral Agent to
apply any Pledged Collateral which the Collateral Agent may hold to the
obligations of the Pledgor or the Operating Partnership to the
Collateral Agent at any time or to pursue any other remedies;
(b) Any claim that the release, substitution or
addition of Pledged Collateral, endorsers or guarantors affects the
liability of the Pledgor hereunder; and
(c) any right of subrogation and any right to
participate in the Pledged Collateral until all Obligations hereby
secured have been paid in full.
8.19 Further Assurances. The Pledgor and Ferrellgas will
execute and deliver to the Collateral Agent, at its request, any further
instruments and will perform any and all acts deemed reasonably necessary by the
Collateral Agent to carry into effect the
16
<PAGE>
terms, conditions and provisions of this Agreement and the transactions
connected herewith. In the event that the same be required in connection with
this transaction, or in connection with any sale made in the course of
enforcement of this Agreement, the Pledgor and Ferrellgas shall execute and
deliver any and all instruments which may be required by law or by the
regulations or rules of any governmental agency to effectuate this Agreement and
to perfect the security interest granted herein to the Collateral Agent, as well
as to effectuate the sale and transfer of the Pledged Collateral sold to the
purchaser or purchasers at any sale made pursuant to, or in enforcement or
foreclosure of, this Agreement. Should the Pledgor and Ferrellgas fail to
execute or deliver any such instruments or to perform any such acts, the Pledgor
and Ferrellgas hereby irrevocably authorizes and appoints the Collateral Agent
to execute and to deliver such instruments and to perform such acts in the name
of the Pledgor and Ferrellgas on their behalf as their attorney-in-fact.
8.20 Right to Receive Distributions and Vote the Pledged
Interest. Unless a Default shall have occurred and be continuing, the Pledgor
shall have the right to receive all payments or distributions that it is
entitled to receive as a partner of or creditor of the Operating Partnership and
the right to exercise the voting and other consensual rights that it is entitled
to exercise under the Partnership Agreement.
Upon the occurrence and during the pendency of a Default, the
Pledgor shall not receive payments or distributions as a partner of or creditor
of the Operating Partnership, provided, however, that the Pledgor will be
entitled to receive such cash, dividends, distributions, interest and other
payments from the Operating Partnership that are sufficient to permit the
Pledgor to satisfy its ordinary course operating expenses whether or not a
Default shall have occurred. The Pledgor hereby authorizes and directs the
Operating Partnership, upon the occurrence and during the pendency of a Default,
to make all payments and distributions (other than the payments and
distributions described in the proviso of the preceding sentence), to which the
Pledgor would otherwise be entitled, directly to the Collateral Agent and all
payments and other distributions that are received by the Pledgor contrary to
the provisions of this Section 8.20 shall be received in trust for the benefit
of the Collateral Agent and the Holders, shall be segregated from the other
property or funds of the Pledgor and shall be forthwith delivered to the
Collateral Agent as Pledged Collateral in the same form as so received (with any
necessary endorsements).
Upon the occurrence and during the pendency of a Default, all
rights of the Pledgor to exercise the voting and other consensual rights that it
would otherwise be entitled to exercise under the Partnership Agreement shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which, to the extent permitted by law and the Partnership Agreement,
shall thereupon have the sole right to exercise such voting and other consensual
rights.
8.21 Limited Recourse. No limited partner of the Pledgor or
director, officer, employee, incorporator or stockholder of the General Partner
shall have any
17
<PAGE>
liability for any obligations of the Pledgor or Ferrellgas under this Agreement
or for any claim based on, in respect of or by reason of such obligations or
their creation. Each Holder, by accepting a Senior Note, waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Senior Notes. The foregoing limitation of personal liability shall
be subject to the following exceptions and qualifications:
(a) directors, officers, employees, incorporators and
stockholders of the General Partner shall be fully and personally
liable for the following:
(i) fraud;
(ii) retention by such persons of any income
arising with respect to the Pledged Collateral held in trust
by the Pledgor under the provisions of this Agreement, which,
under the terms of this Agreement, should have been paid to
the Collateral Agent; and
(iii) any losses that result from the
transfer (not expressly permitted under this Agreement) of the
Pledged Collateral.
(b) Nothing contained in this paragraph shall affect
or limit the ability of the Collateral Agent to enforce any of its
rights or remedies with respect to any property encumbered by this
Agreement.
8.22 Additional Interests. If, after the date hereof and
provided no Default shall have occurred and be continuing, the Pledgor shall
incur any additional Indebtedness (as defined in the Indenture) permitted to be
incurred under the terms of the Indenture and that is not expressly subordinate
in right of payment to any other Indebtedness, such Indebtedness may be secured
by the Pledged Collateral on a pro rata basis with the Obligations secured
hereunder; provided that (i) the Collateral Agent shall act as collateral agent
with respect to the Pledged Collateral for both the Holders and the holders of
such Indebtedness, (ii) the continued priority and perfection of the Collateral
Agent's security interest in the Pledged Collateral for the benefit of the
Holders shall not, in the sole opinion of the Collateral Agent, be interrupted,
diminished or otherwise adversely affected (other than by virtue of the fact
that the Holders will be sharing the Pledged Collateral equally and ratably on a
pro rata basis with the holders of such Indebtedness) and (iii) the rights and
remedies of the holders of such Indebtedness with respect to the Pledged
Collateral shall be no greater or more extensive than the rights of the Holders
with respect to the Pledged Collateral. In connection with the grant of any such
security interest for the benefit of the holders of such Indebtedness, the
Collateral Agent agrees to enter into any agreements reasonably required to
accomplish the purposes of this Section 8.22 (including, if necessary, an
amended and restated pledge agreement and/or an intercreditor agreement which is
substantially identical to the terms of this Agreement).
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered the day and year first above
written.
Very truly yours,
FERRELLGAS PARTNERS, L.P.
By: FERRELLGAS, INC.,
as General Partner
By:
Name: Danley K. Sheldon
Title: Senior Vice President
FERRELLGAS, INC.,
By:
Name: Danley K. Sheldon
Title: Senior Vice President
COLLATERAL AGENT:
AMERICAN BANK NATIONAL ASSOCIATION,
as Collateral Agent
By:
Name:
Title:
By:
Name:
Title:
19
<PAGE>
Exhibit A
Partnership Agreement
20
<PAGE>
Exhibit B
Operating Partnership Agreement
21
For immediate release
Contacts
Investor Relations: Theresa Schekirke, 816/792-6826
Media Relations: Linda Bengston, 816/792-7902
Ferrellgas Completes Acquisitions
LIBERTY, Mo. (May 1, 1996)--Ferrellgas , Inc., General Partner of
Ferrellgas Partners, L.P. (NYSE:FGP), announced today that it has completed
purchase of the stock of Skelgas Propane, Inc., from Superior Propane, Inc., of
Toronto, Canada, for total consideration of approximately $89.7 million, which
included approximately $21 million of net working capital. The Skelgas business
will be contributed to Ferrellgas, L.P., the operating subsidiary of Ferrellgas
Partners, L.P.
The agreement to purchase Skelgas was announced in March. Before the
acquisition, Skelgas was the seventh-largest propane supplier in the nation,
operating 92 retail propane outlets across the United States with sales of
approximately 97 million gallons a year to residential, industrial/commercial
and agricultural customers.
In a separate transaction, Ferrellgas has also completed the
acquisition of Superior Propane based in Nevada City, CA. The company serves
some 17,500 residential, industrial/commercial and agricultural customers in
California and Nevada through seven outlets.
These acquisitions bring to 20 the number of acquisitions Ferrellgas
has completed since becoming a publicly traded Master Limited Partnership (MLP)
in 1994 and add more than 106 million gallons to the company's annual retail
sales.
Ferrellgas is the second-largest retail marketer of propane in the
United States, serving more than 800,000 customers in 45 states.
# # #
For immediate release
Contacts
Investor Relations: Theresa Schekirke, 816/792-6826
Linda Bengston: Media Relations, 816/792-7902
Ferrellgas Partners, L.P.
Completes Private Offering of Senior Secured Notes
LIBERTY Mo. (April 26, 1996)--Ferrellgas Partners, L.P. (NYSE:FGP)
announced today that it has issued $160 million of fixed rate 9 3/8% Senior
Secured Notes due 2006 in a private placement to qualified institutional
investors under Rule 144A. Proceeds of the offering will be contributed by
Ferrellgas Partners to its operating partnership, Ferrellgas, L.P., and will be
used primarily to repay outstanding indebtedness under Ferrellgas, L.P.'s
acquisition bank credit lines.
Ferrellgas Partners, L.P., through its operating partnership,
Ferrellgas, L.P., is the second-largest retail marketer of propane in the United
States, serving more than 700,000 customers in 45 states.
The Senior Notes have not been registered under the Securities Act and
may not be offered or sold in the United States absent such registration or an
applicable exemption from the registration requirements of such Act. This press
release shall not constitute an offer to sell or the solicitation of an offer to
buy these Senior Notes nor shall there by any sale of these Senior Notes in any
state in which such offer or solicitation of sale would be unlawful prior to
registration or qualification under the securities laws of any state.
# # #
AUDITORS' REPORT
To the Board of Directors and Stockholders of
Skelgas Propane, Inc.:
We have audited the consolidated balance sheets of Skelgas Propane, Inc. as at
December 31, 1995 and 1994 and the consolidated statements of loss and
accumulated deficit and cash flows for the year ended December 31, 1995. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform and audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1995
and 1994 the results of its operations and its cash flows for the year ended
December 31, 1995 in accordance with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE
Chartered Accountants
Markham, Canada
April 15, 1996
<PAGE>
Consolidated Financial Statements of
SKELGAS PROPANE, INC.
December 31, 1995
<PAGE>
SKELGAS PROPANE, INC.
Consolidated Balance Sheet
December 31, 1995 and 1994
<TABLE>
<CAPTION>
_________________________________________________________________________________________________
(U.S. dollars) 1995 1994
_________________________________________________________________________________________________
Assets
Current assets:
<S> <C> <C>
Cash $ 3,490,359 $ 3,132,411
Trade accounts receivable (net of allowance 7,516,865 5,867,971
for doubtful accounts of $285,760; 1994 - $267,800)
Other receivables 437,564 1,025,172
Current environmental costs recoverable (note 2) 319,138 181,669
Receivable from related companies (note 3) 1,559,619 3,497,933
Inventories (note 4) 8,630,846 6,937,849
Prepaid expenses 1,134,563 1,604,979
_________________________________________________________________________________________________
23,088,954 22,247,984
Environmental costs recoverable (note 2) 686,243 135,603
Appliances on rental, at cost
less accumulated depreciation 574,128 623,834
Property, plant and equipment (note 5) 51,816,208 53,419,549
Other assets (note 6) 9,733,804 61,689,733
_________________________________________________________________________________________________
$ 85,899,337 $138,116,703
_________________________________________________________________________________________________
Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable $ 3,001,730 $ 3,621,461
Accrued liabilities 6,638,518 4,556,075
Accrued environmental liability (note 2) 561,022 330,015
Income and other taxes payable 424,913 399,097
Current portion of long-term debt (note 7) 52,938 52,350
_________________________________________________________________________________________________
10,679,121 8,958,998
Long-term debt (note 7) 18,377 70,771
Stockholder's equity:
Preferred stock, $1.00 par value, 100,000
shares authorized, none issued or
outstanding - -
Common stock, $1,000.00 par value,
200,000 shares authorized, 155,000
shares issued and outstanding 155,000,000 155,000,000
Accumulated deficit (79,798,161) (25,913,066)
_________________________________________________________________________________________________
75,201,839 129,086,934
_________________________________________________________________________________________________
$ 85,899,337 $138,116,703
_________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Consolidated Statement of Loss and Accumulated Deficit
Year ended December 31, 1995
<TABLE>
<CAPTION>
_________________________________________________________________________________________________
(U.S. dollars) 1995
_________________________________________________________________________________________________
<S> <C>
Revenues $ 75,230,313
Cost of products sold (including depreciation
of $162,516) 39,897,582
_________________________________________________________________________________________________
35,332,731
Expenses:
Operating and overhead 26,288,549
Selling 2,056,836
General and administrative 3,090,539
Interest and foreign exchange adjustments 18,033
Depreciation and amortization (note 8) 57,472,523
_________________________________________________________________________________________________
88,926,480
_________________________________________________________________________________________________
Loss before income taxes (53,593,749)
Income taxes (note 9) 291,346
_________________________________________________________________________________________________
Loss for the year (53,885,095)
Accumulated Deficit at beginning of year (25,913,066)
_________________________________________________________________________________________________
Accumulated Deficit at end of year $(79,798,161)
_________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Consolidated Statement of Cash Flows
Year ended December 31, 1995
<TABLE>
<CAPTION>
_________________________________________________________________________________________________
(U.S. dollars) 1995
_________________________________________________________________________________________________
Cash provided by (used for):
Operations:
<S> <C>
Loss for the year $(53,885,095)
Items not involving cash:
Depreciation and amortization 57,635,039
_________________________________________________________________________________________________
3,749,944
Change in non-cash operating working capital 685,873
_________________________________________________________________________________________________
4,435,817
_________________________________________________________________________________________________
Financing:
Repayment of long-term debt (51,806)
_________________________________________________________________________________________________
(51,806)
_________________________________________________________________________________________________
Investments:
Proceeds from disposals of property,
plant and equipment 384,615
Purchases of property, plant and equipment (4,297,868)
Purchases of appliances on rental (112,810)
_________________________________________________________________________________________________
(4,026,063)
_________________________________________________________________________________________________
Increase in cash position 357,948
Cash at beginning of year 3,132,411
_________________________________________________________________________________________________
Cash at end of year $ 3,490,359
_________________________________________________________________________________________________
_________________________________________________________________________________________________
Supplemental disclosure of cash flow information
Income taxes paid $ 277,785
Interest paid $ 6,311
_________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
Skelgas Propane, Inc. (the Company), incorporated under the laws of Delaware,
has as its principal business activity the marketing of propane. The Company is
a wholly-owned subsidiary of Superior Propane Inc. (the Parent) incorporated
under the laws of Canada.
1. Summary of significant accounting policies:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. The Company's significant accounting
policies are as follows:
Basis of consolidation:
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Inventories:
Inventories of propane are valued at the lower of cost and market
determined on the basis of net realizable value. Inventories of
appliances, materials and supplies are stated at the lower of cost and
market value determined on the basis of replacement cost or net
realizable value. Cost is determined on the first-in, first-out (FIFO)
method.
Appliances on rental:
Appliances on rental are stated at cost less accumulated depreciation.
Depreciation is provided on a straight-line basis, generally over a
period of six years.
Property, plant and equipment:
Property, plant and equipment are recorded at cost and depreciated over
the estimated useful service life using the straight line method except
for loaned dispensers which use the declining balance method at an
annual rate of 10%. Property, plant and equipment are evaluated
periodically, and if conditions warrant, an impairment is recorded. The
estimated useful life of major asset classes are:
Buildings 20 years
Propane marketing equipment 7 - 20 years
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
Goodwill:
Goodwill and non-compete agreements are recorded at cost less
accumulated amortization. Non-compete agreements are amortized on a
straight line basis over 10 years. Effective January 1, 1993, the
Company revised the amortization period for goodwill from 40 years to
20 years prospectively. Goodwill is evaluated periodically, and if
conditions warrant, an impairment is recorded.
Income taxes:
The Company follows Statement of Financial Accounting Standards (SFAS)
No. 109 - "Accounting for Income Taxes". This Statement requires the
liability method of accounting for income taxes. The Company has
established valuation reserves on the deferred tax asset related to the
net operating loss carryforwards.
Environmental Remediation:
The Company accrues environmental remediation costs for work at
identified sites where an assessment has indicated that cleanup costs
are probable and reasonably estimable. Such accruals are based on
currently available facts, estimated timing of remedial actions,
existing technology and presently enacted laws and regulations. The
accruals are routinely reviewed as events and developments warrant.
2. Accrued environmental liability and costs recoverable:
The Company is subject to federal, state and local laws regulating
environmental remediation. These laws result in loss contingencies for
remediation at some of the Company's current locations as well as third
party or formerly owned facilities. The estimated costs for restoration
and remediation of these locations was accrued separately in the amount
of $561,022 (1994 - $330,015). Realization of claims from governmental
authorities for recovery of costs incurred in respect of environmental
liabilities totalling $1,005,381 at December 31, 1995 (1994 - $317,272)
will be recovered between 1996 and 1999.
3. Related party transactions:
The Company buys propane from an affiliate. During the year, such
purchases amounted to $7,696,773.
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
3. Related party transactions (continued):
The company received administrative services which are provided by the
Parent for which it pays a fee. The charge for these services is based
on a reasonable estimation of the time and effort spent by the the
Parent's various corporate office groups to provide services to the
Company. For the year ended December 31, 1995, the fees were $2,170,072.
In addition, certain other transactions are entered into with affiliated
companies. The receivable from the affiliates was $1,559,619 (1994 -
$3,497,933).
<TABLE>
<CAPTION>
4. Inventories:
__________________________________________________________________________________________________________
1995 1994
__________________________________________________________________________________________________________
<S> <C> <C>
Propane $5,790,211 $4,215,443
Appliances 1,777,809 1,842,690
Materials and supplies 1,062,826 879,716
__________________________________________________________________________________________________________
$8,630,846 $6,937,849
__________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
5. Property, plant and equipment:
__________________________________________________________________________________________________________
1995 1994
__________________________________________________________________________________________________________
Accumulated
Depreciation Net Net
and Book Book
Cost Amortization Value Value
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Land $ 3,605,798 $ - $ 3,605,798 $ 3,611,415
Buildings 6,958,062 2,715,773 4,242,289 4,322,885
Propane marketing
equipment 84,154,952 40,186,831 43,968,121 45,485,249
__________________________________________________________________________________________________________
$94,718,812 $42,902,604 $51,816,208 $53,419,549
__________________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
<TABLE>
<CAPTION>
6. Other assets:
__________________________________________________________________________________________________________
1995 1994
__________________________________________________________________________________________________________
<S> <C> <C>
Goodwill (net of accumulated amortization of
$59,835,876; 1994 - $9,289,725) $2,354,026 $52,900,177
Non-compete agreements (net of accumulated
amortization of $8,834,052; 1994 - $6,749,683) 7,379,778 8,789,556
__________________________________________________________________________________________________________
$9,733,804 $61,689,733
__________________________________________________________________________________________________________
</TABLE>
In the last quarter of 1995, the Company changed its method of
evaluating goodwill from a cost recovery method based on a 10 year
discounted cash flow to a net realizable value method. This change was
a result of the Parent's decision to divest its interest in the
Company. This necessitated a write down of the goodwill in the amount
of $47,612,072, which is included as part of the amortization of
goodwill in 1995 as set out in note 8.
<TABLE>
<CAPTION>
7. Long-term debt:
__________________________________________________________________________________________________________
1995 1994
__________________________________________________________________________________________________________
<S> <C> <C>
Notes payable for non-compete agreements $71,315 $123,121
Less: Current portion of long-term debt 52,938 52,350
__________________________________________________________________________________________________________
$18,377 $ 70,771
__________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
8. Depreciation and amortization:
__________________________________________________________________________________________________________
1995
__________________________________________________________________________________________________________
<S> <C>
Depreciation $ 5,690,165
Amortization of goodwill 50,546,151
Amortization of non-compete agreements 1,409,778
Gain on disposal of property, plant
and equipment (173,571)
__________________________________________________________________________________________________________
$57,472,523
__________________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
<TABLE>
<CAPTION>
9. Income taxes
The provision for income taxes includes the following:
__________________________________________________________________________________________________________
1995
__________________________________________________________________________________________________________
<S> <C>
Current taxes:
Federal $ -
State 291,346
__________________________________________________________________________________________________________
Total current taxes 291,346
__________________________________________________________________________________________________________
Deferred taxes -
__________________________________________________________________________________________________________
Total income taxes $291,346
__________________________________________________________________________________________________________
The provision for income taxes differs from applying the federal
statutory income tax rate of 34 percent to the loss before income taxes
as follows:
__________________________________________________________________________________________________________
1995
__________________________________________________________________________________________________________
Statutory federal rate (34.0)%
Goodwill 33.0%
Other 1.5%
__________________________________________________________________________________________________________
Effective income tax rate 0.5%
__________________________________________________________________________________________________________
</TABLE>
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
<TABLE>
<CAPTION>
9. Income taxes (continued)
The types and tax effects of the temporary differences that cause
significant portions of deferred tax assets and liabilities are as
follows:
__________________________________________________________________________________________________________
1995 1994
__________________________________________________________________________________________________________
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $23,966,000 $23,812,000
Self insurance reserve 670,000 -
Investment tax credits 250,000 250,000
Inventory costs capitalized for tax purposes 155,000 155,000
Non deductible allowance for doubtful accounts 114,000 107,000
Restructuring charge - 190,000
__________________________________________________________________________________________________________
Total deferred tax assets 25,155,000 24,514,000
__________________________________________________________________________________________________________
Deferred tax liabilities:
fixed asset basis differences / depreciation 14,033,000 14,427,000
__________________________________________________________________________________________________________
Subtotal 11,122,000 10,087,000
Total valuation allowance 11,122,000 10,087,000
__________________________________________________________________________________________________________
Net deferred tax asset $ - $ -
__________________________________________________________________________________________________________
As at December 31, 1995, the Company had net operating loss
carryforwards of approximatly $60,000,000. These carryforwards expire
between 1999 and 2008. Restrictions on the utilization of the net
operating loss carryforwards apply as a result of the change in the
control that occurred upon acquisition of the Company in 1990.
As at December 31, 1995, the Company has investment tax credit
carryforwards of $250,000. These carryforwards expire between 1999 and
2000.
</TABLE>
10. Employee retirement plans:
Many of the Company's employees are eligible to participate in 401(k)
Savings Plans, some of which provide for company matching under various
formulas. The Company's matching expense for the plans was $235,051 for
the year ended December 31, 1995.
<PAGE>
SKELGAS PROPANE, INC.
Notes to Consolidated Financial Statements
December 31, 1995
_______________________________________________________________________________
11. Financial Instruments:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base.
Financial instruments comprise cash, accounts receivable, accounts
payable, accrued liabilities, and long-term debt. The fair value of
these financial instruments approximates their carrying value.
12. Operating lease commitments:
The Company leases buildings and propane marketing equipment under
operating leases which expire in various years through 2000.
Future minimum lease payments by year under operating leases with
initial terms or remaining terms of one year or more consisted of the
following at December 31, 1995:
1996 $253,869
1997 188,436
1998 185,836
1999 184,686
2000 122,059
13. Contingencies:
At December 31, 1995, there are a number of lawsuits and claims pending
against the Company, the ultimate results of which have been estimated
and included in accrued liabilities. Management is of the opinion that
these claims are adequately reflected in the consolidated balance sheet
of the Company as at December 31, 1995 and that any additional amounts
assessed against the Company would not have a material adverse effect
upon the consolidated financial position of the Company or the results
of its operations.
14. Subsequent event:
On March 23, 1996, an agreement to sell the shares of the Company was
signed with a prospective acquiror. The transaction is dependent upon
regulatory and other approvals, which are expected by April 30, 1996, at
which time the transaction is anticipated to close.
